The opinion of the court was delivered by: Lewis A. Kaplan, District Judge
Plaintiff Enrico Bondi is the Extraordinary Commissioner of Parmalat Finanziaria S.p.A. ("Finanziaria"), Parmalat S.p.A. ("SpA"), and twenty-one affiliates (collectively, "Parmalat") in Italian reorganization proceedings. He sues Bank of America Corporation and affiliates (collectively, "BoA" or the "Bank"), alleging that they structured transactions that permitted corrupt Parmalat insiders to loot the companies with impunity. The Bank has filed counterclaims against Finanziaria, SpA, and fourteen subsidiaries alleging, in essence, that Parmalat repeatedly misrepresented its financial status to BoA and others and that BoA consequently sustained significant damages.*fn1 Bondi here moves to dismiss several of the Bank's counterclaims.
A. The Counterclaim Defendants
SpA was wholly owned by and the main operating company of Finanziaria.*fn2
Parmalat Netherlands B.V. ("Netherlands") was a wholly owned subsidiary of SpA.*fn3 The counterclaims name thirteen additional entities headquartered in the Netherlands, Luxembourg, and Italy that were wholly or majority owned by SpA (the "Named Subsidiaries").*fn4
The counterclaims refer to Finanziaria, SpA, Netherlands, and the Named Subsidiaries collectively as "Parmalat."*fn5 Most of the allegations do not refer specifically to any of the Named Subsidiaries. The counterclaims allege instead that SpA, Netherlands, and the Named Subsidiaries "functioned as one entity" and that:
"Parmalat S.p.A. and its insiders used the subsidiaries . . . as conduits for their fraud by forcing the subsidiaries into financial transactions -- often guaranteed by Parmalat S.p.A. -- that were never properly reported on Parmalat's consolidated balance sheets. Indeed, Parmalat used the subsidiaries to make intercompany transfers designed to hide losses and further the fraud, often in a manner that disregarded appropriate corporate formalities."*fn6 The counterclaims allege further that "[m]any of Parmalat's corrupt insiders served as officers and directors of the subsidiaries."*fn7
The counterclaims allege that from 1990 to 2003 Parmalat sold debt securities based on financial statements and representations of senior management that significantly overstated Parmalat's assets and financial health.*fn8 The Bank, having "no access to Parmalat's underlying accounting books and records[,] . . . reasonably relied to its detriment on" this false information.*fn9
It alleges that from 1994, when its financial relationship with Parmalat began, until 2003, when the Parmalat fraud was exposed, it extended credit to Parmalat and acted as Parmalat's private placement agent.*fn10 As a result of these transactions, the Bank "has taken a charge-off" of more than $400 million.*fn11 It contends that it "did not know of Parmalat's fraud until December 2003."*fn12
The counterclaims list thirteen loans totaling hundreds of millions of dollars that BoA made either to SpA or to Parmalat affiliates not named as counterclaim defendants here. With respect to each loan, the Bank alleges specific misrepresentations by SpA and the borrower about their financial health. These misrepresentations include statements by SpA and the borrower that their financial statements gave a "true and fair view" of their financial condition, that they had no undisclosed material liabilities, and that they were not in breach of or default under any agreement that might have an adverse material effect on their financial conditions.*fn13
2. Private Placements In Which BoA Acted as Agent The counterclaims allege eight instances in which the Bank acted as Parmalat's
private placement agent, resulting in the sale of over $1 billion in bonds.*fn14 The placements were for SpA, Netherlands, and other Parmalat affiliates not named as defendants here. The counterclaims allege that SpA and the relevant affiliate falsely represented their financial health to investors and the Bank in documents and at meetings. The alleged misrepresentations included statements that the proceeds of the investments would go toward legitimate business purposes, that Parmalat's financial statements fairly presented the company's financial position, and that there were "no [undisclosed] fact[s] . . . that could reasonably be expected to have a Material Adverse Effect."*fn15
3. Additional Misstatements and Omissions
In addition to these alleged misrepresentations made in connection with specific transactions, the counterclaims allege misrepresentations by Parmalat and its subsidiaries about, inter alia, Parmalat's debt level, available cash, assets, and liabilities "[t]hroughout the entire time Parmalat had a business relationship with Bank of America."*fn16
The Bank alleges that, from 1990 to 2002, Parmalat's annual financial statements, which contained information about Finanziaria and SpA and its subsidiaries, contained material misrepresentations and failed to comply with Italian law or generally accepted accounting principles.*fn17 The counterclaims allege also nine dates on which Parmalat issued press releases containing false statements about its financial condition.*fn18 Finally, the counterclaims provide a "sample" of allegedly false statements made by Parmalat and its subsidiaries directly to the Bank, including assurances of Parmalat's financial health by Parmalat management and consolidated financial statements sent to BoA employees.*fn19
4. The Benefit to Parmalat
The counterclaims allege that Parmalat itself benefitted from the fraud.*fn20 In essence, they allege that most of the financing Parmalat obtained based on these false representations was used, for example, for "acquisitions of companies and capital expenditures for Parmalat" and "on interest payments, fees, and dividends."*fn21 The Bank alleges that Parmalat therefore should be held liable for the fraud.*fn22
The counterclaims allege six claims for relief: (1) violations of Section 10(b) of the Securities Exchange Act of 1934*fn23 (the "Exchange Act") and Rule 10b-5,*fn24 (2) fraud, (3) negligent misrepresentation, (4) civil conspiracy, (5) violations of the federal Racketeer Influenced and Corrupt Organizations Act*fn25 ("RICO"), and (6) violations of the North Carolina Unfair and Deceptive Trade Practices Act.*fn26
A. Standard On a Rule 12(b)(6) motion, a court ordinarily accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the alleging party's favor.*fn27 Dismissal is inappropriate "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."*fn28 Nevertheless, Federal Rule of Civil Procedure 9(b) requires that "averments of fraud" be stated with particularity.
The entire thrust of the counterclaims is that Parmalat orchestrated a massive fraud.*fn29
As fraud is the sole basis of relief,*fn30 the Bank must comply with the requirements of Rule 9(b) and plead averments of fraud with particularity. This means that the allegations must "(1) specify the [allegedly fraudulent] statements . . . , (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent."*fn31 In addition, the counterclaims must "allege facts that give rise to a strong inference of fraudulent intent."*fn32 Finally, where, as here, "multiple defendants are asked to respond to allegations of fraud, the complaint should inform each defendant of the nature of his [or her] alleged participation in the fraud."*fn33
As explained in a previous opinion,*fn34 the Judicial Panel on Multidistrict Litigation transferred this action here from the Western District of North Carolina pursuant to Section 1407 of Title 28 of the U.S. Code. In such circumstances, a transferee court applies its own interpretation of federal law, not that of the transferor court.*fn35 To the extent that the action involves issues of state law, this Court applies the choice of law rules that would govern in the transferor forum.*fn36
C. Sufficiency of the Counterclaims
Bondi challenges all of the Bank's counterclaims against the ...