Western and Southern Life Insurance Company et al v. Countrywide Financial Corp. et al

MEMORANDUM in Support of MOTION to Dismiss Case and Joinder in Other Defendants' Motions to Dismiss 154

C.D. Cal.December 7, 2011

1 IRELL & MANELLA LLP David Siegel (101355) 2 dsi~gel@irell.com A. Matthew Ashley (198235) 3 mashley@irell.com Allison L Libeu (244487) 4 alibeu@irell.com Holly Gershow (253508) 5 hgershow@irell.com 1800 A venue of the Stars, Suite 900 6 Los Angeles, California 90067-4276 Telephone: (310) 2. 77-1010 7 Facsimile: (310) 203-7199 8 Attorneys. for Defendant Angelo Mozilo · 9 10 11 12 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations WESTERN DIVISION IN RE: COUNTRYWIDE FINANCIAL CORP. MORTGAGE-BACKED SECURITIES LITIGATION AMERICAN FIDELITY ASSURANCE COMPANY, Plaintiff, vs. COUNTRYWIDE FINANCIAL CORPORATION, eta!., Defendants. 2535258 MDL No. 11-ML-02265-MRP (MANx) DEFENDANT ANGELO MOZILO'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF CONSOLIDATED MOTION TO DISMISS PLAINTIFFS' COMPLAINTS Hr'g:. February 13,2012 at 11:00 a.m. February 14, 2012 at 1:00 p.m. Judge: Hon. Mariana R. Pfaelzer Ctrm: 12 Case No. 11-CV-07167-MRP (MANx) DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. I I -ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 1 of 40 Page ID #:4441 1 NATIONAL INTEGRITY LIFE INSURANCE COMPANY, 2 3 4 vs. Plaintiff, COUNTRYWIDE FINANCIAL 5 CORPORATION; et al., 6 7 Defendants. PUTNAM BANK, individually and on 8 behalf of all others similarly situated, 9 10 vs. Plaintiff, 11 COUNTRYWIDE FINANCIAL 12 CORPORATION, et al., 13 14 15 16 17 Defendants. SEALINK FUNDING LIMITED, Plaintiff, vs. 18 COUNTRYWIDE FINANCIAL 19 20 CORPORATION, et al., Defendants. 21 THE WESTERN AND SOUTHERN 22 LIFE INSURANCE COMPANY, eta!., 23 24 vs. Plaintiffs, 25 COUNTRYWIDE FINANCIAL CORPORATION, et al., 26 27 28 IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations Defendants. 2535258 Case No. 11-CV -09889~MRP (MANx) Case No. 11-CV-04698-MRP(MANx) Case No. 11-CV -08896-MRP (MANx) Case No. 11-CV-07166-MRP (MANx) DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 2 of 40 Page ID #:4442 1 TABLE OF CONTENTS 2 Page 3 I. INTRODUCTION ............................. ~ ........ ; .................................................... 1 4 II. BACKGROUND AND ALLEGATIONS AS TO MR. MOZIL0 ................. 3 5 III. ALL OF PLAINTIFFS' FEDERAL SECURITIES CLAIMS ARE TIME-BARRED AS TO MR. MOZILO ............................. ; ................ .4 6 7 A. Prior Complaints, Including the Nearly Identical MBS Class Action, Triggered Discovery as a Matter ofLaw ....................... 5 8 B · ir~~~~rr~~CC1~~~;.~~~~~.~~~~~~ .. ~~~~~~~~~~: .................. ; ........ ~ ......... 8 9 c. 10 11 IV. ALL OF PLAINTIFFS' STATE SECURITIES CLAIMS ARE TIME-BARRED AS TO MR. MOZILO ...................................................... 10 12 v. PLAINTIFFS' CIVIL CONSPIRACY CLAIMS ARE 13 TIME-BARRED AS TO MR. MOZILO ...................................................... 11 14 VI. AMERICAN FIDELITY'S AIDING AND ABETTING FRAUD CLAIM IS TIME-BARRED AS TO MR. MOZIL0 .................................... 13 15 VII. SEALINK'S NEGLIGENT MISREPRESENTATION CLAIM 16 IS TIME-BARRED AS TO MR. MOZIL0 .................................................. 14 17 VIII. THE STATE LAW CLAIMS AGAINST MR. MOZILO IN AMERICAN FIDELITY AND WESTERN & SOUTHERNFAIL 18 FOR LACK OF PERSONAL JURISDICTION ............................ : .............. 14 19 A. Plaintiffs Bear the Burden of Establishing Personal Jurisdiction .......................................................................................... 15 20 21 22 23 . 24 25 26 B. The Long-Arm Statutes Do Not Authorize Jurisdiction ..................... 16 C. Constitutional Due Process Does Not Authorize Jurisdiction ..................... : .................................................................... 18 1. 2. 3. Mr. Mozilo's Contacts Must Be Analyzed Separately from Countrywide Financial Corporation's Contacts ............................................................. 19 Mr. Mozilo Is Not Subject to General Jurisdiction .................. 19 Mr. Mozilo Is Not Subject to Specific Jurisdiction .................. 20 27 IX. CONCLUSION ............................................................................................. 25 28 IRELL & MANELLA LLP A Registered Llm~ed Llabll~y Law Partnership Including Professional Corporations 2535258 - 1- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 3 of 40 Page ID #:4443 1 2 TABLE OF AUTHORITIES Page(s) 3 Cases 4 Allstate Insurance Compa11y v. Countr)!lYide Financial Corporation, ---F. Sl!PP.· 2d ---- No. 11-cv-05236-MRP (MANx), 2011 WL · 5 506712s-~C.D. Caf. Oct. 21, 2011) ........................................................ passim 6 Alsop v. Carolina Custom Products, Inc.,· No. EDCV 07-212-V AP, 2007 WL 2441025 (C.D. Cal. Jun. 29, 7 2007) .............................................................................................................. 21 8 Amba Mktg. Sy_s., Inc. v. Jo,bar Int'l, Inc., 551 F.2d 784 (9th C1r. 1977) ......................................................................... 16 9 Ambassador v. Euclid, · · No. 80 Civ. 1235 (CBM), 1984 WL 341 (S.D.N.Y. May 24, 1984) .............................................................................................................. 14 10 11 16 Ark. Teacher Ret. Sys., Fire & Police Pension Ass 'n of Colo. v. Mozilo, No. 07-cv-06923-MRP (MANx) (C.D. Cal. Oct. 24, 2007) ........................... 6 17 Arneil v. Ramsey_, · 18 550 F.2d 774 (2d Cir. 1977) ............................................................................ 7 19 Auto Channel, Inc. v. Speedvision Network, LLC, 995 F. Supp. 761 (W.D. Ky. 1997) ............................................................... 15 20 Brown v. Gen. Steel Domestic Sales, LLC, . No. 08-cv-00779 MMM (SHX), 2008 WL 2128057 (C.D. Cal. May 19, 2008) ............................................................................................... 19 21 22 Costaras v. NBC Universal, Inc., 23 409 F. Supp. 2d 897 (N.D. Ohio 2005) ......................................................... 17 24 Country World v. ImJZerial Frozen Fopds, 589 N.Y.S.2d 81 (N.Y. App. D1v, 1992) .................................................... ;.14 25 Crown, Cork & Seal Co. v. Parker, 462 u.s. 345 (1983) ........................................................................................ 7 26 27 D'Addario v. Geller, · 264 F. Supp. 2d 367 (E.D. Va. 2003) ............................................................ 15 28 IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 11- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 4 of 40 Page ID #:4444 1 2 Page(s) 3 Data Disc, Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280 (9th Cir. 1977) .......................................................... ; ...... 16, 21 4 Eastwood v. Nat 'l Bank oi Commerce, . 5 673 F. Supp. 1068 (W.D. Okla. 1987) .......................................................... 13 6 Footbridge Ltd. Trust v. Countywide Fin. Corp., 770 F. Supp. 2d 618 (S.D.N.Y. 2011) ............................................................. 7 7 Ford Motor Credit Co. v. Jones, · No. 92428, 2009 WL 1912626 (Ohio Ct. App. July 2, 2009) ...................... 12 8 9 Franklin Prod., Inc. v. Gen. Nutrition Corp., · No. 2:05-cv-1061, 2007 WL 2462665 (S.D. Ohio Aug. 27, 2007) .............. 18 10 Gallaher v. Salem, . 11 No. CIV-07-974-F, 2009 WL 2591669 (W.D. Okla. Aug. 20, 2009) ................. ~ ............................................................................................. 14 12 Glencore Grain Rotterdam B. V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114 (9th Cir. 2002) ....................................................................... 24 13 14 Gordon & Co. v. Ross, 63 F. Supp. 2d 40'5 (S.D.N.Y. 1999) ............................................................. 12 15 16 17 Hardin v. Reliance Trust Co., No. 1:04 CV 02079, 2006 WL 2850455 (N.D. Ohio Sept. 29, 2006) .............................................................................................................. 12 Harman v. Bench Sec. Corp., 18 No. CV 950534266S, 1998 WL 46691 (Conn. Super. Ct. Jan. 22, 1998) .............................................................................................................. 11 19 Harris RutsfcJ! & Co. Ins. Servs. v. Bell & Clements Ltd., 20 328 F.3d 1122 (9th Cir. 2003) ....................................................................... 15 21 Helicopteros Nacionales de Colombia, S.A. v. Hall, 21-66 u.s. 408 (1984) ................................................................................ 18, 19 22 Hnath v. Hereford, . 23 757 F. Supp. 2d 1130 (N.D. Okla. 2010) ...................................................... 18 24 Hoover Co. v. Robeson Indus. Corp., 904 F. Supp. 671 (N.D. Ohw 1995) .............................................................. 17 25 In re Countryw_ide Fin. C()rJ2. _Deriv. Litig. 26 No. 07-CV-06923-MRP (MANx) {C.D. Cal. Feb. 15, 2008) ......................... 6 27 In re Country.yide Fin. Corp. Derivative Litig., 554 F. Supp. 2d 1044 (C.D. Cal. 2008) ................................. ; ......................... 8 28 IRELL & MANELLA LLP A Registered Lim~ed Llabll~y Law Partnership Including Professional Corporations 2535258 - 111- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP {MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 5 of 40 Page ID #:4445 1 2 Page(s) 3 In re Countr)l!Yide Fin. Corp. Sec. Litig., 588 F. Supp. 2d 1132 (C.D. Cal. 2008) ....................................................... 6, 8 4 In·re Dvnamic Random Access Memory (DRAM) Antitrust Litig., 5 1005 WL 2988715 (N.D. Cal. Nov. 7, 2005) .................................... 15, 18, 24 6 In re Nucorp Energy Sec. L~tig., 772 F.2d 1486 (9th C1r. 1985) ..................................................... 11, 12, 13, 14 7 8 In re Wells Far_gq Mortgage-Backed Certificates Litig.* No. 09-CV-01376-LHK, 2010 WL 4117477, at 6-7 (N.D. Cal. . 9 Oct. 19, 2010) ...................................................................... ; ........................... 5 Ind. PlumbingSupply, Inc. v. Sd. ofLynn, Inc., 10 880 F. Supp. 743 (C.D. Cal. 1995) ................................................................ 21 11 Int'l s~26 tfs~·3 'f'oa(f~'l).~.' ....................................................................... 17, 18, 24 12 Irizarry v. East Longitude Trading Co., Ltd., 13 296 F. Supp. 2d 862 (N.D. Ohio 2003) ......................................................... 17 14 Keeton46·5l(J.~~7/t"(f98i)~:.~~~:: ...................................................................... l9, 21 15 Keith v. Lighthouse Sec., Ltd., 16 No. 5:92 CV 0185(GLG), 1997 WL 380430 (D. Conn. June 17, 1997) .............................................................................................................. 10 17 Kennedy v. Freeman 18 . 919 F.2d 126 (lOth Cir. 1990) ...................................................................... ; 16 19 Kondrat v. Morris, . 118 Ohio App. 3d 198 (Ohio Ct. App. 1997) ............................ ~ .................. 11 20 Loyd v. Huntington Bank, . . 21 No. 1:08 CV 2301, 2009 WL 1767586 (N.D. Ohio June 18, 2009) ......................................................................................................... 11, 12 22 Luther v. Countryw)de Home Loans Servicing LP, . 23 No. BC380698 (Cal. Super. Ct. Nov. r4, 2007) ......................................... 4, 7 24 Malone v. Nuber, No. C07-2046RSL, 2009 WL 481285 (W.D. Wash. Feb. 23, 25 2009) .............................................................................................................. 15 26 Maricopa County v. Am. Petrofina, Inc., · 322 F. Supp. 467,469 (N.D. Cal. 1971) ....................................................... 15 27 McMahan & Co. v. Donaldson, Luffiin & Jenrette Sec. Corp., 28 727 F. Supp. 833 (S.D.N.Y. 1989) ................................................................ 12 IRELL & MANELLA LLP A Registered Limited Liabll~y Law Partnership Including Professional Corporations 2535258 -IV- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 6 of 40 Page ID #:4446 1 2 Page(s) 3 Me. State Ret. Sys. v. CountlYlJide Fin. Corp., 722 F. Supp. 2d 1157 (C.D. Cal. 2010) ........................................................... 5 4 Me. State Ret. Sys. v. Cm.,rr1!_ryl1!ide Fin. Cory., 5 No. 10-cv-00302-MRP (MANx) (C.D. Cal. Jan. 14, 2010) ........................... 4 6 Merck1~ocs: ct~1784~to1o) ················:··································································· 5 7 MFS Series Trust III ex rel. MFS Mun. High Income Fund v. Grainger, 8 96 P.3d 927 (Utah 2004) ............................................................................... 17 9 Morley v. Cohen, . . 610 F. Supp. 798 (D. Md. 1985) ................................................................... 15 10 National Integrity Life Insurance Co. v. Countr)l!Vide Financial Corp., . 11 No. 11-cv-09889 MRP (MANx) (C.D. Cal. Nov. 9, 2011) ................... passim 12 New Mexico State Inv. Council v. CountryVt!iqe Fin. Corp., No. D-0101-CV-2008-02289 (N.M. D1st. Ct. Apr. 14, 2009) ...................... 23 13 New York City Employees' Ret. §y_s. v. Countryy-vide Fin. Corp., 14 No. 08-cv-00492-0DW (C.D. Cal. Jan. 25, 2008) ......................................... 6 15· Office of the Atty Gen. v. Mozilo, · No. 08-30105 (19) (Fl. Cir. Ct. June 6, 2011) ............................................... 22 16 Pebble Beach Co. v. Caddy_ · 11 453 F.3d 1151 (9their. 2006) .................. , .................................................... 21 18 People v. Countrywide Fin. Cprp_., No. 08CH22994 (Ill. C1r. Ct. Jun. 24, 2010) ........................ ; ........................ 23 19 Premium Plus Partners, L.P. v. Goldman, Sachs & Co., 648 F.3d 533 (7th Cir. 2011) ........................................................................... 8 20 21 Putnam Bank v. Countryw_ide Financial Corp., . No. 11-cv-04698 MRP (MANx) (C.D. Cal. Jan. 27, 2011) .............. 1, 3, 4, 10 22 Schwarzenegger v. Fred Martin Motor Co., 23 374 F3d 797 (9th Cir. 2004) ......................................... : ......................... 20, 21 24 Sealink Funding Ltd. v. CountrJllYide Financial Corp., No. 11-cv-08898 MRP (MANx) (C.D. Cal. Sept. 29, 2011) .......... 1, 3, 14, 25 25 SECv. Ross, 504 F.3d 1130 (9th Cir. 2007) ....................................... : ............................... 18 26 27 Stichting Pensioenfonds ABP v. Count~ide Financial Corporation, ---F. Supr.. 2d ---- No. 10-cv-07275-MRP (MANx), 2011 WL 28 3558173 ~C.D. Cal. Aug. 9, 2011) ......................... ~·······························Passim IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 -v- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. I I-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 7 of 40 Page ID #:4447 1 2 Page(s) 3 Toyz, Inc. v. Wireless ToJJz, Inc. · No. C 09-05091 JF (HRL), 2010 WL 334475 (N.D. Cal. Jan. 25, 4 ' 2010) .............................................................................................................. 22 5 Trans[!. Alliance Bank, Inc. v. Arrow Trucking Co., · . No. 10-CV-16-GKF-PJC, 2011 WL 221863 (N.D. Okla. Jan. 21, 6 2011) .............................................................................................................. 13 7 United Financial Casualty__ Co. v. Countr~ide Financial Corporation, No. 11-cv-04766-MRP (MANx), slip op. (C.D. Cal. Nov. 16, 2011) .................................................................................................. 1, 2, 6, 10 8 9 Vaccariello v. Smith & NeRhew Richards, Inc., 763 N.E.2d 160 (Oliw 2002) ......................................................................... 11 10 Walker v. Walker, 310 P.2d 760 (Okla. 1957) ............................................................................ 14 11 12 Wash. State Plumbing & Pip_e. Pen$ion Tr. v. Countrywide Fin. Corp., No. BC39257r (Cal. Super. Ct. June 12, 2008) .............................................. 4 13 Western & Southern Life Ins. Co. v. Countrywide Financial Corp., 14 No. 11-cv-07166 MRP (MANx) (C.D. Cal. April27, 201l) ................. passim 15 Wyser-Pratte Mgmt. Co. v. Telxon Corp., 413 F.3d 553 (6th Cir. 2005) ......................................................................... 11 16 17 21 22 23 24 25 26 27 28 IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations Statutes Conn. Gen. Stat. § 36b-29(f) ................................................................................... 10 N.Y. C.P.L.R. 202 ......................................................................................... ~ .......... 12 N.Y. C.P.L.R. 214(4) ............................................................................................... 14 Ohio Rev. Code§ 1707.43(B) ......................................................... ; ....................... 10 Ohio Rev. Code§ 2307.382 .................................................................................... 17 Ohio Rev. Code § 2923.34(K) ................................................................................. 17 Okla. Stat. tit. 12, § 95(A)(3) ................................................................................... 13 2535258 -Vl- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 8 of 40 Page ID #:4448 1 I. INTRODUCTION1 2 These five cases, brought by sophisticated institutional purchasers of 3 Countrywide mortgage-backed securities ("MBS"), are nearly identical to three 4 others that this Court dismissed as to Defendant Angelo Mozilo: Stichting 5 Pensioenfonds ABP v. Countrywide Financial Corporation,--- F. Supp. 2d ----, 6 No. 10-cv-07275-MRP (MANx), 2011 WL 3558173 (C.D. Cal. Aug. 9, 2011); 7 Allstate Insurance Company v. Countrywide Financial.Corporation, ---F. Supp. 2d 8 ----,No. 11-cv-05236-MRP (MANx), 2011 WL 5067128 (C.D. Cal. Oct. 21, 2011); 9 and Un.ited Financial Casualty Co. v. Countrywide Financial Corporation, 10 No. 11-cv-04766-MRP (MANx), slip op. (C.D. Cal. Nov. 16, 2011) 11 ("Progressive"), Def. Mozilo's Request for Judicial Notice ("RJN") 'If 1, Ex. 1. In 12 Stichting, Allstate, and Progressive, the Court found that claims against Mr. Mozilo 13 were time-barred, and there is no reason for a different result here. 14 The limitations period for the federal and the state law securities claims 15 against Mr. Mozilo is one or two years from the date of discovery. The civil 16 conspiracy claims against Mr. Mozilo are also subject to a two-year limitations 17 period, which runs from discovery, as is the aiding and abetting fraud claim in 18 American Fidelity. Faced with these same and similar statutes of limitations, this 19 Court found that the allegations against Mr. Mozilo in Stichting, Allstate, and 20 Progressive --:the same allegations as advanced in this case - were time-barred as a 21 1 Mr. Mozilo brin~ this consolidated motion to dismiss: (1) the Amended 22 Complaint in American Fidelity Assurance Co. v. Countrywide Financial Corp., No. Il-cv-07167 MRP (MANx) (C.D. Cal. Apr. 11, 2011); (2) the Complaint in 23 National Integr_ity Life Insurance Co. v. Countrywide Financial CoJP., No. 11-cv-09889 M1U> (MANx) (C.D. Cal. Nov. 9, 2011); (3} the Comr,laint in 24 Putnam Bankv. Countrywide Financial Corp., No. 11-cv-04698 MRP tMANx) (C.D. Cal. Jan. 27, 2011); (4) the Co:Q112_laint in Sealink Funding Ltd. v. Countrywide 25 Financial Corp., No. 11-cv-08898 MRP (MANx} (C.D. Cal. Sept. 29, 2011); and (5) the Amended Complaint in The Western and Southern Life Insurance Co. v. 26 Countrywide financia1 Co"(p.~ No. 11-cv-07}66 MRP (MAN"x) (C.D. Cal. ~pril27, 2011) tcollecttvely, the plamttffs and operative complamts m the aforementiOned 27 cases are referred to herein as the "Plaintiffs" and the "Complaints," res12ectively). Mr. Mozilo also joins in and incot]Jorates by reference, to tlie extent applicable to 28 the claims against him, the other defendants' motions to dismiss. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 1 - DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. I I -ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 9 of 40 Page ID #:4449 1 matter of law. Stichting, 2011 WL 3558173, at* 13; Allstate, 2011 WL 5067128, at 2 * 13; Progressive, slip op. at 3. In fact, the Complaints here are even more stale; all 3 of them were filed after the complaints in Allstate, and all but one were filed after 4 the First Amended Complaint ("F AC") in Stichting. 5 The lone negligent misrepresentation claim against Mr. Mozilo in Sealink is 6 subject to a three-year limitations period, which runs from the date of the alleged 7 misstatement on which the plaintiff relied. Because all ofSealink's MBS purchases 8 were made more than three years before the complaint was filed, the negligent 9 misrepresentation claim against Mr. Mozilo is time-barred as a matter of law. 10 As in Stichting, Allstate, and Progressive, the Complaints demonstrate on 11 their face that Plaintiffs discovered, or reasonably could have discovered, their 12 alleged claims against Mr. Mozilo years ago. The alleged misconduct is the same 13 conduct alleged in a nearly-identical MBS class action filed more than three years 14 before the Complaints at issue here. Mr. Mozilo was not named in that class action 15 and that fact alone precludes any argument that Plaintiffs' claims could relate back 16 as to him to the earlier-filed class case. Moreover, the Complaints repeatedly crib 17 from prior shareholder, regulatory, and other complaints against Countrywide and 18 Mr. Mozilo, each of which also was filed long ago, further establishing that these 19 cases are time~barred as to Mr. Mozilo. See, e.g., Am. FidelityAm. Compl. ,-r 213 20 (citing Countrywide shareholder class action as supposed proof of alleged 21 abandonment of underwriting guidelines); Sealink Compl. ,-r 93 {same). 22 In addition, the state law claims against Mr. Mozilo in American Fidelity and 23 Western & Southern fail for lack of personal jurisdiction. American Fidelity and 24 Western & SQuthern were originally brought in Oklahoma and Ohio, then 25 transferred to this Court as part of the Countywide MBS multi-district litigation 26 ("MDL"). When a case is transferred to an MDL, personal jurisdiction is analyzed 27 from the perspective of the transferor court, meaning that if Oklahoma and Ohio 28 lack personal jurisdiction over Mr. Mozilo, the cases must be dismissed. Moreover, IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 -2- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 10 of 40 Page ID #:4450 1 because the federal claims are untimely as a matter of law, the nationwide service of 2 process provisions in the federal securities acts cannot be used as the basis for 3 personal jurisdiction over Mr. Mozilo. Plaintiffs must proffer an independent 4 jurisdictional basis for any remaining state law claims. Because Mr. Mozilo had no 5 contact with Oklahoma or Ohio, Plaintiffs cannot make this showing. 6 II. BACKGROUND AND ALLEGATIONS AS TO MR. MOZILO 7 The Claims against Mr. Mozilo. Mr. Mozilo faces the following claims: 8 (1) Section 15 under the Securities Act of 1933 (the "Securities Act")- in American 9 Fidelity; (2) Section 20(a}under the Securities Exchange Act of 1934 (the 10 "Exchange Act") -in National Integrity, Putnam, and Western & Southern; 11 (3) Connecticut Uniform Securities Act- in Putnam; ( 4) Ohio Securities Act- in 12 National Integrity and Western & Southern; (5) Ohio Corrupt Activities Act- in 13 National Integrity and Western & Southern; ( 6) Aiding and Abetting Fraud - in 14 American Fidelity and Sealink; (7) Negligent Misrepresentation- in Sealink; and 15 (8) Civil Conspiracy- in National Integrity and Western & Southern. 16 For the convenience of the Court, attached hereto as Appendix A is a chart of· 17 the claims against Mr. Mozilo, the limitations period, and a citation to the governing 18 statute/case law providing that limitation period. 19 The Securitizations. All the claims here rest upon alleged misstatements in 20 MBS offering documents. See, e.g., Am. Fidelity Aril. Compl. ~~ 1, 4, 41-42, 72-93, 21 253-56, 403, 460-62, 464-65; Nationa( Integrity Compl. ~~ 1, 76-80, 84, 205-07, 22 241-44, 257-58, 260-62, 283-86, 400, 405, 409, 452; Putnam Compl. ~~ 1-2, 5, 23 10-11, 36, 44, 53, 55-82, 97-100, 172-73; Sealink Compl. ~~ 1-2, 52-64, 82, 95-96, 24 98-118, 129, 139, 150, 161-64, 166; Western & Southern Am. Compl. ~~ 1, 76-80, 25 84, 205-07, 241-44, 257-58, 260-62, 283-86, 400, 405, 409, 452. The MBS 26 securitizations at issue are alleged to have taken place between 2005 and March 25, 27 2008. See Am. Fidelity Am. Compl. ~ 5; National Integrity Compl. ~ 75; Putnam 28 Compl. ~~ 2, 11; Sealink Compl. ~ 2; Western & Southern Am. Compl. ~ 75. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 3- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. Il-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 11 of 40 Page ID #:4451 1 The Class Action. On November 14, 2007, a class action attacking hundreds 2 of Countrywide MBS securitizations was filed in California state court. Luther v. 3 Countrywide Home Loans Servicing LP, No. BC380698 (Cal. Super. Ct. Nov. 14, 4 2007). On June 12, 2008, another class action added more securitizations. Wash. 5 State Plumbing & Pipefitting Pension Trust v. Countrywide Fin. Corp., 6 No. BC392571 (Cal. Super. Ct. June 12, 2008). These actions were consolidated in 7 2008 and ultimately re-filed in·January 2010 before this Court. Me. State Ret. 8 Sys. v. Countrywide Fin. Corp., No. 10-cv-00302-MRP (MANx) (C.D. Cal. Jan. 14, 9 2010). Nearly every MBS deal at issue here was also at issue in the class action. 10 Compare Am. Fidelity Am. Compl. ,-r 32, National Integrity Compl. ,-r,-r 75, 394, 11 Ex. A, Putnam Compl. ,-r 15, Sealink Compl. ,-r 33, and Western & Southern Am. 12 Compl. ,-r,-r 75,394, Ex. A with Me. State Compl. ,-r 47, RJN ,-r 2, Ex. 2 at 22-52. 13 However, Mr. Mozilo was never a party to the class action. See Putnam 14 Compl. ,-r 117 ("Except for the Bank of America Defendants, Mozilo, and 15 Countrywide Capital Markets, each Defendant in this Complaint was also a 16 defendant in the Luther or Washington State Plumbing class actions."). He appeared 17 as a defendant for the first time when Plaintiffs filed their respective Complaints in 18 these actions, the earliest on January 27, 2011 and latest on November 9, 2011. This 19 Court will recall that the complaint in Allstate and the amended complaint in 20 Stichting were filed on December 27, 2010 and February 14, 2011, respectively- 21 making the Complaints here even more stale. 22 III. ALL OF PLAINTIFFS' FEDERAL SECURITIES CLAIMS ARE 23 TIME-BARRED AS TO MR. MOZILO 24 Mr. Mozilo faces control person claims under Section 15 of the Securities Act 25 in American Fidelity and Section 20(a) of the Exchange Act in National Integrity, 26 Putnam, and Western & Southern? Claims under the Securities Act must be 27 2 Although Mr. Mozilo faced a Section 20(a) claim in American Fidelity's 28 original complaint, the Section 20(a) claim against him has been dropped from the amended complaint. Am. Fidelity Am. Compl. ,-r 402 . . IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 4- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 12 of 40 Page ID #:4452 1 brought within "one year after the discovery ofthe untrue statement or the 2 omission." 15 U.S.C. § 77m. Claims under the Exchange Act must be brought 3 within two years "after the discovery of the facts constituting the violation." 28 4 u.s.c. § 1658(b)(1). 5 The limitations period under the Securities Act runs from discovery of the 6 alleged misstatement "or after such discovery should have been made by the 7 exercise of reasonable diligence." 15 U.S.C. § 77m. Similarly, under the Exchange 8 Act, "discovery ... encompasses not only those facts the plaintiff actually knew, but 9 also those facts a reasonably diligent plaintiff would have known." Merck & Co. v. 10 Reynolds, 130 S. Ct. 1784, 1796 (2010) (internal quotations omitted); Stichting, 11 2011 WL 3558173, at *6; Allstate, 2011 WL 5067128, at *11. Thus, the limitations 12 period begins to run when the plaintiff discovers or reasonably could have 13 discovered the facts constituting the violation- whichever comes first. Merck, i30 14 S. Ct. at 1794-95; Stichting, 2011 WL 3558173, at *6; Allstate, 2011 WL 5067128, 15 at * 11. Under this standard, the statute begins to run (at the latest) when the facts 16 constituting the violation are publicly disclosed, including through other lawsuits. 17 In re Wells Fargo Mortgage-Backed Certificates Litig., No. 09-CV-01376-LHK, 18 2010 WL 4117477, at *6-7 (N.D. Cal. Oct. 19, 2010) (dismissing lawsuit as stale 19 because its claims overlapped with a prior lawsuit concerning the same MBS 20 offerings with the same registration statements and prospectuses); Stichting, 20 11 21 WL 3558173, at *8, 10-11; Allstate, 2011 WL 5067128, at *11; Me. State Ret. Sys. 22 v. Countrywide Fin. Corp., 722 F. Supp. 2d 1157, 1165 (C.D. Cal. 2010). · 23 A. Prior Complaints, Including the Nearly Identical MBS Class Action, 24 Triggered Discovery as a Matter of Law 25 Here, the Complaints demonstrate on their face that the federal securities 26 claims against Mr. Mozilo are time-barred. The allegations in the Complaints are 27 substantively identical to the Stichting, Allstate, and Progressive complaints that this 28 Court already found to be time-barred. As the Court found in Stichting, Allstate, IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 5- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 13 of 40 Page ID #:4453 1 and Progressive, other complaints and press reports made clear that a reasonable 2 investor exercising reasonable diligence would have discovered facts sufficient to 3 state every element of the plaintiffs' federal securities claims (including scienter) by 4 late 2007. Stichting, 2011 WL 3558173, at *8-13; see also Allstate, 2011 WL 5 5067128, at* 11; Progressive, slip. op. at 3. This finding dooms Plaintiffs' claims 6 here because the Complaints were not filed until 2011, more than three years after 7 the.applicable one- and two-year limitations periods began to run. 8 As in Stichting, Allstate, and Progressive, the gravamen of the Complaints is 9 that "Countrywide knowingly and systematically abandoned its underwriting 10 practices." Compare Stichting, 2011 WL 3558173, at *7, Allstate, 2011 WL 11 5067128, at* 11, and Progressive, slip. op·. at 3 with Appendix B hereto. As this 12 Court has previously held, abandoned underwriting allegations against Countrywide 13 and Mr. Mozilo are not new, having been made by other plaintiffs since 2007. 14 Stichting, 2011 WL 3558173, at *8-9 ("Here, the gravamen ofPlaintiffs claim is 15 that Countrywide wholly abandoned its underwriting standards. The press and 16 numerous widely reported lawsuits had made exactly this allegation by the end of 17 2007."); Allstate, 2011 WL 5067128, at *11; Progressive, slip. op. at 3.3 For 18 example, as this Court has recognized, the MBS class action (which was filed on 19 November 14, 2007 and in which Plaintiffs were putative class members) alleged 20 the "the same abandonment of underwriting standards and misrepresentations." 21 Stichting, 2011 WL 3558173, at *8; see also Luther v. Countrywide Home Loans 22 Servicing LP, No. BC380698 (Cal. Super. Ct. Nov. 14, 2007).4 23 3 See also, e.g., Ark. Teacher Ret. Sys~Fire & Police Pension Ass 'n of Colo. 24 v. Mozilo, No. 07-cv-06923-MRP (MANx) C.D. Cal. Oct. 24, 2007);Argent Classic Convertible Arbitrage Fund L.P. v. ountrywide Fin. CoJP., No. 07-CV- 25 07097-MRP (MANx) (C.D. Cal. Oct. 30, 2007); New York City Em[!loyees 'Ret. Sys. v. Countrpyide fin. Corp., N?· 08.-~v-00492-0DW (C.D. Cal. Jan. 25, 2008); 26 In re Countr)l!Vzde Fzn. Cory. Derzv. Lztzg., No. 07-CV-06923-MRP (MANx) (C.b. Cal. Feb. 15, 2008); In re CountrywJde Fin. Corp. Sec. Litig., No. 07-CV-05295- 27 MRP (MANx) (C.b. Cal. Apr. 11, 2008). 4 Relying on Luther,· Plaintiffs claim the benefit of class action tolling under 28 American Pipe & Construction Co. v. Utah, 414 U.S. 528 (1974). See Am. Fidelity IRELL & MANELLA LLP A Registered Limtted Liabiltty Law Partnership Including Professional Corporations 2535258 - 6- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 14 of 40 Page ID #:4454 1 The Complaints themselves concede that Plaintiffs' allegations are not new: 2 "Defendants' activities as a buyer, financer and securitizer of residential mortgage 3 loans have been the focus of numerous government investigations and prosecutions 4 as well as private investor lawsuits." Sea/ink Compl. ~ 34; see also Am. Fidelity 5 Am. Compl. ~ 198 ("Countrywide's unlawful conduct ha[s] prompted a substantial 6 number of public and private inquiries, investigations and actions."); National 7 Integrity Compl. ~~ 13-14; Western & Southern Am. Compl. ~~ 13-14. Indeed, 8 Plaintiffs cite many of these complaints as purported evidence of their claims. See, 9 e.g., Am. Fidelity Am. Compl. ~~59, 100-03, 154-157, 159, 161-62, 167, 174-76,. 10 178-79, 183, 204-06, 208-10, 213, 237-39; National Integrity Compl. ~~ 107-111, 11 163, 247-49, 253-54; Sea/ink Compl. ~~ 6, 82, 84-85, 92-93; Western & Southern · 12 Am. Compl. ~~ 107-111, 163, 247-49, 253-54. 13 By copycatting allegations made long ago in shareholder, regulatory, and 14 other actions against Countrywide and Mr. Mozilo, the Complaints demonstrate on 15 their face that the claims against Mr. Mozilo are time-barred as a matter oflaw.:s 16 17 Am. Com_pl. ~~ 380-90, 444, 456; National Integrity Compl. ~~ 389-98; Putnam Compl. ~,!105-16; Western & Southern Am. Compl. ~~ 389-98. However, in 18 additiOn to the reasons tolling does not apply to ali defendants, tolling cannot apply to Mr. Mozilo because he was not a defendant in the MBS class action. See 19 Arneil v. Ramsey, 550 F.2d 774, 782 n.10 (2d Cir. 1977), overruled on other grounds by Crown, Cork & Seal Co. v. Parker, 462 U.S'. 345, 348 50 (1983); 20 Footbridge Ltd. Trust v. Countywide Fin. Corp., 770 F. Supp. 2d 618, 624 n.1 21 (S.D.N.Y. 2011). . .· 5 The Section 15 and Section 20(a) control gerson claims against Mr. Mozilo 22 should be dismissed for the additional reason that -rlaintiffs cannot plead valid and timely_m-edicate violations under the Securities Act or the Exchange Act. Stichting, 23 2011 WL 3558173, at* 11; Allstate, 2011 WL 5067128, at* 13. In addition, the Section 15 claim is so stale as to Mr. Mozilo that it is barred by the Securities Act's 24 three-year statute of re2ose. 15 U.S.C. § 77m; Am. Fidelity Am. Compl. ~ 5 (allegmg most recent JVJBS purchase took place in November 2007); see also 25 Countrywide Defs' Mem. ISO Mot. to Dismiss ("Countrywide Defs' Mem.") Part liLA. Likewise, the Section 20(a) claims with re~ect to many of the MBS 26 securitizations are also b~rred by the ~xchange Act's tive-year stat~te ofre2ose. 28 U.S.C. § 1658(b)(2); Natwnal Integrzty Compl. ~~ 75, Ex. A (allegmg ten MBS 27 12urchases took place more than five _years ago); Western & Southern Am. Compl. ,,~ 75, Ex. A (alleging thirty-eight MBS purchases took place more than five years -' 28 ago); see also Countrywide Dels' Mem. J>arts IV.B & V.B.2. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 7- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 15 of 40 Page ID #:4455 1 B. The SEC Complaint Cannot Revive Plaintiffs' Time-Barred Claims 2 Certain Plaintiffs suggest that their claims are timely because they could not 3 have discovered scienter or certain documents and deposition testimony until the 4 SEC complaint was filed on June 4, 2009. See Am. Fidelity Am. Compl. ~~ 104, 5 136; National Integrity Compl. ~~ 85, 385; Putnam Compl. ~~ 86, 118; Western & 6 Southern Am. Compl. ~~ 85, 385. However, this Court already rejected this very 7 argument in Stichting: 8 Plaintiffs reliance on semantic distinctions and supposedly new 9 revelations in the SEC complaint is not persuasive. The SEC complaint 10 may perhaps include more detail than earlier-filed complaints, but it 11 does not contain any fundamentally new revelation. All the facts 12 alleged had been widely reported already[.] 13 Stichting, 2011 WL 3558173, at* 11.6 "Other plaintiffs recognized that such facts 14 were available by 2007, and this Court subsequently held that those plaintiffs had 15 pleaded scienter adequately." !d.; see also In re Countrywide Fin. Corp. Sec. Litig., 16 588 F. Supp. 2d 1132 (C.D. Cal. 2008); In re Countrywide Fin. Corp. Derivative 17 Litig., 554 F. Supp. 2d 1044 (C.D. Cal. 2008). This Court's prior opinions on this 18 topic find ample support in the law. Premium Plus Partners, L.P. v. Goldman, 19 Sachs & Co., 648 F.3d 533, 537 (7th Cir. 2011) (Easterbrook, C. J.) (noting that 20 "[t]here's no magic in the filing date of the Commission's complaint," and that "[i]t 21 would be silly to conclude that, because the SEC did not file its complaint until 22 September 2003, no reasonably diligent person could have inferred scienter 23 24 6 Plaintiffs' argument is also undercut bytheir own allegations, which state that cases well prior to the SEC complaint addressed the very same issues. See, e.g., 25 Am. Fidelity Am. Compl. ~ 252 ("Other courts have similarly found that allegations similar to those made liere relating to the activities of Countrywide and its 26 executives present a 'cogent and compelling inference of scienter.'"} (citing this Court's decision in In re Countrywide Fin. Corp. Sec. Litig., 588 F. Supp. 2d 1132 27 (C.D. Cal. 2008)); Western & Southern Compl. ~ 319 (same). Ironically, National Integrity (which IS being prosecuted by the same counsel who represents Western & 28 Southern) was filed more than two years after the SEC complaint. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 8- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 16 of 40 Page ID #:4456 1 earlier."). Accordingly, Plaintiffs cannot rely on the filing date of the SEC 2 complaint to rescue their belated claims. 3 4 c. An Allegedly New MBS Valuation Model Cannot Revive Plaintiffs' Time-Barred Claims 5 The supposed facts triggering discovery are an ever-moving target in these 6 MDL cases, changing shape every time another milestone passes or another decision 7 is rendered by this Court on the statute of limitations. After this Court's decision in 8 Stichting, the plaintiffs in Western & Southern requested and were granted 9 permission to file an amended complaint. So they changed their supposed facts that 10 triggered discovery. Whereas previously it was the SEC complaint (Western & 11 Southern Compl. ~~ 4, 16, 124, 260), it has now changed to an entirely new theory. 12 Now Western & Southern contends it could not have discovered its claims until a 13 new MBS valuation model was developed in mid-to-late 2009 and it determined that 14 its MBS were impaired. Western & Southern Am. Compl. ~~ 372-83; see also 15 National Integrity Compl. ~~ 372-83.7 Plaintiffs miss the mark again.8 16 Plaintiffs' new theory is irrelevant to this Court's prior reasoning in 17 dismissing nearly-identical cases. As this Court already found, a reasonably diligent 7 National Integrity was one of the plaintiffs in the origi11al Western & Southern complaint and IS represented by the same counsel. -However, rather than 19 file an amended complaint, National Integrity attempted to hedge its bets by filing a spinoff action in New York (apparently hoping to secure a longer statute of 18 20 limitations). National Integnty also had a change of heart on what triggered its 21 discovery of its claims, moving from the SEC complaint to the same new theory Western & Southern proffers. · · 22 8 Western & Southern and National Integrity proffer other supg()sed reasons why they could not have discovered their claims until recently. See Western & 23 Southern Am. Compl. ~ 3 84 (alleging no diminution in interest or principal payments until February 201 0); ~,I 3 86-87 (alleging fraudulent concealment based 24 on "robo-signing," forgery, and perjury relating to loreclosures practices),~ 387 (alleging fraudulent concealment basea on intimidation ofwhistleblowers); National 25 lntegrity_ Compl. ~~ 384, 386-87. As an initial matter, under Plaintiffs' own theory, alleged fraudu1ent concealment occurred long after Mr. Mozilo retired from 26 Countrywide Financia~ Cm:poratio~ ("CFC") on July 1 ~ 2908. We~ tern & Sout~ern Am. Compl. ~ 28; Natwna[ Int(}~zty Compl. ~ 28. Plamtlffs also Ignore that this 27 Court has already found that MBS mvestors exercising reasonable ailigence would have discovered their claims years ~go. There is no reason for a different result 28 here. See also Countrywide Defs' Merri. Parts IV.B, IV.C, V.B.2 & V.B.3. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 9- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 17 of 40 Page ID #:4457 1 MBS investor would have discovered facts giving rise to their alleged claims years 2 ago. Stichting, 2011 WL 3558173, at* 11; Allstate, 2011 WL 5067128, at* 11-13; 3 Progressive, slip. op. at 3. Indeed, virtually identical arguments were rejected in 4 Allstate. Like Western & Southern and National Integrity, Allstate claimed it could 5 not have discovered the facts constituting its claims until its MBS were downgraded 6 and certain loan-level analyses were conducted. Allstate, 2011 WL 5067128, at* 11. 7 This Court rejected both arguments, finding that the plaintiffs were confusing facts 8 with summaries and opinions. Id at * 11-13. The gist of all of these MDL cases is 9 that Countrywide allegedly "abandoned underwriting" and that this negatively 10 affected the risk profile (and therefore the value) ofPlaintiffs' MBS. Under 11 Plaintiffs' own theory, those facts were known long ago, and Plaintiffs' attempts to 12 twist models, tools, and summaries into new facts is just a futile and improper 13 attempt to delay the running of the limitations period ad infinitum. 14 IV. ALL OF PLAINTIFFS' STATE SECURITIES CLAIMS ARE 15 TIME-BARRED AS TO MR. MOZILO 16 Mr. Mozilo faces claims under two blue-sky statutes: (1) the Connecticut 17 Uniform Securities Act ("CUSA") in Putnam; and (2) the Ohio Securities Act in 18 National Integrity and Western & Southern. Both the Connecticut and Ohio 19 blue-sky statutes are subject to a two-year statute of limitations. Conn. Gen. Stat. 20 § 36b-29(t); Keithv. Lighthouse Sec., Ltd., No. 5:92 CV 0185(GLG), 1997 WL 21 380430, at *6 (D. Conn. June 17, 1997) ("Claims brought pursuant to CUSA are 22 governed by the statute of limitations set forth in the remedial provision of CUSA, 23 § 36-498(a) (now§ 36b-29)."); Ohio Rev. Code § 1707.43(8). 24 Under CUSA, the two-year limitations period runs from discovery of the 25 alleged misrepresentation or from the date it should have been discovered in the 26 exercise of reasonable diligence. Conn. Gen. Stat. § 36b-29(t). The two-year 27 limitations period under the Ohio Securities Act likewise runs from the time the 28 plaintiff"knew, or had reason to know" of the facts underlying its claims. Ohio IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 10- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 18 of 40 Page ID #:4458 1 Rev. Code§ 1707.43(B); Kondrat v. Morris, 118 Ohio App. 3d 198, 205 (Ohio Ct. 2 App. 1997); Loyd v. Huntington Bank, No. 1:08 CV 2301, 2009 WL 1767585, at *9 3 (N.D. Ohio June 18, 2009) ("[C]onstructive notice is ... sufficient to start the 4 two-year period running under [the Ohio Securities Act]."); Wyser-Pratte Mgmt. Co. 5 v. Telxon Corp., 413 F.3d 553, 562-63 (6th Cir. 2005) (statute of limitations under 6 the Ohio Securities Act triggered by inquiry notice). 7 Because a two-year statute of limitations applies, the claims against 8 Mr. Mozilo under CUSA and the Ohio Securities Act are untimely for the same 9 reasons that the federal securities claims against him are untimely. See supra 10 Part III; see also Harman v. Bench Sec. Corp., No. CV 950534266S, 1998 WL 11 46691, at *1-2 (Conn. Super. Ct. Jan. 22, 1998) (holding CUSA claim time-barred 12 because the statute of limitations was triggered by a prior class action complaint); 13 Loyd, 2009 WL 1767585, at *10-11 & n.24 (holding claims time-barred because the 14 limitations period under the Ohio Securities Act was triggered by, among other 15 things, a prior class action lawsuit concerning "nearly identical" allegations). 16 The National Integrity and Western & Southern Plaintiffs claim their Ohio 17 Securities Act claims are tolled under Vaccariello v. Smith & Nephew 18 Richards, Inc., 763 N.E.2d 160 (Ohio 2002). See National Integrity Compl. ~ 388; 19 Western & Southern Am. Compl. ~ 388. However, tolling cannot apply to 20 Mr. Mozilo because he was not a defendant in the MBS class action. Wyser-Pratte, 21 413 F.3d at 567-68 {"[C]lass action tolling does not apply to a defendant not named 22 in the class action complaint."); see also supra note 4. 23 V. PLAINTIFFS' CIVIL CONSPIRACY CLAIMS ARE TIME-BARRED 24 AS TO MR. MOZILO 25 Mr. Mozilo faces civil conspiracy claims in National Integrity and Western & 26 Southern. Because National Integrity was transferred from the Southern District of 27 New York pursuant to 28 U.S.C. Section 1407, New York law applies to the 28 common-law claims in that case. In re Nucorp Energy Sec. Litig., 772 F.2d 1486, IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 11- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 19 of 40 Page ID #:4459 .1 1491-92 (9th Cir. 1985). However, because National Integrity is an Ohio resident, 2 New York's borrowing statute provides that National Integrity's claims must be 3 timely under both New York and Ohio law. N.Y. C.P.L.R. 202.9 Ohio's statute of 4 limitations also applies to the civil conspiracy claim in Western & Southern because 5 Western & Southern was transferred to this Court from the Southern District of 6 Ohio. In re Nucorp, 772 F.2d at 1491-92. 7 Civil conspiracy is a derivative claim that requires a viable underlying cause 8 of action. Ford Motor Credit Co. v. Jones, No. 92428,2009 WL 1912626, at *4 9 (Ohio Ct. App. July 2, 2009). "Thus, the applicable statute of limitations for the 10 underlying cause of action applies to the civil conspiracy charge." !d. Here, the 11 underlying causes of action are based on federal, state, and common-law claims of 12 securities fraud. National Integrity Compl. ~ 496; Western & Southern Am. Compl. 13 ~ 496. Accordingly, the civil conspiracy claims are untimely to the extent the 14 underlying securities fraud claims are untimely. 15 As discussed above, the underlying federal securities claims are time-barred 16 by a two-year statute of limitations. See supra Part III. The underlying Ohio 17 Securities Act claims are also time-barred by a two-year statute of limitations. See 18 supra Part IV. The underlying common-law claims are time-barred as well. Under 19 Ohio law, common-law claims "inextricably intertwined" with the sale of securities 20 are subject to the Ohio Securities Act's two-year statute of limitations. Loyd, 2009 21 WL 1767585, at *8-9 (applying two-year limitations period to common-law fraud 22 and civil conspiracy); Hardin v. Reliance Trust Co., No. 1:04 CV 02079,2006 WL 23 9 Under New York's borrowing statute, a cause of action by a non-New York 24 resident must be timely under the limitations periods of both New York and the jurisdiction where the cause of action accrued. N.Y. C.P.L.R. 202. "When an injury 25 Is purely economic, the place of injury for purposes of the borrowing statute is wfiere the economic impact of defendant's conduct is felt, which is usually the 26 §aintiffs place of residence." Gordon & Co. v. Ross 63 F. Supp. 2d 405, 408 S.D.N.Y. 1999); see also McMahan & Co. v. Donaldson, Luflan & Jenrette Sec. 27 orp., 727 F. Supp. 833; 834 (S.D.N.Y. 1989) (residency determined by principal place ofbusiness). As aiscussed in the Countrywide Defendants' Memorandum, 28 National Integrity is a resident of Ohio. See Countrywide Defs' Mem. Part V.B.4. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 12- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. I 1-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 20 of 40 Page ID #:4460 1 2850455, at* 11 (N.D. Ohio Sept. 29, 2006) (applying two-year limitations period to 2 civil conspiracy claim "shar[ing] the same factual basis" as Ohio Securities Act 3 claim). There is no question that the common-law claims alleged here are 4 "inextricably intertwined" with securities sales. Accordingly, the Ohio Securities 5 Act's two-year limitations period applies, and the common-law claims are 6 time-barred for all the same reasons. Because the underlying causes of action are 7 untimely, the civil conspiracy claims against Mr. Mozilo fail. 8 VI. AMERICAN FIDELITY'S AIDING AND ABETTING FRAUD CLAIM 9 IS TIME-BARRED AS TO MR. MOZILO 10 Mr. Mozilo faces an aiding and abetting fraud claim in American Fidelity. 11 Because American Fidelity was transferred from the Western District of Oklahoma, 12 Oklahoma law applies to this claim. In re Nucorp, 772 F.2d at 1491-92. Oklahoma 13 does not recognize a cause of action for aiding and abetting fraud. Transp. Alliance 14 Bank, Inc. v. Arrow Trucking Co., No. 10-CV-16-GKF-PJC, 2011 WL 221863, at *5 15 (N.D. Okla. Jan. 21, 2011) ("It does not appear that Oklahoma recognizes a cause of 16 action for acquiescing in, or aiding and abetting, common law fraud."); Eastwood v . . 17 Nat'! Bank of Commerce, 673 F. Supp. 1068, 1081 (W.D. Okla. 1987). This fact 18 alone is· fatal to American Fidelity's claim against Mr. Mozilo. 19 Moreover, even if Oklahoma recognized a claim for aiding and abetting fraud, 20 the claim would be time-barred because Oklahoma's statute of limitations for 21 fraud-based claims is two years from discovery. Okla. Stat. tit. 12, § 95(A)(3).10 22 Under this discovery standard, "[f]raud is deemed to be discovered ... when in the 23 24 10 Oklahoma has a borrowing statute that provides that "[tJhe period of limitation applicable to a claim accruing outside of this state slia 1 be that prescribed 25 either by the 1aw of the place where the claim accrued or b_y the law of this state, whichever last bars the claim." Okla. Stat. tit. 12, § 105. Because the aiding and 26 abetting claim against Mr. Mozilo necessarily accrued in either Oklahoma or California, the Court need not determine which state's statute of limitations applies 27 because the aidin,r and abetting claim is time-barred under both. Stichting, 20 I 1 WL 3558173, at 12 (aiding and abetting fraud claim against Mr. Mozilo 28 time-barred by California's three-year statute of limitatiOns). IRELL & MANELLA LLP A Registered Llm~ed Llabil~y Law Partnership Including Professional Corporations 2535258 - 13- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 21 of 40 Page ID #:4461 1 exercise of reasonable diligence it could have been discovered." Gallaher v. Salem, 2 No. CIV-07-974-F, 2009 WL 2591669, at *6 (W.D. Okla. Aug. 20, 2009) (quoting 3 Walker v. Walker, 310 P.2d 760,763 (Okla. 1957)). Thus, if Oklahoma recognized 4 a cause of action for aiding and abetting fraud (which it does not), the aiding and 5 abetting fraud claim against Mr. Mozilo would be untimely for the same reasons that 6 the federal securities claims against him are untimely. See supra Part III. 7 VII. SEALINK'S NEGLIGENT MISREPRESENTATION CLAIM IS 8 TIME-BARRED AS TO MR. MOZILO 9 Mr. Mozilo faces a negligent misrepresentation claim in Sealink. Because 10 Sealink was transferred to this Court from the Southern District of New York, New 11 York law applies. In re Nucorp, 772 F.2d at 1491-92. In New York, the statute of 12 limitations for negligent misrepresentation is three years from the date of the alleged · 13 misstatement. N.Y. C.P.L.R. 214(4); Ambassador v. Euclid, No. 80 Civ. 1235 14 (CBM), 1984 WL 341, at *4 n.7 (S.D.N.Y. May 24, 1984); Country World v. 15 Imperial Frozen Foods Co., 589 N.Y.S.2d 81, 82 (N.Y. App. Div. 1992). 16 Here, the negligent misrepresentation claim against Mr. Mozilo is untimely. 17 Although Sealink has not actually alleged that Mr. Mozilo made any misstatements, 18 all ofSealink's MBS purchases were made more than three years before the 19 complaint was filed on September 29, 2011. See Sealink Compl. ~ 2 (alleging MBS 20 purchases took place between 2005 and 2007). Because any statements on which · 21 Sealink allegedly relied in making these purchases were necessarily made even 22 earlier, the negligent misrepresentation claim against Mr. Mozilo is time-barred. 23 VIII .. THE STATE LAW CLAIMS AGAINST MR. MOZILO IN AMERICAN 24 FIDELITY AND WESTERN & SOUTHERN FAIL FOR LACK OF 25 PERSONAL JURISDICTION 26 American Fidelity and Western & Southern were originally brought in 27 Oklahoma and Ohio, respectively. They were then transferred to this Court as part 28 of the MDL for pre..:trial purposes only. Consequently, if the transferor courts did IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 14- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. I 1-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 22 of 40 Page ID #:4462 1 not have personal jurisdiction over Mr. Mozilo, the cases must be dismissed. In re 2 Dynamic Random Access Memory (DRAM) Antitrust Litig., 2905 WL 2988715, at 3 *2 (N.D. Cal. Nov. 7, 2005) ("In MDL actions such as this one, the court is entitled 4 to exercise personal jurisdiction over each defendant only to the same degree that 5 the original transferor court could have.") (citing Maricopa County v. Am. Petrofina, 6 Inc., 322 F. Supp. 467, 469 (N.D. Cal. 1971)) .. As set forth more fully below, 7 Mr. Mozilo had no contact with Oklahoma or Ohio at all, much less the contact 8 required by the long-arm statutes and the United States Constitution. 9 Mr. Mozilo recognizes that the federal securities law claims have nationwide 10 service of process provisions. However, because those claims are untimely as a 11 matter of law (see supra Part III), they cannot form the basis for personal 12 jurisdiction. See Malone v. Nuber, No. C07-2046RSL, 2009 WL 481285, at *I 13 (W.D. Wash. Feb. 23, 2009) ("[O]nce the federal claims were dismissed, they can 14 no longer provide a basis for asserting pendent personal jurisdiction over defendants 15 · for the state law claims."); Morley v. Cohen, 610 F. Supp. 798, 823 (D. Md. 1985) 16 (same ).11 Consequently, the state law claims against Mr. Mozilo in American 17 Fidelity and Western & Southern fail for lack of personal jurisdiction. 18 A. Plaintiffs Bear the Burden of Establishing Personal Jurisdiction 19 On a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the 20 burden of demonstrating that the court has jurisdiction. Harris Rutsky & Co. Ins. 21 11 See also.D:Acf:dqrio y. Geller, 264 F. Supp. 2d 367, 3~7-8~ (E.D. ya. 2003) 22 (where personal Junsdictwn Is based on a federai statutory natwnw1de service v.rovision "if the court were to later determine that the feaeral claim( s) should be 23 aismissed against a defendant, the state claims against that defendant would also have to be dismissed, unless another basis for asserting personal jurisdiction 24 exists"); Auto Channel, Inc. v. Speedvision Network, ELC, 995 F. SupQ. 761, 762 (W.D. Ky. 1997) ("Since all antitrust claims against Speedvision and Continental 25 have been dismissed, this Court no longer has persona1 jurisdiction over the_parties ~ rsuant to the nationwide service ofprocess provision set forth in 15 U.S.C. 26 22."); Bill Rea Ins. Assoc., Inc. v. Nat'l Fin. Servs. Corp., 860 F. Supp. 1181, 1184 W.D. Tex. 1994) ("Plaintiffs dropped their cause of action against Natwnal under 27 e Federal Securities Act. Thus, the nationwide service ofprocess_provisions of the Securities Act were no longer applicable and traditional concepts of-personal 28 jurisdiction over the remaining state law claims were brought mto play."). IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 15- DEFENDANT ANGELO MOZILO'S MEMO. ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 23 of 40 Page ID #:4463 1 Servs. v. Bell & Clements Ltd., 328 F.3d 1122, 1128-29 (9th Cir. 2003). Moreover, 2 the Court need not assume the truth of allegations in a pleading that are contradicted 3 by sworn affidavit. Data Disc, Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280, 1284 4 (9th Cir. 1977). In addition, the plaintiff must establish both that the forum state's 5 long-arm statute authorizes jurisdiction and that the exercise of jurisdiction accords 6 with constitutional principles of due process. Amba Mktg. Sys., Inc. v. Jobar Int'l, 7 Inc., 551 F.2d 784, 787 (9th Cir. 1977). Western & Southern and American Fidelity 8 have not alleged, nor can they establish, either with respect to Mr. Mozilo. 9 B. The Long-Arm Statutes Do Not Authorize Jurisdiction 10 Oklahoma's long-arm statute is coextensive with Constitutional due process. 11 Kennedy v. Freeman, 919 F.2d 126, 128 (lOth Cir. 1990). As demonstrated in the 12 following section, American Fidelity's complaint fails to satisfy Constitutional due 13 process, and thus by definition, it fails to satisfy Oklahoma's long-arm statute. 14 Ohio's long-arm statute specifically enumerates the circumstances in which 15 personal jurisdiction attaches.12 Western & Southern alleges none of these statutory 16 bases for jurisdiction in Ohio. For instance, Western & Southern does not and 17 cannot allege that Mr. Mozilo transacted any business in Ohio, contracted to supply 18 12 Ohio's long-arm statute authorizesjurisdiction under the following 19 expressly enumerated circumstances: "(1) Transacting any business in this state; (2) Contracting to supply services or goods in this state; (3) Causing tortious injury 20 by an act or omission m this state; (4) Causing tortious injury in this state by an act or omission outside this state ifhe regularly does or solicits business, or engages in 21 any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this stat~; ( 5) Causing ir~.jury in tliis state 22 to any person by breach of warranty expressly or Impliedly made m the sale of goods outside this state when he might reasonably have expected such person to use, 23 consume, or be affected by the goods in this state, provided that he also re_gularly do~s or solicits }?usiness, or engages in any other persistent courst? of conduct, C!r . 24 denves.substantml revenue from goods used or consumed or services rendered m this state; ( 6) Causing tortious injury in this state to any _person by an act outside this 25 state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state; (7) Causing 26 tortious injucy to any person by a criminal act, any element of which takes place in this state, which he commits or in the commission of which he is guilty of 27 com,Elicity; (8).Havi~g an interest in, using, orposses~ing real P.ror.ef!:y in.this state; or(~) Contractmg to msure any person, property, or nsk located withm this state at 28 t4e time of contracting." Ohio Rev. Code § 2307.382. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 16- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 24 of 40 Page ID #:4464 1 goods in Ohio, owns any property in Ohio, or insured anyone in Ohio. Nor does 2 Western & Southern allege that Mr. Mozilo acted with the specific purpose of 3 injuring Plaintiffs in Ohio, engaged in any persistent course of conduct directed at 4 Ohio, or personally derived substantial revenue from goods used or services 5 rendered in Ohio. Indeed, Western & Southern alleges no contact by Mr. Mozilo 6 with Ohio at all, because there was none. Mr. Mozilo is a resident of California. He 7 does not own property in Ohio. He does not pay taxes in Ohio and has not even 8 visited the state since 2002. Mozilo Decl. ,-r,-r 2-3. He did not engage personally in 9 any business, hold a business license, or maintain an office in Ohio. Id. ,-r,-r 4-5, 7. 10 Under these circumstances, the Western & Southern amended complaint fails the 11 personal jurisdiction test of Ohio's long-arm statute. Hoover Co. v. Robeson Indus. 12 Corp., 904 F. Supp. 671, 674 (N.D. Ohio 1995) ("The nonresident defendant must 13. do some act or consummate some transaction within the forum."). 13 14 Indeed, the only actions Mr. Mozilo is alleged to have taken were in his 15 capacity as an officer ofCFC. See Am. Fidelity Am. Compl. ,-r 27 (actions by 16 officers were committed "while those individuals were acting within the actual or 17 implied scope oftheir authority"); Western & Southern Am. Compl. ,-r 44 (same). 18 These actions are barred by the "fiduciary shield" doctrine from serving as a basis 19 20 13 Western & Southern asserts a new "conspiracy" claim against Mr. Mozilo under the Ohio ~orrupt Actiyities Act, which wa~ not asserted ir:t W. estern & . 21 Southern's prevwus complamt. Although the Ohw Corrupt Acttvttles Act contams a provision relating to personal jurisdictwn, Ohio Rev. Code§ 2923.34(K)A a state 22 statute cannot extend personaUurisdiction oeyond the reach of the United ~tates Constitution. See, e.g~, MFS Series Trust III ex rel. MFS Mun. High Income Fund v. 23 Grainger, 96 P.3d 917, 933 (Utah 2004) ("Permitting allegations of liability under Utah's securities laws to automatically give rise to_personaljurisdiction,.., wtthout 24 first considering wh.etber each defendant 'pumoserul!y avaired' himselr of the benefits and protectiOns of Utah's laws, woula be to tgnorethe du~_process 25 requirements of the fourteenth amendment.") (citing Int'l Shoe v. Washingt_on, 326 U.S. 310, 316 (1945)); see also Irizarry v. East Longitude Trading Co., Lid., 296 F. 26 Supp. 2d 862, 866-67 (N.D. Ohio 2003) (no personal jurisdiction under Constitution despite meeting Ohio's long-arm statute); Costaras v. NBC Universal, Inc., 409 F. 27 Supp. 2d 897, .90~ (N.D. Ohio 2005) (same). As demonstrated in the followJng sectwn, Constltutwnal due process precludes Western & Southern's complamt 28 against Mr. Mozilo, including the new Ohio Corrupt Activities Act claim. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 17- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 25 of 40 Page ID #:4465 1 for personal jurisdiction. Under both Ohio and Oklahoma law, the fiduciary shield 2 doctrine bars jurisdiction over corporate officers based solely on acts carried out in 3 their normal corporate capacities. See Franklin Prod., Inc. v. Gen. Nutrition Corp., 4 No. 2:05-cv-1061, 2007 WL 2462665, at *3 (S.D. Ohio Aug. 27, 2007) ("The 5 fiduciary shield doctrine generally prevents the exercise of personal jurisdiction over 6 a corporate officer whenever an out-of-state officer's contacts with the forum state 7 occur by virtue of his or her acts as a fiduciary."); Hnath v. Hereford, 757 F. Supp. 8 2d 1130, 1136 (N.D. Okla. 2010) ("Under the fiduciary shield doctrine, exercise of 9 personal jurisdiction over an individual may not be based solely on acts the 10 individual performed in a purely representative capacity."). 11 c. Constitutional Due Process Does Not Authorize Jurisdiction 12 In determining whether the requirements of federal· due process are met, the 13 Court should apply its own circuit's law. In re Dynamic, 2005 WL 2988715, at *2. 14 For a court to exercise personal jurisdiction over a nonresident defendant consistent 15 with due process, that defendant must have "certain minimum contacts" with the 16 relevant forum "such that the maintenance of the suit does not offend 'traditional 17 notions of fair play and substantial justice."' Int'l Shoe Co. v. Washington, 326 U.S. 18 310,316 (1945); SECv. Ross, 504 F.3d 1130, 1138 (9th Cir. 2007). 19 Jurisdiction over a nonresident defendant may be "general" or "specific." 20 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,414-15 (1984). 21 General personal jurisdiction exists where the defendant's contacts with the forum 22 state are substantial, "continuous and systematic," irrespective of whether the 23 transaction at issue in the case arose from contacts with the forum state. Id. at 24 416 & n.9. Specific personal jurisdiction may be asserted only where the claim 25 itself- here, alleged fraud in the sale ofMBS- arises from the defendant's contacts 26 with the forum state. Id. 27 As to Mr. Mozilo, jurisdiction in American Fidelity and Western & Southern 28 fails under both tests. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 - 18- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-.MRP {MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 26 of 40 Page ID #:4466 1 1. Mr. Mozilo's Contacts Must Be Analyzed Separately from 2 Countrywide Financial Corporation's Contacts 3 Due process requires that "[ e ]ach defendant's contacts with the forum State 4 must be assessed individually." Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 5 781 n.13 (1984); see also Brown v. Gen. Steel Domestic Sales, LLC, No. 08-cv- 6 00779 MMM (SHX), 2008 WL 2128057, at *10 (C.D. Cal. May 19, 2008) ("The 7 fact that a corporation is subject to jurisdiction in the forum state, however, does not 8 necessarily confer jurisdiction over its individual officers. Instead, the court must 9 examine the individual's contacts with the forum to determine if they are sufficient 10 to warrant the exercise of jurisdiction over him in connection with forum-related 11 claims."). This means that Mr. Mozilo's former status as the CEO ofCFC is 12 insufficient to subject him to this Court's jurisdiction. As the Supreme Court has 13 emphasized, "jurisdiction over an employee does not automatically follow from 14 jurisdiction over the corporation which employs him; nor does jurisdiction over a 15 parent corporation automatically establish jurisdiction over a wholly owned 16 subsidiary." Keeton, 465 U.S. at 781 n.13. 17 Consequently, CFC's contacts with Ohio and Oklahoma (assuming that the 18 corporation had sufficient contacts) cannot be imputed to Mr. Mozilo. Only 19 Mr. Mozilo' s own, personal actions can subject him to personal jurisdiction in 20 Oklahoma or Ohio. As demonstrated h~rein, Mr. Mozilo had no contact at all with 21 Oklahoma or Ohio, much less the heightened contact required by due process for 22 personal jurisdiction to attach. 23 2. Mr. Mozilo Is Not Subject to General Jurisdiction 24 General jurisdiction cannot be asserted here because Mr. Mozilo did not have 25 substantial, "continuous and systematic" contacts with Oklahoma or Ohio. 26 Helicopteros, 466 U.S. at 416 & n.9. The complaints allege no relationship between 27 Mr. Mozilo and Oklahoma or Ohio at all; nor could they. Mr. Mozilo is a California 28 resident. Mozilo Decl. ~ 2. He owns no property in Oklahoma or Ohio. !d.~ 3. He IRELL & MANELLA LLP A Registered LlmHed LlabiiHy Law Partnership Including Professional Corporations 2535258 - 19- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. I 1-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 27 of 40 Page ID #:4467 1 does not maintain any ongoing contact with Oklahoma or Ohio and did not 2 personally conduct business in Oklahoma or Ohio during the relevant time period. 3 !d. ,-r 4. In fact, Mr. Mozilo did not enter either Oklahoma or Ohio at all during the 4 time period in which the MBS at issue were securitized and sold. Id. ,-r 5. In short, 5 Mr. Mozilo had no contact with the forum states at all, let alone the substantial,· 6 "continuous and systematic" contacts necessary for general jurisdiction to apply. 7 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004). 8 3. Mr. Mozilo Is Not Subject to Specific Jurisdiction 9 The Ninth Circuit has adopted a three-part test to determine whether specific 10 jurisdiction exists over a defendant: (1) the non-resident defendant must 11 purposefully direct his activities or consummate some transaction with the forum or 12 resident thereof; or perform some act by which he purposefully avails himself of the 13 privilege of conducting activities in the forum, thereby invoking the benefits and 14 protections of its laws; (2) the claim must be one which arises out of or relates to the 15 defendant's forum-related activities; and (3) the exercise of jurisdiction must 16 comport with fair play and substantial justice, i.e. it must be reasonable. 17 Schwarzenegger, 374 F.3d at 802. Plaintiffs fail to meet every prong of this test. 18 a. No Purposeful Availment/Direction 19 Purposeful availment and purposeful direction are distinct concepts, with 20 purposeful availment used in "suits sounding in contract" and purposeful direction 21 used in "suits sounding in tort." Schwarzenegger, 374 F.3d at 802. Plaintiffs' 22 claims sound in tort, and Plaintiffs cannot show that Mr. Mozilo purposefully 23 directed actions at either Ohio or Oklahoma.14 24 14 Plaintiffs cannot satisfy the purposeful availment test either. They allege no action by Mr. Mozilo that took place within Oklahoma or Ohio; therefore they 25 have not alleged that he purposefully availed himself of the privileges of conducting activities there. See Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1156 (9th Cir. 26 2006) (where "[a]ll of [the defendant'sJ action identified bY, [the plaintiff! is action taking place outs1de the forum;'' there 1s no purposeful avadment). The American 27 Fidellty p,laintiffs make the bmlerplateallegation that the defendants "transact business' in this district; Am. Fidelity Am. Compl. ,-r 30. Not only does this 28 allegation impermissibly lump Mr. Mozilo with the other defendants, but it is clearly IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 -20- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 28 of 40 Page ID #:4468 1 Purposeful direction requires: (1) the defendant committed an intentional act; 2 (2) expressly aimed at the forum state; (3) causing harm that the defendant knows is 3 likely to be suffered in the forum state. Schwarzenegger, 374 F.3d at 805 (citation 4 omitted). To find that the defendant "expressly aimed" his conduct at the forum 5 state, a plaintiff must allege that the defendant did "something more than commit a 6 foreign act with foreseeable effects in the forum state" - for instance by showing 7 "individualized targeting" of residents in the forum state .. Pebble Beach, 453 F .3d at 8 1157 (internal quotations and citation omitted); Alsop v. Carolina Custom Products, 9 Inc., No. EDCV 07-212-V AP, 2007 WL 2441025, at *7 (C.D. Cal. Jun. 29, 2007) 10 ("[D]efendant must 'individually target' the forum state rather than just commit an 11 act that has foreseeable effects in the forum state."). This standard is a high 12 standard, and generalized incantations of directing corporate activity will not 13 suffice. Ind. Plumbing Supply, Inc. v. Sd. of Lynn, Inc., 880 F. Supp. 743, 751 (C.D. 14 Cal. 1995) (corporate officer's authorization of infringing advertisements published 15 in forum state was insufficient to establish special personal jurisdiction). Here, 16 Plaintiffs have come nowhere close to meeting their burden of showing that 17 Mr. Mozilo individually targeted Ohio or Oklahoma in any way. 18 In American Fidelity, Plaintiffs make the boilerplate allegation that 19 "Defendants are also subject to personal jurisdiction in in this district." Am. Fidelity 20 Am. Compl. ,-r 30. However, Plaintiffs do not allege even one specific action by 21 Mr. Mozilo expressly aimed at Oklahoma, and boilerplate allegations are not 22 sufficient in light of Mr. Mozilo's declaration denying contacts with Oklahoma. See 23 Data Disc, 55 7 F .2d at 1284 ( conclusory personal jurisdiction allegations fail 24 against declaration). In Western & Southern, Plaintiffs make no specific allegations 25 26 contradicted by Mr. Mozilo's declaration. See Mozilo Decl. ,-r,-r 4-5; Keeton, 465 27 U.S. at 781 n.13 (group personal jurisdiction allegations are improper); Data Disc,, 5 57 F .2d at 1284 t conclusory personal jurisdiction allegations fail against 28 declaration). . IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 -21- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 29 of 40 Page ID #:4469 1 regarding the basis for personal jurisdiction over Mr. Mozilo, aside from the 2 nationwide service of process under federal securities law. 3 Neither set of Plaintiffs allege any facts showing that Mr. Mozilo took any 4 part in the core allegation of fraud here-fraud in the sale of MBS. Mr. Mo:Zilo was 5 the CEO of a parent company which, with its subsidiaries, employed over 50,000 6 people. Mozilo Decl. ,-r 8. He was not an officer or director of any of the 7 subsidiaries that sold or securitized the MBS at issue in this case. Jd. ,-r 9. 8 Moreover, there is no allegation that Mr. Mozilo even read the MBS offering 9 documents, much less that he knew they were false and disseminated them to Ohio 10 or Oklahoma intending to harm residents there. Cf Allstate, 2011 WL 5067128, at 11 *20-21 (differentiating allegations regarding underwriting from allegations 12 regarding the allegedly fraudulent sale ofMBS). 13 Plaintiffs cannot overcome these deficiencies by arguing that allegations that 14 Mr. Mozilo "controlled" the operations of CFC and its subsidiaries are sufficient to 15 establish personal jurisdiction. See, e.g., Am. Fidelity Am. Com pl. ,-r,-r 286-99; 16 Western & Southern Am. Compl. ,-r,-r 305-17. "Control" allegations are not sufficient 17 to show that Mr. Mozilo personally directed activities towards Oklahoma or Ohio. 18 See Toyz, Inc. v. Wireless Toyz, Inc., No. C 09-05091 JF (HRL), 2010 WL 334475, 19 at *7 (N.D. Cal. Jan. 25, 2010) ("Because plaintiffs do not allege an alter ego theory, 20 the Court must determine if the Individual Defendants played a primary role in the 21 alleged wrongdoing intentionally directed at Plaintiffs in [the forum]."). In Toyz, 22 the court held that the vague, blanket allegation of the individual defendants' 23 supposed control "does not establish purposeful direction." !d. at *8. 24 Indeed, courts throughout the United States repeatedly have refused to find 25 personal jurisdiction over former officers of Countrywide entities based upon naked 26 assertions Gust like the assertions of Plaintiffs here) that those officers controlled 27 Countrywide- uniformly finding that such allegations fail to meet due process 28 requirements. Office of the Att'y Gen. v. Mozilo, No. 08..:30105 (19) (Fl. Cir. Ct. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 -22- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP {MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 30 of 40 Page ID #:4470 1 June 6, 2011) (order granting motion to dismiss), RJN ,-r 3, Ex. 3 (dismissing for lack 2 of personal jurisdiction a Florida Attorney General action against Mr. Mozilo based 3 on allegedly improper lending by Countrywide); People v. Countrywide Fin. Corp., 4 No. 08CH22994 (Ill. Cir. Ct. Jun. 24, 2010) (order granting motion to dismiss), RJN 5 ,-r 4, Ex. 4 (dismissing for lack of personal jurisdiction an Illinois Attorney General 6 action against Mr. Mozilo based on allegedly improper lending by Countrywide); 7 New Mexico State Inv. Council v. Countrywide Fin. Corp., No. D-0101-CV-2008- 8 02289 (N.M. Dist. Ct. Apr. 14, 2009) (order granting motions to dismiss), RJN ,-r 5, 9 Ex. 5 (dismissing for lack of personal jurisdiction a fraud claim brought by a 10 purchaser ofMBS against several former officers of Countrywide entities).15 For 11 personal jurisdiction to be properly asserted over Mr. Mozilo, he must have had 12 personal contact with Oklahoma and Ohio, which he did not. 13 New Mexico is particularly instructive. In New Mexico, like this case, the 14 plaintiffs sued several Countrywide entities and their former officers, alleging that 15 they made false and misleading statements relating to the sale ofMBS. Plaintiffs 16 argued that the New Mexico court could assert personal jurisdiction over the 17 individual defendants because the MBS sales activities were directed nationwide 18 and because those individual defendants (not including Mr. Mozilo) signed the MBS 19 offering documents at issue in that case. The court flatly rejected the argument, 20 holding that the minimum contacts test and Constitutional due process· require more. 21 Id.; New Mexico Hr'g Tr., Mar. 6, 2009 (incorporated into Court's Apr. 14, 2009 22 Order), RJN ,-r 6, Ex. 6 at 278-280. 23 The case for dismissal is even stronger here because, unlike the individual 24 defendants dismissed in New Mexico, Mr. Mozilo did not even sign the offering 25 documents at issue, nor was he an officer, director, or employee of any of the 26 companies that sold the MBS. 27 15 The Illinois Attorney General did not appeal the dismissal, and the Florida 28 decision is currently on appeal. . IRELL & MANELLA LLP A Registered Limned Liability Law Partnership Including Professional Corporations 2535258 -23- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. I 1-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 31 of 40 Page ID #:4471 1 b. Claims Do Not Arise From Contact 2 The Ninth Circuit has adopted a "but for" test to determine whether a , 3 plaintiffs claim arises out of a defendant's forum-related contacts. Glencore Grain 4 Rotterdam B. V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 5 2002). Under this test, Plaintiffs must demonstrate that "but for" Mr. Mozilo's 6 contacts with the forum states, Plaintiffs' claims would not have arisen. !d. 7 Plaintiffs cannot meet this test. They have not alleged any contact by Mr. Mozilo 8 with the forum states but for which they would not have been injured. Indeed, they 9 have not alleged any contact at all. See In re Dynamic, 2005 WL 2988715, at *9 (if 1 0 there are no minimum contacts at all, then by definition the "arising out of'' 11 requirement is not met). Moreover, Plaintiffs' claims arise from the sale ofMBS. 12 Because Mr. Mozilo had no involvement in the sale ofMBS to Plaintiffs (see 13 Mozilo Decl. ~ 9), Plaintiffs cannot show that their claims arise from his contacts. 14 c. Exercise of Jurisdiction Not Reasonable 15 Because Plaintiffs cannot satisfy either of the first two requirements for 16 personal jurisdiction, the Court need not even reach this requirement. However, an 17 independent reason to dismiss the remaining state law claims for lack of personal 18 jurisdiction is that jurisdiction is not reasonable as to Mr. Mozilo. Personal 19 jurisdiction is appropriate only where summoning a defendant "does not offend 20 'traditional notions of fair play and substantial justice."' Int'l Shoe, 326 U.S. at 316 21 (citations omitted). Haling Mr. Mozilo into an Oklahoma or Ohio court over MBS 22 sales he had nothing to do with fails this common sense test. The reasonableness 23 determination requires consideration of a number of factors: (1) the extent of the 24 defendant's purposeful interjection into the forum state; (2) the burden on the 25 defendant in defending in the forum; (3) the extent of the conflict with the 26 sovereignty of the defendant's state; (4) the forum state's interest in adjudicating the 27 dispute; (5) the most efficient judicial resolution of the controversy; {6) the 28 importance of the forum to the plaintiffs interest in convenient and effective relief; IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 -24- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 32 of 40 Page ID #:4472 1 and (7) the existence of an alternative forum. Glencore Grain, 284 F.3d at 1125. 2 Here, the factors weigh heavily in Mr. Mozilo's favor. Mr. Mozilo had no contact at 3 all with Plaintiffs or their states. He had nothing to do with the sale ofMBS to 4 Plaintiffs. Consequently, no legitimate interest would be served in forcing 5 Mr. Mozilo to defend himself in a trial in Ohio or Oklahoma. 6 IX. CONCLUSION 7 For the aforementioned reasons, Mr. Mozilo respectfully requests that the 8 Court dismiss the Complaints against him with prejudice.16 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Dated: December 7, 20 11 Respectfully submitted, IRELL & MANELLA LLP By:~~/9A'~ David Siegef Attorneys. for Defendant Angelo Mozilo . 25 16 The only claims against Mr. Mozilo not addressed herein are Claim No.3 26 in Sealink for aiding and aoetting fraud and Claim No. 6 in National Integrity for violation of the Oh10 Corrupt Activities Act. Those claims should be dismissed with 27 prejudice for the reasons set forth in the Count~ide Defendants Memorandum, whtch Mr. Mozilo joins in and incorporates by reference. See Countrywide Defs' 28 Mem. Parts V .A & VIII. IRELL & MANELLA LLP A Registered Limited Liability Law Partnership Including Professional Corporations 2535258 -25- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 33 of 40 Page ID #:4473 Appendix A: Statutes of Limitations for Claims Against Mr. Mozilo American Fidelity Assurance Co. v. Countrywide Financial Corp., No. 11-cv-07167 MRP (MANx) (C.D. Cal. Apr. 11, 2011) Section 15 ofthe Securities Act of 1933 Aiding and Abetting Fraud One year. 15 U.S.C. § 77m. Two years. Okla. Stat. tit. 12, § 95(A)(3).1 Discovery of the alleged misstatement "or after such discovery should have been made by the exercise of reasonable diligence." 15 U.S.C. § 77m. Discovery of the alleged fraud or, when in the exercise of reasonable diligence, it could have been discovered. Gallaher v. Salem, 2009 WL 2591669; at *6 (W.D. Okla. Aug. 20, 2009). 1 Although Oklahoma does not recognize a cause of action for aiding and abetting fraud, fraud:-based claims are subject to a two-year limitations period. 2539739 -26- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DjSMISS PLAINTIFFS' COMPLAINTS . MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 34 of 40 Page ID #:4474 Appendix A: Statutes of Limitations for Claims Against Mr. Mozilo National Integrity Life Insurance Co. v. Countrywide Financial Corp., No. 11-cv-09889 MRP (MANx) (C.D. Cal. Nov. 9, 2011) Section 20(a) of the Securities Exchange Act of 1934. Ohio Securities Act Civil Conspiracy 2539739 Two years. 28 U.S.C. § 1658(b)(l). Two years. Ohio Rev. Code § 1707.43(B). Two years (based on the statute of limitations for the underlying federal, state, and common-law securities fraud claims). Ford Motor Credit Co. v. Jones, 2009 WL 1912626, at *4 (Ohio Ct. App. July 2, 2009). -27- When the plaintiff discovers or reasonably could have discovered the facts constituting the violation. Merck & Co. v. Reynolds, 130 S. Ct. 1784, 1796 (2010). When the plaintiff "knew, or had reason to know" of the facts underlying its claims. Ohio Rev. Code § 1707.43(B). When the plaintiff discovers or reasonably could have discovered the facts constituting the violation. Merck & Co. v. Reynolds, 130 S. Ct. 1784, 1796 (2010). When the plaintiff "knew, or had reason to know" of the facts underlying its claims. Ohio Rev. Code § 1707.43(B). DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 35 of 40 Page ID #:4475 Appendix A: Statutes of Limitations for Claims Against Mr. Mozilo Putnam Bank v. Countrywide Financial Corp., No. 11-cv-04698 MRP (MANx) (C.D. Cal. Jan. 27, 2011) Section 20( a) of the Securities Exchange Act of 1934 Connecticut Uniform Securities Act 2539739 Two years. 28 U.S.C. § 1658(b)(1). Two years. Conn. Gen. Stat. § 36b-29(f). -28- When the plaintiff discovers or reasonably could have discovered the facts constituting the violation. Merck & Co. v. Reynolds, 130 S. Ct. 1784, 1796 (20 1 0). When the plaintiff discovers or should have discovered the alleged misrepresentation in the exercise of reasonable diligence. Conn. Gen. Stat. § 36b-29(f). DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 36 of 40 Page ID #:4476 Appendix A: Statutes of Limitations for Claims Against Mr. Mozilo Sealink Funding Ltd. v .. Countrywide Financial Corp., No. 11-cv-08898 MRP (MANx) (C.D. Cal. Sept. 29, 2011) Negligent Misrepresentation Aiding and Abetting Fraud2 Three years. N.Y. · C.P.L.R. 214(4). Three years. BGB § 195. Date of the alleged misstatement. Ambassador v. Euclid, 1984 WL 341, at *4 n.7 (S.D.N.Y. May 24, 1984). The end of the year in which the claim accrues, which is when plaintiff (i) gained knowledge of the circumstances and party giving rise to the claim; or (ii) would have acquired such knowledge but for its own gross negligence. BGB § 199. 2 The aiding and abetting fraud claim against Mr. Mozilo in Sea/ink is time-barred for the reasons set forth in the Countrywide Defendants Memorandum, which Mr. Mozilo joins in and incorporates by reference. See Countrywide Defs' Mem. ISO Mot. to Dismiss Part VIII.B. 2539739 -29- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 37 of 40 Page ID #:4477 Appendix A: Statutes of Limitations for Claims Against Mr. Mozilo Western and Southern Life Insurance Co. v. Countrywide Financial Corp., No. 11-cv-07166 MRP (MANx) (C.D. Cal. April27, 2011) Section 20(a) of the Securities Exchange Act of1934 Ohio Securities Act Civil Conspiracy 2539739 Two years. 28 U.S.C. § 1658(b)(l). Two years. Ohio Rev. Code § 1707.43(B). Two years (based on the statute of limitations for the underlying federal, state, and common-law securities fraud claims). Ford Motor.Credit Co. When the plaintiff discovers or reasonably could have discovered the facts constituting the violation. Merck & Co. v. Reynolds, 130 S. Ct. 1784, 1796 (20 1 0). When the plaintiff "knew, or had reason to know" of the facts underlying its claims. Ohio Rev. Code § 1707.43(B). When the plaintiff discovers or reasonably could have discovered the facts constituting the violation. Merck & Co. v. Reynolds, 130 S. Ct. 1784, 1796 (20 1 0). v. Jones, 2009 WL 1912626, at *4 (Ohio Ct. App. July 2, 2009). When the plaintiff "knew, or had reason to -30- know" of the facts underlying its claims. Ohio Rev. Code § 1707.43(B). DEFENDANT ANGELO MOZILO'S MEMO ISO . MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 38 of 40 Page ID #:4478 AppendixB: Allegations that Countrywide Abandoned Underwriting Guidelines American Fidelity National Integrity Putnam 2539747 Countrywide "systematically [] ignore[ d] the underwriting standards it touted." Am. Compl. ,-r 2. "In order to meet is volume and market share goals, Countrywide abandoned any semblance of underwriting standards." Am. Compl. ,-r 49. "As the evidence shows, Countrywide's abandonment of its underwriting guidelines was systemic." Am. Compl. ,-r 94. "Countrywide abandoned all semblance of underwriting guidelines, regularly originating or purchasing loans issued to borrowers regardl~ss of ability to repay or collateral value." Com pl. ,-r 10. Countrywide "disregard[ ed] [ ] its owri underwriting guidelines in favor of blindly approving nearly any kind of loan." Com pl. ,-r 65. Countrywide "systematically abus[ ed] the 'exceptions' process in order to further circumvent its purported underwriting standards." Compl. ,-r 84. Countrywide failed to disclose that it "systematically disregard[ ed] the mortgage loan underwriting guidelines that [were] stated in the Certificates' Offering Documents." Compl. ,-r 5. "[I]n order to meet its volume and market share goals, Countrywide's underwriting practices abandoned any semblance of the standards set forth in the Offering Documents." Compl. ,-r 53. "The systematic abandonment of any underwriting standards rendered ... [the] representations [in the Offering Documents] false or misleading at the time they were made. Countrywide systematically abandoned its underwriting standards to increase loan volumes without regard to loan quality." Compl. ,-r 59. - 31 - DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 39 of 40 Page ID #:4479 AppendixB: Allegations that Countrywide Abandoned Underwriting Guidelines Sea/ink "Countrywide 'developed a systematic pattern and practice of abandoning its own guidelines for loan origination and underwriting .... "' Compl. ·~ 82. "Attorneys General from various states have investigated Countrywide's lending practices and charged that Countrywide systematically departed from the underwriting standards it professed to use for originating residential loans, including those loans originated by Countrywide Home." Compl. ~ 84. Western & "Countrywide abandoned all semblance of underwriting Southern guidelines, regularly originating or purchasing loans issued to borrowers regardless of ability to repay or collateral value." Am. Compl. ~ 10. 2539747 Countrywide "disregard[ ed] [ ] its own underwriting guidelines in favor of blindly approving nearly any kind of loan." Am. Compl. ~ 65. Countrywide "systematically abus[ed] the 'exceptions' process in order to further circumvent its purported underwriting standards." Am. Compl. ~ 84. - 32- DEFENDANT ANGELO MOZILO'S MEMO ISO MOTION TO DISMISS PLAINTIFFS' COMPLAINTS MDL No. 11-ML-02265-MRP (MANx) Case 2:11-cv-07166-MRP-MAN Document 155 Filed 12/07/11 Page 40 of 40 Page ID #:4480