Buchwald v. Citibank, N.A.

• Decision Date: 17 September 2013
• Docket Number: Civil Action No. 13-cv-210 (RLW)
• Parties: JOEL BUCHWALD, in his capacity as the Executor of the Estate of ARTHUR BUCHWALD, Plaintiff, v. CITIBANK, N.A., Defendant.
• Court: U.S. District Court — District of Columbia

JOEL BUCHWALD, in his capacity as the Executor of the Estate of ARTHUR BUCHWALD, Plaintiff, v. CITIBANK, N.A., Defendant.

Civil Action No. 13-cv-210 (RLW)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

Date: September 17, 2013

SUMMARY MEMORANDUM OPINION; NOT INTENDED

FOR PUBLICATION IN THE OFFICIAL REPORTERS

MEMORANDUM OPINION¹

I. INTRODUCTION

Previously, this Court granted Defendant Citibank, N.A.'s (Citibank) motion to dismiss against Plaintiff Joel Buchwald (Buchwald), in his capacity as executor of the estate of his late father, the writer Art Buchwald. Buchwald now moves this Court to amend the judgment and for leave to file an amended complaint, which adds an additional count and supplements the facts. (See generally Dkt. No. 11). Because this Court made no error in its previous decision, the motion to amend will be denied, and accordingly, Buchwald's motion for leave to file an amended complaint is denied as well.

II. FACTUAL SUMMARY

A. Background

In the 1980s, Art Buchwald retained Kenneth Starr (Starr) and his firms Starr and Company, LLC (Starrco) and/or Starr Investment Advisors, LLC (SIA), to provide financial services. (Dkt. No. 1-4, ¶ 4).² Art Buchwald owned a residence in Martha's Vineyard. (Id. ¶ 10). In late 2006, his health was in serious decline; he would die on January 17, 2007. (Id. ¶¶ 3, 11). "By November 1, 2006 . . . Starr and his employees, Arlene Graff and Patricia Dorn had obtained the approval of Citibank to open a HELOC [home equity line of credit] on the Martha's Vineyard Property. [Art] Buchwald was not aware of, and certainly had not approved, of the application for the HELOC." (Id. ¶ 13). The HELOC states it "will be governed by the law of the state where the Property is located," i.e., Massachusetts. (Dkt. No. 6-2, at 8 (§ 23)).

Around November 29, 2006, Graff and Dorn prepared a "Massachusetts General Durable Power of Attorney" that "purports to effect the appointment by [Art] Buchwald of Dorn as his attorney-in-fact." (Dkt. No. 1-4, ¶ 14). Among other things, the Power of Attorney states that it was executed in Massachusetts, that it "will be governed by the laws of the Commonwealth of Massachusetts without regard for conflicts of law principles," and that Art Buchwald "agree[s] to indemnify [any] third party for any claims that arise against the third party because of reliance on this power of attorney." (Dkt. No. 6-1, at 6). However, Art Buchwald did not execute the Power of Attorney, and it has an invalid date. (See Dkt. No. 1-4, ¶¶ 15, 21). The Power of Attorney "was, in effect, an attempt to retroactively authorize the creation of an account that was originated without any authority." (Id. ¶ 23). Citibankadvanced $100,000 to Dorn between December 11, 2006 and January 19, 2007; neither Art Buchwald, nor his estate, ever received any of the money. (Id. ¶¶ 24, 28). Citibank states that the Power of Attorney "was publically recorded with the mortgage supporting the HELOC . . . on January 18, 2007." (Dkt. No. 6, at 5).

After Art Buchwald's death in 2007, the Probate Division of the Superior Court of the District of Columbia appointed Starr executor of his estate. (Dkt. No. 1-4, ¶ 29). Around June 2010, the United States charged Starr in an Indictment with fraud, wire fraud, and money laundering. See United States v. Starr, No. 10-cr-520 (SAS), Dkt. No. 71 (S.D.N.Y. 2011). Shortly thereafter, Art Buchwald's son, Plaintiff Joel Buchwald, successfully petitioned the Probate Division to succeed Starr as executor, and assumed that role on January 7, 2011. (See Dkt. No. 1-4, ¶ 31).

B. Procedural History

Joel Buchwald learned of "the scheme perpetrated by Starr and his associates to extract funds by means of the fraudulent HELOC," (id. ¶ 32), and filed a Complaint in D.C. Superior Court on January 7, 2013. The Complaint alleges one Count of negligence against Citibank "in approving the loan application effected in Buchwald's name by persons affiliated with Starr, Starrco and/or SIA." (Id. ¶ 34). Because the parties are diverse and the amount in controversy exceeds $75,000, Citibank properly removed to this Court on February 18, 2013, (Dkt. No. 1), and then moved to dismiss pursuant to FED. R. CIV. P. 12(b)(6) the following week, (Dkt. No. 6). In his Opposition, Buchwald "request[ed] that he be afforded leave to file an amended complaint in the event that the pending motion is granted in whole or in part." (Dkt. No. 7, at 12) (citation omitted). He did not file an associated motion to amend, nor did he include a proposed pleading as required by the Local Rules. See LCvR 7(i).

This Court held a hearing on Citibank's motion to dismiss on April 29, 2013, and granted the motion from the bench. The Court found that Buchwald's claim rested upon a theory of negligence that had never been extended to a third party not implicated in the wrongdoing. At the conclusion of the hearing, counsel for Citibank asked whether the ruling was a dismissal without leave to amend, and the Court answered in the affirmative.

Buchwald has now filed a motion to amend the judgment and for leave to file an amended complaint. He claims two errors: one, "in declining to allow Plaintiff the benefit of tolling during the pendency of Starr's executorship," and two, in dismissing the case with prejudice rather than without, thus disallowing Buchwald to file an amended complaint. (See Dkt. No. 11-2, at 3). Attached to Buchwald's motion is a proposed First Amended Complaint (FAC), which includes two counts; in addition to the negligence count, there is an additional count for a "Declaration that the HELOC is Null and Void." (Dkt. No. 11-1, at 9-10). The FAC adds two points to the "substantive allegations" section. One, Starr and his employees "conducted all of their banking business with Citibank and had established a relationship with Citibank." Likewise, "[Art] Buchwald also had a prior banking relationship with Citibank, which held exemplars of his signature." (Id. ¶¶ 14-15). Two, after Citibank rejected a $50,000 check for an irregular signature, the bank "was thereafter on notice that those persons purporting to act on [Art] Buchwald's behalf were willing to prepare and present forged and irregular documents. This awareness should have prompted Citibank to investigate further, and to demand direct verification from [Art] Buchwald that Ms. Dorn was acting with proper authority, particularly in light of Citibank's familiarity with both [Art] Buchwald and Starr." (Id. ¶ 29).

III. LEGAL STANDARDS

A. Standard For Altering Or Amending A Judgment

A motion to alter or amend a judgment is brought pursuant to FED. R. CIV. P. 59(e). Motions to alter or amend under Rule 59(e) are disfavored, "and relief from judgment is granted only when the moving party establishes extraordinary circumstances." Niedermeier v. Office of Max S. Baucus, 153 F. Supp. 2d 23, 28 (D.D.C. 2001) (citing Anyanwutaku v. Moore, 151 F.3d 1053, 1057-58 (D.C. Cir. 1998)). There are three reasons why a Rule 59 motion may have merit. Such a motion may be granted if (1) there is an "intervening change of law;" (2) the movant presents "new evidence that was not previously available;" or (3) the movant "establish[es] an error of law or fact in the court's original opinion." See Messina v. Krakower, 439 F.3d 755, 758 (D.C. Cir. 2006) (citation omitted). A Rule 59 motion is not a means by which to "reargue facts and theories upon which a court has already ruled." New York v. United States, 880 F. Supp. 37, 38 (D.D.C. 1995).

B. Rule 15 Standard

FED. R. CIV. P. 15(a)(1) provides that a party "may amend its pleading once as a matter of course within" a limited amount of time; otherwise, pursuant to FED. R. CIV. P. 15(a)(2), "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." However, a court should deny a motion to amend a complaint "if the proposed claim would not survive a motion to dismiss." Hettinga v. United States, 677 F.3d 471, 480 (D.C. Cir. 2012) (per curiam). In addition, if "parties to the action can show that prejudice will result by allowing the amendment or that the proposed amendment is totally frivolous, leave to amend will be

denied." 6 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE &SECT 1473 (3d ed. 2010) (WRIGHT, MILLER & KANE).

IV. ANALYSIS

A. This Court Did Not Commit Error In Determining That The Statute Of Limitations Should Not Have Been Tolled

Buchwald cannot demonstrate any of the three elements of a successful Rule 59 motion. There has been no change in the law, and Buchwald concedes this. Meanwhile there are two problems with Buchwald's effort to supplement his complaint with new information. The first problem is that the allegedly key piece of new information is not new. Buchwald claims to have "supplemented the factual allegations pertinent to the applicable tolling doctrine," pointing the Court to information in the FAC at paragraphs 14 and 29. (See Dkt. No. 11-2, at 11). The "new" information at paragraph 29 of the FAC, that Starr's staff presented a forged check to Citibank, appeared in the original complaint. (Compare Dkt. No. 11-1, ¶ 29 with Dkt. No. 1-4, ¶ 25). And while Buchwald refers to "new" information in paragraph 14 of the FAC, that Starr had an established relationship with Citibank, the FAC adds that "[Art] Buchwald also had a prior banking relationship with Citibank . . . ." (Dkt. No. 11-1, ¶ 15). The FAC seems to be implying that because Citibank had a relationship with Starr that they valued more than their relationship with Buchwald, the bank was willing to overlook fraudulent behavior. This suggestion does not rise above mere speculation. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (holding that factual allegations must "raise a right to relief above the speculative level"). The second problem is that the purportedly new information was...