Usacm Liquidating Trust v. Deloitte & Touche, LLP
754 F.3d 645
9th Cir.2014Background
- USACM filed Chapter 11 on April 13, 2006; its confirmed plan created the USACM Liquidating Trust (the Trust) to pursue claims on behalf of unsecured creditors.
- The Trust sued USACM’s former auditor, Deloitte & Touche, alleging Deloitte issued unqualified 2000 and 2001 audit opinions that concealed two fraudulent schemes run by majority owners/controllers Thomas Hantges and Joseph Milanowski, causing USACM’s losses and bankruptcy.
- District court granted summary judgment for Deloitte based on Nevada law imputing the owners’ knowledge/misconduct to USACM under the “sole actor” rule, which defeats tolling and discovery-based accrual arguments.
- Because the owners’ knowledge was imputed, the relevant statutes of limitation ran before the April 13, 2006 petition date, so 11 U.S.C. § 108(a) (two-year extension) could not revive the Trust’s claims filed in 2008.
- The court rejected concealment-based tolling (Deloitte could not conceal from USACM what was known by its sole actors) and declined to apply the adverse-domination doctrine because Nevada has not adopted it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether owners’ misconduct is imputed to the corporation under Nevada law | The Trust argued the owners’ knowledge should not be imputed because their misconduct was adverse to USACM | Deloitte argued Nevada’s sole-actor rule imputes the owners’ knowledge to USACM, defeating discovery and tolling arguments | Sole-actor rule applies; owners’ misconduct imputed to USACM |
| Whether statutes of limitations were tolled so claims filed in 2008 are timely under 11 U.S.C. § 108(a) | The Trust contended claims accrued later or were tolled by concealment/adverse domination, making § 108(a) applicable | Deloitte argued accrual occurred when audits completed/engagement ended and limitations expired pre-petition, so § 108(a) cannot extend them | Accrual occurred by audit completion/termination; limitations expired pre-petition; § 108(a) inapplicable |
| Applicability of concealment-based tolling | Trust asserted Deloitte concealed fraud from USACM, tolling limitations | Deloitte replied USACM knew (via owners), so nothing was concealed from the corporation | No concealment-based tolling because owners’ knowledge imputed to USACM |
| Whether Nevada recognizes adverse-domination tolling | Trust urged tolling under adverse-domination doctrine | Deloitte noted Nevada has not adopted adverse-domination; limitations framework is comprehensive | Court declined to apply adverse-domination; Nevada has not adopted it |
Key Cases Cited
- Glenbrook Capital Ltd. P’ship v. Dodds (In re Amerco Derivative Litig.), 252 P.3d 681 (Nev. 2011) (adopts Nevada "sole actor" rule imputing agent knowledge where corporation and agent are indistinguishable)
- Stalk v. Mushkin, 199 P.3d 838 (Nev. 2009) (true nature of claim determines applicable limitations period)
- Fed. Deposit Ins. Corp. v. Jackson, 133 F.3d 694 (9th Cir. 1998) (describes adverse-domination doctrine for tolling claims against controlling wrongdoers)