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

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NOT FOR PUBLICATION FEB 23 2015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.
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