Bank of Am., N.A. v. Dist. of Columbia

• Decision Date: 27 November 2013
• Docket Number: No. 10–CV–78.,10–CV–78.
• Citation: 80 A.3d 650
• Parties: BANK OF AMERICA, N.A., et al., Appellants, v. DISTRICT OF COLUMBIA, Appellee.
• Court: D.C. Court of Appeals

80 A.3d 650

BANK OF AMERICA, N.A., et al., Appellants,

v.DISTRICT OF COLUMBIA, Appellee.

No. 10–CV–78.

District of Columbia Court of Appeals.

Argued Oct. 19, 2011.

Decided Nov. 27, 2013.

Appeal from the Superior Court of the District of Columbia, (CAB–7763–08) (Hon. Joan Zeldon, Motions Judge) ^* (Hon. Frank Burgess, Motions Judge) ^**.

Ava E. Lias–Booker, Baltimore, MD, with whom Samantha Thompson, Washington, DC, Brian A. Kahn, Charlotte, NC, Adrienne J. Lawrence, Washington, DC, and Michelle N. Lipkowitz, Baltimore, MD, were on the brief, for appellants.

Stacy L. Anderson, Assistant Attorney General, with whom Irvin B. Nathan, ActingAttorney General for the District of Columbia at the time the brief was filed, Todd S. Kim, Solicitor General, and Donna M. Murasky, Deputy Solicitor General, were on the brief, for appellee.

Before BLACKBURNE–RIGSBY and THOMPSON, Associate Judges, and WAGNER, Senior Judge.

WAGNER, Senior Judge:

Appellants, Bank of America, N.A. and Bank of America Corporation (hereinafter collectively referred to as Bank of America or the Bank), appeal from an order of the trial court denying the Bank's motion to compel arbitration under the Federal Arbitration Act (FAA) of the District of Columbia's claims for damages for losses incurred as the result of a protracted fraudulent scheme perpetrated by the District's employees and allegedly facilitated by Bank of America. Bank of America argues that the trial court erred in its ruling because all of the District's claims are within the scope of a contractual agreement that requires arbitration in the state of North Carolina. The District's position is that there was no valid arbitration agreement, or alternatively, its claims do not fall within the scope of any agreement between the parties. We affirm the decision of the trial court holding that the parties had no valid agreement to arbitrate their dispute in North Carolina or elsewhere and retaining jurisdiction of the District's claim under the Fraud Claims Act. We remand the case to the trial court for further proceedings consistent with this opinion as it relates to the remaining counts of the District's amended complaint.

I. Procedural Background

This action arises out of a fraudulent scheme by a former manager in the District's Real Property Tax Administration Adjustment Unit in its Office of Tax and Revenue. The District filed a complaint against Bank of America, Walter R. Jones, Jr., Harriette Walters, Jayrece Elaine Turnbull, and unknown Jane and John Does alleging that they participated in a conspiracy that utilized a Controlled Disbursement Account (CDA or CD Account) that the District maintained with Bank of America to process fraudulent tax refund checks. Specifically, the District alleged that Walters, a former District employee, used her knowledge of the District's property tax refund process to prepare and ensure approval of the fraudulent checks which were given to co-conspirators to deposit or cash through the Bank. According to the complaint, Jones, an assistant branch manager for the Bank, and other unknown bank personnel facilitated the negotiation of the fraudulent checks. As theories of liability, the District asserted: (1) violation of the Uniform Commercial Code (UCC) (D.C.Code § 28:3–404 (2001)); (2) violation of UCC § 28:3–405; (3) negligence; (4) fraud; (5) breach of fiduciary duty; (6) conversion; (7) violation of the D.C. False Claims Act (FCA) (D.C.Code § 2–308.14 (2006 Repl.)); ¹ and (8) negligence in training, hiring and supervising bank personnel. As relief, the District sought repayment of all funds lost totaling $39,212,815.24. Under the False Claims Act, it sought treble damages of $117,212,815.24, penalties of $10,000 plus costs and attorney's fees.

The Bank filed a “Motion to Dismiss, or in the Alternative, Stay Based on Forum Selection and Arbitration Clauses,” which the trial court treated as a Motion to Compel Arbitration under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. In its motion, the Bank asserted that the District's claims are subject to arbitration pursuant to a clause in its Treasury Service Booklet (TSB) requiring arbitration of disputes related to the account or bank services and a forum selection clause in its Deposit Agreement (DA) requiring any proceeding regarding the CD Account to be brought in North Carolina. Concluding that the parties' voluminous filings did not make clear what documents controlled the dispute, the trial court held an evidentiary hearing in order to ascertain whether they had an agreement to arbitrate in North Carolina. Following completion of the hearing proceedings, the trial court denied the Bank's motion by written order in which it found that the parties' 2005 contract provisions superseded any dispute resolution or forum selection clauses previously agreed upon and that the signatories to any documents executed subsequently lacked authority to bind the District to arbitration in North Carolina. The court retained jurisdiction of the False Claims Act count explaining that the FCA is a part of the Procurement Practices Act of 1985(PPA), which the parties incorporated into their 2005 agreement, and that actions thereunder are within the Superior Court's exclusive jurisdiction under D.C.Code § 2–301 et seq.² The court dismissed the District's remaining claims, holding that they are within the exclusive jurisdiction of the District's own contracting officer and the Contract Appeals Board (CAB).

The Bank filed a motion to alter or amend the trial court's order and to certify certain rulings to this court for review. The Bank noted this appeal before the trial court (J. Zeldon) denied the motion to alter or amend. The trial court (J. Burgess) granted the Bank's motion to stay the proceedings on the FCA claim and stayed the dismissal of the District's remaining counts. However, the order permitted the District to pursue its contract claims before the District's Contracting Officer.

The Bank filed in this court a Motion to Stay Proceedings, or in the Alternative Enjoin the District Pending Appeal, in which it requested a stay or injunction to prevent the District from initiating proceedings before a contracting officer during the pendency of this appeal. This court denied that motion and ordered the Bank to show cause why the appeal should not be dismissed for lack of jurisdiction as having been taken from a non-final order, citing In re Calomiris, 894 A.2d 408, 408 (D.C.2006), Hercules & Co. v. Beltway Carpet Serv., Inc., 592 A.2d 1069, 1071 n. 6 (D.C.1991), and D.C.Code § 11–721(d) (2001). Without resolving the jurisdictional question, this court issued an order vacating the Show Cause order, stating that “[t]he Supreme Court's decision in Andersen LLP v. Carlisle, 556 U.S. 624, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009) may [a]ffect the applicability of Calomiris, 894 A.2d at 410.” In that order, this court set a briefing schedule and requested the parties to discuss the opinion in Carlisle in their briefs. For the reasons set forth in part III A., infra, we conclude that this court has jurisdiction of the appeal.

II. Factual Background and Trial Court's Decision

A. Factual Summary

Before addressing the issues, we outline in some detail the factual background essential to an understanding of the parties' arguments and our disposition. At least since the 1990s, the District has maintaineda Controlled Disbursement Account with Bank of America or its predecessors.³ In July 1999, after Bank of America merged with its most recent predecessor, Nations Bank, the account was maintained in North Carolina. On January 6, 2000, Valerie Holt, then Chief Financial Officer (CFO) for the District, executed a “Certified Copy of Corporate Resolutions—Opening and Maintaining Deposit Accounts and Services,” which designated the CFO, the Deputy CFO/Treasurer, and the Associate Treasurer as persons authorized “to execute and sign any application, deposit agreement, signature card and any other documentation required by the Bank to open said accounts.” ⁴ That same day, CFO Holt signed a signature card for the CDA and verified the signatures of three others to act under the Corporate Resolution.⁵ The signature card states that by signing, the signatory agrees that the account is to be governed by the terms and conditions set forth in the Bank's Deposit and Disclosures Agreement (Deposit Agreement), including any amendments. The trial court found that all relevant Deposit Agreements specify North Carolina as the location for resolution of disputes and give the Bank the right unilaterally to amend its own Deposit Agreement. According to evidence at the hearing, completion of a signature card was required to add signatories to the account. Between 2000 and November 13, 2005, a number of District officials signed signature cards to add or remove names from the account. These included CFO Dr. Natwar Gandhi, successor to CFO Holt, Associate Treasurer Lasana Mack, and Interim Associate Treasurer Alcindor Rosier. One of the signature cards signed by Dr. Gandhi stated that by signing, he “agree[d] ... [t]o be governed by the terms and conditions” set forth in the Deposit Agreement. Dr. Gandhi, Mr. Mack, and Mr. Rosier testified that they signed signature cards only to open an account or to add or remove signatories.

On September 25, 2000, Acting Deputy CFO/Treasurer, John Robinson, and Interim Associate Treasurer and Bank Manager, Alcindor Rosier, executed an “Authorization and Agreement for Treasury Services” (Authorization) agreeing to be bound by the Treasury Booklet. The trial court found that the 2000 Corporate Resolution authorized Rosier and Robinson to enter an agreement for treasury services. On September 25, 2000, Associate Treasurer Lasana Mack signed a certification attesting to the authenticity of the signatures of Rosier and Robinson and to his own authority to execute the certification. The certification form states...