NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

GREGORY R. RAIFMAN; et al.,

Plaintiffs

- Appellants,

v. WACHOVIA SECURITIES, LLC, n/k/a Wells Fargo Advisors, LLC and WELLS FARGO ADVISORS, LLC, successor in interest to Wachovia Securities, LLC,

Defendants

- Appellees. No. 14

- 15851 D.C. No. 4:11

- cv - 02885

- SBA

MEMORANDUM *

Appeal from the United States District Court for the Northern District of California Saundra B. Armstrong, District Judge, Presiding

Submitted May 9, 2016 ** San Francisco, California Before: McKEOWN and FRIEDLAND, Circuit Judges and BOULWARE, *** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36

- 3.

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

*** The Honorable Richard F. Boulware, District Judge for the U.S. District Court for the District of Nevada, sitting by designati on. 

# FILED

MAY 12 2016 MOLLY C. DWYER, CLER K U.S. COURT OF APPEAL S2

The issue on appeal is whether Plaintiffs’ suit against Wachovia for alleged misconduct in connection with a “sto ck loan program” is barred by the statute of limitations. The district court held that it was and we affirm. Plaintiffs do not dispute that at the time their loans matured and they realized they were not getting their stock back , they were on notice tha t something was wrong and that this notice required an investigation on their part. They contend , however, that they were on notice of only Derivium ’ s wrongdoing, not Wachovia ’ s. They further contend that , despite their reasonable diligence in investigating, they had no reason to suspect Wachovia until November 2010, when Wachovia produced various documents in a separate bankruptcy matter. That is when “smoking gun” evidence was discovered and Plaintiffs claim they finally became aware that the y could pursue claims against Wachovia. Plaintiffs argue that the “delayed discovery rule” should apply to toll the statute of limitations until they discovered those documents. Under California law ( which provides the longest statute of limitations that could apply in this case ), the discovery rule “postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” Fox v. Ethicon Endo

- Surgery, Inc. , 110 P.3d 914, 920 (Cal. 2005). “A plaintiff has3

reaso n to discover a cause of action when he or she ‘ has reason at least to suspect a factual basis for its elements. ’ ” Id. (emphasis added) (quoting Norgart v. Upjohn
Co. , 981 P.2d 79, 88 (Cal. 1999))

. “Elements” does not refer to the legal elements of a spe cific claim, merely the “ ‘ generic ’ elements of wrongdoing, causation, and harm.” Id. In other words, “a potential plaintiff who suspects that an injury has been wrongfully caused must conduct a reasonable investigation of all potential causes of that inj ury . If such an investigation would have disclosed a factual basis for a cause of action, the statute of limitations begins to run on that cause of action when the investigation would have brought such information to light.” Id. at 921 (emphasis added). To take advantage of the discovery rule, a plaintiff must “specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” Grisham v. Philip Morris, USA, Inc. , 151 P.3d 1151, 1159 (Cal. 2007). As the district court correctly explained , b ased on Wachovia’ s involvement in the loan program, Plaintiffs had reason to suspect possible wrongdoing by Wachovia and to investigate Wachovi a within the time limitations. Plainti ffs did not adequately plead in their complaint what investigations they undertook and why they were unable to discover earlier the facts that were later disclosed in the4

s eparate bankruptcy proceeding. None of Plaintiffs’ allegations regarding Wachovia show what, if anything, Plaintiffs did to diligently investigate Wachovia
in this case , nor does the complaint provide any reason why Plaintiffs were unable to discover information sufficient to file a complaint within the s tatutory period. Moreover, Plaintiffs’ contention that they c ould not have filed suit until the
Nov ember 2010 “smoking gun” disclosure is unavailing for at least two reasons: First, the letter primarily referred to as the key disclosure does not actually say Wachovia sold the borrowers’ securities or that anything untoward was happening between Wachovia and Derivium. Second, “[a] plaintiff need not be aware of the specific ‘facts’ necessary to establish the claim [in order for the claim to accrue]; that is a process contemplated by pretrial discovery. Once the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to file suit or sit on her rights.” Jolly v. Eli Lilly & Co. , 751 P.2d 923,
928 (Cal. 1988) (in bank). Finally, Plaintiffs’ contention that the limitations period should be tolled because of Wachovia’s fraudulent concealment of relevant materia ls fails for similar reasons. “ In order to establish fraudulent concealment, the complaint must show: (1) when the fraud was discovered; (2) the circumstances under which it was5

discovered; and (3) that the plaintiff was not at fault for failing to discover it or had no actual or presumptive knowledge of facts sufficient to put him on inquiry .” Baker v. Beec h Aircraft Corp. , 114 Cal. Rptr. 171 , 175 ( Cal. Ct. App. 1974). Again, Plaintiffs do not sufficiently allege any efforts to investigate, or that Wachovia fra

udulently withheld information. In their briefing before this court, Plaintiffs also do nothing t o suggest that they could so allege if given an opportunity to amend

— even after the district court faulted their allegations on these very grounds. T he district court was therefore correct in treating further leave to amend as futile.
AFFIRMED.