Lr Trust v. Rogers et al

REPLY BRIEF re MOTION to Dismiss

N.D. Ga.May 1, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION LR TRUST, derivatively on behalf of SUNTRUST BANKS, INC., Plaintiff, v. WILLIAM H. ROGERS, JR., PAUL R. GARCIA, M. DOUGLAS IVESTER, KYLE PRECHTL LEGG, DONNA S. MOREA, DAVID M. RATCLIFFE, FRANK P. SCRUGGS, JR., THOMAS R. WATJEN, DR. PHAIL WYNN, JR., ROBERT M. BEALL, II, DAVID H. HUGHES, WILLIAM A. LINNENBRINGER, JEROME T. LIENHARD II, Defendants, and SUNTRUST BANKS, INC., a Georgia corporation, Nominal Defendant. CIVIL ACTION NO. 1:16-CV-04132-SCJ REPLY MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 1 of 36 TABLE OF CONTENTS Page -i- I. The Complaint Does Not Satisfy Fed. R. Civ. P. 23.1...................................1 II. The DRC Conducted a Good Faith Reasonable Investigation.......................2 III. The DRC’s Findings Do Not Run Afoul of the Restitution and Remediation Agreement ...............................................................................10 IV. The Deferral of Certain Claims Is a Protected Business Judgment .............11 V. The DRC’s Decision Properly Accounted for Practical Considerations......12 VI. The Complaint Fails to State a Claim for Relief ..........................................13 A. Plaintiff’s Claims Are Barred by the Doctrine of Res Judicata.........14 B. The Board Is Exculpated from Liability by SunTrust’s Articles.......16 C. Plaintiff Fails to State a Caremark Claim and The Business Judgment Rule Bars Its Claims ..........................................................17 D. Plaintiff’s Claims Are Barred by the Statute of Limitations..............21 VII. Plaintiff Is Not Entitled to Discovery under the Circumstances ..................24 CONCLUSION.......................................................................................................25 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 2 of 36 -ii- TABLE OF AUTHORITIES Page(s) CASES Allen v. Columbus Bank & Tr. Co., 534 S.E.2d 917 (Ga. Ct. App. 2000)...................................................................22 Barovic v. Ballmer, 72 F. Supp. 3d 1210 (W.D. Wash. 2014) ...................................................8, 9, 10 Belendiuk v. Carrion, 2014 Del. Ch. LEXIS 126 (Del. Ch. July 22, 2014).............................................5 Benfield v. Wells, 749 S.E.2d 384 (Ga. Ct. App. 2013).....................................................3, 4, 14, 15 Benfield v. Wells, No. 2011CV205554, slip op. (Ga. Super. Ct. Oct. 29, 2012)...............................3 Bouldin v. Mortg. Elec. Registration Sys., 2015 U.S. Dist. LEXIS 180558 (N.D. Ga. Feb. 5, 2015)...................................16 Brazil v. Janssen Research & Dev. LLC, 196 F. Supp. 3d 1351 (N.D. Ga. 2016)...............................................................24 Bresalier v. Good, 2017 U.S. Dist. LEXIS 47579 (D. Del. Mar. 30, 2017) .....................................13 Brosz v. Fishman, 2016 U.S. Dist. LEXIS 180011 (S.D. Ohio Dec. 29, 2016).................................8 Citibank, N.A. v. Data Lease Fin. Corp., 904 F.2d 1498 (11th Cir. 1990) ..........................................................................16 City of Orlando Police Pen. Fund v. Page, 970 F. Supp. 2d 1022 (N.D. Cal. 2013)........................................................7, 8, 9 Cooper v. Countrywide Home Loans Bank of Am., 2016 U.S. Dist. LEXIS 130363 (N.D. Ga. July 15, 2016) .................................23 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 3 of 36 -iii- Copeland v. Lane, 2012 U.S. Dist. LEXIS 146815 (N.D. Cal. Oct. 10, 2012) ..................................6 Cordner v. Specialized Loan Servicing, LLC, 2016 U.S. Dist. LEXIS 88066 (N.D. Ga. June 7, 2016).....................................16 Cotton v. Fed. Land Bank, 676 F.2d 1368 (11th Cir. 1982) ..........................................................................14 Desimone v. Barrows, 924 A.2d 908 (Del. Ch. 2007) ........................................................................2, 20 Echeverria v. Bank of Am., N.A., 632 F. App’x 1006 (11th Cir. 2015) ...................................................................15 Egleston v. McClendon, 318 P.3d 210 (Okla. Ct. App. 2013) ...................................................................12 Espinoza v. Dimon, 807 F.3d 502 (2d Cir. 2015) ...............................................................................12 FDIC v. Adams, 2013 U.S. Dist. LEXIS 165232 (N.D. Ga. Apr. 10, 2013)...........................17, 18 FDIC v. Cameron, 986 F. Supp. 2d 1337 (N.D. Ga. 2013)...............................................................22 Frank v. Lo Vetere, 363 F. Supp. 2d 327 (D. Conn. 2005)...................................................................6 Furman v. Walton, 2007 U.S. Dist. LEXIS 39618 (N.D. Cal. May 16, 2007)..................................12 Godwin v. Mizpah Farms, LLLP, 766 S.E.2d 497 (Ga. Ct. App. 2014)...................................................................22 Goldstein v. Wells, No. 2007-CV-139004, slip op. (Ga. Super. Ct. Mar 13, 2008) ............................5 Halpert Enters., Inc. v. Harrison, 2008 U.S. App. LEXIS 22557 (2d Cir. Oct. 15, 2008) ....................................5, 6 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 4 of 36 -iv- Hendry v. Wells, 650 S.E.2d 338 (Ga. Ct. App. 2007)...................................................................22 In re Bank of Am. Corp. Sec., Deriv. & ERISA Litig., 2013 U.S. Dist. LEXIS 59912 (S.D.N.Y. Apr. 25, 2013) ..................................20 In re Bank of N.Y. Deriv. Litig., 320 F.3d 291 (2d Cir. 2003) .................................................................................2 In re Chemed Corp. S’holder Deriv. Litig., 2015 U.S. Dist. LEXIS 171754 (D. Del. Dec. 23, 2015) ...................................19 In re Citigroup Inc. S’holder Deriv. Litig., 964 A.2d 106 (Del. Ch. 2009) ......................................................................18, 19 In re Intel Corp. Deriv. Litig., 621 F. Supp. 2d 165 (D. Del. 2009)..............................................................20, 21 In re Johnson & Johnson Deriv. Litig., 865 F. Supp. 2d 545 (D.N.J. 2011).....................................................................19 In re JPMorgan Chase & Co. Deriv. Litig., 2014 U.S. Dist. LEXIS 46363 (S.D.N.Y. Mar. 31, 2014)..................................18 In re Sagent Tech., Inc. Deriv. Litig., 278 F. Supp. 2d 1079 (N.D. Cal. 2003)..............................................................14 In re UnitedHealth Grp. S’holder Deriv. Litig., 2008 Minn. Dist. LEXIS 12 (D. Minn. Dec. 19, 2008)........................................6 In re Verifone Holdings, Inc. S’holder Deriv. Litig., 2009 U.S. Dist. LEXIS 44138 (N.D. Cal. May 26, 2009)..................................20 In re World Acceptance Corp. Deriv. Litig., 2017 U.S. Dist. LEXIS 27519 (D.S.C. Feb. 28, 2017).......................................18 In re Zoran Corp. Deriv. Litig., 511 F. Supp. 2d 986 (N.D. Cal. 2007)..................................................................2 Ironworkers Dist. Council v. Andreotti, 2015 Del. Ch. LEXIS 135 (Del. Ch. May 8, 2015) ..............................................9 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 5 of 36 -v- Kaplan v. Wyatt, 484 A.2d 501 (Del. Ch. 1984) ............................................................................25 Kaplan v. Wyatt, 499 A.2d 1184 (Del. 1985) ...................................................................................4 Katell v. Morgan Stanley Grp., Inc., 1995 Del. Ch. LEXIS 76 (Del. Ch. June 15, 1995) ..............................................5 Lambrecht v. O’Neal, 504 F. App’x 23 (2d Cir. 2012) ..........................................................................12 Levine v. Damico, 2016 N.Y. Misc. LEXIS 1559 (N.Y. Sup. Ct. Apr. 26, 2016) .............................9 Levine v. Liveris, 2016 U.S. Dist. LEXIS 144468 (E.D. Mich. Oct. 19, 2016)..........................6, 13 Lieblein v. Ersek, 2016 U.S. Dist. LEXIS 44683 (D. Col. Mar. 31, 2016) .....................................18 Lindsay v. Bank of Am. Home Loans, 2016 U.S. Dist. LEXIS 121828 (N.D. Ga. Feb. 1, 2016).....................................3 Lowinger v. Oberhelman, 2017 U.S. Dist. LEXIS 50098 (C.D. Ill. Mar. 31, 2017)....................................12 MacCoumber v. Austin, 2004 U.S. Dist. LEXIS 14772 (N.D. Ill. July 29, 2004) ....................................12 Malivuk v. Ameripark, LLC, 2016 U.S. Dist. LEXIS 97093 (N.D. Ga. July 26, 2016) .....................................1 Mayfield v. Heiman, 730 S.E.2d 685 (Ga. Ct. App. 2012).............................................................22, 23 McCabe v. Foley, 424 F. Supp. 2d 1315 (M.D. Fla. 2006)..............................................................18 Millsap v. Am. Family Corp., 430 S.E.2d 385 (Ga. Ct. App. 1993).................................................................3, 6 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 6 of 36 -vi- Moorman v. Unumprovident Corp., 2005 U.S. Dist. LEXIS 46390 (N.D. Ga. Feb. 17, 2005)...................................24 Moreland v. Wood, 2015 U.S. Dist. LEXIS 50339 (S.D. Ga. Apr. 16, 2015) ...................................23 Mother Doe I v. Maktoum, 632 F. Supp. 2d 1130 (S.D. Fla. July 30, 2007) .................................................25 Mount Moriah Cemetery v. Moritz, 1991 Del. Ch. LEXIS 68 (Del. Ch. Apr. 4, 1991) ................................................5 Pelletier v. Zweifel, 921 F.2d 1465 (11th Cir. 1991) ..........................................................................14 Piven v. Ryan, 2006 U.S. Dist. LEXIS 12745 (N.D. Ill. Mar. 23, 2006) ...................................12 Pleming v. Universal-Rundle Corp., 142 F.3d 1354 (11th Cir. 1998) ..........................................................................15 Quantum Tech. Partners II, L.P. v. Altman Browning & Co., 2009 U.S. Dist. LEXIS 53648 (D. Or. June 23, 2009).........................................6 Ret. Sys. v. Crain, 2013 U.S. Dist. LEXIS 189037 (D.N.J. Sept. 26, 2013)....................................20 Rosenberg v. Gould, 554 F.3d 962 (11th Cir. 2009) ..............................................................................1 S.W. v. Clayton Cnty. Pub. Sch., 185 F. Supp. 3d 1366 (N.D. Ga. 2016).................................................................3 Sciabacucchi v. Burns, 2016 U.S. Dist. LEXIS 99427 (S.D.N.Y. July 29, 2016).....................................8 Smith v. SunTrust Bank, 754 S.E.2d 117 (Ga. Ct. App. 2014)...................................................................22 South v. Baker, 62 A.3d 1 (Del. Ch. 2012) ..................................................................................19 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 7 of 36 -vii- Spooner v. Wells Fargo Bank Nat’l Ass’n, 2015 U.S. Dist. LEXIS 115790 (N.D. Ga. Aug. 6, 2015) ..................................14 St. Clair Shore Gen. Emps. Ret. Sys. v. Eibeler, 2008 U.S. Dist. LEXIS 57546 (S.D.N.Y. July 30, 2008).................................3, 5 Steinberg v. Dimon, 2014 U.S. Dist. LEXIS 96838 (S.D.N.Y. July 16, 2014)...................................20 Thompson v. Scientific Atlanta, 621 S.E.2d 796 (Ga. Ct. App. 2005).................................................................3, 4 Williams v. Ocwen Loan Servicing, LLC, 2016 U.S. Dist. LEXIS 140744 (N.D. Ga. May 9, 2016)...................................14 Zucker v. Hassell, 2016 Del. Ch. LEXIS 180 (Del. Ch. Nov. 30, 2016) ...........................................9 STATUTES 8 Del. Code § 102(b)(7) ...........................................................................................17 O.C.G.A. § 7-1-493(e) .............................................................................................16 O.C.G.A. § 14-2-202................................................................................................17 O.C.G.A. § 14-2-744..................................................................................................2 OTHER AUTHORITIES Fed. R. Civ. P. 7(b)(1)..............................................................................................25 Fed. R. Civ. P. 23.1 ................................................................................................1, 2 N.D. Ga. L.R. 26.2 ...................................................................................................24 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 8 of 36 Despite having nearly two months to respond to Defendants’ Motion to Dismiss, Plaintiff’s Opposition does not raise a single legal or factual issue that should cause the Court to deviate from well-settled law that requires dismissal of the Complaint. Consequently, Defendants’ Motion to Dismiss should be granted. I. The Complaint Does Not Satisfy Fed. R. Civ. P. 23.1. As shown in Defendants’ opening brief, even though Plaintiff had the DRC Report for nearly a year before filing, its Complaint fails to meet Rule 23.1’s requirement that it state with particularity the reasons why the DRC’s refusal of the demand was wrongful. (Defs.’ Mot. to Dismiss at 9.) In opposition, Plaintiff does not address Defendants’ particularity argument. Instead, in a footnote in a separate section of its Opposition, Plaintiff requests leave to amend its Complaint “to cure any pleading infirmities” if the Court concludes it has failed to adequately plead wrongful refusal. (Pl.’s Opp. at 13 n.3.) That request is deficient as a matter of law. See Rosenberg v. Gould, 554 F.3d 962, 967 (11th Cir. 2009); Malivuk v. Ameripark, LLC, 2016 U.S. Dist. LEXIS 97093, at *13-14 n.6 (N.D. Ga. July 26, 2016) (“A response to a motion to dismiss is not the proper vehicle to seek leave to amend a complaint.”). Consequently, the Complaint should be dismissed. Plaintiff’s Opposition addresses only Rule 23.1’s contemporaneous ownership requirement and still misses the mark. Plaintiff concedes that Rule 23.1 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 9 of 36 -2- requires that it establish that it was a shareholder “at the time of the wrongful conduct.” (Pl.’s Opp. at 11 (citing Desimone v. Barrows, 924 A.2d 908 (Del. Ch. 2007)).) Although the Complaint challenges alleged misconduct beginning nearly three years before it allegedly acquired SunTrust stock, Plaintiff nevertheless argues that it has standing to challenge that conduct. (Id.) Not so. “Federal courts have held that, when a series of wrongful transactions is alleged and some of them transpired before plaintiff became a shareholder but others took place subsequent to that date, the shareholder’s action may be maintained only on the basis of the later events.” In re Bank of N.Y. Deriv. Litig., 320 F.3d 291, 297 (2d Cir. 2003) (emphasis added); see In re Zoran Corp. Deriv. Litig., 511 F. Supp. 2d 986 (N.D. Cal. 2007) (plaintiff only had standing to assert claims based on wrongs that occurred while holding stock and rejecting argument that it could challenge prior events). Under Rule 23.1, claims based on conduct pre-dating Plaintiff’s ownership of stock must be dismissed. II. The DRC Conducted a Good Faith Reasonable Investigation. In Defendants’ opening brief, they submitted substantial documentation, including the thorough and detailed DRC Report and supporting affidavits of the DRC members, demonstrating the DRC’s independence and the reasonableness of their good faith investigation. O.C.G.A. § 14-2-744. To avoid dismissal of the Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 10 of 36 -3- Complaint, it was “incumbent upon [Plaintiff] to come forward with evidence to support [its] claim of lack of independence of the [DRC] members.” Benfield v. Wells, 749 S.E.2d 384, 388 (Ga. Ct. App. 2013). Yet, in opposition, Plaintiff does not challenge the DRC’s independence and, thus, concedes that issue. See Lindsay v. Bank of Am. Home Loans, 2016 U.S. Dist. LEXIS 121828, at *5-6 n.3 (N.D. Ga. Feb. 1, 2016) (when the non-moving party fails to respond to an argument, “such claims are deemed abandoned and subject to dismissal”); see also S.W. v. Clayton Cnty. Pub. Sch., 185 F. Supp. 3d 1366, 1380 (N.D. Ga. 2016). Likewise, Georgia law is clear that dismissal also is appropriate where Plaintiff fails to refute Defendants’ showing that the DRC made its determination in good faith based on a reasonable investigation. See Benfield v. Wells, No. 2011CV205554, slip op. at 5 (Ga. Super. Ct. Oct. 29, 2012) (finding DRC Report supports dismissal, “unless Plaintiff can affirmatively point to material issues of fact regarding the independence and good faith of the DRC and the reasonableness of its investigation”), App’x II of Ex. A to Defs.’ Mot. to Dismiss; Thompson v. Scientific Atlanta, 621 S.E.2d 796, 799 (Ga. Ct. App. 2005); Millsap v. Am. Family Corp., 430 S.E.2d 385, 388 (Ga. Ct. App. 1993); see also St. Clair Shore Gen. Emps. Ret. Sys. v. Eibeler, 2008 U.S. Dist. LEXIS 57546, at *44 (S.D.N.Y. July 30, 2008) (“Given the wealth of documentary evidence consulted by the [DRC], Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 11 of 36 -4- the Court sees no cause to doubt the [DRC’s] good faith on that ground.”); Kaplan v. Wyatt, 499 A.2d 1184, 1191 (Del. 1985), as cited by Pl.’s Opp. at 34.1 With the assistance of experienced independent counsel, the DRC conducted a thorough, detailed, and lengthy investigation, spanning a year and encompassing nearly 6,500 hours of investigative time. (DRC Report at 12-13.) The DRC and its counsel directly interviewed or reviewed prior interview summaries of more than 70 current or former SunTrust personnel related to the specific issues raised in the Demand. (Id.) The DRC, through counsel, also interviewed SunTrust’s external counsel directly involved in the government investigations raised by the Demand. (Id. at 16.) In all, the DRC and its counsel reviewed over 1.8 million pages of materials, including regulatory oversight material, independent reviews performed by outside consultants (including Accenture, PricewaterhouseCoopers, Deloitte, KPMG, and others), and substantial documentation from the government’s investigation and settlements of SunTrust’s origination and 1 Relying on Delaware law, Plaintiff argues that the DRC’s refusal of the Demand is not protected by the business judgment rule if Plaintiff can show a reason to doubt the DRC’s due care in responding to the Demand. While Plaintiff’s challenges fail even under Delaware law, the Georgia Business Corporations Code requires Plaintiff to come forward with evidence establishing material issues of fact regarding the DRC’s independence and good faith and the reasonableness of its investigation. Benfield, supra, at 5; see also Thompson, 621 S.E.2d at 799. Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 12 of 36 -5- underwriting of mortgage loans insured by the FHA, administration of the HAMP program, and the NMS. (Id. at 12, 16, 169-74.) At bottom, Plaintiff makes one singular challenge to the reasonableness of the DRC’s investigation: the decision of the DRC not to interview the government “investigators” who “uncovered” certain SunTrust internal reports, only one of whom is even identified by name - Christy Romero of SIGTARP. Plaintiff’s argument fails on several fronts. It ignores well-settled law that “[w]hile a board of directors has a duty to act on an informed basis in responding to a demand such as [Plaintiff’s], there is obviously no prescribed procedure that a board must follow.” Halpert Enters., Inc. v. Harrison, 2008 U.S. App. LEXIS 22557, at *5 (2d Cir. Oct. 15, 2008). Indeed, “in any investigation, the choice of people to interview or documents to review is one on which reasonable minds may differ. Inevitably, there will be potential witnesses, documents and other leads that the investigator will decide not to pursue.” Id. at *2 (citing Mt. Moriah Cemetery v. Moritz, 1991 Del. Ch. LEXIS 68, at *4 (Del. Ch. Apr. 4, 1991)).2 Thus, “there is 2 See also Goldstein v. Wells, No. 2007-CV-139004, slip op. at *9 (Ga. Super. Ct. Mar 13, 2008) (rejecting reasonableness and good faith challenge based on special committee’s selection of interviewees), attached hereto as Exhibit 1; Belendiuk v. Carrion, 2014 Del. Ch. LEXIS 126 (Del. Ch. July 22, 2014); Katell v. Morgan Stanley Grp., Inc., 1995 Del. Ch. LEXIS 76 (Del. Ch. June 15, 1995); St. Clair, 2008 U.S. Dist. LEXIS 57546, at *42 (“[T]he SLC’s decisions regarding whom it Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 13 of 36 -6- no rule of general application that a board must interview every possible witness who may shed some light on the conduct forming the basis of the litigation.” Id.; see Millsap, 430 S.E.2d at 388 (committee interviewing only 8 of 22 defendants did not render investigation unreasonable); In re UnitedHealth Grp. S’holder Deriv. Litig., 2008 Minn. Dist. LEXIS 12, at *11 (D. Minn. Dec. 19, 2008). More to the point, Plaintiff does not (and cannot) specifically allege what information government investigators who were not interviewed might have had that would have changed the DRC’s decision to refuse the Demand. See, e.g., Levine, 2016 U.S. Dist. LEXIS 144468, at *40; Copeland v. Lane, 2012 U.S. Dist. LEXIS 146815, at *23 (N.D. Cal. Oct. 10, 2012) (finding plaintiff must identify un-interviewed individuals and explain how they possess information “unique and unobtainable without those interviews, and how those interviews if taken would have altered the Board’s decision to refuse demand”); Quantum Tech. Partners II, L.P. v. Altman Browning & Co., 2009 U.S. Dist. LEXIS 53648, at *12 (D. Or. June 23, 2009); Frank v. Lo Vetere, 363 F. Supp. 2d 327, 335-36 (D. Conn. 2005) (finding SLC not required to interview “executive and a key person identified by [plaintiff],” as SLC was aware of the “essence” of what the individual would have revealed and plaintiff failed to show an interview “would have provided new would interview provide no reason to doubt the Committee’s good faith.”); Levine v. Liveris, 2016 U.S. Dist. LEXIS 144468, at *15 (E.D. Mich. Oct. 19, 2016). Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 14 of 36 -7- information that would have changed the reasonableness of the SLC’s decision”).3 As both the allegations of the Complaint and the DRC Report make clear, these individuals were basing their investigations on their review of SunTrust’s internal documents, and the DRC and its counsel independently reviewed the same. (See Compl. ¶¶ 42-52; DRC Report at 12-16.) In fact, as detailed in the DRC Report, the DRC reviewed the Consent Judgment, the Restitution and Remediation Agreement, and the documents produced to the government, including the internal reports. The DRC also reviewed the DOJ’s detailed presentations of the government’s allegations of wrongdoing. (See DRC Report at 86-88.)4 Moreover, the DRC also interviewed the actual witnesses - the personnel directly involved in the underlying issues - as well as individuals outside of the Company, including outside counsel for matters referenced in the Demand, and analyzed independent reviews performed by outside consultants (including Accenture, PricewaterhouseCoopers, Deloitte, KPMG, and others). (See id. at 3 Even the primary case relied on by Plaintiff acknowledges it is Plaintiff’s “burden to show that the un-interviewed individuals ‘had knowledge that was unique and unobtainable without those interviews, and how those interviews if taken would have altered the board’s decision to refuse demand.’” City of Orlando Police Pension Fund v. Page (“Google”), 970 F. Supp. 2d 1022, 1032 (N.D. Cal. 2013). 4And, in connection with the HAMP Settlement, in addition to the voluminous documents produced, there were “significant exchanges” between government investigators and the Company regarding the government’s allegations, all of which were available to and reviewed by the DRC. (DRC Report at 136, 142-45.) Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 15 of 36 -8- 16.)5 The DRC plainly conducted a reasonable and good faith inquiry, and Plaintiff has presented no evidence that anyone not interviewed possessed unique information necessary for the DRC’s investigation to be reasonably complete. The case authorities Plaintiff relies upon for the notion that the failure to interview certain witnesses renders the DRC’s investigation unreasonable are unavailing. In each of Barovic v. Ballmer (“Microsoft”), 72 F. Supp. 3d 1210 (W.D. Wash. 2014), Brosz v. Fishman, 2016 U.S. Dist. LEXIS 180011 (S.D. Ohio Dec. 29, 2016), and Google, the committee either did not provide a copy of its report to the plaintiff or the court and restricted access to the reasons underlying its decision. Here, Plaintiff had the DRC Report for almost a year before filing the Complaint, and the full DRC Report has been publicly filed, subject to redactions of confidential information, and made available to the Plaintiff and the Court in unredacted form.6 Also, in Microsoft, the facts differed - there, the government 5See Sciabacucchi v. Burns, 2016 U.S. Dist. LEXIS 99427, at *22-23 (S.D.N.Y. July 29, 2016) (rejecting argument that the DRC’s failure to “‘attempt to interview a single individual from outside Xerox or ACS,’ specifically any representative of the SEC” rendered its investigation incomplete and supported an inference that its conclusions were not reached in good faith). 6 While Plaintiff incorrectly asserts that DRC Report was not made “publicly available,” the court in Google concluded that “Defendants’ failure to make the report public does not, by itself, make the refusal of the demand unreasonable.” Google, 970 F. Supp,. 2d at 1030. Rather, the court focused on the committee’s refusal to provide plaintiff or the court any details regarding its refusal, Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 16 of 36 -9- investigators were direct witnesses to the conduct that allegedly gave rise to the breach of duty by Microsoft directors. In contrast, here, the allegations of wrongdoing relate to matters that are purely internal to the Company, concern information within its possession, predate any government investigation, and investigators only came in after the fact to examine what happened.7 Finally, as to Google, the Delaware Chancery Court has rejected attempts like Plaintiff’s to overstate its holding. See Ironworkers Dist. Council v. Andreotti, 2015 Del. Ch. LEXIS 135, at *100-01 (Del. Ch. May 8, 2015) (declining to follow the Google decision); Zucker v. Hassell, 2016 Del. Ch. LEXIS 180, at *26 n.100 (Del. Ch. Nov. 30, 2016) (noting Delaware Chancery Court “has already declined to follow [Google] in a demand-refused context”). This Court should do the same. The DRC Report amply demonstrates that the DRC sought out “all material information, including external, non-innocence-corroborating evidence.” (Pl.’s unreasonably “insulat[ing] its investigation from any scrutiny.” Id. This is not the case here. 7 See Levine v. Damico, 2016 N.Y. Misc. LEXIS 1559 (N.Y. Sup. Ct. Apr. 26, 2016) (distinguishing Google and Microsoft where, “by contrast, all of the information relevant to defendants’ alleged failure to reveal that the FDIC would no longer be an Intralinks customer . . . was necessarily within the possession of Intralinks. Plaintiff fails to allege with particularity what information the FDIC could have provided to the Special Committee that Intralinks did not already possess. Accordingly, the fact that the Special Committee did not interview FDIC employees does not demonstrate that the investigation was unreasonable . . . .”). Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 17 of 36 -10- Opp. at 15 n.4 (quoting Microsoft).)8 No matter how much time and money the Company and DRC spent on the investigation, the Plaintiff would still claim that it should have gone one step further. Consistent with applicable standards, the DRC here took reasonable steps to investigate, and the Complaint should be dismissed. III. The DRC’s Findings Do Not Run Afoul of the Restitution and Remediation Agreement. In contending that the DRC found that “the Company and its personnel engaged in no misconduct,” Plaintiff mischaracterizes the contents of the DRC Report. (Pl.’s Opp. at 4.) The DRC Report plainly acknowledges that mistakes were made by SunTrust personnel and that deficiencies existed in its administration of the HAMP program between 2009 and 2010, consistent with the Restitution and Remediation Agreement and Attachment A to Exhibit J of the Consent Judgment. (See, e.g., DRC Report at 142, 146.) Regardless, the Restitution and Remediation Agreement does not apply to any statements made by any individual in a civil case initiated by a private party, and explicitly allows SunTrust to “take good faith positions in litigation involving any private party.” 8 Indeed, nothing could be more “external” and “non-innocence corroborating” than DOJ’s detailed presentations of the government’s allegations of wrongdoing, independent reviews of the Company’s operations performed by outside consultants, and oversight material prepared by and at the behest of its external regulator (i.e., the Federal Reserve), all of which was taken into consideration by the DRC. (See DRC Report at 16, 86-88, 169-74.) Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 18 of 36 -11- (Restitution & Remediation Agmt. at ¶ 3.) Similarly, pursuant to Attachment A to Exhibit J of the Consent Judgment, “SunTrust reserve[d] the right to contest the use and/or application of this [Statement of Facts] in any future litigation.” (Consent Judgment, Ex. J, Att. A at 15.) After a thorough investigation, the DRC found no evidence that any director or officer failed to act on an informed basis, in good faith, with ordinary prudence and due care, and in the honest belief that the action taken was in the best interest of the corporation and that SunTrust’s “corporate indemnification and/or exculpation provisions . . . would shield such individual from ultimate liability to the corporation.” (Id. at 82, 112-13.)9 IV. The Deferral of Certain Claims Is a Protected Business Judgment. Plaintiff contends that the DRC rejected certain of its claims without any investigation. That is not true. To the contrary, the DRC Report makes clear that these ongoing investigations and litigation were reviewed at length by the DRC, which concluded that “claims based on unresolved lawsuits and investigations are not currently ripe . . . [and] pending, unresolved matters mentioned by the shareholder cannot, as a matter of law, support a claim at this time.” (DRC Report 9 Plaintiff further mischaracterizes the DRC Report when it claims that SunTrust personnel viewed the deficiencies with a “sense of pride.” In fact, the DRC Report makes clear that SunTrust personnel viewed the internal audit reports with a sense of pride as demonstrating SunTrust’s willingness to “identify its problems and do its best to formulate and implement plans to improve its operations.” (DRC Report, Executive Summary at 7.) Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 19 of 36 -12- at 153-62, 167, 175 (emphasis added).) The DRC’s deferral of unripe, unresolved claims was an appropriate exercise of its business judgment. See MacCoumber v. Austin, 2004 U.S. Dist. LEXIS 14772, at *19 (N.D. Ill. July 29, 2004); Lowinger v. Oberhelman, 2017 U.S. Dist. LEXIS 50098, at *11 (C.D. Ill. Mar. 31, 2017); Piven v. Ryan, 2006 U.S. Dist. LEXIS 12745, at *10 (N.D. Ill. Mar. 23, 2006).10 Plaintiff’s Demand regarding these pending, unresolved matters was not ripe and could not support a current claim against any SunTrust director or officer. Consequently, the deferral of these claims was a protected business judgment. V. The DRC’s Decision Properly Accounted for Practical Considerations. Plaintiff claims, without citation, that the DRC was required “to quantify the competing financial consideration” when it considered the cost of litigation, diversion of management and employee resources, and the potential exhaustion of insurance coverage in refusing the Demand. (Pl.’s Opp. at 19.) This is not correct. Such considerations are appropriate and protected by the business judgment rule without need for quantification. See Espinoza v. Dimon, 807 F.3d 502, 508 (2d Cir. 2015) (“It is within the bounds of business judgment to conclude that a 10 Even if construed as a constructive “denial,” the DRC’s decision to defer action on the Demand pending the outcome of investigations and litigation “constituted a reasonable exercise of business judgment.” Egleston v. McClendon, 318 P.3d 210, 217 (Okla. Ct. App. 2013); see Furman v. Walton, 2007 U.S. Dist. LEXIS 39618 (N.D. Cal. May 16, 2007); Lambrecht v. O’Neal, 504 F. App’x 23 (2d Cir. 2012). Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 20 of 36 -13- lawsuit, even if legitimate, would be excessively costly to the corporation or harm its long-term strategic interests.”); Bresalier v. Good, 2017 U.S. Dist. LEXIS 47579, at *19 (D. Del. Mar. 30, 2017) (committee appropriately considered “practical factors” that weighed against bringing litigation, including low chance of success, substantial cost of litigation, lack of insurance to satisfy any successful claim, and the likelihood that litigation would distract key personnel); Levine, 2016 U.S. Dist. LEXIS 144468, at *34-35. Plaintiff’s argument is baseless. VI. The Complaint Fails to State a Claim for Relief. Because the DRC was independent and conducted a good faith reasonable investigation, the Court need not reach whether the Complaint should be dismissed for failure to state a claim. The Complaint does, however, fail on this additional independent ground. At the outset, Defendants note a fatal flaw of the Complaint, which Plaintiff wholly fails to address - namely, that Plaintiff lumps all of the Defendants together, ignoring the significant differences in their tenure. Notably, three of the Defendants - Scruggs, Garcia, and Morea - were not present for any part of the six-year span of conduct at issue in the Complaint, and Mr. Ratcliffe was on the Board for fewer than seven months at the end of that time. Because Plaintiff has pled no facts connecting Defendants with varying Board tenures to the alleged Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 21 of 36 -14- wrongful acts in question, it cannot state a claim. See In re Sagent Tech., Inc. Deriv. Litig., 278 F. Supp. 2d 1079, 1094-95 (N.D. Cal. 2003) (dismissing breach of fiduciary duty claims where plaintiffs pled “no facts showing how defendants that joined the board in late 2000 or in 2001 could be responsible for events that occurred in 1999”). Plaintiff has not indicated “which individual defendant or defendants were responsible for which alleged wrongful act” and, thus, its breach of fiduciary duty claims fail as a matter of law. See id. At a minimum, Defendants established, without rebuttal, that Defendants Scruggs, Garcia, and Morea were not present for any part of the complained-of conduct and should be dismissed. A. Plaintiff’s Claims Are Barred by the Doctrine of Res Judicata. Claims barred by res judicata include those that were or could have been raised in a prior suit arising out of the same transactions or events at issue. Williams v. Ocwen Loan Servicing, LLC, 2016 U.S. Dist. LEXIS 140744, at *20 (N.D. Ga. May 9, 2016); Pelletier v. Zweifel, 921 F.2d 1465, 1502 (11th Cir. 1991).11 The complaints in both Benfield and Mannato alleged that SunTrust’s lending practices and conduct in the mortgage business exposed SunTrust to 11 See Cotton v. Fed. Land Bank, 676 F.2d 1368, 1369 (11th Cir. 1982) (even if not actually litigated in prior foreclosure proceeding, plaintiffs’ challenges were barred by res judicata as they could have been raised therein); Spooner v. Wells Fargo Bank Nat’l Ass’n, 2015 U.S. Dist. LEXIS 115790, at *18 (N.D. Ga. Aug. 6, 2015), adopted by, 2015 U.S. Dist. LEXIS 115789 (N.D. Ga. Aug. 31, 2015). Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 22 of 36 -15- significant potential liability. (Compare Compl. ¶ 5-6, 96 (alleging damages based on government investigations and litigation) with Benfield Compl. ¶ 6; Mannato Compl. ¶ 18; see also Defs.’ Mot. to Dismiss at 25.)12 While Plaintiff now claims that its Complaint is based on different facts (Pl.’s Opp. at 24), the Complaint concedes that claims asserted in Benfield and Mannato were “based on substantially similar misconduct as that at issue in this action.” (Compl. ¶ 86.)13 Plaintiff does not address that concession in its Opposition, but it is fatal to Plaintiff’s claims and makes clear that this “substantially similar misconduct” was adjudicated in Benfield and Mannato and bars this suit.14 12 Despite Plaintiff’s contrary assertion, res judicata applies to all claims based on facts in existence at the time the original lawsuit was filed. Echeverria v. Bank of Am., N.A., 632 F. App’x 1006 (11th Cir. 2015). Benfield and Mannato were filed on or prior to December 19, 2011 and any claims premised upon extant conduct, including the vast majority of conduct as issue here, are barred by res judicata. 13 In an effort to avoid preclusion, Plaintiff now argues that the Benfield and Mannato complaints alleged certain facts “by way of background” (Pl.’s Opp. at 24), citing to Pleming v. Universal-Rundle Corp., 142 F.3d 1354 (11th Cir. 1998). Pleming, however, specifically addressed matters which were not pled in the complaint, but were interjected by a plaintiff into a pretrial statement as mere “background material to distinct legal claims” not having a res judicata effect. As Defendants pointed out in their Motion, the Benfield and Mannato Complaints alleged claims arising from the ERISA Action and litigation of “captive reinsurance” claims of the precise nature of those alleged in Plaintiff’s Complaint. (Compl. ¶ 83; see also Benfield Compl. ¶ 6; Mannato Compl. ¶¶ 81, 197.) 14 Relying entirely on Georgia law, Plaintiff argues that res judicata does not apply to Mannato, claiming it was not decided “on the merits.” (Pl.’s Opp. at 24.) However, federal law controls and makes clear that the Mannato dismissal with Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 23 of 36 -16- B. The Board Is Exculpated from Liability by SunTrust’s Articles. The two-thirds vote requirement under O.C.G.A. § 7-1-493(e) governing financial institutions does not apply here as SunTrust is incorporated under the Georgia Business Corporations Act as a Domestic Profit Corporation - not as a financial institution - a fact which is a matter of public record, readily available to Plaintiff prior to filing its Opposition. (See Ga. Bus. Search, available at https://ecorp.sos.ga.gov/BusinessSearch/.) In any event, the Articles of Amendment to the SunTrust Banks, Inc. Articles of Incorporation, dated April 19, 1988, that adopted the Article 15 exculpation clause (a certified copy attached hereto as Exhibit 2) record that this amendment was adopted by the holders of 69.6% of common shares. These Articles of Amendment - a public record available to Plaintiff - confirm that exculpation is available to Defendants and would bar any recovery. Plaintiff further confuses the issue by relying entirely on Delaware case authorities in an attempt to define the parameters of exculpation under the Georgia Business Corporations Code. Plaintiff’s argument falls flat. Plaintiff’s cases prejudice operated as a final judgment on the merits, which is entitled to preclusive effect. See Cordner v. Specialized Loan Servicing, LLC, 2016 U.S. Dist. LEXIS 88066, at *30 (N.D. Ga. June 7, 2016); Bouldin v. Mortg. Elec. Registration Sys., 2015 U.S. Dist. LEXIS 180558 (N.D. Ga. Feb. 5, 2015); Citibank, N.A. v. Data Lease Fin. Corp., 904 F.2d 1498, 1501 (11th Cir. 1990) (“‘[W]ith prejudice’ and ‘on the merits’ are synonymous terms.”). Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 24 of 36 -17- interpret 8 Del. Code § 102(b)(7), but O.C.G.A. § 14-2-202(b)(4) governs here, and there is a significant difference between these statutes that Plaintiff ignores. Delaware Code Section 102(b)(7) prevents the elimination or limitation of liability of a director for “any breach of the director’s duty of loyalty to the corporation or its stockholders; [and] for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law.” O.C.G.A. § 14-2-202(b)(4) does not contain any such limitation; rather, limitation of liability is fully permitted except with regard to “acts or omissions which involve intentional misconduct or a knowing violation of law.” Indeed, the Official Comments to O.C.G.A. § 14-2-202 make clear that “[s]ubsection (b)(4)(ii), containing one of the exceptions to permitted exculpation, has been altered by deletion of the phrase ‘not in good faith.’ The exculpatory statutes of a number of jurisdictions now follow this pattern of excluding from exculpation only acts involving intentional or willful ‘misconduct or a knowing violation of’ law.” (Emphasis added). Thus, Plaintiff’s entire premise that “such a provision” cannot exculpate conduct in breach of the duties of loyalty or good faith is simply wrong. C. Plaintiff Fails to State a Caremark Claim and The Business Judgment Rule Bars Its Claims. The Caremark pleading standard is well settled, and has been recognized by this Court. (Defs.’ Mot. to Dismiss at 31 (citing FDIC v. Adams, 2013 U.S. Dist. Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 25 of 36 -18- LEXIS 165232 (N.D. Ga. Apr. 10, 2013).) As Adams makes clear, a Caremark claim “is one of, if not the, most difficult theories upon which to prevail.” 2013 U.S. Dist. LEXIS 165232, at *24. It carries with it a requirement that predicate factual allegations be pled with particularity. McCabe v. Foley, 424 F. Supp. 2d 1315, 1324 (M.D. Fla. 2006); Lieblein v. Ersek, 2016 U.S. Dist. LEXIS 44683, at *19 (D. Col. Mar. 31, 2016).15 Plaintiff’s arguments, disconnected from the allegations of the Complaint, gloss over the most significant requirements of a Caremark claim, which Plaintiff simply has not alleged: (1) the Board’s knowledge of inadequate controls; and (2) conscious ignorance of associated “red flags.” In re Citigroup Inc. S’holder Deriv. Litig., 964 A.2d 106, 128 (Del. Ch. 2009) (dismissing complaint not specifying “how the director defendants knew of [control] inadequacies and consciously ignored them”).16 “The [Caremark] test is 15 Plaintiff’s argument that the standard is “inaction in the face of a known duty to act” merely restates the Caremark standard, does not support a breach of fiduciary duty claim on any other theory, and should be dismissed for these same reasons. See, e.g., In re JPMorgan Chase & Co. Deriv. Litig., 2014 U.S. Dist. LEXIS 46363, at *13-14 (S.D.N.Y. Mar. 31, 2014); In re World Acceptance Corp. Deriv. Litig., 2017 U.S. Dist. LEXIS 27519, at *23-24 (D.S.C. Feb. 28, 2017). 16 See also Lieblein, 2016 U.S. Dist. LEXIS 44683, at *19 (“A central feature of Caremark-type claims is the concept of ‘red flags.’ A plaintiff is required to plead, with particularity, certain circumstances or events that ‘put the directors on notice of problems with their systems, but which were consciously disregarded.’”). Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 26 of 36 -19- rooted in concepts of bad faith; indeed, a showing of bad faith is a necessary condition to director oversight liability.” Id. at 123. First, the Complaint only alleges that internal audit reports existed, but the mere existence of audit reports is not enough. While Plaintiff alleges that certain reports were “distributed to SunTrust management,” Plaintiff does not plead that the Board received them, or that each Board member reviewed them or was made aware of specific wrongdoing as a result. (See Compl. ¶¶ 48-50, 52-53.) Moreover, certain Defendants’ mere presence on the Board’s Audit and Risk Committee’s during their respective tenures does not change this result. See South v. Baker, 62 A.3d 1, 17 (Del. Ch. 2012) (“[A]n allegation that the underlying cause of a corporate trauma falls within the delegated authority of a board committee does not support an inference that the directors on that committee knew of and consciously disregarded the problem.”). Numerous courts in this situation have dismissed such claims. See, e.g., In re Chemed Corp. S’holder Deriv. Litig., 2015 U.S. Dist. LEXIS 171754, at *75-76 (D. Del. Dec. 23, 2015) (Caremark claims dismissed where “[p]laintiffs make generalized allegations about the role of the Audit Committee, without citing to specific information presented to that Committee or to specific knowledge held by these participating directors”), adopted by 2016 U.S. Dist. LEXIS 62648 (D. Del. May 12, 2016); In re Johnson & Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 27 of 36 -20- Johnson Deriv. Litig., 865 F. Supp. 2d 545, 576 (D.N.J. 2011) (rejecting inference that directors learned of wrongdoing through audit reports); Steinberg v. Dimon, 2014 U.S. Dist. LEXIS 96838 (S.D.N.Y. July 16, 2014) (dismissing Caremark claim as complaint cited internal reports but did not allege directors reviewed them); City of Roseville Emps.’ Ret. Sys. v. Crain, 2013 U.S. Dist. LEXIS 189037, at *18 (D.N.J. Sept. 26, 2013). Second, conclusory allegations that Defendants “ignored” problems and “recklessly disregarded” risks are insufficient to show that Defendants consciously failed to monitor or oversee the controls of the Company. (See Compl. at ¶¶ 101, 112.) 17 Plaintiff’s Opposition does not address this pleading deficit. Any claim that, because misconduct occurred, internal controls must have been deficient and the Board must have known and done nothing is unavailing. See, e.g., Desimone, 924 A.2d at 940; In re Verifone Holdings, Inc. S’holder Deriv. Litig., 2009 U.S. Dist. LEXIS 44138, at *21 (N.D. Cal. May 26, 2009); In re Bank of Am. Corp. Sec., Deriv. & ERISA Litig., 2013 U.S. Dist. LEXIS 59912, at *69 (S.D.N.Y. Apr. 25, 2013); In re Intel Corp. Deriv. Litig., 621 F. Supp. 2d 165 (D. Del. 2009) (“Intel”). The Complaint fails on the same grounds identified by the court in Intel: 17 Despite Plaintiff’s bald allegations, both the Restitution and Remediation Agreement and DRC Report make clear the Company took affirmative steps to improve upon any problems once identified. (See, e.g., DRC Report at 169-74.) Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 28 of 36 -21- [W]hat is most notable about Plaintiff’s “red flags” allegation, and the Complaint generally, is what is lacking. Though Plaintiff identifies a number of so-called “red flags,” Plaintiff fails to identify what the Directors actually knew about the “red flags” and how they responded to them. For instance, there are no allegations regarding how often the Board met, if at all, to discuss the alleged [misconduct] and no allegations that the Board approved any such “red flag” activity. Similarly, there are no allegations as to how often and by whom the Board was advised regarding the “red flags.” There is no allegation that any of the Directors is a party to any of the proceedings or investigations that Plaintiff alleges is a “red flag.” . . . Simply put, when it comes to “red flags,” Plaintiff’s approach is little more than to catalog the ongoing investigations into [the Company’s] alleged wrongdoing, and then assert that the thickness of the catalog demonstrates that [the Company’s] conduct was so egregious and widespread that the Directors certainly must now face . . . personal liability for having ignored the “red flags.” 621 F. Supp. 2d at 174-75. Plaintiff’s Complaint should be dismissed.18 D. Plaintiff’s Claims Are Barred by the Statute of Limitations. The parties agree that Plaintiff’s claims are governed by a four year statute of limitations. (Defs.’ Mot. to Dismiss at 33; Pl.’s Opp. at 32.) Although the Complaint alleges wrongful conduct occurring from January 2006 through March 2012 which damaged SunTrust, Plaintiff argues that its breach of fiduciary duty claims did not accrue until June 17, 2014 when SunTrust entered into the Consent Judgment. (Pl.’s Opp. at 6, 32.) Plaintiff’s argument is contrary to Georgia law. 18 As conceded by Plaintiff, its unjust enrichment claim rises or falls with its breach of fiduciary duty claim. (Pl.’s Opp. at 31.) Thus, this claim likewise fails. Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 29 of 36 -22- A cause of action for breach of fiduciary duty accrues each time defendant commits an alleged wrongful act that causes any appreciable damage. Godwin v. Mizpah Farms, LLLP, 766 S.E.2d 497, 504-05 (Ga. Ct. App. 2014); Hendry v. Wells, 650 S.E.2d 338, 343 (Ga. Ct. App. 2007). In fact, under Georgia law, the statute of limitations begins to run “even though the plaintiff has not sustained all or even most of his damages.” Hendry, 650 S.E.2d at 344 (emphasis added). Georgia courts consistently have measured the accrual date at the time of the alleged misconduct. See, e.g., Hendry, 650 S.E.2d at 343; Smith v. SunTrust Bank, 754 S.E.2d 117, 128 (Ga. Ct. App. 2014); Allen v. Columbus Bank & Tr. Co., 534 S.E.2d 917, 921 (Ga. Ct. App. 2000) (cause of action accrued and limitations period began to run each time an allegedly improper investment was made); Mayfield v. Heiman, 730 S.E.2d 685, 689 (Ga. Ct. App. 2012) (breach of fiduciary duty claim based on a loan “detrimentally affect[ing]” trust accrued at the time the loan closed); FDIC v. Cameron, 986 F. Supp. 2d 1337, 1340 (N.D. Ga. 2013). On its face, the Complaint is clear that the alleged misconduct ended in March 2012, and the statute of limitations began to run no later than that date. (Compl. ¶¶ 38- 42, 59-60.) While Plaintiff argues that its claims should be saved by equitable tolling, alleging that Defendants deliberately concealed the cause of action from it, there Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 30 of 36 -23- are no such allegations in the Complaint and the claim fails on this basis alone. Cooper v. Countrywide Home Loans Bank of Am., 2016 U.S. Dist. LEXIS 130363, at *11 n.6 (N.D. Ga. July 15, 2016) (“Plaintiff has not alleged any facts in support of equitable tolling, and therefore he has not [carried] his pleading burden.”); Moreland v. Wood, 2015 U.S. Dist. LEXIS 50339, at *30 (S.D. Ga. Apr. 16, 2015) (“[A] plaintiff must plead with particularity facts giving rise to a claim of fraudulent concealment before a federal court will toll the statute of limitations.”). Regardless, Georgia law does not recognize tolling in these circumstances. Under Georgia law, “[f]raud sufficient to toll the statute of limitation requires: (1) actual fraud involving moral turpitude on the part of the defendant; (2) the fraud must conceal the cause of action from the plaintiff, thereby debarring or deterring the knowing of the cause of action; and (3) the plaintiff must have exercised reasonable diligence to discover the cause of action, notwithstanding the failure to discover within the statute of limitation.” Mayfield, 730 S.E.2d at 690 (emphasis added); Moreland, 2015 U.S. Dist. LEXIS 50339, at *30 (“[M]erely stating that Defendants ‘fraudulently concealed their wrongful acts’ and tried ‘to impede and prevent the discovery of this litigation or cause of action’ is insufficient to support equitable tolling.”). Plaintiff simply has not shown that Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 31 of 36 -24- tolling is appropriate. All of Plaintiff’s claims are based upon alleged misconduct occurring prior to November 2012 and are barred by the statute of limitations. VII. Plaintiff Is Not Entitled to Discovery under the Circumstances. Plaintiff has had the DRC Report since January 8, 2016. Plaintiff filed its Complaint on November 3, 2016 and, on February 15, 2017, Defendants filed their Motions to Dismiss. Under Local Rule 26.2, discovery does not begin until 30 days after the first Defendant answers the Complaint. On March 3, 2017, the Court approved the parties’ consent motion delaying all discovery-related deadlines in this action until after the Court’s ruling on Defendants’ Motion. And, rather than filing a motion for leave to take discovery promptly when Defendants filed their Motions to Dismiss, Plaintiff waited nearly two months and simply included at the end of its Opposition a request that it be allowed discovery prior to a ruling on Defendants’ Motion. Under the Local Rules, discovery has not yet commenced, Plaintiff has unduly delayed in making its request, and, in any event, a request for discovery in a response brief is procedurally improper as “not presented by proper motion.” Brazil v. Janssen Research & Dev. LLC, 196 F. Supp. 3d 1351, 1365 (N.D. Ga. 2016); Moorman v. Unumprovident Corp., 2005 U.S. Dist. LEXIS 46390, at *9 (N.D. Ga. Feb. 17, 2005) (denying request for discovery where, “[i]n this case, [plaintiff] argued for additional discovery not in the context of a motion Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 32 of 36 -25- but within his response brief”); see also Mother Doe I v. Maktoum, 632 F. Supp. 2d 1130, 1146 (S.D. Fla. July 30, 2007) (discovery request made in opposition brief to motion to dismiss was no substitute for filing a formal motion for discovery and noting that, if “discovery is what Plaintiffs wanted, it is altogether unclear why they agreed with Defendants not to take any discovery until after the Court ruled on Defendants’ Motion to Dismiss”); Fed. R. Civ. P. 7(b)(1) (“[A]n application to the court for an order shall be by motion.”). Even if Plaintiff’s discovery request was made properly, Plaintiff has not provided a sufficient basis to show discovery is necessary. Indeed, as Plaintiff’s own authorities make clear, in this context, discovery is “intended more as an aid to the Court than it is as a preparation tool for the parties,” and “is not afforded to the plaintiff as a matter of right but only to such extent as the Court deems necessary.” Kaplan v. Wyatt, 484 A.2d 501, 510 (Del. Ch. 1984), aff’d by 499 A.2d 1184 (Del. 1985). The Court has the benefit of the robust DRC Report and, because the issues are sufficiently clear-cut, Plaintiff’s request should be denied. CONCLUSION For the foregoing reasons, this Court should dismiss Plaintiff’s Complaint with prejudice. Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 33 of 36 -26- Respectfully submitted, this 1st day of May, 2017. /s/ J. Timothy Mast J. TIMOTHY MAST Georgia Bar No. 476199 MARY M. WEEKS Georgia Bar No. 559181 TROUTMAN SANDERS LLP 600 Peachtree Street, Suite 5200 Atlanta, GA 30308 Tel: (404) 885-3000 Facsimile: (404) 962-2727 Attorneys for Defendants William H. Rogers, Jr., M .Douglas Ivester, Kyle Prechtl Legg, Donna S. Morea, Thomas R. Watjen, Dr. Phail Wynn, Jr., Robert M. Beall, II, David H. Hughes, William A. Linnenbringer, Jerome T. Lienhard II, and Nominal Defendant SunTrust Banks, Inc. Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 34 of 36 LOCAL RULE 7.1D CERTIFICATION By signature below, counsel certifies that the foregoing document was prepared in Times New Roman, 14-point font in compliance with Local Rule 5.1C. /s/ J. Timothy Mast J. Timothy Mast Georgia Bar No. 476199 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 35 of 36 -28- CERTIFICATE OF SERVICE The undersigned hereby certifies that the foregoing REPLY MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS was electronically filed with the Clerk of Court using the CM/ECF system, which serves notification of such filing to all CM/ECF participants. This 1st day of May, 2017. /s/ J. Timothy Mast J. Timothy Mast Georgia Bar No. 476199 Case 1:16-cv-04132-SCJ Document 52 Filed 05/01/17 Page 36 of 36 EXHIBIT 1 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 1 of 12 IN THE SUPERIOR COURT OF FULTON COUNTY. 1"\1 STATE OF GEORGIA Fik~D IN vFFICE DONALD AND DONNA GOLDSTEIN, ) [ Derivatively on behalf of Nominal) I . . MAR 1 3 2008 DINevfeEnsdTaMnEt NWTETLRLSUSRTEAINLCEST ATE» I DEPUTY CLH11(SUPER10R COURT , ., 1, FU!Tt.IN COUNlY GA ) ."~-.~,=< - " Plaintiffs, ) v. LEO F. WELLS, III, et al. Defendants, -and- WELLS REAL ESTATE INVESTMENT TRUST, INC., ) ) Civil Action File No. 2007-CV-139004 ! ~ ) ) ) ) ORDER Counsel appeared before the Court on February 22,2008, to present oral argument on Defendants' Motion to Dismiss. After reviewing the record of the case, the briefs submitted by the parties on this issue, and the arguments presented by counsel, this Court finds as follows: I. Facts Wells Real Estate Investment Trust, Inc. ("Wells REIT"), a Maryland corporation with its principal place of business in Georgia, was a limited term real estate trust that, per its Articles of Incorporation, must liquidate or list itself on a stock exchange by January 30, 2008. Wells REIT's Board of Directors decided to acquire two of its three primary advisors, Wells Real Estate Advisory Services ("WREAS") and Wells Government Services Inc. ("WGS"), (hereinafter, the "Internalization") prior to the 2008 deadline. After the Internalization, Wells REIT amended its Articles of Incorporation and 1 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 2 of 12 extended the liquidation deadline. Both the Internalization and the deadline extension were ratified by separate shareholders' votes. This case is a derivative action brought by certain complaining shareholders on behalf of Wells REIT that challenges the terms of the Internalization and its related shareholder proxy statement, alleges that the Internalization delayed or hindered meeting the 2008 deadline, and challenges ongoing advisor services contracts with Wells Advisory Service I, LLC ("WASI"). The Internalization, which closed in April 2007, was investigated by a special committee (the "Internalization Committee"), approved by the Board of Directors, and ratified by the shareholders. On August 1, 2007, unidentified Wells REIT shareholders sent a demand letter to Wells REIT. On August 14, 2007, counsel for the complaining shareholders, counsel for Wells REIT, and counsel for the independent directors met to discuss the demand letter. After the meeting, counsel for Wells REIT responded to shareholders' counsel with a formal request for additional information and to identify the complaining shareholders. On August, 24, 2007, this suit was filed, and shortly thereafter Wells REIT's Board' of Directors formed a demand review committee (the "DRC") to investigate the demand letter. In October, the DRC issued a report recommending that the demand letter be rejected. Thereafter, the Board of Directors rejected the demand and filed the motion to dismiss 1 addressed in this Order. II. Standards A party seeking a motion to dismiss brought under OCGA § 9-11-12(b)(6) for failure to state a claim upon which relief can be granted must demonstrate that plaintiff's 1 The individual director Defendants moved on October 31,2007, to join in Wells REIT's Motion to Dismiss. 2 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 3 of 12 allegations in the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof. Common Cause/Georgia v. City of Atlanta, 279 Ga. 480, 481 (2005). Defendants seek a dismissal based upon the determination of the ORC to reject the demand letter pursuant to O.C.G.A. § 14-2-744. See also, MD CODE ANN., Corp. & Assoc. §§ 3-203, 2-401 (West 2007). The DRC report, as well as other documents such as minutes from the Board of Directors, have been attached as exhibits to the various briefs on this issue. In Thompson v. Scientific Atlanta. Incorporated, 275 Ga. App. 680, the Georgia Court of Appeals reviewed a trial court's order dismissing a derivative suit pursuant to O.C.G.A. § 14-2-744, where a special litigation committee had rejected a shareholder's demand letter. The Court of Appeals acknowledged that a motion to dismiss, "under these circumstances is perhaps best considered as a hybrid summary judgment motion for dismissal. .. " Id. at 683 (quoting Zapata Corp. v. Lamdonado, 430 A.2d 779 (Del. 1981 ». Thus, the DRC report and other documents related to the DRC's review are properly before the Court on this motion. In light of the DRC report, Plaintiffs bear the burden of coming "forward with evidence to support [their] claim of lack of independence." 19.. The internal affairs of a corporation, such as actions involving officers and directors, are regulated by the law of the state of incorporation. Diedrich v. Miller & Meier & Assoc .. Architects & Planners. Inc., 254 Ga. 734, 735 (1985). Whether or not the director defendants breached their fiduciary duties to Plaintiffs and the other Wells REIT shareholders is determined in accordance with Maryland law under the internal affairs doctrine. 3 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 4 of 12 III. Adequacy of Shareholders' Demand Defendants petition the Court to grant its motion to dismiss on the grounds that the shareholders' demand letter was inadequate as a matter of law. Defendants argue that the demand letter failed to identify the complaining shareholders and provided insufficient factual information regarding their complaints and requested actions. Citing Smalcho v. Virkelo, 576 F. Supp 1439 (Del. Dist. 1983), Defendants argue that Plaintiffs' failure to respond to their August 8th and 22nd requests to supplement the demand letter (identify the shareholders and provide additional factual information) before filing suit rendered the demand inadequate. "[T]he identity of the shareholder requesting board action is equally important information for the board and the Court cannot expect a board of directors to act upon a shareholder's request without such information." Id. at 1445 (upholding a trial court's dismissal of a shareholder derivative action where the shareholders failed to supplement their demand letter by identifying the complaining shareholders before filing suit). Plaintiffs in this action, however, filed a verified Complaint on August 24,2007, and in the Complaint (Paragraph 82) stated that Plaintiffs, Mr. and Mrs. Goldstein, served a demand letter on Wells REIT's Board of Directors.2 Cf., Smalcho, 576 F. Supp. 1439 (plaintiff's complaint in that case was not verified). In addition, counsel for the independent directors represented to the Court that the DRC investigation focused on both the demand letter and the Complaint. With the combined information, the Court finds Defendants had information necessary to confirm the identity of the complaining shareholders for purposes of the DRC investigation. 2 On February 21, 2008, Mr. Goldstein filled an affidavit with the Court to dispel any confusion regarding whether he and his wife were the unidentified shareholders in the August 1, 2007 demand letter. 4 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 5 of 12 Second, Defendants argue that the demand letter contained insufficient factual information for the Board to investigate and act upon. The purpose of a demand letter is "to give directors a fair opportunity to initiate the action requested by appellants." Bender v. Schwartz, 917 A.2d 142, 154 (Md. App., 2007). The demand letter in this case identifies the Internalization and challenges it on the grounds that Wells REIT overcompensated the advisors, granted excessive employment agreements to certain executives, and continued an advisory relationship with WASI. In addition, the demand letter alleges that the Board failed to disclose a contemporaneous Lex-Winn offer to the shareholders or to negotiate in good faith with Lex-Winn, whom the complaining shareholders allege offered a higher per-share price and discouraged the Internalization. Plaintiffs additionally accuse interested directors of breaching their fiduciary duties and engaging in self-dealing transactions. The Court finds that all of these factors, combined with the August 14th meeting, provided the Board with sufficient information to proceed with its investigation. IV. Reasonableness of ORe Review Upon receiving a shareholder demand letter, a Maryland corporation's board of directors "must conduct an investigation into the allegations in the demand" and determine whether to pursue a lawsuit. Bender v. Schwartz, 917 A.2d 142,152 (Court of Special Appeals 2007). If the board of directors refuses a demand, then the complaining shareholder may bring a "demand refused" action.3 .!Q. 3 The timing of this lawsuit departs from that of a traditional derivative suit. Here, Plaintiffs presented their demand letter and then filed the Complaint three weeks later before the Board of Directors had completed their investigation or made a recommendation. Because, however, Plaintiffs' demand was ultimately denied, for purposes of this section, the Court will evaluate this case as a classic demand refused action. 5 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 6 of 12 A board of directors' investigation and refusal of a demand is evaluated by courts under the business judgment rule because a board's decision whether to pursue litigation is treated with substantial deference. A shareholder's suit may proceed, however, if the shareholder can demonstrate that either (i) "the board or committee's investigation or decision was not conducted independently and in good faith," or (ii) "the decision was not within the realm of sound business judgment." Id. (citing Levine v. Smith, 591 A.2d 194, 212 (Del. 1991); Scalasi v. Grills, 501 F .Supp.2d 356, 362-362 (E.D.N.Y. 2007). After making a demand upon a board of directors, the shareholder waives claims that the "board cannot independently act on the demand", but, instead, must allege that the board "in fact did not act independently .... " Bender v. Schwartz, 917 A.2d at 152 (emphasis in original). A. Independence Plaintiffs allege that the following facts demonstrate that the Board did not act independently in refusing their demand: (i) the overlap between the Board members on the Internalization Special Committee and the DRC, (ii) the Board of Directors' refusal of demand in another "factually similar" derivative suit challenging the internalization, and/or (iii) the representation of the DRC by the same independent counsel who represented the disinterested directors on the Internalization. Plaintiffs argue that the Board of Directors was essentially allowed to grade its own homework by allowing the same individuals (Directors and independent counsel) who recommended and approved the Internalization to review its propriety in the context of the demand letter. Three of the Directors on the Internalization Committee also served on the four- member DRC. Plaintiffs complain that Mr. Cantrell, a newly elected Director, was not 6 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 7 of 12 put on the ORC. On any board of directors, overlapping committee membership is a practical reality. Without more, this alone is insufficient to challenge the independence of the ORC's review. See,~, Scalisi v. Grills, 501 F.Supp.2d 356, 362-362 (upholding a committee's independence for purposes of applying the business judgment rule to a demand refusal); Webowsky v. Collumb, 362 Md. 581, 618 (Md. 2001) (board members' participation in underlying transactions did not demonstrate lack of independence sufficient for excuse of demand). Similarly, refusing a factually-related demand and/or participating in a defense of a factually-related suit is insufficient to establish lack of independence. Scalisi, 501 F.Supp.2d at 362-363. Plaintiffs' third challenge to the ORC's independence relates to its legal representation by Rogers & Hardin, LLP ("R&H"). R&H acted as special outside counsel to the Internalization Committee and to the ORC. See, In Re Consumers Power Co. Derivative Litigation, 132 F.R.O. 455, 474 (E.O. Mich. 1990) ("the integrity of a special litigation committee can be undermined if the attorneys represented and advising it have a sufficient conflict of interest to taint the committee's investigation and decision-making."). Plaintiffs challenge R&H's dual representation of the Internalization and ORC Committees as an opportunity for R&H to review its own performance and advice. Plaintiffs argue that for R&H to advise the ORC to take action on the demand would have been a criticism of the Internalization Committee's work, which was done under the guidance of R&H. Retaining the same special counsel to advise the Internalization Committee and the ORC, however, does not "taint" the independence of the ORC and remove it from the protection of the business judgment rule. See,~, In Re Boston Scientific Corp. 7 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 8 of 12 Shareholders' Litigation, 2007 WL 1696995 (S.D.N.Y 2007) (upholding the application of the business judgment rule to a demand committee's investigation where the committee retained the same counsel to advise it as advised the transaction being challenged in the demand); Madvig v. Gaither, 461 F. Supp. 2d 398, 408 (W.D.N.C., 2006) (finding no conflict to retain the same counsel to advise the audit committee and who handled the SEC allegations). Practical considerations such as the time and money required to bring in new counsel, catch them up to speed, and perform the investigation support the conclusion that outside counsel who advised a company on an underlying transaction are not necessarily conflicted out of advising a demand committee investigating that transaction. Plaintiffs also challenge R&H's impact on the DRC's independence because it represents the individual shareholders in this litigation. In Re Consumers Power Co. Derivative Litigation, 132 F.R.D. 455,474 (E.D. Mich. 1990). In In Re Consumer Power, the Court analyzed the existing attorney relationships and found a potential for a law firm's involvement to negate the independence of the special investigation committee where the law firm represented the interested directors on issues raised in the demand. Defendants, however, argue that in this case R&H has been aligned only with the independent directors in their capacity as both Board of Director committee members (Internalization and DRC) and now as defendants in this case. Defendants argue that the conflict opined upon in In Re Consumer Power would be analogous to R&H representing the interested directors and the corporation, which is not the factual situation before the Court. Without more, the Court declines to find that R&H's 8 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 9 of 12 involvement in the events giving rise to the law suit and in this litigation negate the ORe's independence.4 B. ORe Investigation, Review, and Report Plaintiffs also challenge the sufficiency of the ORe investigation, review and report arguing that it was neither reasonable nor based in sound business judgment. The reasonableness of a committee review is evaluated by factors such as (1) retention of independent counsel, (2) production of a report, including its length, procedures, reasoning and supporting documentation, (3) proper identification of the issues, investigation/interviewing of officers, directors and/or employees, (4) review of relevant documents, and (5) demand committee meetings. Bender v. Schwartz, 917 A.2d 142, 156. Plaintiffs specifically challenge the ORe review on the grounds that the ORe performed insufficient interviews (Le., did not interview the interested directors), reviewed an insufficient number of documents related to the Internalization, and failed to adequately meet and/or deliberate regarding the demand. On August 22,2007, the Wells REIT Board of Directors formed the ORe, which was comprised of four independent Directors represented by R&H as outside counsel. The DRe held a telephonic meeting on September 7,2007, and in-person meetings on September 12th and the 20th, which included presentations from Wells REIT's financial advisors. In addition, Defendants state that the ORe reviewed nine binders of documents relating to the Internalization including advisor reports and Board meeting minutes. Defendants also argue that the ORe's investigation was reasonable because it relied, in part, on its familiarity with and investigations regarding the Internalization, 4 The issues raised by Plaintiffs' counsel in this regard speak more to potential conflicts between multiple clients and potential disqualification issues. In light of the facts of this case, however, these concerns alone are not sufficient to negate the ORe's independence. 9 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 10 of 12 including prior investigations in factually similar law suits. See Frank v. LoVetere, 363 F.Supp.2d 327, 337 ("Plaintiff points to no authority or policy reason why it would be unreasonable as a matter of law for the [demand committee] to rely on a knowledgeable corporate official's expertise derived from his own involvement with the transaction when it occurred."). On September 24,2007, the ORC presented its conclusions to the Board and followed up with a 57-page report plus numerous exhibits on October 4, 2007.5 In its Report, the ORC concluded that there were inadequate facts to support a claim of breach of fiduciary duty, waste of corporate assets, unjust enrichment, or usurpation of corporate opportunity. Finally, the ORC concluded that pursuing this litigation was not in the best interest of the company because of the expense, disruption to business operations, distraction of management, and harm/difficulty in undoing the Internalization. Based upon the foregoing analysis, the Court finds that Plaintiffs have failed to raise facts sufficient to call into question the reasonableness of the ORC review. In light of the Bender factors, this Court holds that the ORC investigation, review, and report were reasonable and grounded in sound business judgment. 5 Plaintiffs concede that the DRe correctly identified and investigated the relevant issues, which were laid out in the demand letter and discussed between counsel during their various meetings. 10 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 11 of 12 v. Conclusion For the above stated reasons, Defendants' Motion to Dismiss is hereby GRANTED. SO ORDERED, this ~ day of March, 2008. Copies to: Counsel for Plaintiffs Corey D. Holzer, Esq. Michael I. Fistel, Jr., Esq. Marshall P. Dees, Esq. HOLZER HOLZER & FISTEL LLC 1117 Perimeter Center West, Suite E-107 Atlanta, Georgia 30338 (770) 392-0090 (770) 392-0029 fax Counsel for Plaintiffs John C. Herman, Esq. Ryan K. Walsh, Esq. COUGHLIN STOIA GELLER RUDMAN & ROBBINS 3424 Peachtree ST., Suite 1650 Atlanta, GA 30326 Counsel for Nominal Defendant Wells Real Estate Investment Trust, Inc. J. Kirk Quillian, Esq. J. Timothy Mast, Esq. Jamie Theriot, Esq. TROUTMANSANDERSLLP Bank of America Plaza, Suite 5200 600 Peachtree Street Atlanta, GA 30308 ( 404) 885-3000 ( 404) 885-3900 fax J:\Goldstein\ORDER on Motion to Dismiss.doc ALICE D. BONNER, SENIOR JUDGE Superior Court of Fulton County Atlanta Judicial Circuit Counsel for Leo F. Wells, III, Douglas P. Williams, Randall D. Fretz, Donald A. Miller, Robert E. Bowers, and Wells Capital, Inc. Michael R. Smith, Esq. Dan S. McDevitt, Esq. Michael J. Cates, Esq. Bethany M. Rezek, Esq. KING & SPALDING, LLP 1180 Peachtree St. Atlanta, GA 30309 4045724600 404572-5100 fax Counsel for Michael R. Buchanan, Richard W. Carpenter, Bud Carter, William H. Keogler, Jr., Donald S. Moss, Neil H. Strickland, and W. Wayne Woody Tony Powers, Esq. Kimberly Myers, Esq. ROGERS & HARDIN LLP 229 Peachtree Street N E 2700 International Tower Atlanta, GA 30303 404 522.4700 11 Case 1:16-cv-04132-SCJ Document 52-1 Filed 05/01/17 Page 12 of 12 EXHIBIT 2 Case 1:16-cv-04132-SCJ Document 52-2 Filed 05/01/17 Page 1 of 4 Control Number : J507871 STATE OF GEORGIA Secretary of State Corporations Division 313 West Tower 2 Martin Luther King, Jr. Dr. Atlanta, Georgia 30334-1530 CERTIFIED COPY I, Brian P. Kemp, the Secretary of State of the State of Georgia, do hereby certify under the seal of my office that the attached documents are true and correct copies of documents filed with the Corporations Division of the Office of the Secretary of State of Georgia under the name of SUNTRUST BANKS, INC. a Domestic Profit Corporation This certificate is issued pursuant to Title 14 of the Official Code of Georgia Annotated and is prima-facie evidence of the existence or nonexistence of the facts stated herein. Docket Number : 2220028 Date Inc/Auth/Filed : 07/24/1984 Jurisdiction : Georgia Print Date : 04/27/2017 Form Number : 215 Case 1:16-cv-04132-SCJ Document 52-2 Filed 05/01/17 Page 2 of 4 Case 1:16-cv-04132-SCJ Document 52-2 Filed 05/01/17 Page 3 of 4 Case 1:16-cv-04132-SCJ Document 52-2 Filed 05/01/17 Page 4 of 4