The opinion of the court was delivered by: Bassler, District Judge
Defendants, Breen Capital Services Corporation ("BCSC"), Breen Capital Services LLC, Breen Capital Group, Breen Capital Investment Corporation ("BCIC"), J. Douglas Breen, Robert C. Silcox, and Donald E. Williams (collectively "Defendants"), move to dismiss Counts I, II, and III of Plaintiff National Rural Electric Cooperative Association's ("Plaintiff") Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6) and Counts III, IV, V, and VI pursuant to Fed. R. Civ. P. 12(b)(1).
For the reasons set forth in this opinion, Defendants' motion to dismiss is hereby denied.
On September 23, 1999, Plaintiff *fn1 filed suit against Defendants in the United States District Court for the Eastern District of Virginia. (See Defs.' Exh. A.) On February 11, 2000, based upon the principle of forum non conveniens, Judge Leonie M. Brinkema ordered the case transferred to the District of New Jersey. (See Defs.' Exh. B.)
On April 10, 2000, Plaintiff filed an Amended Complaint with this Court. (See Defs.' Exh. C.) In the Amended Complaint, Plaintiff brought a securities fraud claim against Defendants based upon five counts: violation of the Securities Exchange Act (1934) § 10(b) and 10(b)(5) (Count I); violation of the Securities Exchange Act (1934) § 20(a) (Count II); the New Jersey Uniform Securities Act § 49:3-52 and § 49:3-71 (a)(2)-(4)(Count III); fraud (Count IV); conspiracy to commit fraud (Count V); negligent misrepresentation (Count VI); and constructive fraud (Count VII).
Counts I and III were brought against Breen Entities *fn2 and Breen in his individual capacity. Count II was brought against Breen, Silcox and Williams. Counts IV, V, VI, VII were brought against the combined Defendants.
On May 10, 2000, Defendants moved to dismiss Plaintiff's suit. Defendants argue that such a motion should be granted because Plaintiff failed to bring suit within the required statute of limitations period and because there is no diversity jurisdiction.
Defendants are engaged in the business of tax lien servicing. In 1993 and 1994, a trust, for which Defendants Breen, Silcox, and Williams were the indirect beneficial owners, ("Trust") purchased tax liens *fn3 from Jersey City. (See Am. Compl. ¶ 27.)
Defendants paid for these tax liens by raising cash from bonds they sold in 1993 and 1994 ("1993 Bonds" and "1994 Bonds"). (See Am. Compl. ¶¶ 21, 27.) Subordinate promissory notes were issued to Jersey City by Defendants for the difference still owed between the value of the tax liens purchased and the actual cash paid for the tax liens. (See Am. Compl. ¶ 27.) Likewise, purchasers of the 1993 Bonds and 1994 Bonds received a secured interest in the tax liens.
Defendants, as issuer of these bonds, were responsible for paying back the bondholders. The Trust's ability to pay the principal and interest on the bonds was contingent upon the Trust's capability to collect the amount due on the outstanding tax liens. (See Am. Compl. ¶ 21.) If the Trust failed to collect all or a sufficient amount of the value ...