Facciola Ex Rel. Mortgages Ltd. Investor Class v. Greenberg Traurig LLP ( 2015 )


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  •                                                                            FILED
    NOT FOR PUBLICATION                             FEB 23 2015
    MOLLY C. DWYER, CLERK
    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    ROBERT FACCIOLA, Lead Plaintiff on               No. 12-17761
    behalf of Mortgages Ltd. Investor Class;
    ROBERT MAURICE FACCIOLA
    TRUST DATED 12/2/94, Lead Plaintiff              D.C. No. 2:10-cv-01025-FJM
    on behalf of Mortgages Ltd. Investor
    Class; HONEYLOU C. REZNIK, Lead
    Plaintiff on behalf of Mortgages Ltd.            MEMORANDUM*
    Investor Class; MORRIS REZNIK AND
    HONEYLOU C. REZNIK TRUST, Lead
    Plaintiffs on behalf of Mortgages Ltd.
    Investor Class; JEWEL BOX
    INCORPORATED, Lead Plaintiff on
    behalf of Mortgages Ltd. Investor Class;
    JEWEL BOX LOAN COMPANY
    INCORPORATED, Lead Plaintiff on
    behalf of Mortgages Ltd. Investor Class;
    H-M INVESTMENTS LLC, Lead Plaintiff
    on behalf of Mortgages Ltd. Investor
    Class; FRED C. HAGEL AND
    JACQUELINE M. HAGEL REVOCABLE
    LIVING TRUST DATES 3/15/95, Lead
    Plaintiffs on behalf of Radical Bunny
    Investor Class,
    Plaintiffs - Appellants,
    v.
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by 9th Cir. R. 36-3.
    GREENBERG TRAURIG LLP,
    Defendant,
    And
    CBIZ, INC., a Delaware corporation;
    CBIZ MHM, LLC, a Delaware limited
    liability company; MAYER HOFFMAN
    MCCANN P.C., a Missouri professional
    corporation,
    Defendants - Appellees.
    Appeal from the United States District Court
    for the District of Arizona
    Frederick J. Martone, Senior District Judge, Presiding
    Argued and Submitted February 5, 2015
    San Francisco, California
    Before: TALLMAN and RAWLINSON, Circuit Judges, and DEARIE, Senior
    District Judge.**
    Plaintiffs–Appellants appeal the dismissal of their putative Arizona securities
    and negligent misrepresentation class action against Mayer Hoffman McCann P.C.
    (Mayer Hoffman) and its affiliated corporations, CBIZ, Inc. and CBIZ MHM, LLC
    (collectively CBIZ). We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
    **
    The Honorable Raymond J. Dearie, Senior United States District
    Judge for the Eastern District of New York, sitting by designation.
    2
    With respect to the Arizona Securities Act claim, no reasonable inference may
    be drawn from the amended allegations that Mayer Hoffman acted outside the
    ordinary course of its profession when issuing the contested audit reports or that it
    “participated in or induced” Appellants’ investments with Mortgages Ltd. or Radical
    Bunny, LLC. Ariz. Rev. Stat. § 44-2003(A); Standard Chartered PLC v. Price
    Waterhouse, 
    190 Ariz. 6
    , 21-22 (Ct. App. 1996).
    Because Appellants made the tactical decision to pursue only their Arizona
    Securities Act claims in their Amended Complaint, the appeal of the dismissal of their
    other claims against Mayer Hoffman—for violation of the Arizona Investment
    Management Act (AIMA) and common law negligent misrepresentation—may rely
    only upon the allegations contained in the Original Complaint. The district court
    properly dismissed Appellants’ claim brought under the AIMA because no reasonable
    inference may be drawn that any entity—including Mayer Hoffman, Mortgages Ltd.,
    or Radical Bunny, LLC—engaged in investment advisory services. Ariz. Rev. Stat.
    §§ 44-3241, 44-3101(5). Appellants’ negligent misrepresentation claim fails because
    the allegations in the Original Complaint are insufficient to demonstrate, in
    accordance with Arizona’s adoption of the Restatement (Second) of Torts § 552
    (1979), Standard 
    Chartered, 190 Ariz. at 29
    , that Appellants were part of the “limited
    group of persons” that Mayer Hoffman’s audit reports were intended to benefit. Bily
    3
    v. Arthur Young & Co., 
    3 Cal. 4th 370
    , 392, 410-11 (1992); see also Glenn K. Jackson
    Inc. v. Roe, 
    273 F.3d 1192
    , 1200 (9th Cir. 2001).
    Absent a cognizable claim for primary liability against Mayer Hoffman,
    Appellants cannot successfully allege a claim for statutory or common law secondary
    liability against CBIZ. Ariz. Rev. Stat. § 44-1999(B); Grand v. Nacchio, 
    225 Ariz. 171
    , 176 (2010) (en banc).
    AFFIRMED.
    4
    

Document Info

Docket Number: 12-17761

Judges: Tallman, Rawlinson, Dearie

Filed Date: 2/23/2015

Precedential Status: Non-Precedential

Modified Date: 11/6/2024