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Standard Chartered PLC v. Waterhouse11/7/1996
of Lincoln and U.S. Thrift Associations. Defendants allowed Lincoln and U.S. Thrift, as well as Omaha Surety, to continue operating with impunity when various defendants knew, and others should have known, that these companies were blatantly violating the law in virtually every transaction they conducted. Various of defendants, acting both as state officials and as individuals, went so far as to actively promote these companies to unsuspecting potential depositors and actively took part in Robert Fendler's scheme to defraud the depositors.
These facts must be taken as established since the order challenged herein is a denial of a motion to dismiss. It is defendants who chose to move to dismiss at the outset rather than waiting for discovery to establish the facts with more precision. Defendants are therefore bound by the facts as related by plaintiffs as long as such facts are consistent with the allegations of the complaint. The rule established by this Court is that a motion to dismiss may not be granted "unless it appears certain that the plaintiff would be entitled no relief under any state of facts which is susceptible of proof under the claim as stated." Mackey v. Spangler, 81 Ariz. 113, 115, 301 P.2d 1026 (1956).
Response to Petition for Special Action, State v. Superior Court, No. 14231 (filed March 5, 1979) (emphasis added).
Confined to the issues that were framed by the pleadings, the supreme court first addressed itself to the public duty issue. After determining that Counts I and II were not based on a theory of negligence, the court stated:
Arizona discarded the concept of sovereign immunity for tort liability over fifteen years ago. Stone v. Arizona Highway Commission, 93 Ariz. 384, 381 P.2d 107 (1963). Because Counts I and II are not based on a theory of negligence, a "public duty defense," as discussed in Massengill v. Yuma County, 104 Ariz. 518, 456 P.2d 376 (1969), is inapplicable. We, therefore, need only determine if the pleadings in Counts I and II adequately state claims upon which relief can be granted.
123 Ariz. at 330, 599 P.2d at 783.
The court then determined that Count I did state a cause of action against the defendants. It reasoned:
Generally speaking, a purchaser of stock has no cause of action under the Arizona Securities Act for a rescission of the sale and recovery of the money paid for stock from one who received none of the consideration and was not a party to the sale. See Trump v. Badet, 84 Ariz. 319, 327 P.2d 1001 (1958). Pursuant to A.R.S. § 44-2003, however, an action under A.R.S. § 44-2001 may be brought against any person, including any dealer, salesman or agent, who made, participated in or induced the unlawful sale or purchase. Such persons are jointly and severally liable to the purchaser. This section, therefore, clearly fixes the liability of one who induces the unlawful sale or purchase. Trump, (supra) .
The theory of Count I is clearly that the misrepresentations and omissions of the Corporation Commissioner officer defendants induced the plaintiffs to become depositors in the Associations. As such, a cause of action, pursuant to § 44-1991, is properly stated against these defendants. A.R.S. § 44-2003.
Id. at 331, 599 P.2d at 784.
SC argues that State v. Superior Court held that officers and employees of the Arizona Corporation Commission can "participate in" or "induce" securities law violations when securities purchasers detrimentally rely upon incorrect information that the officers and employees have communicated to them in the course of performing their official duties. State v. Superior Court does not so hold. The meaning of
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