were made aware of the misstatements because Hiser told Leach exactly which of Scherzer's statements were false. The "Damages" portion of the Memorandum demonstrates that Plaintiffs had made the causal connection between the misstatements and the injury by that date as well. From this we determine that the Urland requirement is met.
Second, Plaintiffs argue that the July, 1993 letter simply refers to potential claims and is merely an attempt to exert leverage in a collection action. They point out that the letter does not refer to any specific federal securities law claim and so could apply to state securities law violations as easily as the violations alleged in this action. This argument is also unavailing. Plaintiffs' attorney certainly had enough facts about the underlying issues in this action by July 14, 1993 to determine that securities fraud was a potential issue. It is significant that the only threat he made concerned the area of law, securities fraud, that ultimately became the issue in this case. Plaintiffs' attorney did not threaten Hiser with charges of employment discrimination, or any other general area of law that could conceivably have been relevant in the breakup of the employment relation. The letter demonstrates that Plaintiffs had notice of the factual basis underlying the claim, the legal claims arising from those facts and had connected Hiser to those facts and that legal claim by July 14, 1993.
We turn now to apply the test laid out in Gruber. First, we ask whether Plaintiffs "had information of possible wrongdoing" more than a year before filing the Complaint. 697 F. Supp. at 864. According to Plaintiffs themselves, they had actual knowledge of wrongdoing in October, 1992 when Hiser told Leach of the misstatements, although he blamed Scherzer for them. Next, we ask whether reasonable diligence would have uncovered the basis for the claims. Id. Again, we find that based on Plaintiffs' own evidence, it would have. According to Plaintiffs, they learned of the wrongdoing as soon as they received the documents their lawyer requested from Quality Health. This demonstrates that timely, reasonable diligence would have revealed the true facts within a year. Therefore, Plaintiffs are "held to have constructive notice of all facts that could have been learned through diligent investigation through the limitations period." Id.
This analysis is made in the context of a motion for summary judgment. For that reason, all of the facts must be viewed in the light most favorable to the non-moving party and all reasonable inferences must be drawn in favor of the non-moving party. Anderson, 477 U.S. at 256. We must determine whether the evidence is such that a reasonable jury could return a verdict for the non-moving party. Id. at 248. Plaintiffs' evidence consists solely of their assertion that they only learned the facts in September, 1993. If we view all the evidence in the light most favorable to Plaintiffs, we can infer that at no point before September, 1993 did they have actual notice of the actual violations that have been sued upon here. However, this "mere scintilla" does not controvert the overwhelming evidence that they had inquiry notice by July 14, 1993 at the latest. Id. at 251. We find that a reasonable jury would have no choice but to find that in this situation, "'a person of ordinary intelligence would have suspected that he or she was being defrauded'" by July 14, 1993 at the latest. Hirschfeld, 775 F. Supp. at 578.
Because of this finding, we grant summary judgment in Defendants' favor on Counts One, Two and Three, the federal securities law counts. Having granted summary judgment on the only federal claims in this action, we turn to the state law claims. We do not find that those claims should remain in federal court. 28 U.S.C. § 1367(c)(3). For this reason, we dismiss the remaining counts, Counts Four through Nine. The Counterclaim of AHRS and the Third-Party Complaint of LifeQuest likewise consist of state causes of action, and will be dismissed for the same reasons.
An appropriate Order follows.
AND NOW, this 3rd day of October, 1995, upon consideration of:
1. Third Party Defendant Robert M. Scherzer's Motion for Summary Judgment and for Attorney's Fees and Sanctions pursuant to 28 U.S.C. § 1927 (document no. 43) and responses thereto, the Motion is hereby GRANTED in PART and DENIED in PART. The Motion is hereby GRANTED in that the Third-Party Complaint is hereby DISMISSED. The Motion is hereby DENIED in all other respects.
2. Upon consideration of Plaintiffs' Motion for Summary Judgment on the Counterclaim of Defendant American Health Resource Systems, Inc. and for Sanctions (document no. 48) and responses thereto, the Motion is hereby GRANTED in that the COUNTERCLAIM is hereby DISMISSED. The Motion is hereby DENIED in all other respects.
3. Upon consideration of the Motion for Summary Judgment of Defendants LifeQuest, Inc. and OccuMed Resources (document no. 49) and the Motion of Defendants Roger B. Hiser and American Health Resource Systems, Inc. for Summary Judgment (document no. 50) and responses thereto, the Motions are hereby GRANTED and Plaintiffs' Amended Complaint is hereby DISMISSED.
BY THE COURT:
J. CURTIS JOYNER, J.