The opinion of the court was delivered by: KAPLAN
LEWIS A. KAPLAN, District Judge.
In L.L. Capital Partners, L.P. v. Rockefeller Center Properties, Inc., 921 F. Supp. 1174 (S.D.N.Y. 1996) (" L.L. Capital I "), familiarity with which is assumed, this Court granted defendant's motion to dismiss the complaint and judgment was entered accordingly. The Court subsequently granted plaintiff's motion for relief from the judgment and leave to file an amended complaint. Defendant now moves to dismiss the amended complaint.
The original complaint alleged that the Registration Statement improperly failed to disclose that (a) Rockefeller Center Properties, Inc. ("RCP") was aware that Mitsubishi and the Rockefeller family were likely to cease funding the loan and that the Borrowers therefore were likely to default on the loan in the foreseeable future, (b) RCP was urging Mitsubishi to acquire RCP or restructure the loan, and (c) Mitsubishi during the fourth quarter of 1993 had rebuffed RCP's attempts to enter into discussions regarding their future relationship. The Court held that the first of these alleged nondisclosures was not material as a matter of law because it related only to RCP's subjective view of the likelihood that the loan would be funded. 921 F. Supp. at 1178-80. It held that the second was not material because the alleged nondisclosure related solely to RCP's wish to explore restructuring or an acquisition which, at least as long as it was unrequited, would not have altered the total mix of publicly available information in the circumstances of this case. Id. at 1180-81. The Court assumed, although it was far from clear in the complaint, that the third of plaintiff's claims alleged that Mitsubishi knew RCP's purpose in seeking a meeting, but refused to meet with RCP. It concluded that the materiality of this alleged fact could not be determined on a Rule 12(b)(6) motion but nevertheless granted the motion to dismiss on the ground that plaintiff had failed to plead fraud in connection with this alleged nondisclosure with the particularity required by FED. R. CIV. P.9(b).
The Sufficiency of the Amended Complaint
RCP's Alleged Belief that Funding Would Cease
The complaint alleged that RCP, at the time of the offering, had a "growing belief" that the funding would stop, had "grown concerned about Mitsubishi's unwillingness to fund the Deficits . . .", and knew "that Mitsubishi and the Rockefeller family were likely to cease funding the Deficits or the Loan . . ." (Cpt PP 16, 18, 25) In short, it sought to premise liability, insofar as this point is concerned, exclusively on the failure of the defendant to disclose its own subjective evaluation of the likely future actions of third parties. The amended complaint seeks to deal with this deficiency.
Paragraph 16 now alleges, in addition to the assertions contained in the original version, that RCP and others urged Mitsubishi to restructure the Loan or acquire RCP, actions which allegedly "reflected [RCP's] conclusion that (1) the Rockefeller family could no longer be relied upon for continued funding of the Deficits or the Loan; and (2) Mitsubishi, likewise, was unlikely to continue the funding the Deficits or the Loan in its present form. Thus, RCP's own actions confirm its knowledge that Mitsubishi and the Rockefeller family were intending, for the first time since 1985, to cease to fund the Deficits or the Loan." Paragraph 20 contains new language asserting that Mitsubishi's rebuff of RCP's alleged attempts to discuss the deficits "signaled Mitsubishi's decision to cease funding . . ." And paragraph 34 of the amended complaint, in language that did not appear in the complaint, alleges that RCP "had direct knowledge of specific events demonstrating the strong and growing likelihood that the Rockefellers and Mitsubishi would cease to fund the Deficits . . ."
Statements added in the amended complaint, read generously, allege that Mitsubishi and the Rockefeller family had decided, by the time the Registration Statement had been issued, to cease funding. There is no allegation, however, that this information was communicated to RCP. Rather, the amended complaint, like that previously dismissed, alleges only that RCP management had seen straws in the wind that led it to conclude that Mitsubishi and the Rockefeller family either had decided not to continue funding the deficits or were likely to come to that decision. For the reasons expressed in the Court's original decision, even if RCP had reached such an internal conclusion, its failure to disclose that information, in the context of this case, does not give rise to a claim under the federal securities laws.
Rejection of Possible Restructuring or Acquisition
The Court dismissed plaintiff's claim that defendant violated the securities laws by failing to disclose that it had decided to explore the possibility of a restructuring of the loan or an acquisition by Mitsubishi of RCP on the ground that RCP's perhaps uncommunicated and in any case unrequited desire for such a deal was immaterial as a matter of law.
The amended complaint now squarely alleges that RCP actually urged Mitsubishi to engage in such a transaction and that Mitsubishi rejected the overture. (Am Cpt PP 16-17, 19) The threshold question therefore is whether the failure to disclose these facts, assuming it was ...