Gilman Brothers Inc. v. Peat, Marwick, Mitchell & Co.
The plaintiff, Gilman Brothers Inc., sued Peat, Marwick, Mitchell & Co. (PMM) and individual defendants Burrows and McLaughlin for federal securities law violations and common law claims. The plaintiff alleged that PMM aided and abetted a scheme to defraud Gilman Brothers Inc. during its purchase of a majority stock interest in Systems for Advanced Information Inc. PMM moved to dismiss the claims, arguing they were time-barred under Massachusetts' statute of limitations. The court applied the two-year Massachusetts statute of limitations, finding the cause of action arose in April 1972. Although a federal tolling doctrine applied, the discovery of the fraud in July 1975 initiated the two-year period, rendering the December 1977 action untimely. Consequently, the court granted PMM's motion to dismiss the securities fraud claims and also dismissed the state common law claims.