Slainte Investments Ltd. Partnership v. Jeffrey
142 F. Supp. 3d 239
D. Conn.2015Background
- Slainte Investments (Texas LP) alleges John Jeffrey solicited six investments totaling $719,500 between April 2008 and December 2011 for two purported Marshall Islands shipping entities (AS&T and Southern Cross) but diverted funds for personal use in an alleged pyramid/fraud scheme.
- Slainte received a March 2008 PPM and April 2008 SPA and later additional documents and oral assurances; payments were made on specified dates in 2008–2011.
- Mueller (Slainte’s manager) repeatedly received post‑investment assurances (2009–2014) that investments were profitable; in 2014 an FBI agent informed Mueller the ventures were fraudulent.
- Slainte sued (Nov. 21, 2014; Am. Compl. Feb. 10, 2015) asserting fraud, civil theft, breach of contract, CUTPA violation, CUSA (securities) claim, conversion, and unjust enrichment.
- Defendant moved to dismiss under Rule 12(b)(6), asserting statute‑of‑limitations/repose and pleading deficiencies; the court evaluated tolling doctrines (Conn. §52‑595 fraudulent concealment; continuing course of conduct) and Rule 9(b) particularity for fraud allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are breach‑of‑contract claims sufficiently pled? | Jeffrey’s oral/written solicitations created enforceable promises to use funds for vessel/shipping purposes; October 2014 repayment promise created a contract. | Contract claims are conclusory and (re repayment) conditioned on execution of settlement agreement; statute of frauds concerns. | Oral/written solicitation breach claims survive; Repayment Agreement claim dismissed because condition precedent (signing settlement) was not alleged to have occurred. |
| Does CUTPA apply or are the transactions securities under CUSA? | CUTPA claim does not depend on securities purchase/sale. | Investments were investment contracts (securities); CUTPA is inapplicable to securities transactions. | Investments qualified as securities (Howey/Edwards): CUTPA claim dismissed. |
| Are conversion, unjust enrichment, civil theft timely/adequately pled despite lack of precise misappropriation dates? | Exact dates of later misappropriation are in defendant’s control; claims are timely as to later investments and not facially barred. | Complaint fails to show when conversion/unenrichment occurred so claims may be time‑barred. | Conversion and unjust enrichment claims survive: complaint pleads investments on dates that make some claims timely; statute‑of‑limitations is an affirmative defense not usually decided on motion to dismiss. |
| Are fraud/CUSA claims time‑barred or tolled? (statutory tolling; repose) | Fraud and securities claims tolled by fraudulent concealment (§52‑595) and ongoing concealment; misrepresentations continued post‑investment so discovery accrual delayed. | Many alleged misrepresentations predate limits/repose; CUSA five‑year repose bars claims older than five years; statutes of repose are not tolled. | Common‑law tolling doctrines must meet Conn. §52‑595 standard. Court finds fraud adequately pled and tolled until October 2014 (discovery), so fraud and civil theft survive. CUSA: five‑year statute of repose bars claims for investments more than five years before filing (Apr 24, 2008; May 11, 2009; June 19, 2009 dismissed); CUSA claims survive for Fall 2009, June 14, 2010, Dec. 2011 investments. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (framework for plausibility and legal conclusions)
- W. J. Howey Co. v. SEC, 328 U.S. 293 (1946) (investment‑contract test for securities)
- SEC v. Edwards, 540 U.S. 389 (2004) (Howey formulation applied; flexible investment‑contract test)
- Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (1991) (statutes of repose are not subject to equitable tolling)
- Fed. Hous. Fin. Agency v. UBS Americas Inc., 712 F.3d 136 (2d Cir. 2013) (distinguishing statutes of limitations and statutes of repose; repose cuts off substantive right)
- Flannery v. Singer Asset Fin. Co., 312 Conn. 286 (2014) (Connecticut accrual rules for occurrence statutes)
- Falls Church Grp., Ltd. v. Tyler, Cooper & Alcorn, LLP, 281 Conn. 84 (2007) (elements of fraudulent concealment under Conn. §52‑595)