Trudel v. SunTrust Bank

924 F.3d 1281

Deborah A. TRUDEL, et al., Appellants

v.SUNTRUST BANK, also known as SunTrust Banks, Inc., et al., Appellees

No. 18-7068

United States Court of Appeals, District of Columbia Circuit.

Argued January 23, 2019

Decided May 28, 2019

George A. Lambert, Washington, DC, argued the cause and filed the briefs for appellants.

Bradford S. Bernstein, Rockville, MD, argued the cause and filed the brief for appellees.

Before: Rogers, Millett, and Katsas, Circuit Judges.

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 SunTrust maintains that the deposits were likely withdrawn by Yevgenyi's former assistant, through no fault of the bank.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, 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, 106 S.Ct. 2505, 91 L.Ed.2d 202 (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 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.

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.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 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...