Source: https://openjurist.org/954/f2d/1125
Timestamp: 2019-04-20 20:55:30+00:00

Document:
Don W. Boyett, Bobby W. McDonald, Charles F.
John N. EHRMAN, Individually, Etc., et al., Defendants-Appellees.
Nos. 90-2104, 90-2105 and 90-2106.
As Amended April 27, 1992.
Armando Lopez, Lopez & Ramirez, Houston, Tex., W. Sherman Rogers, Washington, D.C., Gillis & Slogar, Houston, Tex., for Michael K. Topalian et al.
Don Jackson, Paul S. Wells, Vinson & Elkins, Houston, Tex., for Houston Petroleum Corp. & Richard O'Donnell.
Stephen W. Schueler, Charles M. Silverman, Neil A. Wasserstrom, Margraves, Kennerly & Schueler, Frank Pinedo, James Austin Pinedo, Pinedo, Cezeaux & Sweeney, Houston, Tex., for Rio Bravo Oil and Bert Gamble.
W. Roderick Johnson, Butler & Binion, Kevin F. Risley, Houston, Tex., for W. Roderick Johnson.
John R. Knight, Morris & Campbell, Houston, Tex., for Robert E. Eckis, Jr.
Frank Pinedo, James Austin Pinedo, Pinedo, Cezeaux & Sweeney, Houston, Tex., for counter plaintiff-appellee in No. 90-2105.
Kevin F. Risley, Butler & Binion, Houston, Tex., for Rockwood Ins.
Frank Pinedo, James Austin Pinedo, Pinedo, Cezeaux & Sweeney, Houston, Tex., for Ehrman and Ehrman Inv. Group in No. 90-2106.
W. Roderick Johnson, Houston, Tex., for W.R. Johnson and W.R. Johnson, P.C. in No. 90-2106.
Don Jackson, Vinson & Elkins, Houston, Tex., for O'Donnell and Houston Petroleum.
Dale Jefferson, D. John Leger, Houston, Tex., for Victor Russek and Russek Co.
Stephen W. Schueler, Neil A. Wasserstrom, Charles M. Silverman, Margraves, Kennerly & Schueler, Houston, Tex., for Bert Gamble and Rio Bravo Oil Co. in Nos. 90-2105 & 90-2106.
Before DUHE, WILLIAMS, and GARZA, Circuit Judges.
(viii) "other relief as may be just and proper."
Concluding that plaintiffs have failed to set forth specific facts and establish a genuine issue worthy of trial, we affirm the district court's summary judgment in favor of defendants.
Onshore was formed in September 1984 under Texas law for the purpose of raising funds for oil and gas drilling ventures. The enterprise was presented to potential investors as a tax shelter and a sound, legitimate investment vehicle. On September 26, 1984, Onshore entered into a Joint Venture Agreement with Defendant Houston Petroleum Company ("HPC"), Onshore agreeing to use its best efforts to raise a minimum subscription of $3,600,000 in capital contributions on or before December 31, 1984.
The defendants, general partners of Onshore, decided to raise this 3.6 million dollars by selling limited partnership units. Onshore actively began to solicit investors in November 1984. According to plaintiffs, Onshore's general partners represented to prospective investors that the Onshore offering was exempt from registration under the Security and Exchange Commission's Rule 506 of Regulation D. See 17 C.F.R. § 230.506 (1989).3 This Rule 506 exemption to the registration requirements of section 5 of the Securities Act of 1933 is limited to offerings made to not more than 35 non-accredited investors. See id. Although the Onshore offering was made primarily to accredited investors, defendants and their seller-agents allegedly offered and sold the Onshore securities to more than 35 non-accredited investors.
In their effort to obtain adequate financing, defendants printed at least two different offering memoranda, one dated September 30, 1984 and another dated November 30, 1984.4 The November 30, 1984 memorandum stated that the offering termination date--the date by which the partnership needed to raise a minimum subscription of $3,600,000 in capital contributions--was December 31, 1984.5 As that deadline approached, defendants were short of the minimum subscriptions required to continue the partnership. Rather than dissolving the partnership and reimbursing the limited partners as promised in the original offering memoranda, in January 1985 Onshore forwarded a document to each investor who had subscribed on or before December 31, 1984 which permitted each subscriber to rescind or affirm her respective purchase of Onshore interests. To compensate for Onshore's subscription deficiency, the general partners then allegedly decided to pledge the limited partners' promissory notes as security for a bank loan made to Onshore by Interdiscount Ltd. ("IDL") and guaranteed by Ehrman Investment Group, Ltd. ("EIG").6 These loan proceeds were allegedly spent financing the Onshore venture.
Plaintiffs filed their original complaint on December 3, 1987. On December 18, 1987, they filed their first amended complaint, alleging that, with the help of others, Onshore's general partners--EIG and W. Roderick Johnson--engaged in a scheme to defraud them in the sale of Onshore limited partnership securities.
Defendants filed motions to dismiss, and, with the exception of claims brought under section 17 of the Securities Act of 1933, the district court denied these motions. Plaintiffs were directed to amend their complaint to specifically refer to the defendants against whom allegations were being made and comply with the court's RICO standing order. Discovery commenced. In August 1988, plaintiffs filed their Second Amended Complaint, which the district court struck.7 In September 1988, plaintiffs filed a Motion for Leave to File a Second Amended Complaint or in the Alternative a Motion for Joinder of Persons Needed for Just Adjudication. In October 1988, the district court held a pre-trial conference on matters including this motion--a motion the district court ultimately denied.
In January 1989, the court considered a joint motion to amend the scheduling order of August 1988, and extended the discovery cut-off date to April 1989. At this January hearing, the court admonished all counsel to cooperate in discovery and reserved a ruling on pending motions for sanctions. The court set July 28, 1989 for the hearing and disposition of pending motions.
Defendants filed motions for summary judgment on June 15, 1989. Although responses to these motions were due on July 10, 1989, plaintiffs did not file their responses until July 27, 1989. Plaintiffs were also late in filing their motions for summary judgment. In October 1989, the district court granted summary judgment in favor of the Ehrman defendants and against plaintiffs. In December 1989, the district court first granted summary judgment in favor of EIG, Onshore, and Rockwood on their counterclaims against certain plaintiffs. Later that same month, the district court entered its final judgment, granting summary judgment to all the remaining defendants. The district court also held a hearing on pending motions for sanctions and granted defendants' motion for sanctions against some of the plaintiffs and against their counsel, Mr. Armando Lopez.
Plaintiffs seek reversal of the district court's grant of summary judgment, and they have pinned a tail of reversible-error assertions to this summary judgment challenge.8 Defendants deny plaintiffs' allegations, and they allege that even if the facts were true, plaintiffs' causes of action are time-barred by (i) the one and three-year statutes of limitations applicable to claims brought under the Securities Act of 1933, (ii) the two-year statute of limitations applicable to claims under the Securities Exchange Act of 1934, and (iii) the fact that plaintiffs failed to state a claim under RICO. Some of the defendants deny participating in the offer and sale of the units, and they further deny that they had any fiduciary or other duty to any of the plaintiffs.
(a) Did the district court err in granting defendants' motions for summary judgment?
(b) Did the district court err in granting defendants' motions for summary judgment on the counterclaims against plaintiffs?
(c) Did the district court err in denying plaintiffs' Motion to File a Second Amended Complaint or, in the Alternative, a Motion for Joinder of Persons Needed for Just Adjudication?
(d) Did the district court dismiss IDL as a party solely as a Rule 11 sanction to punish plaintiffs for allegedly filing a frivolous claim and, if so, is the district court in contempt of the Fifth Circuit's mandate to reinstate IDL as a party?
(e) If this court should reverse the district court, is there sufficient evidence in the record to justify reassignment of this case to another judge?
(f) Should this court grant Rockwood's Motion for Sanctions?
* Since this case is an appeal from a grant of summary judgment, this court reviews the record de novo. See International Shortstop, Inc. v. Rally's, 939 F.2d 1257, 1263 (5th Cir.1991). Our inquiry as to whether the district court properly granted summary judgment in defendants' favor is guided by Rule 56 of the Federal Rules of Civil Procedure and three Supreme Court cases. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2550, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2505-14, 91 L.Ed.2d 202 (1986); Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).
Summary judgment is proper if the movant demonstrates that there is an absence of genuine issues of material fact. See Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. Such a showing entitles the movant to summary judgment as a matter of law. See Fed.R.Civ.P. 56(c). The movant accomplishes this by informing the court of the basis for its motion, and by identifying portions of the record which highlight the absence of genuine factual issues. See generally id. Once the movant produces such evidence, the nonmovant must then direct the court's attention to evidence in the record sufficient to establish that there is a genuine issue of material fact for trial--that is, the nonmovant must come forward with evidence establishing each of the challenged elements of its case for which the nonmovant will bear the burden of proof at trial. See Catrett, 477 U.S. at 322, 106 S.Ct. at 2552.
The district court's opinion, organized first claim-by-claim and then defendant-by-defendant, establishes the basis upon which the court dealt with each of the claims raised by plaintiffs.13 See Record Excerpts at tab 2 (Memoranda and Order at 9-30) ["Order"]. The appropriate way to challenge these findings would have been for plaintiffs to explicitly respond to them, point-by-point, with specific facts and evidentiary challenges pulled from the record. See supra note 10; see generally supra Part II.A-B.1. That, unfortunately, is not what the plaintiffs have chosen/been able to do. Rather, plaintiffs have stepped back from the district court's opinion and responded with general challenges to the court's very specific findings.14 To fully resolve each of these contentions, we consider them individually.
Plaintiffs have briefed a lengthy list of misrepresentations allegedly made by defendants. The gist of plaintiffs' overall argument is that: (i) they were induced to purchase interests in Onshore with promises of low risk and high profits, and that, (ii) even though plaintiffs were given a rescission opportunity when the financing deadline established in the first memorandum expired, that opportunity was not an honest one and defendants are, therefore, liable for their misrepresentations.
As noted by the district court, despite their differences, both memoranda warned plaintiffs of the Onshore risk.15 Moreover, the differences between these two memoranda are harmonized by Onshore's rescission offer--plaintiffs' opportunity to, in essence, enforce the terms of the first memorandum by walking away from the Onshore deal. Although plaintiffs assault the legitimacy of that opportunity,16 they have produced no tangible evidence to suggest anything less than "fair play" on the part of defendants. Such was the observation of the district court17 and, having reviewed the summary judgment record thoroughly, we agree with and affirm the district court's findings.
defendants' alleged misrepresentations by May 1, 1985?
1933 Securities Act began to run?
Plaintiffs argue that there is a genuine issue of material fact as to when the limitations period on their causes of action under sections 12(1) and 12(2) of the Securities Act of 1933 began.21 In short, plaintiffs argue that defendants assured them that Onshore would be a sound and lucrative venture. Defendants contend, however, that the district court correctly concluded that investors were not diligent in bringing their claims under the Securities Act of 1933. More precisely, defendants stress that plaintiffs did not furnish any evidence or cite any authorities to rebut the evidence and authorities offered by defendants regarding the one-year statute of limitations on plaintiffs' claims under § 12(2) of the Securities Act of 1933. Codified at 15 U.S.C. § 77l(2) (1989).
Each plaintiff signed a subscription agreement when she purchased Onshore interests--a subscription agreement that should have put these investors on notice of the speculative nature of their investment. It certainly triggered a reason to exercise reasonable diligence.22 If plaintiffs subsequently were told something contrary to this agreement, that should have dyed the flag raised by the subscription agreement an even brighter shade of red.
No action shall be maintained to enforce any liability created under section 77k or 77l (2) of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence, or, if the action is to enforce a liability created under section 77l (1) of this title, unless brought within one year after the violation upon which it is based. In no event shall any such action be brought to enforce a liability created under ... section 77l (1) ... more than three years after the sale.
Codified at 15 U.S.C. § 77m (1989) (emphasis added). Plaintiffs filed this lawsuit on December 3, 1987. All of the plaintiffs, with the exceptions of Steubling, LaCelle, Mikles and MJM, purchased their Onshore units before November 30, 1984 by executing the subscription agreements. Therefore, under the discovery rule of section 77m of Title 15,23 the latest date that any of these plaintiffs could have filed suit in order to toll the one-year limitation period would have been December 1, 1985. Even if we were to disregard the discovery rule of section 77m, the latest date that these plaintiffs could have filed suit to toll the three-year limitation period would have been December 1, 1987. In short, plaintiffs' claims are barred by both of the limitation periods in section 77m of Title 15. Steubling, LaCelle, Mikles, and MJM purchased their Onshore units and executed the subscription agreement by May 1, 1985. Accordingly, their claims are barred by the one-year limitation prescribed by section 77m of Title 15.
Were plaintiffs' 10(b) and 10(b)(5) claims properly time-barred?
Plaintiffs have tucked a related "catch-all" contention within the pages of their brief--namely that they have suffered financial injuries as a result of various predicate acts, including violations of section 10(b) and federal mail and wire fraud statutes. Plaintiffs elaborated upon this contention in their Supplemental Brief. See Supplemental Brief on the Impact of the Supreme Court's Recent Decision in Lampf, Pleva, Lipkind, Prupis & Petigrow vs. Gilbertson (filed Sept. 3, 1991) ["Supplemental Brief"].
In Lampf, the United States Supreme Court, in a majority opinion authored by Justice Blackmun, held that: (i) the statute of limitations applicable to actions under section 10(b) consists of the one-and-three-year provisions of the Securities Exchange Act and Securities Act for causes of action which they specifically provided for; and that (ii) equitable tolling is not applicable. See Lampf v. Gilbertson, --- U.S. ----, 111 S.Ct. 2773, 2781-82, 115 L.Ed.2d 321 (1991). Plaintiffs, with Lampf in hand, argue that it is beyond dispute that all plaintiffs filed this lawsuit within the three-year cut-off of Section 9(e). They then go on to argue the dissenting position of Justices Kennedy and O'Connor--"that a 3-year absolute time bar is inconsistent with the practical realities of § 10(b) litigation[,]" given the difficulties in discovering whether a violation of the securities laws occurred at all. Lampf, 111 S.Ct. at 2790.
Were plaintiffs' RICO claims properly barred?
Our review of the record supports these findings, and plaintiffs have added nothing new in their presentation to this court.28 We therefore find that plaintiffs' RICO claims were properly barred.
This is all the plaintiffs have to offer--no specific allegations, not even so much as general allegations balanced upon the tip of a factual kernel, to connect the activity of any defendant(s) to what plaintiffs allege. See generally supra Part II; see also Fed.R.Civ.P. 56(e) (Nonmovant "may not rest upon the mere allegations or denials of the adverse party's pleading, but ... must set forth specific facts showing that there is a genuine issue for trial."); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986) (movant has burden of showing that no genuine issue of fact exists, but non-moving party is not thereby relieved of producing evidence that would support jury verdict). Which of the defendants made such offerings, and to whom? Which investors indicated they did not have the money to purchase, and what exactly did they say? Plaintiffs' allegations are better suited for a complaint. After some eighteen months of discovery, tens of thousands of pages of deposition and transcripts, thousands of pages of documents and extensive interrogatories and admissions, there should be more. The burden to discover a genuine issue of fact is not on this court.30 Accordingly, we find that summary judgment is appropriate.
We have said before that because of the relative simplicity of the issues involved, suits to enforce promissory notes "are among the most suitable classes of cases for summary judgment." Lloyd v. Lawrence, 472 F.2d 313, 316 (5th Cir.1973). This statement holds true today. Appellee's motion and supporting materials established the elements necessary for recovery: the RTC holds a valid claim against Colony Creek and Goldberg, the note has matured according to its terms, and Colony Creek and Goldberg have defaulted.
941 F.2d 1323, 1325 (5th Cir.1991) (citations omitted).32 Accordingly, we affirm the district court's grant of summary judgment on defendants' counterclaims.
We have sifted through plaintiffs' briefs and found numerous points tucked within their pages. Our efforts have separated out a few more contentions worthy of discussion.
Throughout their brief and during oral argument, plaintiffs have argued that the defendants' Pretrial Order, filed after their Motions for Summary Judgment, identified twenty-eight contested issues of material fact, and that plaintiffs' own Proposed Pretrial Order lists at least twenty-four witnesses prepared to testify about defendants' fraudulent inducements and assorted Onshore wrongdoings. Plaintiffs argue that these issues are sufficient to defeat defendants' motions for summary judgment.
We disagree. After eighteen months of discovery, the only "evidence" plaintiffs produced in response to defendants' motions for summary judgment was an unsigned letter and a one-page excerpt from Ms. Joel Middlebrook's deposition, the bookkeeper for the Houston Petroleum Company.35 Ms. Middlebrook did not purchase any Onshore shares, nor is she a plaintiff in this lawsuit. While the deposition excerpt and letter do illustrate Ms. Middlebrook's dissatisfaction with HPC, neither of these provides reliable evidence that HPC or O'Donnell have, or may have, violated the Securities Act or RICO. Such insignificantly probative facts are insufficient to satisfy plaintiffs' summary judgment burden. See Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2511.
A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise a party may amend the party's pleading only by leave of court or by the written consent of the adverse party; and leave shall be freely given when justice so requires.
[o]nce a responsive pleading has been filed, a pleading may be amended only by leave of court or by consent of the adverse party. Fed.R.Civ.P. 15(a). While "leave shall be freely given when justice so requires," the decision rests in the sound discretion of the trial court.... Our review extends only to whether the trial court abused that discretion.
This case's convoluted procedural history suggests that it is litigation with Bleak House potential. One chapter within that history is the opportunity plaintiffs were given to amend their complaint on December 18, 1987. Another is the opportunity plaintiffs were given, following the court's granting of an extension of time, to join new parties until August 9, 1988. Rather than taking advantage of these opportunities, plaintiffs waited until they had expired and then moved for another extension of time to join new parties--a motion the district court denied. Now plaintiffs appeal the district court's denial of their September 9, 1988 Motion for Leave to File a Second Amended Complaint or in the Alternative Motion for Joinder of Persons Needed for Just Adjudication. We will not oblige and, accordingly, we affirm the district court's denial of that motion.
Plaintiffs also allege that the district court dismissed IDL as a party solely as a Rule 11 sanction to punish them for filing an allegedly frivolous claim. More specifically, plaintiffs assert that the district court's dismissal of IDL is (i) a mistake of law and (ii) in contempt of this court's mandate to reinstate IDL as a defendant.
* Plaintiffs contend that this court, in deciding plaintiffs' previous appeal, implicitly recognized that the case now before us is not frivolous.37 They are wrong. The appeal plaintiffs previously brought before us was from the district court's order dismissing IDL for lack of personal jurisdiction. The panel opinion did not consider, examine, or rule on the merits of the overall case. Accordingly, we do not find that our previous opinion is persuasive authority in opposition to defendants' motions for summary judgment.
Plaintiffs also assert that the district court's dismissal of IDL as a party is in contempt of this court's mandate to reinstate IDL as a defendant. We disagree. The only debatable issue is whether IDL should be reinstated as a defendant to plaintiff Topalian's claims--an issue incidental to our consideration of the merits of plaintiffs' overall action.38 Finding that plaintiffs have not even proximately approached meeting their summary judgment burden,39 we find that the district court properly granted summary judgment against them.
Another issue raised by plaintiffs is whether, should this court decide to reverse the district court's summary judgment against plaintiffs, there is sufficient evidence in the record to justify reassignment of this case to another district court judge. We find no grounds for reversal and, therefore, we do not reach this issue.
The final matter before us is whether we should grant defendant Rockwood's request for sanctions pursuant to Rule 38 of the Federal Rules of Appellate Procedure. Under Rule 38, this court may impose sanctions upon parties who pursue frivolous appeals. See Coghlan v. Starkey, 852 F.2d 806, 810-11 (5th Cir.1988). A frivolous appeal is one "that relies on legal points that are not arguable on the merits." Lyons v. Sheetz, 834 F.2d 493, 496 (5th Cir.1987) (citation omitted); see also McAfee v. Fifth Circuit Judges, 884 F.2d 221, 223 (5th Cir.1989), cert. denied, 493 U.S. 1083, 110 S.Ct. 1141, 107 L.Ed.2d 1046 (1990). We find that, although plaintiffs have not met the evidentiary burden required to survive defendants' motions for summary judgment, we cannot summarily dismiss the issues they have brought before us as "frivolous." Accordingly, we deny defendant Rockwood's request for sanctions.
C.  " § 55t"         District court found that no such statute exists.
factual dispute."  Order at 15.
no knowledge of Johnson's role in the partnership."
trial they will prove their claims."  Order at 22.
in any way with the sale of the units of Onshore."
based on the promissory notes."  Order at 24"25.
Ultimately, they seek much more--rescission of the transactions which resulted in the purchase of the units, treble damages under RICO, imposition of a constructive trust, appointment of a receiver, costs and attorney's fees, and "other relief as may be just and proper."
(a) failing to note twenty-eight (28) contested issues of material fact listed in Defendants' Joint Pretrial Order Filed after Defendants had made their summary judgment motions; (b) totally failing to discuss how the moving party Defendants had satisfied their burden of production or the legal standard for making that determination; (c) assuming that the moving party Defendants had satisfied their burden of production of the legal standard for making that determination; (d) and overlooking deposition testimony and other documents presented by the non-moving Plaintiffs, including Plaintiffs' Pretrial Order, which identified twenty-four (24) witnesses prepared to testify as to each issue based on their personal dealings with Defendants.
Appellants' Brief at vi, Topalian v. Ehrman, Nos. 90-2104, 90-2105, 90-2106 (5th Cir. filed Oct. 24, 1990) ["Appellants' Brief"].
Order at 11-12; id. at 14 ("The offering memorandum clearly states that the investors might never see a penny of their investment and might never make a profit. The promissory notes clearly state that the signer is responsible for the debt. It is well settled law that an adult is responsible for reading the documents he signs.").
[t]he unlawful rescission offer was made after December 31, 1984, it was not made to all subscribers, did not require an affirmative reconfirmation and was not accompanied by a disclosure including all information necessary to update previously provided disclosures. Furthermore, Defendants did not give any disclosure materials to Plaintiffs until well after the Partnership had secured financing.
Appellants' Brief at 26-27. And appellants add, "Defendants were able to resell the units to Plaintiffs while Plaintiffs were still under the influence of Defendants' continuing fraudulent misrepresentations and high-pressure selling tactics." Id. at 26.
Nothing appears to have been kept secret from the Plaintiffs. In fact, in their depositions, they admit their ignorance of any wrongdoing. They all state that they did not read any of the documents they received in connection with Onshore, including the ones they signed, or that they scanned them, did not understand them but sought no explanation.
The Court's finding is not only preposterous but in conflict with: (a) portions of its own Opinion which repeatedly states that Plaintiffs lacked knowledge of any wrongdoing by certain Defendants at the time of the alleged wrongs; (b) Defendants' Pretrial Order which states that the date when each Plaintiff should have known of the alleged wrongs as to each Defendant was a contested issue of fact; (c) Plaintiffs' Complaint and other documents which consistently state that Defendants fraudulently concealed their wrongdoing and prevented Plaintiffs from suspecting any wrongdoing until May, 1987; (d) the uncontested fact that selling activities were still continuing and all Plaintiffs were just receiving the "Other" Memorandum on May 1, 1985, the date used by the Court; and (e) the fact that Defendants continuously authorized secondary sales of restricted securities for an indefinite period.
No action shall be maintained to enforce any liability created under section 77k or 77l(2) of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence, or, if the action is to enforce a liability created under section 77l(1) of this title, unless brought within one year after the violation upon which it is based. In no event shall any such action be brought to enforce a liability created under section 77k or 77l(1) of this title more than three years after the security was bona fide offered to the public, or under section 77l(2) of this title more than three years after the sale.
15 U.S.C. § 77m (1989).
(a) EFFECT ON PENDING CAUSES OF ACTION--The limitation period for any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991.
(2) which would have been timely filed under the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991.
shall be reinstated on motion by the plaintiff not later than 60 days after the date of enactment of this section.
In the present case, the claims brought under the 1934 Securities and Exchange Act were dismissed by the district court in 1990--that is, prior to Lampf, --- U.S. at ----, 111 S.Ct. at 2773, and prior to this amendment's June 19, 1991 trigger date. Accordingly, we find that the amendment does not resurrect the plaintiffs' claims.
The summary judgment evidence shows that the efforts expended by the Defendants were all legitimate business practice. Ehrman and the other Defendants entered into agreements for the partnership to participate in drilling programs. Financing was arranged. Units were offered and sold to the Plaintiffs and other investors. Wells were drilled, some produced oil or gas and the Partnership was paid its share of money due. The Offering Memorandum and other documents state how the money would be paid out of funds received. This is normal business practice. There is no evidence of illegality.
However, throughout the text of their Complaint as well as in the RICO statement, Plaintiffs clearly detailed that they were fraudulently induced to make sizeable investments of money in an "Enterprise" which was conceived, developed and operated for the unjust enrichment of the Defendants. The "Enterprise" referred to is clearly the limited partnership--ONSHORE. It was plain to see that they were not referring to the Defendants as the "Enterprise."
Plaintiffs do contend, however, that all the Defendants conducted or participated, directly or indirectly, in the business affairs of the limited partnership--the Enterprise--through a pattern of racketeering activity in violation of 18 U.S.C. § 1962. All of the Defendants were an integral part of the scheme to deprive Plaintiffs of their investment in ONSHORE. They each participated in the scheme to unjustly enrich themselves to the loss and detriment of the Plaintiffs.
Appellants' Brief at 48 (emphasis added).
The Defendant General Partners and their seller-agents consciously ignored the Partnership's "Suitability Standards" by offering units to prospective investors who did not qualify, some of whom indicated that they did not have the money to purchase a unit. However, the guarantees of no loss, the expectancy of a return of three or four times the initial investment, the "no cash down basis" and the assurances that limited partners could sell back their shares for double what they paid were irresistible lures to Plaintiffs and others.
Q And what was the occasion that brought about your learning of Houston Petroleum Company?
A Well, one time I went to their office, before they started the program, and visited with them. They had several people there that showed the office and what they were going to drill, and so on. It was a kind of a dog-and-pony show for potential investors that John had set up and did.

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