United States District Court, W.D. Washington, Seattle
ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO
RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendants Lidingo Holdings,
LLC's, Kamilla Bjorlin's and Andrew Hodge's
(collectively “Lidingo Defendants”) Motion to
Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6),
in which Defendant Brian Nichols has also joined. Dkts. #66
and #68. Defendants seek dismissal of all claims against them
on the basis that they are time-barred. Id.
Alternatively, Defendants argue that certain of
Plaintiff's claims should be dismissed for the failure to
adequately plead facts supporting the elements of those
claims. Dkts. #66 at 11-18 and #68 at 3-12. Plaintiff opposes
the motion, asserting that its claims are not time-barred,
and that, even if some claims are barred against Defendant
Lidingo, it has adequately pled its claims against the
individual Defendants. Dkt. #69. Having reviewed the record
before it, and neither party having requested oral argument
on the motions, the Court now GRANTS IN PART AND DENIES IN
PART Defendants' motions for the reasons discussed
initially filed its Complaint in this matter in the United
States District Court for the Southern District of New York.
Dkt. #1. The matter was subsequently transferred to this
Court on October 27, 2017. Dkt. #53. According to the
Following an investigation, the SEC filed this action under
the antifraud and antitouting provisions of the federal
securities laws alleging Defendants Lidingo Holdings, LLC
(“Lidingo”), Kamilla Bjorlin
(“Bjorlin”), Andrew Hodge (“Hodge”),
Brian Nichols (“Nichols”), and Vincent Cassano
(“Cassano”) engaged in a scheme to promote the
stock of public companies without disclosing compensation
they received for the promotion directly or indirectly from
the issuers, and in many instances, by falsely stating they
had received no compensation at all.
The SEC has charged Defendants with violating Sections 17(a)
and 17(b) of the Securities Act of 1933 (“Securities
Act”), 15 U.S.C. §§ 77q(a) and 77q(b); and
Section 10(b) and Rule 10b-5 of the Securities Exchange Act
of 1934 (“Exchange Act”), 15 U.S.C. § 78j(b)
and 17 C.F.R. § 240.10b-5. Defendants have responded
with numerous defenses to the counts raised.
Dkt. #61 at 1-2. Defendant Cassano has since been dismissed
from this action. Dkt. #72. The instant motions to dismiss
are ripe for review.
Standard of Review
motion to dismiss for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6), all allegations of material
fact must be accepted as true and construed in the light most
favorable to the nonmoving party. Cahill v. Liberty Mut.
Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). However,
the Court is not required to accept as true a “legal
conclusion couched as a factual allegation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). The Complaint “must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.” Id. at 678. This
requirement is met when the plaintiff “pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. Absent facial plausibility,
Plaintiff's claims must be dismissed. Twombly,
550 U.S. at 570.
the Court limits its Rule 12(b)(6) review to allegations of
material fact set forth in the Complaint, the Court may
consider documents of which it has taken judicial notice.
See F.R.E. 201; Swartz v. KPMG LLP, 476
F.3d 756, 763 (9th Cir. 2007). The Lidingo Defendants have
asked the Court to take judicial notice of business entity
documents and a Form 10-K of Galena Biopharma, Inc. for the
period ending December 31, 2013. Dkts. #66 at 20-22 and #67,
Exs. A and B. The Court finds it unnecessary to consider
those documents to resolve this matter, and declines
Defendants' request on that basis. However, the Court
does take judicial notice that Lidingo Holdings, LLC, with
registered agent Kamilla Bjorlin, was formerly registered to
do business in the State of Washington, but is now
terminated. This information is contained in the public
records maintained by the Secretary of State of the State of
Washington, and can be retrieved on the public website for
the Secretary of State of the State of Washington
Corporations division. https://www.sos.wa.gov/corps/
(last visited May 9, 2018).
first move to dismiss all of Plaintiff's claims on the
basis that they are time-barred pursuant to Nevada law. Dkts.
#66 at 8-11 and #68 at 2-3. Defendants rely on Nevada Revised
Statutes (“NRS”) § 86.505(1) pertaining to
dissolved corporations. Id. Plaintiff, relying on
U.S. v. Summerlin, 310 U.S. 414, 417, 60 S.Ct. 1019,
1020, 84 L. Ed.1283 (1940), asserts that when it brings
claims in its governmental capacity, it cannot become subject
to any state statute of limitations. Dkt. #69 at 14. While
acknowledging the general rule, this Court disagrees that it
is applicable in this case.
Williams v. United States, 674 F.Supp. 334 (1987),
the United States District Court for the Northern District of
Florida examined a Florida statute with nearly identical
language to that of the Nevada statute, to determine whether
the statute constituted a statute of limitations. The Court
started by recognizing the general principle that Plaintiff
asserts in this case - as a general rule, the United States
is not bound by state statutes of limitation.
Williams, 674 F.Supp. at 336. The court went on to
determine, however, that the statute was a
“prolongation” statute rather than a statute of
A statute of limitations is one that prescribes a period of
time within which a civil action must be commenced . . . .,
the “limitation” being the time at the end of
which no action can be maintained. 35 Fla. Jur. 2d,
Limitations and Laches, S.1. Put another way, a
“statute of limitation” is but the action of the
state in determining that, after the lapse of a specified
time, a claim shall not be legally enforceable. State of
South Dakota v. State of North Carolina, 192 U.S. 286,
24 S.Ct. 269, 48 L.Ed. 448 (1904).
In determining whether Section 607.297, Florida Statutes, is
a statute of limitation, the court will first examine the
plain language of the statute and then consider the gloss
placed upon the statute by the Florida courts.
Section 607.297, which is entitled “Survival of remedy
after dissolution, ” states in part that, “The
dissolution of a corporation . . . shall not take away or
impair any remedy available . . . against such corporation,
or its directors . . . . for . . . any liability incurred,
prior to such dissolution . . . if action . . . is commenced
within 3 years . . . .” It is apparent that the Florida
legislature intended Section 607.297 to extend the time in
which a claim against a dissolved corporation could be
brought. This court must presume that the legislative purpose
is expressed by the ordinary meaning of the words used and
that the language must be regarded as conclusive.
American Tobacco Co. v. Patterson, 456 U.S. 63, 68,
102 S.Ct. 1534, 71 L.Ed.2d 748 (1982). The cause of action is
not barred, but rather, the remedy survives the dissolution
of the corporation.
This is in sharp contrast to the effect of a typical statute
of limitation where the substantive right continues to exist,
but its enforcement is cut off. A statute of limitation bars
the remedy after the passage of a prescribed amount of time.
Henry v. Halifax Hospital Dist., 368 So.2d 432, 433
(Fla. 1st DCA 1979); Walter Denson & Son v.
Nelson, 88 So.2d 120, 122 (Fla. 1956); Hoagland v.
Railway Exp. Agency, 75 So.2d 822, 827 (Fla. 1954).
Section 607.297 not only does not act as a bar to an action,
it actually creates a remedy where one did not exist. Prior
to the passage of Section 607.297, the common law rule was
that after the dissolution and termination of a corporation,
no action could be maintained against it. Marinelli v.
Weaver, 208 So.2d 489, 492 (Fla. 2nd DCA 1968);
Nelson v. Miller, 212 So.2d 66, 67 (Fla. 3rd DCA
1968); Bahl, 423 So.2d at 965. The common law rule
still controls after the passage of the three years
prescribed in the statute. Fedonics West Hollywood Corp.
v. Barnett Bank, 450 So.2d 322, 324 (Fla. 4th DCA 1984).
In addition, the Florida courts have not described nor
treated Section 607.297 as a statute of limitation. A
corporation “continued as a body corporate” in
order to satisfy its liabilities. Air Control Products,
Inc. v. Perma-Stress, Inc., 189 So.2d 412, 414 (Fla. 1st
DCA 1966) (construing prior law, Florida Statutes, Section
608.30(1)). Section 607.297 has been described as a
“winding up” statute, one which extends the life
of a dissolved corporation. McGlynn v. Rosen, 387
So.2d 468, 469 (Fla. 3rd DCA 1980), Advance Machine Co.
v. Berry, 378 So.2d 27, 28 (Fla. 3rd DCA 1978). The
statute provides for a three year “grace period.”
Fedonics, 450 So.2d at 324.
Additional evidence that Section 607.297 was not intended to
be a statute of limitation is its placement in Florida's
statutory scheme. The statute at issue is part of the Florida
General Corporation Act, Section 607.001 et seq.
Chapter 95 of the Florida Statutes contains the limitations
of actions provisions.
This court is of the opinion that Florida Statutes, Section
607.297 is, as described by the third party defendant, a
“prolongation statute” and not a statute of
limitation. The general rule that the United States is not
subject to state statutes of limitation is not applicable
here, and the United States claim against the third party
defendant may not proceed.
Williams, 674 F.Supp. at 336-37.
the Ninth Circuit Court of Appeals nor any District Court in
the Ninth Circuit has addressed the same question with
respect to the Nevada statute at issue here. However, the
Court finds the reasoning in Williams,
supra, persuasive in this case. First, the language
of the Nevada statute, entitled “Continuation of
company after dissolution for winding up of affairs, ”
is nearly identical in ...