City of Vista v. Robert Thomas Securities, Inc.

The City of Vista (Vista) appeals the court’s grant of summary judgment in favor of Robert Thomas Securities, Inc. (Robert Thomas). Vista contends (1) the court erred when it found the suit barred by the statute of limitations because there is a triable issue of fact as to when Vista sustained damage, and (2) the four-year statute of limitations applies. We agree there is a triable issue of fact as to when Vista sustained damage.

Factual and Procedural History

This suit stems from Vista’s purchase of securities called interest-only strips. The holder of the interest-only strip is entitled to a certain percentage of the interest from a pool of bonds. When interest rates decline, debtors may prepay the bonds, which causes a reduction of the underlying pool of debt as well as the amount of interest paid to the holder of the interest-only strip.

In 1990, Vista purchased the two securities that are the subject of this action: Small Business Administration interest-only strip No. 366 (SBA 366) and Small Business Administration interest-only strip No. 533 (SBA 533) (collectively SBA strips). In February 1990, Vista purchased SBA 366 for $378,001.88 and in June, Vista…