BPP Illinois, LLC v. the Royal Bank of Scotland Group PLC
603 F. App'x 57
2d Cir.2015Background
- Plaintiffs: several BPP entities (collectively, "BPP Plaintiffs"), FFC Partnership and Fine Capital Associates ("FFC Plaintiffs"), and Budget Portfolio Properties, LLC ("Equity Plaintiff") sued The Royal Bank of Scotland Group PLC, RBS Citizens, N.A., and Citizens Bank of Pennsylvania.
- Core allegation: defendants made material misrepresentations at a January 28, 2008 presentation about a swap/guaranty that induced plaintiffs to enter transactions.
- Procedural posture: District Court (S.D.N.Y.) dismissed the Amended Complaint under Fed. R. Civ. P. 12(b)(6); appeal followed to the Second Circuit.
- Pleading issues: District court held FFC Plaintiffs and Equity Plaintiff failed to meet Rule 9(b) particularity because the complaint did not identify specific fraudulent statements made to them or their presence at the January 28 presentation.
- Limitations issues: District court ruled BPP Plaintiffs’ claims time-barred under Pennsylvania’s two-year statute of limitations, applying the discovery rule to conclude they should have known of their injury by May 29, 2008.
- Appellate disposition: Second Circuit affirmed dismissal as to FFC and Equity Plaintiffs under Rule 9(b); vacated dismissal of the BPP Plaintiffs on statute-of-limitations grounds and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FFC and Equity Plaintiffs pleaded fraud with Rule 9(b) particularity | Complaint alleges those plaintiffs attended all discussions and thus were exposed to the misrepresentations | Complaint fails to identify specific fraudulent statements made to those plaintiffs or their presence at the January 28 presentation | Affirmed dismissal: allegations too generalized under Rule 9(b) |
| Whether BPP Plaintiffs’ claims are time-barred under Pennsylvania’s statute of limitations (discovery rule) | BPP alleges they did not and could not reasonably have discovered their injury by May 29, 2008 | Defendants argue plaintiffs should have discovered injury by that date; claims therefore untimely | Vacated dismissal: at motion-to-dismiss stage reasonable diligence is a factual question not resolvable as a matter of law |
| Whether plaintiffs had an obligation at pleading stage to plead facts overcoming statute-of-limitations defense | Plaintiffs contend they need not plead facts negating an affirmative defense | Defendants contend statute-of-limitations is obvious from complaint so dismissal appropriate | Court: plaintiffs need not plead facts to overcome an affirmative defense at 12(b)(6); dismissal premature |
| Whether appellate court should decide other alternative defenses raised by defendants | Plaintiffs request remand for lower court to consider remaining defenses | Defendants ask appellate court to resolve alternative grounds for dismissal | Court declined to decide new arguments on appeal; directed district court to consider them on remand |
Key Cases Cited
- Cohen v. S.A.C. Trading Corp., 711 F.3d 353 (2d Cir. 2013) (Rule 9(b) particularity principles)
- In re Am. Express Co. S’holder Litig., 39 F.3d 395 (2d Cir. 1994) (standard for leave to amend pleadings)
- Crouse v. Cyclops Indus., 560 Pa. 394 (Pa. 2000) (Pennsylvania discovery rule explanation)
- Gleason v. Borough of Moosic, 609 Pa. 353 (Pa. 2011) (discovery rule is factual and for jury except in clear cases)
- Schmidt v. Skolas, 770 F.3d 241 (3d Cir. 2014) (plaintiff not required to plead facts negating affirmative defenses at pleading stage)
- Dardana Ltd. v. Yuganskneftegaz, 317 F.3d 202 (2d Cir. 2003) (appellate courts generally decline to consider issues not ruled on below)