Summary
dismissing claims because plaintiff added a new defendant and new claims
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Case No. 06-2548-JAR.
October 16, 2007
MEMORANDUM AND ORDER
The Court now considers defendant Bradley Young LLP's ("Bradley Young") Motion for Judgment on the Pleadings (Doc. 18). Plaintiffs Craig Brown, Jan Brown, David Arrighi, Lydia Reed, Ronald Critchon-Reed, Katherine Critchon-Reed, and Walter Simmons brought this action claiming violation of the Kansas Securities Act, fraud and misrepresentation, for an accounting of all income and expenses for each oil lease represented in this case, and for violations of the Racketeering, Influenced and Corrupt Organization Act ("RICO") (Doc. 1). For the reasons set forth below, defendant's motion is granted in part.
Background
Plaintiffs commenced this action in Johnson County District Court on May 18, 2004, against defendants James Moore, Thomas Moore, and Alma, Inc. The case was dismissed without prejudice in state court, on August 29, 2006, by stipulation of the parties. Plaintiffs then refiled the action in this Court on December 13, 2006, adding defendant Bradley Young. Additionally, plaintiffs added a new claim against the parties, asserting violations of RICO. Defendant Bradley Young filed a Motion for Judgment on the Pleadings claiming that the Kansas saving statute does not apply because this case is not substantially similar to the prior state court action. Specifically, defendant claims that because plaintiff added a new claim and a new defendant, the saving statute does not apply and the case should be dismissed because the statute of limitations has run.
Standard for Motion for Judgment on the Pleadings
Discussion
1212 Rogers v. Williams, Larson, Voss, Strobel Estes, Taylor v. International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, AFL-CIO,
"The saving statute applies only if the original action and subsequent action are substantially the same. Where the parties and the relief sought in the new action are different from those in the original action, the actions are not substantially the same, and the saving statute does not apply. In addition, where the relief sought is the same in both actions, but defendants are different, the actions are not substantially the same for purposes of the saving statute."
Ramirez v. Dep't of Corr., 222 F.3d 1238, 1240 (10th Cir. 2000).
Id.
Id.
Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1969 (2007)).
Id. (quoting Twombly, 127 S. Ct. at 1969).
Id.
K.S.A. § 60-518.
Rogers v. Williams, Larson, Voss, Strobel Estes., 777 P.2d 836, 838 (Kan. 1989) (quotations omitted).
Taylor v. Int'l Union of Elec., Elec., Salaried Mach. Furniture Workers AFL-CIO, 968 P.2d 685, 689 (Kan.Ct.App. 1998) (citing Rogers, 777 P.2d at 837 for the proposition that the two actions must be substantially similar).
Rogers, 777 P.2d at 839.
968 P.2d 685 (Kan.Ct.App. 1998).
Taylor, 968 P.2d at 689 (quoting Day v. NLO, Inc., 798 F. Supp. 1322, 1328 (S.D. Ohio 1992)) (citations omitted).
Here, as can plainly be noticed, plaintiffs' actions are not the same. Indeed plaintiffs seem to concede that this action is not substantially similar to the first action. First, this action adds a new defendant, Bradley Young, in contravention of the rule issued in Taylor.
Plaintiffs only contend that the statute of limitations has not run on the RICO claim and that defendant has not shown that the statute of limitations has run on the other state law claims.
Additionally, plaintiff's second action brings additional claims against all the defendants in this case, in contravention of the rule in Taylor. Needless to say, plaintiffs claim cannot rest on the saving statute to survive the statute of limitations.
The statute of limitations for a violation of the Kansas Securities Act, specifically the sale of unregistered securities, is three years. The period begins to run upon the sale of the security. The statute of limitations for a fraud claim is two years, and that period begins to run when the plaintiff becomes aware of the fraud. The sale of the securities occurred in 2003 and the original action was filed on May 18, 2004. It has been over three years since the sale of the securities. Presumably, plaintiffs were aware of their fraud injury when they filed the first action in state court. The statute of limitations for the RICO claim, however, is four years, thus that claim remains viable. As the statutes of limitations for the state law claims have expired and the saving statute does not provide a safeguard for plaintiffs, defendant's Motion for Judgment on the Pleadings (Doc. 18) is granted as to the state law claims.
Perry H. Bacon Trust v. Transition Partners. Ltd., 298 F. Supp. 2d 1182, 1186 (D. Kan. 2004); Kelly v. Primeline Advisory, Inc., 889 P.2d 130, 135 (Kan. 1995). Though the Kansas Uniform Securities Act ("KUSA") provides for a statute of limitations, this case is governed by the old Kansas Securities Act because it was pending while the KUSA was promulgated.
Kelly, 889 P.2d at 135.
Rotella v. Wood, 528 U.S. 549, 553 (2000).
IT IS THEREFORE ORDERED BY THE COURT that defendant Bradley Young LLP's Motion for Judgment on the Pleadings (Doc. 18) is GRANTED in part.
IT IS SO ORDERED.