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CAMOTEX, S.R.L. v. HUNT

July 9, 1990

CAMOTEX, S.R.L., PLAINTIFF,
v.
LAMAR HUNT, INTERNATIONAL METALS INVESTMENT CO., LTD., PRUDENTIAL-BACHE SECURITIES, INC., BACHE HALSEY STUART SHIELDS, INC., BACHE GROUP, INC., MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED, GILION FINANCIAL, INC., NAJI ROBERT NAHAS, SHEIK MOHAMMED ABOUD AL-AMOUDI, SHEIK ALI BIN MUSSALEM, AND BANQUE POPULAIRE SUISSE, DEFENDANTS.



The opinion of the court was delivered by: Lasker, District Judge.

  Merill Lynch, Pierce, Fenner & Smith ("Merrill Lynch"), and Prudential-Bache Securities, Inc. and Prudential Securities Group (collectively "Bache") move to dismiss the RICO and antitrust claims asserted by Camotex, S.R.L. ("Camotex") on the grounds that they are time-barred. Camotex alleges that the defendants conspired to monopolize and fix prices in the silver and silver futures markets in violation of the Sherman and Clayton Antitrust Acts, 15 U.S.C. § 1, 2, and 15 (1982), the Commodity Exchange Act ("CEA"), 7 U.S.C. § 13(b) (1982), the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961-68 (1982), and New York common law. Merrill Lynch and Bache assert that these claims are barred by the applicable four-year statute of limitations governing the antitrust and RICO claims, Section 4B of the Clayton Act, 15 U.S.C. § 15b (1982).*fn1 Camotex responds that, in light of the defendants' fraudulent concealment of their role in the silver market manipulation and tolling during the pendency of two actions, Zeltser v. Hunt, 80 Civ. 4009 (KTD), and Grosser v. Commodity Exchange, Inc., 84 Civ. 412 (MEL), brought on behalf of classes to which Camotex purportedly belonged, its complaint was timely filed.

Banque Populaire Suisse ("BPS") moves separately to dismiss the complaint as to it on the ground that, because it was never served in the prior Grosser action, there was no tolling as to it and the claims against it are time-barred. In answer, Camotex argues that the statute of limitations is tolled upon filing of the complaint, not from the time of service of process, and that, in any event, its effort to effect service, along with BPS' actual notice of the claims against it, constitute sufficient cause to excuse any defects in service. For the reasons stated below, decision on Merrill Lynch's and Bache's motion to dismiss is granted in part and deferred in part. BPS' motion to dismiss is granted.

I.

Camotex purchased a series of silver futures contracts on the Commodity Exchange, Inc. ("Comex"), between January 14, 1980, and March 17, 1980. Six of the contracts were closed out on the same day they were purchased, January 14, 1980. All but ten of the remaining contracts were liquidated on or before March 17, 1980. Camotex continued to hold the ten remaining contracts on March 27, 1980, when the average price of silver plummeted from $15.80 per ounce to $10.80 per ounce.*fn2 These contracts were finally liquidated on May 1, 1980. It is alleged that the defendants engaged in a conspiracy to monopolize the silver market. This scheme purportedly culminated in the crash of March 27, 1980, when the Hunt defendants defaulted on several of their obligations and the dramatic fall in silver prices followed. Merrill Lynch and Bache assert that Camotex's cause of action with respect to the silver conspiracy arose at the latest on March 27, 1980, and that the four-year statute of limitations began to run on that date. On January 18, 1984, the Grosser complaint was filed. It is conceded that the limitation period was tolled from January 18, 1984, until February 7, 1989, when the Grosser class was decertified. On this theory, only 69 days remained in which to file a further complaint and Camotex's claim was untimely because it was not filed until May 19, 1989, 101 days after the Grosser class decertification and 32 days after the limitations period expired.

A. Date of Injury

Camotex argues that its cause of action did not accrue until May 1, 1980, because its damages were not ascertainable until it liquidated the then remaining contracts. Merrill Lynch and Bache answer that Camotex's damages were provable at the latest as of the market collapse on March 27, 1980, the date of Camotex's alleged injury. Merrill Lynch and Bache argue further that, even if the precise amount of damage suffered was not known, Camotex could have estimated the amount or deferred its determination until trial.

In general, a cause of action accrues, for statute of limitations purposes, at the time of "injury". Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 806, 28 L.Ed.2d 77 (1971). Thus, once a plaintiff "feels the adverse impact of an antitrust conspiracy on a particular date, a cause of action immediately accrues to him." Id. at 339, 91 S.Ct. at 806. A limited exception to the general rule of accrual upon injury permits tolling where the damage is speculative or unprovable as of the date of injury. Id. However, this exception does not apply to mere uncertainty as to the precise amount of damages. Charlotte Telecasters, Inc. v. Jefferson-Pilot Corp., 546 F.2d 570, 573 (4th Cir. 1976). Thus, as the Zenith court noted, even though a cause of action accrues upon injury, a plaintiff may recover for "all provable damages that will flow in the future from the acts of the conspirators on that date." 401 U.S. at 339, 91 S.Ct. at 806 (emphasis added). In sum, uncertainty as to the extent of damages does not alone prevent accrual of a cause of action and the subsequent running of the statute of limitations.

Even assuming the precise amount of damages as to the last ten contracts was not known until liquidation, Camotex had an "immediate" cause of action with respect to any damages incurred up to and including the March 27, 1980 market collapse, as well as for "all provable damages that will flow in the future." Id. Furthermore, Camotex could have estimated the amount of damages by calculating the drop in silver prices from the purchase date to the date of the market collapse, or sought damages in an unspecified amount to be determined at trial. See, e.g., Charlotte Telecasters, 546 F.2d at 573.

Camotex next argues that this court found that the cause of action for all "silver cases" accrued in May 1980 in Korwek v. Hunt, 646 F. Supp. 953, 957 (S.D.N.Y. 1986), aff'd, 827 F.2d 874 (2d Cir. 1987). The argument is a misstatement of the holding in that case. Korwek, which involved claims almost identical to those asserted in the present case, merely noted that the "latest acts attributed by the complaint to any of the defendants occurred in May 1980." Id. Korwek did not fix a specific date on which all antitrust claims stemming from the silver market monopoly were deemed to have accrued.

B. Tolling During the Pendency of Class Actions

Camotex claims that the four-year period of limitations was tolled during the pendency of two separate class actions, Grosser v. Commodity Exchange, Inc., 84 Civ. 412 (MEL), and Zeltser v. Hunt, 80 Civ. 4009 (KTD). Merrill Lynch and Bache Concede that the Grosser class action tolled the statute of limitations for Camotex's cause of action from January 18, 1984, the date of the Grosser filing, to the decertification of the class on February 7, 1989. Merrill Lynch and Bache contend, however, that the statute of limitations was not tolled during Zeltser because they were not given any notice regarding the number and generic identity of potential plaintiffs, as required by the tolling doctrine of American Pipe & Construction Co. v. Utah, 414 U.S. 538, 555, 94 S.Ct. 756, 767, 38 L.Ed.2d 713 (1974).

In American Pipe, 414 U.S. at 552-53 94 S.Ct. at 765-66, the Supreme Court held that, upon the commencement of a class suit, the statute of limitations is tolled for all members of the putative class. One of the purposes of the rule is to protect a defendant by allowing tolling only where the complaint notifies the defendant of the number and generic identity of potential plaintiffs who might participate in the judgment Id. at 555, 94 S.Ct. at 767. See also Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 353, 103 S.Ct. 2392, 2397, 76 L.Ed.2d 628 (1983) (notice requirement is necessary to make defendant aware of "the need to preserve evidence and witnesses respecting the claims of all the members of the class").

Camotex argues that the statute of limitations was tolled not only in Grosser but for a 221-day period during the pendency of Zeltser, July 14, 1980, to February 20, 1981. This claim is unpersuasive. Camotex has failed to cite any authority for tolling by a "pyramiding" of class actions, that is, allowing successive class actions of which plaintiff was a putative member to toll the statute of limitations. Camotex's argument that such tolling is barred only with respect to subsequent class actions that are identical to the original class action does not establish that the rule is applicable to class actions that differ in significant respects, such as those with narrower claims. Moreover, the Supreme Court in Crown, Cork, 462 U.S. at 354, 103 S.Ct. at 2397 (Powell, J., concurring), suggested that the "pyramiding" of class actions, if allowable at all, should be applied with extreme caution. Nothing in the factual context of this case supports the radical proposition of "pyramiding" of class actions for tolling ...


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