Piedmont Resolution, L.L.C. v. Johnston, Rivlin & Foley
| Decision Date | 13 March 1998 |
| Docket Number | No. CA 96-1605(PJA).,CA 96-1605(PJA). |
| Citation | 999 F.Supp. 34 |
| Parties | PIEDMONT RESOLUTION, L.L.C., Plaintiff, v. JOHNSTON, RIVLIN & FOLEY, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Eugene M. Propper, Washington, DC, for Plaintiff.
David Durbin, Pamela Bresnahan, Steven Becker, Paul J. Maloney, John T. May, Washington, DC, for Defendants.
Pending before the Court are several motions for summary judgment by the numerous defendants, and a motion by the plaintiff, Piedmont Resolution, for a voluntary dismissal. This memorandum opinion and order will address only the summary judgment motion by defendant First National Bank of Maryland [FNB] [# 73], whose participation in the transaction giving rise to the instant dispute was indirect due to, in FNB's words, its "misfortune to be chosen by one of Piedmont's lawyers to wire (for a $36 fee) Piedmont's $3 million to England." [FNB mot. at 1-2]1. The tangential relationship between FNB and the plaintiff, and the fact that FNB's summary judgment motion was filed prior to Piedmont's motion for voluntary dismissal, leads the Court to resolve FNB's motion prior to turning to Piedmont's, which will be addressed in a separate memorandum opinion and order filed concurrently herewith. FNB's motion for summary judgment is opposed by the plaintiff, Piedmont Resolution, and partially opposed by three of the 14 codefendants, Lewis A. Rivlin, Lewis A. Rivlin, P.C., and Anne T. Taylor.
In its several-count First Amended Complaint, Piedmont alleges (1) breach of contract (count VI), (2) negligence (count VII), and (3) gross negligence (count VIII)2 against defendant FNB.
Pursuant to 28 U.S.C. § 636(c), the parties consented to proceed before a U.S. Magistrate Judge for all purposes, including the entry of final judgment. Upon consideration of the motion, oppositions, reply and the applicable law, and for the reasons explained below, the Court concludes that First National Bank of Maryland is not entitled to summary judgment as a matter of law against the plaintiff, Piedmont Resolution, on counts VI, VII or VIII of the First Amended Complaint. Accordingly, FNB's motion for summary judgment shall be denied.
Summary judgment is appropriate when "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). "Federal Rule of Civil Procedure 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. at 247-248.
A material dispute of fact "is one that affects the outcome of the litigation and requires a trial to resolve the differing versions of the truth", Hirschhorn v. Sizzler Restaurants Int'l Inc., 913 F.Supp. 1393, 1397 (D.Nev.1995); "[a] dispute of fact `is genuine ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Haysman v. Food Lion, Inc., 893 F.Supp. 1092, 1099 (S.D.Ga.1995) (quoting Anderson, 477 U.S. at 248).
If the moving party makes a sufficient showing pursuant to Rule 56(c), then the nonmoving party must come forward with affidavits and/or other evidence as provided by Rule 56(e), setting forth specific facts showing that there is a genuine issue for trial; the party opposing summary judgment may not rest upon the mere allegations or denials of the adverse party's pleadings. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Viewing all facts and inferences in a light most favorable to the non-moving party, Tao v. Freeh, 27 F.3d 635, 638 (D.C.Cir.1994)(citing Anderson, 477 U.S. at 250), the Court concludes that genuine issues of material fact exist, thus FNB is not entitled to summary judgment as a matter of law. To find otherwise would force the Court to make credibility determinations, which is the role of the jury, not the Judge.
This Court has jurisdiction over this case pursuant to 28 U.S.C. § 1332(a). The parties have not raised any choice of law issues and, in their arguments in support of and in opposition to FNB's motion for summary judgment, all parties have relied solely on District of Columbia law. Accordingly, the Court will resolve the motion under District of Columbia law.
It is unnecessary for the Court to recite the entire history of the transaction giving rise to the instant dispute—the purchase of a non-existent 108% per annum bank guarantee for $1.5 million. It suffices to say that this is a classic "tale" (a term artfully used by Piedmont and FNB) of a situation where, in retrospect, a deal sounded too good to be true from the beginning and, consequently, it was.
Only hindsight, however, is 20/20, and thus necessarily capable of distinguishing a legitimate business transaction from a "prime bank instrument scam". [See Interagency Advisory, FNB mot., exh. 42]. Accordingly, the Court must look at the events surrounding the transaction at their place in time, in 1995, when perhaps the scam was not as "easily recognized" as FNB alleges in its motion for summary judgment; otherwise FNB, a legitimate banking institution, "would have immediately rejected the request" and, thus, would not be defending this action today. [FNB expert rpt., FNB mot., exh. 8, ¶¶ B, G].
For the purposes of this summary judgment motion, most of the material facts begin on Wednesday, December 13, 1995, when Ernest Reigel, Piedmont's attorney, entered into an escrow agreement with defendants Lewis Rivlin and his law firm, Johnston, Rivlin & Foley [JR & F].
The escrow or attorney trust agreement between Piedmont and Rivlin and his firm, JR & F, for the transfer of $3 million into Rivlin's escrow account is set forth in a letter dated December 13, 1995, from Reigel to Rivlin and counter-signed and initialed by Rivlin; it provides in pertinent part:
The $3M that Piedmont will transfer to [Rivlin's] trust account will be held on behalf of Piedmont and will not be pledged, hypothecated, transferred or released except as follows:
1. In the event that pursuant to the Contract [Rivlin] and an authorized representative of Piedmont (that will be [Reigel]] initially) execute joint instructions to your trust account bank to issue by S.W.I.F.T. wire the agreed upon MT-100 Field 72 Cash Backed Conditional S.W.I.F.T. wire under procedures substantially in the form attached hereto as EXHIBIT A.
2. If after ten (10) banking days from the date Piedmont's funds are deposited in your trust account, the release of the funds pursuant to paragraph 1 above has not occurred, Piedmont's authorized representatives may by written request direct [Rivlin] to return the funds immediately to Piedmont.
It is agreed that [Rivlin] will have no other obligations to Piedmont other than as described herein and no third party shall have any claim against Piedmont's funds in your trust account except as authorized in writing by Piedmont to you. In addition, we understand and agree that any escrow fees or other charges that [Rivlin or Rivlin's] bank will charge will be paid by Mr. C.P. Jones of Deerfield Holding Co., Inc.
[FNB mot., exh. 19]. Exhibit A noted in paragraph 1 (above) of the escrow agreement, however, was not attached to this letter agreement because "time was of the essence, according to the other parties involved, that we needed to hurry or we would miss the opportunity ... [and] Rivlin had assured [Reigel/Piedmont] that the wire instructions could be worked out and would be worked out before anything happened with the money." [Reigel depo., 87:20-88:9]. Although the attorney trust agreement was between Rivlin and Piedmont, Jones was compensating Rivlin (and his firm) with "a percentage of the completed transaction." [Rivlin depo., 60:4-20].
Rivlin expressed his concerns about the transaction to Reigel. . Reigel assured Rivlin "that in the wire room they would make the final decision of how to convey that condition within the number of lines and the number of characters available for field 72 [of a conditional S.W.I.F.T.]." [Rivlin depo., 143:15-19]. From Reigel's assurances and instructions with respect to the line and character limitations, Rivlin believed "Reigel had spoken to somebody expert [with S.W.I.F.T.]". [Rivlin depo., 92:1-93:6].
Rivlin's understanding of "conditional" was "that there was to be a use of an MT-100 screen 72." [Rivlin depo., 52:7-10]. Rivlin did not independently know what that meant, but had previously used S.W.I.F.T. [Rivlin depo., 52:11-17]. Rivlin was under the impression he could obtain a "S.W.I.F.T. 100 Field 72" "form and study it", which he tried to do at NationsBank where Rivlin's trust account was located, but "[t]he people at the branch level had no idea what [Rivlin] was talking about." [Rivlin depo., 53:6-25; 55:2-24].
On December 14, 1995, despite Reigel's (and Rivlin's [Rivlin depo., 326:5-25]) earlier reservations about Jones or anyone else...
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