Agile Safety Variable Fund, L.P. v. RBS Citizens, N.A.
793 F. Supp. 2d 1248
D. Colo.2011Background
- Lancelot Investors Fund L.P. and Lancelot Investors Fund II, L.P. were Ponzi-like funds managed by Bell; Agile and Sky Bell invested and later suffered losses exceeding $65 million.
- Swiss Financial Services, Inc. acted as Lancelot's administrator, recording transactions and producing statements, but claimed no duty to verify investments.
- Charter One Bank (RBS Citizens, N.A.) financed Lancelot and had significant oversight responsibilities; its audits were allegedly inadequate and relied on internal field examiners.
- Plaintiffs allege Charter One and Swiss Financial misrepresented Lancelot’s assets and due diligence results during Agile’s and Sky Bell’s ongoing investments.
- Lancelot collapsed in 2008 after FBI investigations; Bell pled guilty and Lancelot filed for bankruptcy, with investors losing billions of dollars.
- Colorado retirees were the alleged injury focus, with representations made to Agile in Colorado during due diligence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the court have subject matter jurisdiction? | Agile/ Sky Bell argued sufficient jurisdiction despite prior diversity concerns. | Defendants argued lack of complete diversity. | Diversity concerns resolved; jurisdiction denied on that ground. |
| Negligent misrepresentation viability | Plaintiffs relied on Swiss Financial and Charter One assurances to reinvest. | Defendants contend lack of justifiable reliance and lack of duty or causation. | Genuine issues of material fact preclude summary judgment; negligence misrepresentation survives. |
| Negligence duty and breach | Defendants undertook to provide information and services reasonably calculated to prevent harm. | No duty or gratuitous service; §13-21-116 immunity may apply. | Factual disputes exist; jury to decide duty and causation. |
| Colorado Securities Act claim viability | Holder doctrine does not bar claim; misrepresentations connected to securities; privity not required. | Holder doctrine and timing may bar claim; no direct purchase/sale with defendants. | Genuine issues of material fact; Colorado Securities Act claim survives for jury trial. |
| Statute of limitations under Colorado Securities Act | Investments continued through 2008; factual questions remain. | Limitations period may bar claim for pre-2004 purchases. | Not resolved on summary judgment; await factual development. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (standing elements: injury, causation, redressability)
- Rosenthal v. Dean Witter Reynolds, Inc., 908 P.2d 1095 (Colo. 1995) (elements of Colorado Securities Act claims)
- In re Qwest Communications Intern., Inc. Securities Litig., 387 F. Supp. 2d 1130 (D. Colo. 2005) (no privity requirement for the Act; purchaser/seller connection not required)
- COPIC Ins. Co. v. Wells Fargo Bank, N.A., 767 F. Supp. 2d 1191 (D. Colo. 2011) ( Holder doctrine analysis; causation and connection to securities)
- Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (U.S. 1975) (holder doctrine background on securities misrepresentation claims)
- Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71 (U.S. 2006) (fraud in connection with securities transactions; ‘coincide’ standard)