Levinson et al v. PSCC Svc Inc et al

Filing 495

ORDER granting 460 Motion for Reconsideration. See attached Order.. Signed by Judge Vanessa L. Bryant on 3/28/2013. (Fernandez, Melissa)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
STEPHEN R. LEVINSON; RICHARD E.
LAYTON; and DR. R. LAYTON P.A. 401(K)
PLAN
PLAINTIFF,

v.
WESTPORT NATIONAL BANK;
TD BANKNORTH NA;
And ROBERT L. SILVERMAN,
DEFENDANTS.

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: CIVIL ACTION NO. 3:09cv269(VLB)
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: MARCH 28, 2013
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ORDER GRANTING DEFENDANT’S [DKT. #460] MOTION FOR
RECONSIDERATION
Defendant Westport National Bank (“WNB”) moves for reconsideration of
the Court’s September 28, 2012 order granting summary judgment in favor of
Plaintiffs on their unjust enrichment and money had and received claims. [Dkt.
#372, Summary Judgment Order]. “The standard for granting such a motion is
strict, and reconsideration will generally be denied unless the moving party can
point to controlling decisions or data that the court overlooked–matters, in other
words, that might reasonably be expected to alter the conclusion reached by the
court.” Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir.1995). “There are
three grounds that justify granting a motion for reconsideration: (1) an
intervening change in controlling law; (2) the availability of newly discovered
evidence; and (3) the need to correct clear error or prevent manifest injustice.”
Pellechia v. OneWest Bank, FSB, No.3:11-cv-1587(JCH), 2013 WL 1131609, at *2
(D. Conn. Mar. 18 2013) (citing Virgin Atl. Airways, Ltd. v. Nat'l. Mediation Bd., 956
F.2d 1245, 1255 (2d Cir.1992)). “That the court overlooked controlling law or

material facts may also entitle a party to succeed on a motion to reconsider.” Id.
(citing Eisemann v. Greene, 204 F.3d 393, 395 n. 2 (2d Cir.2000) (per curiam) (“To
be entitled to reargument, a party must demonstrate that the Court overlooked
controlling decisions or factual matters that were put before it on the underlying
motion.”) (internal quotation marks omitted)). WNB argues that reconsideration
is warranted on the Court’s decision with respect to the Plaintiffs’ unjust
enrichment and money had and received claims because the Court both
overlooked material factual matters and controlling case law, which preclude
recovery under equitable theories where a remedy is available pursuant to
contract. The Court agrees that reconsideration is warranted because certain
factual matters were overlooked with respect to the nature of WNB’s
acknowledgment that the omnibus account at BLMIS held zero assets in
conjunction with case law that directs that equitable remedies are unavailable
where a plaintiff can be fully compensated under contract.
The Court’s prior decision with respect to the Plaintiffs’ unjust enrichment
and money had and received claims was largely predicated on WNB’s
acknowledgement that the omnibus account at BLMIS in WNB’s name actually
held no assets and had never held any assets. See [Dkt. #372, Summary
Judgment Order, p. 52-53]. Based on this fact, the Court reasoned that WNB was
unjustly enriched because under the Custodian Agreement it would have been
entitled to no fees if the average value of the assets in the account was zero.
However upon reconsideration, the Court finds that it overlooked the facts that
WNB’s acknowledgement in its Local Rule 56(a)(1) statement that there was never

any assets in the BLMIS account when it took over as custodian was predicated
on Madoff’s testimony before the Southern District of New York in his criminal
prosecution and the testimony of the named Plaintiffs based on their
understanding of Madoff’s actions after his scheme had come to light. See [Dkt.
#358, Sealed Exs. N, B and D]. Further, the Court overlooked the fact that WNB
had also submitted evidence that neither it nor the Plaintiffs had any knowledge
that Madoff had stolen their assets. [Dkt. #358, Sealed Ex. D at 14-17]; [Dkt. #367.
Murphy Aff. ¶¶5, 13]. This evidence taken together demonstrates that WNB
received fees calculated on the basis of the values reported in statements that
were fraudulently produced by BLMIS which WNB did not know were false at the
time it was collecting those fees and did not know that in fact the account value
was zero.
Further, this Court held on summary judgment that there are triable issues
of fact as to the nature and scope of the Bank’s contractual duty to conduct
audits and whether that duty required it to assure the accuracy of the Plaintiffs’
account statements, on which it calculated its fees, by auditing its own
operations or whether it also required it to assure the accuracy of the BLMIS
account statements by auditing BLMIS. In view of the fact that WNB’s
acknowledgment that the BLMIS account never held any assets was based on its
own as well as the Plaintiffs’ hindsight and the fact that there are triable issues
with respect to BLMIS’s duty or obligation to audit, there are likewise triable
issues as to whether it is contrary to equity and good conscience to allow WNB to
retain the fees it was paid. In view of these facts, the Court finds that there are

genuine factual disputes about whether WNB was unjustly enriched when it
received fees based on the fictitious values of the assets in the BLMIS account,
which warrant reconsideration.
This conclusion is bolstered by precedent, which holds that “[u]njust
enrichment applies whenever justice requires compensation to be given for ...
services rendered under a contract, and no remedy is available by an action on
the contract,” Paulsen v. Kronberg, 66 Conn. App. 876, 879 (2001) (internal
quotation marks and citaiton omitted), and therefore an “action for unjust
enrichment cannot lie in the fact of an express contract.” Russell v. Russell, 91
Conn.App. 619, 638, cert. denied, 276 Conn. 924, 925, 888 A.2d 92 (2005) (internal
quotation marks and citation omitted). Further, "when an express contract does
not fully address a subject, a court of equity may impose a remedy to further the
ends of justice." Town of New Hartford v. Conn. Res. Recovery Auth., 291 Conn.
433, 454 (2009) (internal quotation marks and citation omitted); see also Rent-APC, Inc. v. Rental Management, Inc., 96 Conn. App. 600, 606 (2006) ("the existence
of a contract, in itself, does not preclude equitable relief which is not inconsistent
with the contract”) (emphasis in original). If the Plaintiffs are able to establish
that WNB had the contractual duty to audit BLMIS’s operations and not simply its
own operations, the Plaintiffs’ recovery based on that breach may compensate
them for the harm caused by the fact that WNB collected fees based on false
values, which is the basis of their unjust enrichment and money had and received
claims. It is also possible that such recovery may not fully remedy that purported
harm. In that event, the Plaintiffs may have recourse to a claim for unjust

enrichment as such equitable relief may not be inconsistent with the contract and
necessary to further the ends of justice. In view of this case law, the Plaintiffs’
entitlement to claim unjust enrichment is contingent on their ability to recover
and the extent of that recovery on their breach of contract claims at trial and
therefore summary judgment was inappropriately granted. The Court thus having
reconsidered it prior determination concludes that there are triable issues of fact
with respect to Plaintiffs’ unjust enrichment and money had and received claims,
which preclude the Court from granting summary judgment in either parties’
favor. Accordingly, the prior judgment on these claims is vacated and these
claims therefore remain extant for trial.
IT IS SO ORDERED.
_______/s/_ ________
Hon. Vanessa L. Bryant
United States District Judge

Dated at Hartford, Connecticut: March 28, 2013