    14-402-cv
    Montgomery v. Bank of America Corporation


                          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 ASUMMARY ORDER@). A PARTY CITING TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

                  At a stated term of the United States Court of Appeals for the Second Circuit,
    held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
    New York, on the 15th day of June, two thousand fifteen.

    PRESENT:
                ROBERT D. SACK,
                PETER W. HALL,
                SUSAN L. CARNEY,
                      Circuit Judges.
    _____________________________________

    NECA-IBEW Pension Trust Fund, Denis
    Montgomery, on behalf of himself and all
    others similarly situated,

                              Plaintiffs-Appellants,

                     v.                                                   No. 14-402-cv

    Kenneth D. Lewis, Bank of America
    Corporation, William Barnet, III, Frank
    P. Bramble, Sr., Joe L. Price, John T.
    Collins, Neil A. Cotty, Gary L.
    Countryman, Tommy R. Franks,
    Charles K. Gifford, Steven W. Jones,
    Walter E. Massey, Thomas J. May,
    Patricia E. Mitchell, Temple O. Sloan,
    Thomas M. Ryan, Meredith R.
    Spangler, Robert L. Tillman, Banc of
    America Securities LLC, Jackie M.
    Ward, Citigroup Global Markets
    Inc., UBS Securities LLC,
Wachovia Capital Markets, LLC, Merrill
Lynch, Pierce, Fenner & Smith
Incorporated, Deutsche Bank Securities,
J.P. Morgan Securities Inc., Morgan
Stanley & Co. Incorporated,

                   Defendants-Appellees,

Incapital LLC,

                  Defendant.
_____________________________________

FOR PLAINTIFFS-APPELLANTS:                     MARK L. KNUTSON, JEFFREY R. KRINSK,
                                               Finkelstein & Krinsk, San Diego, CA;
                                               Jeffrey A. Klafter, Klafter Olsen & Lesser
                                               LLP, Rye Brook, NY.

FOR DEFENDANTS-APPELLEES:                      JONATHAN ROSENBERG, Bradley J. Butwin,
                                               William J. Sushon, B. Andrew Bednark,
                                               O’Melveny & Myers LLP, New York, NY,
                                               for Defendants-Appellees Kenneth D. Lewis,
                                               Bank of America Corporation, William
                                               Barnet, III, Frank P. Bramble, Sr., Joe L.
                                               Price, John T. Collins, Neil A. Cotty, Gary L.
                                               Countryman, Tommy R. Franks, Charles K.
                                               Gifford, Steven W. Jones, Walter E. Massey,
                                               Thomas J. May, Patricia E. Mitchell, Temple
                                               O. Sloan, Thomas M. Ryan, Meredith R.
                                               Spangler, Robert L. Tillman, and Jackie M.
                                               Ward.

                                               SCOTT D. MUSOFF, Jay B. Kasner, Gary J.
                                               Hacker, Skadden, Arps, Slate, Meagher &
                                               Flom LLP, New York NY, for
                                               Defendants-Appellees Merrill Lynch, Pierce,
                                               Fenner & Smith Incorporated, individually
                                               and as successor by merger to Banc of
                                               America Securities LLC, Citigroup Global
                                               Markets Inc., Deutsche Bank Securities Inc.,
                                               J.P. Morgan Securities, Inc., Morgan Stanley
                                               & Co. Inc., UBS Securities LLC, and
                                               Wachovia Capital Markets, LLC.


                                           2
          Appeal from a judgment of the United States District Court for the Southern District of

New York (Kaplan, J.).

          UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

          Plaintiffs-Appellants NECA-IBEW Pension Trust Fund and Denis Montgomery

(collectively, “Plaintiffs”) filed suit on behalf of themselves and others similarly situated in the

United States District Court for the Southern District of New York (Kaplan, J.), alleging violations

of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 in connection with two Bank of

America (“BAC”) public offerings of securities in January and May of 2008 (collectively, the

“Offerings”). Defendants-Appellees are BAC, various BAC directors and officers, and the

Offerings’ underwriters (collectively, “Defendants”). On December 3, 2013, the district court

entered an order adopting the February 15, 2013 report and recommendation of Magistrate Judge

Henry Pitman, which recommended denial of Plaintiffs’ motion for leave to amend on the grounds

that the amendments contained in the Proposed Second Amended Complaint (“PSAC”) would be

futile. Plaintiffs appeal from the district court’s December 3, 2013 order. We assume the

parties’ familiarity with the underlying facts, the procedural history of the case, and the issues on

appeal.

          We review the district court’s denial of leave to amend de novo where “the denial was

based on an interpretation of law, such as futility.” Panther Partners Inc. v. Ikanos Commc’ns,

Inc., 681 F.3d 114, 119 (2d Cir. 2012). Proposed amendments are futile if they “would fail to

cure prior deficiencies or to state a claim under Rule 12(b)(6) of the Federal Rules of Civil

Procedure.” Id. The standard for denying leave to amend based on futility is therefore the same as


                                                 3
the standard for granting a motion to dismiss. IBEW Local Union No. 58 Pension Trust Fund and

Annuity Fund v. Royal Bank of Scotland Grp., PLC, 783 F.3d 383, 389 (2d Cir. 2015).

         The district court concluded that leave to amend would be futile because, inter alia, the

additional allegations contained in the PSAC were untimely. We agree.

         The district court correctly determined that Plaintiffs’ amended claims are time barred

because the PSAC’s own allegations demonstrate that a reasonably diligent plaintiff would have

had sufficient information to plead the asserted Securities Act violations by late 2008—more than

one year prior to the filing of Plaintiffs’ initial complaint on January 19, 2010. 15 U.S.C. § 77m

(“No action shall be maintained to enforce any liability created under section [11] or [12(a)(2)] of

this title unless brought within one year after the discovery of the untrue statement or the omission,

or after such discovery should have been made by the exercise of reasonable diligence.”); cf. Ellul

v. Congregation of Christian Bros., 774 F.3d 791, 798 n.12 (2d Cir. 2014) (“Although the statute

of limitations is ordinarily an affirmative defense that must be raised in the answer, a statute of

limitations defense may be decided on a Rule 12(b)(6) motion if the defense appears on the face of

the complaint.” (citation omitted)). 1             The district court properly observed that the facts

comprising the core of Plaintiffs’ accounting-related claims were contained within BAC’s 2008

financial disclosures that are cited in the PSAC. Though the PSAC asserts, for example, that

BAC concealed a 70% write down of impaired collateralized debt obligations (“CDOs”), the

PSAC acknowledges that this information was disclosed in BAC’s 2007 Form 10-K filed on

February 28, 2008. The PSAC also asserts that BAC concealed the removal of certain CDOs

1
  The parties dispute whether the statute of limitations governing Plaintiffs’ Securities Act claims is triggered by
inquiry notice or the less-onerous discovery rule announced by the Supreme Court in Merck & Co. v. Reynolds, 559
U.S. 633 (2010) (rejecting inquiry notice as a trigger for claims under Section 10(b) of the Securities and Exchange
Act of 1934). We not need resolve this issue, however, because we agree with the district court that Plaintiffs’ claims
are untimely even under the less-burdensome Merck discovery rule.
                                                          4
from its Value-at-Risk (“VAR”) models but acknowledges that BAC disclosed (1) that it had

revised its procedures for VAR testing CDOs in its 2007 Form 10-K and (2) that the CDOs were

reinstated into its VAR models in its Form 10-Q filed on May 8, 2008.

       We further agree with the district court that a reasonably diligent plaintiff would have had

sufficient information by late 2008 to plead the PSAC’s claims relating to the acquisition of

Countrywide Financial Corporation (“Countrywide”). The district court correctly observed that

sufficient information relating to Countrywide’s loan origination practices was in the public

domain by virtue of, inter alia, the numerous federal and state lawsuits filed against Countywide in

2007 and the widespread press coverage that Countrywide received in national publications such

as The New York Times and The Wall Street Journal in 2007 and 2008.

       We have considered Plaintiffs’ remaining arguments and find them to be without merit.

Accordingly, we AFFIRM the judgment of the district court.

                                              FOR THE COURT:
                                              Catherine O’Hagan Wolfe, Clerk




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