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11- 4443
Landesbank Baden- Wur t t ember g v. Gol dman, Sachs & Co.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURTS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION SUMMARY ORDER). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals 1
for the Second Circuit, held at the Daniel Patrick Moynihan 2
United States Courthouse, 500 Pearl Street, in the City of 3
New York, on the 19
th
day of April, two thousand twelve. 4
5
PRESENT: DENNIS JACOBS, 6
Chief Judge, 7
ROSEMARY S. POOLER, 8
SUSAN L. CARNEY, 9
Circuit Judges. 10
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- - - - - - - - - - - - - - - - - - - - X 12
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LANDESBANK BADEN-WURTTEMBERG, 14
15
Plaintiff-Appellant, 16
17
-v.- 11-4443 18
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GOLDMAN, SACHS & CO., TCW ASSET 20
MANAGEMENT COMPANY, 21
22
Defendants-Appellees. 23
24
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26
27
2
FOR APPELLANT: Ar t hur R. Mi l l er , Of Counsel 1
( Wi l l i amH. Nar wol d, Mot l ey Ri ce 2
LLC, Har t f or d, CT; Vi ncent I . 3
Par r et t , Wi l l i amS. Nor t on, J ohn 4
Br andon Wal ker , Mot l ey Ri ce LLC, 5
Mount Pl easant , SC, on t he 6
br i ef ) 7
New Yor k, NY 8
9
10
FOR APPELLEE GOLDMAN, SACHS 11
& CO.: Theodor e Edel man ( Ri char d H. 12
Kl apper , Wi l l i amB. Monahan, 13
Chr i st opher J . Dunne, W. Rudol ph 14
Kl eyst euber , J acob E. Cohen, on 15
t he br i ef ) 16
Sul l i van & Cr omwel l LLP 17
New Yor k, NY 18
19
FOR APPELLEE TCW ASSET 20
MANAGEMENT COMPANY: Mar k A. Ki r sch ( Chr i st opher M. 21
J or al emon, on t he br i ef ) 22
Gi bson, Dunn & Cr ut cher LLP 23
New Yor k, NY 24
25
Appeal f r oma j udgment of t he Uni t ed St at es Di st r i ct 26
Cour t f or t he Sout her n Di st r i ct of New Yor k ( Paul ey, J . ) . 27
28
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED 29
AND DECREED t hat t he di st r i ct cour t s j udgment i s AFFIRMED. 30
31
Landesbank Baden- Wur t t ember g ( Landesbank) appeal s 32
f r omt he di smi ssal of i t s common l aw cl ai ms f or f r aud, 33
negl i gent mi sr epr esent at i on, and unj ust enr i chment . We 34
assume t he par t i es f ami l i ar i t y wi t h t he under l yi ng f act s, 35
t he pr ocedur al hi st or y, and t he i ssues pr esent ed f or r evi ew. 36
37
We r evi ew de novo t he gr ant of a mot i on t o di smi ss 38
pur suant t o Feder al Rul e of Ci vi l Pr ocedur e 12( b) ( 6) . 39
Har r i s v. Mi l l s, 572 F. 3d 66, 71 ( 2d Ci r . 2009) . 40
[ A] l t hough a cour t must accept as t r ue al l of t he 41
al l egat i ons cont ai ned i n a compl ai nt , t hat t enet i s 42
i nappl i cabl e t o l egal concl usi ons, and t hr eadbar e r eci t al s 43
of t he el ement s of a cause of act i on, suppor t ed by mer e 44
1
For si mpl i ci t y, bot h Landesbank and i t s subsi di ar y
ar e r ef er r ed t o her ei n as Landesbank.
3
concl usor y st at ement s, do not suf f i ce. I d. at 72 ( i nt er nal 1
quot at i on mar ks and br acket s omi t t ed) . To sur vi ve a mot i on 2
t o di smi ss, a compl ai nt must pl ead enough f act s t o st at e a 3
cl ai mt o r el i ef t hat i s pl ausi bl e on i t s f ace. ECA & Local 4
134 I BEWJ oi nt Pensi on Tr ust of Chi . v. J P Mor gan Chase Co. , 5
553 F. 3d 187, 196 ( 2d Ci r . 2009) ( i nt er nal quot at i on mar ks 6
omi t t ed) . 7
8
[1] Landesbank asser t s cl ai ms f or common l aw f r aud agai nst 9
t he def endant s, Gol dman, Sachs & Co. ( Gol dman) and TCW 10
Asset Management Company ( TCW) , i n connect i on wi t h t he 11
mar ket i ng and sal e t o a subsi di ar y of Landesbank of not es i n 12
a col l at er al i zed debt obl i gat i on known as Davi s Squar e 13
Fundi ng VI ( Davi s Squar e) .
1
14
15
Under New Yor k l aw, [ t ] he el ement s of a cause of 16
act i on f or f r aud r equi r e a mat er i al mi sr epr esent at i on of a 17
f act , knowl edge of i t s f al si t y, an i nt ent t o i nduce 18
r el i ance, j ust i f i abl e r el i ance by t he pl ai nt i f f and 19
damages. Eur ycl ei a Par t ner s, LP v. Sewar d & Ki ssel , LLP, 20
12 N. Y. 3d 553, 559 ( 2009) . A cl ai mf or common l aw f r aud i s 21
subj ect t o t he par t i cul ar i t y pl eadi ng r equi r ement s of 22
Feder al Rul e of Ci vi l Pr ocedur e 9( b) , whi ch r equi r es t hat 23
t he pl ai nt i f f ( 1) det ai l t he st at ement s ( or omi ssi ons) t hat 24
t he pl ai nt i f f cont ends ar e f r audul ent , ( 2) i dent i f y t he 25
speaker , ( 3) st at e wher e and when t he st at ement s ( or 26
omi ssi ons) wer e made, and ( 4) expl ai n why t he st at ement s ( or 27
omi ssi ons) ar e f r audul ent . Et er ni t y Gl obal Mast er Fund 28
Lt d. v. Mor gan Guar . Tr ust Co. of N. Y. , 375 F. 3d 168, 187 29
( 2d Ci r . 2004) ( i nt er nal quot at i on mar ks omi t t ed) . 30
31
[ W] e have r epeat edl y r equi r ed pl ai nt i f f s t o pl ead t he 32
f act ual basi s whi ch gi ves r i se t o a st r ong i nf er ence of 33
f r audul ent i nt ent . O Br i en v. Nat l Pr op. Anal yst s 34
Par t ner s, 936 F. 2d 674, 676 ( 2d Ci r . 1991) ( i nt er nal 35
quot at i on mar ks omi t t ed) . A st r ong i nf er ence of f r audul ent 36
i nt ent may be est abl i shed ei t her ( a) by al l egi ng f act s t o 37
show t hat def endant s had bot h mot i ve and oppor t uni t y t o 38
commi t f r aud, or ( b) by al l egi ng f act s t hat const i t ut e 39
st r ong ci r cumst ant i al evi dence of consci ous mi sbehavi or or 40
r eckl essness. Ler ner v. Fl eet Bank, N. A. , 459 F. 3d 273, 41
4
290- 91 ( 2d Ci r . 2006) ( quot i ng Shi el ds v. Ci t yt r ust Bancor p, 1
I nc. , 25 F. 3d 1124, 1128 ( 2d Ci r . 1994) ) . 2
3
The compl ai nt i n t hi s case does not ascr i be t o Gol dman 4
or TCWany par t i cul ar mot i ve f or commi t t i ng f r aud beyond a 5
gener al pr of i t mot i ve common t o al l cor por at i ons, whi ch does 6
not suf f i ce. See Novak v. Kasaks, 216 F. 3d 300, 307 ( 2d 7
Ci r . 2000) . Landesbank ar gues t hat a st r ong i nf er ence of 8
f r audul ent i nt ent ar i ses because t he def endant s knew f act s 9
or had access t o i nf or mat i on suggest i ng t hat t hei r publ i c 10
st at ement s wer e not accur at e. ECA, 553 F. 3d at 199 11
( i nt er nal quot at i on mar ks omi t t ed) . The compl ai nt al l eges 12
t hat Gol dman had access t o conf i dent i al due di l i gence 13
r epor t s whi ch showed t hat t he qual i t y of t he mor t gages 14
under l yi ng t he col l at er al f or t he Davi s Squar e not es di d not 15
j ust i f y t he not es t r i pl e- A r at i ngs. However , an al l egat i on 16
t hat def endant s had access t o i nf or mat i on t hat was 17
i nconsi st ent wi t h t hei r al l eged mi sst at ement s must 18
speci f i cal l y i dent i f y t he r epor t s or st at ement s cont ai ni ng 19
t hi s i nf or mat i on. Novak, 216 F. 3d at 309; see al so San 20
Leandr o Emer gency Med. Gr p. Pr of i t Shar i ng Pl an v. Phi l i p 21
Mor r i s Cos. , 75 F. 3d 801, 812- 13 ( 2d Ci r . 1996) . The onl y 22
due di l i gence r epor t speci f i cal l y i dent i f i ed i n t he 23
compl ai nt i s dat ed f r om2007, af t er t he i ssuance of t he 24
Davi s Squar e not es, and t he due di l i gence conveyed i n t hat 25
r epor t t her ef or e does not bear on t he def endant s knowl edge 26
at t he t i me of i ssuance. The gener al i zed r ef er ences i n t he 27
compl ai nt t o ot her due di l i gence r epor t s commi ssi oned by 28
Gol dman ar e i nsuf f i ci ent t o sust ai n Landesbank s pl eadi ng 29
bur den as t o i nt ent . 30
31
[2] Landesbank ar gues t hat t he compl ai nt suf f i ci ent l y 32
st at es a cl ai mf or negl i gent mi sr epr esent at i on under New 33
Yor k l aw. [ T] he el ement s of negl i gent mi sr epr esent at i on 34
ar e: ( 1) car el essness i n i mpar t i ng wor ds; ( 2) upon whi ch 35
ot her s wer e expect ed t o r el y; ( 3) and upon whi ch t hey di d 36
act or f ai l ed t o act ; ( 4) t o t hei r damage. Most r el evant , 37
t he act i on r equi r es t hat ( 5) t he decl ar ant must expr ess t he 38
wor ds di r ect l y, wi t h knowl edge or not i ce t hat t hey wi l l be 39
act ed upon, t o one t o whomt he decl ar ant i s bound by some 40
r el at i on or dut y of car e. Dal l . Aer ospace, I nc. v. CI S Ai r 41
Cor p. , 352 F. 3d 775, 788 ( 2d Ci r . 2003) ( ci t at i on omi t t ed) . 42
[ T] he l aw of negl i gent mi sr epr esent at i on r equi r es a cl oser 43
degr ee of t r ust bet ween t he par t i es t han t hat of t he 44
5
or di nar y buyer and sel l er i n or der t o f i nd r el i ance on such 1
st at ement s j ust i f i ed. I d. I n det er mi ni ng whet her a 2
compl ai nt adequat el y pl eads j ust i f i abl e r el i ance, we 3
consi der whet her t he per son maki ng t he r epr esent at i on hel d 4
or appear ed t o hol d uni que or speci al exper t i se; whet her a 5
speci al r el at i onshi p of t r ust or conf i dence exi st ed bet ween 6
t he par t i es; and whet her t he speaker was awar e of t he use t o 7
whi ch t he i nf or mat i on woul d be put and suppl i ed i t f or t hat 8
pur pose. Ki mmel l v. Schaef er , 89 N. Y. 2d 257, 264 ( 1996) . 9
[ A] spar sel y pl ed speci al r el at i onshi p of t r ust or 10
conf i dence i s not f at al t o a cl ai mf or negl i gent 11
mi sr epr esent at i on wher e t he compl ai nt emphat i cal l y al l eges 12
t he ot her t wo f act or s enunci at ed i n Kimmell. Et er ni t y 13
Gl obal Mast er Fund, 375 F. 3d at 188 ( i nt er nal quot at i on 14
mar ks omi t t ed) . 15
16
The Of f er i ng Ci r cul ar by whi ch t he Davi s Squar e not es 17
wer e mar ket ed di scl ai med bot h t he exi st ence of a speci al 18
r el at i onshi p of t r ust or conf i dence bet ween t he def endant s 19
and Landesbank and any par t i cul ar exper t i se on t he par t of 20
t he def endant s wi t h r espect t o t he cr edi t qual i t y of t he 21
Davi s Squar e not es. I t caut i oned i nvest or s t o consi der and 22
assess f or t hemsel ves t he l i kel y l evel of def aul t s on t he 23
under l yi ng col l at er al , and di scl ai med a f i duci ar y or 24
advi sor y r ol e. The Of f er i ng Ci r cul ar al so r equi r ed 25
Landesbank t o r epr esent t hat i t was a sophi st i cat ed 26
i nvest or and had suf f i ci ent access t o f i nanci al and ot her 27
i nf or mat i on t o make an i nf or med i nvest ment deci si on, 28
i ncl udi ng an oppor t uni t y t o ask quest i ons and r equest 29
addi t i onal i nf or mat i on concer ni ng Davi s Squar e. The 30
r el at i onshi p bet ween Landesbank and t he def endant s was t hat 31
of buyer and sel l er i n a st andar d ar m s l engt h t r ansact i on; 32
and by i t s own r epr esent at i ons Landesbank possessed 33
suf f i ci ent exper t i se t o eval uat e t he r i sks of i t s 34
i nvest ment . The compl ai nt t her ef or e f ai l s t o pl ead 35
j ust i f i abl e r el i ance. See Dal l . Aer ospace, 352 F. 3d at 789 36
( [ Pl ai nt i f f ] cannot cl ai mi t r el i ed on [ def endant s] 37
speci al exper t i se because i t i s cl ear t hat [ pl ai nt i f f ] 38
i t sel f had t he r el evant exper t i se at i ssue. ) . 39
40
Landesbank ar gues t hat i t s r epr esent at i ons af f i r mi ng 41
i t s st at us as a sophi st i cat ed i nvest or wi t h means t o make 42
an i nf or med i nvest ment deci si on do not under mi ne [ i t s] 43
al l egat i on of r easonabl e r el i ance, because t he al l egedl y 44
6
mi sr epr esent ed f act s [ wer e] pecul i ar l y wi t hi n [ def endant s ] 1
knowl edge. War ner Theat r e Assocs. Lt d. P shi p v. Met r o. 2
Li f e I ns. Co. , 149 F. 3d 134, 136 ( 2d Ci r . 1998) . However , 3
as pr evi ousl y di scussed, Landesbank s compl ai nt f ai l s t o 4
al l ege f act s pl ausi bl y est abl i shi ng exi st ence of such 5
knowl edge. Thi s ar gument i s t her ef or e mer i t l ess. 6
7
[3] Landesbank al so seeks t o r ecover under a t heor y of 8
unj ust enr i chment . To pr evai l on a cl ai mf or unj ust 9
enr i chment i n New Yor k, a pl ai nt i f f must est abl i sh 1) t hat 10
t he def endant benef i t t ed; 2) at t he pl ai nt i f f s expense; and 11
3) t hat equi t y and good consci ence r equi r e r est i t ut i on. 12
Kaye v. Gr ossman, 202 F. 3d 611, 616 ( 2d Ci r . 2000) ( i nt er nal 13
quot at i on mar ks omi t t ed) . Landesbank has f ai l ed t o st at e a 14
cl ai mf or ei t her f r aud or negl i gent mi sr epr esent at i on, and 15
has not ot her wi se shown t hat i t i s ent i t l ed t o r est i t ut i on 16
as a mat t er of equi t y. 17
18
We have consi der ed Landesbank s r emai ni ng ar gument s and 19
f i nd t hemt o be wi t hout mer i t . For t he f or egoi ng r easons, 20
t he j udgment of t he di st r i ct cour t i s her eby AFFIRMED. 21
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FOR THE COURT: 25
CATHERI NE O HAGAN WOLFE, CLERK 26
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