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The Commercial Bank v. Smith Shellnut Wilson LLC

Court of Appeals of Mississippi

August 7, 2018

THE COMMERCIAL BANK APPELLANT
v.
SMITH SHELLNUT WILSON LLC APPELLEE

          DATE OF JUDGMENT: 05/01/2017

          MADISON COUNTY CIRCUIT COURT HON. WILLIAM E. CHAPMAN III JUDGE

          ATTORNEYS FOR APPELLANT: WILLIAM C. HAMMACK STEPHEN H. KUPPERMAN LAURENCE D. LESUEUR MATTHEW RICHARD WATSON

          ATTORNEYS FOR APPELLEE: MARK DANIEL GRIFFIN LORI H. PATTERSON

          BEFORE LEE, C.J., CARLTON AND WILSON, JJ.

          CARLTON, J.

         ¶1. This case arises from $1, 850, 000 of securities that the Commercial Bank of DeKalb, Mississippi (the Bank) purchased in 2005 and 2007 from third-party securities dealers. The Bank's purchases were made based on recommendations by the Bank's investment advisor, Smith Shellnut Wilson LLC (SSW). The Bank claims that SSW negligently or intentionally misrepresented or omitted material facts when SSW advised the Bank to buy the securities and, in doing so, breached its fiduciary duty to the Bank. The Bank also claims SSW violated the Mississippi Securities Act in recommending these securities to it.

         ¶2. The securities at issue were issued by two non-party Soloso entities, and the securities are trust-preferred collateralized debt obligations (CDOs) (collectively, the "Soloso securities"). According to the Bank, it learned that it allegedly was not qualified to purchase the Soloso securities based on a December 2014 email from SSW. However, despite the purported ineligibility, the record reflects that the Bank continues to hold the securities at issue. The Bank, nonetheless, sued SSW in March 2016 for SSW's alleged failure to disclose the purchasing-and-holding eligibility requirements for the Soloso securities when SSW advised the Bank to purchase them. The record reflects that the Bank did not include the issuer or the securities dealers in the lawsuit.

         ¶3. After discovery, SSW moved for summary judgment on all the Bank's claims, namely (1) negligent or intentional misrepresentation or omission of material fact; (2) breach of fiduciary duty; and (3) violation of the Mississippi Securities Act under Mississippi Code Annotated section 75-71-509(b) (Rev. 2016). The Madison County Circuit Court granted SSW's motion for summary judgment on two independent and dispositive grounds. In granting summary judgment, the circuit court first found that the Bank's claims were time-barred by applicable statutes of limitation and repose. Second, the circuit court found that summary judgment was warranted because the Bank failed to offer competent summary judgment evidence to prove one or more essential elements on each of its claims.

         ¶4. The Bank appealed, raising the following issues: (1) the circuit court erred by concluding that the Bank's claims were time-barred; and (2) the circuit court erred by ignoring competent summary judgment proof on each of the Bank's claims because SSW recommended certain investments and later admitted that it failed to disclose to the Bank the applicable material purchasing criteria, which the Bank did not meet. Upon appellate review, we find that (1) the Bank's claims are barred by the applicable statutes of limitation or repose;[1] and (2) the Bank cannot succeed on any of its claims on the merits because it has not shown that it is unlawful for the Bank to purchase or hold the Soloso securities; nor has the Bank shown that the issuers' alleged violation of the Investment Company Act[2] impaired the value of the Soloso securities to the Bank. We therefore affirm the circuit court's decision on these grounds.

         STATEMENT OF FACTS

         ¶5. The record reflects that with respect to the status of the parties, SSW is an investment advisory firm registered with the Securities and Exchange Commission (SEC). It provides investment advisory services for a fee based on assets under management. SSW does not, and cannot, sell securities. The record also shows that the Bank is chartered under the laws of the State of Mississippi. Under federal law, as a state-chartered, nonmember bank, the Bank's primary federal regulator is the Federal Deposit Insurance Corporation (FDIC). See 12 U.S.C. § 1813(q)(2) (2012). We now turn to review additional relevant facts in the record as to the disputes at issue in this appeal.

         ¶6. In 1999, the Bank and SSW entered into an investment-management agreement, which was later amended in 2001. The record and briefs reflect that it is undisputed that SSW, as a registered investment adviser, owed a fiduciary duty to the Bank.[3] We will first address the facts of the agreement between the parties and then the evidence in the record pertaining to SSW's advice and conduct related to the purchase of the securities in this case.

         ¶7. The record contains the initial investment-management agreement and the 2001 amendment. Under the agreement, SSW was to provide the Bank with "investment advice and management services that SSW shall determine to be appropriate or which is reasonably requested by the [Bank]." The agreement provides that the compensation that SSW received for its services was in the form of a fee equal to 1/10 of 1% of the Bank's assets under management. SSW did not receive commissions for any services or recommendations that it provided to the Bank. The agreement also specifies that "[a]ll transactions under this agreement shall be subject to applicable laws, rules[, ] and regulations of governmental authorities. . . ." The express terms under both the original agreement and the amendment limit any warranty by SSW, as follows: "[The Bank] specifically acknowledges and agrees that SSW is not warranting to [the Bank] that the information or advice given to [the Bank] is correct or accurate or that the assets managed by SSW will necessarily increase in value or retain their value."

         ¶8. The record reflects that the Soloso securities at issue in this case are notes issued by third parties: Soloso CDO 2005-1 LTD and Soloso CDO 2007-1 LTD. The notes are trust- preferred CDOs, as noted above. Specifically, in 2005 and 2007, the record shows that SSW recommended to the Bank that it purchase these securities, and, based on SSW's recommendations, the Bank purchased a total of $1, 850, 000 of the Soloso securities from third-party securities dealers not named in this case.

         ¶9. The record reflects that the parties acknowledge that Section 5 of the Securities Act requires a company to file a registration statement and prospectus with the SEC before it offers public securities for sale. See 15 U.S.C. §§ 77c-77h (2012). The Soloso securities in this case, however, were privately placed securities. These securities were offered under certain available exemptions from the registration requirements of the Securities Act. Additionally, the record reflects that the co-issuers of the Soloso securities were not registered under the Investment Company Act of 1940 (ICA), as codified in Title 15 of the Unites States Code in sections 80a-1 through 80a-64 (2012).

         ¶10. In this appeal, the Bank asserts that the Soloso securities were offered pursuant to a Rule 144A exemption under the Securities Act, and, for this reason, they could be owned only by, and sold only to, a "qualified institutional buyer" (QIB), defined by law to include a bank that invests in at least $100 million in non-affiliated securities and has an audited net worth of at least $25 million. See 17 C.F.R. § 230.144A(a)(1)(vi) (2005); 17 C.F.R. § 230.144A(a)(1)(vi) (2007). Additionally, the Bank asserts that the Soloso securities could only be sold to a "qualified purchaser" under the ICA, which is defined to include a bank that "in the aggregate owns and invests on a discretionary basis, not less than $25, 000, 000 in investments." See 15 U.S.C. § 80a-2(51)(A)(iv) (2012). It is undisputed that the Bank is neither a QIB under the Securities Act, nor a qualified purchaser under the ICA. According to the Bank, because it is not a QIB or a qualified purchaser, it was ineligible to purchase and own the Soloso securities. The Bank argues that it therefore improperly purchased and now continues to hold the Soloso securities as a result of SSW's negligent failure to disclose the applicable purchaser requirements in SSW's financial advice.

         ¶11. The Bank further asserts that it did not discover that it was required to be a QIB or a qualified purchaser to buy the Soloso securities until late December 2014, when it received an email from SSW wherein the Bank was described as a "non-qualified purchaser" of the Soloso securities. The record shows that SSW sent this email to the Bank in 2014 upon its discovery that Wells Fargo, the trustee for the Soloso CDO 2005 notes, had declared an "event of default" under the Soloso transaction indenture based upon a default in payment of interest due to the senior noteholders on the Class A-1 notes. As reflected in the record, SSW assessed that if liquidation were ordered, there would likely be insufficient funds to pay junior noteholders like the Bank. The email from SSW provided the Bank with options furnished by legal counsel to salvage the Bank's investment in the securities. The email identified four options the Bank had, as a "non-qualified purchaser," to participate in a lawsuit with other non-senior noteholder banks. Such a lawsuit would seek to enforce a separate "event of default" under the indenture due to these banks' failure to meet the Soloso securities' legal purchasing and holding requirements.

         ¶12. Despite forwarding the emailed advice from legal counsel to the Bank regarding the Bank's "non-qualified purchaser" status and options to salvage the Bank's investment in the Soloso 2005 securities, SSW denies that the Bank was not qualified to purchase the Soloso securities in the case at bar. SSW's position is that the Bank is an "accredited investor" under the Securities Act, which includes "any national bank, or banking institution organized under the laws of any State." See 17 C.F.R. § 230.501(a)(1) (2005); 17 C.F.R. § 230.501(a)(1) (2007); see also 15 U.S.C. § 77c(a)(2) (2012). SSW argues that as an accredited investor under the Securities Act, the Bank indeed constituted an eligible purchaser of these securities.[4]

         ¶13. Although the Bank purchased the 2005 and 2007 Soloso securities from third-party securities dealers, for purposes of determining the timeliness of the Bank's claims, SSW established in discovery that it had furnished to the Bank courtesy copies of both the Soloso 2005 and also the Soloso 2007 offering circulars on at least six occasions, beginning in 2007.[5] The record reflects that the offering circulars contained notice of purchaser restrictions. The record is silent as to whether the issuer or the securities dealers also provided the offering circulars to the Bank in 2005 or 2007 when the purchases at issue occurred.

         ¶14. As required by federal law, the front page of the offering circulars for Soloso 2005 and Soloso 2007 describe in bold print that resale and transfer restrictions applied in order for sales to be exempt from the registration requirements under the Securities Act.[6] This language is repeated in numerous other places in each offering circular, including in the section entitled "NOTICES TO PURCHASERS." As addressed in further detail below, each of the offering circulars also possessed an attached glossary, which defined "Accredited Investor," "Qualified Institutional Buyer," and "Qualified Purchaser" by reference to the publicly available federal statutory or regulatory definitions.

         ¶15. Although the Bank initially alleged in its complaint that it had not received any Soloso securities offering circulars, the record reflects that it now acknowledges that it received the offering circulars from SSW in 2007 and several times subsequent to 2007. However, the Bank argues that it received the offering circulars after SSW had recommended the Soloso securities and after the Bank had already purchased them.

         ¶16. The Bank asserts that it had no reason to question its eligibility for the Soloso securities or to read the offering circulars because, not only had the investments already been made, but the Bank claims it reasonably relied on the financial advice of its financial advisor, SSW, as well as on the parties' agreement in which SSW acknowledged that any investments the Bank made upon SSW's recommendation would be subject to all applicable laws. The record, however, shows that in their express written investment agreement the parties agreed that SSW was not warranting that its advice was correct or accurate or that the assets managed by SSW would increase or retain their value.

         ¶17. Additionally, the Bank asserts that even if it had received the offering circulars before it purchased the Soloso securities and read them, the offering circulars were unclear and would not have given notice to the Bank that it was not permitted by law to purchase or own the Soloso securities. The record shows that the Bank's own investment policy required that the Bank maintain the prospectuses/offering circulars for the securities it purchased.

         ¶18. As the record reflects, the securities purchases in this case were not the first such purchases by the Bank. Through the affidavit of Frank Smith, a principal of SSW, and through the Bank's Investment and Asset/Liability Management Policy, SSW established that the Bank first started purchasing trust-preferred securities (like the Soloso securities) in 2003, well before the purchases at issue in this case.

         ¶19. Further, as of March 2005, before it completed the first of its Soloso purchases in August 2005, the record shows that the Bank had its own asset-liability management committee responsible for managing the Bank's investment portfolio and its own board of directors responsible for overseeing the Bank's investment activities. The record also shows that the Bank's investment policy at that time provided that the President and Investment Officer and the Executive Vice President were authorized by the committee to carry out the day-to-day investment functions as specified in the policy, including a provision prohibiting the Bank from granting any investment discretion to any third party and the requirement that the Bank ultimately be responsible for authorizing and approving all securities purchases. In particular, the investment policy provides: "Outside investment advisory relationships are permitted provided the discretionary authority remains with the Bank."

         ¶20. Under its investment policy the Bank was in charge of identifying, measuring, monitoring, reviewing, and controlling the risks of its investment portfolio. The risks that the Bank was responsible for managing included the legal risks of its investments, or the risks that could occur if a transaction violated laws or regulations. In addition, the Bank's investment policy specifically provided that the Bank was eligible to purchase asset-backed securities, including pooled trust-preferred securities (like the Soloso securities), and, as stated, the Bank's policy required that, for each such purchase, the Bank was required to have and maintain a prospectus (i.e., an offering circular) for the security.

         COURSE OF PROCEEDINGS AND PROCEDURAL HISTORY

         ¶21. Less than two years after the Bank alleges it discovered it was a non-qualified purchaser of the Soloso securities, the Bank sued SSW in March 2016 in Kemper County Circuit Court, alleging claims for negligent or intentional misrepresentation or omission of material fact, breach of fiduciary duty, and violation of the Mississippi Securities Act, namely Mississippi Code Annotated sections 75-71-509 and 75-71-717(a)(2) (1981).[7] In this action, the Bank sought rescission of the transactions, or, alternatively, damages for its alleged losses in these purchases in the amount of $1.85 million, [8] which was the total amount it paid for the Soloso securities. In its answer, SSW denied the Bank's allegations of wrongdoing and asserted several affirmative defenses. SSW subsequently moved to transfer venue, and the Kemper County Circuit Court granted that motion, transferring the case to Madison County Circuit Court.

         ¶22. After the parties engaged in months of discovery, the record shows that SSW filed its motion for summary judgment on two independent, dispositive grounds. First, it asserted that the Bank's claims were time-barred under the following statutes of limitation and repose: (a) the Bank's claims for negligent or intentional misrepresentation or omission of material fact and breach of fiduciary duty (Counts I and II) were time-barred by the three-year statute of limitations under Mississippi Code Annotated section 15-1-49 (Rev. 2012); and (b) as of January 1, 2015, the five-year statute of repose under section 75-71-701 extinguished any and all rights and remedies the Bank may have had under the Mississippi Securities Act (Count III). Alternatively, SSW asserted that the Bank's claim under the Mississippi Securities Act was barred by the two-year limitations period or the five-year statute of repose under section 75-71-509(j). SSW also moved for summary judgment on the alternate ground that the Bank could not prove one or more essential elements on each of its claims because the Bank indeed was an eligible purchaser of the Soloso securities as an accredited investor.

         ¶23. Regarding the time-bar, the Bank argued that its breach of fiduciary duty and misrepresentation claims were timely because the discovery rule applied. The Bank claims that it did not have notice of the facts entitling it to bring an action until allegedly learning in December 2014 that it was a non-qualified buyer of the Soloso securities from the email SSW sent it about the Wells Fargo declaration of default. The Bank also asserted that its Mississippi Securities Act claim was not time-barred because it received no notice of its cause of action until December 2014 due to SSW's alleged ongoing misrepresentations and omissions. As to its claims on the merits, the Bank asserted that it had furnished competent proof to overcome summary judgment on the essential elements of each of its claims.

         ¶24. On April 17, 2017, the Madison County Circuit Court granted SSW's summary judgment motion in its entirety, entering its order on May 1, 2017. The Bank timely appealed, raising the following issues: (1) the circuit court erred by concluding that the Bank's claims were time-barred, even though the Bank's claims are based upon ongoing misrepresentations or omissions, and the offering circulars for the Soloso securities provided to the Bank did not "clearly contradict" SSW's continued misrepresentations and omissions so as to allow the Bank to discover or to be put on notice of its claims, as required under Weathers v. Metropolitan Life Ins. Co., 14 So.3d 688 (Miss. 2009); and (2) the circuit court erred by ignoring competent summary judgment proof on each of the Bank's claims because SSW recommended certain investments and later admitted in sworn interrogatories to show that it failed to disclose to the Bank the applicable purchasing criteria, which the Bank did not meet. We now turn to apply the controlling law to this case.

         STANDARD OF REVIEW

         ¶25. A de novo standard of review applies to statute of limitations issues. Weathers, 14 So.3d at 691 (¶12). We likewise review the grant of a motion for summary judgment de novo, viewing the evidence in the light most favorable to the Bank, the party opposing summary judgment. Karpinsky v. Am. Nat'l Ins. Co., 109 So.3d 84, 88 (¶9) (Miss. 2013). SSW, as the movant, "bears the burden of persuading the trial judge that . . . (1) no genuine issue of material fact exists, and (2) on the basis of the facts established, [it] is entitled to judgment as a matter of law." Davenport v. Hertz Equip. Rental Corp., 187 So.3d 194, 198 (¶10) (Miss. Ct. App. 2016) (quoting Palmer v. Biloxi Reg'l Med. Ctr. Inc., 564 So.2d 1346, 1355 (Miss. 1990)).

         ¶26. Once SSW meets its burden, however, the Bank, as the non-movant, is "required to bring forward significant probative evidence demonstrating the existence of the triable issue of fact." Banks ex rel. Banks v. Sherwin-Williams Co., 134 So.3d 706, 710 (¶10) (Miss. 2014). "Summary judgment is appropriate when the non-moving party has failed to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial." Karpinsky, 109 So.3d at 89 (¶11). Additionally, as the party asserting that its case is not barred by the statute of limitations, the Bank has the burden of proving that the limitations period should be tolled. Hall v. Dillard, 739 So.2d 383, 387-88 (¶19) (Miss. Ct. App. 1999) ("Where the plaintiff asserts that his case is not barred by the statute of limitations, the burden is on him to show some legal or equitable basis for avoiding such period of limitations.") (citing Gulf Nat'l Bank v. King, 362 So.2d 1253, 1255 (Miss.1978)); see also Trustmark Nat'l Bank v. Meador, 81 So.3d 1112, 1119 (¶17) (Miss. 2012) (providing that each element of fraudulent concealment must be proven by the party claiming that the limitations period is tolled by that doctrine).

         DISCUSSION

         I. Time-Bar

         A. The Bank's Misrepresentation/Material Omission Claim and Breach of Fiduciary Duty Claim

         ¶27. Controlling law and the record reflect that it is undisputed that section 15-1-49, Mississippi's catch-all three-year statute of limitations, applies to the Bank's misrepresentation/material omission claim and breach of fiduciary duty claim. The parties, however, dispute the application of the discovery rule to the facts of this case. Under section 15-1-49(1), the limitations period begins within three years after the cause of action accrued. The statute also provides a discovery-rule exception to the three-year limitation period for certain situations. Specifically, section 15-1-49(2) provides: "In actions for which no other period of limitation is prescribed and which involve latent injury or disease, the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury." We turn to apply the law to the facts of this case.

         ¶28. In this case the Bank alleges that it purchased the Soloso securities based upon SSW's negligent recommendation when, according to the Bank, it was unqualified to purchase them. The Bank asserts that the discovery exception under section 15-1-49(2) applies to its claims because, it argues, it did not discover its injury until December 2014 when, according to the Bank, SSW provided the Bank an email which said the Bank was not a qualified buyer for the Soloso securities. As such, the Bank claims that its complaint, filed in March 2016, was timely because it was filed within three years from December 2014.

         ¶29. The record reflects that the Bank received copies of the Soloso offering circulars on at least six different occasions in 2007, 2008, 2009, and 2011. The 2005 and 2007 offering circulars contained notice of purchaser-eligibility requirements on the face of the documents, and the offering circulars defined the requirements by reference to publicly available federal law and rules.

         1. The Discovery Rule

         ¶30. As addressed above, the Bank has the burden of proving whether the limitations period should be tolled. Hall, 739 So.2d at 387-88 (¶19). Under section 15-1-49(2), the limitations period "commences upon discovery of an injury," Donald v. Amoco Prod. Co., 735 So.2d 161, 167 (Miss. 1999), and, thus, in the "summary judgment context . . . [we must] identify as a matter of law, the point at which [the Bank] knew or should have known or should have made an inquiry, based on the information available to [it]." Weathers, 14 So.3d at 692 (¶14).

         ¶31. To benefit from the discovery rule, the Bank must also show that it exercised reasonable diligence in investigating its alleged injury, which in this case is the Bank's purchase of the Soloso securities based upon SSW's alleged negligent recommendations when, according to the Bank, it was unqualified to purchase them. See, e.g., Peoples Bank of Biloxi v. McAdams, 171 So.3d 505, 509-10 (¶¶17-22) (Miss. 2015) (holding that plaintiff failed to exercise due diligence as a matter of law and thus his negligence claim was time-barred); Smith v. Sanders, 485 So.2d 1051, 1052 (Miss. 1986). "The would-be plaintiff need not have become absolutely certain that he had a cause of action; he need merely be on notice-or should be-that he should carefully investigate the materials that suggest that a cause probably or potentially exists." First Trust Nat'l Assoc. v. First Nat'l Bank of Commerce, 220 F.3d 331, 336-37 (5th Cir. 2000) (citing Mississippi cases). We will address notice and the requirement of reasonable diligence in applying the discovery rule to this case. a. Notice

         ¶32. Applicable law pertaining to the discovery rule also establishes that a plaintiff "need not have actual knowledge of the facts before the duty of due diligence arises; rather, knowledge of certain facts which are 'calculated to excite inquiry' give rise to the duty to inquire. The statute of limitations begins to run once plaintiffs are on inquiry that a potential claim exists." Id. at 336 n.4.[9]

         ¶33. In this case, the record reflects that the offering circulars expressly set forth the federally required language regarding sale restrictions on the Soloso securities, which form the predicate for the Bank's claims against SSW. Jurisprudence reflects that the Bank was not at liberty to simply ignore this information, which was federally required to be in the offering circulars to notify purchasers of eligibility restrictions. Kravetz v. U.S. Tr. Co., 941 F.Supp. 1295, 1308 (D. Mass. 1996). In applying the law to this case, the limitations period, therefore, began to run when the Bank received the offering circulars beginning in 2007, as the Bank does not dispute receipt of the offering circulars in 2007 and numerous times thereafter. Under Mississippi law, upon receipt of the offering circulars, the Bank knew or should have known to make an inquiry regarding purchaser restrictions and SSW's allegedly negligent recommendation to purchase the Soloso securities. Weathers, 14 So.3d at 692 (¶14); see First Trust, 220 F.3d at 336-37; Kravetz, 941 F.Supp. at 1308.

         ¶34. In particular, the cover page of the offering circulars provides the following in all caps:

THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT NOR HAS EITHER OF THE CO-ISSUERS BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT. THE NOTES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED IN REGULATIONS UNDER THE SECURITIES ACT), EXCEPT TO "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR "ACCREDITED INVESTORS" (AS DEFINED IN RULE 50l(a) UNDER THE SECURITIES ACT). THE NOTES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT TO "QUALIFIED PURCHASERS" (WITHIN THE MEANING OF SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT) IN A TRANSACTION THAT DOES NOT CAUSE EITHER OF THE CO-ISSUERS TO BE REQUIRED TO REGISTER UNDER THE INVESTMENT COMPANY ACT. FOR CERTAIN RESTRICTIONS ON RESALE SEE "DELIVERY OF THE NOTES; TRANSFER RESTRICTIONS; SETTLEMENT."

         This language is repeated in numerous other places in each offering circular, including in the section entitled "NOTICES TO PURCHASERS," where this information again appears in all capital letters. Further, each offering circular possessed a glossary which defined the terms "Accredited Investor" (citing Rule 501(a) promulgated under the Securities Act), [10]"Qualified Institutional Buyer" (citing Rule 144A(a)(1) promulgated under the Securities Act), [11] and "Qualified Purchaser" (citing Section 3(c)(7) of the Investment Company Act), [12]by reference to the publically available federal laws and rules. The record reflects that it is undisputed that the Bank is neither a QIB under the Securities Act, nor a qualified purchaser under the Investment Company Act.

         ¶35. The Bank asserts that it could not have been put on notice of the eligibility requirements by reference to the offering circulars alone. The law reflects, however, that the existence of a fiduciary relationship does not permit "the principal of a fiduciary [to] . . . permanently and willfully . . . ignore patent evidence of the fiduciary's breach so as to delay indefinitely the accrual of an action against the fiduciary. Statutes of limitations exist to protect the courts from indolent claimants as well as defendants from stale claims." First Trust, 220 F.3d at 337-38. Additionally, the investment-management agreement between the parties did not relieve the Bank of the obligation to familiarize itself with the investment materials that were sent to it and were created pursuant to federal law. See Kravetz, 941 F.Supp. at 1308.

         ¶36. An application of the law to this case reflects that the language of the offering circulars, containing the federally required notice of purchaser restrictions with reference to publicly available federal law, was sufficient to put the Bank on inquiry notice that "[it] should carefully investigate the materials that suggest that a cause probably or potentially exists." See First Trust, 220 F.3d at 336-37; Kravetz, 941 F.Supp. at 1308 (determining that even where a fiduciary relationship was alleged, investors were imputed with knowledge of investment materials for purposes of determining when they should have been on inquiry notice); see also Weathers, 14 So.3d at 692 (¶14) (The limitations period begins when the plaintiff "knew or should have known or should have made an inquiry, based on the information available to [it]." (emphasis added)).

         ¶37. Relying primarily on Weathers, the Bank also asserts that the offering circulars were insufficient to put it on notice of any claim against SSW because the information that the offering circulars provided did not "clearly contradict" SSW's recommendations. We find that the Bank's argument on this issue is misplaced because it applies the wrong standard. Jurisprudence reflects that the applicable standard is whether the language was sufficient to put the Bank on notice to inquire about the purchaser-eligibility requirements. Weathers, 14 So.3d at 692 (¶14); see Spann, 987 So.2d at 449-50 (¶19); see also First Trust, 220 F.3d at 336 n.4.

         ¶38. In Weathers, 14 So.3d at 689 (ΒΆ2), the insured (Weathers) sued MetLife for fraud and other causes of action based on representations made by his agent that his premium obligation would "vanish" after ten years because the policy would become self-sustaining through dividends after that time. Weathers brought his lawsuit after he received notice about a class-action lawsuit against MetLife concerning the "vanishing" premium feature in his policy, arguing that his lawsuit ...


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