DEVORAH v. ROYAL BANK OF CANADA et al

Filing 42

ORDER: it is hereby ORDERED that 23 Defendants Joint Motion to Dismiss is GRANTED. It is further ORDERED that 25 Plaintiffs Motion to deny respondents joint motion to dismiss; 26 Plaintiffs Motion to Amend Respondent Scott A. Sangerman Tr Trus t; 30 Plaintiffs Motion to amend respondent Scott A. Sangerman TR Trust; 35 Plaintiffs Motion for Sanctions; and 40 Defendants Motion to Strike are DENIED as Moot. And it is further ORDERED that this case is DISMISSED. Signed by Judge Christopher R. Cooper on 7/16/2015. (lccrc1, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CARRIE DEVORAH,
Plaintiff,
v.

Case No. 15-cv-00032 (CRC)

ROYAL BANK OF CANADA, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pro se plaintiff Carrie Devorah has brought suit against her former investment advisor and
associated defendants alleging various misdeeds related to her investment accounts. The defendants
have moved to dismiss Devorah’s complaint, contending that the Court lacks personal jurisdiction
over several of them, that Devorah waived her claims by entering into a settlement agreement in a
prior arbitration, and that her claims are otherwise meritless. The Court agrees with the defendants
and will dismiss Devorah’s complaint.
I.

Background

Carrie Devorah held investment accounts with RBC Wealth Management—a subsidiary of
the Royal Bank of Canada—from 2002 to 2009. Compl. at 8. Devorah’s relationship with RBC
and her financial consultant, Scott Sangerman, soured after the value of her investment accounts
plummeted during the 2008 financial crisis. Mot. to Dismiss Ex. A. In 2010 she initiated, through
counsel, an arbitration with the Financial Industries Regulatory Authority (“FINRA”), alleging that
Sangerman had refused to execute sell orders that she had placed at various times in the latter half
of 2008. Id. That same year, Devorah settled her claims in an agreement that released Sangerman,
RBC, and its affiliates and employees from all claims “known and unknown” related to her
accounts. Id. Ex. B.

After entering into the settlement agreement, Devorah contacted RBC through one of its inhouse lawyers, Carolyn Guy, to request records related to her former accounts, which Guy provided
via an encrypted CD in January 2012. Compl. Ex. 5. According to Devorah, the approximately
800 records she received revealed improper and criminal acts by the defendants. Compl. ¶ 41.
While the exact improprieties are unclear, Devorah generally alleges that: (1) Sangerman continued
to serve as her investment advisor after she moved to the District of Columbia from London in
2003, although he was not licensed as a broker in D.C.; (2) the defendants initiated a FINRA
arbitration matter a few months before she filed her FINRA complaint in an effort to control the
course of the litigation; (3) the defendants defamed her by sending “humiliating” emails and
providing her with false information; (4) her accounts were “falsified” because RBC mistakenly
used an incorrect social security number when establishing them in 2002; (5) the defendants failed
to provide her with requested records or respond to questions; and (6) a former RBC IT employee,
Bryan Gasche, “digitally trespassed” in her account information because his name is listed as the
author of PDFs contained in the CD she received. Compl. ¶¶ 9–10, 13–14, 18–24, 34.
Devorah’s most extensive allegations surround an account statement that appears to have
been erroneously included in the collection of records provided by Mr. Guy. Devorah’s financial
statements for the latter half of 2007, which were included in the CD, list an individual retirement
account in her name with an account number ending in 0636, naming Sangerman as her financial
advisor and reflecting a balance of approximately $260,000. Compl. Ex. 21. Along with a
statement for each month for that account, all reflecting identical information, is a single additional
statement for October 2007 listing a newly-created IRA with an account number ending in 0635,
managed by another advisor, Jason Wise, containing no information related to Devorah and
reflecting a balance of approximately $430,000. Id. Devorah does not claim that she herself
created a new account or deposited this substantial sum to her accounts with RBC at that time. She
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also does not claim that anyone at RBC transferred this money out of any of Devorah’s other
investment accounts. Rather, she alleges that the defendants “brought $430,730 into [Devorah’s]
‘new account’” and then failed to alert her to the existence of this money, thereby stealing it from
her. Compl. ¶ 48.
Devorah filed suit in this Court against RBC Wealth Management, its parent companies,
Sangerman, Wise, Guy, and various other RBC employees. Her claims include respondeat superior
liability, breach of fiduciary duty, conspiracy, identity theft and invasion of privacy, spoliation,
defamation, breach of contract, and fraud. She demands damages in excess of $36,000,000. The
defendants have moved to dismiss Devorah’s complaint, contending that the Court lacks personal
jurisdiction over several of the defendants; that Devorah has waived her right to bring these claims
by entering into the settlement agreement in her 2010 FINRA arbitration; and that her claims are
otherwise meritless. The Court will address each contention in turn.
II.

Standard of Review

When the Court’s subject-matter jurisdiction is challenged, 1 “the plaintiff bear[s] the burden
of proving by a preponderance of the evidence that the Court has subject matter jurisdiction.” Biton
v. Palestinian Interim Self–Gov’t Auth., 310 F. Supp. 2d 172, 176 (D.D.C. 2004). The court
construes the allegations contained in the complaint in the plaintiff's favor. Jerome Stevens
Pharms., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005). When assessing subject-matter

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Although the defendants have styled their motion to dismiss as one for failure to state a claim, a
valid settlement agreement in fact removes the Court’s jurisdiction to hear a plaintiff’s complaint.
E.g., Allen v. Nicholson, 573 F. Supp. 2d 35, 38 (D.D.C. 2008) (citing Aulenback, Inc. v. Federal
Highway Admin., 103 F.3d 156, 161 (D.C. Cir. 1997)). The Court will therefore consider the
defendant’s arguments regarding the settlement agreement as a motion to dismiss for lack of subject
matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1).

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jurisdiction, unlike a motion to dismiss for failure to state a claim, a court may consider material
outside of the complaint, Herbert v. Nat’l Acad. of Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992),
but factual discrepancies are resolved in favor of the plaintiff. Crane v. N.Y. Zoological Soc’y, 894
F.2d 454, 456 (D.C. Cir. 1990). To survive a motion to dismiss for lack of personal jurisdiction, the
plaintiff may not rely on conclusory allegations, but instead must make a showing of the facts
necessary to connect each defendant to the forum. First Chicago Int’l v. United Exch. Co., 836 F.2d
1375, 1378 (D.C. Cir. 1988).
A complaint challenged by a motion to dismiss for failure to state a claim “must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). The court must accept all non-conclusory allegations of fact contained in a complaint
and draw all reasonable inferences in favor of the plaintiff. Id. at 678–79. A pleading must provide
factual content that “allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Id. In ruling upon a motion to dismiss
for failure to state a claim, a court ordinarily may consider only “the facts alleged in the complaint,
documents attached as exhibits or incorporated by reference in the complaint, and matters about
which the Court may take judicial notice.” Gustave–Schmidt v. Chao, 226 F. Supp. 2d 191, 196
(D.D.C. 2002) (citing EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir.
1997)).

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III.

Analysis
A.

Personal Jurisdiction over Defendants Jason Wise, Carolyn Guy, and John
Pokladowski

Despite Devorah’s voluminous complaint—which spans 80 pages and includes over 300
pages of exhibits—she fails to allege any specific activity by three defendants—Jason Wise,
Carolyn Guy, and John Pokladowski—taking place in the District of Columbia. Each of these
defendants, moreover, has filed an affidavit declaring that he or she neither resides in nor transacts
business in the District of Columbia. Mot. to Dismiss. Exs. D, E, F. Devorah has not contested
these representations but instead contends that Wise, Guy, and Pokladowski are subject to the
Court’s jurisdiction because they participated in the alleged conspiracy to defraud her. But to
establish personal jurisdiction over a defendant based on their participation in a conspiracy, a
plaintiff must allege “‘specific acts connecting [the] defendant with the forum.’” Second
Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001) (alterations
in original) (quoting First Chicago, 836 F.2d at 1378). Devorah’s generalized assertion of a
conspiracy cannot cure her failure to allege facts demonstrating the Court’s jurisdiction over these
defendants. Accordingly, the Court will dismiss the complaint as to defendants Wise, Guy, and
Pakladowski.
B.

Prior Settlement and Release of Claims

Devorah resolved her prior FINRA arbitration proceeding by signing a settlement agreement
in which she agreed to waive any and all claims, whether known or unknown, related to her
investment accounts with RBC wealth management. Mot. to Dismiss Ex B. Absent a showing of
fraud or duress, this agreement binds Devorah and precludes her from bringing these claims against
any party identified in the waiver provision of the settlement agreement. See, e.g., Schmidt v. Shah,
696 F. Supp. 2d 44, 62 (D.D.C. 2010) (“[a] party to a voluntary settlement agreement may waive

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his or her rights to litigate claims in court”); Johnson v. Penn Camera Exchange, 583 F. Supp. 2d
81, 86 (D.D.C. 2008) (“Absent a showing of fraud or duress, parties are bound by the agreements
that they sign, without regard to whether they regret their decisions after the fact.”). According to
Devorah, documents she discovered in the CD provided by Guy establish that the defendants
procured the settlement agreement by fraud. The documents that Devorah has provided to the
Court, however, do not demonstrate fraud. An affirmative and material misrepresentation during
contract negotiations may render a contract voidable, but a failure to disclose information only
constitutes a misrepresentation in certain limited circumstances not applicable here. See
Restatement (Second) of Contracts §§ 159, 162, 162 (1981) (a failure to disclose constitutes a
misrepresentation only when it is necessary to correct an earlier incorrect statement, corrects a basic
misunderstanding by the other party regarding the contents of the agreement, or is required based
on a position of trust between the parties). Devorah’s allegations of fraud amount to an assertion
that the defendants, when negotiating the settlement agreement, failed to inform her of the full
scope of claims she would be waiving. This does not amount to a misrepresentation making the
settlement agreement voidable by Devorah because she acknowledged in the settlement agreement
that she was giving up all claims “known and unknown” regarding her accounts. In doing so, she
took on the risk that new information might come to light that would increase the value of those
claims, and nothing required the defendants, who were adverse to Devorah at the time of the
settlement negotiations, to disclose information that allegedly would have harmed their interests.
Moreover, after review of Devorah’s allegations and evidence, and drawing all reasonable

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inferences in her favor, the Court concludes that she has provided no evidence that would have
materially altered the scope of her claims in arbitration. 2
IV.

Conclusion

For the foregoing reasons, it is hereby
ORDERED that [ECF No. 23] Defendants’ Joint Motion to Dismiss is GRANTED. It is
further
ORDERED that [ECF No. 25] Plaintiff’s Motion to deny respondents joint motion to
dismiss; [ECF No. 26] Plaintiff’s Motion to Amend Respondent Scott A. Sangerman Tr Trust;
[ECF No. 30] Plaintiff’s Motion to amend respondent Scott A. Sangerman TR Trust; [ECF No. 35]
Plaintiff’s Motion for Sanctions; and [ECF No. 40] Defendants’ Motion to Strike are DENIED as
Moot. And it is further
ORDERED that this case is DISMISSED.
This is a final, appealable order.
SO ORDERED.

CHRISTOPHER R. COOPER
United States District Judge
Date:

July 16, 2015

2

Certain defendants—namely Royal Bank of Canada, RBC Private Counsel (USA) Inc., David
McKay, and the Sangerman Trust—are not specifically covered by the release of claims. The
complaint, however, fails to assert any specific allegations of wrongdoing by any of these
defendants. In fact, it does not mention them at all except by naming them as defendants.
Accordingly, her claims against these defendants will be dismissed for failure to state a claim.
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