Free Memorandum in Opposition - District Court of California - California

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LUKENS LAW GROUP WILLIAM M. LUKENS (SBN 037196) JENNIFER L. JONAK (SBN 191323) One Maritime Plaza, Suite 1600 San Francisco, CA 94111 Telephone: (415) 433-3000 Facsimile: (415) 781-1034 Attorneys for Plaintiff UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

RICHARD T. THIERIOT, an individual; 10 Plaintiff, 11 v. 12 13
Lukens Law Group One Maritime Plaza, Suite 1600 San Francisco, CA 94111

Case No. C-07-5069 JW OPPOSITION TO AIG DEFENDANTS' MOTION TO DISMISS AND STRIKE

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

AIG MATCHED FUNDING CORP., a corporation; AIG FINANCIAL SECURITIES CORP., a corporation; AIG FINANCIAL PRODUCTS CORP., a corporation; BANQUE AIG, a corporation; and DOES ONE THROUGH THIRTY, inclusive; Defendants.

Date: April 7, 2008 Time: 9:00 a.m. Dept.: Courtroom 8, 4th Floor Judge: The Hon. James Ware

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. C. D. E. F. G. H. I. II.

TABLE OF CONTENTS

INTRODUCTION...........................................................................1 ARGUMENT..................................................................................2 A. B. Legal Standard.......................................................................2 Plaintiff's Fraud Claim Is Not Time Barred ....................................3 1. 2. Choice of Law Analysis....................................................3 Neither the IRS Notices Nor the Tax Court Proceeding Triggered the Running of the Statute of Limitations on Plaintiff's Fraud Claim.....................................................5

Plaintiff's Fraud Claim Meets the Pleading Standard of Rule 9(b).........14 AIG's Boilerplate Disclaimers Do Not Preclude Plaintiff's Fraud Claim.........................................................................17 The Alleged Omissions by AIG Support a Claim of Fraud..................19 Plaintiff Has Properly Pled a Claim for Unjust Enrichment..................20 Plaintiff Has A Viable Unfair Business Practices Claim.....................22 Plaintiff Is Entitled to a Jury Trial................................................24

CONCLUSION..............................................................................25

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TABLE OF AUTHORITIES CASES 131 Main Street Associates v. Manko, 897 F.Supp. 1507 (S.D.N.Y. 1995) ..................................................8, 11-12 Agair Inc. v. Shaefferi, 232 Cal. App. 2d 513 (1965) ................................................................21 Averbach v. Vnescheconombank, 280 F.Supp. 2d 945 (N.D. Cal. 2003) .....................................................5-6 Bassidji v. Goe, 413 F.3d 928 (9th Cir. 2005) ..............................................................24 Banque Arabe Et Internationale D'Investissement v. Maryland Nat'l Bank, 57 F.3d 146 (2d Cir.1995)...............................................................19-20 Bennett v. Hibernia Bank, 47 Cal.2d 540 (1956)...........................................................................7 Bharucha v. Reuters Holdings PLC, 810 F. Supp. 37 (E.D.N.Y. 1993)...........................................................15 Caiola v. Citibank, N.A., 295 F.3d 312 (2d Cir. 2002).................................................................18 Certilman v. Hardcastle, Ltd., 754 F. Supp. 974 (E.D.N.Y. 1991)..........................................................15 Conley v. Gibson, 355 U.S. 41 (1957)..............................................................................2 Conwill v. Arthur Andersen LLP, 12 Misc.3d 1171(A) (N.Y.Sup. 2006)......................................................18 Day & Zimmerman, Inc. v. Chaloner, 423 U.S. 3 (1975)................................................................................3 DeMarco v. Lehman Brothers, Inc., 309 F.Supp.2d 631 (S.D.N.Y. 2004).......................................................8-9 Dunkin v. Boskey, 82 Cal. App. 4th 171 (2000)..................................................................20 Europadisk Holdings, LLC. v. Shelton, 2004 WL 613109 (S.D.N.Y. 2004).........................................................18 Fidelity Fin. Corp. v. Federal Home Loan Bank, 792 F.2d 1432 (9th Cir. 1986).................................................................2 First Nationwide Savings v. Perry, 11 Cal. App. 4th 1657 (1992).................................................................21
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Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797 (2005)..........................................................................9 Fujisawa Pharmaceutical Co., Ltd. v. Kapoor, 115 F.3d 1332 (7th Cir. 1997)...............................................................13 Gilligan v. Jamco Development Corp., 108 F.3d 246 (9th Cir. 1997)..................................................................3 Glue-Fold, Inc. v. Slautterback Corp., 82 Cal. App. 4th 1018 (2000).................................................................22 . Govt of India v. Cargill, 445 F. Supp. 714 (D.C.N.Y. 1978)..........................................................13 Grafton Partners L.P. v. Superior Court, 36 Cal.4th 944 (2005)..........................................................................24 Grisham v. Philip Morris USA, 40 Cal. 4th 623 (2007).........................................................................23 Haskell v. Time, Inc., 857 F. Supp. 1392 (E.D. Cal. 1994)..........................................................2 Hishon v. King & Spalding, 467 U.S. 69 (1984)..............................................................................2 Hobbs v. Bateman Eichler, Hill Richards, Inc., 164 Cal.App.3d 174 (1985)....................................................................7 Huskinson & Brown LLP v. Wolf, 32 Cal. 4th 453 (2004).........................................................................21 In re Evergreen Mut. Funds Fee Litigation, 423 F. Supp. 2d 249 (S.D.N.Y. 2006)......................................................23 In re J. Baranello & Sons, Inc., 149 B.R. 19 (E.D.N.Y. 1992)................................................................15 In re Worldcom, 377 B.R. 77 (S.D.N.Y. 2007)................................................................13 International Engine Parts, Inc. v. Feddersen & Co., 9 Cal.4th 606 (1995)............................................................................8 Jenkins v. McKeithen, 395 U.S. 411 (1969).............................................................................2 Jolly v. Eli Lilly & Co., 44 Cal.3d 1103 (1988)........................................................................13 Karl Storz Endoscopy America, Inc. v. Surgical Technologies, Inc., 285 F.3d 848 (9th Cir. 2002).................................................................23
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Katz v. Zuckerman, 481 N.Y.S.2d 271 (1984).....................................................................21 Kline v. Turner, 87 Cal.App.4th 1369 (2001).................................................................13 Kotlyarsky v. New York Post, 757 N.Y.S.2d 703 (2003).....................................................................14 Lazar v. Superior Court, 12 Cal. 4th 631 (1996) ........................................................................20 .... LC Capital Partners, L.P. v. Frontier Ins. Group, 318 F.3d 148 (2d Cir. 2003) ..................................................................7 LiMandri v. Judkins, 52 Cal. App. 4th 326 (1997) .................................................................20 Lopez v. Smith, 203 F.3d 1122 (9th Cir. 2000) ..............................................................25 M&T Mortg. Corp. v. Miller, 323 F. Supp. 2d 405 (E.D.N.Y. 2004) .............................................14, 23-24 Massachusetts Mutual Life Ins. Co. v. Sup. Ct., 97 Cal. App. 4th 1282 (2002) ............................................................22-23 Marks v. CDW Computer Centers, Inc., 122 F.3d 363 (7th Cir. 1997) ..................................................................6 McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784 (2008) .................................................................17 McKeown v. First Interstate Bank, 94 Cal. App. 3d 1225 (1987) ............................................................10-11 Medical Instrument Development Laboratories v. Alcon Laboratories, 2005 WL 1926673 (N.D. Cal. 2005) ....................................................3, 22 Medimatch, Inc. v. Lucent Technologies, Inc., 120 F. Supp. 2d 842 (N.D. Cal. 2000) .......................................................3 Merrill Lynch & Co., Inc. v. Allegheny Energy, Inc., 382 F.Supp.2d 411 (S.D.N.Y. 2003) ......................................................18 Mitschele v. Schultz, 36 A.D.3d 249 (2008) ........................................................................10 Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459, 465 (1992) ....................................................................24 Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal. 3d 176 (1971) ..........................................................................21
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NL Industries, Inc. v. Kaplan, 792 F.2d 896 (9th Cir. 1986) .................................................................2 OCM Principal Opportunities Fund v. CIBC World Markets Corp., 157 Cal. App. 4th 835 (2007) ................................................................20 Perrott v. U.S. Banking Corp., 53 F. Supp. 953 (D.C. Del. 1944) ...........................................................15 Pointer v. Columbia Univ., 1997 WL 86387 (S.D.N.Y. 1997)...........................................................14 Reznor v. J. Artist Management, Inc., 365 F.Supp.2d 565 (S.D.N.Y. 2005) .......................................................13 Rodriguez v. Village of Islan Park, Inc., 1991 WL 128568 (E.D.N.Y. 1991) ........................................................23 Ross v. A.H. Robins Co., 607 F.2d 545 (2d Cir. 1979), cert. denied, 446 U.S. 946 (1980) .......................15 San Bernadino County v. Sapp, 156 Cal. App. 2d 550 (1958) ................................................................14 SEC v. Management Dynamics, Inc., 1973 WL 434 (S.D.N.Y. 1973) ..............................................................15 Seippel v. Sidley, Austin, Brown & Wood LLP, 399 F.Supp.2d 283 (2005) ....................................................................7 Shannon v. Gordon, 249 A.D.2d 291 (1998) .......................................................................6 Simmons v. Ratterree Land Co., 217 Cal. 201 (1932) ..........................................................................17 Snapp & Associates Ins. Services, Inc. v. Robertson, 96 Cal. App. 4th 884 (2002) .................................................................23 St. Paul Travelers Inc. Co. v. Nandi, 2007 WL 1662050 (N.Y. Sup. 2007) ......................................................22 Stambovsky v. Ackley, 169 A.D.2d 254 (1991) .......................................................................19 Sutter Home Winery, Inc. v. Vintage Selections, Ltd., 971 F.2d 401 (9th Cir. 1992) ..................................................................3 Tahini Investments, Ltd. v. Bobrowsky, 99 A.D.2d 489, 490 (1984) ..................................................................19 Tello v. Dean Witter Reynolds Inc., 410 F3d 1275 (11th Cir 2005) ................................................................6
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Tijsseling v. General Acc. Assur. Corp., 55 Cal. App. 3d 623 (1976) ...................................................................6 Transit Rail, LLC v. Marsala, 2007 WL 2089273 (W.D.N.Y. 2007).......................................................18 Tryforos v. Icarian Development Co., S.A., 47 F.R.D. 191 (N.D. Ill. 1969) ..............................................................15 Tucci v. Club Mediterranee, S.A., 89 Cal. App. 4th 180 (2001) ...................................................................4 Victor Oil Co. v. Drum, 184 Cal. 226 (1920) ....................................................14 Waldman v. Englishtown Sportswear, Ltd., 460 N.Y.S.2d 552 (1983) ....................................................................21

STATUTES AND REGULATIONS Cal. Bus. & Prof. Code § 17200.................................................................3, 22 Cal. Civil Code § 339................................................................................21 Cal. Code Civ. Proc. § 338 .......................................................................5, 21 Cal. Rev. & Tax. § 18407(a)(4) .....................................................................5 Cal. Rev. & Tax. § 18628.............................................................................5 Cal. Rev. & Tax. § 18648.............................................................................5 Cal. Rev. & Tax. § 19177.............................................................................5 Cal. Rev. & Tax. § 19182.............................................................................5 Cal. Rev. & Tax. § 19751.............................................................................5 Cal. Rev. & Tax. § 19772.............................................................................5 Cal. Rev. & Tax. § 19777.............................................................................5 Cal. Rev. & Tax. § 19777.5..........................................................................5 Cal. Rev. & Tax. § 19778.............................................................................5 Fed. R. Civ. Pro. 9(b) ............................................................................14-16 N.Y. C.P.L.R. § 213...............................................................................5, 22 N.Y. General Business Law § 349.............................................................22-23
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SECONDARY AUTHORITIES Restatement (Second) of Conflict of Laws § 187................................................24 1 Witkin, Summary of Cal. Law, Contracts, § 304..............................................17 5 Witkin, Summary of Cal. Law, Torts, § 676....................................................20

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I.

INTRODUCTION In 2000, Plaintiff Richard Thieriot and his family were faced with the sale of the

family's longtime business, the San Francisco Chronicle. Concerned about the volatility of the market during this time period and its impact on the sale, Mr. Thieriot consulted with his advisors at Arthur Andersen and purchased a transaction that was supposed to hedge the family's assets against a large drop in value, as well as provide investment potential and customized tax treatment. Plaintiff was explicitly advised that his transaction was unique to him and had been set up with his family's specific circumstances in mind. Plaintiff took every step possible to ensure that he was engaging in something legitimate, obtaining a legal opinion from a recommended, nationally recognized firm and following up with that firm after IRS notices were issued to make sure that they did not apply to his transaction. Unbeknownst to him, Plaintiff had been sold an illegal Son of BOSS tax shelter that had been mass-marketed to numerous other clients of Arthur Andersen and the AIG defendants ("AIG"). AIG's paperwork made the transaction appear customized and as though it had investment potential, when in fact, neither was true. Plaintiff believed that AIG, who had significant discretionary control over the hedge of his transaction, had been chosen because of their "reputation for integrity and fairness." Instead, AIG was chosen because it had a kickback referral system for illegal tax shelters with Arthur Andersen and because it had helped create, coordinate and promote the tax shelter at issue. Plaintiff was never informed about AIG's true role, instead believing that it was a neutral broker. He was never told that the transaction would not pass muster with the Internal Revenue Service ("IRS") and should have been listed as a registered tax shelter. He was also never told that the opinion letters saying otherwise had been mass-generated to AIG's other tax shelter clients and was simply "cover" for the tax shelters. When the truth about AIG came out, Plaintiff timely filed this action. AIG now claims that he has acted too late ­ despite the fact that AIG concealed its role, claiming to this day in its motion to dismiss that it was nothing more than a third party broker
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unrelated to any wrongdoing that may have occurred. AIG argues that Plaintiff should have been on notice of its wrongdoing in 2004 when the IRS first indicated that it might disallow his transaction, and when Plaintiff filed a Tax Court proceeding challenging any disallowance. Yet the Tax Court proceeding proves exactly the opposite ­ Plaintiff believed that he had not been sold a tax shelter and was thereby defending the transaction. Neither the IRS' documentation nor the Tax Court proceeding, nor any IRS Notices, focused on AIG, which is not surprising, as Plaintiff believed it to have been a transaction customized by Arthur Andersen. It was not until very late in the tax proceedings in 2006 that he was informed as to AIG's role. Even if Plaintiff had suspected wrongdoing prior to this stage, which he did not, any possible suspicion would have simply been as to negligence on Arthur Andersen's part, not fraud on the part of AIG. A reasonable person would not have been put on actual or constructive notice, and thus, the statute of limitations was not triggered. Based on this, AIG's motion to dismiss for statute of limitations, which raises factual issues inappropriate for resolution at this stage, must be denied. AIG's other challenges to Plaintiff's causes of action are likewise without basis. II. ARGUMENT A. Legal Standard

A motion to dismiss will be denied unless it appears "to a certainty" that the plaintiff would not be entitled to relief under any set of facts that could be proved. NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). See also Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Fidelity Fin. Corp. v. Federal Home Loan Bank, 792 F.2d 1432, 1435 (9th Cir. 1986). In considering a motion to dismiss, the Court must treat all material allegations in the complaint as true, construe the pleading in the light most favorable to the plaintiff, and resolve all doubts in the plaintiff's favor. NL Industries, Inc., 792 F.2d at 898; Haskell v. Time, Inc., 857 F. Supp. 1392, 1396 (E.D. Cal. 1994) (citing Jenkins v. McKeithen, 395 U.S. 411, 421 (1969)). "A court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73
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(1984). Accordingly, a motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted. Gilligan v. Jamco Development Corp., 108 F.3d 246, 249 (9th Cir. 1997). B. Plaintiff's Fraud Claim Is Not Time Barred 1. Choice of Law Analysis

In suits based on diversity jurisdiction, courts apply the choice of law principles of the forum state. Day & Zimmerman, Inc. v. Chaloner, 423 U.S. 3, 4 (1975). Since this lawsuit was brought in the Northern District of California as a diversity case, California law properly determines whether New York law should control the present dispute. Under California law, a choice of law clause agreed upon through arm's length negotiations by sophisticated commercial parties is generally enforced unless it is contrary to California public policy. Medimatch, Inc. v. Lucent Technologies, Inc., 120 F. Supp. 2d 842, 861-62 (N.D. Cal. 2000) (citation omitted). Setting aside whether this case involved balanced and arm's length negotiations, the Ninth Circuit has rejected the application of contractual choice of law provisions to claims arising in tort. Sutter Home Winery, Inc. v. Vintage Selections, Ltd., 971 F.2d 401, 407 (9th Cir. 1992) ("Claims arising in tort are not ordinarily controlled by a contractual choice of law provision. Rather they are decided according to the law of the forum state.") (citation omitted). Therefore, unless a defendant's choice of law provision, as written, explicitly applies to "all matters arising out of the Agreement," tort claims will be governed by California law. See Medical Instrument Development Laboratories v. Alcon Laboratories, 2005 WL 1926673, *3 (N.D. Cal. 2005) (even where contract provided that Texas law would govern interpretation and construction of the contract, choice of law provision did not explicitly control non-contractual claims and plaintiff's fraud and section 17200 claims, which arose in tort, were therefore governed by California law) (emphasis in original in quote). Here, the choice of law provisions upon which AIG relies apply only to the performance and construction of the agreements themselves. Declaration of Oliver P.
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Strauch, Exs. A-F, ISDA Master Agreement ("This Agreement will be governed and construed in accordance with [New York law]"); Master Agreement ("This Agreement will be governed by and construed in accordance with New York law"); Note Purchase Agreement ("This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York"); Note Purchase Agreement ("This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be enforced in such State"); Zero Coupon Notes ("This Note shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be enforced in such State"). Just as in the Medical Instrument case, these general choice of law provisions do not apply to claims arising in tort, such as those asserted for fraud, unjust enrichment, and unfair business practices against AIG. Id. California applies a choice of law analysis known as the "governmental interests analysis" or simply the "interest test." See Tucci v. Club Mediterranee, S.A., 89 Cal. App. 4th 180, 189 (2001). "This governmental interest analysis involves three steps. (1) The court determines whether the foreign law differs from that of the forum. (2) If there is a difference, the court examines each jurisdiction's interest in the application of its own law to determine whether a true conflict exists. When both jurisdictions have a legitimate interest in the application of its rule of decision, (3) the court analyzes the comparative impairment of the interested jurisdictions. The court applies the law of the state whose interest would be the more impaired if its law were not applied." Id. (internal quotations and citations omitted; emphasis in original). Here, California's interests in this action outweigh those of New York. The transaction in question affected a California resident and concerned conduct occurring within California. Complaint, ¶¶ 3, 4, 14. Other California taxpayers were deceived, and the transaction had substantial California state tax implications (and no New York tax implications). Complaint, ¶¶ 14, 38. The State of California has also been investigating illegal tax shelters and offering an amnesty program based on disclosure of participation
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in listed tax shelters, indicating its interest in regulating and overseeing tax shelters that affect its residents. See Cal. Rev. & Tax. § 19751; Cal. Rev & Tax § 18407(a)(4) (adopting as "California Listed Transactions" all federal listed transactions for income tax purposes) (amended in non-substantive ways, 2004 Cal. Legis. Serv. Ch. 183 (A.B. 3082)); FTB Chief Counsel Notice 2003-1 (Dec. 31, 2003). See also, e.g., Cal. Rev. & Tax §§ 18628 (registration of tax shelters), 18648 (requiring lists of investors of tax shelters); 19177 (penalty for promotion of tax shelters); 19182 (failure to file tax shelter information); 19772 (incorporating reportable transactions under IRC); 19777 (penalties for tax shelter); 19777.5 (amnesty programs for tax shelters); 19778 (interest penalties for tax shelters). Clearly, California has demonstrated a powerful interest in applying its laws to tax shelters such as the very transaction at issue here. Based upon this, California law should apply to Plaintiff's tort claims. Whether New York or California law applies, however, Plaintiff's claims are timely, because under either state's laws, he was not on notice of AIG's wrongdoing until late 2006, when he finally became aware of AIG's true role in the transaction. Therefore, regardless of whether the Court adopts AIG's or Plaintiff's reasoning as to choice of law, AIG's motion to dismiss should be denied. 2. Neither the IRS Notices Nor the Tax Court Proceeding Triggered the Running of the Statute of Limitations on Plaintiff's Fraud Claim

California's statute of limitations for fraud is three years from the time that the aggrieved party discovers the facts constituting fraud. See Averbach v. Vnescheconombank, 280 F.Supp. 2d 945, 956 (N.D. Cal. 2003) (citing Cal. Code Civil Proc. § 338(d)). New York's statute of limitations for fraud is the longer of six years from accrual or two years from discovery of the fraud. C.P.L.R. § 213(8). Both California and New York law provide for an extension or tolling of fraud claims until the fraud is, or ought to be, discovered. The statute commences to run only after one has knowledge of facts sufficient to make a prudent person believe she or he may have been defrauded, thus putting them on inquiry. Averbach, 280 F. Supp. 2d at 956 (under California law,
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discovery of the facts constituting a fraud occurs either when the victim has actual knowledge of the fraud or when he has notice or information of circumstances to put a reasonable person on inquiry, or has the opportunity to obtain knowledge from sources open to his investigation); Tijsseling v. General Acc. Assur. Corp., 55 Cal. App. 3d 623, 628 (1976); Shannon v. Gordon, 249 A.D.2d 291, 292 (1998) (under New York law, when statute of limitations commences for fraud depends on when possessed knowledge of facts from which he could reasonably have inferred the fraud). AIG relies on two arguments in support of its statute of limitations defense. First, it claims that IRS Notices 1999-59 and 2000-44, which disallowed "basis-shifting" transactions and were issued in 1999 and 2000 respectively, put Plaintiff on notice of fraud and triggered the running of the statute of limitations. Motion to Dismiss, p. 13. Second, AIG argues that Plaintiff's filing of a petition in Tax Court in July 2004 challenging a possible disallowance of tax losses from his transaction, also triggered the statute. However, the documents relied upon by AIG in its motion do not support either of these arguments. Neither the IRS notices nor the Tax Court documents show that the conduct of AIG or the transactions in which it entered with Plaintiff were the basis for the IRS's determination, and none of these documents speak to or otherwise implicate fraudulent conduct by AIG. Inquiry notice ... must not be construed so broadly that the statute of limitations starts running too soon for the victim of the fraud to be able to bring suit within a year [former statute]. The facts constituting such notice must be sufficiently probative of fraud-sufficiently advanced beyond the stage of a mere suspicion, sufficiently confirmed or substantiated-not only to incite the victim to investigate but also to enable him to tie up any loose ends and complete the investigation in time to file a timely suit. Tello v. Dean Witter Reynolds Inc., 410 F3d 1275, 1284 (11th Cir 2005) (quoting Marks v.

24 25

CDW Computer Centers, Inc., 122 F.3d 363, 368 (7th Cir. 1997)). Since neither of the IRS Notices for the tax adjustment or tax court action reveals facts sufficient to determine

26 that Plaintiff was on notice of AIG's fraud, Plaintiff's claims are timely under both New 27 York and California law. 28
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AIG contends that Plaintiff was placed on inquiry notice because of IRS Notices 1999-59 and 2000-44. This argument has been rejected by other courts in perfectly analogous circumstances. In Seippel v. Sidley, Austin, Brown & Wood LLP, 399 F.Supp.2d 283 (2005), defendants argued that the plaintiffs were on inquiry notice for fraud in connection with their COBRA tax shelter transaction at the time that IRS Notice 1999-59 was issued and that their claims had therefore expired. The court rejected defendants' arguments, finding: IRS Notice 1999-59 cannot have placed the Seippels on inquiry notice. Where "warning signs are accompanied by reliable words of comfort from management, [s]uch statements are among the factors that must be considered when evaluating whether the circumstances would suggest to an investor of ordinary intelligence the probability that she has been defrauded." Here, before entering into the COBRA transaction, the Seippels were expressly informed by the Brown and Wood Defendants and by Jenkens that ACM Partnership and Notice 1999-59 did not apply to COBRA. Such "reassuring statements will prevent the emergence of a duty to inquire or dissipate such a duty only if an investor of ordinary intelligence would reasonably rely on the statements to allay the investor's concern." The Seippels were clearly entitled to rely on defendants' advice regarding technical issues of tax law. Seippel, 399 F.Supp.2d at 291 (quoting LC Capital Partners, L.P. v. Frontier Ins. Group, 318 F.3d 148, 154 (2d Cir. 2003)). See also Hobbs v. Bateman Eichler, Hill Richards, Inc., 164 Cal.App.3d 174, 201-02 (1985) (for purposes of establishing when statute of limitations commences, "[w]here a fiduciary relationship exists, facts which ordinarily require investigation may not incite suspicion and do not give rise to a duty of inquiry (citing Bennett v. Hibernia Bank 47 Cal.2d 540, 560-3 (1956)). Like Seippel, Plaintiff alleges that he received formal opinion letters from Sidley Austin Brown & Wood LLP, Plaintiff's tax counsel and one of AIG's fellow tax-shelter promoters, advising that Notices 1999-59 and 2000-44 did not apply to his transaction.1 Complaint, ¶¶ 16, 24. Since his counsel specifically advised him that these IRS Notices did not apply, knowledge of the Notices cannot be imputed to Plaintiff for purposes of Plaintiff's opinion letter from Sidley opined that Plaintiffs transaction was lawful and had tax benefits that were likely to be recognized by the IRS. Complaint, ¶ 16. In addition, after IRS Notice 2000-44 was issued, Plaintiff obtained a further opinion letter from Sidley specifically concluding that the Notice (which also refers to and incorporates the reasoning of IRS Notice 1999-59) did not apply. Complaint, ¶ 24.
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determining when he had knowledge of the fraud. Id. Tellingly, AIG does not point to any portion of either IRS Notice that speaks to AIG. It is also unclear how IRS Notice 1999-59, which was issued in 1999, could have put Plaintiff on notice of fraud before he even entered into the transaction with AIG in 2000. Complaint, ¶ 21; Motion to Dismiss, p. 3 (acknowledging March 2000 as the earliest date of agreement between AIG and Plaintiff regarding the transaction). AIG also contends that the IRS's preliminary disallowance of Plaintiff's deductions, and Plaintiff's subsequent filing of a Tax Court petition contesting the determination, put him on notice of AIG's fraud. As a preliminary matter, the mere fact that the IRS disallowed Plaintiff's deductions does not mean that one must suspect fraud. The "notice of disallowance" upon which AIG relies contains only proposed findings by the IRS. See AIG's Request for Judicial Notice ("RJN"), Ex. 1; International Engine Parts, Inc. v. Feddersen & Co., 9 Cal.4th 606,611-2 (1995) (discussing IRS deficiency procedures). "It is clear that tax shelters can be risky ventures for reasons wholly unrelated to fraud. . . . There are many reasons, other than fraud on the part of [a tax shelter's] managers and trading partners, for an investment in a tax shelter limited partnership to become worthless and for its associated tax deductions to be disallowed by the IRS." 131 Main Street Associates v. Manko, 897 F.Supp. 1507, 1518 (S.D.N.Y. 1995). In fact, Plaintiff vigorously contested the IRS's preliminary findings, as evidenced by the petition upon which AIG relies. RJN, Ex. A. Far from suggesting that Plaintiff was on notice of fraud, the Tax Petition shows that Plaintiff firmly believed the tax deductions and his transaction were legitimate. If the tax savings were legal and allowable, as Plaintiff believed, then he could not have considered himself defrauded. This is so even with the specter of the IRS' disallowance looming. That a transaction does not work out as expected, even if attributable to reliance upon false statements, does not mean that one must conclude fraud is involved. See, e.g., DeMarco v. Lehman Brothers, Inc., 309 F.Supp.2d 631, 637 (S.D.N.Y. 2004) (in securities fraud action, even though stockholders had knowledge of economic injuries suffered as a result of false research
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reports (loss causation) for period of time beyond statute of limitations, element of scienter had not been known to stockholders until Securities and Exchange Commission disclosed previously unknown emails, and statute of limitations was tolled until Plaintiff's had basis for believing basis that stock analyst had intentionally lied). Put another way, the fact that the IRS might disallow the tax deductions from his transaction was very different than realizing that AIG, who claimed to be a "neutral" broker, had fraudulently concealed its role in the transaction. Complaint, ¶¶ 13-14. See Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 810 (2005) (where plaintiff filed medical malpractice action against her surgeon but did not realize, until surgeon's deposition, that manufacturer of stapler used during the surgery was potentially liable, statute of limitations was tolled for cause of action against product manufacturer; cause of action did not accrue until discovery of facts putting plaintiff on notice). Here, AIG has contended to this day, including in its motion to dismiss, that it was simply a third party neutral. Motion to Dismiss, p. 2, 4. AIG does not show any portion of the deficiency notice or Plaintiff's Tax Petition (or any other document relied upon in AIG's motion to dismiss) that reveals AIG's true conduct or its role in creating or conspiring with Sidley and Arthur Andersen as to the fraudulent tax shelter. It is little wonder, then, given Plaintiff's lack of access to facts that would show otherwise, that he did not suspect and was not put on notice of AIG's fraud until late 2006.2 It would be unreasonable to expect any prudent person to suspect fraud on the part of someone where the IRS notices and petition did not call into question that person's handling of the transaction. In such a situation, Plaintiff could not have been put on actual or constructive notice of AIG's fraud, and the statute of limitations could not begin to run. This is particularly so where a plaintiff relies heavily on others, such as accountants and attorneys, as alleged here. Complaint, ¶¶ 12-14, 16. In such situations, It was at this time that Plaintiff first learned about AIG's true role in helping to create and promote tax shelters with Arthur Andersen, thanks to information shared by the government with Plaintiff's counsel. Plaintiff concedes his omission of this allegation in the Complaint and, if given leave to amend, can plead it in detail it in a subsequent complaint.
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courts are loath to impute knowledge of fraud. In Mitschele v. Schultz, 36 A.D.3d 249 (2008), the plaintiff sued her former accountant for fraud over representations made in connection with an improper compensation arrangement that was supposed to reduce her tax liabilities. Id. at 250. The misrepresentations at issue occurred more than six years prior to the plaintiff's filing of an action, and she admitted suspicion about the truth of the statements at the time they were made, though her accountant reassured her as to the validity of his advice. The Mitschele Court reversed a dismissal of the fraud claims based on the statute of limitations, holding that [M]ere suspicion will not constitute a sufficient substitute for knowledge of fraud [and w]here it does not conclusively appear that a plaintiff had knowledge of facts from which the fraud could reasonably be inferred, . . . the question should be left to the trier of the facts. Id. at 256. Though Plaintiff's tax deductions were challenged by the IRS - as deductions often are - the fact that he relied on the advice of accountants and counsel and vigorously

13 contested the IRS's findings proves that he did not believe there was any fraud present. 14 AIG expends considerable ink discussing McKeown v. First Interstate Bank in an 15 effort to suggest the opposite ­ that any disallowance by the IRS is indication of fraud on 16 the part of the persons responsible for the rejected transaction or deduction. 194 Cal. App. 17 3d 1225 (1987). Indeed, McKeown is the only case cited by AIG in support of its 18 contention that the IRS notice and Tax Court petition show that plaintiff knew or should 19 have known of AIG's fraud. Motion to Dismiss, p. 12. However, McKeown was 20 concerned only with the question of when a taxpayer who had been given false 21 information concerning tax liability by a bank suffered "appreciable harm" such as to give 22 rise to a cause of action for negligence and fraud. Id. at 1229-30. Nowhere in this 23 decision does the Court discuss when the fraud was or should have been discovered. Id. 24 McKeown thus cannot stand for the proposition that a taxpayer must have reason to know 25 he or she has been defrauded upon receipt of a deficiency notice from the IRS. 26 Yet even if the court in McKeown had reached the conclusion that AIG suggests, it 27 would nevertheless be readily distinguishable from this case. In McKeown, the bank 28
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represented to the taxpayers that they would incur no tax liabilities for payments on a loan made by their company, and the taxpayers assumed the loan based on those representations. Id. at 1228. The IRS concluded otherwise and imposed taxes for which the bank had expressly told the taxpayers they would not be liable. Id. The IRS's position thus had a direct bearing on the truth of the bank's specific representations. Here, as AIG has itself suggested, Arthur Andersen and Sidley provided advice to Plaintiff about the tax consequences of the transaction. Complaint, ¶¶ 12-14, 16; Motion to Dismiss, pp. 1-2 (deflecting attention to Sidley and Arthur Andersen and questioning why they are not defendants in this action).3 Because AIG deliberately concealed its role in creating and promoting the Son of BOSS tax shelter, and because AIG passed itself off as a "neutral" bank, not a promoter of tax shelters connected with Arthur Andersen and Sidley, Plaintiff had no way of suspecting that AIG was involved in any fraud when the tax consequences of his transaction were challenged. Complaint, ¶¶ 12-14, 16, 28. It is precisely because of this problem ­ that an IRS deficiency notice may not provide notice of persons or conduct connected with a fraudulent tax shelter - that there is no "bright line" rule establishing notice of fraud on a taxpayer through the deficiency notice. What this means in practice is that per se rules of actual or inquiry notice-such as a rule that notices of disallowances from the IRS are always enough to put an investor on notice of fraud in the marketing and management of his tax-shelter investment-are not very helpful. Sometimes IRS disallowance notices will convey the information necessary to provide notice, sometimes they will not-it all depends on the content of the notice, the nature of the loss, and the nature of the fraud. 131 Main Street Associates, 897 F.Supp 1507, 1515 (S.D.N.Y. 1995) 131 Main Street Associates is instructive. That case concerned a tax shelter scheme involving transactions between partnerships and entities created by the tax shelter promoters. Id. at 1518-21. The taxpayers brought suit alleging fraud based on the management of the tax shelters and the transactions the tax shelter promoters entered into with third parties in order to As AIG well knows, Arthur Andersen, with whom it created the Son of BOSS tax shelter, is defunct and has left numerous taxpayers, not just Plaintiff, without recourse for the illegal tax shelters they have been sold.
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effectuate the scheme. Id. Defendants contended that the IRS's prior investigation of tax shelters, disallowance of the claimed deductions as being based on sham transactions, and the fact that the taxpayers ultimately settled with IRS proved that the plaintiffs had at least constructive notice of the alleged fraud more than four years before bringing suit, and their claims had thus expired. Id. Rejecting these arguments, the 131 Main Street Associates Court considered the substance of the IRS investigation, deficiency notice, and settlement. Id. In disallowing the deductions and finding the underling transactions a sham, the IRS had focused on transactions between taxpayer partnerships and entities set up by the tax shelter promoters and managers. Id. Plaintiffs' fraud claims, however, were based on purportedly arm's length transactions between the tax shelter entities and an independent third-party trading counterpart. Id. Even though those transactions and third-parties were part of the taxshelter scheme and defendants were alleged to have defrauded the taxpayers in connection therewith, because the IRS disallowance was not based on the transactions with those parties, the Court allowed plaintiffs to pursue their claims, holding that the disallowance and settlement did not provide notice of potential fraud claims pertaining to the third parties. Id. The statute of limitations on that fraudulent conduct was thus tolled until plaintiffs subsequently became aware of the fraud. Id. at 1518-21. In this case, the situation is similar. The IRS disallowed Plaintiff's tax deductions because it found that certain transactions between entities that were set up by Arthur Andersen were not legitimate and lacked economic substance. RJN, Ex. 1. The IRS' disallowance deficiency notice did not directly concern the role of AIG, which was purportedly an independent third party acting at arm's length, nor did the deficiency notice or Tax Court petition call into question AIG's handling of the calls or puts. RJN, Ex. 1. The IRS' disallowance thus did not provide notice of AIG's fraudulent conduct, and it was not until subsequent information was uncovered that Plaintiff came to suspect that AIG did in fact engage in fraudulent conduct related to the tax shelter. Like the Court in 131 Main Street Associates, this Court should allow Plaintiff to pursue claims based on
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that recently discovered conduct. See also In re Worldcom, 377 B.R. 77, 99 (S.D.N.Y. 2007) (in order to dismiss claim based on statute of limitations, defendants had to demonstrate more than inquiry notice of a problematic transaction ­ they had to demonstrate inquiry notice of the "falsity of WorldCom's stated obligation to use $25 million worth of WAXS's services per month" that would have put plaintiff on notice of fraud); Tello, 410 F.3d at 1284 ("[I]nquiry notice is defined . . . to require more than merely suspicious circumstances ­ to require that the suspicious circumstances place the potential plaintiff in possession of, or with ready access to, the essential facts that he needs in order to be able to sue.") (citing Judge Posner in Fujisawa Pharmaceutical Co., Ltd. v. Kapoor, 115 F.3d 1332, 1335 (7th Cir. 1997)).4 At the very least, there exists a question of fact as to whether Plaintiff had actual or constructive notice of AIG's fraud. "Generally, statute of limitations issues raise questions of fact that must be tried." Kline v. Turner, 87 Cal.App.4th 1369, 1374 (2001), citing Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1112 (1988). Only where undisputed facts are susceptible of a single legitimate inference is dismissal proper based on the statute of limitations. Id. See also Reznor v. J. Artist Management, Inc., 365 F.Supp.2d 565, 576 (S.D.N.Y. 2005) (when plaintiff "knew or should have known of the alleged fraud is a genuinely disputed question of fact that the jury must resolve"); Govt of India v. Cargill, 445 F. Supp. 714, 720-21 (D.C.N.Y. 1978). Since the issue of when Plaintiff was put on notice of AIG's fraud is one of fact, AIG's motion to dismiss based upon the statute of limitations must be denied. There is also an issue of fact as to whether the statute of limitations was tolled based on fraudulent concealment or equitable tolling. Both New York and California law provide that where a defendant conceals his role in the fraud, such that a plaintiff would "More than bare access to information is required to start the statute of limitations running." Id. Courts have found that there must be a suspicious circumstance, and how suspicious that circumstance must be as to that defendant, will depend on how easy it is for Plaintiff to access information about the wrongdoing. Id. Here, based on AIG's continued insistence that it was no more than a "neutral" and that others, Arthur Andersen and Sidley, are really to blame, it is not surprising that Plaintiff lacked both access and suspicion about AIG or its conduct. Motion to Dismiss, pp. 1-2.
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not suspect that he had a cause of action or was actively misled into thinking there was no wrongdoing, the statute of limitations shall not begin to accrue. The courts will not lightly seize upon some small circumstance to deny relief to a party plainly shown to have been actually defrauded against those who defrauded him on the ground, forsooth, that he did not discover the fact that he had been cheated as soon as he might have done. It is only where the party defrauded should plainly have discovered the fraud except for his own inexcusable inattention that he will be charged with a discovery in advance of actual knowledge on his part. San Bernadino County v. Sapp, 156 Cal. App. 2d 550, 554 (1958) (citing Victor Oil Co. v. Drum, 184 Cal. 226, 241 (1920)). See also Kotlyarsky v. New York Post, 757 N.Y.S.2d 703, 707 (2003) (equitable tolling of limitations period is applicable where defendant has wrongfully deceived or misled the plaintiff to conceal the existence of cause of action); Pointer v. Columbia Univ., 1997 WL 86387 (S.D.N.Y. 1997) (defendant's misleading statement justifies equitable tolling of limitations period because it may have caused plaintiff to delay filing suit). Here, Plaintiff has alleged that AIG intentionally and actively misled him into believing that it had a "neutral" role in the transaction and concealed its true role in helping to create and promote extremely complex and illegal tax shelters. Complaint, ¶¶ 12-13, 16-18. Because of this, Plaintiff did not realize that AIG was connected to any wrongdoing related to his transaction, nor did he suspect AIG of fraud. Based upon this, Plaintiff's fraud claim is timely under New York or California law. See M&T Mortg. Corp. v. Miller, 323 F. Supp. 2d 405, 411 (E.D.N.Y. 2004) (where fraudulent concealment is pled and nothing in the complaint precludes a party from developing facts showing a basis for fraudulent concealment and thus for equitable tolling, a motion to dismiss on the statute of limitations will be denied). C. Plaintiff's Fraud Claim Meets the Pleading Standard of Rule 9(b)

Rule 9(b) requires Plaintiff to plead with particularity the circumstances of the alleged fraud in order to place defendants on notice of the misconduct with which they are charged. Plaintiff is only required to plead with enough particularity to provide defendants with "a reasonable opportunity to answer the complaint and adequate
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information to frame a response." Certilman v. Hardcastle, Ltd., 754 F. Supp. 974, 978 (E.D.N.Y. 1991) (quoting Ross v. A.H. Robins Co., 607 F.2d 545, 557-58 (2d Cir. 1979), cert. denied, 446 U.S. 946 (1980)). This is in order to harmonize Rule 9(b) with Rule 8, which provides that a plaintiff need only plead a "short and plain" statement of the claim that is "simple, concise and direct." Id. Rule 9(b) does not "require the pleading of detailed evidentiary matters, nor does it require any particularity in connection with an averment of intent, knowledge or condition of mind." SEC v. Management Dynamics, Inc., 1973 WL 434, *1 (S.D.N.Y. 1973) (where defendants were put on notice by pleadings of the circumstances of fraud and could therefore prepare a responsive answer to SEC's complaint, purposes of Rule 9(b) were satisfied). See also In re J. Baranello & Sons, Inc., 149 B.R. 19, 29 (E.D.N.Y. 1992) (finding general allegations of fraud sufficiently specific "[w]here conduct complained of occur[ed] over extended period of time, and requirement for particularity of fraudulent allegations [under Rule 9(b) was] lessened" and less specificity was also required where Plaintiff had limited investigation available to him pre-discovery); Bharucha v. Reuters Holdings PLC, 810 F. Supp. 37, 4142 (E.D.N.Y. 1993) (where facts evidencing fraud were almost exclusively within defendant's knowledge, pleading on information and belief was appropriate to satisfy Rule 9(b)); Perrott v. U.S. Banking Corp., 53 F. Supp. 953, 957 (D.C. Del. 1944) (Rule 9(b) only requires the allegation of ultimate facts, not evidence, and even where defendants were not able to file a responsible pleading, court held that relief was available to them under other procedural mechanisms); Tryforos v. Icarian Development Co., S.A., 47 F.R.D. 191, 195-96 (N.D. Ill. 1969) (where plaintiff alleged that transfer of cash and ships were diverted to defendants, such that plaintiff did not get the benefits of either, no further specificity under Rule 9(b) was necessary). Plaintiff has alleged the active role that AIG played in creating, promoting and facilitating illegal tax shelter schemes, including the Son of BOSS tax shelter sold to him. Specifically, he has alleged that AIG knew "that the Son of BOSS was a sham that would not be recognized by federal or state taxing authorities for income tax purposes, yet
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facilitated this strategy and helped induce [Plaintiff] to purchase it in order to generate enormous fees for themselves." Complaint, ¶¶ 12, 20. Plaintiff alleges that had he known about this, he would not have entered into the transaction, but he was misled, in part, by transactional documentation presented by AIG to give his transaction the "appearance and semblance of . . . a legitimate investment strategy." Complaint, ¶¶ 12, 16. He has alleged that AIG concealed its role in helping create the Son of BOSS transaction so as to claim an objective, neutral role that it did not have.5 Complaint, ¶ 13. Plaintiff alleges that AIG set up sham limited liability companies that turned out later to be "shell" companies created solely to further fraudulent tax shelter activity. Id. AIG failed to register any of the Son of BOSS transactions as tax shelters. Complaint, ¶ 15. AIG also knew that the legal opinion letter provided to Plaintiff advising him that the transaction was legal was a mass-generated boilerplate letter from a firm with a vested interest in the promotion of Son of BOSS yet AIG never disclosed this to Plaintiff. Complaint, ¶ 16. Most significantly, Plaintiff believed that his transaction was customized expressly for him and his family's circumstances. He had no idea that he was purchasing a mass-marketed tax shelter, and AIG, despite knowing this ­ because it had sold others of these in conjunction with Arthur Anderson ­ never disclosed otherwise to him. Complaint, ¶¶ 16-17, 23. See also Complaint, ¶¶ 25, 28. These numerous, specific allegations of fraud and fraudulent omissions provide AIG with more than enough notice to reasonably frame its response and answer the complaint with respect to the fraud allegations. Thus, the complaint meets the pleading standards of Rule 9(b).6 This is significant, because it shows that AIG had a vested role in making the transaction appear legitimate when, in fact, it was a sham tax shelter. It also allowed Plaintiff to provide AIG with enormous discretion with regard to the investment, since Plaintiff believed that AIG was a "neutral broker." Complaint, ¶ 13. 6 AIG suggests that Plaintiff cannot rely on two of the alleged misrepresentations, because the transactional documentation contradicts them. Motion to Dismiss, pp. 19-20. Since those are not the only misrepresentations or material omissions on which Plaintiff relies, even if true, this would not defeat Plaintiff's fraud claim. See, e.g., Complaint, ¶¶ 12, 13, 15-17, 20, 23, 25, 28. However, it is also untrue. The first misrepresentation has to do with AIG's concealment of "kickback" fees. Complaint, ¶¶ 13, 17; Motion to Dismiss, p. 19. Although the documentation cited by AIG discloses "a fee" paid by
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D.

AIG's Boilerplate Disclaimers Do Not Preclude Plaintiff's Fraud Claim

AIG also argues that boilerplate, pre-dispute contract disclaimers contained in its ISDA agreements should preclude any fraud claims. AIG is wrong. It is the longstanding and well-established policy of California that disclaimers such as those relied upon by AIG are ineffective. See, e.g., Simmons v. Ratterree Land Co., 217 Cal. 201, 204 (1932) (seller cannot escape liability for his own fraud or misrepresentations by statements in contract that purchaser relies on no representations except those mentioned therein); McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 794 (2008) (all contracts that attempt to exempt anyone from responsibility for his own fraud, whether willful or negligent, "are against the policy of the law" and thus commercial lease provision disclaiming reliance on representations of lessor was not effective to bar plaintiff from asserting fraud claim or showing reasonable reliance on misrepresentations); 1 Witkin, Summary of Cal. Law, supra, Contracts, § 304, p. 330. ("A party to a contract who has been guilty of fraud in its inducement cannot absolve himself or herself from the effects of his or her fraud by any stipulation in the contract, either that no representations have been made, or that any right that might be grounded upon them is waived. Such a stipulation or waiver will be ignored, and parol evidence of misrepresentations will be admitted, for the reason that fraud renders the whole agreement voidable, including the waiver provision."). Arthur Andersen for AIG's "assistance," this is different than a "kickback," which implies a fee based on referral of clients or business and often involving illegal conduct. One of the key points of Plaintiff's fraud claim is that he did not know that AIG participated in creating the transaction in the first place or that it mass-marketed it with Arthur Andersen to others, and the fact that the fees were "kickbacks," as opposed to ordinary banking fees, was a significant nondisclosure. Complaint, ¶¶ 13, 17. For the second misrepresentation, AIG claims that it disclosed in one of its agreements that it had paid fees for "similar transactions" and that Plaintiff should therefore have realized that his was not a customized transaction. Motion to Dismiss, p. 19. Again, this does not address the omission at issue. AIG's role was supposed to involve selecting the "basket" of securities and arranging call and put options. It was not unexpected for a Bank to have engaged in those types of transactions in the past or future. What was unexpected and never disclosed to Plaintiff was AIG's role in creating a Son of BOSS tax shelter and helping promote it to Plaintiff as though it was a customized investment vehicle and not an illegal tax shelter. Complaint, ¶¶ 16-17, 23. Therefore, with respect to both alleged omissions ­ which AIG seems to have understood very well in framing a substantive defense in its motion to dismiss ­ Plaintiff has properly pled a fraud claim under Rule 9(b).
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Under New York law, the result is the same. There, a disclaimer only eliminates reliance for purposes of a fraud claim where it relates to the specific representation disclaimed. Merrill Lynch & Co., Inc. v. Allegheny Energy, Inc., 382 F.Supp.2d 411, 417 (S.D.N.Y. 2003) (A "disclaimer is generally enforceable only if it `tracks the substance of the alleged misrepresentation'") (quoting Caiola v. Citibank, N.A., 295 F.3d 312, 330 (2d Cir. 2002). Where the disclaimer does not address specific and discrete representations, it is ineffective. "It is the specificity of the disclaimer which `destroys the allegations in plaintiff's complaint that the agreement was executed in reliance upon these contrary oral representations . . . .'" Id. See also Transit Rail, LLC v. Marsala, 2007 WL 2089273, *10 (W.D.N.Y. 2007) (where the representations upon which plaintiff claimed reliance had to do with the overall corporate structure and financial status of company, none of which was specifically disclaimed in the purchase agreements, general reliance disclaimers were ineffective); Merrill Lynch & Co., Inc., 382 F.Supp.2d at, 417-9 (S.D.N.Y. 2003) (denying motion to dismiss fraud claims despite general disclaimer where disclaimer did not specifically address sham trades or executive's qualifications.) Cf. Europadisk Holdings, LLC. v. Shelton, 2004 WL 613109, *3 (S.D.N.Y. 2004) (integration clause of stock purchase agreement did not specifically disclaim reliance on defendant's representations as to company's financial status).7 Furthermore, even if the disclaimers upon which AIG relies were specific, they would still be ineffective because Plaintiff's claims are based largely on AIG's concealment of facts about the transactions unknown to Plaintiff. Complaint, ¶¶ 12, 13, Conwill v. Arthur Andersen LLP, an unpublished trial court decision upon which AIG heavily relies, is readily distinguishable from Plaintiff's claims here. 12 Misc.3d 1171(A) *11 (N.Y.Sup. 2006). In Conwill, the plaintiff expressly and specifically disclaimed a fiduciary relationship with Sumitomo Bank, and then later asserted claims based upon an alleged breach of fiduciary duty. In that case, the claims asserted were inconsistent with a specific disclaimer relating to the alleged fiduciary relationship. As in Conwill, the agreement relied upon by AIG also contains a disclaimer concerning a fiduciary relationship. The difference, of course, is that, in this case, Plaintiff has not asserted breach of fiduciary duty against AIG and his claims do not depend on the existence of a fiduciary duty. Unlike the situation in Conwill, Plaintiff's causes of action do not contradict the express disclaimer and the disclaimer does not, therefore, provide AIG with a defense.
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16-18, 23, 28. "[E]ven such an express waiver or disclaimer `will not be given effect where the facts are peculiarly within the knowledge of the party invoking it.' Banque Arabe Et Internationale D'Investissement v. Maryland Nat'l Bank, 57 F.3d 146, 155 (2d Cir.1995), quoting Stambovsky v. Ackley, 169 A.D.2d 254, 572 N.Y.S.2d 672, 677 (1991.) See also, Tahini Investments, Ltd. v. Bobrowsky, 99 A.D.2d 489, 490 (1984) (even where parties have executed a specific disclaimer of reliance on seller's representations, a purchaser may not be precluded from claiming reliance on misrepresentations if the misrepresented facts are peculiarly within the seller's knowledge). E. The Alleged Omissions by AIG Support a Claim of Fraud AIG also suggests that there can be no fraud claim because AIG did not owe a "duty" to Plaintiff to disclose