Anwar et al v. Fairfield Greenwich Limited et al

Filing 1539

ENDORSED LETTER addressed to Judge Victor Marrero from Sharon L. Nelles dated 1/20/2016 re: For the foregoing reasons, SCB respectfully requests that the Court require Ms. Barbachano to revise her breach of fiduciary duty and gross negligence claims (Counts I and II) to remove any reference to these previously dismissed and legally insufficient "unauthorized" investment suitability claims. Should the Court permit Ms. Barbachano to file her proposed Revised Third Amended Complaint, SCB requests that the Court defer remand of this action until SCB has the opportunity to move to dismiss these new claims under Rule 12 of the Federal Rules of Civil Procedure. 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 Bank Defendants. (Signed by Judge Victor Marrero on 1/20/2016) Filed In Associated Cases: 1:09-cv-00118-VM-FM, 1:11-cv-03553-VM(mro)

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January 20, 2016

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

Anwar v. Fairfield Greenwich Ltd. - No. 09-cv-118 (VM)(FM) Barbacharw v. Standard Chartered Bank International (Americas)
Ltd et al.l No. l I-CV-3553

Dear Judge Marrero:
We ~Tite on behalf of Standard Chartered Bank International (Americas)

Ltd. and Standard Chartered PLC (together, "SCB ") concerning plaintiff Teresa
Barbachano's January 12, 2016, proposed Revised Third Amended Complaint. (Dkt.
#1538.) On January 7, 2016, this Court denied Ms. Barbachano leave to file a proposed
Third Amended Complaint because it contained claims the Court had previously
dismissed. The Court permitted Ms. Barbachano "to submit a further amended complaint
asserting the uniform negligence count, without reference to any previously dismissed
claims." (Order at 4, Dkt. #1534.) The proposed Revised Third Amended Complaint
fails to conform with the Court's direction.
Instead, Ms. Barbachano seeks to re-plead in part her previously dismissed
portfolio suitability claim-namely. the portion of that claim based on allegations that
SCB made investments on her behalf without her authorization. Specifically, in the
proposed Revised Third Amended Complaint, Ms. Barbachano now asserts breach of
fiduciary duty and gross negligence claims (Counts I and II) based on the allegation that
SCB "often made investment decisions without obtaining Barbachano 's written
authorization, including the purchase of Fairfield securities." (Proposed Revised 3d Am.
Compl. ~~ 40, 51.) This Court previously dismissed, and denied Ms. Barbachano leave to
re-plead, portfolio suitability claims based on the same allegation. Anwar v_ Fairfield
Greenwich Ltd. 891 F. Supp. 2d 548, 552 (S.D.N.Y. 2012); Am. Compl. ~~ 70, 94, Dkt.
#990 (alleging SCB breached a fiduciary duty and was grossly negligent "by causing

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[Barbachano) to make investments unsuited to her investment objectives and risk
tolerance. including ... by often making investment decisions without obtaining
Barbachano' s \Vntten authorization, including the purchase of Fairfield securities"); Dkt.
# 1309 (Order denying leave to file Second Amended Complaint containing same
allegation). The Court should require Ms. Barbachano to revise Paragraphs 38, 40, 49,
51 of her proposed Revised Third Amended Complaint to remove any reference to the
previously dismissed "unauthorized investment'" claims.
Alternatively, should the Court allow Ms. Barbachano to proceed with her
proposed Revised Third Amended Complaint, the Court should defer remand of this
action until SCB has been provided an opportunity to move against these new
"unauthorized investment" claim:., which fail as a maner of law because they rest on
allegations that directly contradic1: Ms. Barbachano' s other breach of fiduciary duty,
negligence and gross negligence daims. Those claims all rest on the allegation that Ms.
Barbachano 'justifiably relied upon Defendants' investment advice, expertise, and skill"
in following the Bank's recommendation that she invest in Sentry. (Proposed Revised 3d
Am. Comp!.~~ 42, 53; see also ~·IT 59(a) & (b).) Ms. Barbachano could not have
''justifiably relied upon'' SCB"s recommendation if she did not authorize SCB to make
those investments. Although a pc.rty may plead "inconsistent theories or statements of a
claim, there is no authority for the proposition that ... a party may assert as fact two
assertions that directly contradict each other." Nat 'I Western L?fe bu. Co. v. Merrill
Lynch Pierce, Fenner & Smith, 175 F. Supp. 2d 489, 492 (S.D.N.Y. 2000) (Marrero, J.).
Indeed, this Court previous! y dismissed claims for breach of fiduciary
duty and gross negligence brought by two other Standard Chartered Plaintiffs where
plaintiffs had alleged both th.at SCB (1) invested in Sentry without plaintiffs'
authorization and (2) failed to conduct adequate due diligence into and post-investment
monitoring of Sentry. The Court reasoned then that it "defies logic to assume that [SCB)
breached its fiduciary duty or was grossly negligent in recommending Fairfield Sentry
without conducting due diligence"' where plaintiffs alleged that the ·"investment was
made without their prior authorization." Anwar v. Fairfield Greenwich Lid, 826 F.
Supp. 2d 578, 591-92 (S.D.N.Y. 2011). The Court later denied those same plaintiffs
leave to re-plead because they "continue[ d) to allege that [the Bank] made an
unauthorized investment on their behalf in Sentry. which ... does not support an
allegation for breach of fiduciary duty." Amvar v. Fairfield Greenwich Ltd., 872 F. Supp.
2d 342, 344 (S.D.N.Y. 2012). 1

Ms. Barhachano 's "unaurhorized investment" claims also fail for the independent
reasons that ( 1) they arc time-ba:rred under Florida· s four-year statute of limitations, as
Ms. Barbachano brought this lawsuit in December 2 0 l 0, more than four years after the

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Accordingly, for t.t.e foregoing reasons, SCB respectfully requests that the
Court require Ms. Barbachano to revise her breach of fiduciary duty and gross negligence
claims (Counts l and II) to remove any reference to these previously dismissed and
legally insufficient '\mauthorized'' investment suitability claims. Should the Court
permit Ms. Barbachano to file her proposed Revised Third Amended Complaint, SCB
requests that the Court defer remand of this action until SCB has the opportunity to move
to dismiss these new claims under Rule 12 of the Federal Rules of Civil Procedure.

Alb:,,/'~;]
Sharon L. ::-Jelles

cc:

H. Eugene Lindsey, counsel for Ms. Barbachano

The Clerk of Court is directed to enter into the public record
~)us actAon the, \etter,. i.tbov; submi;,ted to the. Cou~ by ~.

-»..._._£'2-~d:_ C'h~:{j,,::ed J~/~J 0eh
SO ORDERED.

/- J.-D I
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alleged unauthorized investment occurred in June 2006, see Fla. Stat § 95.11; and (2) Ms.
Barbachano acquiesced in the transaction by failing to challenge her June 2006 Sentry
investment for more than four years after that investment was repeatedly disclosed to her
in monthly account statements and other disclosures, see Hayden. Stone Inc. v. Brown,
218 So. 2d 230, 236-37 (Fla. Dist Ct. App. 1969).