10-2919-cv
SRM Global Fund Limited Partnership v. Countrywide Financial Corporation, et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Daniel Patrick Moynihan
3 United States Courthouse, 500 Pearl Street, in the City of
4 New York, on the 23rd day of November, two thousand eleven.
5
6 PRESENT: DENNIS JACOBS,
7 Chief Judge,
8 ROBERT A. KATZMANN,
9 DEBRA ANN LIVINGSTON,
10 Circuit Judges.
11
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13 SRM GLOBAL FUND LIMITED PARTNERSHIP
14 Plaintiff-Appellant,
15
16 -v.- 10-2919-CV
17
18 COUNTRYWIDE FINANCIAL CORPORATION,
19 n/k/a Bank of America Home Loans,
20 ANGELO R. MOZILO, DAVID SAMBOL,
21 ERIC P. SIERACKI,
22 Defendants-Appellees,
23
24 BANK OF AMERICA CORPORATION,
25 KENNETH D. LEWIS,
26 Defendants.
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1 FOR APPELLANTS: DAVID BOIES (Philip C. Korologos, Boies,
2 Schiller & Flexner LLP, New York, NY,
3 Richard B. Drubel, Matthew J. Henken,
4 Boies, Schiller & Flexner LLP, Hanover,
5 NH, George A. Zelcs, Korein Tillery LLC,
6 Chicago, IL, Stephen M. Tillery, Douglas
7 R. Sprong, Peter Rachman, Christopher A.
8 Hoffman, Korein Tillery LLC, St. Louis,
9 MO., on brief), Boies, Schiller & Flexner
10 LLP, New York, NY.
11
12 FOR APPELLEES: BRIAN A. PASTUSZENSI (Alexis L. Shapiro,
13 Goodwin Procter LLP, Boston, MA, Mark
14 Holland, Goodwin Procter LLP, New York,
15 NY, Richard M. Wyner, Goodwin Procter
16 LLP, Washington, DC, on brief), Goodwin
17 Procter LLP, Boston, MA, for Appellee
18 Countrywide Financial Corporation, n/k/a
19 Bank of America Home Loans.
20
21 DAVID SIEGEL (Kenneth R. Heitz, Daniel P.
22 Lefler, Adam Fletcher, on brief), Irell &
23 Manella LLP, Los Angeles, CA, for
24 Appellee Angelo R. Mozilo.
25
26 Lori Lynn Phillips, Orrick, Herrington &
27 Sutcliffe LLP, Seattle WA, Michael D.
28 Torpey, Penelope A. Graboys Blair,
29 Orrick, Herrington & Sutcliffe LLP, San
30 Francisco, CA, for Appellee David Sambol.
31
32 SHIRLI FABBRI WEISS (Keara M. Gordon, DLA
33 Piper LLP (US), New York, NY, David
34 Priebe, DLA Piper LLP (US), East Palo
35 Alto, CA), DLA Piper LLP (US), San Diego,
36 CA, for Appellee Eric P. Sieracki.
37
38 Appeal from a judgment of the United States District
39 Court for the Southern District of New York (Berman, J.).
40
41 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
42 AND DECREED that the judgment of the district court be
43 AFFIRMED.
44
45 Appellant SRM Global Fund Limited Partnership appeals
46 from a judgment of the United States District Court for the
47 Southern District of New York (Berman, J.), dismissing its
2
1 securities and common-law fraud complaint against
2 Countrywide Financial Corporation and three of its officers.
3
4 SRM asserted claims for violations of the Securities
5 Exchange Act of 1934--specifically Section 10(b), 15 U.S.C.
6 § 78j(b); Rule 10b-5, promulgated under the Exchange Act, 17
7 C.F.R. § 240.10b-5; Section 18(a), 15 U.S.C. § 78r(a); and
8 Section 20(a), 15 U.S.C. § 78t(a)--and common-law fraud.
9 The district court dismissed the complaint for failure to
10 identify an actionable misstatement or omission. We assume
11 the parties’ familiarity with the underlying facts, the
12 procedural history, and the issues presented for review.
13
14 Having conducted the requisite review of the record,
15 see Scalisi v. Fund Asset Mgmt., L.P., 380 F.3d 133, 137 (2d
16 Cir. 2004), we affirm the dismissal of SRM’s complaint for
17 substantially the reasons stated in the district court’s
18 thorough and well-reasoned opinion. See SRM Global Fund
19 Ltd. P’ship v. Countrywide Fin. Corp., No. 09 Civ. 5064
20 (RMB), 2010 WL 2473595 (S.D.N.Y. June 17, 2010).
21
22 One issue is closer than others, and as to that as well
23 we agree with the district court, which ruled that SRM
24 failed to identify any statements actionable under Section
25 18. The plaintiff was required to specify a statement in a
26 qualifying SEC filing that was “at the time and in the light
27 of the circumstances under which it was made false or
28 misleading with respect to any material fact.” 15 U.S.C.
29 § 78r(a). The amended complaint relies on four SEC filings:
30 Countrywide’s 2006 and 2007 Form 10-Ks and two Form 8-Ks
31 filed on August 6, 2007 and October 26, 2007. (Amended
32 Complaint (“AC”) ¶ 320.)1 The 10-Ks, alleges SRM, falsely
33 state that Countrywide had “developed a comprehensive
34 Liquidity Management Plan (‘LMP’) to moderate liquidity risk
35 with the goal of maintaining adequate, appropriate, and
36 cost-effective sources of liquidity under all market
37 conditions.” (Id. ¶ 112.) The 2007 10-K advised that
38 Countrywide had “adequate liquidity to meet our obligations,
39 including--but not limited to--our commitments to lend,
40 maturities of debt and obligations to fund rapid
1
SRM also complains that each of Countrywide’s
quarterly filings was false and misleading for similar
reasons. (See, e.g., AC ¶¶ 34, 43, 56, 79, 121.) SRM
failed to adequately plead that any of the statements from
these filings were false or misleading as well.
3
1 amortization events. At December 31, 2007, we estimate that
2 we have available liquidity totaling $36.6 billion.” (Id.)
3 The 2006 10-K made similar representations. (Id. ¶ 113.)
4 In its August 6, 2007 8-K, Countrywide represented that it
5 had net available liquidity of $186.5 billion as of June 30,
6 2007. (Id. ¶ 53.) A press release accompanying its October
7 26, 2007 8-K stated that, during the third quarter,
8 Countrywide had “stabilized its liquidity,” “strengthened
9 its capital position,” and “anticipate[d] that the company
10 will be profitable in the fourth quarter.” (Id. ¶ 72.) SRM
11 argues that these statements were false and misleading
12 because, almost a year later, Countrywide officers
13 identified July 2007 as the time period in which Countrywide
14 had lost viability, and August 2, 2007 as the date on which
15 liquidity “disappeared” (although SRM acknowledges that
16 Countrywide continued to access tens of billions of dollars
17 in new liquidity after that date). (Id. ¶ 76.)
18
19 Fraud cannot be pled by hindsight. See Shields v.
20 Citytrust Bancorp, Inc., 25 F.3d 1124, 1129 (2d Cir. 1994).
21 Countrywide’s optimistic statements about future
22 profitability constitute non-actionable forward-looking
23 statements. See San Leandro Emergency Medical Group Profit
24 Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 811 (2d
25 Cir. 1996); see also Rombach v. Chang, 355 F.3d 164, 174 (2d
26 Cir. 2004) (“[E]xpressions of puffery and corporate optimism
27 do not give rise to securities violations.”). The same is
28 true of Countrywide’s high hopes for its “Liquidity
29 Management Plan.” See ECA & Local 134 IBEW Joint Pension
30 Trust of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 206-
31 07 (2d Cir. 2009) (characterizing as “no more than puffery”
32 statements that company would “continue to reposition and
33 strengthen its franchises with a focus on financial
34 discipline” and that company had “risk management processes
35 that are highly disciplined and designed to preserve the
36 integrity of the risk management process” (alterations and
37 internal quotation marks omitted)). Finally, SRM has not
38 alleged facts demonstrating that Countrywide misstated its
39 liquidity position in its public filings.
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1 Having considered all of SRM’s arguments presented on
2 appeal, we hereby AFFIRM the judgment of the district court.
3
4 FOR THE COURT:
5 CATHERINE O’HAGAN WOLFE, CLERK
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