Usacm Liquidating Trust v. Deloitte & Touche, LLP
2011 U.S. Dist. LEXIS 16123
| D. Nev. | 2011Background
- Trust sues Deloitte for aiding and abetting a fiduciary breach, professional malpractice, and breach of contract stemming from Deloitte's audits of USACM 1998–2001.
- USACM insiders Hantges and Milanowski allegedly diverted USACM funds through USAIP and related entities, funding fraudulent schemes and Ponzi-like payments to maintain investor inflows.
- USACM filed for bankruptcy on April 13, 2006; the Trust obtained enforcement rights under the Joint Plan effective March 12, 2007, and brings claims through USACM's estate.
- Deloitte issued unqualified opinions for 1998–2001 audits and withdrew as USACM's auditor in January 2003; thereafter, other firms audited through 2005.
- Nevada FID oversight revealed deficiencies and related-party concerns but only nominal fines, no license suspensions, over several years.
- Court granted Deloitte summary judgment on imputation and in pari delicto, finding USACM's claims barred by these doctrines and by statute of limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether agent knowledge imputes to the corporation. | Trust argues no imputation due to adverse-interest limitations. | Deloitte contends imputation applies; insiders' knowledge should bind USACM. | Imputation applies; insiders' actions impute to USACM unless adverse-interest exception applies. |
| Whether the adverse-interest exception applies to remove imputation. | Trust asserts insiders acted adversarially to USACM. | Deloitte argues Nevada would require total abandonment; evidence insufficient for exception. | Adverse-interest exception not shown to apply; still imputation remains. |
| Whether Nevada would recognize an innocent decision-maker exception to imputation. | Trust suggests innocent insiders could sever unity and avoid imputation. | Deloitte argues if Nevada adopts such an exception, it is tied to the sole-actor rule and requires actual authority to stop fraud. | Nevada would treat any innocent-insider defense as corollary to the sole-actor rule; no genuine issue that innocent insiders could stop the fraud. |
| Whether in pari delicto bars the Trust from recovering from Deloitte. | Trust argues public policy favors recovery for innocent creditors; not barred. | Deloitte asserts the Trust is barred as the same fault doctrine applies to USACM and Deloitte. | In pari delicto applies; Trustee barred because USACM is equally culpable under imputation and sole-actor findings. |
| Whether the claims are time-barred under statutes and tolling doctrines. | Trust argues tolling doctrines may revive claims post-petition. | Deloitte argues statute ran before bankruptcy; fraud concealment and adverse-domination do not save claims given imputation. | Claims barred by statute; tolling doctrines do not revive post-petition claims. |
Key Cases Cited
- In re 1031 Tax Group, LLC, 420 B.R. 178 (S.D.N.Y. 2009) (adverse-insider and sole actor discussions for imputation and insulate or expose unity)
- In re CBI Holding Co., Inc., 311 B.R. 350 (S.D.N.Y. 2004) (agency imputation and sole actor considerations)
- In re Parmalat Sec. Litig., 659 F. Supp. 2d 504 (S.D.N.Y. 2009) (management's preparation/oversight of financial statements as imputation baseline)
- Kirschner v. KPMG LLP, 912 N.Y.S.2d 508 (N.Y. App. Div. 2010) (innocent insider and sole actor notions in imputation analysis)
- Strohecker v. Mut. Bldg. & Loan Ass'n of Las Vegas, 34 P.2d 1077 (Nev. 1934) (knowledge of officer imputable to corporation when within scope of employment)