Perlman v. PNC Bank, N.A.
| Decision Date | 27 June 2022 |
| Docket Number | 21-10432 |
| Citation | 38 F.4th 899 |
| Parties | Jonathan E. PERLMAN, as Court Appointed Receiver, Plaintiff-appellant, v. PNC BANK, N.A., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Michael A. Friedman, William Barry Blum, Gregory M. Garno, Elizabeth Grace McIntosh, Genovese Joblove & Battista, PA, Miami, FL, for Plaintiff-appellant.
James Christopher Martin, Colin E. Wrabley, Reed Smith, LLP, Pittsburgh, PA, Howard Seth Goldfarb, Peter Winslow Homer, Homer Bonner Jacobs Ortiz, PA, Miami, FL, Terence M. Grugan, Peter D. Hardy, Diana M. Joskowicz, Matthew G. Kussmaul, Priya Roy, Melanie J. Vartabedian, Ballard Spahr, LLP, Philadelphia, PA, Mark S. Kokanovich, Davis Polk & Wardwell, LLP, Menlo Park, CA, for Defendant-Appellee.
Ryann Flack, Attorney General's Office, Miami, FL, for Amicus Curiae Attorney General, State of Florida, Department of Legal Affairs.
Before Wilson, Rosenbaum, Circuit Judges, and Conway* , District Judge.
Jonathan Perlman, a court-appointed receiver, appeals the district court's dismissal of his aiding and abetting claims on behalf of the companies in receivership (the Receivership Entities) against PNC Bank. The district court granted PNC's Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction because it found that Perlman lacked standing to bring those claims. The district court relied on our decision in Isaiah v. JPMorgan Chase Bank , 960 F.3d 1296, 1308 (11th Cir. 2020), which held that the Receivership Entities must have "at least one innocent officer or director" and thus be "honest corporations" for standing purposes. Perlman moved for reconsideration and for leave to amend, but the district court denied both of those motions.
On appeal, Perlman argues that he has standing because he was appointed pursuant to Section 501.207(3) of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). According to Perlman, that statute negates the standing requirement in Isaiah that a receiver must allege that the Receivership Entities had at least one innocent officer or director. We hold that even assuming that Section 501.207(3) applies, it does not rectify the standing issue in Isaiah because it does not expressly address the imputation of wrongful acts between the Receivership Entities themselves and their insiders. Accordingly, we affirm the district court's orders granting PNC's Rule 12(b)(1) motion for lack of subject matter jurisdiction and denying Perlman's motions for reconsideration and leave to amend.
Before we detail the district court proceedings below, we must first introduce a few players involved in this case. At the forefront is Jeremy Marcus, the main perpetrator behind a widespread debt relief scam. Marcus's scheme involved a nationwide enterprise of 85 entities. These entities were controlled by Marcus, and he employed telemarketers at these entities to deceive tens of thousands of consumers into thinking they were being offered low-interest loans to settle their debts. Unfortunately, the consumers did not receive low-interest loans and were left in worse financial positions.
While Marcus lived lavishly for some time, profiting off fraudulently acquired money from his victims, it was not long before government enforcement agencies came knocking. The Federal Trade Commission (FTC) and the Florida Attorney General (collectively, the Enforcement Agencies) filed a complaint against Marcus for various consumer fraud violations, referred to as the Enforcement Action. Often in cases involving fraud, an enforcement agency will move to have a court-appointed receiver take control over the defendant's property to ensure that assets are not dissipated or wasted.2 Given Marcus's record, the Enforcement Agencies thought it would be prudent to have someone other than Marcus responsible for his companies’ assets. This is where Jonathan Perlman comes into the story.
In the Enforcement Action, the United States District Court for the Southern District of Florida (the Enforcement Court) entered a temporary restraining order appointing Perlman as the receiver for several of Marcus's companies, the Receivership Entities. Perlman's role in the Enforcement Action was to investigate the affairs of the Receivership Entities and report to the Enforcement Agencies. Perlman's investigation confirmed the Enforcement Agencies’ material allegations against Marcus, who then stipulated to a permanent injunction and a monetary judgment of roughly $85 million.
Turning to the district court proceedings in this appeal, Perlman, acting on behalf of the Receivership Entities, sued PNC in a separate action for its involvement with Marcus's scheme. Relevant to this appeal, Perlman brought claims for aiding and abetting breach of fiduciary duty (Count I) and aiding and abetting conversion (Count II). Perlman alleged that PNC assisted Marcus by providing bank accounts for the Receivership Entities so that Marcus could carry out his scheme. The Receivership Entities were harmed, according to Perlman, because Marcus diverted funds from the Receivership Entities for a non-business purpose, thus breaching his fiduciary duties owed to them and converting their money. In turn, PNC allegedly aided and abetted Marcus by providing banking services, despite many red flags showing Marcus was committing fraud.
Following our decision in Isaiah , PNC moved under Federal Rule of Civil Procedure 12(b)(1) to dismiss Counts I and II for lack of subject matter jurisdiction, arguing that Perlman failed to allege the presence of an innocent director or officer for purposes of standing. Notably, Perlman did not move to amend his complaint to include the requisite allegation and thereby attempt to cure the standing issue. Instead, Perlman responded to PNC's motion by arguing that he did have standing, notwithstanding Isaiah , because he was appointed under Section 501.207(3) of the Florida Deceptive and Unfair Trade Practices ACT (FDUTPA), which authorizes a court-appointed receiver "to bring actions in the name of and on behalf of the defendant enterprise, without regard to any wrongful acts that were committed by the enterprise ...." Fla. Stat. § 501.207(3). Thus, Perlman argued, it is irrelevant whether the Receivership Entities have an innocent director or stockholder because the FDUTPA provides that the wrongful acts of the Receivership Entities are not imputed to the Receiver for standing purposes. In support of his argument that he was appointed under the FDUTPA, Perlman cited to various docket entries from the Enforcement Action.
PNC then replied to Perlman by arguing that he was not appointed under Section 501.207 of the FDUTPA, but rather under Section 13(b) of the Federal Trade Commission Act (FTCA). In support, PNC pointed to the Enforcement Agencies’ motion for a temporary restraining order that requested the appointment of a receiver. In that document, the Enforcement Agencies cited only to Section 13(b) as the basis for the Enforcement Court's authority to appoint a receiver. The district court agreed with PNC, also noting that "[n]one of the orders regarding the appointment of the Receiver explicitly state the legal authority for appointment of the Receiver." Then, the district found that "[a] review of the record in the Enforcement Action indicates that [Perlman] was appointed pursuant to section 13(b) of the [FTCA]." The court therefore concluded that Isaiah applies and granted PNC's Rule 12(b)(1) motion to dismiss because Perlman's Amended Complaint contained "no allegations of an honest board member, officer, or shareholder."
Following the district court's dismissal of Counts I and II, Perlman moved for reconsideration and for leave to amend his complaint to allege that he was appointed under the FDUTPA. The district court denied these motions and this timely appeal followed.
"In reviewing a district court's dismissal of a complaint under Rule 12(b)(1) for lack of subject matter jurisdiction, we review the district court's legal conclusions de novo , including the court's conclusion concerning standing." Houston v. Marod Supermarkets, Inc. , 733 F.3d 1323, 1328 (11th Cir. 2013).
In Isaiah , we raised the issue of whether a court-appointed receiver had standing to bring "common law tort claims against third parties to recover damages for the fraud perpetrated by the corporation's insiders." Isaiah , 960 F.3d at 1306. Applying Florida law, we noted that:
[U]nless the corporation in receivership has as at least one honest member of the board of directors or an innocent stockholder, the fraud and intentional torts of the insiders cannot be separated from those of the corporation itself and the corporation cannot be said to be an entity separate and distinct from the individual tortfeasors.
Id. We pointed to the distinction "between an honest corporation with rogue employees, which can pursue claims for the fraud or intentional torts of third parties while in receivership, and a sham corporation created as the centerpiece of a [fraudulent] scheme, which cannot pursue such claims." Id. at 1307. For the latter, it is "not the corporation but the individual customers who suffered injury as a result of the [fraudulent] scheme, and who may have rights to pursue claims against third parties that allegedly aided and abetted that scheme." Id.
The "axiomatic" principle from Isaiah is "that a receiver obtains only the rights of action and remedies that were possessed by the person or corporation in receivership." Id. at 1306. If the corporation in receivership is one that is operated for the sole purpose of committing fraud, and thus not an "honest corporation," then that corporation "cannot be said to have suffered an injury from the scheme it perpetrated." Id. at 1306. Since the receiver "obtains only the rights of actions and remedies" of the corporation in receivership, it follows that the...
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