Lesti et al v. Wells Fargo Bank NA

Filing 317

OPINION AND ORDER granting 230 Defendant's Motion for Summary Judgment. Judgment is entered in favor of Defendant as to Counts VI, VII, and IX of the 24 Amended Complaint, and Plaintiff shall take nothing. The Clerk shall withhold the entr y of judgment pending the outcome of 219 Plaintiff's Second Amended Motion for Class Certification. Within 14 days, the parties shall submit supplemental memoranda addressing the impact of this Opinion and Order on Plaintiff's Second Amended Motion for Class Certification. See Opinion and Order for details. Signed by Judge John E. Steele on 1/13/2015. (MAW)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
PETRA RICHTER, individually
and on behalf of all others
similarly situated,
Plaintiff,
v.

Case No: 2:11-cv-695-FtM-29DNF

WELLS FARGO BANK NA,
Defendant.

OPINION AND ORDER
This matter comes before the Court on Defendant’s Motion for
Summary Judgment (Doc. #230) filed on April 25, 2014.

Plaintiff

filed a Response (Doc. #252) on May 9, 2014, to which Defendant
filed a Reply (Doc. #286) on August 11, 2014.

For the reasons set

forth below, Defendant’s motion is granted.
I.
This case concerns Plaintiff’s allegations that SunTrust Bank
(SunTrust) and Wells Fargo Bank, N.A. (Wells Fargo) assisted Ulrich
Engler

(Engler)

and

Angelika

Neumeier-Fuchs

commission of their Ponzi scheme.

(Fuchs)

in

the

When originally filed, the

Amended Complaint alleged ten causes of action against Wells Fargo
and SunTrust. (Doc. #24.)

Subsequently, all causes of action

against SunTrust (Counts I-V) were dismissed as time-barred (Doc.

#72); two causes of action against Wells Fargo (Counts VIII and X)
were dismissed as insufficiently pled (Doc. #72) and were not
further amended; and Plaintiff Franz Lesti’s claims were dismissed
with prejudice (Doc. #206). Thus, at this juncture all that remain
are Plaintiff Petra Richter’s (Plaintiff or Richter) causes of
action against Wells Fargo for aiding and abetting conversion
(Count VI), aiding and abetting fraud (Count VII), and unjust
enrichment (Count IX).
Briefly

stated,

Richter

alleges

that

Engler,

a

German

citizen, owned and purported to operate Private Commercial Office,
Inc.

(PCO),

business.

a

highly

Engler

profitable

solicited

day

trading

investments

from

and

investment

individuals

and

entities primarily located in Europe, and guaranteed annualized
returns of between 48% and 72%.

The investments were documented

by Promissory Notes and Loan Agreements between Engler and PCO as
borrowers and the investors as lenders.

Rather than investing the

proceeds, Engler and Fuchs operated a classic Ponzi scheme which
stole millions of dollars from investors. 1
The Court has previously found that Richter was on notice of
the alleged Ponzi scheme as of November 22, 2006, when the Austrian

1

Engler is currently serving a prison sentence for his role in
the Ponzi scheme. Fuchs has been indicted but, as of the filing
of Wells Fargo’s motion, has not been convicted.

2

Market Financial Authority issued a public warning about Engler
and his business practices. (Doc. #72, pp. 17-18.) Richter stated
in interrogatories that she became aware of the alleged scheme in
early 2007. (Doc. #78-5, p. 29.) Nonetheless, on August 10, 2007,
Richter invested $6,500 with PCO, executing a Promissory Note and
Loan Agreement, and wiring $6,500 to a Wells Fargo bank account of
PCO Client Management, Inc. (PCOM).

In return for her $6,500

investment, Richter was promised a return of $391,574.57 after
seven years and one day.

(Doc. #230, p. 8; Doc. #252, p. 6.)

PCOM maintained two Wells Fargo bank accounts (the PCOM
Accounts).

An account number ending “7271” (the 7271 Account) was

opened on June 27, 2007, in the name of PCOM.
10.)

(Doc. #230-1, ¶¶ 4-

Neither Engler nor PCO were signatories on the 7271 Account,

and no wire transfers were ever processed into or out of this
account.

(Id.)

The last transfer of proceeds into or out of this

account occurred on October 23, 2007, and there was no activity in
the account after that date.

(Id.)

Wells Fargo formally closed

the 7271 Account on October 23, 2007, and Wells Fargo did not
receive any proceeds from the Ponzi scheme into the 7271 Account
after that date.

(Id.)

A second Wells Fargo account, ending in “5057” (the 5057
Account), was opened on May 29, 2007 in the name of PCOM.
¶¶ 11-24.)

(Id. at

Neither Engler nor PCO were signatories on the 5057

3

Account.

(Id.)

Plaintiff’s $6,500 was wire transferred into this

account.

(Doc. #252, p. 6.)

The last wire transfer processed on

this account by PCOM occurred on October 23, 2007.
¶¶ 11-24.)

(Doc. #230-1,

On November 13, 2007, Wells Fargo placed a “debit

restraint” on the 5057 Account, which prevented any proceeds from
being withdrawn from the 5057 Account.

(Id.)

The last transfer

of any proceeds into or out of the 5057 Account occurred on
November 16, 2007, when a previously initiated wire transfer was
returned.

(Id.)

As of December 1, 2007, the 5057 Account had a

negative balance of $8,471.85.

(Id.)

Wells Fargo never collected

any portion of the negative balance, which was ultimately chargedoff on December 31, 2007.

(Id.)

Following the charge-off, Wells

Fargo formally closed the 5057 Account on January 2, 2008.

(Id.)

In addition to the PCOM Accounts, Wells Fargo also maintained
personal accounts (the Personal Accounts) for Fuchs.
1.)

(Doc. #286-

In September 2007, Fuchs transferred approximately $1 million

from the PCOM Accounts to the Personal Accounts.

(Docs. ##252-

20, 252-21.)
From December 15, 2007 onward, the maximum amount in the
Personal Accounts was $614,226.00. (Docs. ##286-1, 252-25.) Prior
to their closure, Fuchs removed all but $639.48 from the Personal
Accounts. (Doc. #252-25.)

Specifically, on January 7, 2008 Wells

Fargo processed a $100,000 check drawn on the Personal Accounts

4

and made payable to Fuchs.

(Doc. #252-23.)

the Personal Accounts on May 23, 2008.

Wells Fargo closed

(Doc. #286-1.)

II.
Wells Fargo now moves for summary judgment, arguing that (1)
Richter’s claims are time-barred; (2) Richter’s investment was a
usurious loan for which she is not entitled to recover; and (3)
Richter cannot prevail on her fraud claim because she cannot
establish reliance on any representation by Engler/PCO.

Richter

takes a contrary position on each issue, asserting that there are
at least issues of disputed material facts which preclude summary
judgment.

The Court applies the same summary judgment legal

standards as set forth in its previous Opinion and Order (Doc.
#116, pp. 2-3.)
As determined in the Court’s prior Opinion and Orders: (1)
Florida law provides the appropriate statute of limitations; (2)
the parties agree that all of Richter’s current remaining claims
are governed by a four-year statute of limitations; (3) the statute
of limitations begins to run when the cause of action accrues,
which is generally on the date the last element constituting the
cause of action occurs; (4) the delayed discovery doctrine does
not impact the accrual of the statute of limitations in this case;
and (5) the statute of limitations “cutoff” date is December 15,
2007 (the Limitations Cutoff), i.e., four years before the original

5

Complaint was filed on December 15, 2011.

(Docs. ##72, 116.)

The

Court will apply the statute of limitations to each cause of action
separately.
A.

Aiding and Abetting Conversion (Count VI)
Count VI of the Amended Complaint alleges that Wells Fargo

aided and abetted Engler and Fuchs in their unlawful conversion of
her investor funds.

It is alleged that Wells Fargo had actual

knowledge of the fraudulent use of the PCOM accounts no later than
June 8, 2007. (Doc. #24, ¶¶ 44, 101.) Wells Fargo’s alleged aiding
and

abetting

consisted

of

Wells

Fargo

continuing

to

process

receipts and disbursements of funds to and from the PCOM Accounts
(Doc. #24 at ¶ 102) and Personal Accounts (Doc. #252, pp. 15-18).
Defendant asserts that plaintiff cannot point to “a single action
taken by Wells Fargo after December 15, 2007, which in any way
contributed to the Debtors stealing Richter’s money from the
Accounts.”

(Doc. #230, p. 16.)

The elements necessary to sustain the aiding and abetting
claim under Florida law are: “(1) an underlying violation on the
part of the primary wrongdoer; (2) knowledge of the underlying
violation by the alleged aider and abetter; and (3) the rendering
of substantial assistance in committing the wrongdoing by the
alleged aider and abettor.”

Lawrence v. Bank of Am., N.A., 455 F.

App’x 904, 906 (11th Cir. 2012) (citations omitted).

6

See also

Perlman v. Wells Fargo Bank, N.A., 559 F. App’x 988, 993 (11th
Cir. 2014).
The “underlying violation” in this count is the conversion
committed

by

Engler

and

Fuchs.

“It

is

well

settled

that

a

conversion is an unauthorized act which deprives another of his
property permanently or for an indefinite time.”
973 So. 2d 1257, 1258 (Fla. 1st DCA 2008).

Mayo v. Allen,

See also Tambourine

Comercio Internacional S.A. v. Solowsky, 312 F. App’x 263, 271-72
(11th Cir. 2009).

For summary judgment purposes, Wells Fargo does

not dispute that there was a conversion committed by Engler and
Fuchs.

Therefore the first element is satisfied for summary

judgment purposes.
The actual knowledge by Wells Fargo of the conversion is
disputed, but Wells Fargo does not raise this as a summary judgment
issue.

(Doc. #230, p. 15 n.26.)

Accordingly, the Court assumes

for summary judgment purposes only that Wells Fargo’s had actual
knowledge of the conversion by Engler and Fuchs.
Wells Fargo focuses on the third element, arguing that the
undisputed

material

facts

establish

that

it

did

not

render

substantial assistance to the conversion by Engler and Fuchs within
the statute of limitations period.
Fargo.

7

The Court agrees with Wells

“Substantial assistance occurs when a defendant affirmatively
assists, helps conceal or fails to act when required to do so,
thereby enabling the [underlying violation] to occur.”

BCJJ, LLC

v. LeFevre, No. 09-CV-551, 2012 WL 3071404, at *34 (M.D. Fla. July
27, 2012).

“[A] failure to act, where there is no duty to act, is

not substantial assistance.”

Hines v. FiServ, Inc., No. 08-CV-

2569, 2010 WL 1249838, at *4 (M.D. Fla. Mar. 25, 2010). A defendant
does not provide substantial assistance unless his action, or
inaction, was a “substantial factor in causing the [underlying
violation].”

In re Palm Beach Fin. Partners, L.P., 517 B.R. 310,

348 (Bankr. S.D. Fla. 2013) (quotation omitted). Thus, substantial
assistance will not be found where “[t]he amount of assistance
alleged is minor in comparison to the massive scope of [the]
overall fraudulent scheme.”
defendant

provided

Id. at 349.

substantial

To determine whether a

assistance,

courts

examine

a

variety of factors including “the nature of the act encouraged,
the amount of assistance given by the defendant, his presence or
absence at the time of the tort, [and] his relation to the other
and his state of mind.”

In re Temporomandibular Joint Implants,

113 F.3d 1484, 1495 (8th Cir. 1997).

Additionally, when the

alleged aider and abetter is not an integral part of the underlying
violation,

“[c]ourts

must

also

consider

the

potentially

devastating impact aiding and abetting liability might have on

8

commercial relationships.”

In re Palm Beach Fin. Partners, 517

B.R. at 348 (quotation omitted).
The nature of a claim of conversion is also relevant.

The

last act necessary to make a defendant liable for the tort of
conversion occurs when the wrongdoer exercises wrongful dominion
and control over the property to the detriment to the rights of
its actual owner.

Envases Venezolanos, S.A. v. Collazo, 559 So.

2d 651, 652 (Fla. 3rd DCA 1990).

The conversion is complete upon

the wrongful deprivation of the property, not the acquisition of
the property by the wrongdoer.

Nat'l Union Fire Ins. Co. of

Pennsylvania v. Carib Aviation, Inc., 759 F.2d 873, 878 (11th Cir.
1985) (“The essence of the tort is not the acquisition of the
property; rather, it is the wrongful deprivation.”); see also
Collazo, 559 So. 2d at 652-53 (collecting cases).
It is undisputed that all of the proceeds from the Ponzi
scheme were taken from the Wells Fargo PCOM Accounts before
December 15, 2007.

By that time, the 7271 Account had been closed

for over a month, and the 5057 Account had a negative balance that
was never recouped.

None of the ministerial activity taken by

Wells Fargo thereafter aided or abetted the conversion by Engler
or Fuchs in any way.

On September 13, 2007, prior to closure of

the PCOM Accounts, Fuchs transferred approximately $1 million from
the PCOM Accounts into her Personal Accounts.

9

Of that $1 million,

$614,226 remained in her Personal Accounts after the December 15,
2007 Limitations Cutoff.

Wells Fargo did not prevent Fuchs from

withdrawing all but $639.48 from the Personal Accounts prior to
its closure of her Personal Accounts, some of which was after the
Limitations Cutoff.

For example, Richter has provided documentary

evidence that on January 7, 2008, Wells Fargo processed and cashed
a $100,000 check for Fuchs drawn on one of her Personal Accounts.
(Doc. #252-23.) This, however, did not aid and abet the conversion
because

the

conversion

was

already

complete,

no

later

than

September 13, 2007, when the $1 million was withdrawn from the
PCOM

Accounts.

Simply

transferring

money

from

the

Personal

Accounts to Fuchs did not provide substantial assistance to the
completed conversion.
Additionally even if the conversion was not completed, the
Court concludes that, as a matter of law, Wells Fargo did not
provide substantial assistance to the conversion by allowing Fuchs
to access the investor funds she had previously transferred to her
Personal Accounts.

The only action taken by Wells Fargo after the

Limitations Cutoff that arguably aided Fuchs was the failure to
freeze Fuchs’ Personal Accounts.

The lack of a freeze allowed

Fuchs to withdraw approximately $600,000 that otherwise might have
been returned to Richter and other cheated investors.

10

That inaction would not support a determination that Wells
Fargo provided substantial assistance for the conversion.

To the

extent Wells Fargo’s inaction assisted Fuchs, such assistance was
exceedingly minor “in comparison to the massive scope of [the]
overall fraudulent scheme.”
B.R. at 349.

In re Palm Beach Fin. Partners, 517

Wells Fargo played no role in convincing Richter and

others to invest with PCO, and Fuchs had already transferred the
last of the investors’ funds to her Personal Accounts by the time
Wells Fargo is alleged to have aided and abetted her.

Thus, it

cannot be said that Wells Fargo’s inaction was a “substantial
factor in causing” the conversion.

Id. at 348.

Moreover, Richter

has not pointed to any evidence suggesting that Wells Fargo acted
in concert with Fuchs or that its failure to freeze her Personal
Accounts

was

made

with

commission of conversion.

the

goal

of

assisting

Fuchs

in

the

Nor does Richter argue that Wells Fargo

was under a duty to freeze the Personal Accounts.

Hines, 2010 WL

1249838 at *4.
Thus, each of the factors outlined in In re Temporomandibular
Joint Implants support a finding that Wells Fargo did not render
substantial assistance to Engler and Fuchs.

113 F.3d at 1495.

Likewise, extending aiding and abetting liability to Wells Fargo
here

would

have

a

chilling

effect

on

commercial

banking

relationships by requiring banks to preemptively freeze accounts

11

on their own accord lest they risk liability for aiding and
abetting misconduct by their accountholders.
Fin. Partners, 517 B.R. at 348.

In re Palm Beach

Accordingly, the Court concludes

that Wells Fargo is entitled to summary judgment as to Count VI.
B.

Aiding and Abetting Fraud (Count VII)
Count VII of the Amended Complaint alleges that the same

conduct by Wells Fargo aided and abetted Engler and Fuchs in the
fraud they perpetrated to obtain new investors to fuel their Ponzi
scheme.

For similar reasons discussed above, this claim fails.

The elements of an aiding and abetting claim and the standard
used to determine “substantial assistance” are as set forth above.
Lawrence, 455 F. App’x at 906; In re Temporomandibular Joint
Implants, 113 F.3d at 1495; In re Palm Beach Fin. Partners, 517
B.R. at 348; BCJJ, 2012 WL 3071404 at *34; Hines, 2010 WL 1249838,
at *4. “An aggrieved party proves common law fraud by establishing
that: (1) the opposing party made a misrepresentation of a material
fact, (2) the opposing party knew or should have known the falsity
of the statement, (3) the opposing party intended to induce the
aggrieved party to rely on the false statement and act on it, and
(4) the aggrieved party relied on that statement to his or her
detriment.”

Jackson v. Shakespeare Found., Inc., 108 So.3d 587,

595 n.2 (Fla. 2013) (citing Butler v. Yusem, 44 So.3d 102, 105
(Fla. 2010)).

12

For the reasons set forth in the Court’s analysis of Count
VI, the Court concludes that the fraud was complete prior to the
Limitations Cutoff and, as a matter of law, Wells Fargo did not
aid and abet Engler and Fuchs in committing fraud.

Wells Fargo’s

inaction was at most a minor factor in the overall fraudulent
scheme and therefore it cannot be said that Wells Fargo’s failure
to freeze Fuchs’s Personal Accounts was a substantial causal factor
of the fraud.

Moreover, as the fraud in question took place at

the time Richter made her investment, Wells Fargo’s inaction is
even

further

conversion.

removed

from

the

fraud

than

it

was

from

the

Accordingly, Wells Fargo is entitled to summary

judgment as to Count VII.
C.

Unjust Enrichment (Count IX)
“A claim for unjust enrichment has three elements: (1) the

plaintiff has conferred a benefit on the defendant; (2) the
defendant voluntarily accepted and retained that benefit; and (3)
the circumstances are such that it would be inequitable for the
defendants

to

retain

it

without

paying

the

value

thereof.”

Virgilio v. Ryland Grp., Inc., 680 F.3d 1329, 1337 (11th Cir. 2012)
(citations omitted).

The benefits alleged to have been conferred

in this case were the service and transaction fees earned by Wells
Fargo on the PCOM Accounts and Personal Accounts.

13

As set forth above, any transaction or service fees received
by

Wells

Fargo

for

Limitations Cutoff.

the

PCOM

Accounts

took

place

before

the

Concerning the Personal Accounts, Wells Fargo

has provided uncontradicted testimony and documentary evidence
demonstrating that Wells Fargo neither charged nor collected any
fees on the Personal Accounts at any time.
18, 26; Docs. ##286-2, 286-3, 286-4.)

(Doc. #286-1, ¶¶ 11,

Thus, Richter has provided

no evidence that Wells Fargo obtained any benefit from the PCOM
Accounts or the Personal Accounts after the Limitations Cutoff
and, therefore, Wells Fargo is entitled to summary judgment as to
Count IX.2
Accordingly, it is now
ORDERED:
1.

Defendant’s Motion for Summary Judgment (Doc. #230) is

GRANTED, judgment is entered in favor of Defendant as to Counts
VI, VII, and IX of the Amended Complaint (Doc. #24), and Plaintiff
shall take nothing. The Clerk shall withhold the entry of judgment
pending the outcome of Plaintiff’s Second Amended Motion for Class
Certification (Doc. #219).

2

Having found that Wells Fargo is entitled to summary judgment on
all remaining counts on the basis of its statute of limitations
argument, the Court need not address Wells Fargo’s other grounds
for summary judgment.

14

2.
and

Within fourteen (14) days of the date of this Opinion

Order,

the

parties

shall

file

supplemental

memoranda

addressing the impact of this Opinion and Order on Plaintiff’s
Second Amended Motion for Class Certification (Doc. #219).
DONE AND ORDERED at Fort Myers, Florida, this
January, 2015.

Copies: Counsel of record

15

13th

day of