Ely A. Martell v. Trilogy Limited Trilogy Systems Corp.

Ely A. Martell (“Martell”) appeals the district court’s order dismissing his complaint as time-barred. After the statute of limitations had expired, Martell attempted to amend his complaint to state a different theory of relief against Trilogy Limited and Trilogy Systems Corporation (collectively “Trilogy”). The district court concluded that this theory did not “relate back” to the original complaint and thus fell outside the statute of limitations.

I

Martell was a long-time client of Merrill, Lynch, Pierce, Fenner, and Smith, Inc. (“Merrill Lynch”). In 1981, allegedly upon the advice of his Merrill Lynch representative, Martell purchased two limited partnership units in Trilogy pursuant to a private offering.

In December 1982 Trilogy sought to raise additional capital to finance a particular project by selling preferred stock through a private placement (“1982 private placement”). Martell purchased almost $500,000 worth of this preferred stock. In November 1983 Trilogy initiated a public offering (“1983 public offering”), where it converted this preferred stock to common stock.

In June of 1984, it was publicly disclosed that the project Trilogy had been developing was a…