Wilkins v. U.S. Bank, Nat. Ass'n.

• Decision Date: 19 September 2007
• Docket Number: No. 06-2163.,06-2163.
• Citation: 514 F.Supp.2d 1120
• Parties: Jack Z. WILKINS, Plaintiff, v. U.S. BANK, NATIONAL ASSOCIATION, A National Bank, individually and as successor in interest to Mercantile Trust Co., Defendant.
• Court: U.S. District Court — Western District of Arkansas

514 F.Supp.2d 1120

Jack Z. WILKINS, Plaintiff, v. U.S. BANK, NATIONAL ASSOCIATION, A National Bank, individually and as successor in interest to Mercantile Trust Co., Defendant.

No. 06-2163.

United States District Court, W.D. Arkansas, Fort Smith Division.

September 19, 2007.

COPYRIGHT MATERIAL OMITTED

Carey Brian Meadors, Pryor, Robert son, Beasley, Smith & Karber PLLC, Fort Smith, AR, for Plaintiff.

Gregory J. Digel, Kelli Smith Lott, Holland and Knight LLP, Atlanta, GA, Judy Simmons Henry, Wright, Lindsey & Jennings LLP, Little Rock, AR, for Defendant.

MEMORANDUM ORDER AND OPINION

ROBERT T. DAWSON, District Judge.

This case involves an attempt to recover payments for bonds issued in 1919 that were discovered in a trunk purchased by Plaintiff at an estate sale. Plaintiff alleges a breach of trustees' fiduciary duty, fraud, and seeks an accounting and damages from Defendant. Currently before the Court are Plaintiff's Partial Summary Judgment Motion (Doc. 25) and supporting documents (Does. 26-27); Defendant's Response to Plaintiff's Motion for Partial Summary Judgment (Doc. 32) and supporting documents (Does. 33-34); Defendant's First and Second Supplemental Responses to Plaintiff's Motion for Partial Summary Judgment (Does. 57 and 59) and supporting document (Does. 58 and 60); and, Plaintiff's Reply to Defendant's Responses (Doc. 63). Also before the Court is the Defendant's Motion for Summary Judgment (Doc. 65) and supporting documents (Does. 66-67, 79-80), and Plaintiff's Response to Defendant's Motion for Summary Judgment (Doc. 70) and supporting document (Doc. 71).

For the reasons set forth herein, the Plaintiff's Motion for Partial Summary Judgment is DENIED, and Defendant's Motion for Summary Judgment is GRANTED. Accordingly, Plaintiff's claims are DISMISSED WITH PREJUDICE.

STANDARD OF REVIEW

Summary judgment is appropriate only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ. P. 56(c). The burden of proof is on the moving party to set forth the basis of its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court must view all facts and inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The nonmoving party, however, must still "present evidence sufficiently supporting the disputed material facts that a reasonable jury could return a verdict in [their] favor." Pope v. ESA Services, Inc., 406 F.3d 1001, 1003-4 (8th Cir.2005) (quoting Gregory v. City of Rogers, Ark, 974 F.2d 1006, 1010 (8th Cir.1992)). Summary judgment is appropriate where a plaintiff fails to present evidence sufficient to create a jury question as to an essential element of this claim. Turner v. Honeywell Fed. Manuf. & Tech., 336 F.3d 716 (8th Cir.2003).

Plaintiff argues he has "in essence, already prevailed on the issues in this partial summary judgment motion.... as the Court denied U.S. Bank's motion [to dismiss] and held that Mr. Wilkins's complaint stated a cause of action." (Doc. 25). In response to Defendant's motion for Summary Judgment, Plaintiff states, "Mr. Wilkins has already produced evidence consistent with the allegations in his Complaint. And, because this Court has already ruled that his Complaint stated causes of action, the fact that Mr. Wilkins has evidence consistent with the allegations in his Complaint precludes U.S. Bank's summary judgment motion. Thus, Mr. Wilkins is simply asking this Court to reach the same legal conclusions it reached in denying the motion to dismiss." (Doc. 70).

Plaintiff fails to recognize the difference in the standards for successfully surviving a motion to dismiss and surviving or prevailing on a motion for summary judgment. In ruling on a motion to dismiss, the district court must accept the allegations contained in the compliant as true, and all reasonable inferences from the complaint must be drawn in favor of the non-moving party. Hafley v. Lohman, 90 F.3d 264, 266 (8th Cir.1996). Complaints should be liberally construed in the plaintiff's favor and "`should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle [her] to relief." Rucci v. City of Pacific, 327 F.3d 651, 652 (8th Cir.2003) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). This is a relatively light burden. In contrast, in order to prevail on a motion for summary judgment, the moving party must show there is no genuine issue of material fact. This is a higher burden than the burden necessary in a motion to dismiss.

Background

Plaintiff alleges he is the holder of 390 bearer bonds ("bonds") of $1,000.00 denomination secured by a Mortgage and Deed of Trust ("trust") of the Fort Smith, Subiaco and Rock Island railroad ("Railroad") issued in Logan County on August 19, 1919. (Doc. 1). Mercantile Trust Company, a Missouri corporation, and its successors by merger, ("Mercantile") was the original trustee of the bonds. Through a series of mergers, Mercantile merged with the Defendant U.S. Bank who by virtue of the Bank Merger Act, assumed Mercantile's liabilities. The Plaintiff alleges that the Defendant neglected its role as trustee by allowing the assets to be squandered and by failing to provide an accounting, and in acknowledging its fiduciary duty, and providing the owed monies. (Doc. 1).

The bounds issued in 1919 are thirty year bonds that ran from August 1919 to August 1949. The Plaintiff contends the bonds were renewed and extended in July 1954 for another thirty years, thereby making 1984 the maturity date. (Doc. 9-1).

According to the Plaintiff, he and a friend purchased antique trunks at an estate sale in 1974. When they opened the trunks, they discovered the bonds at issue in this case. (Doc. 60). Plaintiff researched the bonds and discovered they were listed in Moody's investment Manual through approximately 1959 or 1960. (Doc. 60). Ten years after discovering the bonds, Plaintiff purchased his friend's share of the bonds and contacted Mercantile Bank in an attempt to pursue a claim on the bonds. (Doc. 90). In July of 1984, Plaintiff meet with A.O. Johnson at Mercantile Bank. (Doc. 90). Plaintiff directed inquiries concerning the bonds to the trustee bank Mercantile, and states the bank advised that it would investigate the bonds and examine the trust files. The Plaintiff claims that the bank did not dishonor the bonds but rather gave him every indication that the bonds had value. For approximately five years after the meeting at the bank, the Plaintiff contends he periodically inquired about the bonds but was provided no answer as to their value. (Doc. 9-1).

In late 2004, Plaintiff alleges that the bank informed him that the trust money securing the bonds had been embezzled and the bank would not honor the bonds. The Plaintiff demanded documents and an accounting but was informed the bonds were only collector's items and were barred by bankruptcy. (Doc. 9-1). The Plaintiff alleges he conducted research concerning the bonds and discovered that the bank had made many false representations, i.e. the bank stated the bonds were discharged in bankruptcy and that it had "voluminous" records relating to the trust. The Plaintiff alleges both representations are false. (Doc. 9-1).

The Plaintiff contends that when the Railroad ceased business operations in 1960, the bank failed to fulfill its role as trustee by not protecting the bond holder by foreclosing on the liens it held for the Railroad's real and personal property.

During bankruptcy proceedings, the presiding Judge, in an opinion dated June 12, 1941, found the assets were transferred by the Company to a committee consisting of three individuals who were the beneficiaries. The assets included the bonds.¹ Defendant argues the Committee actively participated in the bankruptcy, and that it controlled the assets of the Company and the operations of the railroad. Therefore, any complaint about the performance or lack of performance by the trustee has been waived. (Doc. 90). Defendant argues the railroad while under the control of the Committee sought and received approval to abandon part of its line.² The bankruptcy trustee sold the line and the bankruptcy judge approved the sale. Defendant argues this shows the bondholders approved and instigated the disposition of the assets during the bankruptcy case. Defendant argues if any other property was abandoned or sold by the Railroad, it was done by the bondholders who were running the Railroad and that any complaint a future bondholder might have concerning the disposition of property was waived. (Doc. 90).

Defendant also contends the marginal notation the Plaintiff claims extended and renewed the bonds did not extend the bonds maturity date. Defendant argues there is no evidence the railroad approved or authorized the notation and Plaintiff can provide no such evidence. Further, Defendant states according to the Railroad Commission Report, the bonds matured in 1949 and are listed under the category "Debt in Default" for the year ending December 31, 1955 in the Annual Report to the Public Service Commission. (Doc. 90). Defendant also argues the marginal notation did not bear the attestation of the clerk of the court as required by Arkansas statute and is therefore invalid. (Doc. 90).

Defendant argues that even if the bonds were still valid in 1984, Plaintiffs contention that he deferred any action because of his reliance on promises received from Mercantile Bank is insufficient to toll the statute of limitations. Defendant points to Plaintiffs account of the 1984 meeting with A.O. Johnson of Mercantile bank as contradicting Plaintiffs claim. Plaintiff testified he meet with Mr. Johnson and Mr. Johnson told him he would pass the...