Anwar et al v. Fairfield Greenwich Limited et al

Filing 1127

ENDORSED LETTER: addressed to Judge Victor Marrero from Sharon L. Nelles dated 4/30/2013 re: For the foregoing reasons, Standard Chartered respectfully submits that there is no need for any pre-motion conferences at this time. If the Court is inclined to revisit the scope of Florida's economic loss rule, however, Standard Chartered respectfully requests the opportunity for full briefing. ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court by Standard Chartered defendants. So Ordered. (Signed by Judge Victor Marrero on 4/30/2013) (js)

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April 30, 2013

By Facsimile
Honorable Victor Marrero,
United States District Judge,
Daniel Patrick Moynihan United States Courthouse,
500 Pearl Street,
New York, New York 10007.
Re:

Anwar v. Fairfield Greenwich Ltd.,
No. 09·CV·US (S.D.N.YJ -- Standard Chartered Cases

Dear Judge Marrero:
We write on behalf of the Standard Chartered Defendants ("Standard
Chartered") in response to (1) an April 19,2013 letter from certain plaintiffs requesting a
pre-motion conference to allk the Court to reconsider its prior ruling that Florida's
economic loss LUle bars negligence claims where the panies' written agreement... govern
the conduct at issue (Dkt. No.1 1 14); and (ii) April 22, 2013 letters from Maridom
Limited, Caribetrans S.A. and Abbot Capital, Inc. (the "Maridom Plaintiffs") and
Headway Investment Corp. ("Headway") seek.ing a pre-motion conference to ask the
Coun to reconsider their twice previously denied requests to amend their complaints (Okt
Nos. 1117. 1123). These requests for reconsideration are not well founded and there i!>
no need for a pre-motion conference at this time.

I.

The Court Need Not Reconsider Its Prior Ruling That Florida's Economic
Loss Rule Bars Negligence Claims.

Tiara Condominium Association. Inc. v. Marsh & McLentUJlt Cos.• No.
SClO-1022, 2013 WL 828003 (Fla. Mar. 7,2013) provides no practical nor subs(antive
reason for this Coun to reconsider now any prior rulings.
Fir!J'l, this Coun dismissed negligence claims based on allegations that
Standard Chartered recommended Fairfield Sentry Ltd_ or Fairfield Sigma Ltd. (the
"Fairfield Funds") without conducting adequate due diligence. Anwar v. Fairfield
Greenwich Ltd.• 891 F. Supp. 2d 548, 552 (S.D.N.Y. 2012). Plaintiffs rely on the same
a1\egations for their breach of fiduciary duty claims - claims that are $till pending before

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this Court. I Compare [d. at 552 (negligence), with id. at 555 (breach of fiduciary duty).
This Court has made clear that there is no need for plaintiffs to add (or, here, revive)
claims where the allegations supporting those c1aims are the same as those allega.tions
that support other claims still pending before the Court. Anwar v. Fairfield Greenwich
Ltd., 283 F.R.D. 193, 198 (S.D.N.Y. 2012). Specifically, the Court already denied
plaintiffs leave to add new fraud claims that "center on the existing claims of failure to
conduct adequate due diligence" because the alJeged underlying conduct "will continue
to be prol\ecuted" as a part of plaintiffs' surviving breach of fiduciary duty (and other)
claims. Jd at 197-98. The Court noted that if the existing claims continue to survive post
summary judgment, and at trial admissible evidence is presented. plaintiffs "may then
seek to amend the pleadings to conform to the evidence." [d. (citing FED. R. CIV. P.
15(b). The same may be said for the dismissed negligence claims plaintiffs now seek to
revive: Plaintiffs' "proposed lnegligence] claim[s] relate[] to allegations of a failure to
conduct adequate due diligence which already form the basis for the [] Plaintiffs' existing
breach of fiduciary duty claim[s]." Jd at 199.

Second, Tiara Condo does not mandate reversal of the Court's prior
rulings. In short, although Tiara Condo may have norrowed the application of the
economic loss rule, it does not alter the conclusion that under Florida law tort claims
brought by one party to a contract against another cannot proceed unless the claims are
independent of the contract. See Tiara Condo, 2013 WL 828003 at *6 C'rWle may have
been unnecessarily over-expansive in our reliance on the economic lo~s rule as oppo:~ed
10 fundamenral contractual principle.,;." (quoting Moransais v. Heathman, 744 So.2d 973,
981 (Fla. 1999)) (emphasis added)); see also id. at "'9 (Pariente, J., concurring) ("Basic
common law principles already restrict the remedies available to parries who have
specifically negotiated for those remedies, and ... our clarification of the economic loss
rule's appJicability does nothing to alter these common law concepts."). Here. plaintiffs
entered into agreements governing the account relationship and the remedies available for
any purported damages arising from Standard Chartered's provision of banking and

To the extent plaintiffs' negligence claims arise from alleged misrepresentations
or omissions made in connection with their Fairfield Funds purchases. the Court has held
that "such claims are more accurately brought under a theory of negligent
misrepresentation, a species of fraud ... subject to the heightened pleading requirements
of Rule 9(b)" and are subject to dismissal for failing to satisfy those requirements.
Anwar, 891 F. Supp. 2d at 552,554-55.

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investment services pursuant to those agreements. None of those agreements pennit
plaintiffs to bring negligence claim..,2

II.

This Court Should Not Reconsider Its Two Prior Denials of Plaintiffs'
Requests To Amend Tbeir Complaints.

On Aprill3, 2012, the Coun denied Headway and the Maridom Plaintiffs'
requests for leave to amend their complaints. (April 13. 2012 Decision and Order, Dkt.
No. 853 at 6.) On June 22,2012, the Court denied plaintiffs' mmions for reconsideration
of the Court's deniaL Anwar, 283 F.R.D. at 199 (Dkt. No. 897). Plaintiffs now ask the
Court to consider this issue a third time, but offer no new circumstances justifying a
differen[ result. 3
This Court already detennined that "allowing Plaintiffs to add new claims
... would significantly delay the resolution of the dispute, which amounts to prejudice to
the defendant." Jd. at 8 (internal citation and quotation marks omitted). This reasoning
applies, ajortiori, now that fact discovery has closed and the parties are well into the
expert phase of these coordinated actions. The Maridom Plaintiffs .';tate that they intend
to assert entirely new allegations, including that Standard Chanered was an "agent" of
Fairfield Greenwich and that the purchases and sales of the fairfield Funds occurred in '
Florida. (April 22, 2013 Letter from the Maridom Plaintiffs, at 3-4 ("Maridom Letter").)
This would require a return to fact discovery, including discovery relating to, among
other issues, where these plaintiffs actually purchased or sold shares in the Fairfield
Funds and the nature of the relationship between Standard Chartered and FaiIfield
Greenwich.
Plaintiffs argue that permitting amended pleadings wiH not result in delay
because the Standard Chartered Cases have been progressing slowly and are not yet trial
ready. (April 22. 2013 Letter from Headway. at 1.3 ("Headway Letter").) Standard
Chartered disagrees with plaintiffs' various characterizations of the pace of these ac[ions,
2

Should the Court determine that reconsideration of its decisions dismissing
plaintiffs' negligence claims is appropriate at this time. Standard Chartered respectfully
requests that the Coun permit full briefing on the applicability of Tiara Condo, as well as
the reasons why fundamental contract principles bar plaintiffs' negligence claim~.
On April 24. 2013, plaintiff Joaquina Teresa Barbachano Herrero also submitted a
letter to the Court joining the arguments made by Headway and the Maridom Plaintiffs.
(Dkt. No. 1122.) Ms. Barbachano did not make any additional arguments as to why she
should be permitted to amend her complaint, or state what allegations sne seeks to add.
Her request for a pre-motion conference and for leave to amend her complaint ~hould be
denied for the same reasons as those of Headway and the Maridom Plaintiffs.

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but liuch argument in any event only reinforces that these cases should move forward, not
backward, and "proceed to the next pha.c;e." Anwar, 283 f.R.D. at 198, (Dkt. No. 897).
Moreover. plaimiffs again fail to offer an explanation for why the
amendments they seek to make now were not part of their original complaints despite
being "known to Plaintiffs when this action was first filed." ld. at J 97 (quoting April 13.
2012 Decision and Order, Dkt. No. 853, at 6); see aLso Headway Letter at 1 (additional
allegations are "based on the original. common nucleus of operative facts that gave rise to
Itheir1 original complaint"); Maridom Letter, at 2-3 ("[T]he Maridom Plaintiffs will not
seek to add additional allegations learned through discovery."». Headway's assertion
that an amendment is justified by "[n]ewly discovered evidence" is demonstrably false.
(Headway Letter, at 2 n.8.) The so-called "new" evidence is declarations from a wimess
Headway procured but did not produce or even disclose during fact discovery." Headway
pointed to this same purported "evidence"last year in support of its failed motion for
recon~ideration of the Coun's denial of leave to amend. (May 21. 2012 Headway Reply
Mem. Okt. No. 883, at 9-10.)
Finally, that the Court partially granted plaintiff Barbachano's prior
request for leave to amend her complaint is inapposite. Anwar, 286 F.R.D. 258, 259
(S.D.N.Y,2012). There the Court concluded that Ms. Barbachano was entitled to amend
her complaint "as a matter of course" under Federal Rule of Civil Procedure 15( a)( 1). id.,
and Ms. Barbachano filed an amended complaint. (Okt. No. 990.) There is no dispute
here that Headway's or the Maridom Plaintiffs' time for amendment as a matter of course
has long since passed. s

*

*

*

Headway and the Maridom Plaintiffs do not seek reconsideration based on Tiara
Condo (or reference any other purported Change in the law).
5

Headway and the Maridom Plaintiffs filed their complaints in 2009 and the Court
ruled on Standard Chartered's motions to dismiss their complaints on October 4.2010.
Anwarv. Fairfield Greenwich Lid., 745 F. Supp. 2d 360,379 (S.D.N.V. 2010).

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Honorable Victor Marrero

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Por the foregoing rea-;ons, Standard Chartered respectfully submits that

there is no need for any pre-motion conferences at this time. If the Court is inclined to
revisit the scope of Florida's economic loss rule, however, Standard Chartered
respectfully requests the opportunity for full briefing.
Respectful! Ysubmitted.

~ct~
Sharon L. Nelles

cc:

Members of the Standard Chanered. P1aintiffs' Steering Committee

The Clerk of Court is directed to enter into the public record
of this action the letter above submitted to the Court by

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SO ORDERED.

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