WPC 8D#3c;H=9S$&e!8D َJ.B:}fq%!I 7$H]kv=:;ap,_BQl^iS8gН'Ngz [fdF|TgĬ,LN G-$zmc.f؝42;CKp=󴧎m1Kg|"JuO:fCe'fY\ D `Fiu\14WZS_Vy*ǎEpI)L_ 2k4s?$ = uV 13zs@=V'+.k!:͟8?FUvD&ZTnL"2:hb^9.;&+[9¤; ]f56xTع"&à`Ai$pBu_\>ehuPVؚz`ENL0޸ "!0U:> 0<p 0< 0 0Tlc 0# UF UeF UrJd " " UF "8 "Z "| " " " " "& "H "j " " B 0C 0 B+ D3  > D+N 0y{ 0#%UN %4M:(>Nf^ hwt4x m\  `&Times New Roman' THE BON SECOURS Training0Training .   <:Default Para<:Footnote Ref.++ ,Title X       X <  :Body Text In X X  Y )..      &*X&X*&*  _  XbX* XbXXXb   XbXX Xb *XXb(2$ $!..      &*X&X*&*  7\  `.Times New Roman TUR;\  `.Times New Roman TURkIA`2WP TypographicSymbols         e D\  `.Times New Roman TUR         e          e          e          e          e          e  d($      $!..      &*X&X*&*  B.` hp x (#XB   f  XbX* XbXXXb   1  $   FX Xb F FPlaintiff j F = F j salsoarguesthatE&Tactivelysolicitedsecurities,buttherearenoallegations  intheComplaintthatE&TactivelyassistedNTGinofferingsecuritiesforsale,solicited  offerstobuyNTGsecurities,oractuallyperformedthesaleofsuchsecurities.9q * F* * 'Single1  d'dxdText7'dxd(2$ $!..      &*X&X*&*  bX*  0  #|x(r$..      &*X&X*&*HP LaserJet 5M,,,,0(9 Z6Times New Roman Regular&XΥy/ h.yweb0 U $!..      &*X&X*&*  _       e8*dd8UKUS.,F* FFTHEBONSECOURSUSUK.,   h   *   p INTHE  COMMUNITYINVESTMENT  FUND   Plaintiff h   *   p CIRCUITCOURTFOR   X   X v.    h   *   p BALTIMORECITY    NETWORKTECHNOLOGIES x  GROUP `     h   *   p 24C03001338 q      `     h      p  F F[2003_MDBT_Ԁ7]# F Ff# W   Defendant h   *   p  I    X* ` * *  * h *  *  * p *  *  * x * * ;   X0p x (#X0Q!MEMORANDUMOPINION   X  H.` hp x (#X(#HTheDefendant,_Ellin_Ԁ&Tucker,Chartered( j F_A F jE_&T j F@ F j)movesthisCourtpursuantto %u MarylandRule2322(b)(2)todismissCountIofPlaintiff j F= F jsComplaint,allegingthatit 8 failstostateaclaimagainsttheDefendantE&TundertheMarylandSecuritiesAct,MD  CodeAnn.,Corps.&Ass j F= F jns, j F' F jԀ11101(1999)( j F_A F jthe_ԀAct j F@ F j). k   F FPlaintiff,BonSecoursCommunityInvestmentFund,L.P.,isaDelawarelimited .~ partnership.ItisaprivateequityandmezzaninedebtfundmanagedbySmith_Whiley_Ԁ& > Company( jF_AF jSmith_Ԁ_Whiley_ jF@F j).Smith_Whiley_Ԁisaninvestmentadvisoryfirmwithofficesin  DelawareandIllinois.BonSecoursinvestsinlocalbusinesseslocatedin jF_AF jempowerment_ q!  zones, jF@F jԀlowtomoderateincomegeographicalareas,includingBaltimore,MD. 4#" Defendant,NetworkTechnologiesGroup,Inc.,( jF_AF jNTG_ jF@F j)isaDelawarecorporationthat $G $ haditsprincipalplaceofbusinessinBaltimore,MD._NTG_Ԁwasinthebusinessof & "& providingtelecommunicationinfrastructureservices.Inadditiontosuing_NTG_,Plaintiff z(#( sued_NTG_ԀofficersMichelleTobin,Victor_Giordani_,ThomasBray,BeverlyBaker,Nora :*%*        ee    _Zietz_,RobertStewartand_NTG_ԀdirectorsJohn_Picciotto_ԀandGerhard_Pilcher_.Defendant  _Ellin&Tucker( jFAF jE&T jF@F j)servedasNTG jF=F jsauditorin2000and2001.(Pl. jF=F jsCompl.at11, p para.36.)InAugust2001,BonSecoursbeganpreliminarydiscussionswithNTGabout 3 possibleinvestmentinthecompany.(Pl. jF=F jsComp.at12,para.41.)Throughitsinvestment  C advisor,SmithWhiley,BonSecoursreceivedfromNTGacopyofa jFAF jPPM, jF@F jԀwhich   containedadetaileddescriptionofNTG jF=F jsbusiness,andincludedfinancialstatements y   auditedbyE&TandfinancialprojectionspreparedwithE&T jF=F jsassistance.(Pl. jF=F jsCompl. <  at13para.42).InSeptember2001,SmithWhileybeganaduediligenceinvestigationof O  NTGonbehalfofBonSecours.(Pl. jF=F jsCompl.at13,para.42.)Duringthisprocess,NTG  turnedovertoSmithWhileyrepresentativesfinancialstatementsauditedbyE&Twhich  misstatedNTG jF=F jscashflows,incomeandnetworth.(Pl. jF=F jsCompl.at14,para.48.) B OnMarch4,2002,NTGsoldtoBonSecours353,714sharesofNTG jF=F jsstock U (seriesCConvertiblePreferred)forapurchasepriceof$1milliondollars.Plaintiff  allegesthatwithinfourmonthsofthetransaction,itdiscoveredthatdefendantshad  misledinvestorsregardingthefinancialconditionofNTG.andasaresult,BonSecours H incurredlossesofgreaterthan$1milliondollars. FF X  XX     X     F  X  DISCUSSIONF X FF݌    Ќ   X   XX        v"" 8݌̌   XX   j FA F jInreviewingthegrantofamotiontodismisspursuanttoMarylandRule2 `% & 322(b), j F@ F jԀtheCourtmustassume j FA F jthetruthofallwellpleadedfactsandallinferencesthat #'s"( canreasonablybedrawnfromthem. j F@ F jԀBennettHeating&AirConditioning,Inc.v. (6$* NationsBank,103Md.App.749(1995),rev j F= F jdinpartonothergrounds,342Md.169 *%,    ee   (1996).2322(b)(2). j FA F jWhenmovingtodismiss,adefendantisassertingthat,evenifthe  allegationsofthecomplaintaretrue,theplaintiffisnotentitledtoreliefasamatterof s law. j F@ F jԀHrehorovichv.HarborHosp.Ctr.,93Md.App.772,784(1992). j FA F jThus,in 3 consideringamotiontodismissforfailuretostateaclaim,thecircuitcourtexamines  F onlythesufficiencyofthepleading. j F@ F jԀId. j FA F jThecomplaintshouldnotbedismissedunlessit   appearsthatnosetoffactscanbeproveninsupportoftheclaimsetforththerein. j F@ F j y   Bennett,103Md.App.at749. <  E.` hp x (#X(#EDefendantcontendsthatitisimmunefromliabilityundertheActforthree L  reasons:(1)Defendantwasnotinprivityorotherwisehaveadirectrelationshipwith   Plaintiff;(2)DefendantwasnotaninvestmentadvisertoPlaintiff;and(3)Defendantis | anaccountingfirmandaccountantsareexpresslyexcludedfromthedefinitionofan <  j FA F jinvestmentadvisor. j F@ F jԀPlaintiffcountersthatE&Tisliableunder j F' F jԀ11703(a)(1)(ii), L whichprovidesthatapersonisliableifhe:   X  E(` ` hp xXx (#EfOffersorsellsthesecuritybymeansofanyuntruestatement  ofamaterialfactoranyomissiontostateamaterialfact _ necessaryinordertomakethestatementmade,inlightofthe ? circumstancesunderwhichtheyaremade,notmisleading,the o buyernotknowingoftheuntruthoromission,andifhedoes O notsustaintheburdenofproofthathedidnotknow,andin / theexerciseofreasonablecarecouldnothaveknown,ofthe    untruthoromission. !!  X  E.` hp x (#` XxE ""  XfPlaintiffarguesthatpursuanttosubsection(c)ofthatsectionE&Tisliableasanaider _## andabettor.Subsection(c)(1)providesjointandseveralliabilityforeveryperson %o %  j FA F joccupyingasimilarstatusorperformingsimilarfunctions[asan j FA F jofficerordirectorof &/"'  thepersonliable j F@ F j],...andevery...agentwhomateriallyaidsinsuchconduct. j F@ F j (#)  XTheanalysisoftheadequacyoftheallegationsmustbeginwiththelanguageofthe   Act.Section11101(h)(2)(iii)statesthatanaccountantisnotanagentifhisorher p  j FA F jperformanceofinvestmentadvisoryservicesissolelyincidentaltothepracticeofthe 0 profession.... j F@ F jԀHowever,theservicesofanaccountantarenotconsidered j FA F jsolely  C incidental j F@ F jԀunless:    X  E(` ` hp xXx (#Ef1.Theinvestmentadvisoryservicesrenderedareconnected y   withandreasonablyrelatedtotheotherprofessionalservices Y  rendered; 9  2.Thefeechargedfortheinvestmentadvisoryservicesis i  basedonthesamefactorsasthoseusedtodeterminethefee I  forotherprofessionalservices;and )  3.The...certifiedpublicaccountant...doesnothold[itself]   outasaninvestmentadvisor.   X  E.` hp x (#` XxE y  XId. Y  X 9 fInBaker,Wattsv.Miles&Stockbridge,95Md.App.145(1993),theCourt i discussedcasesfromseveraljurisdictionwithactssimilartotheMarylandActtosupport ) itsholdingthatanattorneyisnotliableformerelyrenderinglegaladviceordrafting  documentsforuseinsecuritiestransactions.Id.at168,citingRendlerv.Markos,453 Y N.W.2d202,206(Wis.App.1990).Becauseanaccountantandanattorneyareinthe i sameclassificationundertheAct, j F' F jԀ11101(b)(2)(iii),theholdinganddiscussioninBaker ) isapplicabletotheclaimagainstE&T. !! K.` hp x (#Xx (#KBakermakesclearthatsomethingmorethananattorney j FA F jengagingin[hisorher] \## traditionaladvisoryfunctions j F@ F jԀisrequiredtoestablishliabilityundertheAct.Id.at168 %o % 170,citingAckermanv.Schwartz,733F.Supp.1231,1251(N.D.Ind.1989),aff j F= F jdinpart &2"' andrev j F= F jdinpartonotherground,947F.2d841(7thCir.1991)(attorneymaybeliableif (#) hehad j FA F jpersonallyandactively j F@ F jԀsolicitedinvestors);InreN.Am.AcceptanceCorp.Sec. h*%+ ##  ee  ee   Cases,513F.Supp.608,623(N.D.Ga.1981)(liabilityoflawfirmrequiredafindingthat  thefirm j FA F jwassoentangledintheactualsaleofthesecuritythathisactivitieswereatleast p asubstantialfactorinpurchaser j F= F jsdecisiontobuythesecurityandthathisactivitieswere 3 eitherauthorizedbyorratifiedbytheissuer j F@ F j);ExcaliburOil,Inc.v.Sullivan,616F.  F Supp.458,467(N.D.Ill.1985)(attorneywhoplayedadirectroleincluding j FA> F jfacetoface   anddirecttelephonicrepresentations j F= F jԀtothepurchaser j F@ F jԀwasactingasagent);andAhernv. |   Gaussoin,611F.Supp.1465,1491(D.Or.1985)(attorneyisliablewhenhe j FA F jprepares, ?  attendstotheexecutionof,andpersonallydeliversandfilesdocumentsforregistrationof R  asecuritywiththeknowledgethatthesolicitationandsalesofsuchsecurity j F@ F jԀhavealready  occurred).TheBakerCourtconcludedthatanattorney j FA F jcouldconceivablybeconsidered  anagentifheorshe j F> F jrepresentsabrokerdealerorissuerineffectingorattemptingto H effectthepurchaseorsaleofsecurities. j F=@ F jԀ(emphasisinoriginal)(quoting j F' F jԀ11101(b)(1)).  [  j FA F jTorisetothelevelofeffectingthepurchaseorsaleofsecurities,theattorneymust  activelyassistinofferingsecuritiesforsale,solicitofferstobuy,oractuallyperformthe  sale. j F@ F jԀ95Md.App.at171. Q F FInarguingthatE&Tmaybeheldliableasanaiderandabettor,Plaintiffrelies d uponthreecasesfromotherjurisdictionsthathavesecuritieslawsthataresubstantially  $  similarto jF'F jԀ703(c)oftheMarylandSecuritiesAct. FFInF FJohnsonv.Colip,658N.E.2d575 "" (1995),thedefendantlawyerwasretainedtoincorporateandrepresentacorporationthat W$$ wassellinglimitedpartnershipsinoilproperties.Thelawyerdraftedtheprospectusused &g!& tosolicitinvestorsandattendedmeetingsofperspectiveinvestors.TheCourtheldthat ''#( summaryjudgmentwasnotappropriatebecausethe jFAF jdeterminationofwhether jF@F jԀthe )$* lawyer jF=F jsattendanceatthe jFAF jmeetingsofperspectiveinvestorsconstitutedanattemptto Z+&, effectthesaleofsecurities jF@F jԀwas jFAF janissueoffactinappropriateforresolutionatsummary  judgment. jF@F jԀId.at578. s  X  H(` ` hp xX x (#Hf[I]fwhencalleduponatthemeetings,[theattorney]primarily 6 reassuredinvestorsthatrisksaboutwhichtheyexpressed  f concernwereunlikelytomaterialize,suchbehaviormadeit  F morelikelythannotthattheinvestorswouldpurchasethe  & securitiesandconstitutedanattempttoeffectapurchaseor   sale.Ontheotherhand,if[theattorney jF=F js]principalfunction    atthemeetingwastoeithertempertheexuberanceofthe w   principalpromoters...ortodiscussthetechnicalaspectsofthe W  partnershipagreementoritstaxconsequenceswithcounsel 7  forperspectiveinvestors...wethinkthesefactsarenot g  susceptibletotheinferencethatanattempttoeffectthe G  purchaseorsaleofasecurityoccurred. '   X  H.` hp x (#` X XH   XfId..InArthurYoung&Co.v.Reves,937F.2d1310(8thCir.1991),theCourtuphelda  juryverdictagainstanaccountingfirmwherethejurywasinstructedtofindliabilityifit W concludedthattheaccountingfirmknowinglymadefalsestatementsthatitknewwould g berelieduponbythepurchaser.Id.at13267. '  XInPrincev.Brydon,764P.2d1370,1371(Ore.1988),theCourtheldthatitwas  errortograntsummaryjudgmenttoalawyerwhoprepareddocumentsandperformed W otherlegalservicesforthepartnershipthatsoldthesecurities.Thelawyer jFA>F jdraftedthe g limitedpartnershipagreementandmajorportionsoftheofferingcircular.Healsogave * anopiniononthetaxstatusofthepartnershipwhich[thepartnership]includedinthe !! informationthatitprovidedprospectiveinvestors. jF=@F jԀId. FFԀTheCourtheldthatthequestion Z## waswhetherthelawyerofthecorporateentity j FA F jmateriallyaided j F@ F jԀinthesaleofsecurities %m % andconcludedthataiderandabettorliabilityturnedonwhetherthedrafter j F= F js j FA F jknowledge, &0"' judgment,andassertionsasreflectedinthecontentsofthedocumentswere j F> F jmaterial j F= F jԀto (#) thesale. j F@ F jԀPrince,764P.2dat1375. f*%+    ee   PlaintiffallegesthatthePPMandotherfinancialdocumentsdraftedbyE&T  containedassertionsastoNTG j F= F jsfinancialhealthandfinancialprojectionswhichBon p Secoursreliedupontopurchasesecurities.(Pl j F= F jsCompl.at13para.43.)Furthermore, 3 PlaintiffallegesthatE&Tactivelyparticipatedinthesubmissionofmisleadingfinancial  F informationtoBonSecours,withtheexpectationthatBonSecourswouldrelyuponitin   decidingwhetherornottoinvestinNTG.(Pl. j F= F jsCompl.at12,para.39;Pl. j F= F jsCompl.at v   14,para.48;Pl.'sCompl.at16,para.5557.)PlaintiffallegesthatE&TprincipalTodd 9  FeuermanheadedtheNTGauditteamandwasthemainE&TcontactforNTG,(Pl. j F= F js I  Compl.at11,para.27),andthatinadditiontohisroleasauditmanagerforNTG,   FeuermanperformedmanyofthefunctionsofthechieffinancialofficerofNTGpriorto | October2000.(Pl. j F= F jsCompl.at11,para.38.) < PlaintiffalsoallegesthatE&ThadactualknowledgethatBonSecourswas O consideringinvestinginNTG,andthatNTGwasprovidingtoBonSecoursfinancial  statementsthathadbeenauditedbyE&Taswellasfinancialprojectionsandother  financialdocumentsthathadbeenpreparedwithE&T j F= F jsadviceandconsultation,andthat ? E&TknewthatthosedocumentswerebeingpreparedspecificallyforBonSecoursin R orderforthecompanytodeterminewhethertoinvestinNTG.(Pl. j F= F jsCompl.at12,para.    39.)PlaintiffalsoallegesthatE&TwasdirectlyinvolvedinadvisingNTG j F= F jsdirectorsand "" officersregardingthevalueofNTGandinassistingthemtoplananegotiationstrategy H$$ fordeterminingthepurchasepriceofthesecuritiestobepurchasedbyBonSecours.(Pl. j F= F js &X!& Compl.at15,para.54.) '#(  l<` DefendantarguesthatbasedonBaker,itmaynotbeheldliableunder j F' F jԀ703(c)of )$* theAct,becausetheComplaintdoesnotallegethatE&Twasanagentorcontrolling N+&, ##  ee  ee   personofNTG.     1     [pnce  (Def. j F= F jsMot.toDismissat3,para.4.)Defendantfurtherarguesthaton  thefactsinBaker,theallegationsagainstMiles&Stockbridgewerefarstrongerthanthe s allegationsmadebyplaintiffagainstE&Tintheinstantsuitbecause j FA F jtheaccused 3 individualattorneywasastockholderinthecompanyinwhichBaker,Watts&Co.had  F alsoinvested. j F@ F jԀ(Def. j F= F jsMot.toDismissat4.)However,themotionwillbedeniedbecause   theComplaintallegesmore.TheallegationthatE&TprincipalToddFeuerman y   performedmanyofthefunctionsofthechieffinancialofficerarguablystatesaclaimthat 9  Feuerman j FA F joccup[ied]asimilarstatusorperform[ed]similarfunctions j F@ F jԀascorporate I  officersanddirectors.SeeMDCodeAnn.,Corps.&Ass j F= F jns, j F' F jԀ11703(c).Additionally,   atthisstageitispossibletoinferbasedontheallegationsthatE&T j FA F jmateriallyaided j F@ F jԀin  thesalebecauseitknowinglymadefalsestatementsthatitknewwouldberelieduponby B Plaintiff. R  XX  x  Forallthesereasons,themotiontodismisswillbeDENIED.xx݌  Ќ XX     XX  X N.` hp x (#X x (#Nzy  _________________________ h     ________________________________zyz݌ B Ќ X  X hN.` hp x (#X x (#NDATE   `     h     JUDGEEVELYNOMEGACANNON ;   hN.` hp x (#X x (#N XbX F XbXX Xb  N.` hp x (#X x (#NUKUS., FX Xb F F  &&"& Ї THEBONSECOURSUSUK.,   h   *   p INTHE c  COMMUNITYINVESTMENT \  FUND U   Plaintiff h   *   p CIRCUITCOURTFOR N   X G  X v.    h   *   p BALTIMORECITY 9  NETWORKTECHNOLOGIES +{ GROUP `     h   *   p 24C03001338 $t  Defendant h   *   p  f   X* ` * *  * h *  *  * p *  *  * x * * XbX FXbXX Xb X  X  FXXbORDERXbXF }  X  FXXbForthereasonsstatedintheattachedMemorandumOpinion,DefendantEllin& B Tucker,Chartered jF=F js( jFAF jE&T jF@F j)MotiontoDismissCountIofPlaintiff jF=F jsComplaintis g  DENIED. !/  SOORDEREDthis11thdayofJuly,2003XbXF T#"   X $ $  h ___________________________________ "&r!& ЀJUDGEEVELYNOMEGACANNON 'X"'  h  E.` hp x (#X(#E XbXXXb +&, ЇBUSINESSANDTECHNOLOGYCASEMANAGEMENTPROGRAM       K+ ` hp x X x (#KCASENAME:  FX Xb F FBONSECOURSCOMMUNITYINVESTMENTFUNDv. x  NETWORKTECHNOLOGIESGROUP,etal XbX F XbXX XbԀ q     E.` hp x (# XEӀ j    H. ` hp x (#X XHCASENUMBER:  FX Xb F F24C03001338 XbX F XbXX Xb 6   H.` hp x (# X XH  H. ` hp x (#X XHCOURT: `   FX Xb F FCircuitCourtforBaltimoreCity XbX F XbXX XbԀ K   H.` hp x (# X XHJUDGE: FX Xb F FԀEvelynOmegaCannon XbX F XbXX XbԀ  DATEOFOPINION: FX Xb F FJuly11,2003  K(X~KE+ ` hp x X XE%  %  * F* *K!(X K  E.` hp x (#X E