Carl v. Republic Security Bank
| Decision Date | 27 March 2003 |
| Docket Number | No. 01-8981-CIV.,01-8981-CIV. |
| Citation | 282 F.Supp.2d 1358 |
| Parties | Bernard J. CARL, Plaintiff, v. REPUBLIC SECURITY BANK, n/k/a Wachovia Bank, N.A., Defendant. |
| Court | U.S. District Court — Southern District of Florida |
Todd Alan Levine, Jason Ross Marks, Kluger, Peretz, Kaplan & Berlin, Miami, FL, for Bernard Carl.
Jeremy James Hart, Aaron Rene Resnick, Gunster, Yoakley & Stewart, Miami, FL, for Republic Security Bank, a national banking institution aka Wachovia Bank.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
This case involves a dispute between a bank and a person who had a contractual relationship with a customer of the bank. The dispositive legal issue on cross-motions for summary judgment is whether certain funds, that were wire transferred and deposited into one of the bank customer's accounts, constituted a general or special deposit. For the reasons set forth below, the court concludes that the deposit was "general," and therefore the bank was entitled to take the deposited funds by setoff. Accordingly, summary judgment will be entered in favor of the bank.
Plaintiff Bernard Carl is a resident of Washington, D.C. Defendant Wachovia Bank is a banking and lending institution based in North Carolina, which operates branch banks in several states in the Mid-Atlantic region and southeastern United States, including Florida. Plaintiff's cause of action arises from transactions that involved Republic Security Bank. On September 14, 2001, Republic merged with Wachovia Bank, which now properly stands as the defendant in this matter.
To understand the plaintiff's dispute with the bank, it is necessary to review the bank's problems with its customer, Angelo Giordano, Mr. Giordano, a non-party to this action, was engaged in the business of arranging for entertainers to perform at various venues. He conducted business under the name of two companies he owned, Giordano World Entertainment Corporation (GWE), and World Gaming & Entertainment Corporation (WGE), both of which were based in Lee County, Fla. Each company maintained a checking account under its name and the name of Angelo Giordano at a Republic branch in Fort Myers, Fla.
On April 3, 2000, Mr. Giordano deposited a check for $150,000.00 from U.S. Knitwear in the WGE account. He received approval for a same-day cash withdrawal of $144,600.00, leaving a balance of $5,578.00. However, on April 6th, the check was returned because of an improper endorsement. This caused the account to have a negative balance of $144,422.00.
Four days later, Mr. Giordano redeposited the same check, and again was given permission to withdraw the funds immediately. The check, however, was returned for a second time for insufficient funds, leaving a negative balance of $146,463.00. To cure the problem, U.S. Knitwear, on April 17th, wire transferred $150,000.00 into the WGE account. This resulted in a $3,537.00 positive balance.
On May 1st, Mr. Giordano redeposited the U.S. Knitwear check for a third time. Again, he was given same-day availability of funds, and over the next several days, Mr. Giordano withdrew a total $95,150.00. On May 4th, the check was returned for a third time due to insufficient funds, causing a negative balance of $95,142.00 in the WGE account. Republic thereafter sent a letter to WGE demanding repayment of $95,142.00.
Republic also terminated the employment of Dennis Cokenour, a bank manager at Republic, for failing to place a hold on the check, in violation of the bank's internal security procedures. When Mr. Giordano failed to repay the $95,142.00, Republic filed a civil complaint against WGE in the circuit court for the twentieth Judicial Circuit of Florida, in Lee County.
With this as background, we turn to the plaintiff Bernard Carl and his dealings with Angelo Giordano. In late May or June 2000, Mr. Carl entered into an oral agreement with Mr. Giordano to arrange for the R & B music group "TLC" to appear and perform at an event at Mr. Carl's summer residence in Southampton, N.Y. on June 5, 2000. The contract called for Mr. Carl to pay GWE $110,000.00. Mr. Carl contends—and this is not disputed —that at the time he contracted with GWE, he did not know of Mr. Giordano's or WGE's problems with Republic.
On June 1st, Mr. Carl wired an initial installment of $40,000.00 to the corporate checking account at Republic titled to GWE and Mr. Giordano. On June 2nd, Mr. Carl sent the remaining $70,000.00 installment to the same account. As soon as Republic became aware of the receipt of these monies, it froze the accounts.
On June 2, 2000, Mr. Giordano's attorney, Todd Foster, Esq., called Michael Coleman, Esq., Republic's outside counsel, and stated that Republic's freeze of Mr. Giordano's accounts would impair Mr. Giordano's ability to fulfill certain contractual obligations. (Coleman Depo., p. 12; Foster Depo., p. 12-14, 22, 46-49, 51-54). Mr. Coleman then sent a letter by fax to Mr. Giordano, with a copy to Mr. Foster, notifying him that the bank intended to take the newly-deposited funds to set off the debt in the WGE account. (Coleman Depo., p. 17-19).
On June 5th, Mr. Coleman received a letter from attorney Foster, dated June 2, 2000, stating: "This is to confirm our conversation this date wherein I advised you that your client, Republic Security Bank had improperly seized funds from the account of Giordano World Gaming Corporation such that this company will be unable to fulfill its immediate contractual obligations." (Coleman Depo. Ex. 6). Mr. Foster also strongly implied that GWE would take legal action.
Mr. Coleman responded by sending a letter by facsimile, on June 5, 2000, advising Mr. Foster that Republic had transferred money from the GWE account to cover the overdraft in the WGE account. (Coleman Depo., p. 22-23). Mr. Coleman also indicated that the bank intended to terminate its banking relationship with Mr. Giordano and any companies with which he was affiliated. (Def.Ex. 7). After that date, Mr. Coleman had no further communication with Mr. Foster or Mr. Giordano. (Coleman Depo., p. 23-24). On June 15, 2000, bank officers at Republic's headquarters in West Palm Beach, Fla. transferred $95,159.00 from the GWE account (in which Mr. Carl deposited the funds) to the WGE account which had a negative balance. On August 14, 2000, Republic dismissed its lawsuit against WGE.
The band "TLC" failed to appear and perform at Mr. Carl's event. Consequently, he filed a lawsuit in the United States District Court for the Eastern District of New York against Mr. Giordano, GWE, and WGE, asserting claims for breach of contract. Mr. Carl obtained default judgments against the defendants in that action in the total sum of $285,477.00. The judgments were later recorded with the clerk of the Circuit Court in Lee County, Florida.
In addition, Mr. Carl registered the New York judgments against Mr. Giordano, WGE and GWE in the Middle District of Florida. See Carl v. Giordano et al., Case No. 00-MC-31. Mr. Carl initiated post-judgment garnishment proceedings against Republic, including issuing subpoenas to the bank's custodian of records to obtain documents related to accounts the judgment debtors held at Republic. Republic answered the garnishment proceedings and asserted that it had no funds belonging to the defendants.
Next, Mr. Carl filed a complaint against Republic Security Bank, now known as Wachovia Bank, in the Circuit Court for the Fifteenth Judicial Circuit of Florida. The complaint set forth five claims: (1) Count I—conversion; (2) Count II—civil theft; (3) Count III—tortious interference with a contractual or a business relationship; (4) Count IV—restitution; and (5) Count V—negligence. Plaintiff alleged $95,159.00 in damages. Defendant, based on diversity of citizenship, timely removed to federal court.
Plaintiff filed a motion for summary judgment in his favor on his wrongful setoff claims. On July 26, 2002, Wachovia filed a motion for summary judgment as to all counts of the plaintiff's complaint.
This court has diversity of citizenship jurisdiction pursuant to 28 U.S.C. § 1332 because the plaintiff is a citizen of the District of Columbia, and the defendant national banking association is a citizen of North Carolina, its principal place of business and the state listed in its organization certificate.1 The amount-incontroversy exceeds $75,000.00, the jurisdictional threshold. Defendant bank does business in Florida and is thereby subject to personal jurisdiction under Fla. Stat. § 48.193 (2000).
Venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events giving rise to the claims occurred in the Southern District of Florida.
Summary judgment is warranted if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party bears the burden of meeting this exacting standard. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). In determining whether summary judgment is appropriate, the facts and inferences from the facts are viewed in the light most favorable to the non-moving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that it is entitled to judgment as a matter of law. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The non-moving party, however, bears the burden of coming forward with evidence of each essential...
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