Michael v. Wesbanco Bank, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1128
DALE R. MICHAEL,
Plaintiff - Appellant,
v.
WESBANCO BANK, INCORPORATED,
Defendant - Appellee.
Appeal from the United States District Court for the Northern
District of West Virginia, at Wheeling. Irene M. Keeley, Chief
District Judge. (5:04-cv-00046-REM)
Argued: May 14, 2008 Decided: July 31, 2008
Before WILKINSON and KING, Circuit Judges, and Jackson L. KISER,
Senior United States District Judge for the Western District of
Virginia, sitting by designation.
Affirmed by unpublished opinion. Senior Judge Kiser wrote the
opinion, in which Judge Wilkinson and Judge King joined.
ARGUED: Robert Gabriel Coury, SMITH & COURY, Woodsfield, Ohio, for
Appellant. Denise Knouse-Snyder, Edward M. George, III, PHILLIPS,
GARDILL, KAISER & ALTMEYER, Wheeling, West Virginia, for Appellee.
ON BRIEF: Gary W. Smith, SMITH & COURY, Woodsfield, Ohio, for
Appellant.
Unpublished opinions are not binding precedent in this circuit.
KISER, Senior District Judge:
On June 6, 2006, Appellant Dale R. Michael (“Michael”) moved
for partial summary judgment on his claims of breach of fiduciary
duty and express trust against Appellee Wesbanco Bank, Inc.
(“Wesbanco”). The district court, deciding that there was no
express trust or fiduciary relationship between the parties to the
contract at issue, denied that motion in an opinion filed September
1, 2006. Michael appealed this ruling when that judgment became
final, arguing to this Court that Wesbanco was in fact a fiduciary
or trustee of Michael, and that therefore the district court must
be reversed and judgment entered in Michael’s favor. Michael has
also argued that it was erroneous to exclude the videotaped
testimony of a particular witness at trial. Because there were
disputed issues of material fact regarding what kind of contractual
or fiduciary relationship, if any, existed between the parties, we
must affirm the district court’s denial of summary judgment for
Michael. We also find that the trial judge was within his
discretion to exclude the challenged testimony.
I
Appellant Dale R. Michael was a friend of troubled businessman
Ralph Tolbert, owner of an automobile dealership. Tolbert’s
business was heavily indebted and he sought Michael’s assistance in
paying its debts to creditors, including Thrifty Car Rental
2
Systems, Inc. (“Thrifty”). Michael agreed, and obtained loans from
Wesbanco’s predecessor in interest, Wheeling National Bank, for
Tolbert’s benefit.1
In February 2001, Michael met with Tolbert and Paul Donahie,
then President of the Bank. On February 15, 2001, and February 27,
2001, the Bank issued loans to Michael in the amounts of $150,000
and $50,000, respectively. Immediately upon issue, Michael turned
the loan proceeds over to the Bank, and instructed the Bank to hold
the proceeds and use them to pay off Tolbert’s debts. The precise
language used by Michael to instruct the Bank on the use of the
proceeds is sharply disputed by the parties. The Bank claims that
the proceeds were being loaned directly to Tolbert by Michael, and
thereafter it took Tolbert’s direction when deciding how to pay
creditors. The Bank made disbursements to Thrifty as well as to
Citizens Savings Bank for obligations involving the titles to
vehicles Tolbert had sold to customers. Nevertheless, Tolbert’s
outstanding debts proved too formidable, such that Michael’s loans
were insufficient to save the business. Tolbert filed for
bankruptcy in October 2001.
On April 9, 2004, Michael filed a complaint in the United
States District Court for the Northern District of West Virginia
against the Bank, alleging breach of contract, willful and wanton
1
Wesbanco merged with Wheeling National Bank, effective March
1, 2001, assuming all liability for the latter’s obligations. The
two banks will henceforth be referred to simply as “the Bank.”
3
conduct, and for an accounting related to the reserve bank account
set up in conjunction with the loans. Later, Michael amended his
complaint to add a fraud claim.
At the summary judgment stage, Michael asserted a breach of
fiduciary duty claim, or alternatively, breach of an express trust.
United States District Judge W. Craig Broadwater denied Michael’s
motion for partial summary judgment as to liability on his claims
for breach of fiduciary duty or express trust, and simultaneously
granted the Bank’s motion for summary judgment as to those claims,
“as [the Bank] did not undertake fiduciary obligations.” (J.A.
218-19.)
After ruling on the cross-motions for summary judgment by the
parties, the case proceeded to a jury trial on the two issues of
whether the Bank had breached its contract with Michael or
defrauded him in its actions. During the trial, Judge Broadwater
excluded the entire testimony of Edward George, II, Chairman of the
Board of the holding company and President of Wesbanco. Michael
had hoped to rely on George’s testimony to establish that it was
not standard operating procedure to put the loan proceeds in the
Bank’s general ledger, since this would make a proper accounting
impossible, and that therefore the Bank’s procedures for handling
the transaction at issue were unusual or suspect. However, from
his deposition testimony, the Bank argued that allowing George’s
testimony would, inter alia, be more confusing than probative for
4
the jury. George was also introduced as a lay witness, not an
expert. Judge Broadwater therefore struck the testimony on the
basis that George had no personal knowledge of the loan
transactions, since neither the holding company nor Wesbanco were
involved with Wheeling National Bank at the time of the
transactions.
On October 5, 2006, the jury found in favor of the Bank on
both counts. Michael’s post-trial motions for judgment as a matter
of law or alternatively for a new trial were denied by District
Judge Irene M. Keeley, who presided over the case after the
untimely death of Judge Broadwater.
Michael now appeals the district court’s denial of his motion
for partial summary judgment on the theories of breach of fiduciary
duty and breach of express trust by the Bank, as well as the
exclusion of George’s testimony at trial.
II
A.
We review de novo a district court’s denial of summary
judgment, construing all facts and reasonable inferences in the
light most favorable to the nonmovant.2 Shaw v. Stroud, 13 F.3d
2Notably, Appellant did not notice an appeal of the district
court’s decision to grant summary judgment to the Bank on the
claims of breach of fiduciary duty and express trust. This affects
our standard of review in this case, since Michael is only
appealing the denial of his own motion for summary judgment, and
5
791, 798 (4th Cir. 1994) (citations omitted), cert. denied, 513
U.S. 813 (1994). Summary judgment is appropriate when no genuine
issue exists as to any material fact and the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
A genuine issue of a material fact exists “if the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48
(1986). “[T]he mere existence of a scintilla of evidence in
support of the [nonmovant’s] position will be insufficient; there
must be evidence on which the jury could reasonably find for the
[nonmovant].” Id. at 252.
B.
Michael claims that the Bank breached its fiduciary duty to
him by not properly paying out the loan proceeds per his
instructions, self-dealing, and through “conflicting loyalties.”
(App. Br. 8.) Michael also asserts that the Bank violated its
fiduciary duty to him when it changed the “material terms of the
reserve account3 contract of 1999 on February 28, 2001 and [paid]
not the granting of the Bank’s motion on that issue. Therefore all
reasonable inferences must be construed in favor of the Bank.
3
A “reserve account” is an account kept by a bank to secure
against default by a borrower. The Bank in this case kept a
reserve account for Tolbert’s debts on his retail installment
contracts. Michael maintains that Tolbert had assigned the reserve
account to him as assurance for his loans to Tolbert.
6
him zero dollars out of the $120,000 reserve account that Tolbert
assigned to Appellant Michael.” (App. Reply Br. 7-8.)
In order to establish a breach of fiduciary duty, a plaintiff
must first show that a fiduciary relationship was formed, and
second that it was breached. The fiduciary duty is a “duty to act
for someone else’s benefit, while subordinating one’s personal
interests to that of the other person.” Elmore v. State Farm Mut.
Automobile Ins. Co., 202 W. Va. 430, 435, 504 S.E.2d 893, 898
(1998) (quoting Black's Law Dictionary 625 (6th ed. 1990)). A
fiduciary relationship exists “whenever a trust, continuous or
temporary, is specially reposed in the skill or integrity of
another.” McKinley v. Lynch, 58 W. Va. 44, 57, 51 S.E. 4, 9
(1905). "As a general rule, a fiduciary relationship is
established only when it is shown that the confidence reposed by
one person was actually accepted by the other, and merely reposing
confidence in another may not, of itself, create the relationship."
Id. (quoting C.J.S. Fiduciary at 385 (1961)) (emphasis added).
The district court, in denying Michael’s motion for partial
summary judgment, found that there were disputed issues of material
facts for the jury to resolve at trial. Specifically, the parties
disputed what Michael’s specific instructions to the Bank were with
regard to using the loan proceeds to pay Tolbert’s debts. Michael
contended that he instructed the Bank only to pay off Tolbert’s
debts to Thrifty and wanted the Bank to act as a fiduciary to
7
Michael; the Bank claimed that it understood the arrangement to be
a commercial loan from the Bank to Michael, followed by a loan from
Michael to Tolbert with the Bank acting as an agent of Tolbert,
taking the latter’s direction in paying down his business’s
obligations. Because of this dispute, the jury was required to
resolve precisely what kind of contractual agreement existed among
the three parties, and so the district court denied summary
judgment to Michael.4
But even assuming arguendo that there was a contractual
relationship between the parties with respect to disbursal of the
loan proceeds, Michael cannot show undisputed facts establishing a
higher duty than contract – that of a fiduciary. Instead, from
what few facts are undisputed, it appears that this contract was
nothing more than one made incident to a standard commercial loan
between creditor and debtor. A creditor-debtor relationship
generally does not implicate the higher duty of a fiduciary. See
Knapp v. American General Finance, Inc., 111 F. Supp. 2d 758, 766
(S.D. W. Va. 2000). On review of Michael’s motion for summary
judgment, this Court must take the facts in a light most favorable
to the Bank, as nonmovant. The promissory note is insufficient to
create a fiduciary relationship and because Michael’s verbal
instructions were disputed by the Bank, summary judgment is
4
At trial, the jury found in favor of the Bank that the
contractual relationship at issue was as the Bank alleged and,
therefore, had not been breached.
8
inappropriate. Therefore, we affirm the district court’s ruling
denying Michael’s motion for summary judgment.
III
A.
We review a district court’s decision to admit or exclude
evidence for abuse of discretion. General Elec. Co. v. Joiner, 522
U.S. 136, 141-43, 118 S. Ct. 512, 517, 139 L. Ed. 2d 508, 516-17
(1997); Bristol Steel & Iron Works v. Bethlehem Steel Corp., 41
F.3d 182, 188 (4th Cir. 1994).
B.
The district court excluded the videotaped trial deposition of
Edward George, II (“George”), the former President and Chairman of
the Board of Wesbanco. Michael argues this was error. The
district court’s reasoning for disallowing Mr. George’s testimony
was that he had no personal knowledge of the events at issue. The
Bank argues that George’s testimony, while having some utility by
describing common banking procedures and practices, was cumulative
and of marginal probative value. Banking practices could have been
easily established by other witnesses in the case. Michael argues
in response that George was competent to testify as a lay witness
as to banking procedures and the irregularity of the Bank’s
9
treatment of Michael’s loan proceeds, both of which were relevant
to the matter in dispute.
Allowing George’s testimony as to banking procedures would
have been simply cumulative. George was not designated as an
expert witness and could not express his opinion that the
transaction was non-standard. There were a number of banking
professionals who had been called as witnesses and who actually had
personal knowledge of the transaction. They would have been able
to offer precisely the evidence for which Michael claims George was
necessary. George’s testimony adds nothing to the jury’s knowledge
of the case, while potentially distracting from or confusing the
issues for the jury. The district court was well within the bounds
of its discretion in excluding the testimony.
IV
For the foregoing reasons, we affirm the district court on
both issues.
AFFIRMED
10