Opinion ID: 223597
Heading Depth: 3
Heading Rank: 1

Heading: Ohio's Blue Sky Law Provides the Correct Statute of Limitations

Text: We have previously held, Ohio law is clear that [where] fraud claims arise out of or are predicated on the sale of securities, they are governed by the specific statute of limitations set forth in Ohio Rev. Code § 1707.43(B); not the four-year general statute of limitations for fraud claims found in Ohio Rev.Code § 2305.09. Wyser-Pratte Mgmt. Co. v. Telxon Corp., 413 F.3d 553, 561 (6th Cir.2005). While the Plaintiffs do not caption any claim as securities fraud, in determining the applicable statute of limitations, we should look to the actual nature or subject matter of the case, rather than the form in which the action is pleaded. Lawyers Coop. Pub. Co. v. Muething, 65 Ohio St.3d 273, 603 N.E.2d 969, 973 (1992) (internal quotation marks omitted). In their actual nature, the Plaintiffs' fraud claims arise out of the sale of securities. The Plaintiffs believed that, in return for their money, they were receiving valid investments representing their interest in Rawhide, Serengeti, or Lomas. That these securities turned out to be fake, or were worthless, is the source of the fraud they allege the defendant banks to have facilitated. See Ryan v. Ambrosio, No. 91036, 2008 WL 5258308, at -3 (Ohio Ct.App. Dec. 18, 2008) (applying § 1707.43 to plaintiffs' common law fraud claims where defendants sold plaintiffs securities in a company defendants falsely represented was an ongoing business, taking in revenue, with huge financial profit). The Plaintiffs contend that even if the fraud involved the purported sale of securities the district court should not have applied the blue sky statute of limitations because Carpenter did not sell any actual securities. In support, the Plaintiffs cite Ferritto v. Alejandro, 139 Ohio App.3d 363, 743 N.E.2d 978, 979-83 (2000), where an investment advisor misappropriated money entrusted to him for investments, the common law fraud statute of limitations applied. This precedent, however, does not influence our determination. The Ferritto court reached its decision because it concluded the [blue sky] statute of limitations... applies only if a violation of [Ohio's blue sky law] has occurred, id. at 982, relying on our decision in Nickels v. Koehler Mgmt. Corp., 541 F.2d 611, 616 (6th Cir.1976), holding the same. However, we overruled Nickels in Wyser-Pratte Mgmt. Co., 413 F.3d at 561, determining that Ohio law applies the blue sky limitations period to all claims of fraud arising out of the sale of a security, not just those alleging violation of Ohio's blue sky law. Wyser-Pratte Management Co., then, undermines the precedential value of Ferritto and supplies the rule of decision as the current law of the Sixth Circuit.