The opinion of the court was delivered by: Conner, District Judge.
Plaintiff investors charge defendants with fraud in
connection with the sale of securities. This action is
currently before the Court on the motion of defendants First
Interstate Bank, Ltd. and First Interstate Services, Inc.
("First Interstate") for summary judgment pursuant to Rule
56(b) Fed.R.Civ.P. as to the claims brought against them by
plaintiff Augustine R. Marusi, the retired Chief Executive
Officer of plaintiff Borden, Inc., a consumer products and
chemical company. Plaintiff has cross-moved for leave to file
a second amended complaint under Rule 15.
The amended complaint in this action alleges, inter alia,
various fraudulent and corrupt practices in connection with the
sale of securities in violation of Section 10(b) of the
Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b),
and Rule 10b-5 promulgated thereunder. The amended
complaint identifies as the primary wrongdoer in this action,
Spoor Behrins Campbell & Young, Inc. ("SBCY"), a firm of
investment advisors. The amended complaint identifies the
moving defendants as successive parent corporations and sole
stockholders of SBCY from May, 1983, to December 31, 1987, and
asserts their liability under Section 10(b) and Rule 10b-5; the
Racketeer Influenced and Corrupt Organizations Act ("RICO"),
18 U.S.C. § 1961 et seq.; and Section 20(a) of the Exchange Act,
15 U.S.C. § 78t(a). The amended complaint further alleges
claims against the moving defendants for the imposition of a
constructive trust and for aiding and abetting SBCY's alleged
commission of common law fraud and breach of fiduciary duty.
The genesis of this action can be traced back to 1978, when
members of SBCY approached executives of plaintiff Borden
offering to establish a program pursuant to which it would
provide key Borden executives, including Marusi and the other
individuals named above, with investment advice to be paid for
by Borden on an annual per capita fee basis. Am. Cmplt. ¶ 26.
According to the amended complaint, SBCY represented to Borden
and Borden officials, that it was independent and was acting
only in the best interests of the Borden executives who were
the beneficiaries of its service. Am. Cmplt. ¶ 27. The gravamen
of this action is the alleged failure of SBCY to disclose to
Marusi and the other plaintiffs payments allegedly made to SBCY
by organizers and promoters of investment ventures as
consideration for SBCY's recommendations and sales of security
interests to Marusi and the other named plaintiffs. Am. Cmplt.
From 1979 through 1984, Marusi made a series of twelve
investments through SBCY, ten of which he challenges in this
action. Plaintiff asserts that no pre-investment materials he
received disclosed any commission or payments to SBCY for
selling to Marusi.*fn1 Op.Mem. at 18. Plaintiff further
asserts that SBCY affirmatively denied receiving payments in
offeree representative questionnaires issued in four of the ten
subject transactions. Op.Mem. at 26. Moreover, plaintiff avers
that subsequent to the challenged investments, in numerous
filings with the SEC and Federal Reserve Board and in
conversations with Borden officials, defendants actively
concealed the commission payments received. Am. Cmplt. ¶¶
Plaintiff made the last investment he challenges here on
August 13, 1984, and he filed the complaint commencing this
lawsuit more than five years later on December 28, 1989.
1. Applicable Legal Requirements
A party seeking summary judgment must demonstrate that "there
is no genuine issue as to any material fact." Fed.R.Civ.P.
56(c); Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.
1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d
762 (1987); see Celotex Corp. v. Catrett, 477 U.S. 317, 106
S.Ct. 2548, 91 L.Ed.2d 265 (1986). "When the moving party has
carried its burden under Rule 56(c), its opponent must do more
than simply show that there is some metaphysical doubt as to
the material facts." Matsushita Elec. Industrial Co. v. Zenith
Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89
L.Ed.2d 538 (1986). It must establish that there is a "genuine
issue for trial." Id. at 587, 106 S.Ct. at 1356. "In
considering the motion, the court's responsibility is not to
resolve disputed issues of fact but to assess whether there are
any factual issues to be tried, while resolving ambiguities and
drawing reasonable inferences against the moving party."
Knight, 804 F.2d at 11. The inquiry under a motion for summary
judgment is thus the same as that under a motion for a directed
verdict: "whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is
so one-sided that one party must prevail as a matter of law."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106
S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).
2. Plaintiffs' Section 10(b) Claim
Defendants move for summary judgment on plaintiff's § 10(b)
claim on the grounds that this claim is time-barred. The
Supreme Court has recently decided that the limitations period
applicable to implied private claims under § 10(b) of the
Exchange Act and Rule 10b-5 is the one-and-three-year structure
applicable to express causes of action under the Exchange Act.
Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, ___
U.S. ___, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991). Thus, the
Court held that "litigations instituted pursuant to § 10(b) and
Rule 10b-5 therefore must be commenced within one year after
the discovery of the facts constituting the violation and
within three years after such violation." See id., 111 S.Ct. at
2782. Significantly, the Supreme Court applied its holding
retroactively in Lampf, thereby making the
plaintiff-respondents' lawsuit untimely. See id. at 2782.
In James B. Beam Distilling Co. v. Georgia, ___ U.S. ___, 111
S.Ct. 2439, 115 L.Ed.2d 481 (1991), decided the same day as
Lampf, the Court addressed the issue of retroactivity with
respect to newly announced rules of law, declaring that it is
error to refuse to apply a rule of federal law retroactively
after the case announcing the rule has already done so and that
"[o]nce retroactive application is chosen for any assertedly
new rule, it is chosen for all others who might seek its
prospective application." See id., 111 S.Ct. at 2447-2448. In
light of Beam, the Second Circuit has
recently confirmed that Lampf will be applied retroactively in
this Circuit. See Welch v. Cadre Capital, 946 F.2d 185 (2d Cir.
In the instant case plaintiff does not contest
Lampf's retroactive effect. Instead, plaintiff insists that the
doctrine of equitable estoppel survived Lampf and bars First
Interstate from invoking Lampf's three-year statute of repose.
Plaintiff's argument derives in large part from the Court's
failure in Lampf to comment explicitly on the availability of
equitable estoppel to avoid the three-year period of repose
established by the Court. The Court noted only that the
three-year period is "a period of repose inconsistent ...