Court Opinion

ID: 53087
Source: CourtListenerOpinion
Date Created: 2010-04-26 01:22:40+00
Date Added: 2024-06-11T14:58:23.737421
License: Public Domain

[DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT                          FILED
                              ________________________               U.S. COURT OF APPEALS
                                                                       ELEVENTH CIRCUIT
                                                                           June 15, 2007
                                     No. 06-15502                        THOMAS K. KAHN
                               ________________________                      CLERK

                         D. C. Docket No. 01-02617-CV-CAP-1

CAROLYN A. GERIN,
MARY KATHLEEN HUGHES,

                                                     Intervenor-Plaintiffs-Appellants,

                                            versus

AEGON USA, INC.,
WMA SECURITIES, INC., et al.,

                                                     Defendants-Appellees.

                               ________________________

                      Appeal from the United States District Court
                         for the Northern District of Georgia
                           _________________________

                                       (June 15, 2007)

Before DUBINA and BLACK, Circuit Judges, and RESTANI,* Judge.

PER CURIAM:

       *
          Honorable Jane A. Restani, Chief Judge, United States Court of International Trade,
sitting by designation.
       Appellants M. Kathleen Hughes and Carolyn Gerin (Appellants) appeal the

district court’s grant of Appellees’ motion to dismiss them from this purported

class action on statute-of-limitations grounds.1 They argue the district court erred

by not tolling the relevant statute of limitations from the time Jeffrey L. Johnson

(Johnson), the original class representative, filed his complaint. We conclude that

even if the district court had tolled the statute of limitations as Appellants argue it

should have, their claims would still be time-barred. Therefore, we affirm.2

       Appellants and Johnson filed a class action under the Securities Act of 1933

alleging that Appellees misled them by issuing prospectuses that failed to reveal

that tax-deferred, variable annuities were not generally appropriate investments for

placement into qualified retirement plans, which are already subject to tax-deferred

growth. The district court dismissed Appellants from the action, finding their

claims were time-barred by the applicable statute of limitations.

       We review a dismissal based on the district court’s interpretation and

application of a statute of limitations de novo. Tello v. Dean Witter Reynolds, Inc.,

       1
          Appellants also argue the district court erred in not considering their 2006 motion to
intervene and certify the class. Because we conclude Appellants are time-barred from bringing
this claim, it is not necessary to decide whether the district court erred in not considering
Appellants’ motion to intervene.
       2
          Although this was not the basis of the district court’s grant of Appellee’s motion to
dismiss, “[t]his court may affirm the district court where the judgment entered is correct on any
legal ground regardless of the grounds addressed, adopted or rejected by the district court.”
Bonanni Ship Supply, Inc. v. United States, 959 F.2d 1558, 1561 (11th Cir. 1992).

                                                 2
410 F.3d 1275, 1278 (11th Cir. 2005). On de novo review, “all factual allegations

contained on the face of the complaint” are taken as true. Byrd v. MacPapers, Inc.,

961 F.2d 157, 159 (11th Cir. 1992).

      The applicable statute of limitations provides that “[n]o action shall be

maintained to enforce any liability created under [15 U.S.C. § 77k or § 77l(a)(2)]

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 . . . .” 15 U.S.C. § 77m. This statute of limitations applies an

objective “inquiry notice” analysis. La Grasta v. First Union Secs., Inc., 358 F.3d

840, 846 (11th Cir. 2004). “Inquiry notice is the term used for knowledge of facts

that would lead a reasonable person to begin investigating the possibility that his

legal rights had been infringed.” Theoharous v. Fong, 256 F.3d 1219, 1228 (11th

Cir. 2001) (internal quotation marks and citation omitted). In making such a

determination, Appellants are presumed to have read the prospectus. Franze v.

Equitable Assurance, 296 F.3d 1250, 1254-55 (11th Cir. 2002) (“Franze and

Busher could have discovered the alleged misrepresentations simply by reading

these documents. Therefore, they were put on inquiry notice despite the fact that

they both testified that they did not read any of the documents that Equitable gave

them.”).

                                          3
      The Complaint cites and incorporates the prospectus from which the

Appellants purchased the securities forming the crux of this case. Therefore, we

can consider the entire prospectus in determining whether to affirm the district

court’s grant of the motion to dismiss. See Financial Sec. Assur., Inc. v. Stephens,

Inc., 450 F.3d 1257, 1264 (11th Cir. 2006) (“[I]n cases in which a plaintiff refers to

a document in its complaint, the document is central to its claim, its contents are

not in dispute, and the defendant attaches the document to its motion to dismiss[,]”

the court can consider the document even though it may be beyond the face of the

complaint.)

      The prospectus warned Appellants in three separate sections that they should

consider whether it was appropriate to buy the tax-deferred, variable annuities for

placement into already tax-deferred accounts. In addition, it advised buyers to

consult independent professionals about the tax and legal consequences of

purchasing a variable annuity in their particular circumstances. We conclude this

was sufficient to place Appellants on inquiry notice and trigger the statute of

limitations.

      Appellants made their final purchases of these annuities more than one year

before Johnson filed the original complaint. Their claims are therefore time-

barred. The district court’s alleged error in not tolling Appellants’ claims from the

                                           4
moment Johnson filed his complaint is inconsequential. We AFFIRM the district

court’s dismissal on statute-of-limitations grounds.

      AFFIRMED.

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