Opinion ID: 764897
Heading Depth: 2
Heading Rank: 3

Heading: The Importance of Interpool

Text: 84 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 Pittsburgh v. West Penn Power Co., 147 F.3d 256, 259 (3d Cir. 1998) (public records); Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (same); Iacaponi v. New Amsterdam Cas. Co., 379 F.2d 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. DiPaolo, 945 F. Supp. 848, 855 n.2 (W.D. Pa. 1996) (same); Kithcart v. Metropolitan Life Ins. Co., 62 F. Supp. 93, 94 (W.D. Mo. 1944) (same), aff'd, 150 F.2d 997 (8th Cir. 1945). 85 Specifically, on a motion to dismiss, we may take judicial notice of another court's opinion--not for the truth 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 may judicially notice other proceedings depends on what the court is asked to notice and on the circumstances of the instant case). 7 86 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 contradicts 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 Hutton, 929 F.2d 875, 879 & n.3 (1st Cir. 1991) (rejecting a fraud claim in light of the underlying documents, pursuant to a 12(b)(6) motion). 87 Our inquiry proceeds in two steps. First, we establish that a reasonable creditor who filed a claim in a bankruptcy proceeding would examine published opinions in that proceeding. Therefore, such a creditor should have known the contents of a published opinion, for purposes of starting the limitations period. Second, we conclude that Judge Politan's Interpool opinion contained sufficient information to put a reasonable creditor on notice that Wah Kwong's claim to be a mere creditor (and not some kind of insider or partner in the affairs of KKL) was suspicious. As a result, the plaintiffs, who were creditors in that proceeding, should have known the relevant facts about Wah Kwong's alleged misrepresentations more than six years before the filing of the complaint, and the statute of limitations bars this suit. 88
89 The plaintiffs argue that they were not true parties to the Interpool litigation, but merely filed their claims in bankruptcy court as creditors after receiving notice from the U.S. bankruptcy trustee. Interpool actually involved a number of consolidated creditors' claims against KKL and a distinct § 304 proceeding challenging the propriety of U.S. bankruptcy jurisdiction while the Australian liquidation was already pending. Though Southern Cross was a named party in Interpool, it alleges that it was not involved in litigating the § 304 proceeding and participated actively only in other aspects of the case involving creditors' claims against various freights. 90 The District Court rejected the plaintiffs' distinction between the § 304 proceeding--in which the allegations of Wah Kwong's misconduct were made--and the run-of-the-mill creditors' claims. It noted that Southern Cross 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 District Court, Wah Kwong's arguments were put forth in the § 304 aspect of the litigation and in Judge Politan's opinion, and the plaintiffs neglected their duty of due diligence if they were not aware of Wah Kwong's position. While the District Court should not have taken arguments before Judge Politan into account on a 12(b)(6) motion, for the reasons that follow we agree that the plaintiffs should have taken notice of Judge Politan's opinion explaining the appointment of a U.S. bankruptcy trustee despite the ongoing Australian litigation. 91 First, and at the very least, a reasonable creditor should have inquired why the court found it necessary to have a U.S. proceeding in the face of an ongoing foreign liquidation. Although Southern Cross argues that it did not participate in the § 304 aspect of the Interpool case, the result that the Australian liquidator sought was to void the U.S. attachment of Southern Cross's freights. Southern Cross was served with all relevant papers, and the contention that it was somehow insulated from the§ 304 proceedings is simply untenable. In these circumstances, Southern Cross should have examined Judge Politan's opinion resolving the Australian liquidator's § 304 claim. 92 TIP's obligations as a reasonable creditor are much more difficult to determine. Unfortunately, the record of the Interpool proceedings has not been preserved in its entirety, though there is evidence that, in 1990, the Australian liquidator was unable to serve TIP with documents in the case because it had moved, and its forwarding order had expired. At all events, TIP had notice of the pending 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 People v. Hill, 952 P.2d 673, 699-700 (Cal. 1998) (judicially noticing prior opinions to show that a prosecutor involved in the prior cases had notice of a particular problem). We conclude that TIP also should have read Judge Politan's opinion, given the circumstances of the case.
93 Because a reasonable creditor in the plaintiffs' position would have read the opinion, the statute of limitations would start to run if the opinion was sufficient as a matter of law to give a creditor notice of the facts underlying 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 Feiner & 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 law). It is not relevant whether Judge Politan's interpretation of the facts was correct; what is critical is that his interpretation 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 evident on the face of the opinion. 94 Judge Politan described the Wah Kwong-KKL link as follows: The 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. Interpool, 102 B.R. at 375-76. This adequately disclosed the alleged partnership agreement behind the plaintiffs' claims. 95 Moreover, the opinion repeatedly indicated that Wah Kwong might have acted illegitimately. Interpool discussed the troubling features of the arrangement between the Australian liquidator and Wah Kwong, which the plaintiffs now attack as fraudulent. Indeed, Judge Politan was so concerned about the fairness of the Australian settlement that he appointed a U.S. bankruptcy trustee to administer KKL's U.S. assets. Furthermore, the plaintiffs' complaint in this case itself demonstrates that the plaintiffs were (or should have been) aware of Wah Kwong's position that it was a creditor, as both the plaintiffs and the defendant were competing creditors in the U.S. bankruptcy proceeding. 96 In sum, the plaintiffs should have been aware of evidence of the alleged true facts after the 1988 Interpool opinion; they were also aware of the allegedly false representation 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 thus ran on the plaintiffs' fraud claims before the December 6, 1996, complaint was filed. The judgment of the District Court will be affirmed. 9