The opinion of the court was delivered by: KIMBA M. WOOD
Defendants move to dismiss, or in the alternative for summary judgment, in this action arising out of a May 1985 overpayment by plaintiffs' clearing agent to defendant. Because the statute of limitations has run on any meritorious action arising out of that event, I grant defendants' motion for summary judgment and dismiss the complaint.
On May 22, 1985, D.G. Meyer & Co., Inc. ("DG Meyer") sold to Paine Webber Real Estate Securities ("PWRES") a Federal Home Loan Mortgage Corporation bond for an agreed upon price of $ 7,680,155.53. Following their regular practice, the two companies produced printed confirmations of the trade and mailed them to each other. See Defendants' Notice of Motion, Exhibits H and J. Both printed confirmations correctly reported the net amount of money owed on the trade. As was the practice in the industry, however, instead of PWRES paying the purchase price directly to DG Meyer, both parties mailed their confirmations of the trade to their clearing agents, U.S. Trust Co. ("UST") and Security Pacific Clearing Corp. ("SecPac"), respectively. The seller's clearing agent, SecPac, then produced a delivery ticket, which it sent to UST on the settlement date. Although neither party could produce the original SecPac delivery ticket, a duplicate ticket, which may or not be the one received by UST,
erroneously reported the amount to be paid to DG Meyer as $ 8,738,621.01 (the current balance of the bond), instead of the correct $ 7,680,155.53 figure (the net money owed). See Defendant's Notice of Motion, Exhibit I. Regardless of this error, according to the uncontested affidavit of defendants' expert in this field, UST should not have paid any money in reliance on SecPac's ticket; "in generating a 'receive ticket' U.S. Trust could act only upon the copy of the trade confirmation supplied by its own customer, PaineWebber." Affidavit of Peter B. Patterson P 10. As the affiant explained, "this arms-length relationship between clearing banks is one of the key reasons that dealers, at that time (1985) engaged clearing banks to settle their trades." Id. P 14.
In any event, UST did, in fact, pay SecPac $ 8,738,621.01, although it is unclear whether it did so based on SecPac's delivery ticket or by making the same mistake on its own receive ticket. It did not at that time, however, debit PWRES's account for that amount, but instead only for the agreed upon $ 7,680,155.53 purchase price. Without informing plaintiff, defendant, or SecPac, UST then made an "internal book entry" adjustment, recording the additional debit to PWRES's account. By then charging PWRES only for the correct amount, and not informing them of the overpayment, UST made it difficult for PWRES to discover the overpayment.
When DG Meyer received its daily activity statement from SecPac, it did discover the million dollar overpayment. DG Meyer then called PWRES to find out whether it had a shortage, but PWRES insisted that its books were in balance. PWRES's reply left DG Meyer with no immediate way of discovering who had overpaid, because either of the clearing agents could have wrongly debited any one of their hundreds of accounts. On advice of its auditors, and in accordance with New Jersey's lost property law, DG Meyer segregated the $ 1,058,465 in a separate "due to customers" account. It listed the account in its 1985 financial statement, Notice of Motion, Exhibit L, which was mailed to PWRES, among others. Defendants also assert that DG Meyer sent an additional notification of the shortage to both $ SecPac and PWRES in February 1986, and attached UPS receipts for that day as Exhibits M and N to its Notice of Motion. Plaintiff's affiant alleges that he searched for that notice in plaintiff's file and could not find it; "we cannot verify, just as defendants cannot, the contents of the item delivered in exchange for the said Acknowledgement, or say in fact if anything was delivered." Affidavit of William P. Urig at 2. Plaintiff nowhere alleges, however, that defendant did not notify it of the overpayment or that the UPS receipt referred to some other item.
DG Meyer maintained the segregated account until its liquidation in August 1987. During the liquidation proceedings, it advised all trading partners to check their records from trades with DG Meyer, and to contact them if they found any discrepancies. DG Meyer received no response. Consequently, upon liquidation, DG Meyer distributed the money to its shareholders. Three and one-half years later, in June 1991, after reviewing plaintiff's account, UST finally charged plaintiff for the 1985 million dollar overpayment. Plaintiff soon entered into a settlement with UST, by which plaintiff was charged with that overpayment.
Plaintiff then commenced this action, on January 3, 1992, alleging causes of action for indemnification, fraud, fraudulent conveyance, constructive trust, conversion, unjust enrichment, breach of fiduciary duty, and money had and received. Defendant moved to dismiss, or in the alternative for summary judgment, arguing that applicable statutes of limitations bar the various claims, that plaintiff alleged no facts on which plaintiff could hold Donald G. Meyer liable in his individual capacity, and that plaintiff had failed to allege fraud or mistake with sufficient particularity. Plaintiff subsequently filed a cross-motion for discovery of the names and addresses of DG Meyer's shareholders and to amend the complaint to name those shareholders and SecPac as defendants.
A. Standards Governing Motions for Summary Judgment
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Citizens Bank of Clearwater v. Hunt, 927 F.2d 707, 710 (2d Cir. 1991). When deciding a motion for summary judgment, a court must "'resolve all ambiguities and inferences . . . in the light most favorable to the party opposing the motion.'" Shockley v. Vermont State Colleges, 793 F.2d 478, 481 (2d Cir. 1986) (citations omitted).
The moving party bears the initial burden of demonstrating that there exists no material issue of fact and that he or she is entitled to judgment as a matter of law. See Brady v. Town of Colchester, 863 F.2d 205, 210 (2d Cir. 1988) (citations omitted). The movant may carry her burden by demonstrating the absence of evidence to support the non-movant's claims. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Motions for summary judgment must be denied if reasonable minds could differ as to the importance of the evidence and if "'there is any evidence in the record from any source from which a reasonable inference in the [nonmoving party's] favor may be drawn. . . .'" Brady v. Town of Colchester, 863 F.2d at 210. However, when the moving party has met its burden under Rule 56(c) of the Federal Rules of Civil Procedure, a nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts," Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 ...