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September 12, 1988


The opinion of the court was delivered by: MCGLYNN


 Presently before the court is the defendant's motion for summary judgment. Plaintiff initiated this action in July, 1983 alleging a cause of action under § 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and pendent state law claims for intentional misrepresentation, negligent misrepresentation and professional malpractice. Following a 13-day trial, the jury answered special interrogatories from which the court molded a verdict and entered judgment in favor of Bradford-White in the amount of $ 1,242,151.

 In disposing of several post-trial motions, I granted the defendant's motion to amend judgment in the defendant's favor with respect to the pendent state law claims. I also granted the defendant's motion for a new trial with respect to the plaintiff's securities claims. The defendant now moves for summary judgment contending that in light of the Third Circuit's recent decisions in In re: Data Access Systems Securities Litigation, 843 F.2d 1537 (3d Cir. 1988) and Hill v. Equitable Trust Co., 851 F.2d 691 (3d Cir. 1988) (1988 Lexis U.S. App. Lexis 9489), the plaintiff's claims are time-barred.


 The factual background giving rise to this litigation has been detailed in previously filed memoranda and only the facts necessary to a determination of the pending motion will be recited here.

 The plaintiff, Bradford-White Corporation, is a Tennessee corporation which manufactures and distributes domestic and commercial water heaters. The defendant, Ernst & Whinney, is a national accounting firm which prepared financial statements which the plaintiff alleges contained material misrepresentations and omissions.

 In June 1981, the plaintiff was interested in acquiring the W. L. Jackson Company ("Jackson Company"), a private Tennessee corporation which operated a water heater manufacturing plant in Chattanooga, Tennessee, and with the approval of the U. S. Justice Department arranged a meeting attended by representatives of both corporations. Due to time constraints imposed by Citicorp, the Jackson Company's primary lender, the acquisition had to be completed by June 22, 1981. Accordingly, the parties entered into a week of intense negotiations which culminated in the execution of a stock purchase agreement. Signed on June 21, 1981, but dated June 20, 1981, the agreement provided that the price of the Jackson Company stock would be determined by an audit of the company as of June 30, 1981.

 Prior to executing this agreement, a consultant for the Jackson Company provided the plaintiff with the Jackson Company's financial statements, which had been prepared by the defendant and dated December 31, 1980, as well as interim financial statements through April 30, 1981. These statements were characterized as being prepared in accordance with generally accepted accounting principles and to fairly and accurately portray the financial condition of the Jackson Company. The statements disclosed a working capital deficiency, a potential warranty liability problem, a net operating loss of $ 1,097,427 in 1980 and a net worth of $ 1,793,203 in 1980.


 In In re: Data Access Securities Litigation, 843 F.2d 1537 (3d Cir. 1988), the Third Circuit answered the "troublesome question," faced several times earlier in this circuit, of determining the correct statute of limitations for causes of action arising under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder. Data Access, 843 F.2d at 1537. The court held that the limitations period for "a complaint charging violation of section 10(b) and Rule 10b-5 is one year after the plaintiff discovers the facts constituting the violation and in no event more than three years after such violation." Id. at 1550. In deciding the defendant's motion for summary judgment, I am required to decide whether the Third Circuit's decision in Data Access should be applied retroactively to the facts of this case, and if so, when the plaintiff discovered the facts which constituted the securities violation, thus giving rise to its cause of action.

 A. The Chevron Factors: Retroactive application of DATA ACCESS

 In Chevron Oil Co. v. Huson, 404 U.S. 97, 30 L. Ed. 2d 296, 92 S. Ct. 349 (1971) the Supreme Court summarized three factors to be considered in determining whether to apply a judicial decision retroactively. In applying these factors to this case, however, I am not writing on a clean slate. In Hill v. Equitable Trust Co., 851 F.2d 691 (3d Cir. 1988), a Third Circuit panel unanimously applied Data Access retroactively to bar the plaintiffs' § 10(b) and Rule ...

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