BUCHWALD v. CITIBANK, N.A.

Filing 17

MEMORANDUM AND OPINION re: Plaintiff's 11 MOTION to Alter Judgment as to 10 Order, MOTION for Leave to File First Amended Complaint. Signed by Judge Robert L. Wilkins on 9/17/2013. (tcb)

SUMMARY MEMORANDUM OPINION; NOT INTENDED
FOR PUBLICATION IN THE OFFICIAL REPORTERS
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JOEL BUCHWALD, in his capacity as the
Executor of the Estate of ARTHUR
BUCHWALD,
Plaintiff,
Civil Action No. 13-cv-210 (RLW)
v.
CITIBANK, N.A.,
Defendant.
MEMORANDUM OPINION 1
I.

INTRODUCTION
Previously, this Court granted Defendant Citibank, N.A.’s (Citibank) motion to dismiss

against Plaintiff Joel Buchwald (Buchwald), in his capacity as executor of the estate of his late
father, the writer Art Buchwald. Buchwald now moves this Court to amend the judgment and
for leave to file an amended complaint, which adds an additional count and supplements the
facts. (See generally Dkt. No. 11). Because this Court made no error in its previous decision,
the motion to amend will be denied, and accordingly, Buchwald’s motion for leave to file an
amended complaint is denied as well.

1

This unpublished memorandum opinion is intended solely to inform the parties and any
reviewing court of the basis for the instant ruling, or alternatively, to assist in any potential
future analysis of the res judicata, law of the case, or preclusive effect of the ruling. The Court
has designated this opinion as “not intended for publication,” but this Court cannot prevent or
prohibit the publication of this opinion in the various and sundry electronic and legal databases
(as it is a public document), and this Court cannot prevent or prohibit the citation of this
opinion by counsel. See FED. R. APP. P. 32.1. Nonetheless, as stated in the operational
handbook adopted by our Court of Appeals, “counsel are reminded that the Court’s decision to
issue an unpublished disposition means that the Court sees no precedential value in that
disposition.” D.C. Circuit Handbook of Practice and Internal Procedures 43 (2011) (citation
omitted).
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II.

FACTUAL SUMMARY
A.

Background

In the 1980s, Art Buchwald retained Kenneth Starr (Starr) and his firms Starr and
Company, LLC (Starrco) and/or Starr Investment Advisors, LLC (SIA), to provide financial
services. (Dkt. No. 1-4, ¶ 4). 2 Art Buchwald owned a residence in Martha’s Vineyard. (Id. ¶
10). In late 2006, his health was in serious decline; he would die on January 17, 2007. (Id. ¶¶
3, 11). “By November 1, 2006 . . . Starr and his employees, Arlene Graff and Patricia Dorn
had obtained the approval of Citibank to open a HELOC [home equity line of credit] on the
Martha’s Vineyard Property.

[Art] Buchwald was not aware of, and certainly had not

approved, of the application for the HELOC.” (Id. ¶ 13). The HELOC states it “will be
governed by the law of the state where the Property is located,” i.e., Massachusetts. (Dkt. No.
6-2, at 8 (§ 23)).
Around November 29, 2006, Graff and Dorn prepared a “Massachusetts General
Durable Power of Attorney” that “purports to effect the appointment by [Art] Buchwald of
Dorn as his attorney-in-fact.” (Dkt. No. 1-4, ¶ 14). Among other things, the Power of
Attorney states that it was executed in Massachusetts, that it “will be governed by the laws of
the Commonwealth of Massachusetts without regard for conflicts of law principles,” and that
Art Buchwald “agree[s] to indemnify [any] third party for any claims that arise against the
third party because of reliance on this power of attorney.” (Dkt. No. 6-1, at 6). However, Art
Buchwald did not execute the Power of Attorney, and it has an invalid date. (See Dkt. No. 1-4,
¶¶ 15, 21). The Power of Attorney “was, in effect, an attempt to retroactively authorize the
creation of an account that was originated without any authority.” (Id. ¶ 23). Citibank
2

For the purposes of this Memorandum Opinion, the facts as alleged by Buchwald are
assumed to be true.
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advanced $100,000 to Dorn between December 11, 2006 and January 19, 2007; neither Art
Buchwald, nor his estate, ever received any of the money. (Id. ¶¶ 24, 28). Citibank states that
the Power of Attorney “was publically recorded with the mortgage supporting the HELOC . . .
on January 18, 2007.” (Dkt. No. 6, at 5).
After Art Buchwald’s death in 2007, the Probate Division of the Superior Court of the
District of Columbia appointed Starr executor of his estate. (Dkt. No. 1-4, ¶ 29). Around June
2010, the United States charged Starr in an Indictment with fraud, wire fraud, and money
laundering. See United States v. Starr, No. 10-cr-520 (SAS), Dkt. No. 71 (S.D.N.Y. 2011).
Shortly thereafter, Art Buchwald’s son, Plaintiff Joel Buchwald, successfully petitioned the
Probate Division to succeed Starr as executor, and assumed that role on January 7, 2011. (See
Dkt. No. 1-4, ¶ 31).
B.

Procedural History

Joel Buchwald learned of “the scheme perpetrated by Starr and his associates to extract
funds by means of the fraudulent HELOC,” (id. ¶ 32), and filed a Complaint in D.C. Superior
Court on January 7, 2013. The Complaint alleges one Count of negligence against Citibank “in
approving the loan application effected in Buchwald’s name by persons affiliated with Starr,
Starrco and/or SIA.” (Id. ¶ 34). Because the parties are diverse and the amount in controversy
exceeds $75,000, Citibank properly removed to this Court on February 18, 2013, (Dkt. No. 1),
and then moved to dismiss pursuant to FED. R. CIV. P. 12(b)(6) the following week, (Dkt. No.
6). In his Opposition, Buchwald “request[ed] that he be afforded leave to file an amended
complaint in the event that the pending motion is granted in whole or in part.” (Dkt. No. 7, at
12) (citation omitted). He did not file an associated motion to amend, nor did he include a
proposed pleading as required by the Local Rules. See LCvR 7(i).

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This Court held a hearing on Citibank’s motion to dismiss on April 29, 2013, and
granted the motion from the bench. The Court found that Buchwald’s claim rested upon a
theory of negligence that had never been extended to a third party not implicated in the
wrongdoing. At the conclusion of the hearing, counsel for Citibank asked whether the ruling
was a dismissal without leave to amend, and the Court answered in the affirmative.
Buchwald has now filed a motion to amend the judgment and for leave to file an
amended complaint. He claims two errors: one, “in declining to allow Plaintiff the benefit of
tolling during the pendency of Starr’s executorship,” and two, in dismissing the case with
prejudice rather than without, thus disallowing Buchwald to file an amended complaint. (See
Dkt. No. 11-2, at 3). Attached to Buchwald’s motion is a proposed First Amended Complaint
(FAC), which includes two counts; in addition to the negligence count, there is an additional
count for a “Declaration that the HELOC is Null and Void.” (Dkt. No. 11-1, at 9-10). The
FAC adds two points to the “substantive allegations” section. One, Starr and his employees
“conducted all of their banking business with Citibank and had established a relationship with
Citibank.” Likewise, “[Art] Buchwald also had a prior banking relationship with Citibank,
which held exemplars of his signature.” (Id. ¶¶ 14-15). Two, after Citibank rejected a $50,000
check for an irregular signature, the bank “was thereafter on notice that those persons
purporting to act on [Art] Buchwald’s behalf were willing to prepare and present forged and
irregular documents. This awareness should have prompted Citibank to investigate further,
and to demand direct verification from [Art] Buchwald that Ms. Dorn was acting with proper
authority, particularly in light of Citibank’s familiarity with both [Art] Buchwald and Starr.”
(Id. ¶ 29).

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III.

LEGAL STANDARDS
A.

Standard For Altering Or Amending A Judgment

A motion to alter or amend a judgment is brought pursuant to FED. R. CIV. P. 59(e).
Motions to alter or amend under Rule 59(e) are disfavored, “and relief from judgment is
granted only when the moving party establishes extraordinary circumstances.” Niedermeier v.
Office of Max S. Baucus, 153 F. Supp. 2d 23, 28 (D.D.C. 2001) (citing Anyanwutaku v. Moore,
151 F.3d 1053, 1057-58 (D.C. Cir. 1998)). There are three reasons why a Rule 59 motion may
have merit. Such a motion may be granted if (1) there is an “intervening change of law;” (2)
the movant presents “new evidence that was not previously available;” or (3) the movant
“establish[es] an error of law or fact in the court’s original opinion.” See Messina v. Krakower,
439 F.3d 755, 758 (D.C. Cir. 2006) (citation omitted). A Rule 59 motion is not a means by
which to “reargue facts and theories upon which a court has already ruled.” New York v.
United States, 880 F. Supp. 37, 38 (D.D.C. 1995).
B.

Rule 15 Standard

FED. R. CIV. P. 15(a)(1) provides that a party “may amend its pleading once as a matter
of course within” a limited amount of time; otherwise, pursuant to FED. R. CIV. P. 15(a)(2), “a
party may amend its pleading only with the opposing party’s written consent or the court’s
leave. The court should freely give leave when justice so requires.” However, a court should
deny a motion to amend a complaint “if the proposed claim would not survive a motion to
dismiss.” Hettinga v. United States, 677 F.3d 471, 480 (D.C. Cir. 2012) (per curiam). In
addition, if “parties to the action can show that prejudice will result by allowing the
amendment or that the proposed amendment is totally frivolous, leave to amend will be

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denied.” 6 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL
PRACTICE AND PROCEDURE § 1473 (3d ed. 2010) (WRIGHT, MILLER & KANE).
IV.

ANALYSIS
A.

This Court Did Not Commit Error In Determining That The Statute Of
Limitations Should Not Have Been Tolled

Buchwald cannot demonstrate any of the three elements of a successful Rule 59
motion. There has been no change in the law, and Buchwald concedes this. Meanwhile there
are two problems with Buchwald’s effort to supplement his complaint with new information.
The first problem is that the allegedly key piece of new information is not new. Buchwald
claims to have “supplemented the factual allegations pertinent to the applicable tolling
doctrine,” pointing the Court to information in the FAC at paragraphs 14 and 29. (See Dkt. No.
11-2, at 11). The “new” information at paragraph 29 of the FAC, that Starr’s staff presented a
forged check to Citibank, appeared in the original complaint. (Compare Dkt. No. 11-1, ¶ 29
with Dkt. No. 1-4, ¶ 25). And while Buchwald refers to “new” information in paragraph 14 of
the FAC, that Starr had an established relationship with Citibank, the FAC adds that “[Art]
Buchwald also had a prior banking relationship with Citibank . . . .” (Dkt. No. 11-1, ¶ 15).
The FAC seems to be implying that because Citibank had a relationship with Starr that they
valued more than their relationship with Buchwald, the bank was willing to overlook
fraudulent behavior. This suggestion does not rise above mere speculation. See Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (holding that factual allegations must “raise a
right to relief above the speculative level”). The second problem is that the purportedly new
information was previously available, and Buchwald presents no reason as to why this
information could not have been included in the original complaint. See Krakower, 439 F.3d at

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759. Buchwald must demonstrate that this Court erred with respect to the law or the facts, but
he fails to do so here.
Buchwald claims that this Court was “incorrect” in finding that one of the tolling
doctrines alleged to be at issue here “applies only against parties that actively participated in
the concealment,” because “courts have applied this tolling doctrine not only as to intentional
wrongdoers who actively prevented the principal from pursuing its claim, but also to claims
against other persons.” (Dkt. No. 11-2, at 5). For support, he cites two cases discussed by the
parties in the motion to dismiss briefing, Demoulas v. Demoulas Super Markets, Inc., 424
Mass. 501 (1997), and Bremer v. Williams, 210 Mass. 256 (1911). Neither case supports
Buchwald’s claim of error. In Demoulas, the statute of limitations was not tolled against a
third party not implicated in the wrongdoing. Instead, the court tolled the statute of limitations
“[b]ased on the fiduciary relationship that existed between key defendants as corporate
directors and the plaintiff as a shareholder . . . .” 424 Mass. at 522. The court also found “[a]
further basis . . . for tolling the limitations period”: “The directors all either benefitted from, or
acquiesced in, the activities that are the basis of the plaintiff’s claims on behalf of the
corporations, and the limitations period therefore had not run on these claims before the
commencement of the action.” Id. at 523 (footnote omitted). In neither situation did the court
rest its decision on a third party’s relatedness to the bad deeds at issue.
Bremer is of no help to Buchwald either. In that case, a trustee of two wills embezzled
money from one estate to pay taxes due for the other. Later, when it was discovered that
money was missing, the trustees under the will that had the money stolen sought to recover
their money from the trustee who stole it. As in Demoulas, this is not a case about the statute
of limitations with respect to a third party. Perhaps Bremer would support the proposition that

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the statute of limitations would be tolled for Buchwald to bring a claim against Starr, but the
case does not support the proposition that he may similarly get the benefit of tolling in a claim
against Citibank. Thus, this Court did not commit any error in its determination on this point.
Buchwald also claims that “under the analogous adverse domination doctrine, this
Court itself has on at least two occasions held that it is applicable to claims against persons
other than the person(s) who adversely dominated the business entity in question.” (Dkt. No.
11-2, at 5). For support, he again cites two cases previously discussed by the parties in the
motion to dismiss briefing, BCCI Holdings (Luxembourg), S.A. v. Clifford, 964 F. Supp. 468
(D.D.C. 1997), and Resolution Trust Corp. v. Gardner, 798 F. Supp. 790 (D.D.C. 1992). But
again, these cases do not support an argument of error because they do not deal with negligent
third parties not implicated in the wrongdoing.
In Clifford, defendants Clark Clifford and Robert Altman were “allegedly corrupt
senior managers and officers of BCCI.” 964 F. Supp. at 472-73. The court denied a motion to
dismiss with respect to the issue of statute of limitations in part because plaintiffs had alleged
that BCCI “was adversely dominated by corrupt prior senior managers and directors, who, in
conjunction with Defendants Clifford and Altman engaged in the harmful acts.” See id. at 479.
The issue of whether the statute of limitations should be tolled for someone who did not
adversely dominate the business entity in question—but “who engage[d] in actionable conduct
. . . concealed through the adverse domination”—is discussed in footnote nine. There, the
court did find that for another defendant, Baldwin Tuttle, who was neither an officer nor
director of BCCI, that the adverse domination theory did toll the statute of limitations. Id. at
481 n.9. Among other acts, Tuttle “assisted in the preparation and submission of multiple false
and misleading documents in order to conceal the scheme concocted by BCCI’s corrupt senior

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managers.” Id. at 480 n.8. Tuttle’s acts can hardly be compared to those of Citibank in this
case. Citibank relied on a notarized document, and did not prepare or submit anything false or
misleading in an effort to conceal a scheme. Buchwald even acknowledges that the Power of
Attorney at issue and the mortgage supporting the HELOC were publically filed in 2007. (See
Dkt. No. 7, at 9; see also Dkt. No. 6, at 5).
The other case cited by Buchwald with respect to the adverse domination doctrine is
cited in footnote nine of Clifford: Resolution Trust Corp. v. Gardner. But like Clifford,
Gardner stands for the unremarkable proposition, endorsed by this Court at oral argument on
the motion to dismiss, that actors other than officers or directors can toll the statute of
limitations. See 798 F. Supp. at 795. But the reason that Buchwald’s motion does not reveal
any legal error is that Gardner does not stand for the proposition that a third party not
implicated in the wrongdoing can toll the statute of limitations. The court in Gardner noted,
among other key facts, that the defendant “was in a fiduciary relationship with the corporation,
which further decreased the likelihood of [the corporation] bringing suit against him.” Id. at
796. Moreover, the cases cited for support in Gardner, which refer to actors other than officers
and directors, all deal with actors involved with the wrongdoing at issue. See, e.g., Mosesian v.
Peat, Marwick, Mitchell & Co., 727 F.2d 873 (9th Cir. 1984) (dealing with an accountant who
allegedly issued false and misleading reports relied upon by stockholders to purchase stock);
Bornstein v. Poulos, 793 F.2d 444 (1st Cir. 1986) (dealing with an attorney who violated
fiduciary duties to the corporation at issue); In re Am. Cont’l Corp./Lincoln Sav. and Loan Sec.
Litig., 794 F. Supp. 1424 (D. Ariz. 1992) (dealing with a law firm for which there were
material questions as to whether they knowingly assisted in fraud).

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distinguishable from the present case, where Citibank was presented with a notarized document
and acted in reasonable reliance on it.
While Buchwald’s plight remains regrettable, he has pointed to no error in this Court’s
previous determination that tolling the statute of limitations for a negligence claim against
Citibank would not be appropriate.
B.

This Court Properly Dismissed Buchwald’s Complaint With Prejudice

Buchwald argues that this Court committed error in granting Citibank’s motion to
dismiss with prejudice. But this argument runs afoul of D.C. Circuit precedent. A Rule
12(b)(6) dismissal “is a resolution on the merits and is ordinarily prejudicial.” Okusami v.
Psychiatric Institute of Washington, Inc., 959 F.2d 1062, 1066 (D.C. Cir. 1992). The D.C.
Circuit’s recent majority and concurring opinions in Rollins v. Wackenhut Servs., Inc., 703
F.3d 122 (D.C. Cir. 2012), are particularly instructive. Notably Judge Kavanaugh stated:
“Rule 12(b)(6) dismissals are typically with prejudice and do not require particular justification
by the district court.” 703 F.3d at 132 (Kavanaugh, J., concurring). See also id. at 133 (“[A]
Rule 12(b)(6) dismissal ordinarily operates as a dismissal with prejudice, unless the district
court in its discretion states otherwise.”).
This Court provided adequate reasoning as to why Buchwald’s original Complaint was
denied, and why it was denied with prejudice. Although Buchwald now seeks leave to amend
his complaint under FED. R. CIV. P. 15, “once a final judgment has been entered, a court cannot
permit an amendment unless the plaintiff ‘first satisf[ies] Rule 59(e)’s more stringent standard’
for setting aside that judgment.” Ciralsky v. CIA, 355 F.3d 661, 673 (D.C. Cir. 2004) (quoting
Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996)). Had Buchwald included his
declaratory judgment count in the original Complaint, the statute of limitations analysis may

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have addressed that claim differently. But he did not. “Since th[is] court declined to set aside
the judgment under Rule 59(e), it properly conclude[s] that [Buchwald]’s motion to amend
under Rule 15(a) [i]s moot.” See id.
Generally, when a complaint “contain[s] only one claim, the right to amend once as a
matter of course prior to a responsive pleading would be terminated by a judgment of
dismissal. Thereafter, efforts to amend a complaint presumably must first be directed to
reopening the judgment under Rule[ ] 59 . . . .” Cassell v. Michaux, 240 F.2d 406, 407-08
(D.C. Cir. 1956) (citation omitted).

“[A] judgment generally will be set aside only to

accommodate some new matter that could not have been asserted during the trial, which means
that relief will not be available in many instances in which leave to amend would be granted in
the prejudgment situation.” WRIGHT, MILLER & KANE § 1489; accord Proskauer Rose, LLP v.
Blix Street Records, Inc., 384 F. App’x 622, 625 (9th Cir. 2010) (denying motion for leave to
add breach of contract claim after entry of judgment); HDC, LLC v. City of Ann Arbor, 675
F.3d 608, 615 (6th Cir. 2012) (“When a party seeks to amend a complaint after an adverse
judgment, it . . . must shoulder a heavier burden.

Instead of meeting only the modest

requirements of Rule 15, the claimant must meet the requirements for reopening a case
established by Rules 59 or 60.”) (citation omitted). Because Buchwald does not satisfy the
Rule 59 standard, his Rule 15 motion will be denied. Cf. United States ex rel. Roop v.
Hypoguard USA, Inc., 559 F.3d 818, 825 (8th Cir. 2009) (“[A] post-judgment motion for leave
to assert an entirely new claim is untimely.”).
At oral argument, counsel for Buchwald pointed out that in the Opposition to the
Motion to Dismiss, he asked for leave to amend his complaint “in the event that the pending
motion is granted in whole or in part.” (Dkt. No. 7, at 12) (citation omitted). This request is

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plainly insufficient under both the Local Rules and settled precedent in this Circuit. “[A] bare
request in an opposition to a motion to dismiss [for leave to amend]—without any indication of
the particular grounds on which amendment is sought—does not constitute a motion within the
contemplation of Rule 15(a).” Belizan v. Hershon, 434 F.3d 579, 582 (D.C. Cir. 2006)
(citation omitted).

See also LCvR 7(i) (noting a motion for leave to amend “shall be

accompanied by an original of the proposed pleading as amended,” which Buchwald did not
provide in his Opposition). Thus, a single sentence in Buchwald’s Opposition referencing
leave to amend, offering no explanation as to why leave to amend should be granted, combined
with his failure to include a proposed amended complaint despite understanding the grounds
raised for dismissal in Citibank’s motion to dismiss, reveals that this Court did not err in
granting Citibank’s motion to dismiss with prejudice.
C.

Buchwald’s Proposed Count For A Declaration Would Be Futile

At the July 29, 2013 hearing on Buchwald’s motion to amend and for leave to file an
amended complaint, this Court asked for additional briefing regarding whether an amendment
that would only leave a count for a declaratory judgment would be futile because under
Massachusetts law, the Declaratory Judgment Act does not serve as an independent source of
standing. See, e.g., Ten Persons of the Commonwealth v. Fellsway Dev. LLC, 951 N.E.2d 648
(Mass. 2011).
Nothing in the parties’ briefs indicates that Buchwald could maintain this case
following the dismissal of his negligence claim, leaving only a count for a declaration. Chapter
231A is the section of the Massachusetts General Laws titled “Procedure for Declaratory
Judgments.” According to Ten Persons, “[i]t is settled that G.L. c. 231A does not provide an
independent statutory basis for standing.” 951 N.E.2d at 660 (citations omitted). Because this

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Court did not err regarding the dismissal of the negligence claim, a complaint only for a
declaration would be futile, because Buchwald would lack standing. While in his supplemental
memorandum Buchwald states that “federal district courts have authority to issue declaratory
judgments,” (Dkt. No. 15, at 2), this power is not without limit.

Similar to the law in

Massachusetts, the federal Declaratory Judgment Act “is not an independent source of federal
subject matter jurisdiction.” Seized Property Recovery Corp. v. U.S. Customs and Border
Protection, 502 F. Supp. 2d 50, 64 (D.D.C. 2007) (quoting GNB Battery Technologies, Inc. v.
Gould, Inc., 65 F.3d 615, 619 (7th Cir. 1995)). Without an actual case or controversy, this
Court cannot render a declaratory judgment under the federal Declaratory Judgment Act, or its
Massachusetts analogue. See C&E Water Services, Inc. of Washington v. District of Columbia
Water and Sewer Authority, 310 F.3d 197, 201 (D.C. Cir. 2002).

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V.

CONCLUSION
This is a frustrating case. Art Buchwald put his trust in Starr, and Starr and his team

allegedly violated that trust and stole money from him.

But that does not mean that

Buchwald’s ability to seek redress for that wrong is limitless. Citibank relied on a notarized
HELOC, and there is nothing in the record to indicate that the bank participated with Starr or
his related entities in the scheme to defraud Art Buchwald. This Court properly ruled that the
negligence count should be dismissed, and Buchwald’s motion to amend raises no new law or
facts that change that determination. Therefore the motion to amend is DENIED. For that
reason, and independently for the reason that a standalone declaratory judgment count would
be futile, Buchwald’s Rule 15 motion for leave to amend is DENIED as well.

Digitally signed by Judge Robert L.
Wilkins
DN: cn=Judge Robert L. Wilkins,
o=U.S. District Court, ou=Chambers
of Honorable Robert L. Wilkins,
email=[e-mail], c=US
Date: 2013.09.17 10:29:01 -04'00'

Date: September 17, 2013

ROBERT L. WILKINS
United States District Judge

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