Rotstain v. Trustmark Nat'l Bank
| Decision Date | 20 January 2022 |
| Docket Number | Civil Action 3:09-CV-2384-N |
| Parties | PEGGY ROIF ROTSTAIN, et al., Plaintiffs, v. TRUSTMARK NATIONAL BANK, et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
This Order addresses the motions for summary judgment filed by all remaining Defendants to this action: HSBC Bank PLC (“HSBC”) [854], Independent Bank [859], Trustmark National Bank (“Trustmark”) [860] Toronto-Dominion Bank (“TD Bank”) [858], Societe Generale Private Banking S.A. (“SG Suisse”) [874], and Blaise Friedli [876].[1] The Court concludes that fact issues exist as to the majority of Plaintiffs' nonabandoned claims. Defendants have, however, demonstrated entitlement to judgment as a matter of law on a subset of issues. Accordingly, the Court grants in part and denies in part the motions for summary judgment.
This case arises out of the Ponzi scheme perpetrated by R. Allen Stanford, his associates, and various entities under his control. The facts of the scheme are well-established, see e.g., Janvey v. Democratic Senatorial Campaign Comm., Inc. (DSCC), 712 F.3d 185, 188-89 (5th Cir. 2013), and will not be recounted in great detail here. Stanford and the entities under his control sold fraudulent certificates of deposit (“CDs”) issued by the Antigua-based Stanford International Bank Limited (“SIBL”). The CDs paid relatively high rates of interest, but SIBL claimed it deployed the funds raised from CD sales only in low risk, high return funds. In reality, the CD proceeds were used to finance Stanford's own extravagant lifestyle, and to pay off previous investors. The facts supporting the claims in this action are complex. At root, the Plaintiffs allege that the Defendant financial institutions provided banking services that supported and furthered Stanford's scheme.
In August 2009, a group of Stanford investors seeking to represent a putative class (“Class Plaintiffs”) filed their original petition in the 129th District Court for Harris County, Texas. Class Plaintiffs named as Defendants Trustmark, TD, HSBC, Bank of Houston (now Independent Bank), and SG Suisse. Class Plaintiffs asserted claims for fraudulent transfers under the Texas Uniform Fraudulent Transfer Act (“TUFTA”), Tex. Bus. & Com. Code §§ 24.001-24.013, conspiracy to commit fraud, and aiding and abetting fraud. After the Defendants removed the action to federal court, the Judicial Panel for Multi-District Litigation transferred the case to this District as part of the ongoing Stanford Multi-District Litigation proceedings.
After Defendants filed motions to dismiss Class Plaintiffs' claims, the Official Stanford Investors Committee (“OSIC”) moved to intervene in the case. The Court granted OSIC's motion to intervene and OSIC filed two intervenor complaints, see Intervenor Compl., Dec. 14, 2012 [130] (the “First Intervenor Complaint” or “FIC”); Intervenor Compl., Feb. 15, 2013 [133] (the “Second Intervenor Complaint” or “SIC”).
In response to OSIC's intervention, Class Plaintiffs moved for leave to amend their petition to include allegations and claims asserted in OSIC's intervenor complaints. The Court granted leave and ordered that “Plaintiffs' Class Complaint shall be considered to incorporate by reference [OSIC's] claims against [SG Suisse and Friedli] . . . and OSIC's claims against [Trustmark, TD, and HSBC] ....” Order, Aug. 25, 2014 [212]. Defendants moved to dismiss OSIC's intervenor complaints and the class complaint. The Court partially granted these motions, applying the arguments raised in Defendants' motions to dismiss the intervenor complaints equally to Class Plaintiffs' claims based on the incorporation. See Order, Apr. 21, 2015 [234]. Among other claims addressed in that Order, the Court declined to dismiss OSIC's constructive fraudulent transfer claims. Id. at 19-20 ().
After partially granting Defendants' motions to dismiss, the Court granted Class Plaintiffs leave to amend their complaint. Order, June 23, 2015 [278]. The Second Amended Class Action Complaint asserts claims against the Bank Defendants and Friedli for (1) aiding, abetting, or participating in a fraudulent scheme; (2) aiding, abetting, or participating in violations of the Texas Securities Act (“TSA”); (3) aiding, abetting, or participating in a breach of fiduciary duty; (4) aiding, abetting, or participating in conversion; and (5) civil conspiracy. See generally Second Am. Class Compl. [279].
Following the amendment, the Defendants again moved to dismiss claims that appeared in the amended complaint. The Court denied the motions. Order 1, July 27, 2016 [387]. Subsequently, the Court denied the Class Plaintiffs motion for certification, holding that the putative class could not satisfy the predominance requirement included in Federal Rule of Civil Procedure 23. Order 3, November 7, 2017 [428]. Nevertheless, several of the original putative class members remain parties to this suit to pursue their claims individually (the “Named Plaintiffs”). The Defendants have moved for summary judgment on claims not previously dismissed or abandoned.[2]
Courts “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). In making this determination, courts must view all evidence and draw all reasonable inferences in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). The moving party bears the initial burden of informing the court of the basis for its belief that there is no genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
When a party bears the burden of proof on an issue, she “must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in [her] favor.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis omitted). When the nonmovant bears the burden of proof, the movant may demonstrate entitlement to summary judgment by either (1) submitting evidence that negates the existence of an essential element of the nonmovant's claim or affirmative defense, or (2) arguing that there is no evidence to support an essential element of the nonmovant's claim or affirmative defense. Celotex, 477 U.S. at 322-25.
Once the movant has made this showing, the burden shifts to the nonmovant to establish that there is a genuine issue of material fact such that a reasonable jury might return a verdict in its favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Moreover, “[c]onclusory allegations, speculation, and unsubstantiated assertions” will not suffice to satisfy the nonmovant's burden. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc). Indeed, factual controversies are resolved in favor of the nonmoving party “‘only when an actual controversy exists, that is, when both parties have submitted evidence of contradictory facts.'” Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir. 1999) (quoting McCallum Highlands, Ltd. v. Washington Capital Dus, Inc., 66 F.3d 89, 92 (5th Cir. 1995)).
Over the course of this action, the Defendants have repeatedly raised timeliness objections, and they do so again in their motions for summary judgment. The Defendants argue that (i) both the Named Plaintiffs' and OSIC's TSA claims fall outside the relevant limitations period, (ii) their fiduciary breach claims also fall outside the four-year limitations period, and (iii) that OSIC's TUFTA claims cannot apply to any fund transfers prior to December 5, 2007 under that statute's four-year statute of repose. Finding the timeliness arguments deficient or subject to genuine factual disputes, the Court declines to grant summary judgment on this ground.
As a threshold matter, the Court notes that it has already ruled that the Named Plaintiffs timely brought their fiduciary breach and TSA claims by pleading facts sufficient to support them in the original complaint [1-4]. Order 9, 11, July 27, 2016 [387]. The Court declines to take up the Defendants' invitation to revisit that holding and turns to the timeliness of OSIC's claims.
Essentially, the Defendants argue that the court should grant judgment on the fiduciary breach and TSA claims because OSIC first specifically identified these legal theories in pleadings filed after the relevant limitations periods had run. This position lacks merit.
The sufficiency of the allegations in a pleading, and not the precise legal theories or causes of action identified or invoked in it, determine whether a party timely instituted an action. The Federal Rules of Civil Procedure applicable to pleading sufficiency govern in federal court. FDIC v Dawson, 4 F.3d 1303, 1308 (5th Cir. 1993). Rule 8 applies generally and requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). It also cautions that no “technical form is required, ” and directs courts to construe pleadings “so as to do justice.” Id. 8(d)(1), (e). As the Supreme Court has recently observed, Rule 8 does not countenance dismissal “for imperfect statement of the legal theory, ” rather it suffices for the plaintiff to describe the events that, he alleges,...
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