Reported / Citable
Background
Rabin Nouranifar, suing individually, as owner of an IRA, and on behalf of Rabin Capital XVII LP, asserted fraud, breach-of-fiduciary-duty, and federal and Texas securities claims against PSN Affiliates and several related entities and individuals. His allegations concerned investments made in 2018 and a transaction in 2019 involving East El Paso Physicians’ Medical Center, LLC.
The defendants moved to dismiss. After Magistrate Judge Robert Castaneda issued a report and recommendation, Nouranifar and three defendants filed objections. The district court reviewed the challenged portions de novo and adopted the report to the extent consistent with its decision to retain supplemental jurisdiction over the state-law claims.
The Court’s Holding
The court held that Nouranifar’s Securities Exchange Act claims were barred by the five-year statute of repose. The alleged misrepresentations occurred in 2018, and the other allegedly culpable conduct underlying the federal securities claims occurred before the investments or in connection with the 2019 transaction. Because the repose period begins on the date of the last culpable act or omission, the July 29, 2025 lawsuit came too late. The control-person claim also failed because it depended on a viable primary securities violation.
Although the federal claims were dismissed, the court retained supplemental jurisdiction over the state-law claims because the issues were not novel or complex and both sides favored retention. It held that the Texas fraud claims were untimely because Nouranifar discovered the alleged fraud on July 22, 2019, making the July 2023 limitations deadline more than two years before suit was filed. The Texas Securities Act claims were barred by the five-year repose period applicable to the relevant sales, and the fiduciary-duty claims were barred by the four-year limitations period because the alleged acts occurred in 2018 and 2019.
The court granted all four dismissal motions but allowed Nouranifar until August 21, 2026, to move for leave to amend and attach a proposed amended complaint. It denied PSN Affiliates’ request for attorneys’ fees and costs, adopting the magistrate judge’s recommendation after PSN did not object to that recommendation.
Key Takeaways
- The five-year repose period for the federal securities-fraud claims began on the date of the last alleged culpable act or omission, not on later missed payments or the investment’s 2024 maturity date.
- Discovery of the alleged fraud in July 2019 started the limitations clock for the Texas fraud claims, while the 2018 securities purchases and the alleged 2018–2019 fiduciary breaches placed the other state claims outside their applicable periods.
- A district court may retain supplemental jurisdiction after dismissing every federal claim when the remaining state issues are not novel or complex and considerations of economy, convenience, and fairness support retention.
Why It Matters
The order illustrates the distinction between statutes of limitation and statutes of repose in investment litigation. Later payment defaults do not restart a securities repose period when the pleaded misrepresentations and other culpable acts occurred years earlier.
It also shows that dismissal of the federal claims does not automatically send related state claims elsewhere. Here, the court retained and resolved those claims while preserving a limited opportunity for Nouranifar to seek leave to amend.