Citations
- 338 F. Supp. 744
Full opinion text
MEMORANDUM OF OPINION ON MOTION OF DEFENDANT MEAHL, McNAMARA & CO. TO DISMISS
FRANCIS J. W. FORD, District Judge.
Plaintiffs in this action are a group of limited partners in defendant Capital Management Associates who seek relief here on the basis of various illegal and fraudulent actions or acts of mismanagement alleged to have been committed by various defendants.
Count Six of the complaint is brought against defendant Meahl, McNamara & Co. under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission, 17 C.F.R. § 240.10b-5. It is alleged that defendant, an accounting firm, prepared an auditors’ report of the condition of Capital Management Associates as of December 31, 1968, that the financial statements attached to this report and certified by the defendants contained untrue statements of material fact as to the market value and marketability of certain securities owned by Capital Management Associates, - and that plaintiffs were thereby misled as to the true financial condition of the partnership and, as a result, refrained, to their loss, from taking immediate steps to dissolve the partnership and convert their partnership investments to cash.
Count Eleven asserts against the same defendant claims under state law based on fraudulent misrepresentation and concealment and on negligence and is brought in this Court under the principles of pendant jurisdiction.
Defendant Meahl, McNamara & Co. moves to dismiss the complaint as to Counts Six and Eleven.
The first ground for dismissal is that defendant is a partnership and that the action should be brought against the individual partners and not against the partnership as an entity. However, since Count Six sets forth a claim based on a law of the United States, the partnership as such may be sued in its common name in this Court, even though it may have no capacity to be sued as such under Massachusetts law, Rule 17(b) (1), Federal Rules of Civil Procedure.
Defendant further contends that Count Six fails to state a claim upon which relief can be granted under § 10(b) of the Act and Rule 10b-5. Rule 10b-5, as relevant here, provides:
“It shall be unlawful for any person, directly or indirectly .
“(2) to make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading
in connection with the purchase or sale of any security.”
Defendant, for purposes of this motion, does not dispute the contention that plaintiffs’ limited partnership interests constituted securities. However, it does contend that since it appears from the complaint that plaintiffs did not take any steps to liquidate their partnership interests, there has been no s