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. e du/thir dc ir c uit_1999/167Filed June 25, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NO. 98-5185

SOUTHERN CROSS OVERSEAS AGENCIES, INC., A New Jersey Corporation;

TRANSPORT INTERNATIONAL POOL INC., A Pennsylvania Corporation, Appellants

v.

WAH KWONG SHIPPING GROUP LTD., A Foreign Corporation

On Appeal From the United States District Court For the District of New Jersey (D.C. Civ. No. 96-cv-05887) District Judge: Honorable Anne E. Thompson, Chief Judge

Argued: March 25, 1999

Before: BECKER, Chief Judge, LEWIS and WELLFORD,* Circuit Judges.

(Filed June 25, 1999)

___________________________________________________ ______________ *Honorable Harry Wellford, United States Circuit Ju dge for the United States Court of Appeals for the Sixth Circuit, sitt ing by designation.HYMAN HILLENBRAND, ESQUIRE

(ARGUED)

R. BRETT KELLY, ESQUIRE De Orchis, Corsa & Hillenbrand 2650 Biscayne Boulevard Miami, FL 33137 (Organized in New York)

1495 Morris Avenue Union, New Jersey 07083

LAURA E. SHER, ESQUIRE

Kroll & Tract One Gateway Center Newark, NJ 07102-5311

Counsel for Appellants

JEFFREY W. SARLES, ESQUIRE (ARGUED)

ALAN N. SALPETER, ESQUIRE Mayer, Brown & Platt

190 South LaSalle Street Chicago, IL 60603

ROBERT B. KURZWEIL, ESQUIRE FREDRIC R. COHEN, ESQUIRE Katz, Ettin, Levine, Kurzweil,

Weber & Scialabba 905 North Kings Highway Cherry Hill, NJ 08034

Counsel for Appellee

OPINION OF THE COURT

BECKER, Chief Judge.

This suit for sums past due for transportation of c argo emerges from a setting of contractual relationships and prior litigation history so complicated and convolu ted as to almost boggle the mind. It will take over thirteen pages of typescript to describe them. The case had its genes is in a now-failed Australian corporation's relationship wi th a stillextant Hong Kong corporation. The plaintiffs here c laim to

2have been victims of fraud by the Hong Kong corpora tion.

Aspects of the controversy have previously been lit igated in an Australian liquidation proceeding, a New Jersey bankruptcy proceeding (consolidated with a Californ ia proceeding),1 and a civil action in the United Stat es District Court for the Northern District of Illinois. The pr esent appeal arises from an order of the District Court f or the District of New Jersey dismissing the complaint of plaintiffs Southern Cross Overseas Agencies, Inc. ("Southern C ross") and Transport International Pool Inc. ("TIP") again st defendant Wah Kwong Shipping Group Ltd. ("Wah Kwong ") under Fed. R. Civ. Proc. 12(b)(6) on the ground tha t the statute of limitations barred the action. It presen ts two interesting and important questions, one of which w e resolve in a way that creates a circuit split.

The first issue stems from the defense that the Dis trict Court lacked diversity jurisdiction because the def endant is a Hong Kong corporation. The Court of Appeals for t he Second Circuit has determined that Hong Kong corporations, being neither "citizens" nor"subjects " of a foreign state, were "stateless" and therefore do no t fall within federal alienage diversity jurisdiction unde r 28 U.S.C. S 1332(a)(2). See Matimak Trading Co. v. Kha lily, 118 F.3d 76 (2d Cir. 1997), cert. denied, 118 S. Ct. 88 3 (1998). We disagree.

Because the question implicates foreign policy, we requested that the government offer its views, and we now endorse the State Department's position that a Hong Kong corporation, though not a "citizen" of the United K ingdom, was a "subject" of the United Kingdom for purposes of diversity jurisdiction. At the time the lawsuit was filed, Hong Kong was a British Dependent Territory. While governed by laws separate from those governing the United Kingdom itself, Hong Kong was ultimately subject to British sovereignty. The British Crown had the power of fin al approval of its laws. Furthermore, under the releva nt consular agreements, Hong Kong citizens (including corporations) were treated as United Kingdom "natio nals"

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1. The principal asset in both the Australian liqui dation and the U.S. bankruptcy came from the proceeds of a California a rbitration.

3for purposes of relations between the United Kingdo m and

the United States. Therefore, we agree with the Dis trict Court that we possess subject matter jurisdiction.

The second issue implicates the permissible scope o f a court's inquiry on a 12(b)(6) motion. The plaintiff s filed their complaint in December 1996. The District Court gran ted the defendant's 12(b)(6) motion, which was grounded on the statute of limitations, because the fraudulent acts complained of occurred in the mid-1980s and the cou rt was satisfied that New Jersey's six-year statute of lim itations for fraud had long since run. The plaintiffs, however, maintain that the facts that might have given them knowledge of a probable cause of action did not come to their atte ntion until 1992 and that they could not reasonably have been expected to know them sooner.

Resolution of the issue requires us to examine the published opinion in the earlier New Jersey bankrup tcy litigation. Although this examination takes us beyo nd the face of the complaint, we conclude that we may take judicial notice of that opinion as a matter of publ ic record and as a document on which the plaintiffs rely in t he complaint. We further conclude that, as a matter of law, the opinion provided the bankruptcy creditors in that a ction

with notice of the facts that should have led them to inquire into the alleged fraud. Because the plaintiffs were creditors who filed claims in that action, they should have k nown of the opinion. Therefore, we will affirm the District Court's conclusion that the complaint is barred by the stat ute of

limitations.

As is already apparent, the factual and procedural background of this case is incredibly complex. Beca use the subject matter jurisdiction issue is a threshold ma tter that is distinct from the other issues before us, we add ress it first, and then turn to the facts and procedural hi story.

I. Subject Matter Jurisdiction

Wah Kwong alleges that we lack alienage diversity jurisdiction in this case because, as a corporation organized under Hong Kong law, it is "stateless" and does not fall within 28 U.S.C. S 1332(a)(2). The Supreme Court ha s

4recently instructed us not to hypothesize jurisdict ion, but

to decide jurisdiction first and then address other issues only if there is jurisdiction. See Steel Co. v. Cit izens for a Better Environment, 523 U.S. 83 (1998). Thus, we ad dress this issue before resolving the parties' other argu ments.

Section 1332(a)(2) confers original jurisdiction on federal

courts in civil actions in which the matter in cont roversy exceeds $75,000 between "citizens of a State and ci tizens or subjects of a foreign state." This tracks the langu age of Article III of the Constitution, which extends the federal judicial power to "all Cases . . . between a State, or Citizens thereof, and foreign States, Citizens or Subjects." Wah Kwong argues that, as a Hong Kong corporation, it i s neither a citizen nor a subject of a "foreign state ."2 The District Court found that it had jurisdiction, reas oning only that federal jurisdiction in this case served the i nterests of "providing a neutral forum and avoiding the appeara nce of injustice or creating grounds for resentment in the relations of the United States with other nations." Slip Op. at 14.

A. The Second Circuit's View

The District Court's decision is in conflict with t he

Second Circuit's decision in Matimak. The District Court disposed of the jurisdictional issue summarily, and did not discuss Matimak. In Matimak, Judge McLaughlin, join ed by Judge Jacobs, held that Hong Kong was not a "foreig n state" for purposes of alienage jurisdiction and th at Hong Kong corporations were not "citizens or subjects" o f the United Kingdom. Matimak set forth two important principles that formed the basis for its decision.

The first concerned the definition of "foreign stat e":

Neither the Constitution nor S 1332(a)(2) de fines "foreign state." However, "it has generally been held that a foreign state is one formally recogni zed by the executive branch of the United States govern ment."

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2. Diversity is to be determined at the time the co mplaint is filed. See Smith v. Sperling, 354 U.S. 91, 93 n.1 (1957). Hong Kong was a British Dependent Territory at the time the complaint wasfi led, and it so remained until July 1, 1997, when sovereignty was t ransferred to the People's Republic of China.

513B C. Wright, A. Miller & E. Cooper, Federa l Practice

& Procedure S 3604 (1984).

Matimak, 118 F.3d at 79. It is undisputed that Hong Kong has not been formally recognized as an independent sovereign by the executive branch. The Matimak cour t also found that Hong Kong was not a "de facto" foreign s tate, despite its status as the United States's twelfth-l argest trading partner and the United States-Hong Kong Pol icy Act of 1992, 22 U.S.C.A. SS 5701-5732 (West Supp. 1996) . That Act establishes that Congress desires close United StatesHong Kong relations to continue after Hong Kong's c hange from a British Dependent Territory to a special administrative region of the People's Republic of C hina.3 While the Act demonstrates that there is a special, close relationship between the United States and Hong Kon g, that, we agree, is simply not the same as explicit recognition of foreign statehood.

Recognition matters because the Framers feared that foreign nations might become incensed if they perce ived that state courts were biased against foreigners; t he result could be or commercial disruption if foreign nation s became incensed at the treatment of their citizens or subj ects in state courts. See Matimak, 118 F.3d at 82-83. Matim ak suggested that, "[w]here the Executive Branch deter mines that a foreign entity is not a `sovereign,' there i s no threat of entanglement with a sovereign stemming from the refusal of a federal court to treat that entity's citizen i n a national forum." Id. at 83. The court recognized that, if an unrecognized foreign entity perceived that its citi zens had been subject to bias in a state court, there could be foreign relations repercussions, but found that it was for the executive branch to evaluate a foreign entity's aut onomy and resources in order to determine whether the ent ity constituted a sovereign state. Thus, the risk of fo reign policy entanglements was not for the court to evalu ate. See

id.

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3. The Act provides that "Hong Kong plays an import ant role in today's regional and world economy. This role is reflected in strong economic, cultural, and other ties with the United States tha t give the United States a strong interest in the continued vitality, prosperity, and stability of Hong Kong." 22 U.S.C. S 5701(4).

6The second crucial principle in Matimak concerned t he

definition of "citizens or subjects," and a corolla ry relating to corporations:

We begin with the truism that a foreign stat e is entitled to define who are its citizens or subjects. United States v. Wong Kim Ark, 169 U.S. 649, 668, 18 S.Ct. 456, 464, 42 L.Ed. 890 (1898) ("Nor can it be dou bted that it is the inherent right of every independen t nation to determine for itself, and according to its o wn constitution and laws, what classes of perso ns shall be entitled to its citizenship."); Ruggiero v. Compania Peruana de Vapores "Inca Capac Yupanqui", 63 9 F.2d 872, 875 (2d Cir. 1981); Murarka v. Bachrack Bros. Inc., 215 F.2d 547, 551-53 (2d Cir. 1954); 1 3B C. Wright, A. Miller & E. Cooper, Federal Pract ice and Procedure: Jurisdiction 2d SS 3604 & 3611 (1 984).

It is another accepted precept that a corpo ration, for purposes of diversity jurisdiction, is a "ci tizen" or "subject" of the entity under whose sovereig nty it is

created.

Id. at 85.

The court concluded that Hong Kong corporations wer e not "citizens or subjects" of the United Kingdom be cause the United Kingdom did not recognize such corporati ons as citizens. The British Nationality Act 1981, which e xtends privileges to natural persons in British Dependent Territories such as Hong Kong, does not apply to corporations. The British Companies Act 1948 specif ies that corporations formed under the laws of Hong Kon g are not entitled to the privileges of British nationali ty. See Matimak, 118 F.3d at 85. Given these laws, the cour t concluded that the alternate argument that Hong Kon g corporations were ultimately subject to British sov ereignty must also be rejected, reasoning that "Hong Kong corporations . . . are no more `subjects' than `cit izens.' " Id. at 86. Although Hong Kong's laws might ultimately b e traceable to the British Crown, the Matimak court r easoned that Hong Kong corporations were in fact incorporat ed under the Companies Ordinance 1984 of Hong Kong and entitled only to the protection of that law. See id

.

7Judge Altimari dissented, arguing that "[a] statele ss

corporation is an oxymoron." Id. at 89 (Altimari, J

., dissenting). He emphasized the practical importance of Hong Kong-United States relations and the State Department's expressed view that Hong Kong corporat ions should be allowed to take advantage of alienage jurisdiction. He would have found diversity jurisdi ction over a Hong Kong corporation on any of three grounds: (1 ) as a citizen or subject of a "de facto" autonomous state ; (2) as a citizen or subject of the United Kingdom, given the "inexorabl[e] link[age]" between Hong Kong and the United Kingdom; or (3) as a citizen or subject of a "polit ical subdivision" of the United Kingdom. See id. at 91-9 2 (Altimari, J., dissenting).

B. The Purposes of Alienage Jurisdiction

Most courts have accepted the proposition that the problem of "statelessness" was unanticipated by the Framers, because it is a twentieth-century phenomen on. "[A] basic assumption of the drafters was that anyo ne who was not a citizen of the United States must by defi nition have been subject to the power of a foreign governm ent or sovereign." Matimak, 118 F.3d at 87. Thus, the Fram ers apparently considered the class of "subjects or cit izens of a foreign state" as identical with the class of"alien s." See Kevin R. Johnson, Why Alienage Jurisdiction? Histor ical

Foundations and Modern Justifications for Federal Jurisdiction over Disputes Involving Noncitizens, 2 1 Yale J. Int'l L. 1, 1-20 (1996).

Historical evidence from the Federalist Papers and the

debates over the ratification of the Constitution s hows that the Framers often "refer[red] to citizens, subjects and foreigners interchangeably." Van der Schelling v. U .S. News & World Report, Inc., 213 F. Supp. 756, 759 (E.D. P a.), aff'd, 324 F.2d 956 (3d Cir. 1963) (per curiam). In fact, the phrase "citizens or subjects" reflected an expansiv e intent:

The framers of the Constitution were undoubt edly keenly aware of the fact that they had latel y been subjects and that in other lands men still r emained subjects of a sovereign and not citizens of a state.. . . It was only by the inclusion of `subjects' t hat all aliens,

8whether they [owed] allegiance to a sovereig n monarch

or were citizens of a democracy, could sue o r be sued

in federal courts.

. . . .

. . . . Indeed, Story's doubts appear to ha ve been abandoned, for in his `Commentaries on the Constitution of the United States' (5th Ed., 1891) he says, at page 499:

`* * * The inquiry may here be made, who ar e to be

deemed aliens entitled to sue in the courts of the United States? The general answer is, any pe rson who

is not a citizen of the United States. * * * '

Id. at 761 (emphasis added). Thus, while foreign mo des of government are hardly "technicalities" in any other sense, the Framers apparently did not consider them releva nt to the exercise of federal jurisdiction. See Johnson, supra; Bradford Williams, Note, The Aftermath of Matimak T rading Co. v. Khalily: Is the American Legal System Ready for Global Interdependence?, 23 N.C. J. Int'l L. & Com. Reg. 201, 224-25 (1997); cf. Wilson v. Humphreys (Cayman ) Ltd., 916 F.2d 1239, 1242 (7th Cir. 1990) (holding that t he "policies supporting alienage jurisdiction" support ed jurisdiction over a Cayman Islands citizen--the Cay man Islands is also a British Dependent Territory).

Matimak rejected these and similar statements on th e ground that the Framers never contemplated "statelessness." See Matimak, 118 F.3d at 87. Howev er, without further analysis, this is an inadequate res ponse. The Framers never contemplated telephones, and yet we have applied the Fourth Amendment to cases about telephones. See Katz v. United States, 389 U.S. 347 (1967) (overruling an earlier decision that had held that telephones, not having been within the Framers' contemplation, would not receive Fourth Amendment protection). The relevant question is whether the F ramers articulated principles that assist us in this case.

We believe that they did. The history reviewed in V an der Schelling is relevant because Hong Kong's importanc e to the

United States evokes the Framers' concerns for smoo th

9foreign relations. As two practitioners note, Briti sh

Dependent Territories "are the international equiva lent of Delaware or Nevada for many clients." William Wilso n III & Jonathan K. Cooperman, 2d Circuit Bars Suits by "Offshore" Corporations, Nat'l L.J., Aug. 25, 1997, at B9. Because Hong Kong was a dependent territory of the United Kingdom and is now a special administrative region of the Peoples' Republic of China, the way we treat its corporations may affect our relations with those co untries, not to mention our relations with Hong Kong itself. See Wilson, 916 F.2d at 1243 (exercise of American judi cial authority over a citizen of a British Dependent Ter ritory implicates our relations with the United Kingdom). The State Department expressed this concern in its subm ission

to us.

C. Who is a "Subject" of a Foreign State?

1. The State Department's Position

The State Department's view, communicated to us by the Justice Department at our request, is that:

[I]n the last analysis, Hong Kong nationals, including corporations, [were] subjects of United King dom sovereignty. While the United States views H ong Kong as largely autonomous in most respects, as a matter of recognition, it deal[t] with Hong Kong throu gh British authorities, since Hong Kong [was] ultimatel y subject to United Kingdom sovereignty. The various international agreements between Hong Kong a nd the United States [were] identified in the State Department's authoritative "Treaties In Forc e" under "United Kingdom" sovereignty. The Consular

Convention between the United States and the United Kingdom identifie[d] citizens of the United Kingdom's "colonies" (including corporations) as U.K." nationals" for purposes of relations between the two co untries. This approach [was] mirrored in the underlyi ng legal structure under which [a Hong Kong] corporat ion was created. The Letters Patent for Hong Kong is sued by the British Crown [made] clear that ultimate sovereignty and authority, including final a pproval of all laws, [was] reserved to the British Crow n. Since the

10ultimate sovereign authority over [a Hong Ko ng

corporation was] the British Crown, [it] sho uld be treated as a subject of United Kingdom sover eignty for purposes of alienage diversity jurisdiction.

Gov't Brief at 6-7.4

2. Citizens and Subjects

Matimak rejected the State Department's argument, which was identical to the argument presented to us , on the ground that Hong Kong corporations were not Uni ted Kingdom citizens according to explicit United Kingd om law. If they were not citizens, Matimak reasoned, they c ould not be subjects. We agree with Matimak that, in general , there is no difference between the way our federal courts deal with "citizens" and "subjects":

In S 1332(a)(2) the terms "citizen" and"subj ect" do not connote a different "degree of attachment or allegiance to a foreign state." 1 James Wm. Moore et al ., Moore's Federal Practice P 0.75 (3d ed. 1996); Unite d States v. Wong Kim Ark, 169 U.S. 649, 663-664, 42 L. E d. 890, 18 S. Ct. 456 (1898) ("The term `citizen,' a s understood in our law, is precisely analogous to the te rm `subject' in the common law, and the change of phrase has entirely resulted from the change of governm ent."). Rather, the terms are meant to encompass per sons living under distinct forms of government: " A monarchy has subjects; a republic has citizens." Moor e, supra, P 0.75.

Matimak, 118 F.3d at 85.

The two terms are identical in that they both descr ibe a relationship between an individual and a sovereign power that suffices to confer alienage jurisdiction on a federal court. That the terms are identical for this specif ic purpose, however, does not mean that a sovereign must have o nly "citizens" or only "subjects." See Walter C. Hutche ns, Note, Alienage Jurisdiction and the Problem of Stateless Corporations, 76 Wash. U. L.Q. 1067, 1081 n.81 (199 8).

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4. At the time the brief was written, Hong Kong rem ained a British Dependent Territory.

11British law does not clearly establish that the Bri tish Crown

recognizes only one sort of sovereign relationship. Rather, British law, while silent on the crucial issue here , seems to recognize both "citizens" and "subjects." The Unite d Kingdom has by statute made natural persons who are citizens of Hong Kong or other British colonies sub jects of the Crown. See British Nationality Act 1948, at 1. Hong Kong corporations are not covered by this statute, but the State Department's position is that Hong Kong's law s required Crown approval at the relevant time, and i ts conclusion that Hong Kong corporations were thus ultimately subject to United Kingdom sovereignty se ems eminently reasonable. We are concerned that, were w e to decide that a foreign sovereign must choose between having "citizens" and "subjects," we would be making a fai rly significant foreign policy decision, and one that t he State Department rejects.

3. The Role of Deference to the Executive Branch

We accord substantial weight to the State Departmen t's position. In Banco Nacional de Cuba v. Sabbatino, 3 76 U.S. 398 (1964), the Supreme Court considered the right of an instrumentality of a hostile foreign government to file suit

in U.S. courts. The United States had severed forma l diplomatic relations with Cuba, but had not derecog nized it as a sovereign. The Court rejected the argument tha t a hostile government should not be allowed to litigat e in U.S. courts. Sabbatino looked to the executive's positio n in support of its decision:

The view that the existing situation between the United

States and Cuba should not lead to a denial of status to sue is buttressed by the circumstance tha t none of

the acts of our Government have been aimed a t closing the courts of this country to Cuba, and more particularly by the fact that the Government has come to the support of Cuba's "act of state" clai m in this very litigation.

Id. at 411.5

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5. We also note that Taiwanese citizens have been a llowed to sue under alienage jurisdiction, despite formal derecognition of Taiwan by the

12We will likewise take heed of the State Department' s

position here. We do not believe that executive aut hority in foreign policy matters is limited to the definition of "foreign state" for S 1332 purposes. Executive competence al so extends to the definition of "citizens or subjects, " at a minimum in cases where the proper interpretation is unclear and the outcome may affect our foreign poli cy. Just as the executive is best positioned to make the determination that recognition of a sovereign is ap propriate,

the executive is best situated to conclude that Hon g Kong was, at the time suit was filed, so closely connect ed to the United Kingdom that its corporations were United Ki ngdom subjects.

4. Conclusion

In summary, it is established that Hong Kong corporations were not United Kingdom citizens at th e time the lawsuit was filed, but it is quite plausible th at they were United Kingdom subjects. The law of the United King dom is not entirely clear on this point. The State Departm ent, however, has informed us that, consistent with vari ous agreements with Hong Kong and the United Kingdom, i t considers Hong Kong corporations to have been subje cts of the United Kingdom for alienage diversity purposes. This, it represents, best reflects the actual relationship b etween the United Kingdom, Hong Kong, and the United States. T here is no indication that the United Kingdom disagrees with

this characterization. For the reasons set forth ab ove, we agree with the State Department that treating Hong Kong corporations as United Kingdom subjects comports wi th the facts and the law of alienage jurisdiction. We ther efore have jurisdiction of this case under 28 U.S.C. S 1332(a) (2).

II. Facts and Procedural History

As we noted at the outset, this case has a history that is difficult to follow. We attempt to unravel the tang led

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executive branch. See, e.g., Chang v. Northwestern Mem'l Hosp., 506 F. Supp. 975 (N.D. Ill. 1980). Formal derecognition ha d geopolitical causes and consequences far overwhelming diversity jurisdi ction, yet courts have not found that derecognition indicated a desir e on the part of the executive branch to strip Taiwanese citizens of the benefits of alienage diversity jurisdiction.

13narrative by describing the dramatis personae, the essence

of the plaintiffs' claims, and then the tortuous co urse of events that brought the parties to this court.

A. Parties

The plaintiffs are Southern Cross and TIP. Southern Cross, a New Jersey corporation that acted as a boo king agent for corporations that transport ocean marine cargo, is wholly owned by a corporation that in turn is at le ast forty percent owned by Trygve Vangsnes, a Norwegian natio nal.6 TIP is a Pennsylvania corporation that rents equipm ent to corporations that transport such cargo. The defenda nt is Wah Kwong Shipping Group, Ltd. ("Wah Kwong"), a corporation organized under Hong Kong law. Wah Kwon g is the parent holding company of a group of subsidiary companies, including Maritime Shipping & Investment s, Ltd. ("MSI") and Venture Shipping Managers, Ltd. (" VSM"). Hong Kong residents Frank and George Chao were the chief executives and managers of Wah Kwong and various

subsidiaries.

Other entities are also involved in this case. Karl ander (Australia) Pty. Ltd. ("Karlander") was an Australi an company operating an ocean liner service out of Aus tralia. Until 1983, Karlander chartered five vessels from shipowning companies in which MSI owned shares, at

which time Karlander went into arrears. Karlander w as reorganized and the liner service was separately incorporated as KKL Kangaroo Lines ("KKL"). Vangsne s was owner and chief executive officer of KKL. Southern Cross and TIP provided services to KKL, which called on p orts in New Jersey before it ceased doing business in 1986. At that time, KKL allegedly owed money to Southern Cross an d TIP.

B. Pre-litigation Activity

The plaintiffs' claims spring from a series of agre ements between Wah Kwong or its subsidiaries and KKL. The agreements apparently involved a $6 million loan fr om Wah Kwong that enabled KKL to continue in business. How ever,

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6. Southern Cross apparently filed a Chapter 11 pet ition in 1986, which was confirmed by the Bankruptcy Court in 1994. Acco rdingly, it may lack present existence, although the parties do not discuss the issue.

14the plaintiffs argue that the agreements actually

established a partnership relationship between Wah Kwong and KKL's other principal (Vansgnes).

In particular, the plaintiffs argue that convoluted agreements, subagreements, collateral agreements--m any of which cancelled prior agreements--addenda, and s ide letters were used to construct KKL. Thus, while Wah Kwong ostensibly made a loan to start KKL, backed by a de mand note and stating an interest rate, the plaintiffs s ubmit that

in fact this "loan" was for show and did not reflec t the true equity relationship between the parties. The plaint iffs allege that Wah Kwong was entitled to receive and retain K KL's profits over $100,000 and that the $6 million was t he cost of buying into KKL's business. Moreover, the $6 mil lion went back to Wah Kwong via intermediaries immediate ly

after the "loan" was made.

The basic substance of the written agreements was a s follows: Karlander chartered vessels from shipownin g companies in which MSI and VSM had interests. The payments ("charterhire") accumulated and became ove rdue. Karlander's owners decided to restructure the compa ny by forming KKL to operate Karlander's Australian-U.S. liner service; KKL undertook Karlander's charters with th e shipowning companies and assumed outstanding charterhire. At about the same time, Wah Kwong soug ht advice from its accountants at Price Waterhouse, wh o suggested five ways Wah Kwong might respond to the restructuring and the unpaid charterhire, including the injection of $6 million as a loan to KKL. In March 1983, Wah Kwong and Karlander entered into a "Loan Facili ty" under which MSI would provide up to $6 million to Karlander to pay off overdue charterhire.

On November 26, 1983, Karlander, KKL and Wah Kwong executed a document called the Heads of Agreement. This document provided that English law would govern its interpretation. Vangsnes and Frank Chao signed for all parties, including various holding companies contro lled by Wah Kwong and others controlled by Vangsnes. Southe rn Cross was one of those companies, though Southern Cross's CEO has submitted an affidavit that Vangsne s was

15never authorized to sign documents on behalf of Sou thern

Cross.

Noting that Karlander was indebted to Wah Kwong and 839<!>that Karlander's successor, KKL, required fi nancial

assistance to pay off Karlander's creditors, the He ads of Agreement provided that MSI would make a $6 million interest-free deposit, repayable on demand, with af inance company established as a wholly-owned subsidiary of KKL. The finance company then would advance the deposit to KKL, which would advance the money to Karlander to pay off the outstanding charterhire. As security for th e $6 million deposit, KKL granted MSI an option to acqui re half of KKL's stock. (KKL's main asset at that point was its rights in an arbitration proceeding between Karland er and the Weyerhauser company.)

The Heads of Agreement also authorized MSI to appoi nt two members of KKL's board of directors, at least o ne of whom was required for a quorum; to appoint a financ ial consultant to KKL; and to approve KKL's auditors. T he agreement additionally allowed MSI to appoint two members of the boards of directors of the holding companies, including Southern Cross.

The Heads of Agreement stated that it would not bec ome effective until additional documents were executed. One such document, a side letter signed the same day as the Heads of Agreement, noted that repayment of the $6 million deposit "is by mutual agreement instead of on deman d." Another document, the Supplemental Agreement, warranted that KKL's total outstanding debts were n ot more than $10.6 million, and stated that if that represe ntation were false, MSI would be entitled to demand repayme nt of the $6 million. The Supplemental Agreement also established a two-person committee, including one M SI nominee, to monitor KKL's cash flow and recommend guidelines for payments to creditors.

In accordance with the Heads of Agreement and the related agreements, on February 6, 1984, VSM drew a $6 million check on MSI's account payable to KKL's subsidiary. The subsidiary endorsed the check to KK L, which endorsed it to VSM as the shipowners' agent i n

16payment of outstanding charterhire. Thus, the loan

proceeds returned to Wah Kwong-controlled companies . On February 22, 1984, George Chao sent Vangsnes a noti ce of default indicating that KKL's total outstanding deb ts in fact exceeded $10.6 million. On March 2, 1984, the parti es executed a document providing for the assignment of KKL's and Karlander's ship-operation earnings to VSM as "security for the various obligations" to MSI and V SM. The agreement provided that KKL's earnings would be pai d to VSM-designated bank accounts, though such earnings first would be applied to charterhire due to shipowners. Wah Kwong represents that the Assignment of Earnings wa s never implemented.

In April 1984, the parties agreed that the finance committee provided for in the Supplemental Agreemen t would be replaced by an arrangement in which the Wa h Kwong-nominated members of the KKL board would examine KKL's various expenditures. In August 1984, Vangsnes agreed that all KKL checks would be signed jointly by Wah Kwong and KKL representatives. The plaintiffs assert that Wah Kwong took further steps to ensure its control of KKL's expenses, including ent ering into agreements with two principal booking agents i n the U.S., Great Lakes Overseas, Inc. ("GLO") in the mid west and Southern Cross in New Jersey, to arrange for bo oking services and provide customers to KKL. Wah Kwong al so sent two employees to New Jersey and stationed them on Southern Cross's premises to ensure that only prope rly approved expenses would be paid in the U.S.; these employees remained in New Jersey for almost two yea rs.

The plaintiffs argue that Wah Kwong's representativ es essentially raided KKL, paying sums owed to Wah Kwo ng subsidiaries ahead of the priority actually allowed to them under the various agreements. It was this activity, according to the plaintiffs, that led to KKL's liqu idation. At the time KKL stopped doing business in January 1986 , it still carried the $6 million to Wah Kwong on its bo oks as a debt, along with other accumulated arrearages, incl uding debts to the plaintiffs.

C. The Australian Liquidation and Litigation

KKL went into liquidation in January 1986 in New So uth Wales when it lacked funds to pay its creditors. A liquidator

17appointed by the Australian courts assumed control and

discontinued KKL's operations. The liquidator agree d to repay $6 million to Wah Kwong as a priority credito r. This agreement was incorporated in a confidential settle ment with various Wah Kwong companies dated May 14, 1986

, which indicated that Wah Kwong was owed $20 million in past-due charterhire and that Wah Kwong was a credi tor and not a partner. The plaintiffs allege that Wah K wong submitted "show" documents to the liquidator to pro ve its creditor status and persuaded the liquidator to for go suing Wah Kwong in exchange for Wah Kwong's agreement to finance certain collateral litigation. Southern Cro ss and TIP were KKL creditors in this liquidation.

In 1994, the liquidator petitioned Justice Bryson o f the Supreme Court of New South Wales for direction to c lose the proceedings in Australia, because KKL had been wound down. Vangsnes and TIP filed an application for lea ve to intervene and argued that Wah Kwong had misrepresen ted itself as a creditor. Justice Bryson rejected this argument, finding no evidence of fraud and expressing concern s about the statute of limitations, and refused to reopen t he liquidator's 1986 decision. In 1996, Vangsnes filed an application to inspect correspondence and other doc uments in the possession of the liquidator relating to the KKL liquidation. An Australian master rejected the appl ication in light of Justice Bryson's decision.

D. The New Jersey Bankruptcy Proceeding (The Interp ool Litigation)

In early 1986, certain of KKL's U.S. creditors file d complaints in the U.S. District Court for the Distr ict of New Jersey seeking writs of maritime attachment against KKL's freights. Three KKL creditors filed a Chapter 7 inv oluntary bankruptcy petition against KKL in the U.S. Distric t Court

for the Central District of California. All cases w ere consolidated and transferred to the U.S. District C ourt for the District of New Jersey. See Interpool, Ltd. v. Certain Freights of M/V Venture Star, 102 B.R. 373 (D.N.J. 1988), appeal dismissed, 878 F.2d 111 (3d Cir. 1989). Sout hern Cross was a named party in the consolidated action, because its assets were attached by KKL's other cre ditors,

and TIP was a KKL creditor.

18In February 1986, the Australian liquidator brought an

11 U.S.C. S 304(a) proceeding ancillary to a foreig n proceeding in New Jersey Bankruptcy Court, seeking to enjoin the U.S. creditors from proceeding against K KL's

U.S. assets and to remit those assets to Australia for administration in the liquidation there. The S 304 proceeding was transferred and consolidated with th e other pending proceedings. The District Court entered an interim order enjoining the U.S. creditors from proceeding against KKL's assets and later ordered that KKL's freights should be distributed among the liquidator and the credito rs. In February 1988, the liquidator moved to dismiss the pending involuntary Chapter 7 petition and thereby

administer all KKL assets in Australia. On October 14, 1988, Judge Politan denied the motion and held that KKL's U.S. assets should be administered in a Chapter 7 bankruptcy case. He reasoned that the Australian liquidation proceedings (1) were already underway a nd (2) were being conducted ex parte, which under the circumstances made it highly unlikely that the righ ts of U.S. creditors would be properly respected. He ther efore authorized the appointment of a Chapter 7 trustee.

We quote Judge Politan's opinion at length, because it is vital to our resolution of this appeal:

On November 26, 1983, KKL executed a "Heads of Agreement," assuming the business of Karland er. KKL also agreed to pay off Karlander's creditors . In turn, Karlander transferred its rights in the Weye rhauser arbitration to KKL in January 1984. KKL rece ived a loan of $6 million from a Wah Kwong subsidia ry, and in exchange, KKL assigned its rights in the Weyerhauser arbitration to Wah Kwong. The re payment method to Wah Kwong for this loan was unclea r. According to the Heads of Agreement, it was to be on demand. However, according to a letter dated November 26, 1983, repayment was to be by mu tual agreement. Again, on January 11, 1984, a let ter was sent to KKL from a Wah Kwong subsidiary, sta ting that unless outstanding debts exceeded $10,122,00 0, repayment of the loan would be by mutual agr eement.

19The relationship between Wah Kwong and KKL was

described as a joint venture agreement. Wah Kwong corporate individuals were considered to be partners for the purpose of "earnings or distribution of earnings" of KKL. On March 2, 1984, KKL assigned its e arnings to Wah Kwong through another Wah Kwong subsi diary. In addition, by letter dated March 3, 1984, the parties agreed to take care to ensure that "day to d ay liner service operations will be maintained withou t any interruption." By agreement, dated October 8 , 1984, KKL and Wah Kwong agreed to require joint si gnatures

on all KKL checks.

In January 1986, a vessel was arrested in L .A., and Wah Kwong issued a press release saying KKL owed[it] $10 million. Wah Kwong blocked payments to c reditors

who in turn shortened their credit terms and forced a shortage of funds from KKL. Soon after, KKL ceased doing business and Wah Kwong also went into receivership.

On May 14, 1986, an agreement ("Deed") was consummated between the Liquidator, KKL, Kar lander, and several Wah Kwong subsidiaries which con cerned the prospective proceeds of the Weyerhauser arbitration pending in San Francisco, Califo rnia between Karlander and Weyerhauser Co. (Weyco ). Karlander had previously assigned its rights in the arbitration outcome on January 10, 1984 to K KL. KKL, in turn, assigned its rights in the arbitrat ion outcome to a Wah Kwong subsidiary, as security for r epayment of the $6 million loan. Under the terms of t he "Deed," any proceeds from Weyco claims would be paid to the Liquidator. The Liquidator, in turn, agreed to distribute the first $6 million to a Wah Kwong subsidia ry in satisfaction of the loan. Following distribu tion of some other monies, the rest of the proceeds would be held by the Liquidator for the purposes of administe ring KKL while in bankruptcy.

A second agreement, dated May 14, 1986, als o entitled "Deed", stated that the shipowners had "suffered damages as a result of a breach by KKL of the

terms and conditions of its charters." There is a

20disagreement as to whether this was true, wi th KKL

asserting that Wah Kwong was in breach by mi lking it of funds and Wah Kwong asserting that KKL co uld not meet its obligations and therefore [that Wah Kwong]

was entitled to the funds. Both "Deeds" were submitted to the Australian Courts and were approved.

. . . .

Since, in this case, the creditors were not notified prior to the date the Court ratified the agr eement between the Liquidator and Wah Kwong, and in addition, were not notified of the original S 304 filing, this Court finds that the procedural protect ions

available to creditors in the United States were not given to the United States creditors in Aust ralia. This

is a serious omission.

. . . .

. . . . Wah Kwong's loan was made payable e ither on demand or by mutual agreement; Wah Kwong's president sat on the Board of Directors of K KL; and someone from Wah Kwong was required to co-si gn checks prior to issuance. Additionally, it w as Wah Kwong who allegedly overdrew on monies held by KKL which hampered its ability to pay creditors and led to the involuntary petition being brought again st KKL. On its face there appear to be substantial alle gations of

insider machinations . . . .

Both the laws and the public policy of the United States will be violated if the case is permi tted to proceed under Australian law. The claims of the creditors may have already been prejudiced b y the dealings between the Liquidator and Wah Kwon g, and this Court does not intend to stand idly by while United States[ ] citizens and creditors are harmed.

Interpool, 102 B.R. at 375-76, 379, 380.

On April 5, 1988, the U.S. bankruptcy trustee enter ed

into a settlement with MSI. The settlement included a full release by the trustee of KKL's claims against MSI, Wah Kwong, and all other Wah Kwong subsidiaries that ha d dealt with KKL. It also included an agreement that MSI

21would fund prosecution of KKL's arbitration claim a gainst

the Weyerhauser Company, which the trustee regarded as KKL's principal asset. The settlement also recogniz ed MSI as a KKL creditor and agreed to share proceeds of t he Weyerhauser claim. The settlement was approved by t he

District Court.

E. The Illinois Litigation

GLO, which was a shipping agent and a KKL creditor, sued Wah Kwong in federal district court in Illinoi s in 1989. GLO, like Southern Cross, is wholly owned by a corp oration that is at least forty percent owned by Vangsnes. A lthough GLO sought compensation in the liquidation proceedi ngs, it was unsuccessful, and it sued Wah Kwong on the theo ry that Wah Kwong entered into a partnership or alter- ego relationship with KKL, making it responsible for KK L's debts. Wah Kwong once again took the position that it was a creditor, not a partner, and that the court there fore lacked personal jurisdiction over it.

According to GLO, a partnership existed because Wah Kwong had a right to receive a share of KKL's profi ts, agreed to share KKL's losses, and exercised general control over KKL. The Court of Appeals for the Seventh Circ uit, affirming the decision of the District Court for th e Northern District of Illinois, held that English law applied , which put the burden of proof of demonstrating partnership on GLO. See Great Lakes Overseas, Inc. v. Wah Kwong Shippin g Group, Ltd., 990 F.2d 990, 994 (7th Cir. 1993) ("GL O"). The

court found that the central issue was the characte rization of Wah Kwong's $6 million payment to KKL. Wah Kwong described the transaction as a loan that was part o f a workout arrangement through which Wah Kwong could obtain the charterhire KKL owed it. GLO, on the oth er hand, asserted that the $6 million was not an enfor ceable debt obligation but essentially an equity investmen t by Wah Kwong in a partnership with KKL.

The court in GLO held that the $6 millon was in fac t a loan, and that the Wah Kwong-KKL relationship was therefore a creditor-debtor relationship and not an equity arrangement. Although the side letters indicated th at the money was repayable "on mutual agreement," Wah Kwon g

22was entitled to demand repayment if KKL's liabiliti es

exceeded $10.6 million, a situation which in fact d eveloped. Moreover, English law recognizes that, under approp riate circumstances, transactions may be "loans" even whe n repayment of the loan is only by mutual agreement. See id. at 995 n.7. Furthermore, the court found that Wah K wong was not entitled to share in KKL's profits, as a pa rtner would be. The close corporate relationship between KKL and Wah Kwong, the court concluded, could readily b e explained as an arrangement by which Wah Kwong coul d attempt to obtain money due on the ships it had cha rtered to KKL, especially in light of the fact that this a rrangement was recommended by Price Waterhouse as a way to pro tect Wah Kwong's position as a major KKL creditor. See i d. at

996.

The immediate consequence of the decision that Wah Kwong was a creditor was that there was no personal jurisdiction over Wah Kwong, which could only be ha led into Illinois courts if it had a partnership or alt er-ego relationship with KKL. See id. at 998. The plaintif fs here contend that the Seventh Circuit misinterpreted the various agreements between the parties and relied on certai n paragraphs that were made ineffective by amendment in later agreements, thus erroneously finding a debtor -creditor relationship. They also contend that depositions in the GLO case revealed important elements of Wah Kwong's fraudulent scheme: George and Frank Chao, it is contended, admitted that Wah Kwong overdrew on KKL earnings to pay themselves charterhire in excess of that to which they were entitled under their agreement with KKL,

while KKL was neither insolvent nor in arrears on charterhire payments. The plaintiffs argue that, be cause they were not parties to the Illinois litigation, t his evidence only became available to them in late 1992 (Souther n Cross) and mid-1993 (TIP).

F. The Present Dispute

On December 6, 1996, Southern Cross and TIP filed a complaint in federal district court in New Jersey a lleging a fraudulent breach of contract by Wah Kwong and seek ing damages of $7.2 million. The plaintiffs alleged tha t, when KKL went into liquidation, it owed them substantial sums

23for services rendered. The plaintiffs' theory was e ssentially

that Wah Kwong controlled KKL, looted the company a nd drove it into bankruptcy, and then, adding insult t o injury,

distanced itself from KKL so as to be treated as a preferred creditor, rather than a partner responsible for KKL 's debts. Thus, the plaintiffs are attempting to recover from Wah Kwong the money that KKL owed them, along with associated damages.

The complaint alleged that Wah Kwong knew that it w as participating in a partnership that was to share KK L's profits and losses. It further alleged that Wah Kwo ng and its principals consistently misrepresented this rel ationship to the Australian liquidator, the District Court fo r the District of New Jersey, the U.S. bankruptcy trustee , the

District Court for the Northern District of Illinoi s, and the Court of Appeals for the Seventh Circuit. These kno wingly false representations are said to have enabled Wah Kwong to enter into settlement agreements with the liquid ator and

the trustee that resulted in an estate with insuffi cient funds to pay its creditors. Judge Thompson granted Wah Kw ong's 12(b)(6) motion on the ground that the statute of l imitations

had run.

III. The Statute of Limitations

A. The District Court's Opinion

The District Court reasoned that the purported misrepresentations occurred prior to January 1986, since on the plaintiffs' own allegation it was at that ti me that the Australian liquidator directed that the $6 million loan be repaid by KKL. Under New Jersey law, the statute of limitations for fraud is six years, see N.J. Stat. Ann. S 2A:14-1, and a cause of action accrues when a pla intiff knows or should know of its existence, see Bougher v. University of Pittsburgh, 882 F.2d 74, 80 (3d Cir. 1989). The plaintiff must be aware of an injury and a causal relationship between the injury and an actor, but n eed not know that the conduct is tortious or legally wrongf ul. See Baird v. American Med. Optics, 713 A.2d 1019, 1026 (N.J. 1998). When the gist of the action is fraud conceal ed from the plaintiff, the statute begins to run on discove ry of the

24wrong or of facts that reasonably should lead the p laintiff

to inquire into the fraud. See N.J. Stat. Ann. S 2A :14-1; Lopez v. Swyer, 300 A.2d 563, 567 (N.J. 1973).

The District Court held that the plaintiffs had not ice of the alleged misrepresentations at the time they wer e made

and that there was no reason to toll the statute. T he court noted that the Australian liquidator had agreed tha t Wah Kwong was a creditor in the 1986 settlement agreeme nt, thus demonstrating that Wah Kwong's position was op en and notorious. The court also reasoned that Vansgne s was involved in the Australian liquidation on behalf of KKL and was aware of the arguments Wah Kwong was making to the liquidator.

B. The Plaintiffs' Arguments

The plaintiffs argue that the District Court failed to draw all reasonable inferences in their favor, as is req uired when there is a 12(b)(6) motion to dismiss, and that it wrongly

assumed the existence of certain facts not evident on the face of the complaint. In this procedural posture, we must take all properly pleaded facts as true. See Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) . When the applicability of the statute of limitations is in dispute, there are usually factual questions as to when a pl aintiff

discovered or should have discovered the elements o f its cause of action, and thus "defendants bear a heavy burden in seeking to establish as a matter of law that the challenged claims are barred." Van Buskirk v. Carey Canadian Mines, Ltd., 760 F.2d 481, 498 (3d Cir. 19 85). If the complaint's allegations, taken as true, allege facts sufficient to toll the statute of limitations, it m ust survive a

motion to dismiss. See Leone v. Aetna Cas. & Sur. C o., 599 F.2d 566, 569 (3d Cir. 1979).

The plaintiffs allege that, though they were aware of Wah Kwong's position that it was a creditor and not a p artner of KKL, they did not have notice that this position wa s false until they obtained documentary evidence in 1992 af ter obtaining discovery documents from the GLO litigati on. As they point out, as late as 1996, the Australian cou rts refused to allow the Australian creditors (includin g Vansgnes and TIP) access to KKL corporate informati on and

25Wah Kwong's dealings with the liquidator. They main tain

that the statute of limitations did not begin to ru n until they had some notice that Wah Kwong's misrepresenta tion

was false.

We agree that the mere representation that one is a creditor and not a partner, without more, is not su spicious. While the District Court characterized Wah Kwong's alleged misrepresentation as "open and notorious," it was n ot openly and notoriously a misrepresentation. One wou ld have to know other facts, not necessarily within th e reasonable ken of an unrelated creditor, to know th at a party that held itself out as a creditor was in fac t a partner. Thus, the limitations period did not start to run w hen the plaintiffs knew or should have known that Wah Kwong represented itself as a creditor. Rather, the perio d would begin to run only when they knew or should have kno wn information that would have led a reasonable person to question that representation. See Hauptmann v. Wile ntz, 570 F. Supp. 351, 397-98 (D.N.J. 1983), aff 'd with out opinion, 770 F.2d 1070 (3d Cir. 1985).

In addition, the District Court should not have imp uted Vansgnes's knowledge to Southern Cross and TIP. Fir st, there is nothing in the pleadings or in the publish ed decisions of any court that suggests that TIP is in any way related to Vansgnes. Second, while Vansgnes's owner ship of a large amount of Southern Cross stock could potent ially justify imputing his knowledge to Southern Cross, s uch an imputation could not be made in the context of a 12 (b)(6) motion. Wah Kwong cites cases concerning shareholde r derivative suits for the proposition that Vansgnes and Southern Cross are in privity, but privity means di fferent things in different contexts.

In this case, imputing Vansgnes's knowledge to Sout hern Cross would require resolving issues of fact. South ern Cross argues that Vansgnes was not authorized to ac t for it (though he signed the Heads of Agreement on its behalf, allegedly as the result of an error) and that he ne ver communicated any of the relevant facts to it. It su bmitted an affidavit that Vangsnes was never an officer, em ployee, agent, director, or shareholder of Southern Cross. Another sticking point is that the complaint and the publis hed

26judgments do not reveal that Vansgnes participated in the

1986 proceedings, which were kept confidential from nonparticipants. The parties have not directed our attention to the relevant Australian procedures. The Australi an liquidator took over the management of KKL, and we cannot find any suggestion that Vansgnes was involv ed in the Wah Kwong-liquidator settlement negotiations. P ossibly he was, and if this were a summary judgment motion we might have the evidence to prove it, but the Distri ct Court could not so assume within the 12(b)(6) framework.

If Vansgnes's knowledge in 1986 were dispositive, w e would be obliged to reverse, as these are issues no t appropriate for judgment on the pleadings. However, Vansgnes was not the only possible source of the pl aintiffs' knowledge. We turn, therefore, to the 1988 Interpoo l

decision.

C. The Importance of Interpool

To resolve a 12(b)(6) motion, a court may properly look at public records, including judicial proceedings, in addition to the allegations in the complaint. See City of Pi ttsburgh v. West Penn Power Co., 147 F.3d 256, 259 (3d Cir. 199 8) (public records); Pension Benefit Guar. Corp. v. Wh ite Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (same); Iacaponi v. New Amsterdam Cas. Co., 379 F.2 d 311, 311-12 (3d Cir. 1967) (previous litigation referred to in complaint); In re Woodmar Realty Co., 294 F.2d 785, 788 (7th Cir. 1961) (previous opinions); DiNicola v. Di Paolo, 945 F. Supp. 848, 855 n.2 (W.D. Pa. 1996) (same); Kithc art v. Metropolitan Life Ins. Co., 62 F. Supp. 93, 94 (W.D . Mo. 1944) (same), aff'd, 150 F.2d 997 (8th Cir. 1945).

Specifically, on a motion to dismiss, we may take j udicial notice of another court's opinion--not for the trut h of the facts recited therein, but for the existence of the opinion, which is not subject to reasonable dispute over its authenticity. See Kramer v. Time Warner Inc., 937 F .2d 767, 774 (2d Cir. 1991); United States v. Wood, 925 F.2d 1580, 1582 (7th Cir. 1991); see also Funk v. Commissioner , 163 F.2d 796, 800-01 (3d Cir. 1947) (whether a court ma y judicially notice other proceedings depends on what the

27court is asked to notice and on the circumstances o f the

instant case).7

Judge Politan's opinion in Interpool is judicially noticeable. Moreover, it is a document on which the plaintiffs rely, as they specifically reference it in the complaint to show Wah Kwong's fraudulent behavior. We may therefore examine the decision to see if it con tradicts the complaint's legal conclusions or factual claims . See City of Pittsburgh, 147 F.3d at 259 (court may examine documents of unquestioned authenticity on which the plaintiff 's claim depends); Pension Benefit Guar. Corp., 998 F.2d at 1196 (same); Romani v. Shearson Lehman Hutt on, 929 F.2d 875, 879 & n.3 (1st Cir. 1991) (rejecting a fraud claim in light of the underlying documents, pursuan t to a 12(b)(6) motion).

Our inquiry proceeds in two steps. First, we establ ish

that a reasonable creditor who filed a claim in a b ankruptcy proceeding would examine published opinions in that proceeding. Therefore, such a creditor "should have known" the contents of a published opinion, for purposes o f starting the limitations period. Second, we conclud e that Judge Politan's Interpool opinion contained suffici ent information to put a reasonable creditor on notice that Wah Kwong's claim to be a mere creditor (and not some k ind of "insider" or partner in the affairs of KKL) was sus picious.

___________________________________________________ ______________

7. We have held that a court that examines a transc ript of a prior proceeding to find facts converts a motion to dismi ss into a motion for summary judgment. See Kauffman v. Moss, 420 F.2d 12 70, 1274-75 (3d Cir. 1970). We do not call Kauffman into question w hen we hold that judicially noticing the existence of a published op inion is proper to resolve a 12(b)(6) motion. Recently, courts and com mentators have paid more attention to the distinction between judiciall y noticing the

existence of prior proceedings and judicially noticing the tr uth of facts averred in those proceedings. See 21 Charles Alan Wright & Ken neth W. Graham, Jr., Federal Practice & Procedure: EvidenceS 5106, at 247 (1999 Supp.). It has been suggested that the appropriate analogy is the hearsay rule,

which allows an out-of-court statement to be admitt ed into evidence for purposes other than establishing the truth of the s tatement. See id.; see also Colonial Leasing Co., Inc. v. Logistics Contro l Group Int'l, 762 F.2d 454, 459 (5th Cir. 1985) (making the distinction be tween existence and

truth).

28As a result, the plaintiffs, who were creditors in that

proceeding, should have known the relevant facts ab out Wah Kwong's alleged misrepresentations more than si x years before the filing of the complaint, and the s tatute of

limitations bars this suit.

1. The Obligations of a Bankruptcy Creditor Filing a Claim

The plaintiffs argue that they were not true partie s to the Interpool litigation, but merely filed their claims in bankruptcy court as creditors after receiving notic e from the U.S. bankruptcy trustee. Interpool actually inv olved a number of consolidated creditors' claims against KK L and a distinct S 304 proceeding challenging the propriety of U.S. bankruptcy jurisdiction while the Australian liquid ation was already pending. Though Southern Cross was a na med party in Interpool, it alleges that it was not invo lved in litigating the S 304 proceeding and participated ac tively only in other aspects of the case involving creditors' c laims against various freights.

The District Court rejected the plaintiffs' distinc tion between the S 304 proceeding--in which the allegati ons of Wah Kwong's misconduct were made--and the run-of-th emill creditors' claims. It noted that Southern Cros s was represented by counsel who entered an appearance in the litigation, and that TIP, though not a named party, filed a claim after receiving notice. According to the Dist rict Court, Wah Kwong's arguments were put forth in the S 304 a spect of the litigation and in Judge Politan's opinion, a nd the plaintiffs neglected their duty of due diligence if they were not aware of Wah Kwong's position. While the Distri ct Court should not have taken "arguments" before Judg e Politan into account on a 12(b)(6) motion, for the reasons that follow we agree that the plaintiffs should hav e taken notice of Judge Politan's opinion explaining the appointment of a U.S. bankruptcy trustee despite th e ongoing Australian litigation.

First, and at the very least, a reasonable creditor should have inquired why the court found it necessary to h ave a U.S. proceeding in the face of an ongoing foreign liquidation. Although Southern Cross argues that it did not

29participate in the S 304 aspect of the Interpool ca se, the

result that the Australian liquidator sought was to void the U.S. attachment of Southern Cross's freights. South ern Cross was served with all relevant papers, and the

contention that it was somehow insulated from theS 304 proceedings is simply untenable. In these circumsta nces, Southern Cross should have examined Judge Politan's opinion resolving the Australian liquidator's S 304 claim.

TIP's obligations as a reasonable creditor are much more difficult to determine. Unfortunately, the record o f the Interpool proceedings has not been preserved in its entirety, though there is evidence that, in 1990, the Austral ian liquidator was unable to serve TIP with documents i n the case because it had moved, and its forwarding order had expired. At all events, TIP had notice of the pendi ng U.S. bankruptcy proceeding triggered by Judge Politan's opinion, because it filed a claim in that proceeding.8 Judge Politan's opinion was not simply "notice in the air," as TIP participated in the resultant proceedings. See Peop le v. Hill, 952 P.2d 673, 699-700 (Cal. 1998) (judicially notic ing prior opinions to show that a prosecutor involved in the prior cases had notice of a particular problem). We concl ude that TIP also should have read Judge Politan's opinion, given the

circumstances of the case.

2. The Content of the Interpool Opinion

Because a reasonable creditor in the plaintiffs' po sition would have read the opinion, the statute of limitat ions would start to run if the opinion was sufficient as a matter

___________________________________________________ ______________

8. The complaint does not specifically allege that TIP filed a claim in

the U.S. bankruptcy proceeding, though it does allege t hat the plaintiffs were

unsecured creditors and that "the unsecured United States creditors" were harmed by Wah Kwong's representations to the U .S. bankruptcy trustee. Logically, only competing claimants could have been harmed by Wah Kwong's acts, and thus the only reasonable read ing of the complaint is that the plaintiffs filed claims. In t heir brief, the plaintiffs state that they both filed claims in the bankruptcy proceeding. The brief is not evidence, but it allows us to interpret the complaint. See Doe v. Johnson, 817 F. Supp. 1382, 1399 n.13 (W.D. Mich. 1 993); Ricciotti v. Warwick Sch. Comm., 319 F. Supp. 1006, 1010 n.3 (D. R.I. 1970); 5A Charles Alan Wright & Arthur R. Miller, Federal Pra ctice and Procedure S 1364, at 480-81 (1990).

30of law to give a creditor notice of the facts under lying the

fraud claim. We find that the published opinion in Interpool was sufficient to put the plaintiffs on notice that there was evidence that Wah Kwong was KKL's partner and thus to distrust Wah Kwong's representations that it was a mere creditor. Cf. Hal Roach Studios, Inc. v. Richard Fe iner & Co., Inc., 896 F.2d 1542, 1548 (9th Cir. 1989) (holding that controlling statutory language can be sufficiently clear to start a limitations period running as a matter of l aw). It is not relevant whether Judge Politan's interpretation of the facts was correct; what is critical is that his int erpretation was published and available to KKL's creditors, and that the discrepancy between Wah Kwong's claims to be a creditor and Judge Politan's conclusions was eviden t on the face of the opinion.

Judge Politan described the Wah Kwong-KKL link as follows: "The relationship between Wah Kwong and KK L was described as a joint venture agreement. Wah Kwo ng corporate individuals were considered to be partner s for the purpose of `earnings or distribution of earnings' o f KKL." Interpool, 102 B.R. at 375-76. This adequately disc losed the alleged partnership agreement behind the plaintiffs ' claims.

Moreover, the opinion repeatedly indicated that Wah Kwong might have acted illegitimately. Interpool di scussed the troubling features of the arrangement between t he Australian liquidator and Wah Kwong, which the plai ntiffs now attack as fraudulent. Indeed, Judge Politan was so concerned about the fairness of the Australian sett lement that he appointed a U.S. bankruptcy trustee to admi nister KKL's U.S. assets. Furthermore, the plaintiff 's co mplaint in this case itself demonstrates that the plaintiffs w ere (or should have been) aware of Wah Kwong's position tha t it was a creditor, as both the plaintiffs and the defe ndant were competing creditors in the U.S. bankruptcy proceeding.

In sum, the plaintiffs should have been aware of ev idence of the alleged "true facts" after the 1988 Interpoo l opinion; they were also aware of the allegedly false represe ntation during the bankruptcy proceedings. It follows that they

should have known all the information sufficient to begin the running of the statute of limitations, which th us ran on

31the plaintiffs' fraud claims before the December 6, 1996,

complaint was filed. The judgment of the District C ourt will

be affirmed.9

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

___________________________________________________ ______________

9. Because we find that the statute of limitations has run for both plaintiffs, we need not address Wah Kwong's other a rguments.

32