Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_09-cv-08162/USCOURTS-azd-3_09-cv-08162-16/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

In re: Allstate Life Insurance Company 

Litigation 

No. CV-09-08162-PHX-GMS

ORDER 

 Pending before the Court is Defendant James W. Treliving’s Motion for Summary 

Judgment. (Doc. 574.) For the reasons discussed below, Stinson’s Motion is granted in 

part and denied in part. 

BACKGROUND

 At issue in this lawsuit is the offering and sale of $35 million in revenue bonds 

(the “Bonds”) used to finance the construction of a 5,000-seat Event Center in the Town 

of Prescott Valley, Arizona. The facts of the case are set out in greater detail in this 

Court’s earlier Order of November 4, 2010. (Doc. 212.) Plaintiffs in this case are entities 

and individuals who purchased in the Bond offering in November 2005 (the 

“Bondholders”). They include Allstate Life Insurance Company and a number of 

individual plaintiffs whose interests are represented by the Indenture Trustee of the 

Bonds, Wells Fargo. 

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 The Defendants in this case are numerous. They include the underwriters for the 

bonds, attorneys for the underwriters, and the various entities that received the proceeds 

for the bonds and built the Event Center. The relevant Defendants for the purposes of this 

order are Prescott Valley Event Center LLC (“PVEC-LLC”), Global Entertainment 

Corporation (“Global”), and Treliving. PVEC-LLC is the entity that received the 

proceeds of the bond sale and was responsible for managing the construction and 

financing of the Event Center. Global was the majority shareholder of PVEC-LLC, 

owning between 50% of PVEC-LLC’s stock during the times relevant to this suit. In turn, 

the majority shareholder of Global was a holding company named Western Professional 

Hockey League (“WPHL”). Treliving is the chairman and a minority shareholder of both 

Global and WPHL. 

 This suit is based on a number of misstatements purportedly made by the 

Defendants. These misstatements were allegedly made in the Preliminary Official 

Statement and the Official Statement, collectively entitled as the Official Statements 

(“OS”). The OS provided two sources for paying debt service on the Bonds: (1) the net 

operating income from the Event Center and (2) Transaction Privilege Tax Revenues 

(“TPT Revenues”), allegedly pledged by the Town of Prescott Valley, consisting of sales 

taxes generated by the Event Center and certain areas near the Event Center. The alleged 

misstatements pertained to (1) the annual attendance and profitability of the Event Center 

and (2) the existence of a lien or other security device on the TPT Revenues for the 

benefit of the Bondholders. 

 The alleged misstatements regarding the Event Center’s attendance and 

profitability are based on figures in the OS that projected an annual attendance of 

approximately 480,000. Based on this number, the OS projected that the Event Center 

would generate approximately $5 million in total revenues in the first year. Plaintiffs 

allege that Defendants put these figures in the OS despite their knowledge of material 

information that would undermine the Event Center’s ability to generate the projected 

attendance and revenue. Two reports—the “2001 ICC Report” and the “2005 ERA 

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Report”—were conducted on the feasibility of the Event Center. These reports concluded 

that the center would generate substantially less revenue than what was stated in the OS. 

Plaintiffs allege that the defendants failed to disclose the existence of these feasibility 

reports, and that the OS stated that no feasibility reports had been prepared on its 

projections at all. Since its opening, the Event Center has in fact failed to recognize profit 

at the level of the projections set forth in the OS. 

 Plaintiffs allege that Defendants Global and PVEC-LLC contributed to the 

allegedly misleading statements in the OS. They assert claims against Treliving as a 

control person of Global and thus PVEC-LLC under Section 20(a) of the Exchange Act, 

A.R.S. § 44-1999(B) of the Arizona Securities Act, and 815 ILCS § 5/13 of the Illinois 

Securities Law. Plaintiffs also assert a claim against Treliving for negligent 

misrepresentation. Treliving moved for summary judgment on all claims against him, and 

the matter is now fully briefed before the Court. (Docs. 574, 617, 630.) 

DISCUSSION

I. Legal Standard

 Summary judgment is appropriate if the evidence, viewed in the light most 

favorable to the nonmoving party, shows “that there is no genuine issue as to any material 

fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). 

Only disputes over facts that might affect the outcome of the suit will preclude the entry 

of summary judgment, and the disputed evidence must be “such that a reasonable jury 

could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 

U.S. 242, 248 (1986). “[A] party seeking summary judgment always bears the initial 

responsibility of informing the district court of the basis for its motion, and identifying 

those portions of [the record] which it believes demonstrate the absence of a genuine 

issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 

 Substantive law determines which facts are material, and “[o]nly disputes over 

facts that might affect the outcome of the suit under the governing law will properly 

preclude the entry of summary judgment.” Anderson, 477 U.S. at 248; see Jesinger, 24 

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F.3d at 1130. In addition, the dispute must be genuine, that is, the evidence must be “such 

that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 

U.S. at 248. Because “[c]redibility determinations, the weighing of the evidence, and the 

drawing of legitimate inferences from the facts are jury functions, not those of a judge, 

. . . [t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to 

be drawn in his favor” at the summary judgment stage. Id. at 255 (citing Adickes v. S.H. 

Kress & Co., 398 U.S. 144, 158–59 (1970)); Harris v. Itzhaki, 183 F.3d 1043, 1051 (9th 

Cir. 1999) (“Issues of credibility, including questions of intent, should be left to the 

jury.”) (citations omitted). 

 Furthermore, the party opposing summary judgment “may not rest upon the mere 

allegations or denials of [the party’s] pleadings, but . . . must set forth specific facts 

showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e); see Matsushita Elec. 

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986); Brinson v. Linda Rose 

Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995); Taylor v. List, 880 F.2d 1040, 1045 

(9th Cir. 1989); see also LRCiv. 1.10(l)(1) (“Any party opposing a motion for summary 

judgment must . . . set[] forth the specific facts, which the opposing party asserts, 

including those facts which establish a genuine issue of material fact precluding summary 

judgment in favor of the moving party.”). If the nonmoving party’s opposition fails to 

specifically cite to materials either in the court’s record or not in the record, the court is 

not required to either search the entire record for evidence establishing a genuine issue of 

material fact or obtain the missing materials. See Carmen v. S.F. Unified Sch. Dist., 237 

F.3d 1026, 1028–29 (9th Cir. 2001); Forsberg v. Pac. N.W. Bell Tel. Co., 840 F.2d 1409, 

1417–18 (9th Cir. 1988). 

II. Control Person Liability under Section 20(a) of the Exchange Act 

 Section 20(a) of the Exchange Act provides that “[e]very person who, directly or 

indirectly, controls any person liable under [this Act] shall also be liable jointly and 

severally with and to the same extent as such controlled person . . . .” 15 U.S.C. § 78t(a). 

To make a prima facie case under this section, a plaintiff must prove “(1) a primary 

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violation of federal securities law and (2) that the defendant exercised actual power or 

control over the primary violator.” No. 84 Empl.-Teamster Joint Council Pension Trust 

Fund v. Am. W. Holding Corp., 320 F.3d 920, 945 (9th Cir. 2003) (citing Howard v. 

Everex Sys., Inc., 228 F.3d 1057, 1065 (9th Cir. 2000)) (internal quotations omitted). This 

“two-pronged test . . . should be construed liberally and flexibly.” Wool v. Tandem 

Computers Inc., 818 F.2d 1433, 1441 (9th Cir. 1987), overruled on other grounds by

Hollinger v. Titan Capital Corp., 814 F.2d 1564, 1575 (9th Cir. 1990) (en banc). 

 “Control” is defined in the Code of Federal Regulations as “the possession, direct 

or indirect, of the power to direct or cause the direction of the management and policies 

of a person, whether through the ownership of voting securities, by contract, or 

otherwise.” 17 C.F.R. § 230.405. The determination of a defendant’s control over the 

primary violator “is an intensely factual question, involving scrutiny of the defendant’s 

participation in the day-to-day affairs of the corporation and the defendant’s power to 

control corporate actions.” Kaplan v. Rose, 49 F.3d 1363, 1382 (9th Cir. 1994) (citing 

Arthur Children’s Trust v. Keim, 994 F.2d 1390, 1396–97 (9th Cir. 1993)) (internal 

quotations omitted). 

 “Traditional indicia of control” include “having a prior lending relationship, 

owning stock in the target company, or having a seat on the board.” Am. W. Holding 

Corp., 320 F.3d at 645 (citing Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 

1151, 1162 (9th Cir. 1996)). “A director is not automatically liable as a controlling 

person, although director status is a ‘red light’ to the court.” Kaplan, 49 F.3d at 1382 

(internal quotations omitted). The plaintiff need not prove that the defendant had scienter 

or that he “culpably participated” in the primary violation to establish control. Paracor, 

96 F.3d at 1161. However, once the plaintiff makes a prima facie case of control, the 

“defendant is entitled to a good faith defense if he can show no scienter and an effective 

lack of participation.” Howard, 228 F.3d at 1057. The defendant bears the burden of 

proving the good faith defense. Hollinger, 914 F.2d at 1575. 

 Treliving does not argue that no primary violation under the securities laws 

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occurred. Rather, he focuses on the second prong of Section 20(a) liability, contending 

that he is entitled to summary judgment because “Plaintiffs are unable to show that 

Treliving exercised control over either [Global or PVEC-LLC].” (Doc. 574 at 9.) (Id.) He 

cites to a host of facts to show that he was not personally involved in the Bond Offering, 

the drafting of the OS, or otherwise related in any way to the construction and financing 

of the Event Center. (Id. at 6–8.) Treliving argues that the only connection he has to the 

alleged securities violation is his status as a chairman and minority shareholder of WPHL 

and Global, and that this status is insufficient to establish control person liability. (Id. at 

10 (citing In re Gupta Corp. Sec. Litig., 900 F. Supp. 1217, 1243 (N.D. Cal. 1994.))) He 

stresses that he was neither an officer nor employee of Global and that he was not 

involved in the day-to-day operations of the company. (Id. at 5–6.) 

 Treliving is correct that a defendant’s mere status as director or shareholder is 

insufficient to establish control person liability. Wool, 818 F.2d at 1441. However, as 

stated above, director status is a “red light” suggesting the defendant’s control over the 

company. Kaplan, 49 F.3d at 1382. Treliving does not dispute that he was the chairman 

of Global. (Doc. 574 at 5.) Nor does Treliving deny that he owned shares in Global, 

though he stresses that the most he ever held was nine percent. (Id. at 11.) Both of these 

are factors that traditionally indicate control. Am. W. Holding Corp., 320 F.3d at 645. 

 Treliving asserts that he is entitled to summary judgment because the record lacks 

a crucial element: evidence that Treliving’s “ability to control” had “some nexus” to the 

alleged misstatements in question. (Doc. 574 at 9.) He cites Howard v. Everex Systems, in 

which the Ninth Circuit upheld a grant of summary judgment for a defendant who served 

as director for less than three months and did not “supervise[] or [have] any responsibility 

for the preparation of the [misstatements].” 228 F.3d at 1067. He then points to his 

deposition, in which he testifies that he did not participate in any way in the transactions 

leading up to the construction of the Event Center and the sale of the Bonds. (Doc. 575-1 

at 68:3–73:25.) The fact that Treliving did not participate or was unaware of the alleged 

misstatements in this case, however, does not show that he did not have any 

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responsibility for the preparation of those misstatements. Indeed, Global’s bylaws show 

that Treliving’s position as chairman obligated him to “supervise and control all of the 

business and affairs of the corporation and the performance by all of its other officers . . . 

.” (Doc. 618-3, Ex. 3.2 at 5.06.) 

 Treliving has failed to meet his summary judgment burden of showing that there is 

no material issue of fact that he did not control Global or PVEC-LLC. The question of 

control is intensely fact-driven, Kaplan, 49 F.3d at 1382, and as such is difficult to 

resolve on summary judgment. The undisputed facts show that Treliving was both a 

shareholder and chairman of Global and PVEC-LLC, and that the position of chairman 

came with significant supervisory responsibilities. Based on this evidence, a reasonable 

fact-finder could determine that Treliving was a control person under Section 20(a) of the 

Exchange Act. 

 In order for Treliving to obtain a grant of summary judgment, then, he must 

establish that he acted in good faith by demonstrating “no scienter and an effective lack 

of participation.” Howard, 228 F.3d at 1057. Treliving makes no express argument that 

he acted in good faith. The evidence that he musters in support of his Motion, however, is 

stronger support for a good faith defense than for his argument that he was not a control 

person. Because Treliving appears to be arguing that he acted in good faith, the Court 

will analyze whether he has such a defense to Plaintiffs’ prima facie showing of his status 

as a control person. 

 Treliving sets forth evidence that he did not participate in discussions regarding 

the Event Center (Doc. 575-1 at 38:14–17), did not review or comment on any contracts 

relating to the Event Center (id. at 69:6–9), never reviewed any feasibility reports (id. at 

69:10–71:1) or reports for the financial performance of any event center (id. at 71:11–

17), did not review or comment on any documents associated with the Bond offering or 

other financing of the Event Center (id. at 72:2–12), never discussed or approved the OS 

relating to the Bonds (id. at 73:6–21), and was unaware any “problem brewing in Prescott 

Valley” prior to hearing about the lawsuit (id. at 75:25–76:4). This evidence is sufficient 

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to meet Treliving’s summary judgment burden of showing a lack of scienter and effective 

participation for the purposes of the good faith defense. See Kaplan, 49 F.3d at 1383 

(upholding grant of summary judgment where defendant declared that he never directed 

or induced anyone to make any statements which he knew to be false or misleading). The 

burden thus falls on Plaintiffs to raise a material issue of fact that Treliving did not act in 

good faith. 

 Plaintiffs argue that the good faith defense can be established only if the defendant 

also shows that he “maintained and enforced a reasonable and proper system of 

supervision and internal control.” (Id. at 9) (citing Hollinger, 914 F.2d at 1576). Plaintiffs 

admit that the elucidation of this rule occurred in the context of determining whether to 

hold broker-dealers liable as control persons. (Id.) However, they assert that the Ninth 

Circuit has held that this rule can be extended to other contexts. (Id.) 

 In Kersh v. General Council of Assemblies of God, the Ninth Circuit contemplated 

extending liability for failure to supervise to cases not involving broker-dealers. 804 F.2d 

546, 550 (9th Cir. 1986). It set out a multi-factor test for determining whether failure-tosupervise liability should be imposed beyond the broker-dealer context. The factors 

included: 

a) whether the controlling person derives direct financial gain 

from the activity of the controlled person, b) the extent to 

which the controlled person is tempted to act unlawfully 

because of the controlling person’s policies (e.g., 

compensation system), c) the extent to which statutory or 

regulatory law or the defendant’s own policies require 

supervision, d) the relationship between the plaintiff and the 

controlling person, and e) the demonstration of some public 

policy need to impose such a requirement. 

Id. In Kersh, the issue was whether a controlling person’s failure to supervise could 

constitute “culpable participation,” an element of the control liability that has since been 

eliminated from the Section 20(a) analysis. Hollinger, 914 F.2d at 1575. However, in 

eliminating the culpable participation requirement from the prima facie case, the Ninth 

Circuit merely shifted the burden, requiring the defendant to prove lack of culpable 

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participation as a part of establishing the good faith defense. Id. at 1576. The multi-factor 

test set out in Kersh is therefore still relevant in determining whether a defendant must 

prove adequate supervision as an element of his good faith defense. 

 Here, the parties agree that Treliving was the chairman and shareholder of Global, 

indicating that Treliving stood to benefit from Global’s activities. In addition, Treliving 

had a duty to supervise the affairs of Global as set out in Global’s bylaws. (Doc. 618-3, 

Ex. 3.2 at 5.06.) Treliving’s relationship with Global as its chairman was one in which he 

should have exercised responsibility and oversight. The Court thus finds that public 

policy favors requiring individuals like Treliving, whose ownership and position of 

power within his company should not be accompanied with obliviousness to the 

company’s important business dealings, to demonstrate adequate supervision as part of 

the defense of good faith. 

 A reasonable juror could find, based on the evidence of Treliving’s high-ranking 

position and his apparent unawareness of Global’s involvement in the Prescott Valley 

Event Center deal, that his lack of supervision amounted to a failure to act in good faith. 

Thus, Plaintiffs have raised a material issue of fact that Treliving did not act in good faith 

in connection with the construction of the Event Center and the Bond offering. Because 

Treliving failed to establish an absence of genuine issue as to his status as a control 

person, and Plaintiffs have raised a material fact issue that Treliving did not act in good 

faith, the Motion for Summary Judgment is denied on the Section 20(a) claim. 

III. Arizona Securities Law Claim

 A.R.S. § 44-1999(B) is almost identical to Section 20(a) of the Exchange Act, 

providing for “vicarious or secondary liability to ‘controlling persons’ as it does to a 

person or entity that commits a primary violation of [A.R.S.] §§ 44-1991 or 1992.” 

Facciola v. Greenberg Traurig, LLP, 781 F. Supp. 2d 913, 922–23 (D. Ariz. 2011). Like 

its federal counterpart, § 44-1999(B) provides a defense if the defendant can show that he 

acted in good faith. 

 The Arizona legislature passed § 44-1999(B) with the intent that the courts “use as 

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a guide the interpretations given by the securities and exchange commission and the 

federal or other courts.” E. Vanguard Forex, Ltd. v. Arizona Corp. Comm’n, 206 Ariz. 

399, 410, 79 P.3d 86, 97 (Ct. App. 2003) (quoting 1996 Ariz. Sess. Laws, ch. 198, 

§11(C)). The legislature also intended “that the Arizona Securities Act be liberally 

construed to effect its remedial purpose of protecting the public interest.” Id. Thus, if 

anything, the sweep of the Arizona Securities Act is broader than that of the federal 

securities regime. See Siporin v. Carrington, 200 Ariz. 97, 103, 23 P.3d 92, 98 (Ct. App. 

2001) (stating that the Arizona courts would “depart from those federal decisions that do 

not advance the Arizona policy of protecting the public from unscrupulous investment 

promoters”). 

 Treliving’s argument for granting summary judgment on the § 44-1999(B) differs 

little from his argument for Section 20(a). (Doc. 574 at 11.) He argues that Vanguard, 

“[t]he only Arizona case that imposed control liability on a corporate director pursuant to 

§ 44-1999(B), did so under the limited circumstance where the individual defendants 

were the sole shareholders, sole officers, and sole directors of the primarily liable 

defendant corporations.” (Id. at 12.) Treliving’s characterization of the facts of Vanguard

is correct, but the Arizona Court of Appeals did not limit its holding to those facts. 

Instead, the Court of Appeals stated that § 44-1999(B) imposed “presumptive control 

liability on those persons who have the power to directly or indirectly control the 

activities of those persons or entities liable as primary violators of §§ 44-1991 and -

1992.” Vanguard, 79 P.3d at 99 (emphasis in original). This definition is substantially 

similar to the definition of control under the federal securities regime. See 17 C.F.R. § 

230.405. To accept Treliving’s interpretation of Vanguard as limiting control person 

liability under § 44-1999(B) would be to adopt a standard for control person liability that 

is narrower than the one set out under Section 20(a). This concept is unsupported by 

Arizona case law and contradicted by the express legislative intent that § 44-1999(B) 

have broad coverage. 

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is duplicative of the evidence they submitted in their arguments for Section 20(a) of the 

Exchange Act. Moreover, the parties have not demonstrated, and the Court’s own review 

of the case law has not revealed, any significant difference between Arizona and federal 

law on control person liability that would be relevant in deciding this motion. Thus, 

Treliving’s Motion for Summary Judgment on the § 44-1999(B) claim for the same 

reasons it is denied on the Section 20(a) claim. 

IV. Illinois Securities Law Claim

 Section 13(A) of the Illinois Securities Law provides that controlling persons are 

jointly and severally liable for any sale of a security made in violation of its provisions. 

815 ILCS § 5/13. A “controlling person” is defined under Illinois law as an individual 

who owns either (1) 25% or more of the outstanding voting securities of the issuer of 

such security or (2) enough outstanding securities to allow that individual to elect a 

majority of the board of directors or other managing body of the issuer. Id. § 5/2.4. An 

issuer, in turn, is defined as “every person who shall have issued or proposes to issue any 

security.” Id. § 5/2.2. For unincorporated issuers, however, the definition of a 

“controlling person” is different: it is defined as “any person offering or selling a 

security, or group of persons acting in concert in the offer or sale of a security, who 

directly or indirectly controls the activities of the issuer.” Id. § 5/2.4. 

 Treliving points to evidence that the Bonds were issued by the Industrial 

Development Authority of the County of Yavapai (the “Authority”), not WHPL or 

Global or any of the entities that Plaintiffs claim Treliving controls. (Doc. 559-3 at 

SMH002712.) Because Treliving does not own any outstanding securities in the 

Authority, he asserts that he cannot be held liable as a controlling person under Illinois 

law. Treliving has demonstrated that there is no genuine issue of material fact as to his 

lack of control over the Authority. 

 The burden thus falls on Plaintiffs to raise a genuine issue of material fact. 

Plaintiffs assert, without citation or explanation, that “the Illinois statute is broad enough 

in scope to treat PVEC[-LLC] as a de facto issuer and hold both Global and Treliving 

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liable as controlling persons of PVEC.” (Doc. 617 at 14.) Plaintiffs assert that this 

holding is necessary for “the Illinois Act to function as its drafters intended.” Plaintiffs 

cite to no authority for how, exactly, the drafters of the Illinois Securities law intended 

for the statute to function. A plain reading of 815 ILCS § 5/2.2 does not reveal any 

support for holding the borrowers of bond proceeds as “de facto issuers.” The statute 

straightforwardly defines “issuer” as “every person who shall have issued or proposes to 

issue any security,” with four clearly delineated exceptions. Id. None of the exceptions 

refer to municipal bonds. If the Illinois legislature intended for the borrowers of proceeds 

from the sale of municipal bonds to be subject to liability as “issuers,” they could have 

drafted an additional exception. They did not. Plaintiffs’ argument that PVEC-LLC 

should be treated as a “de facto issuer” is rejected. Plaintiffs have failed to raise any issue 

of material fact that Treliving was a controlling person under Illinois law. As such, 

Treliving’s Motion for Summary Judgment on this claim is granted. 

V. Negligent Misrepresentation

 Under Arizona law, negligent misrepresentation occurs when a person “fails to 

exercise reasonable care and competence in obtaining or communicating information and 

thereby, in the course of his business or employment, provides false information for the 

guidance of others.” PLM Tax Certificate Program 1191–92, L.P. v. Schweikert, 216 

Ariz. 47, 50, 162 P.3d 1267, 1270 (Ct. App. 2007). The recipients of the information 

must incur damages due to their justifiable reliance on the false information. Id. In 

addition, the defendant must have owed a duty to the injured party. Id. A defendant can 

be held liable for negligent misrepresentation if it discloses some facts but negligently 

omits others, and the omission creates a misleading or false impression. Hill v. Jones, 151 

Ariz. 81, 84–85, 725 P.2d 1115, 1118–19 (Ct. App. 1986). As stated in this Court’s Order 

of November 4, 2010, Plaintiffs’ negligent misrepresentation claim is limited to 

statements in the OS that create “the misleading impression that Bondholders would have 

a ‘first lien’ upon certain TPT Revenues that were pledged for debt servicing.” (Docs. 

212 at 69.) 

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 Treliving sets forth evidence that he “neither participated in drafting nor did he 

have knowledge of the Official Statements.” (Doc. 574 at 15.) As discussed above in 

Section II, Treliving testified at his deposition that he did not review or comment on any 

documents associated with the Bond offering or other financing of the Event Center and 

that he never discussed or approved the OS relating to the Bonds. (Doc. 575-1 at 72:2–12, 

73:6–21.) There is no evidence in the record that he either provided false information or 

negligently omitted information, thereby creating a false impression. Treliving has met 

his summary judgment burden. 

 Plaintiffs do not address the negligent misrepresentation claim at all in their 

Response. As such, they have failed to overcome Treliving’s showing of lack of any 

genuine issue of material fact. Treliving’s Motion for Summary Judgment on the 

negligent misrepresentation claim is granted. 

CONCLUSION

 Plaintiffs have shown that a genuine issue of material fact exists as to whether 

Treliving was a control person of Global under both Section 20(a) of the Exchange Act 

and § 44-1991 of the Arizona Securities Act. However, Plaintiffs have failed to establish 

any fact issue as to Treliving’s liability under the Illinois Securities Law or Arizona’s 

common-law negligent misrepresentation claim. As such, Treliving’s Motion for 

Summary Judgment is denied as to the Section 20(a) and § 44-1991 claims, but granted 

as to the Illinois Securities Law and negligent misrepresentation claims. 

IT IS THEREFORE ORDERED that Defendant James W. Treliving’s Motion 

for Summary Judgment (Doc. 574) is GRANTED IN PART and DENIED IN PART. 

 Dated this 1st day of March, 2013. 

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