Opinion ID: 492502
Heading Depth: 2
Heading Rank: 1

Heading: Statute of Limitations for the Federal Securities Claim

Text: 36 Talley and Kellar assert that the district court committed several errors in determining the statute of limitations applicable to the Osternecks' federal securities claims. If Talley and Kellar had been successful in bringing themselves within the protection of the statute of limitations, thus barring the federal securities claims, the award of prejudgment interest would have to be vacated, since prejudgment interest is not available on the state law claims in this particular case. See infra, note 24. 37 The federal securities laws do not provide a specific statute of limitations for private rights of action asserted under Secs. 10(b), 20 and Rule 10b-5. Thus, federal courts are required to borrow the most appropriate statute of limitations from the forum state. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 210 n. 29, 96 S.Ct. 1375, 1389 n. 29, 47 L.Ed.2d 668 (1976); Friedlander v. Troutman, Sanders, Lockerman & Ashmore, 788 F.2d 1500, 1502 (11th Cir.1986). 38 In this case, the district court originally concluded that the two-year statute of limitations provision of Georgia's Securities Act was applicable. See Osterneck v. E.T. Barwick Industries, Inc., 79 F.R.D. 47, 50-51 (N.D.Ga.1978) (applying Ga.Code Ann. Sec. 97-114 (1973)). 19 Subsequently, however, the district court accepted the Osternecks' argument that Georgia's four-year statute of limitations for common law fraud was the proper statute of limitations to borrow. In reaching this conclusion, the district court relied upon the district court opinion of Judge Shoob in the Friedlander case. See Friedlander v. Troutman, Sanders, Lockerman & Ashmore, 595 F.Supp. 1442, 1443-52 (N.D.Ga.1984) (applying O.C.G.A. Sec. 9-3-31 (1982)), 20 rev'd, 788 F.2d 1500 (11th Cir.1986). Thus, when this case was sent to the jury, they were instructed that the suit was timely brought if it was initiated within four years of when the Osternecks knew or reasonably should have known through the exercise of due diligence that they had a cause of action against the defendants. 39 This instruction also had the effect of tolling the statute of limitations. Even under a four-year statute of limitations, the Osternecks might have been required to begin litigation by September 1973--4 years after the 1969 merger. The court's instruction permitted the jury to conclude that the suit was timely, however, if they found that the Osternecks did not know and through due diligence could not have known of the existence of their cause of action before September 4, 1971--the date four years before they filed suit. 40 Appellants Talley and Kellar now seek a new trial, arguing first that a two-year statute of limitations should properly have been charged to the jury. Because Talley and Kellar failed to object to the jury charge as required by Fed.R.Civ.P. 51, our review is restricted to one of plain error. Since we conclude that the district court's charge was not plainly erroneous, we reject the appellants' assertion that a new trial is necessary. 41 The law in this circuit is clear. Pursuant to Fed.R.Civ.P. 51, one who wishes to challenge on appeal a district court's instruction to the jury on the ground that it was an erroneous statement of the law must have objected to the instruction at trial. See Kenney v. Lewis Revels Rare Coins, Inc., 741 F.2d 378, 382 (11th Cir.1984). One may not rely on the objections made by co-parties to the action, but, rather must expressly adopt a co-parties objection as his own. Id. In the absence of an objection, a defendant is deemed to have waived his right to assign as error the district court's jury charge. We will depart from this rule only in narrow circumstances when an error is so fundamental as to result in a miscarriage of justice, see Barnett v. Housing Authority, 707 F.2d 1571, 1580 (11th Cir.1983) (quoting Patton v. Archer, 590 F.2d 1319, 1322 (5th Cir.1979)), or when the district court's instruction amounts to plain error, see Barnett, 707 F.2d at 1581 n. 18; Johnson v. Bryant, 671 F.2d 1276, 1281 (11th Cir.1982). But see Williams v. Butler, 746 F.2d 431, 443-44 (8th Cir.1984). 42 In the instant case, both Talley and Kellar failed to object to the district court's statute of limitations charge. Indeed, they were not even represented at trial having, by their own stipulation, been excused from attending the lengthy proceedings. Thus, though their codefendants E & W and E.T. Barwick did object to the jury instruction, Talley and Kellar did not adopt these objections. Consequently, they have failed to preserve the issue for review on appeal unless the instruction was plainly erroneous. 43 Nor will it do for Talley and Kellar to argue that the district court's decision permitting them to be absent from trial somehow excuses them from their obligations pursuant to Rule 51. This would create the perverse result of according greater lenity to those who do not appear at trial than to those who do appear but merely neglect to adopt the objections of their codefendants. 44 Moreover, both Talley and Kellar were fully aware that the district court was reconsidering its earlier determination to charge a two-year statute of limitations. They were both served with voluminous memoranda on the subject submitted by the Osternecks and E & W, yet neither offered any reply of their own. 21 Thus, Talley and Kellar had ample opportunity to place their objections to the jury charge on the record as required by Rule 51. By failing to do so, they limited their own rights on appeal and may only receive a new trial if the jury instruction amounted to plain error. 22 45 In the circumstances of this case, we cannot conclude that the trial court was plainly erroneous in charging the jury as it did. As the Supreme Court has recognized, a court's interpretation of the contours of [an area of legal uncertainty] hardly could give rise to plain judicial error [when] those contours are ... in a state of evolving definition and uncertainty. City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 256, 101 S.Ct. 2748, 2754, 69 L.Ed.2d 616 (1981); see also Barnett, 707 F.2d at 1581 n. 18; Black v. Stephens, 662 F.2d 181, 184 n. 1 (3d Cir.1981), cert. denied, 455 U.S. 1008, 102 S.Ct. 1646, 71 L.Ed.2d 876 (1982). 46 The district court's jury instructions in this case were rendered at a time when the law concerning which statute of limitations to borrow from the forum state was uncertain. Applying a case-by-case analysis, the district court followed an earlier decision of the Friedlander district court, 595 F.Supp. at 1443-52, which chose a four-year statute of limitations in a similar securities case fraud case. 47 It was not until several months later that the Supreme Court, in Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), revised the method by which courts should choose the appropriate statute of limitations to borrow and determined that lower courts must analyze the question on a statute-by-statute basis. Moreover, it was not until May 1986, over one year later, that this court first had occasion to apply the Wilson standard to a case involving the appropriate statute of limitations to be borrowed for federal securities claims. In Friedlander, 788 F.2d at 1507-09, we concluded that for all federal securities cases the appropriate statute of limitations to borrow is that of the Georgia Securities Act. Thus, though Friedlander now makes clear that the district court should properly have charged a two-year statute of limitations (since that is now and was in 1969 the statute of limitations in the Georgia Securities Act), we cannot say that the court's erroneous four-year charge was plain judicial error. 23 Given the uncertain and evolving contours of the law regarding the appropriate statute of limitations to borrow, we think the district court was reasonable in its erroneous conclusion that a four-year statute of limitations should apply. 24 For these reasons, 25 Talley and Kellar's assertion that the erroneous jury charge entitles them to a new trial is without merit. 26 48 Kellar also argues that the district court erred in instructing the jury that the statute of limitations was tolled until such time as the Osternecks knew or through due diligence should have known of the existence of their cause of action. This instruction, Kellar contends, improperly allowed the fraudulent concealment of third parties, such as Talley and Barwick Industries, to be attributed to him. Instead, Kellar argues, the four-year statute of limitations should not be tolled against him because he did not do any fraudulent acts which would have concealed the Osternecks' cause of action. Were we to accept Kellar's argument the statute of limitations would have expired four years after the merger and the Osternecks' suit against Kellar would be barred. 49 Kellar, however, is mistaken. 27 Though the limitations period for a securities claim is borrowed from the forum state the date when a claim accrues so as to trigger the state law limitation period is a matter of federal law. Sargent v. Genesco, Inc., 492 F.2d 750, 758 (5th Cir.1974). Under federal law the statute of limitations for a fraud action may be equitably tolled. See Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743 (1946) (tolling limitations period in action under Federal Farm Loan Act). This equitable tolling doctrine is plainly available to federal securities law plaintiffs. Schaefer v. First National Bank, 509 F.2d 1287, 1295-96 (7th Cir.1975), cert. denied, 425 U.S. 943, 96 S.Ct. 1682, 48 L.Ed.2d 186 (1976). Equity mandates that the statute of limitations be tolled until the fraud is discovered, Sargent, 492 F.2d at 758, provided that the plaintiff injured by the fraud remains in ignorance of it without any fault or want of diligence or care on his part, Parrent v. Midwest Rug Mills, Inc., 455 F.2d 123, 128 (7th Cir.1972) (quoting Bailey v. Glover, 88 U.S. (21 Wall.) 342, 348, 22 L.Ed. 636 (1875)). Since the jury instructions plainly charged the jury with this exact standard, Kellar's contention that the district court erred is without merit. 28