NOT FOR PUBLICATION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 designation.

FILED

MAY 12 2016

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
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The issue on appeal is whether Plaintiffs’ suit against Wachovia for alleged 

misconduct in connection with a “stock 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 that 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 they 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 has 
3

reason 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 specific 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 injury. 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, based on Wachovia’s involvement 

in the loan program, Plaintiffs had reason to suspect possible wrongdoing by 

Wachovia and to investigate Wachovia within the time limitations. Plaintiffs 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 the 
4

separate 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 statutory period. 

Moreover, Plaintiffs’ contention that they could not have filed suit until the 

November 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 materials 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 was 
5

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. Beech Aircraft Corp., 114 Cal. Rptr. 171, 175 (Cal. Ct. App. 1974). 

Again, Plaintiffs do not sufficiently allege any efforts to investigate, or that 

Wachovia fraudulently withheld information. In their briefing before this court, 

Plaintiffs also do nothing to suggest that they could so allege if given an 

opportunity to amend—even after the district court faulted their allegations on 

these very grounds. The district court was therefore correct in treating further 

leave to amend as futile. 

AFFIRMED.