Deborah Trudel v. SunTrust Bank

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 23, 2019 Decided May 28, 2019
No. 18-7068
DEBORAH A. TRUDEL, ET AL.,
APPELLANTS
v.
SUNTRUST BANK, ALSO KNOWN AS SUNTRUST BANKS, INC., ET
AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:15-cv-01966)
George A. Lambert argued the cause and filed the briefs
for appellants.
Bradford S. Bernstein argued the cause and filed the brief
for appellees.
Before: ROGERS, MILLETT, and KATSAS, Circuit Judges.
Opinion for the Court filed by Circuit Judge KATSAS.
2
KATSAS, Circuit Judge: In this diversity action, we
consider accounting and fraudulent-concealment claims arising
from the loss of funds deposited into a Florida bank account
more than two decades ago.
I
Yevgenyi Scherban, a Ukrainian national, opened a
savings account at a Boca Raton branch of defendant SunTrust
Bank in the mid-1990s. Scherban deposited over a million
dollars into the account and designated his wife and son as its
beneficiaries. The money disappeared under mysterious
circumstances, sometime between the deaths of Scherban and
his wife in November 1996 and SunTrust’s closure of the
account in January 2003.
Plaintiffs Deborah Trudel, who represents the decedents’
estates, and Ruslan Scherban, Yevgenyi’s son, accuse
SunTrust of stealing the money or allowing others to do so.
SunTrust maintains that the deposits were likely withdrawn by
Yevgenyi’s former assistant, through no fault of the bank.
SunTrust discarded the account records in 2010, which the
bank says was consistent with its record-retention policies.
Plaintiffs filed suit against SunTrust in November 2015.
Their second amended complaint asserted twelve claims. The
district court dismissed ten of them for untimeliness or failure
to state a claim, but it allowed claims for an accounting and for
fraudulent concealment to proceed to discovery. Trudel v.
SunTrust Bank, 223 F. Supp. 3d 71 (D.D.C. 2016) (Trudel I).
Later, the court granted SunTrust’s motion for summary
judgment, Trudel v. SunTrust Bank, 288 F. Supp. 3d 239, 246–
53 (D.D.C. 2018) (Trudel II), and it denied a series of motions
for additional discovery, reconsideration, and leave to amend,
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id. at 253–56; Trudel v. SunTrust Bank, 325 F.R.D. 23 (D.D.C.
2018) (Trudel III).
II
Summary judgment is appropriate if there is no “genuine
dispute as to any material fact.” Fed. R. Civ. P. 56(a). A
dispute is material if its resolution “might affect the outcome
of the suit” and genuine if “a reasonable jury could return a
verdict for the nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). We review a summary
judgment de novo, and, like the district court, we draw all
reasonable inferences in favor of the nonmoving party. Feld v.
Fireman’s Fund Ins. Co., 909 F.3d 1186, 1193 (D.C. Cir.
2018). The parties agree that Florida law governs this case.
A
Plaintiffs appeal the summary judgment on their claim for
an equitable accounting of the disputed funds. “To obtain an
accounting under Florida law … a party must show either (1) a
sufficiently complicated transaction and an inadequate remedy
at law or (2) the existence of a fiduciary relationship.” Zaki
Kulaibee Establishment v. McFliker, 771 F.3d 1301, 1311 &
n.22 (11th Cir. 2014). The district court held that there was
insufficient evidence to create a genuine dispute on these
elements. Trudel II, 288 F. Supp. 3d at 246–49. We agree.
In Florida, “[a] bank and its customers generally deal at
arm’s-length as creditor and debtor, and a fiduciary
relationship is not presumed.” Bldg. Educ. Corp. v. Ocean
Bank, 982 So. 2d 37, 40–41 (Fla. 3d DCA 2008). To prove
such a relationship, the plaintiff must show “special
circumstances” establishing both “some degree of dependency
on one side and some degree of undertaking on the other side
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to advise, counsel, and protect the weaker party.” Watkins v.
NCNB Nat’l Bank of Fla., N.A., 622 So. 2d 1063, 1065 (Fla. 3d
DCA 1993) (quotation marks omitted); see Taylor Woodrow
Homes Fla., Inc. v. 4/46-A Corp., 850 So. 2d 536, 541–42 (Fla.
5th DCA 2003); Susan Fixel, Inc. v. Rosenthal & Rosenthal,
Inc., 842 So. 2d 204, 208 (Fla. 3d DCA 2003).
Plaintiffs failed to create a genuine dispute about whether
this case presents such special circumstances. They note that
Scherban and his family spoke little or no English. But even if
that were enough to create a genuine dispute regarding
dependency, plaintiffs have produced no evidence tending to
show that SunTrust undertook to advise, counsel, and protect
Scherban or his family.
On appeal, plaintiffs further argue that the disputed
transactions were complex enough to warrant an accounting
even without a fiduciary relationship. Because plaintiffs failed
to raise this argument below, they have forfeited it. See
Chichakli v. Tillerson, 882 F.3d 229, 234 (D.C. Cir. 2018).
B
Plaintiffs also appeal the summary judgment on their
fraudulent-concealment claim. In their second amended
complaint, plaintiffs alleged that SunTrust, during this
litigation, concealed relationships with contractors who might
have records regarding the disputed funds. The district court
declined to dismiss this claim as untimely. Trudel I, 223 F.
Supp. 3d at 83. But after discovery against the contractors
failed to yield any relevant records, the court granted summary
judgment to SunTrust on the ground that plaintiffs could not
establish the essential element of detrimental reliance. Trudel
II, 288 F. Supp. 3d at 251–53. Plaintiffs do not contest this
aspect of the district court’s decision.
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Instead, plaintiffs advance a different concealment
theory—that SunTrust, in the early 2000s, hid Scherban’s
unclaimed account in violation of Florida’s escheat laws.
Plaintiffs never pleaded this theory, but first raised it in
opposing SunTrust’s motion for summary judgment. The
district court rejected the theory as forfeited. Trudel II, 288 F.
Supp. 3d at 249–50. Although embedded in its summary-
judgment decision, this preservation ruling is subject to review
only for abuse of discretion. See Wannall v. Honeywell, Inc.,
775 F.3d 425, 428 (D.C. Cir. 2014).
The district court did not abuse its discretion. As that court
explained, the theory that plaintiffs sought to pursue
(concealment of an unclaimed account in the early 2000s)
reflected a “fundamental change” from the theory that they
pleaded (concealment of contractor relationships during
litigation, almost 15 years later). Trudel II, 288 F. Supp. 3d at
249–50 (quotation marks omitted). Moreover, plaintiffs did
not raise their new concealment theory until summary-
judgment briefing—after the close of an eight-month, twice-
extended discovery period. See id. at 250, 253–54.
In the alternative, the district court held that Florida’s
twelve-year statute of repose for fraud claims barred plaintiffs
from pursuing their new theory of concealment. The court
raised this point sua sponte, Trudel II, 288 F. Supp. 3d at 250,
based on Florida caselaw describing statutes of repose as
“jurisdictional” bars to adjudication. See, e.g., Barnett Bank of
Palm Beach Cty. v. Estate of Read, 493 So. 2d 447, 448 (Fla.
1986) (per curiam); Lutheran Bhd. Legal Reserve Fraternal
Benefit Soc’y v. Estate of Petz, 744 So. 2d 596, 598 (Fla. 2d
DCA 1999). More recently, however, the Florida Supreme
Court has described the fraud statute of repose as an affirmative
defense that the “defendant has the burden to prove.” Hess v.
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Philip Morris USA, Inc., 175 So. 3d 687, 695 (Fla. 2015).
Because we affirm on the ground that plaintiffs failed to
preserve their new theory of concealment, we need not assess
whether the district court permissibly raised what now seems
to be a non-jurisdictional repose defense or, if so, whether the
court correctly held that the defense applies in this case.
Finally, plaintiffs argue that SunTrust discarded account
records in violation of its internal policies. But plaintiffs never
explain how any such lapse could give rise to a claim for
fraudulent concealment.
III
We review for abuse of discretion the district court’s
rulings on discovery, reconsideration, and leave to amend. Xia
v. Tillerson, 865 F.3d 643, 649 (D.C. Cir. 2017); Capitol
Sprinkler Inspection, Inc. v. Guest Servs., Inc., 630 F.3d 217,
225 (D.C. Cir. 2011); Messina v. Krakower, 439 F.3d 755, 762
(D.C. Cir. 2006). We find no abuse of discretion here.
To begin, the district court permissibly denied plaintiffs’
motions to compel further discovery and to defer ruling on
summary judgment in the meantime. Plaintiffs argued that a
SunTrust company witness had been unprepared to answer
deposition questions about the bank’s record-retention
practices and that SunTrust had provided incomplete
documents regarding those practices. As a result, plaintiffs say,
they were denied a fair opportunity to take discovery on
whether SunTrust might still be able to recover information
about Scherban’s account. But as the district court explained,
the proposed additional discovery would not have cured the
fatal flaws that the court identified in the accounting claim
(absence of any fiduciary relationship) and the preserved
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concealment claim (absence of any contractor records). Trudel
II, 288 F. Supp. 3d at 253–56.
The district court also permissibly denied plaintiffs’
motion to reconsider summary judgment on the concealment
claim. Under Federal Rule of Civil Procedure 59(e), a motion
to reconsider “is discretionary and need not be granted unless
the district court finds that there is an intervening change of
controlling law, the availability of new evidence, or the need to
correct a clear error or prevent manifest injustice.” Firestone
v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996) (per curiam)
(quotation marks omitted). Here, plaintiffs’ new evidence
consists of allegedly false statements made by SunTrust to the
Scherban family or its agents between 2003 and 2013. As the
district court explained, it was “not justifiable that counsel
failed to unearth (or at least plead) these additional allegations
during three years of litigation.” Trudel III, 325 F.R.D. at 27.
Plaintiffs further contend that the district court clearly erred in
considering the repose issue sua sponte. We need not decide
that question because, as discussed above, we affirm the
dismissal of the concealment claim on other grounds. Plaintiffs
allege manifest injustice because the district court ruled on
summary judgment before holding a status conference that it
previously had scheduled. But as the court explained, that
conference addressed an unrelated issue about service on
another defendant who had not appeared in the case and is not
present in this appeal. Id. at 26.
Finally, the district court permissibly declined to allow
plaintiffs to file a third amended complaint to expand the
concealment claim beyond the alleged litigation misconduct in
2015 and 2016. Plaintiffs surfaced the amendment issue in
their brief opposing SunTrust’s motion for summary judgment,
which purported to reserve a right to amend. Trudel II, 288 F.
Supp. 3d at 256. The district court correctly concluded that any
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attempt at amendment was ineffective because “a request for
leave to amend must be submitted in the form of a written
motion, and … must state with particularity the grounds for
seeking the order and state the relief sought.” Benoit v. USDA,
608 F.3d 17, 21 (D.C. Cir. 2010) (cleaned up). Plaintiffs then
resurfaced the amendment issue in their motion for
reconsideration. But “once a final judgment has been entered,
a court cannot permit an amendment unless the plaintiff ‘first
satisfies Rule 59(e)’s more stringent standard’” for
reconsideration. Ciralsky v. CIA, 355 F.3d 661, 673 (D.C. Cir.
2004) (alteration adopted) (quoting Firestone, 76 F.3d at
1208). The district court thus properly denied leave to amend
after finding reconsideration unwarranted. See Trudel III, 325
F.R.D. at 27.
Plaintiffs contend that the governing amendment standard
is the more liberal one set forth in Federal Rule of Civil
Procedure 15(a), which provides that a court “should freely
give leave when justice so requires.” Plaintiffs invoke Foman
v. Davis, 371 U.S. 178 (1962), which applied Rule 15(a) to a
request for leave to amend filed post-judgment. Id. at 182. But
Foman did not directly address how Rule 59(e) interacts with
Rule 15(a), Firestone resolved that precise question, and the
latter is now binding circuit precedent. LaShawn A. v. Barry,
87 F.3d 1389, 1395 (D.C. Cir. 1996) (en banc). In any event,
after holding that plaintiffs had to satisfy the Rule 59(e)
standard, the district court further held, in the alternative, that
they failed to satisfy even the Rule 15(a) standard. See Trudel
III, 325 F.R.D. at 27–28. That conclusion was amply justified,
because “undue delay” is a valid ground for denying leave to
amend under Rule 15(a). See, e.g., Foman, 371 U.S. at 182;
Elkins v. District of Columbia, 690 F.3d 554, 565 (D.C. Cir.
2012). Here, as the district court explained, plaintiffs offered
no good reason for failing to expand their concealment claim
until after the close of discovery and entry of final judgment.
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Moreover, we agree with the district court that “allowing them
to go back to the drawing board now—after protracted
discovery and a decision on summary judgment—would be
highly prejudicial to the Bank.” Trudel III, 325 F.R.D. at 28.
IV
For these reasons, we affirm the district court’s summary
judgment.
So ordered.