Sovereign Bank v. Valentino

Decision Date27 November 2006
Citation914 A.2d 415
PartiesSOVEREIGN BANK, Appellant v. John G. VALENTINO and Jeffrey Ganter, Appellees. Sovereign Bank, Appellee v. John Valentino and Jeffrey Ganter Appeal of Jeffrey Ganter, Appellant.
CourtPennsylvania Superior Court

Jeffrey Ganter, Pro Se.

BEFORE: LALLY-GREEN, GANTMAN, and KELLY, JJ.

OPINION BY GANTMAN, J.:

¶ 1 The parties, Sovereign Bank ("Sovereign") and Jeffrey Ganter, ask us to determine whether the trial court erred when it entered judgment in favor of Sovereign in the amount of $143,000.00, based upon a claim of concerted tortious action. We hold the trial court erred when it did not enter judgment in favor of Sovereign for $303,323.90, the entire harm caused by Mr. Ganter's tortious conduct, where concerted tortious action, as set forth in Section 876 of the Restatement (Second) of Torts, is a recognized civil cause of action under Pennsylvania law. We further hold Mr. Ganter's arguments related to the statute of limitations and the Commercial Code are waived. Accordingly, we vacate the judgment and remand for the entry of a damage award consistent with this opinion.

¶ 2 The relevant facts and procedural history of these appeals are as follows. On July 2, 2001, Sovereign filed a complaint against its former employee, John Valentino.1 Sovereign alleged Mr. Valentino used his position as a commercial loan officer to establish loan accounts under fictitious names and deposit the loan proceeds into checking accounts bearing the same fictitious names. Sovereign further alleged Mr. Valentino dissipated these accounts for his own use and benefit. Between 1995 and 2000, Mr. Valentino diverted approximately $1,821,565.74 in loan proceeds.

¶ 3 On October 17, 2002, Sovereign filed a motion for leave of court to file an amended complaint, which the court granted. Sovereign filed its amended complaint on December 13, 2002, adding Mr. Ganter. Sovereign alleged Mr. Ganter, who had worked in the banking industry since 1973, knowingly assisted Mr. Valentino in misappropriating the loan proceeds.2

¶ 4 Sovereign contended Mr. Valentino met with Mr. Ganter on multiple occasions between 1995 and 2000, for the purpose of providing Mr. Ganter with checks drawn from the fraudulent checking accounts. The checks were written for amounts between $10,000.00 and $40,000.00. In exchange, Mr. Ganter gave Mr. Valentino checks drawn from Mr. Ganter's personal bank accounts, in amounts less than the checks issued from the fraudulent accounts. Sovereign alleged Mr. Valentino used Mr. Ganter in this way to "launder" the proceeds of the fraudulent loan accounts. Sovereign also estimated Mr. Valentino misappropriated $1,821,565.74 of bank funds.

¶ 5 Sovereign alleged one count of aiding and abetting against Mr. Ganter, claiming he "actively, knowingly, and intentionally facilitated Mr. Valentino's fraudulent scheme by knowingly exchanging funds for the proceeds of such scheme and depositing proceeds of such scheme into his personal accounts." (Amended Complaint, filed 12/13/02, at ¶ 72; R.R. at 133a-134a). Sovereign further claimed it suffered damages as a direct result of Mr. Ganter's actions, and it demanded judgment against Mr. Ganter in the amount of $1,821,565.74, plus interest, punitive damages, attorneys' fees and costs. Additionally, Sovereign alleged counts against Mr. Ganter under theories of conversion, fraud, unjust enrichment, and conspiracy.

¶ 6 Sovereign filed a motion for summary judgment against Mr. Valentino on March 20, 2003. On July 3, 2003, Mr. Valentino pled guilty in federal court to related bank fraud charges. Subsequently, Sovereign filed a supplemental motion for summary judgment against Mr. Valentino, which the court granted on December 17, 2003.

¶ 7 At the same time, Mr. Ganter chose to proceed pro se and responded to Sovereign's allegations against him. On January 16, 2003, Mr. Ganter filed an answer to Sovereign's complaint, as well as what he called a petition to dismiss the amended complaint. Mr. Ganter's answer denied the averments contained in Sovereign's pleading; his petition to dismiss alleged defects in Sovereign's pleading, as well as defects in service of the pleading.3 On March 5, 2003, the trial court denied Mr. Ganter's petition to dismiss.

¶ 8 On September 2, 2003, Mr. Ganter filed what he called a new matter and motion to dismiss Sovereign's amended complaint. In this filing, Mr. Ganter again insisted Sovereign's pleading was defective and improperly served. Mr. Ganter also asserted Sovereign had committed numerous discovery violations. Mr. Ganter concluded the action against him should be dismissed, because of Sovereign's "failure to respond to either discovery and/or interrogatories and its false statement on record about cooperating with Ganter...." (New Matter and Motion to Dismiss, filed 9/2/03, at 4; R.R. at 403a). On December 17, 2003, the trial court denied Mr. Ganter relief. On May 21, 2004, Mr. Ganter filed a motion for hearing and sanctions, alleging violations of the Rules of Civil Procedure by Sovereign and counsel. The court also denied this motion by order entered June 28, 2004.

¶ 9 Mr. Ganter proceeded to a bench trial on July 26, 2004. At trial, Sovereign entered into evidence copies of nine checks issued by Mr. Valentino to Mr. Ganter, drawn from the fraudulent checking accounts, totaling $303,323.90. These checks are summarized in the following chart:

                --------------------------------------------------------------
                                                Fictitious Name
                on Checking Plaintiff's
                Date Check # Amount Account Exhibit #
                --------------------------------------------------------------
                10/95        94   $45,737.00   James D. Mitchell   Ganter-2
                --------------------------------------------------------------
                7/25/95      98   $43,000.00   Jay T. Ganner       Ganter-4
                --------------------------------------------------------------
                3/12/96     109   $42,000.00   James D. Mitchell   Ganter-5
                --------------------------------------------------------------
                11/21/96    116   $36,510.00   James D. Mitchell   Ganter-8
                --------------------------------------------------------------
                1/13/97     117   $15,959.00   James D. Mitchell   Ganter-9
                --------------------------------------------------------------
                5/96        152   $40,039.00   Jay T. Ganner       Ganter-10
                --------------------------------------------------------------
                5/28/96     156   $28,965.00   Jay T. Ganner       Ganter-11
                --------------------------------------------------------------
                4/11/97     176   $27,113.90   Jay T. Ganner       Ganter-12
                --------------------------------------------------------------
                6/1/97      181   $24,000.00   Jay T. Ganner       Ganter-13
                --------------------------------------------------------------
                

Sovereign also presented evidence of four checks issued by Mr. Ganter to Mr. Valentino, drawn from Mr. Ganter's personal account, totaling $135,933.10:

                ------------------------------------------
                                               Plaintiff's
                Date Check # Amount Exhibit #
                ------------------------------------------
                10/6/95     776   $44,537.00   Ganter-3
                ------------------------------------------
                5/13/96    1026   $39,384.00   Ganter-6
                ------------------------------------------
                5/30/96    1051   $28,595.10   Ganter-7
                ------------------------------------------
                6/11/97    1595   $23,417.00   Ganter-14
                ------------------------------------------
                

¶ 10 Mr. Ganter testified in his own defense and vigorously denied participating in any money laundering scheme. Instead, Mr. Ganter testified that Mr. Valentino had asked him to join "some sort of stock club," and the checks he exchanged with Mr. Valentino were related to costs and profits associated with this endeavor. (N.T. Trial, 7/26/04, at 93; R.R. at 1104a). On November 24, 2004, the court entered a verdict in favor of Sovereign in the amount of $143,000.00. According to the court, this figure represented the amount "by which Ganter personally profited."4 (Trial Court Opinion, dated June 17, 2005, at 3).

¶ 11 Mr. Ganter timely filed a post-trial motion on December 6, 2004, asserting the verdict was "excessively punitive" and "contrary to the weight of the evidence."5 (Motion for Post-Trial Relief, filed 12/6/04, at 2; R.R. at 1518a). On December 13, 2004, Sovereign filed a cross-motion for post-trial relief. Sovereign contended the evidence adduced at trial demonstrated Mr. Ganter "directly assisted Mr. Valentino in laundering and concealing" the sum of $328,256.90. (Cross-Motion for Post-Trial Relief, filed 12/13/04, at 3; R.R. at 1539a). Sovereign concluded the verdict should permit recovery in this amount. On February 18, 2005, the court denied both parties' post-trial motions. Sovereign filed its notice of appeal on February 24, 2005. Mr. Ganter filed his notice of appeal on March 3, 2005. On March 10, 2005, Sovereign filed a praecipe for the entry of judgment in its favor, in the amount of $143,000.00.6

¶ 12 In its appeal, docketed at No. 499 EDA 2005, Sovereign raises three issues for our review:

SHOULD [DEFENDANT] BE LIABLE FOR THE TOTAL AMOUNT THAT HE AIDED [ANOTHER PARTY] IN FRAUDULENTLY MISAPPROPRIATING, LAUNDERING AND CONCEALING FROM [PLAINTIFF], RATHER THAN THE AMOUNT HE PERSONALLY PROFITED?

SHOULD THE TRIAL COURT HAVE GRANTED [PLAINTIFF'S] POST-TRIAL MOTION TO INCREASE THE JUDGMENT AMOUNT TO THE FULL AMOUNT [DEFENDANT] ASSISTED [ANOTHER PARTY] IN
FRAUDULENTLY MISAPPROPRIATING FROM [PLAINTIFF], RATHER [THAN] THE AMOUNT [DEFENDANT] PERSONALLY PROFITED?

SHOULD [PLAINTIFF'S] JUDGMENT AMOUNT BE $328,256.90, WHICH WAS THE AMOUNT [DEFENDANT] ADMITTED HE RECEIVED FROM [ANOTHER PARTY], AND NOT THE DIFFERENCE BETWEEN THE AMOUNT HE RECEIVED, AS DEMONSTRATED BY COPIES OF CHECKS PRODUCED AT TRIAL, AND WHAT HE RETURNED TO [THE OTHER PARTY?]

(Sovereign's Brief at 2).

¶ 13 "Our appellate role in...

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