938 F.Supp.2d 1238 (M.D.Fla. 2013), 8:12-cv-00557-T-27EAJ, Wiand v. Wells Fargo Bank, N.A.

Docket Nº:8:12-cv-00557-T-27EAJ
Citation:938 F.Supp.2d 1238
Opinion Judge:JAMES D. WHITTEMORE, United States District Judge.
Party Name:BURTON W. WIAND, as Court-Appointed Receiver for SCOOP REAL ESTATE L.P. et al., Plaintiff, v. WELLS FARGO BANK, N.A., et al., Defendants
Attorney:For Burton W. Wiand, as Court-Appointed Receiver for Scoop Real Estate, L.P., Valhalla Investment Partners, L.P, Victory IRA Fund, LTD., Victory Fund, LTD., Viking IRA Fund, LLC, and Viking Fund, LLC., Plaintiff: Jonathan Betten Cohen, Sean P. Keefe, Terry Alan Smiljanich, LEAD ATTORNEYS, James H...
Case Date:April 04, 2013
Court:United States District Courts, 11th Circuit, Middle District of Florida
 
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938 F.Supp.2d 1238 (M.D.Fla. 2013)

BURTON W. WIAND, as Court-Appointed Receiver for SCOOP REAL ESTATE L.P. et al., Plaintiff,

v.

WELLS FARGO BANK, N.A., et al., Defendants

No. 8:12-cv-00557-T-27EAJ

United States District Court, M.D. Florida, Tampa Division

April 4, 2013

Filed: April 5, 2013.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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For Burton W. Wiand, as Court-Appointed Receiver for Scoop Real Estate, L.P., Valhalla Investment Partners, L.P, Victory IRA Fund, LTD., Victory Fund, LTD., Viking IRA Fund, LLC, and Viking Fund, LLC., Plaintiff: Jonathan Betten Cohen, Sean P. Keefe, Terry Alan Smiljanich, LEAD ATTORNEYS, James Hoyer Newcomer & Smiljanich, P.A, Tampa, FL.

For Wells Fargo Bank, N.A., as Successor-in-interest to Wachovia Bank, N.A, Timothy Ryan Best, Defendants: Beth A. Cronin, Dale W. Cravey, LEAD ATTORNEYS, Marie Tomassi, Trenam Kemker, St Petersburg, FL; Charles M. Harris, Jr., Marvin E. Barkin, LEAD ATTORNEYS, Trenam Kemker, St Petersburg, FL.

OPINION

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JAMES D. WHITTEMORE, United States District Judge.

ORDER

BEFORE THE COURT is Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint, and to Strike Certain Allegations Therein (Dkt. 66), to which the Receiver has responded in opposition (Dkt. 68). Upon consideration, the motion (Dkt. 66) is GRANTED in part and DENIED in part.

I. Factual and Procedural Background

Arthur Nadel orchestrated a massive Ponzi scheme for ten years before he was caught in January 2009. His management companies, Scoop Management, Inc. and Scoop Capital, LLC, raised in excess of $350 million from unwitting investors, purporting to deposit the money in a set of hedge funds, which he used as his personal bank account. Burton Wiand is the court-appointed receiver for the hedge funds: Scoop Real Estate, L.P., Valhalla Investment Partners, L.P., Victory IRA Fund, Ltd., Victory Fund, Ltd., Viking IRA Fund, LLC, and Viking Fund, LLC. In this action, he alleges that Wells Fargo Bank 1 and Ryan Best gained actual knowledge of Nadel's fraud and substantially assisted Nadel in stealing money from investors.

The initial complaint (Dkt. 2) was dismissed in part (Dkt. 37) for failing to state a claim. Specifically, the Receiver's claims for aiding and abetting common law fraud (Count I), aiding and abetting breach of fiduciary duty (Count II), and aiding and abetting conversion (Count III) were dismissed without prejudice. Also dismissed without prejudice was Count IV for common law negligence, but only as it pertained to Victory IRA Fund, Ltd., Valhalla Investment Partners, L.P., and Viking IRA Fund, LLC. The negligence claims asserted on behalf of Scoop Real Estate, L.P., Victory Fund, Ltd., and Viking Fund, LLC were upheld. Also upheld were the Receiver's claims for fraudulent transfer against Wells Fargo and Best (Count V) and unjust enrichment against Wells Fargo only (Count VI). The Receiver was granted leave to file an amended complaint.

The Receiver then filed a 76-page, 282-paragraph First Amended Complaint (Dkt. 42), which was stricken sua sponte as a shotgun pleading and for failing to comply with Federal Rule of Civil Procedure 8(a) (Dkt. 60). The Receiver was granted leave to file a second amended complaint and warned that failure to plead in a manner contemplated by Rule 8 could result in dismissal with prejudice. The Receiver has now filed his Second Amended Complaint (Dkt. 63), and Defendants again move to dismiss all of the claims and to strike certain allegations concerning anti-money laundering statutes, regulations and manuals (Dkt. 66). The Receiver has responded in opposition (Dkt. 68) and filed a Notice of Supplemental Authority (Dkt. 74).

II. Standard of Review

A complaint should contain " a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). This Rule does not required

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detailed factual allegations, but it demands more than an unadorned, conclusory accusation of harm. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). " The complaint must contain enough facts to make a claim for relief plausible on its face." Resnick v. AvMed, Inc., 693 F.3d 1317, 1324-25 (11th Cir. 2012). " [O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 556 U.S. at 679 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

" A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678 (citing Twombly, 550 U.S. at 556). This plausibility standard " asks for more than a sheer possibility that a defendant has acted unlawfully." Id. at 679 (citing Twombly, 550 U.S. at 556). " Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. at 678 (quoting Twombly, 550 U.S. at 557). " Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679 (citing Iqbal v. Hasty, 490 F.3d 143, 157 (2d Cir. 2007), rev'd sub nom. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has not shown that the pleader is entitled to relief. Id.

In Twombly, the Supreme Court addressed the well-pleaded, nonconclusory factual allegations of parallel behavior to determine whether they gave rise to a " plausible" suggestion of conspiracy. Twombly, 550 U.S. at 565-66. Although the Court acknowledged that the conduct alleged was consistent with an unlawful agreement, the Court nevertheless concluded that the claims were not plausible because the conduct was more likely explained by other lawful behavior. Id. at 567. Therefore, where the allegations of parallel conduct underlying the legal conclusions of a complaint are more likely explained by other lawful behavior, the complaint must be dismissed.

At the motion to dismiss stage, the complaint is construed in the light most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). Although it is axiomatic that the Court must accept as true all of the allegations contained in the complaint, this tenet is " inapplicable to legal conclusions." Iqbal, 556 U.S. at 678. " While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. at 679.

III. Discussion2

A. Counts I through IV - The Aiding and Abetting Claims

Counts I through IV of the Second Amended Complaint are claims for aiding

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and abetting the tortious activity of Nadel: Count I for his common law fraud, Count II for his breach of fiduciary duty, and Counts III and IV for his conversion. (Count III is brought on behalf of Scoop Real Estate, Victory IRA Fund and Victory Fund, while Count IV is brought on behalf of Valhalla Investment Partners, Viking IRA Fund, and Viking Fund.) Defendants move to dismiss all four counts for failing to state a claim upon which relief may be granted. Because the elements of aiding and abetting are the same for each of these claims, 3 they are considered together. See Lawrence, 455 Fed.Appx. at 906 (" Given that all of Plaintiffs' claims are predicated on the theory of aiding and abetting, we need only consider whether Plaintiffs adequately alleged the elements of such a claim." ).

A cause of action for aiding and abetting requires " (1) an underlying violation on the part of the primary wrongdoer; (2) knowledge of the underlying violation by alleged aider and abetter [ sic ]; and (3) the rendering of substantial assistance in committing the wrongdoing by the alleged aider and abettor." Id. (citing AmeriFirst Bank v. Bomar, 757 F.Supp. 1365, 1380 (S.D. Fla. 1991)); ZP No. 54, 917 So.2d at 372. In actions involving the liability of a bank for aiding and abetting its customer's Ponzi scheme, the second element, knowledge, will only be satisfied if the bank had " actual knowledge of [the] fraudulent activities." Id. Actual knowledge may be shown by circumstantial evidence. See Woods v. Barnett Bank of Ft. Lauderdale, 765 F.2d 1004, 1009 (11th Cir. 1985) (referencing cases in the Rule 10b-5 context for the proposition that " surrounding circumstances and expectations of the parties were critical, because knowledge of the existence of a violation must usually be inferred" ); Aetna Cas. & Sur. Co. v. Leahey Constr. Co., 219 F.3d 519, 535 (6th Cir. 2000) (" For the purposes of establishing aiding and abetting liability, the requisite intent and knowledge may be shown by circumstantial evidence." ) (internal quotations omitted). In addressing aiding-and-abetting liability, courts are " [m]indful of the potentially devastating impact aiding-and-abetting liability might have on commercial relationships." Woods, 765 F.2d at 1009; Leahey Constr., 219 F.3d at 534.

1. Actual Knowledge

While actual knowledge may be shown by...

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