Opinion
11-03-2016
AOZORA BANK, LTD., Plaintiff–Respondent, v. UBS AG, et al., Defendants–Appellants.
Sullivan & Cromwell LLP, New York (Robert J. Giuffra Jr. of counsel), for UBS AG, UBS Limited and UBS Securities LLC, appellants. Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York (H. Christopher Boehning of counsel), for Deutsche Investment Management Americas Inc., appellant. Kirby McInerney LLP, New York (Andrew M. McNeela of counsel), for respondent.
Sullivan & Cromwell LLP, New York (Robert J. Giuffra Jr. of counsel), for UBS AG, UBS Limited and UBS Securities LLC, appellants.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York (H. Christopher Boehning of counsel), for Deutsche Investment Management Americas Inc., appellant.
Kirby McInerney LLP, New York (Andrew M. McNeela of counsel), for respondent.
TOM, J.P., SWEENY, ANDRIAS, WEBBER, and GESMER, JJ.
Order, Supreme Court, New York County (Saliann Scarpulla, J.), entered on or about October 14, 2015, which, to the extent appealed from, denied the UBS defendants' motion to dismiss the causes of action alleging fraud and aiding and abetting fraud as against them; and order, same court and Justice, entered on about October 14, 2015, which, to the extent appealed from as limited by the briefs, denied defendant Deutsche Investment Management Americas Inc.'s motion to dismiss those same causes of action as against it, unanimously reversed, on the law, with costs, and the motions granted. The Clerk is directed to enter judgment dismissing the complaint.
The motion court erred in denying defendants' motions to dismiss the fraud claims as time-barred (see CPLR 3211[a][5] ). The parties agree that the timeliness of the claims depends on whether plaintiff “discovered the fraud, or could with reasonable diligence have discovered it,” more than two years before the filing of the complaint on June 18, 2013 (CPLR 213[8] ). The record demonstrates that plaintiff could, with reasonable diligence, have discovered the alleged fraud by April 2010, rendering its fraud claims untimely (see Aozora Bank, Ltd. v. Deutsche Bank Sec. Inc., 137 A.D.3d 685, 689, 29 N.Y.S.3d 10 [1st Dept.2016] ). By that date, numerous lawsuits had been filed against the UBS defendants for misconduct similar to that alleged in this complaint (see id. at 689–690, 29 N.Y.S.3d 10 ; see also CIFG Assur. N. Am., Inc. v. Credit Suisse Sec. [USA] LLC, 128 A.D.3d 607, 608, 11 N.Y.S.3d 563 [1st Dept.2015], lv. denied 27 N.Y.3d 906, 2016 WL 2636590 [2016] ). Also by that date, the Securities and Exchange Commission had commenced an investigation into UBS's CDO practices (see Aozora, 137 A.D.3d at 689, 29 N.Y.S.3d 10 ). In addition, news articles disclosed the alleged misconduct involving hedge fund Magnetar and the Constellation CDOs (id. ). The foregoing lawsuits, investigations and articles also sufficed to put plaintiff on “inquiry notice” of defendant Deutsche's alleged fraud (id. ).
We have considered plaintiff's arguments and find them unavailing.