ESTATE OF YEVGENYI SCHERBAN et al v. SUNTRUST BANK et al

Filing 25

Memorandum Opinion re 24 Order on Motion to Dismiss Complaint. Signed by Judge James E. Boasberg on 02/26/2016. (lcjeb2)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

ESTATE OF SCHERBAN, et al.,
Plaintiffs,
v.

Civil Action No. 15-1966 (JEB)

SUNTRUST BANK, aka SUNTRUST
BANKS INC., et al.,
Defendants.

MEMORANDUM OPINION
Plaintiffs and half-brothers Evgenyi, Ruslan, and Yevgen Scherban, all Ukrainian
nationals, bring this action for recovery of any and all assets in the SunTrust Bank accounts of
their deceased father, Yevgenyi Alexandrovich Scherban (Scherban), and his third wife and
mother to Yevgen, Nadedja Nikitina Scherban (Nikitina). Scherban was allegedly a leading
entrepreneur in Ukraine and one of the richest businessmen there in the early 1990s; according to
Plaintiffs, his control over a natural-gas distribution network led to scuffles with criminal groups
and ultimately to the 1996 assassination of him and his wife.
A few years before Scherban’s death, he set up several bank accounts with SunTrust in
Boca Raton, Florida, near one of his vacation homes. These accounts were in Scherban and
Nikitina’s names, but Plaintiffs state that the sons were the intended beneficiaries. Although
their parents died about 20 years ago, the brothers have yet to obtain the assets. The quest of
their suit – against SunTrust and a holding company in the British Virgin Islands – is to recover
what remains of these accounts, as well as to remedy what they allege was an improper

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conversion or confiscation of funds out of one of the accounts by means of the forgery of
Nikitina’s signature.
While there is much more to the story and this suit, an initial barrier blocks their claims:
Yevgenyi and Nikitina’s estates are listed as plaintiffs along with the three half-brothers. As to
the estates, SunTrust correctly points out that an estate itself cannot properly be a plaintiff; only a
legal representative acting on behalf of the estate has that power. As to the brothers, the Bank
questions whether they have established their legal right to act as representatives for the estates.
Defendant also asserts that Plaintiffs have failed to serve it properly with the Complaint. While
these procedural requirements are not insurmountable, the Court agrees that they temporarily
stop Plaintiffs in their tracks. The Court will thus grant the Motion and dismiss the Complaint
with leave to amend.
I.

Analysis
At this point, the other named Defendant – Gwynfe Holding Ltd. – has yet to be served,

so SunTrust has moved by itself to dismiss. Although the Bank raises various substantive
defenses to Plaintiffs’ claims, the Court will separately consider the two aforementioned
procedural challenges first.
A. Proper Plaintiffs
SunTrust initially asserts that Scherban and Nikitina’s estates have been improperly
included as Plaintiffs in this action. It argues that “[t]he Complaint fails to identify any
representative of the Estates much less allege that any person with authority to act on behalf of
the Estates has in fact authorized the bringing of the suit.” Mot. at 8. Defendant maintains that
only a duly appointed representative of the estates may bring claims on their behalf. Id. It is true
that under Fed. R. Civ. P. 17(a), an estate may not be a real party in interest; instead, only the

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executor or administrator of an estate may sue on its behalf. Rule 17 further states that for an
individual acting as a representative, his capacity to sue or be sued is determined “by the law of
the state where the court is located.” Fed. R. Civ. P. 17(b)(3). In the District of Columbia, “[a]
foreign personal representative administering an estate which has property located in the District
of Columbia shall file with the Register a copy of the appointment as personal representative and
a[n authenticated] copy of the decedent’s will.” D.C. Code § 20-341. “The term personal
representative is strictly construed under D.C. law to mean only the decedent’s executor or
administrator.” Estate of Manook v. Research Triangle Inst., Int’l & Unity Res. Group, L.L.C.,
693 F. Supp. 2d 4, 17 (D.D.C. 2010); see also Saunders v. Air Florida, Inc., 558 F. Supp. 1233,
1234 (D.D.C. 1983).
Plaintiffs counter that this requirement applies only “if the claimed property is within the
District,” which is “not the case here, [since] the claim is not for property in this District.” Opp.
at 9. Although they do not spell this out, Plaintiffs presumably think the property is in Florida –
where the accounts were first opened – and/or wherever the converted funds ended up. In taking
such a position, Plaintiffs want to have their cake and eat it too. They claim that venue is proper
in D.C. because “SunTrust does business in this District, and because all relevant documents,
necessary for tracing the funds, and other relevant information, may be obtained in Washington,
D.C.” Compl., ¶ 16. Yet they seek to avoid D.C. registration rules by claiming the property is
not in the District. At a most basic level, since SunTrust is a national bank operating with
branches in both Florida and D.C., Scherban’s assets in the Bank’s accounts could be thought to
be property located in either place, since SunTrust would ultimately have to surrender funds
from some branch were Plaintiffs successful. In another sense, Plaintiffs cannot even be certain

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of the location of the converted funds, which they allege the Bank initially wired to a bank in the
Czech Republic. See Compl., ¶¶ 48-50.
As Plaintiffs desire SunTrust to grant them recovery of their deceased parents’ accounts
and to compensate them for the wrongful conversion and confiscation of assets, see Compl. at
28-29, the Court believes the question more properly turns on whether the present action can be
considered a form of property. District of Columbia law suggests that it can be. In Estate of
Manook, the plaintiff – an Iraqi citizen’s estate – brought claims under D.C.’s wrongful-death
and survival statutes for his killing by several American defense contractors operating in Iraq.
See 693 F. Supp. 2d at 9-10, 16. Defendants argued, as SunTrust does here, that the estate was
not a proper plaintiff under the requirements of Rule 17 and D.C. law, and no personal
representative of the estate had filed the requisite paperwork establishing their legitimacy. Id.
The plaintiff countered that since it “ha[d] no property within the District, the Estate need not file
with the Register.” Id. at 17. The district court rejected that argument, instead concluding that
since “Plaintiff’s present action can be considered a form of property” under D.C. law, the failure
to file proof of appointment of personal representative with the Register “prevents the Estate
from bringing suit.” Id. (citing Bullard v. Curry-Cloonan, 367 A.2d 127, 132 (D.C. 1976)). The
court determined, however, that “this procedural oversight is curable,” and it directed the
plaintiff to file its documents with the Register within several weeks of the issuance of the
Court’s order. Id. A similar course of action is appropriate here.
This outcome seems particularly prudent since the brothers have not provided proper
assurances to this Court that they are, in fact, legally able to bring claims on behalf of Scherban
and Nikitina’s estates. Plaintiffs concede that while they were the intended beneficiaries, their
names do not so appear on any of the accounts. See Compl., ¶¶ 34-42. Although they assert that

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the affidavits of the brothers “state under oath that they are duly authorized to make a claim to
the estate,” Opp. at 9, this is contradicted by the affidavits themselves, which include no such
statements. See id., Attach. 1 (Affidavit of Ruslan Chtcherban); id., Attach. 2 (Affidavit of
Yevgenyi E. Scherban); id., Attach. 3 (Affidavit of Yevgen E. Scherban). Further complicating
matters is the existence of a so-called “Personal Representative’s Deed” of Scherban, which was
attached to SunTrust’s Reply. See Reply, Exh. 2. This document appears to name an Alan
Lindsay “as Personal Representative of the Estate of” Scherban. Id. at 1. It also appears to have
enabled Lindsay to sell real estate owned by Scherban in 2001 and to transfer proceeds from the
sale to the decedent’s SunTrust bank account. Id. at 5.
Given the Court’s uncertainty as to who the estates’ legal personal representatives
actually are – including what role, if any, Lindsay has – it will not proceed without Plaintiffs’
first filing documents manifesting the appropriate appointment of a personal representative as
well as authenticated copies of decedents’ wills. See D.C. Code § 20-341. As this is a
procedural hurdle potentially within Plaintiffs’ ability to overcome, the Court will dismiss the
Complaint with leave to amend so that they may remove the estates as parties and establish
which named Plaintiffs are the proper representatives.
B. Service of Process
Defendant also alleges a second procedural defect that may halt this case, arguing that
under Fed. R. Civ. P. 12(b)(5) service of process was insufficient. See Mot. at 6-7. In such a
circumstance, “[t]he party on whose behalf service is made has the burden of establishing its
validity when challenged” by “demonstrat[ing] that the procedure employed satisfied the
requirements of the relevant portions of Rule 4 and any other applicable provision of law.” Light
v. Wolf, 816 F.2d 746, 751 (D.C. Cir. 1987) (citations and internal quotation marks omitted).

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Adequate service of process requires “more than notice to the defendant,” Omni Capital Int’l,
Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987), and Plaintiffs bear the burden of
proving that Defendant was properly served. See Fed. R. Civ. P. 4(c)(1); Light, 816 F.2d at 751.
As SunTrust is a corporation, Plaintiffs must conform to Fed. R. Civ. P. 4(h). See Wilson
v. Prudential Fin., 332 F. Supp. 2d 83, 87-88 (D.D.C. 2004). Rule 4(h)(1) authorizes service on
a corporation “by delivering a copy of the summons and of the complaint to an officer, a
managing or general agent, or any other agent authorized by appointment or by law to receive
service of process . . . .” The rule also allows service in accordance with the law of the state
where process is served or the state where the subject district court is located. Id.; Fed. R. Civ.
P. 4(e)(1). The District’s rule, a mirror image of Rule 4(h), also authorizes service on
corporations to be made “to an officer, a managing or general agent, or any other agent
authorized by appointment or by law to receive service of process . . . .” D.C. Super. Ct. R. Civ.
P. 4.
The Bank contends that Plaintiffs improperly served Wendy Turner, who is a branch
manager for SunTrust, and therefore not an officer, managing or general agent, or an agent
authorized by appointment or law. See Mot. at 7. Turner, moreover, declares by affidavit that
she is the branch manager of a local SunTrust branch in D.C. and is neither the resident agent for
the Bank here nor authorized to accept service of a complaint against it. See Mot., Exh. 1
(Affidavit of Wendy Turner). Instead, “[u]pon information and belief,” SunTrust claims that the
registered agent for the Bank in D.C. is Corporation Service Company, located at 1090 Vermont
Ave., Washington, D.C., 20005. See Mot. at 7.
Plaintiffs counter that this cannot be true, as SunTrust is not even incorporated in the
District, having let its incorporation lapse in 1990 and dissolving it shortly thereafter. See Opp.

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at 2. Plaintiffs put forward evidence that the Bank’s charter has been revoked, see Aff. of
George Lambert, Exh. 2 (District of Columbia Corporations Search), meaning that SunTrust
cannot have a registered agent in the District. See Opp. at 2. Attesting to the propriety of
serving Turner, Plaintiffs attached to their Opposition an exhibit showing that Plaintiff’s counsel
George Lambert had communicated with Samuel Fuller, Senior Bank Examiner for the District
of Columbia, who had responded that “[f]or a national bank, a branch manager should accept
service on behalf of the bank.” Lambert Aff., Exh. 1 (Email Correspondence with Samuel
Fuller) at 3. This suggests that Wendy Turner – the branch manager for one of the D.C. branches
of SunTrust – should have accepted service of Plaintiffs’ Complaint. Fuller, it should be noted,
also furnished Lambert with contact information for the “bank representative[] that will accept
service of process on behalf of the bank.” Id. This appears to be Dan O’Neill, President, Greater
Washington and Maryland Division, Sun Trust Bank, 1445 New York Ave., NW, Washington,
D.C. 20005. Id.
No case precedent in this District appears to settle the question as to whether a bank
branch manager who is not designated as a registered agent can nonetheless accept service of
process for the purposes of compliance with Rule 4(h). “The general rule with regard to a
domestic corporation is that the person upon which a summons and a complaint are served must
have some measure of discretion in operating some phase of the defendant’s business or in the
management of a given office.” Baade v. Price, 175 F.R.D. 403, 405 (D.D.C. 1997). As to the
question of which employees may be considered to have “some measure of discretion in
operating” a defendant’s business for the purpose of Rule 4(h), courts in this District have
approached this question by analyzing the employee in question’s functions, responsibilities, and
position of authority. See, e.g., Lopes v. JetsetDC, LLC, 994 F. Supp. 2d 135, 144 (D.D.C.

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2014); Estate of Klieman v. Palestinian Auth., 547 F. Supp. 2d 8, 13 (D.D.C. 2008), vacated on
reconsideration on other grounds, 82 F. Supp. 3d 237 (D.D.C. 2015); Flynn v. Pulaski Const.
Co., Inc., No. 02-2336, 2006 WL 47304, at *4-5 (D.D.C. Jan. 6, 2006).
The parties dispute whether or not Turner satisfies Rule 4(h)’s standards, each putting
forward plausible arguments. See Mot. at 6-7; Opp. at 5-8. Instead of attempting to resolve the
dispute, however, the Court believes the wiser course is for Plaintiffs to simply re-serve
Defendant. This makes sense here, where the Court is requiring amendment of the Complaint
for improper Plaintiffs. The Court trusts that, to save all parties time and expense at this point,
SunTrust’s counsel will simply agree to accept service of the Amended Complaint.
Although the Court has the authority to dismiss an action outright on the basis of
insufficient service of process, “the court can, in its sound discretion, ‘direct that service be
effected within a specified time,’” quashing the defective service without dismissing the case.
Wilson, 332 F. Supp. 2d at 89 (quoting Fed. R. Civ. P. 4(m)). Choosing to quash service in lieu
of dismissing the case is appropriate where “dismissing the plaintiff’s case . . . would potentially
subvert justice and unfairly prejudice the plaintiff, . . . [and the defendant would] not be
prejudiced by affording the plaintiff the opportunity to comply with Rule 4.” Candido v. District
of Columbia, 242 F.R.D. 151, 164 (D.D.C. 2007); see generally Angelich v. MedTrust, LLC,
910 F. Supp. 2d 128, 132-33 (D.D.C. 2012).
II.

Conclusion
The Court, accordingly, will issue a contemporaneous Order dismissing the Complaint

without prejudice with leave to amend by March 31, 2016, but not dismissing the action. Cf.
Ciralsky v. CIA, 355 F.3d 661, 665, 667 (D.C. Cir. 2004).

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/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: February 26, 2016

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