DocketNumber: No. 13-P-661
Citation Numbers: 85 Mass. App. Ct. 43
Judges: Grainger
Filed Date: 3/5/2014
Status: Precedential
Modified Date: 6/25/2022
The plaintiff, Lawrence Genovesi, appeals from an order entered by a judge in the Superior Court allowing the defendants’ motions to dismiss his third amended complaint on statute of limitations grounds.
Factual background. We recite those facts alleged in the
On November 24, 2004, Nelson provided Genovesi with the unattached signature pages to two documents; the pages were entitled “Paragon CDO, Limited, subscription agreement, preference shares” (subscription agreement), and “Risk Factors Acknowledgment” (REA) (collectively, the account documents). Genovesi executed the signature pages “in blank,” and alleges that Nelson never provided him with copies of the account documents.
In February, 2009, the Paragon CDO announced that the preference shares no longer would pay any interest and would not return any principal. Genovesi lost his entire investment. In July, 2011, Genovesi filed a complaint in Superior Court alleging fraud, fraudulent inducement, negligent misrepresentation, breach of fiduciary duty, and violations of G. L. c. 93A, § 9, and G. L. c. 110A, § 410(a)-(b) (the Massachusetts Uniform Securities Act, hereinafter MUSA). Shortly after filing his complaint, Genovesi filed an amended complaint and then a second amended complaint.
A Superior Court judge allowed the defendants’ motions to dismiss the second amended complaint on the ground that almost seven years had elapsed between Genovesi’s Paragon CDO purchase and the filing of his complaint, and that he had failed to plead any facts upon which to toll the statutes of limitations. The judge, however, provided Genovesi twenty days to cure the pleading defects, and Genovesi timely filed a third amended complaint. The defendants moved to dismiss the third amended complaint. A second Superior Court judge allowed their motions, this time with prejudice, finding as a matter of law that the account documents put Genovesi on notice of his claims in
Discussion. “We review the allowance of a motion to dismiss de nova,” Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011), accepting as true “the factual allegations in the plaintiff[’s] complaint, as well as any favorable inferences reasonably drawn from them,” Ginther v. Commissioner of Ins., 427 Mass. 319, 322 (1998). Although detailed factual allegations are not required, a complaint must set forth “more than labels and conclusions .... Factual allegations must be enough to raise a right to relief above the speculative level.” Iannacchino, 451 Mass, at 636, quoting from Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Genovesi’s claims are subject to either three- or four-year limitations periods;
“In tort actions and actions for violation of G. L. c. 93A, the cause of action accrues at the time the plaintiff is injured.” See Stark v. Advanced Magnetics, Inc., 50 Mass. App. Ct. 226, 232
The defendants also point to the reference to “risk” at the top of the signature page of the RFA. They argue, correctly, that the acknowledgment at the top of the RFA signature page should have given Genovesi caution in signing in blank without requesting to review the entire document. However, the reasonableness of his actions in the circumstances is a question of fact that is not appropriately resolved on a motion to dismiss. See id. at 59-60 (reasonableness of plaintiff’s reliance may be considered question of law, “but generally only after some record has been established on a motion for summary judgment or after a trial”). See also Patsos v. First Albany Corp., 433 Mass. 323, 329 (2001) (“factual disputes concerning when a plaintiff knew or should have known of his cause[s] of action are to be resolved by the jury”), quoting from Riley v. Presnell, 409 Mass. 239, 247 (1991). Thus, we reject the defendants’ argument that the signature pages provide a legal basis to dismiss Genovesi’s complaint on the rationale that their wording requires a ruling that he had actual knowledge of his claims in 2004.
Alternatively, the defendants argue that Genovesi should be charged with knowledge of the full contents of the account documents as a matter of law, regardless of his averment that he never received copies, because one who signs his name to a
For his part, Genovesi asserts that he did not suffer any harm until the Paragon CDO collapsed in 2009, and that he could not have filed suit any earlier because his causes of action were not complete until he lost his investment. We evaluate this argument solely with respect to his claims alleging negligence and violation of c. 93A. The other causes of action accrued — regardless of the portfolio’s performance — when Genovesi’s funds were invested in the preference shares;
However, we agree with the defendants that the principle of ratification applies to prevent tolling of all of Genovesi’s causes of action once he was, or should have been, aware of the alleged fraud or misrepresentations.
Finally, we turn to Genovesi’s assertion that the statute of limitations was tolled on the additional basis of Nelson’s breach
Conclusion. On this record the allowance of the motions to dismiss the third amended complaint was error. The pleadings allege with sufficient detail that Genovesi was misled by Nelson, assisted by Ricciardi and McCaffery, into believing he had placed his funds in a liquid low-risk investment, and that the truth was inherently unknowable, thus setting forth a legal basis to toll the statute of limitations. The extent to which Genovesi had access to contrary information, rendering his reliance and continued acquiescence unreasonable (thus causing the statutes of limitations to run their course), is neither evident factually nor compelled legally by his signature on the signature pages the defendants provided. With the exception of the breach of fiduciary duty claims against Ricciardi and McCaffery which properly were dismissed, we reverse the judgment allowing the motions to dismiss Genovesi’s third amended complaint, and remand the matter to the Superior Court for further proceedings consistent with this opinion.
So ordered.
We find no support in the sparse record for the judge’s finding to the-contrary. The record demonstrates only that Genovesi’s financial wherewithal resulted from his ownership and participation in a successful technology-based company rather than from investment or financial dealings.
In particular, the investor profile stated that Genovesi had an aggregate net worth of $15 million (approximately five times greater than his actual net worth), a liquid net worth of $10 million (Genovesi’s actual liquid net worth was approximately $2 million), and an annual salary of $1 million (in 2004, his actual annual salary was $200,000). The profile also contained misrepresentations as to Genovesi’s investment experience and sophistication.
Genovesi’s statutory claims are subject to four-year limitations periods, see G. L. c. 260, § 5A, and G. L. c. 110A, § 410(e), while his common-law claims are subject to three-year limitations periods, see G. L. c. 260, § 2A.
We use the phrases “should not have known” and “inherently unknowable” interchangeably in our consideration. See Williams v. Ely, 423 Mass. 467, 473 n.7 (1996) (discovery rule’s “inherently unknowable” standard is used interchangeably with “knew or should have known” standard).
To the extent that the signature pages themselves can be alleged to contain representations about the nature of the investment vehicles, the term “preference” commonly connotes desirability and not a speculative level of risk.
We are unpersuaded by Genovesi’s argument that he was precluded from asserting his rights before suffering actual financial loss because neither Lehman nor the defendants were the issuers of the securities and therefore could not be ordered to unwind the investment. Assuming that the defendants had
“Ratification is a doctrine of agency law in which a principal is deemed to adopt the previously unauthorized actions of his or her agent by failing to object after finding out about them.” Schofield v. First Commodity Corp. of Boston, 793 F.2d 28, 36 (1st Cir. 1986), citing Jaksich v. Thomas McKinnon Sec., Inc., 582 F. Supp. 485, 496 (S.D.N.Y. 1984), and Reuschlein and Gregory, Agency and Partnership 72 (1979).
It appears from the record that the second judge based the dismissal of Genovesi’s fiduciary duty claims against Nelson on a misreading of the first judge’s ruling. The first judge determined that Genovesi had failed to allege sufficient facts to support a fiduciary relationship only with respect to Ricciardi and McCaffery. Genovesi does not challenge the dismissal of his claims of breach of fiduciary duty as to those two defendants.
We deny the request for appellate fees by Ricciardi and McCaffery.