Summary
This United States District Court for the District of New Jersey opinion and order grants defendants' motions to dismiss the plaintiff's amended complaint. The court holds that the plaintiff's federal securities fraud claims are time-barred by both the two-year statute of limitations and the five-year statute of repose, rejecting arguments for equitable tolling. Additionally, the court finds it lacks diversity jurisdiction due to incomplete diversity and declines to exercise supplemental jurisdiction over the remaining state law claims. Consequently, the case is dismissed without prejudice so the plaintiff may refile in the appropriate state court.
Topics
Practice areas
Questions Presented
- Whether the securities‑fraud claims are barred by the two‑year statute of limitations.
- Whether the securities‑fraud claims are barred by the five‑year statute of repose.
- Whether the district court has federal‑question or diversity subject‑matter jurisdiction.
- Whether the court should exercise supplemental jurisdiction over the state‑law claims.
Holdings
- The securities‑fraud claims are time‑barred and are dismissed.
- The claims are barred by the five‑year statute of repose and are dismissed.
- The court lacks both federal‑question and diversity jurisdiction; therefore it has no subject‑matter jurisdiction.
- The court declines to exercise supplemental jurisdiction and dismisses the state‑law claims.
Key quotations
“For the reasons set forth below, Defendants’ motions are GRANTED and Plaintiff’s FAC is dismissed without prejudice to refile in the Superior Court of New Jersey, Essex County.” (at *4)
“The statute of limitations requires securities fraud claims to be “brought within ‘2 years after the discovery of the facts constituting the violation.’”” (at *4)
Factual background
Plaintiff, a former vice‑president of Diversegy, alleges that Diversegy sold the company in December 2013 under a Unit Purchase Agreement (UPA) whose signature he claims was forged. He contends that the defendants misrepresented the company's value, concealed debts, and failed to pay his ownership interest and commissions.
Procedural history
Plaintiff filed an amended complaint on June 2, 2021 alleging securities fraud and state law claims. Defendants filed Rule 12(b)(6) motions to dismiss and a Rule 12(f) motion to strike. The court considered statutes of limitations, statutes of repose, subject‑matter jurisdiction, diversity jurisdiction, and supplemental jurisdiction, and granted the motions to dismiss, dismissing the complaint without prejudice.
Remand instructions
Plaintiff may refile the complaint in the Superior Court of New Jersey, Essex County.