Anwar et al v. Fairfield Greenwich Limited et al

Filing 853

ORDER: Accordingly, for the reasons stated above, it is hereby ORDERED that the motion (Docket No. 837) of plaintiff Headway Investment Corp. for leave to amend the complaint is DENIED; and it is further ORDERED that the motion (Docket No. 831) of plaintiff Joaquina Teresa Barbachano Herrero for leave to file a first amended complaint is DENIED.ORDERED that the motion (Docket No. 815) of plaintiffs Maridom Ltd., Caribetrans, S.A., and Abbot Inc. for leave to file a second amended complaint is DENIED; and it is further. (Signed by Judge Victor Marrero on 4/13/2012) Filed In Associated Cases: 1:09-cv-00118-VM-THK, 1:09-cv-08500-VM, 1:10-cv-00920-VM, 1:11-cv-03553-VM(js)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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PASHA ANWAR, et al.,

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09 Civ. 0118 (VM) (THK)

Plaintiffs,

09 Civ. 8500 (Headway)
10 Civ. 0920 (Maridom)
11 Civ. 3553 (Barbachano)
DECISION AND ORDER

-againstFAIRFIELD GREENWICH LIMITED,
et al.,
Defendants.

--------------------------x
VICTOR MARRERO, UNITED STATES DISTRICT JUDGE.
Presently before

the

Court

are motions

to

amend

the

Complaints in Headway Investment Corp. v. Standard Chartered
Bank Int'l (Americas), et al., No. 09 Civ. 8500,
et al. v. Standard Chartered Bank Int'l
,

No.

10 Civ.

0920,

Chartered Bank Int'l
3553.

Maridom Ltd.

(Americas) Ltd., et

and Barbachano Herrero v.

(Americas)

Ltd.,

et al.,

No.

Standard
11 Civ.

These actions are three of a number of actions brought

against Standard Chartered Bank International (Americas) Ltd.
("SCBI") ,

and its affiliates,

recommending and

for alleged derelictions

investing Plaintiffs'

funds

in

in Fairfield

Sentry Ltd. and Fairfield Sigma Limited Fund ("Sigma"), which
were feeder funds to Bernard L. Madoff Investment Securities
LLC ("BLMIS").

The Headway, Maridom, and Barbachano actions,

which originated in Florida, were transferred to the Southern
District

of

New

York

by

the

United

States

Panel

on

Multidistrict Litigation, where they were consolidated with
other Standard Chartered cases for pretrial purposes.

While

there are certain case-specific allegations in the various
Complaints, all of the pretrial activity in these cases has
been proceeding under a coordinated scheduling order.
Although the Headway and Maridom actions were filed in
2009, their progress has been slow.

There have been various

motions to dismiss, which took substantial time to brief and
decide,

and extensive pretrial

discovery.

The

discovery

deadline has been extended several times and fact discovery is
now scheduled to be completed in less than one month.

By

contrast, SCBI has not moved to dismiss the Barbachano action,
which was filed more recently, in December 2010.
In addressing previous motions to dismiss in the Headway
and Maridom actions, the Court sustained much of Plaintiffs'
Complaints,

but dismissed certain claims sounding in fraud

because they were not pleaded with sufficient particularity.l
See Anwar v.

Fairfield Greenwich Ltd.,

745 F. Supp.

2d 360

1

The Court also concluded that certain claims had been
abandoned, but a motion for reconsideration was granted and
those claims remain in these actions.
2

(S.D.N.Y. 2010).

The Court concluded by noting that it would

grant leave to replead upon a request by Plaintiffs within
twenty-one days of the decision and order,

so long as that

request plausibly showed "how such repleading would correct
the deficiencies identified in the Court's findings.
thus would not be futile." Id. at 379.
made and,

on November 24,

affirmative defenses.

2010,

.. ,

and

No such request was

SCBI filed an answer and

Pretrial discovery then commenced and

the current deadline for the completion of fact discovery is
May 4, 2012.

I.
A.

DISCUSSION

LEGAL STANDARD
Rule 15 of the Federal Rules of Civil Procedure provides

that courts "should freely give leave [to amenq] when justice
so requires." Fed. R. Civ. P. 15(a) (2).

Leave to amend should

be granted unless there is "any apparent or declared reason ­
such as undue delay, bad faith or dilatory motive on the part
of

the

movant,

repeated

failure

to

cure

deficiencies

by

amendments previously allowed, undue prejudice to the opposing
party by virtue of

allowance of the amendment,

[or] futility

of the amendment . . . . " Foman v. Davis, 371 U. S. 178, 182, 83
S. Ct. 227, 230 (1962)

i

see also Commander Oil Corp. v. Barlo

Equip. Corp., 215 F.3d 321, 333
3

(2d Cir. 2000)

(noting that

leave

to

amend

is

"discretionary"

and

should

be

\\ freely

given"); Block v. First Blood Assocs., 988 F.2d 344, 350 (2d
Cir.

1993)

("The rule in this Circuit has been to allow a

party to amend its pleadings in the absence of a showing by
the

nonmovant

of

prejudice

or

bad

faith.")

(citations

Prejudice may be demonstrated when an amendment

omitted) .

"would require the opponent to expend significant additional
resources

to

conduct

discovery

and prepare

for

trial

or

significantly delay the resolution of the dispute." City of
New York v. Group Health Inc.,
2011)
Am.,

649 F.3d 151,

158

(2d Cir.

(guoting AEP Energy Servo Gas Holding CO. V. Bank of
N.A.,

626 F.3d 699,

725-26

(2d Cir.

issued

a

2010»)

(emphasis

added) .
When

a

court

has

scheduling

order

and

established deadlines for amending the pleadings, however, a
more stringent standard applies and the deadlines

"may be

modified only for good cause and with the judge's consent."
Fed.

R.

Civ.

P.

16 (a) (4)

i

see also Grochowski

Constr., 318 F.3d 80, 86 (2d Cir. 2003)

V.

Phoenix

("Where a scheduling

order has been entered, the lenient standard under Rule 15(a)
must be balanced against the requirement under Rule
16 (b) .

. ") .

Accordingly,

" [0] nce

the

deadline

for

amendment in a scheduling order has passed, leave to amend may
4

be denied 'where the moving party has failed to establish good
cause. '"
Inc.,

Presbyterian Church of Sudan v.

582 F.3d 244,

267

(2d Cir.

2009)

Talisman Energy,
(quoting Parker v.

Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000)).
Here,

the

Court

did

set

a

deadline

for

amending

the

Complaints.
In determining whether good cause exists, a court must
consider the diligence of the party seeking to amend.

See

Parker, 204 F.3d at 340 ("[A] finding of 'good cause' depends
on the diligence of the moving party.")
The

Court

may

also

consider

(citation omitted) .

"other

relevant

factors,

including, in particular, whether allowing the amendment . .
. will prejudice [the nonmoving party] ." Kassner v. 2nd Avenue
Delicatessen,

Inc.,

496 F.3d 229,

244

(2d Cir.

2007).

"In

determining what constitutes 'prejudice,' we consider whether
the assertion of the new claim would: (I) require the opponent
to

expend

significant

additional

discovery and prepare for trial;

resources

to

conduct

(ii) significantly delay the

resolution of the dispute; or (iii) prevent the plaintiff from
bringing a timely action in another jurisdiction."

Block, 988

F.2d at 350

(internal citations omitted).

"good cause"

standard was created to ensure that

The Rule 16 (b)
"at some

point both the parties and the pleadings will be fixed." See
5

Parker,

204

F. 3d at

339-40

(internal quotation marks

and

citation omitted) .

B.

THE HEADWAY AND MARIDOM PROPOSED AMENDMENTS
The Court concludes that there has been undue delay in

seeking to amend the Headway and Maridom Complaints and there
has

not

been

a

showing

of

good

cause

for

that

delay.

Moreover, permitting the proposed amendments at this late date
would inevitably result in significant delay in resolving
these complex,

consolidated actions.

Thus,

even under the

more lenient standard applied when there has been no prior
deadline to amend,

granting leave to amend would prejudice

SCBI.
First, with respect to any detail added to the Headway
and

Maridom

Complaints

that

seeks

to

particularity with respect to previously

establish

greater

pled and dismissed

fraud and negligent misrepresentation claims -

most notably

the identities of individuals who recommended the investments
to Plaintiffs and where the representations were made -

the

information was known to Plaintiffs when this action was first
filed and was certainly available to Plaintiffs within the
deadline set for amending the Complaints.

See Parker,

204

F.3d at 340-41 (finding that because the plaintiff had all of
the information necessary to support his claim when he filed
6

the initial complaint,

he could not satisfy the good cause

standard for failing to comply with a deadline for amending
the complaint) .
The Maridom Plaintiffs also seek to name two additional
Standard Chartered entities as defendants - Standard Chartered
International (USA) Ltd.
("SCB").

("SCI") and Standard Chartered Bank

These entities were known to, or could have easily

been identified by,

Plaintiffs when this action was first

filed.

Indeed, they were named as defendants in other related

cases.

Their addition as defendants is therefore untimely.

See Leber v. Citigroup, Inc., No. 07 Civ. 9329 (SHS), 2011 WL
5428784, at *6 (S.D.N.Y. Nov. 8, 2011)

("Because there is no

indication that the proposed claim is

. predicated on

facts learned after the pleading stage of [this] litigation,
the resulting delay is not excusable. '")

(quoting Priestley v.

Am. Airlines, Inc., 89 Civ. 8625, 1991 U.S. Dist. LEXIS 4804,
at *4,

1991 WL 64459

(S.D.N.Y. Apr.

12,

1991)).

Moreover,

adding new party-defendants at this late date will inevitably
entail

a

new round of

unacceptable

delay

in

motions
reaching

to
the

dismiss,
merits

leading
of

to an

Plaintiffs'

claims.
In addition,

Plaintiffs in both actions propose to add

claims under the Florida Securities and Investor Protection
7

Act ("FSIPA"), Fla. Stat.

§

517.301, which is a state law that

parallels federal securities fraud statutes.
Proposed

Amended

Complaint

Counts

XII

and

(See Headway
XlIIi

Maridom

Proposed Second Amended Complaint Count Six.)

The original

Complaints

in

Plaintiffs'
statute's
Indeed,
under

these

actions

were

filed

counsel

were

obviously

existence

when

these

in

Florida

aware

of

the

actions

were

and

Florida

commenced.

in other related actions claims have been asserted
the

FSIPA.

Yet,

Plaintiffs

delayed until

what

is

essentially the completion of pretrial discovery to assert
these

claims,

which,

like

Plaintiffs'

other

fraud

and

negligent misrepresentation claims, could have been asserted
in the original Complaints and are not dependent upon evidence
revealed in the course of discovery.

The delay has not been

justified and the Court will not jeopardize the progress of
these cases to allow untimely amendments that will inevitably
trigger new motions to dismiss.
Finally,

the

Headway

facially defective as
Standard

Chartered

Proposed

it asserts

entities,

but

Amended

claims

not

against

Complaint

is

just against
the

Fairfield

Greenwich Group and its affiliates, individual executives at
Fairfield Greenwich, PriceWaterhouseCoopers LLP ("PwC Canada")
and PricewaterhouseCoopers NV ("PwC Netherlands"), Citco Funds
8

Services

(Europe)

Defendants

point

As

B.V ..
out,

the

Headway's

non-Standard

claims

Chartered

against

the

non­

Standard Chartered Defendants have been consolidated for all
pretrial purposes in the Consolidated Anwar Action, which is
a

related action but proceeding on a

separate

track.

A

Consolidated Management and Scheduling Order, dated March 11,
2009 ("CMO"), in the Anwar Action, specifically provides that
Defendants to the Consolidated Action "shall respond only to
the Consolidated Amended Complaint; no response by Defendants
is due to any individual complaints that are consolidated into
the

Consolidated

Defendants,
Consolidated

PwC,

Action."
and

Action

Citco
and

~

(CMO
are

have

The

6. )

all

Defendants

responded

Consolidated Amended Complaint.

Fairfield

Thus,

in

the

to

the

Second

under

the

Court' s

Orders with respect to the management of these cases,

the

claims

are

against

the

non-Standard

Chartered Defendants

improperly pleaded in the Proposed Amended Complaint in the
individual Headway Action.
The Court notes that Headway and Maridom Plaintiffs'
proposed amendments

largely seek

allegations underlying

to but tress

their present

claims

the
of

factual

breach of

fiduciary duty, negligent misrepresentation, and fraud.

The

presently operative Complaints contend that SCBI failed to
9

conduct

adequate

due

diligence

investments in Sentry and Sigma.
deal of weight

on,

with

their

the fact

own

due

recommending

the

Plaintiffs now place a great

and devote a

proposed pleadings to,
comply

before

substantial part of

the

that Defendants failed to

diligence

standards

before

recommending the investments in Sentry and Sigma. (See Maridom
Proposed Second Amended Complaint "
Amended Complaint "102-128.)

47-73; Headway Proposed

To the extent that competent

evidence exists supporting that allegation, nothing prevents
Plaintiffs from offering it at trial without amending the
Complaints.

Similarly, Plaintiffs contend that they learned

in the course of discovery that, in addition to the fee paid
to SCBI by Plaintiffs, SCBI received an additional "kickback"
or trailing fee
clients

from FGG for securing investments by its

in

Sentry.

Complaint "

44-66;

Plaintiffs

109. )

(See

Maridom

Proposed

Second Amended

Headway Proposed Amended Complaint ,
are

free

to

advance

evidence

of

this

contention in support of their existing claims.
C.

THE BARBACHANO PROPOSED AMENDMENTS
The

proposed

amendments

to

the

Barbachano

consist only of additional factual allegations,
new claims and defendants.

Complaint

rather than

And unlike the Maridom and Headway

actions, Barbachano was not the subject of an earlier deadline
10

to

Nevertheless,

amend.

the

concerns

expressed

regarding the creation of otherwise avoidable,
delay are equally applicable
amend.
prevents

to

above

significant

the Barbachano motion to

And, as in the Headway and Maridom actions, nothing
the

Barbachano plaintiff

from offering competent

evidence at trial without amending the Complaints.

Should

SCBI file a motion to dismiss in the Barbachano action, the
Barbachano plaintiff may then amend the pleading as a matter
of

course

15(a) (1) (B).

pursuant

to

Federal

Rule

of

Civil

Procedure

But as the action currently stands, the Court

declines to exercise its discretion and permit an amendment to
the Barbachano Complaint.
III. ORDER

Accordingly, for the reasons stated above, it is hereby
ORDERED that the motion

(Docket No.

837)

of plaintiff

Headway Investment Corp. for leave to amend the complaint is
DENIED; and it is further
ORDERED that the motion (Docket No.

815) of plaintiffs

Maridom Ltd., Caribetrans, S.A.,and Abbot Inc. for leave to
file a second amended complaint is DENIED; and it is further

11

ORDERED that the motion

(Docket No.

831)

of plaintiff

Joaquina Teresa Barbachano Herrero for leave to file a first
amended complaint is DENIED.

SO ORDERED.
Dated:

New York, New York
13 April 2012

VICTOR MARRERO
U.S.D.J.

12