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RAMOS v. PATRICIAN EQUITIES CORP.

June 17, 1991

DANTE A. RAMOS, ET AL., PLAINTIFFS, PATRICIAN EQUITIES CORP., AL., DEFENDANTS.


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

OPINION

This is an action relating to 48 limited partnerships. Plaintiff Ramos invested in one of these — Woburn Mall Associates. Plaintiff Rabin invested in another — Southroads Mall Limited Partnership. The complaint purports to name a plaintiff class and a defendant class. The plaintiff class consists of persons who purchased limited partnership interests in any of the 48 partnerships. The defendant class consists of the 48 partnerships.

The complaint asserts that the plaintiff class was the victim of false and misleading information furnished in connection with the investments in the limited partnerships. There are claims for damages under the federal securities laws, RICO, common law fraud, negligence, and breach of fiduciary duty. There is also a derivative claim brought on behalf of the class of partnerships seeking declaratory relief.

Aside from the defendant class of partnerships, named for purposes of the derivative claim, there are various defendants upon whom liability is sought to be imposed. The so-called "Patrician Defendants" and "Trust Defendants" consist of the promoters of the partnerships and allied parties. In addition, two accounting firms are named — Arthur Andersen & Co. and Hecht and Company. The complaint also names three companies which acted as real estate appraisers — Howard Jackson Associates, Inc., Nationwide Appraisal Company, Inc. and McGraw-Hill, Inc., acting through a division named McGraw-Hill Information Systems Company. Finally, two law firms are sued — Summit Rovins & Feldesman and Carro, Spanbock, Caster & Cuiffo.

The action has been settled in regard to the Patrician Defendants, the Trust Defendants and Arthur Andersen. Howard Jackson Associates is in bankruptcy. The remaining defendants are Hecht, Nationwide Appraisal, McGraw-Hill, Summit Rovins and Carro Spanbock.

Amendments to Complaint

The initial complaint was filed August 9, 1989. An amended complaint was filed in November 1989.

A conference was held on January 10, 1990, after a settlement agreement had been made with the Patrician Defendants. At this conference the remaining defendants objected to the amended complaint and indicated their desire to move to dismiss. It was readily apparent that the complaint was deficient, and it was agreed that there would be a further amendment. The second amended complaint was filed on January 31, 1990. Motions to dismiss the second amended complaint were filed in April 1990. Counsel have appeared before the court twice to argue these motions.

The moving defendants have asserted a number of arguments, including lack of standing; failure to plead the elements required to be alleged for the various causes of action, necessitating dismissal under Rule 12(b)(6); failure to plead fraud with particularity as required by Rule 9(b); an statute of limitations.

The complaint in this case is unusually difficult to deal with. Many important allegations are lacking in specifics. It is difficult to discern whether this should be considered a violation of the pleading rules, or whether there is a reasonable explanation in the fact that this is a suit dealing with 48 partnerships, in which some degree of generalization is appropriate.

It now appears that the issue about the sufficiency of pleadings is largely rendered academic by the problem of standing. For reasons hereafter set forth, the court has determined that all claims against three of the moving defendants — McGraw-Hill, Nationwide and Carro Spanbock — must be dismissed because plaintiffs lack standing to sue them. As to Hecht and Summit Rovins, plaintiff Rabin lacks standing to assert any claims against these defendants, and plaintiff Ramos has standing to sue these two defendants in respect to only one of the 48 partnerships — Woburn Mall Associates.

The result of these rulings is the drastic alteration of the remaining case. There is no longer a suit relating to 48 partnerships. The present form of the complaint is wholly inappropriate to a suit regarding one partnership. Beyond this, it may be, in view of the settlements achieved thus far with certain defendants, that there will be no desire to pursue claims against Hecht and Summit Rovins with respect to this one partnership.

The court will confer with the appropriate attorneys and discuss ...


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