Stella v. Asset Management Consultants

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Plaintiff filed suit alleging nine causes of action as to seven limited partnership transactions. The gravamen of the suit was that a private placement memoranda’s description of a real estate commission to be paid by the seller of the property at closing was false. Defendants filed or joined motions for a general reference, and the trial court granted the motions, appointing a referee. The referee found all causes of action barred by the governing statutes of limitations because, when plaintiff received and reviewed the private placement memoranda, he was either aware or, as a reasonable person, should have conducted the due diligence required to inform himself that the purchase price recited in the private placement memoranda had been increased over that for which the property otherwise could have been purchased to facilitate payment of the fee labeled "real estate commission." The trial court then granted defendants' motion for entry of judgment. The court concluded that the private placement memoranda attached as exhibits to plaintiff's first amended complaint, rather than the conclusory allegations in the pleading itself, establish that plaintiff had inquiry notice, if not actual notice, of the alleged wrongdoing at the time the transactions closed. Therefore, all of plaintiff's causes of action are time-barred, the delayed discovery rule does not apply, and the demurrers of all defendants were properly sustained without leave to amend. The court also concluded that any error in ordering a general reference was harmless. Accordingly, the court affirmed the judgment. View "Stella v. Asset Management Consultants" on Justia Law