Heritage Integrity Investment Trust v. Computershare Trust Company, N.A.

Nature of the order

This is an order scheduling oral argument, not a decision on the merits or a ruling granting or denying any motion. Judge Moses, to whom the motions were referred, scheduled argument for July 14, 2025, at 10:00 a.m. in Courtroom 20A of the Daniel Patrick Moynihan United States Courthouse. The order states that no additional briefing would be accepted before the hearing, although Heritage could notify the court by letter if it wished to withdraw any pleading, claim, motion, or contention.

Background

Heritage filed a Second Amended Complaint against several defendants, including Computershare Trust Company, N.A. and Ruwack Irrevocable Trust. Heritage alleged that it owned certain unregistered, uncertificated debt securities issued by Ruwack and that the securities had been “lost.” It claimed that Computershare, which had served as Ruwack’s transfer agent and registrar until June 22, 2023, was liable for approximately $96 million. The claims alleged a breach of fiduciary duty based on Computershare’s transfer of Ruwack’s files and records to Ruwack, and a claim under Securities and Exchange Commission Rule 17Ad-2.

Heritage later proposed a Third Amended Complaint that described the securities as no longer lost but alleged that they could not be sold because of issues involving the Depository Trust and Clearing Corporation, the securities’ identifying number, and market access. The proposed complaint asserted claims described as negligence, breach of fiduciary duty, and misrepresentation under state law and Securities and Exchange Commission Rule 10b-5. Heritage also asked to dismiss cross-claims that Computershare had asserted against Ruwack and Ruwack’s President, Isaac Cain. Those cross-claims sought indemnity and contribution, meaning payment or reimbursement for potential liability.

Issues identified for argument

Computershare moved to dismiss the Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6), which concerns whether a complaint adequately states a legal claim. Computershare argued, among other things, that it owed no fiduciary duty to holders of Ruwack securities and that Rule 17Ad-2 does not create a private right to sue. Heritage did not substantively defend the Second Amended Complaint in its amendment papers and acknowledged that it had made an error in asserting a damages claim under Rule 17Ad-2, but it had not formally withdrawn that claim or the Second Amended Complaint.

Heritage’s cross-motion asks for permission to amend again. Computershare argues that amendment would be futile, including because the alleged mandatory exchange procedure may not apply to the securities, Computershare owed no relevant duty of care or fiduciary duty, some fiduciary-duty theories may be time-barred, and the proposed misrepresentation claim does not adequately identify the statements, reliance, loss causation, or a qualifying securities purchase or sale.

Heritage’s motion concerning the cross-claims initially argued that cross-claims are allowed only between existing co-parties. Heritage later acknowledged that the timing of Computershare’s cross-claims could allow them to continue, but argued that the cross-claims should be dismissed because, in Heritage’s view, no claims were then operative against Computershare. The order notes that neither side had addressed whether Heritage has legal standing—the required connection to challenge another party’s claims—to seek dismissal of the cross-claims.

Court’s directions

At a June 5, 2025 conference before United States District Judge John P. Cronan, the court told Heritage that the validity of the Second Amended Complaint needed to be resolved before the proposed Third Amended Complaint. Heritage’s counsel refused to withdraw the Second Amended Complaint unless the Third Amended Complaint was accepted. Judge Moses therefore directed counsel to be prepared to address the three pending motions, the standing issue, and how Heritage could both acknowledge an error in the Second Amended Complaint and assert that all claims in that complaint had already been dismissed while refusing to withdraw it. The order also referenced possible sanctions under Federal Rule of Civil Procedure 11, 28 U.S.C. § 1927, and the court’s inherent authority, but it did not impose sanctions.