Lesti et al v. Wells Fargo Bank NA

Filing 72

OPINION AND ORDER granting 35 SunTrust Bank's Motion to Dismiss; denying as moot 36 SunTrust Bank's Motion to Strike; granting in part and denying in part 43 Wells Fargo Bank, N.A.'s Motion to Dismiss; denying without prejudice [ 54] Plaintiffs' Motion to Certify Class. Counts I, II, III, IV, and V of the 24 Amended Complaint are dismissed with prejudice. Counts VIII and X of the Amended Complaint are dismissed without prejudice. Plaintiffs shall comply with the 65 Order dated August 2, 2012. See Opinion and Order for details. Signed by Judge John E. Steele on 3/19/2013. (AAA)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
FRANZ LESTI, PETRA RICHTER, CHRISTA
MILLENTRUP,
HUBERT
MILLENTRUP,
HERBERT SCHICKLE, HANS ZWICKY, KATHI
ZWICKY,
and
WOLF
VON
LOEBEN,
individually and on behalf of all
others similarly situated; ROBERT E.
TARDIFF, JR., in his capacity as the
Chapter
7
Trustee
of
the
substantively
consolidated
bankruptcy
estates
of
Debtors,
Ulrich Felix Anton Engler, Private
Commercial Office, Inc., and PCO
Client Management, Inc.,
Plaintiffs,
vs.

Case No.

2:11-cv-695-FtM-29DNF

WELLS FARGO BANK, N.A., formerly
known as Wachovia Bank, N.A., and
SUNTRUST BANK,
Defendants.1
___________________________________
OPINION AND ORDER
This matter comes before the Court on (1) SunTrust Bank’s
Motion to Dismiss Plaintiffs’ Amended Class Action Complaint (Doc.
#35) filed on May 11, 2012, and (2) Wells Fargo Bank, N.A.’s Motion
to Dismiss Amended Class Action Complaint (Doc. #43) filed on May
29, 2012.

1

Plaintiffs filed an Omnibus Opposition (Doc. #47) on

The Amended Complaint does not comply with Fed. R. Civ. P.
10(a), which requires that “[t]he title of the complaint must name
all the parties.”
The parties will be required to utilize the
caption set forth above for the duration of the case, and the
Amended Complaint is deemed to be interlineated to add the new
plaintiffs and defendant.

June 22, 2012.

On August 15, 2012, Wells Fargo Bank, N.A. filed a

Limited Reply (Doc. #70).

Also before the Court is SunTrust’s

Motion to Strike Paragraphs 42, 43, 70(v), 75(v), 83(v), and
Exhibit 4 of Plaintiffs’ Amended Class Action Complaint (Doc. #36),
to which plaintiffs filed a Response (Doc. #46).

The parties

request oral arguments (Docs. #37, 71.)
Defendants

seek

dismissal

of

all

counts

Complaint pursuant to Fed. R. Civ. P. 12(b)(6).

of

the

Amended

Defendants assert

that the face of the Amended Complaint establishes that each claim
is barred by the statute of limitations, or alternatively, that
each count fails to sufficiently set forth a cause of action upon
which relief may be granted.
I.
Under Federal Rule of Civil Procedure 8(a)(2), a Complaint
must contain a “short and plain statement of the claim showing that
the pleader is entitled to relief.”

Fed. R. Civ. P. 8(a)(2).

This

obligation “requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(citation
omitted). To survive dismissal, a complaint must set forth factual
allegations that state a claim which is “plausible on its face.”
Id. at 555.

See also Edwards v. Prime Inc., 602 F.3d 1276, 1291

(11th Cir. 2010).

This requires facts which are more than merely

possible, and must set forth enough facts to raise a reasonable

-2-

expectation that discovery will reveal evidence of defendant’s
liability.

Twombly, 550 U.S. at 556.

In deciding a Rule 12(b)(6) motion to dismiss, the Court must
accept all factual allegations in a complaint as true and take them
in the light most favorable to plaintiff, Erickson v. Pardus, 551
U.S. 89 (2007), but “[l]egal conclusions without adequate factual
support are entitled to no assumption of truth,” Mamani v. Berzain,
654

F.3d

“Threadbare

1148,

1153

recitals

of

(11th
the

Cir.

2011)(citations

elements

of

a

cause

omitted).
of

action,

supported by mere conclusory statements, do not suffice.” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009).

“Factual allegations that are

merely consistent with a defendant’s liability fall short of being
facially plausible.”
1337

(11th

omitted).

Cir.

Chaparro v. Carnival Corp., 693 F.3d 1333,

2012)(internal

quotation

marks

and

citations

Thus, the Court engages in a two-step approach: “When

there are well-pleaded factual allegations, a court should assume
their veracity and then determine whether they plausibly give rise
to an entitlement to relief.”

Iqbal, 556 U.S. at 679.

The statute of limitations is an affirmative defense, and the
burden of proving an affirmative defense is on the defendant.
Tello v. Dean Witter Reynolds, Inc., 410 F.3d 1275, 1292 (11th Cir.
2005).

A plaintiff is not required to anticipate and negate an

affirmative defense in the complaint.

La Grasta v. First Union

Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).

-3-

A Rule 12(b)(6)

motion to dismiss on statute of limitations grounds may be granted,
however, if it is apparent from the face of the complaint that the
claim is time-barred. La Grasta, 358 F.3d at 845-46. Nonetheless,
a motion to dismiss on statute of limitations grounds should not be
granted where

resolution

depends

either

on

facts

not

yet

in

evidence or on construing factual ambiguities in the complaint in
defendants’ favor.

Omar ex rel. Cannon v. Lindsey, 334 F.3d 1246,

1252 (11th Cir. 2003).
II.
The Amended Complaint against defendants Wells Fargo Bank,
N.A. (Wells Fargo) and SunTrust Bank (SunTrust) sets forth ten
state law claims.

In a nutshell, the Amended Complaint alleges

that each bank knowingly and/or negligently assisted one of their
customers and his minions with a Ponzi scheme being implemented to
loot millions of dollars from innocent foreign investors.

The

original two plaintiffs (Lesti and Richter) refer to themselves as
the Wells Fargo Plaintiffs and bring four claims against Wells
Fargo.

The six new plaintiffs refer to themselves as the SunTrust

Plaintiffs and bring four claims against SunTrust.

The Bankruptcy

Trustee brings two claims, one against each defendant.
In the Amended Complaint, plaintiffs allege the following
material facts: Ulrich Felix Anton Engler (Engler), a German
citizen, owned and purported to operate Private Commercial Office,
Inc. (PCO) as a day trading and investment business.

-4-

(Doc. #24, ¶

25.)

Engler solicited investments primarily from individuals and

entities located in Europe.

(Id., ¶ 26.)

In the solicitations,

Engler claimed to be a highly experienced investor who was formerly
employed by Chase Manhattan Bank for 21 years, and claimed to
possess sophisticated software which allowed him to quickly analyze
shares of stock and capture significant investment returns before
others could do so.

(Id., ¶ 27.)

Engler guaranteed annualized

returns of 48% to 72% in his solicitation materials.

(Id.)

The investments were documented by Promissory Notes and Loan
Agreements between Engler and PCO, as Borrowers, and the investors,
as Lenders.

(Id., ¶ 28.)

The loans were made payable to the

Borrowers’ order at a designated account at SunTrust (prior to May
2007) and Wells Fargo (after May 2007).

(Id.)

Engler did not

actually invest the money as he represented, but instead used the
invested funds to operate a classic Ponzi scheme and make lavish
personal expenditures.
A.

(Id., ¶ 29.)

SunTrust Accounts

Engler opened and maintained two PCO accounts at SunTrust on
or about January 1, 2006 (the SunTrust Accounts), and also opened
two

other

SunTrust

corporations.

accounts

in

(Id., ¶¶ 34, 36.)

the

names

of

two

different

At the time, SunTrust knew that

Engler was a German national who purported to conduct a day
trading/investing business at a specific location in Cape Coral,
Florida.

(Id., ¶ 34.)

Plaintiffs allege that if SunTrust had

-5-

properly discharged its obligation to know its customer, SunTrust
would have learned that: (1) Engler possessed no occupational or
professional licenses; (2) his office location was a mail slot at
a UPS Store; and (3) Engler had a criminal record in Germany for
various fraud-related cases and was wanted on a German arrest
warrant.

(Id., ¶ 35.)

The SunTrust Accounts received deposits of approximately $24
million each month in international wire transfers, which stated on
their

face

“promissory

that

they

notes,”

were

or

for

“loans,”

“daytrading.”

“loan

(Id.,

¶

agreements,”
37.)

These

international wire transfers were the sole source of deposits into
the SunTrust Accounts.
same

amount

was

(Id., ¶ 38.)

disbursed

from

Each month approximately the
the

SunTrust

Accounts

as

international wire transfers, commission payments, and domestic
wire transfers for lavish luxury expenses.
Plaintiffs

allege

that

SunTrust

had

(Id., ¶¶ 37, 38.)
actual

knowledge

of

Engler’s fraudulent use of the SunTrust Accounts by at least May
2007, (id., ¶2), because: (1) on November 22, 2006, the Austrian
Financial Market Authority (AMFA) published a warning to the
general public in an official gazette, (id., ¶ 39; Exhibit 1); (2)
on March 1, 2007, JP Morgan Chase Bank, N.A. filed a federal
lawsuit against Engler and PCO in the Fort Myers Division of the
Middle District of Florida regarding Engler’s false representations
concerning his prior employment with Chase Manhattan Bank, and on

-6-

September

18,

2007,

a

Final

Consent

Judgment

and

Permanent

Injunction was entered against Engler and PCO, (id., ¶ 40); (3) in
May 2007,

AE

Centurion

Bank

refused to

process

several

wire

transfers involving the SunTrust Accounts due to an internal risk
management decision, and notified SunTrust, (id., ¶ 41); (4) on or
about June 8, 2007, SunTrust issued a 314(b) request to Wells Fargo
pursuant

to

the

USA

Patriot

Act

which

summarized

SunTrust’s

knowledge of PCO and Engler’s suspicious activities and also
concerned a $7 million check by PCO to PCOM, (id., ¶¶ 3, 43); and
(5) a May 3, 2011, email from a SunTrust attorney summarizing its
prior knowledge, (id., ¶ 42).
Plaintiffs allege that notwithstanding SunTrust’s knowledge of
Engler’s fraudulent use of the SunTrust Accounts no later than May
2007, SunTrust
Engler

by

consciously

continuing

to

rendered
process

substantial

numerous

assistance to

international

wire

transfers, which enabled Engler to loot over $35 million from
innocent investors.

(Id., ¶¶ 2, 45.)

On June 28, 2007, SunTrust

sent PCO a letter stating that based upon an account review and
consistent with the best interests of SunTrust and its customers,
PCO’s two SunTrust Accounts should be closed voluntarily by July
30, 2007, or would be closed involuntarily by that date.
4, 44.)

(Id., ¶¶

Upon receipt of this letter, Engler siphoned off the

remaining balances in the SunTrust Accounts.

-7-

(Id., ¶4.)

B.

Wells Fargo Accounts

PCO Client Management, Inc. (PCOM) maintained two accounts at
Wells Fargo (the Wells Fargo Accounts) that were opened on or about
May 29, 2007, by Angelika Neumeier-Fuchs (Fuchs).

(Id., ¶ 46.)

Plaintiffs allege that Wells Fargo then knew that: (1) Fuchs was a
German national; (2) Fuchs was associated with Engler; (3) PCOM
purported to conduct billing services for PCO from the same office
location as PCO; (4) PCOM’s sole client was PCO; (5) PCOM obtained
funds from PCO and paid PCO’s bills with the funds; (6) on or about
May 30, 2007, PCOM deposited a $7 million check from PCO’s SunTrust
Accounts into PCOM’s Wells Fargo Accounts; and (7) Fuchs intended
to

initiate

approximately

1,700

wires

Austria, the Netherlands, and Italy.
Accounts

were

funded

entirely

international wire transfers.

by

per

month

(Id., ¶ 46.)
transfers

(Id., ¶ 54.)

to

Germany,

The Wells Fargo
from

PCO

and

On or about June 8,

2007, Wells Fargo received SunTrust’s 314(b) request and the AMFA
Warning Notification Letter from SunTrust.

(Id., ¶¶ 47, 48.)

On

July 10, 2007, Wells Fargo sent PCOM a letter stating that its two
Wells Fargo Accounts should be closed voluntarily by August 21,
2007, or would be closed involuntarily by that date, because PCOM’s
needs or expectations were not compatible with what Wells Fargo was
in a position to offer.

(Id., ¶¶ 6, 49.)

Despite this letter,

Wells Fargo continued to process thousands of monthly receipts and
disbursements of investor funds totaling tens of millions of

-8-

dollars per month to and from Fuchs/PCOM until in or about January
2008.

(Id., ¶6.)

Plaintiffs allege that despite Wells Fargo’s knowledge by June
2007 that Fuchs was utilizing the PCOM Wells Fargo Accounts as “a
mere filter” so Engler could continue to perpetrate his fraud,
(id., ¶ 5), Wells Fargo made a conscious decision to keep the
accounts open until January 2008 so that it could ensure collection
of transaction/service fees and clear up any wire issues, (id., ¶¶
50, 53, 55). Wells Fargo rendered substantial assistance to Engler
by continuing to process numerous international wire transfers of
innocent investor funds totaling tens of millions of dollars per
month.

(Id., ¶¶ 5, 56.)

Plaintiffs allege that Wells Fargo

generated approximately $30,000 a month in transaction/service fees
as a result of the wire transfers.
C.

(Id., ¶ 57.)

German Arrest Warrant for Engler

On December 4, 2007, the County Court of Mannheim, Germany
issued an arrest warrant for Engler.

(Id., ¶ 30.)

On April 21,

2008, the Public Prosecutor’s Office of Mannheim, Germany issued a
request to the United States for Engler’s arrest and extradition.
(Id., ¶ 31.)

Engler was a fugitive at the time the Amended

Complaint was filed.
D.

(Id., ¶ 32.)

Bankruptcy Court Proceedings

On March 31, 2008 a group of creditors filed involuntary
petitions for relief under Chapter 7 of the Bankruptcy Code against

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Engler, PCO, and PCOM (Debtors).

(Id., ¶ 20.)

On April 29, 2008,

the Bankruptcy Court entered Orders of Relief against Debtors.
(Id., ¶ 21.)

On April 30, 2008, the Bankruptcy Trustee was

appointed for the Debtors’ bankruptcy estates.

(Id., ¶ 22.)

In

June 2008 and April 2010, the Bankruptcy Court substantively
consolidated the assets and liabilities of the Debtors’ bankruptcy
estates.

(Id., ¶ 23.)

The Trustee asserts that he has exclusive

standing to bring certain of the claims asserted on behalf of the
Debtors’ creditor body.
E.

(Id., ¶ 24.)

The Complaint and Amended Complaint

The putative class action Complaint was filed on December 15,
2011, by plaintiffs Franz Lesti (Lesti), Petra Richter (Richter),
and Robert E. Tardif, Jr. as Chapter 7 Bankruptcy Trustee (Trustee)
against Wells Fargo.

(Doc. #1.)

In response to a motion to

dismiss filed by Wells Fargo (Doc. #17), plaintiffs filed an
amended complaint.
The Amended Complaint (Doc. #24) was filed on March 30, 2012,
and added six plaintiffs and SunTrust as a defendant, and federal
jurisdiction is premised upon diversity of citizenship.

All eight

individual plaintiffs are alleged to be aliens, that is, residents
and citizens of Germany.

(Doc. #24, ¶¶ 9-14.)

alleged to be a citizen of Florida.

2

The Trustee is

(Id., ¶ 15.)2

SunTrust is

This may not be accurate. “[T]he citizenship for diversity
purposes of bankruptcy trustees has always been the subject of a
(continued...)
-10-

alleged to be a citizen of Georgia, (id., ¶ 16), and Wells Fargo is
alleged to be a citizen of Delaware and California, (id., ¶ 17).3
The Amended Complaint sets forth companion counts against
SunTrust and Wells Fargo for the following causes of action:
Aiding and Abetting Conversion (Counts I and VI), Aiding and
Abetting Fraud (Counts II and VII), Aiding and Abetting Breach of
Fiduciary Duties (Counts III and VIII), Unjust Enrichment (Counts
IV and IX), and Negligence and Wire Transfer Liability (Counts V
and X).

(Doc. #24.)

Various counts are brought by the “SunTrust

Plaintiffs,” the “Wells Fargo Plaintiffs,” and the Bankruptcy
Trustee.

The Amended Complaint asserts that all claims accrued on

April 29, 2008, when the Bankruptcy Court entered Orders of Relief
against Debtors in the pending bankruptcy case.

(Id., ¶ 8.)

III.
Defendants assert that all of the counts are time-barred under
the applicable statute of limitations.

Alternatively, defendants

assert that all claims are insufficiently pled.

Plaintiffs take a

contrary view.

2

(...continued)
special rule: ‘[I]t is the citizenship of the bankrupt rather than
the citizenship of the trustee in bankruptcy that is determinative
for diversity jurisdiction.’ 13B C. Wright, A. Miller & E. Cooper,
Federal Practice and Procedure: Jurisdiction 2d § 3606.” Carlton
v. Baww, Inc., 751 F.2d 781, 786-87 (5th Cir. 1985).
3

Even if the Trustee has the citizenship of the debtors (i.e.,
is deemed an alien), federal jurisdiction is not affected. Minimal
diversity is required under 28 U.S.C. § 1332(d)(2), and the Amended
Complaint still alleges complete diversity.
-11-

A.
When

Statute of Limitations
federal

citizenship,

the

jurisdiction
law

of

the

is

founded

forum

appropriate statute of limitations.

state

upon
will

diversity

of

provide

the

Raie v. Cheminova, Inc., 336

F.3d 1278, 1280 (11th Cir. 2003).

The parties agree that all of

plaintiffs

by

claims

are

governed

limitations under Florida law.
Doc. #47, p. 3.)

a

four-year

statute

of

(Doc. #35, p. 4; Doc. #43, p. 4;

Florida law will determine when the applicable

statute of limitations begins to run, but federal law will provide
the legal standard to determine if defendants are entitled to
dismissal.

Bernard Schoninger Shipping Ctrs., Ltd. v. J.P.S.

Elastomerics, Corp., 102 F.3d 1173, 1177 (11th Cir. 1997).
Under Florida law, the statute of limitations begins to run
when the cause of action accrues.
1179, 1185 (Fla. 2000).

Hearndon v. Graham, 767 So. 2d

Generally, a cause of action accrues, and

the statute of limitations therefore begins to run, on the date the
last element constituting the cause of action occurs.
767 So. 2d at 1184-85 (citing Fla. Stat. § 95.031).

Hearndon,

An exception

is made for claims of fraud (and other causes of action not
relevant to this case), for which the accrual is delayed until the
plaintiff either knows or should know that the last element of the
cause of action occurred.

Davis v. Monahan, 832 So. 2d 708, 709-10

(Fla. 2002)(citing Fla. Stat. § 95.031).

-12-

SunTrust

argues

that

the

face

of

the

Amended

Complaint

establishes that the causes of action accrued on July 30, 2007, the
date

it

closed

the

SunTrust

Accounts,

and

the

statute

of

limitations therefore ran on July 30, 2011, eight months prior to
the March 30, 2012 filing of the Amended Complaint which first
named SunTrust as a defendant.

(Doc. #35, pp. 4, 5.)

Wells Fargo

argues that based upon the face of the Amended Complaint the
statute of limitations ran as to it on December 10, 2011, five days
prior to the filing of the original Complaint (Doc. #1) on December
15, 2011.

(Doc. #43, pp. 4, 5.)

The Court applies the statute of

limitations to each count individually.
(1)

Counts I and VI:

Aiding And Abetting Conversion

Count I of the Amended Complaint alleges that SunTrust aided
and abetted Engler and PCO in their unlawful conversion of funds
provided by innocent investors. This aiding and abetting consisted
of

SunTrust

continuing

to

process

numerous

receipts

and

disbursements of funds in the form of international wire transfers
to and from the SunTrust Accounts, causing losses exceeding $35
million.
actual

(Doc. #24, ¶ 71.)

knowledge

of

It is alleged that SunTrust gained

Engler’s

fraudulent

use

of

the

SunTrust

Accounts no later than May 2007, that on June 28, 2007, SunTrust
sent a letter to PCO stating that the accounts “should be closed
voluntarily by July 30, 2007, or would be closed involuntarily by

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such date,” (id., ¶¶ 44, 70), and that Engler then took the rest of
the money out of the SunTrust Accounts, (id., ¶ 4).
Count VI of the Amended Complaint alleges that Wells Fargo
aided

and

abetted

Fuchs,

Engler

and

PCOM

in

their

unlawful

conversion of funds provided by innocent investors.

This aiding

and

to

abetting

consisted

numerous receipts

and

of

Wells

Fargo

disbursements of

continuing
funds

in

the

process
form

of

international wire transfers to and from the Wells Fargo Accounts,
causing losses exceeding $35 million.

(Id., ¶ 102.)

It is alleged

that Wells Fargo had actual knowledge of the fraudulent use of the
Wells Fargo Accounts no later than June 8, 2007.

(Id., ¶¶ 44,

101.)
The elements necessary to sustain the aiding and abetting
claim 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).
counts is conversion.

The “underlying violation” in these

“It is well settled that a conversion is an

unauthorized act which deprives another of his property permanently
or for an indefinite time.”

Mayo v. Allen, 973 So. 2d 1257, 1258-

59 (Fla. 1st DCA 2008).

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Plaintiffs

assert

that

SunTrust’s

statute

of

limitations

argument must be rejected because the face of the Amended Complaint
does not explicitly establish when the cause of action in Count I
accrued, and therefore it cannot be determined when the statute of
limitations ran.

The Court disagrees.

The factual allegations in

Count I allege that SunTrust informed its account holders in
writing that the SunTrust Accounts would be closed involuntarily on
July 30, 2007, if they were not closed voluntarily by that date.
Count I then alleges that the funds in the SunTrust Accounts were
depleted by Engler.
Amended

Complaint

None of the remaining allegations in the

suggest

any

conduct

involving

the

SunTrust

Accounts which occurred after July 30, 2007, or suggest that the
accounts remained opened. This is in contrast with the allegations
concerning the Wells Fargo Accounts after their closing letter.
The Court finds that it is apparent from the face of the Amended
Complaint that the SunTrust Accounts were closed on July 30, 2007,
that the substantial assistance alleged in Count I only involved
use of those SunTrust Accounts, and that the last act of SunTrust
which could possibly have constituted the aiding and abetting
alleged in Count I occurred on July 30, 2007.

Accordingly, the

face of the Amended Complaint establishes that the aiding and
abetting conversion claim against SunTrust accrued on July 30,
2007.

The four year statute of limitations expired on July 30,

2011.

The Amended Complaint was not filed until March 30, 2012,

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and therefore Count I is time barred.

The SunTrust motion to

dismiss will be granted on that basis.
The factual allegations in Count VI as to Wells Fargo are
similar yet significantly different. On July 10, 2007, Wells Fargo
sent a letter to PCOM stating that the accounts “should be closed
voluntarily by August 21, 2007, or would be closed involuntarily by
such date.”
Amended

(Doc. #24, ¶ 49.)

Complaint

further

Unlike SunTrust’s situation, the

alleges

that:

(1)

the

Wells

Fargo

Accounts remained open until in or about January 2008, (id., ¶ 50);
after the letter was sent to PCOM, Fuchs repeatedly requested that
Wells Fargo close the accounts, (id., ¶ 53); and (3) in an e-mail
dated December 10, 2007, a Wells Fargo representative stated that
the account was still open and showed a balance of “-8k,” (id., ¶
55).

While Count VI does not expressly allege any wire transfers

after December 15, 2011, the allegations cannot support a statute
of limitations defense on a motion to dismiss without viewing the
allegations and their reasonable inferences in favor of defendant,
which is not permitted when resolving a motion to dismiss. Because
it is not apparent on the face of the Amended Complaint that Count
VI is barred by the application of the statute of limitations,
Wells Fargo’s motion to dismiss as to Count VI is denied.
(2)

Counts II and VII:

Aiding And Abetting Fraud

Count II of the Amended Complaint alleges that the same
conduct by SunTrust aided and abetted Engler in the fraud he

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perpetrated to obtain funds provided by innocent investors pursuant
to his Ponzi scheme. Similarly, Count VII of the Amended Complaint
alleges that the same conduct by Wells Fargo aided and abetted
Engler in the fraud he perpetrated to obtain funds provided by
innocent investors pursuant to his Ponzi scheme.
The elements of an aiding and abetting claim are as set forth
above.

Lawrence, 455 F. App’x at 906.

“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., No. SC11-1196, --- So. 3d ---, 2013 WL 362786, at *6 n. 2
(Fla. Jan. 31, 2013)(citing Butler v. Yusem, 44 So.3d 102, 105
(Fla. 2010)).

The Florida delayed discovery doctrine applies to a

fraud claim, and therefore the statute of limitations does not run
until the plaintiff either knows or should know that the last
element of the cause of action occurred.

Davis, 832 So. 2d at 709-

10 (citing Fla. Stat. § 95.031).
Under the facts alleged in the Amended Complaint, plaintiffs
were put on notice of the Ponzi scheme on November 22, 2006, when
the AMFA issued a public warning about Engler and his business
practices.

La Grasta, 358 F.3d at 845-46. As discussed above, the

-17-

last element of SunTrust’s aiding and abetting was on or about July
30, 2007, and therefore the delayed discovery doctrine does not
impact the accrual of the statute of limitations.

The statute of

limitations has run as to SunTrust, and SunTrust’s motion to
dismiss will be granted as to Count II on that basis.
As to Wells Fargo, while plaintiffs were on notice from
November 22, 2006, as discussed above the timing of the last
element of Wells Fargo’s aiding and abetting cannot be definitively
determined from the Amended Complaint.

Therefore, Wells Fargo’s

motion to dismiss Count VII is denied.
(3) Counts III and VIII: Aiding and Abetting Breach of
Fiduciary Duties
Count III of the Amended Complaint alleges that Engler owed
fiduciary duties to the innocent investors, that he breached these
fiduciary duties by engaging in the Ponzi scheme, and that SunTrust
aided and abetted Engler in the breach of the fiduciary duties he
owed

to

his

transfers.

investors

by

processing

(Doc. #24, ¶¶ 79-85.)

the

international

wire

Count VIII of the Amended

Complaint alleges that Fuchs owed fiduciary duties to the innocent
investors, that she breached these fiduciary duties by permitting
Engler to engage in the Ponzi scheme with the Wells Fargo Accounts,
and that Wells Fargo aided and abetted Fuchs in the breach of the
fiduciary duties she owed to the investors by processing the
international wire transfers.

(Id., ¶¶ 110-116.)

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The elements of an aiding and abetting claim are as set forth
above.

Lawrence, 455 F. App’x at 906.

“The elements of a cause of

action for breach of fiduciary duty are (1) the existence of a
duty, (2) breach of that duty, and (3) damages flowing from the
breach.”

Miller

v.

Miller,

89

So.

3d

962

(Fla.

5th

DCA

2012)(quoting Crusselle v. Mong, 59 So. 3d 1178, 1181 (Fla. 5th DCA
2011)).
For the same reasons as discussed in Counts I and II, Count
III against SunTrust accrued on July 30, 2007, and the statute of
limitations ran prior to the filing of the Amended Complaint
against SunTrust.
granted.

The SunTrust motion to dismiss Count III is

For the same reasons as discussed above, Count VIII

against Wells Fargo cannot be said at this stage of the proceedings
to be barred by the statute of limitations.

The Wells Fargo motion

to dismiss Count VIII is denied.
(4)

Counts IV and IX:

Unjust Enrichment

Count IV of the Amended Complaint alleges that PCO conferred
a benefit upon SunTrust by making wire transfers into and out of
PCO’s SunTrust accounts, thereby accruing significant fees, which
were paid to SunTrust with misappropriated investor funds.
#24, ¶ 87.)

(Doc.

It further alleges that SunTrust knowingly and

voluntarily accepted and retained these benefits with respect to
transaction/service fees, and has thus been unjustly enriched at
the expense of the innocent investors.

-19-

(Id., ¶¶ 88, 89.)

Because

it would be inequitable and unjust for SunTrust to retain these
benefits, Count IV alleges the innocent investors are entitled to
the return of these amounts.

(Id., ¶¶ 90, 91.)

Count IX of the Amended Complaint alleges that PCOM conferred
a benefit upon Wells Fargo by making wire transfers into and out of
PCOM’s Wells Fargo Accounts, thereby accruing significant fees,
which were paid with misappropriated investor funds. (Id., ¶ 118.)
It further alleges that Wells Fargo knowingly and voluntarily
accepted

and

retained

these

benefits

with

respect

to

transaction/service fees, and has thus been unjustly enriched at
the expense of the innocent investors.

(Id., ¶¶ 119, 120.)

Because it would be inequitable and unjust for Wells Fargo to
retain these benefits, Count IX alleges the innocent investors are
entitled to the return of these amounts.

(Id., ¶¶ 121, 122.)

“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
defendant[ ] 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 were the fees earned by SunTrust and Wells Fargo for the
international wire transfers through their respective accounts.
The SunTrust Accounts were closed on July 30, 2007, and no wire

-20-

transfers are alleged to have been made through the accounts
thereafter.

The statute of limitations therefore expired prior to

the filing of the March 30, 2012 Amended Complaint.

The same

cannot be determined as to the Wells Fargo Accounts, as discussed
above.

SunTrust’s motion to dismiss is granted as to Count IV and

Wells Fargo’s motion to dismiss Count IX is denied.
(5) Counts V and X: Bankruptcy Trustee’s Claims for
Negligence and Wire Transfer Liability
In Count V, the Bankruptcy Trustee for the Debtors Engler,
PCO, and PCOM (the alleged Ponzi scheme wrongdoers) seeks damages
from SunTrust based upon negligence and wrongful and improper
transfer of funds by the wire transfers.

Count V alleges that

Engler authorized and directed wire transfers from funds in the
SunTrust Accounts, and that SunTrust had a duty of care to PCO to
“correctly, cautiously, and prudently” process the wire transfers
pursuant to commercially reasonable security procedures.
#24, ¶¶ 94, 95.)

(Doc.

The Trustee alleges that SunTrust breached its

duty of care by violating prudent and sound banking practices and
procedures, or by the lack of good faith in processing, or by
effectuating

wire

transfers

based

on

an

actual

Engler’s fraudulent use of the SunTrust Accounts.

knowledge

of

(Id., ¶ 96.)

The Trustee argues that by keeping the SunTrust Accounts open, and
processing wire transfers after obtaining knowledge of Engler’s
fraudulent use of its accounts, SunTrust allowed innocent investors

-21-

to make deposits into the accounts, and enabled Engler to convert
the funds, resulting in damages to PCO.

(Id., ¶¶ 97, 98.)

In Count X, the Bankruptcy Trustee seeks damages from Wells
Fargo based upon negligence and wrongful and improper transfer of
funds by the wire transfers. Count X alleges that Fuchs authorized
and directed wire transfers from funds in the Wells Fargo Accounts,
and that Wells Fargo had a duty of care to PCOM to “correctly,
cautiously, and prudently” process the wire transfers pursuant to
commercially reasonable security procedures.

(Id., ¶¶ 125, 126.)

The Trustee alleges that Wells Fargo breached its duty of care by
violating prudent and sound banking practices and procedures, or by
the lack of good faith in processing, or by effectuating wire
transfers based on an actual knowledge that Fuchs was utilizing the
Wells Fargo Accounts so that Engler could continue his fraudulent
scheme.

(Id., ¶ 127.)

The Trustee argues that by keeping the

Wells Fargo Accounts open, and processing wire transfers after
obtaining knowledge of the fraudulent use of the accounts, Wells
Fargo

allowed

innocent

investors

to

make

deposits

into

the

accounts, and enabled Fuchs, PCOM, and/or Engler to convert the
funds, resulting in damages to PCOM.

(Id., ¶¶ 128, 129.)

The elements necessary to sustain a negligence claim are:
1. A duty, or obligation, recognized by the
law, requiring the [defendant] to conform to a
certain
standard
of
conduct,
for
the
protection of others against unreasonable risks.
2. A failure on the [defendant's] part to
-22-

conform to the standard required: a breach of
the duty....
3. A reasonably close causal connection
between the conduct and the resulting injury.
This is what is commonly known as “legal
cause,” or “proximate cause,” and which
includes the notion of cause in fact.
4. Actual loss or damage....
Curd

v.

Mosaic

Fertilizer,

LLC,

39

So.

3d

1216,

1227

(Fla.

2010)(quoting Clay Elec. Coop., Inc. v. Johnson, 873 So. 2d 1182,
1185 (Fla. 2003)).
If the Court gets past the fact that the Trustee stands in the
shoes of the Debtors, not the victims, and therefore lacks standing
to assert any claims on behalf of the investors, the Trustee is
suing

SunTrust

instructed.

and

Wells

Fargo

for

doing

what

the

Debtors

The only breach of the alleged duty relates to the

wire transfers from the SunTrust Accounts, which could not occur
after July 30, 2007, when the accounts were closed.

Again, the

same cannot be determined as to the Wells Fargo Accounts, as
discussed above.

Additionally, the Court does not find that the

Trustee’s appointment on April 30, 2008 “in some extraordinary way”
prevented the Debtors, or then the Trustee, from asserting the
Debtors’ rights prior to July 30, 2011.
apply the doctrine of equitable tolling.

Thus, the Court will not
The SunTrust motion to

dismiss is granted as to Count V, and the Wells Fargo motion to
dismiss is denied as to Count X.

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B.

Pleading Sufficiency
(1)

Count VI:

Aiding And Abetting Conversion

Wells Fargo first argues that Count VI must be dismissed
because the allegations: (1) fail to establish that Wells Fargo had
actual knowledge of the conversion; and (2) fail to demonstrate
that Wells Fargo provided substantial assistance in committing the
wrongdoing.

In

support,

Wells

Fargo

relies

on

the

Eleventh

Circuit’s recent unpublished opinion in Lawrence v. Bank of Am.,
N.A., 455 F. App’x 904.

Plaintiffs respond that Lawrence is

distinguishable.
The Court agrees with plaintiffs.

The Amended Complaint, in

addition to alleging that the transactions were atypical, alleges
that Wells Fargo: (1) knew about the relationship between Fuchs and
Engler and between PCOM and PCO on May 29, 2007; (2) received
SunTrust’s 314(b) request and the AMFA Warning Notification Letter
on June 8, 2007; (3) conducted its own investigation into the
accounts; (4) sent a letter to PCOM on July 10, 2007, requesting
that the accounts be closed by August 21, 2007 or would be closed
involuntarily by that date; and (5) despite the letter, continued
to process thousands of monthly receipts and disbursements of
investor funds totaling tens of millions of dollars per month to
and from Fuchs/PCOM until in or about January 2008.
6, 46, 47, 48, 49, 50, 54.)

(Doc. #24, ¶¶

These allegations are sufficient to

plausibly state that Wells Fargo had actual knowledge of the

-24-

wrongdoing, Fed. R. Civ. P. 9(b)(“Malice, intent, knowledge, and
other conditions of a person’s mind may be alleged generally.”),
and sufficiently demonstrate that Wells Fargo provided substantial
assistance in committing the wrongdoing, Groom v. Bank of Am., No.
8:08-cv-2567-JDW-EAJ, 2012 WL 50250, at *4 (M.D. Fla. Jan. 9,
2012)(“Substantial assistance occurs when a defendant affirmatively
assists, helps conceal or fails to act when required to do so,
thereby enabling the breach to occur.”)(citation omitted).
Wells Fargo also argues that Count VI must be dismissed
because “[t]he failure to repay a loan, even when the borrower had
no intention of repaying the loan at the time of the promise, does
not give rise to the underlying tort of conversion.”
15).

(Doc. #43, p.

Plaintiffs, in their response to a similar argument made by

SunTrust, respond that an exception applies because the claim goes
well beyond the terms of the investment agreement.

(Doc. #47, p.

30.)
“The law in Florida is clear—a simple monetary debt generally
cannot form the basis of a claim for conversion or civil theft.”
Walker v. Figarola, 59 So. 3d 188, 190 (Fla. 3d DCA 2011)).

See

also Rosen v. Marlin, 486 So. 2d 623, 625-26 (Fla. 3rd DCA 1986).
To establish conversion when there is a contractual relationship,
the conversion “must go beyond, and be independent from, a failure
to comply with the terms of a contract.”

Gasparini v. Pordomingo,

972 So. 2d 1053, 1055 (Fla. 3d DCA 2008).

Where money is involved,

-25-

“there must be an obligation to keep intact or deliver the specific
money in question, so that money can be identified.”

Walker, 59

So. 3d at 190 (quoting Gasparini, 972 So. 2d at 1056)(internal
quotation marks omitted).

On the other hand, Florida case law has

also upheld a verdict of conversion where there was a contractual
relationship and evidence of “a classic embezzlement.” Masvidal v.
Ochoa, 505 So. 2d 555, 556 (Fla. 3d DCA 1987).
The

Amended

Complaint

alleges

that

the

investments

were

documented by Promissory Notes and Loan Agreements between Engler
and PCO, as Borrowers, and the investors, as Lenders.
¶ 28.)
for

his

(Doc. #24,

Plaintiffs also allege that Engler solicited investments
day

trading

and

investment

business

and

“guaranteed

annualized returns of 48% to 72%,” and engaged in a classic Ponzi
scheme.

While there is no allegation that plaintiffs, in their

Promissory Notes and Loan Agreements, directed how the money was to
be used, the pleading is sufficient to state a plausible claim
under Masvidal. Therefore, the motion to dismiss will be denied as
to Count VI.
(2)

Count VII:

Aiding And Abetting Fraud

Wells Fargo does not assert any additional arguments beyond
those made as to the actual knowledge and substantial assistance
elements of aiding and abetting. For the reasons stated previously
as to Count VI, Wells Fargo’s arguments as to Count VII fail, and
the motion to dismiss is denied as to Count VII.

-26-

(3) Count VIII: Aiding and Abetting Breach of Fiduciary
Duties
Wells Fargo’s actual knowledge and substantial assistance
arguments similarly fail as to Count VIII as they did for Counts VI
and VII.

However, Wells Fargo also argues that Count VIII must be

dismissed because there are no allegations supporting a fiduciary
relationship between Fuchs and the Wells Fargo plaintiffs.
A Florida court has summarized the contours of a fiduciary
relationship as follows:
If a relation of trust and confidence exists
between the parties (that is to say, where
confidence is reposed by one party and a trust
accepted by the other, or where confidence has
been acquired and abused), that is sufficient
as a predicate for relief.
Fiduciary
relationships may be implied in law and such
relationships are premised upon the specific
factual situation surrounding the transaction
and the relationship of the parties. Courts
have found a fiduciary relation implied in law
when confidence is reposed by one party and a
trust accepted by the other. To establish a
fiduciary relationship, a party must allege
some degree of dependency on one side and some
degree of undertaking on the other side to
advise, counsel and protect the weaker party.
Bingham v. Bingham, 11 So. 3d 374, 387 (Fla. 3d DCA 2009)(internal
citations and quotations omitted).

Fiduciary relationships are

either expressly or impliedly created.

Capital Bank v. MVB, Inc.,

644 So. 2d 515, 518-19 (Fla. 3d DCA 1994).

When a fiduciary

relationship has not been created by an express agreement, the
question of whether the relationship exists generally depends “upon
the specific facts and circumstances surrounding the relationship
-27-

of the parties in a transaction in which they are involved.”
Collins v. Countrywide Home Loans, 680 F. Supp. 2d 1287, 1297 (M.D.
Fla. 2010)(quoting Taylor Woodrow Homes Fla., Inc. v. 4/46-A Corp.,
850 So. 2d 536, 540 (Fla. 5th DCA 2003)).
Here, plaintiffs simply allege that “Fuchs owed a fiduciary
duty

to

[PCOM’s]

creditors/innocent

investors

because

it

continually operated in the zone of insolvency since in or about
January 2005.”

(Doc. #24, ¶ 110.)

Plaintiffs do not, however,

allege sufficient facts to support this conclusory allegation. The
Court finds that the allegations, standing alone, are insufficient
to plausibly suggest that Fuchs was acting as a fiduciary to PCOM’s
creditors/innocent investors.

Therefore, the motion to dismiss

will be granted as to Count VIII, and Count VIII will be dismissed
without prejudice.
(4)

Count IX:

Unjust Enrichment

Wells Fargo asserts that Count IX should be dismissed because
there is no allegation that plaintiffs have directly conferred a
benefit on defendant. Plaintiffs respond, citing Williams v. Wells
Fargo Bank N.A., No. 11-21233-CIV, 2011 WL 4368980 (S.D. Fla. Sept.
19, 2011), that the lack of direct contact does not preclude an
unjust

enrichment

claim.

Here,

plaintiffs

allege:

(1)

PCOM

conferred a benefit upon Wells Fargo by making wire transfers into
and out of the Wells Fargo Accounts, thereby accruing significant
transaction/service fees; (2) PCOM paid the fees with investor

-28-

funds;

(3)

Wells

Fargo

knowingly

accepted

and

retained

the

benefits; and (4) the circumstances are such that it would be
inequitable for Wells Fargo to retain the benefits.
118-121.)

(Doc. #24, ¶¶

At this stage in the litigation, the Court finds that

plaintiffs have adequately pled a plausible cause of action for
unjust enrichment.
(5) Count X: Bankruptcy Trustee’s Claims for Negligence
and Wire Transfer Liability
As alluded to above, the Trustee lacks standing to assert any
claims of the investors, Caplin v. Marine Midland Grace Trust Co.,
406 U.S. 416 (1972), and cannot set forth a plausible negligence
claim or wire liability claim on behalf of the Debtors for doing
what the Debtors instructed, see, e.g., O’Halloran v. First Union
Nat’l Bank of Fla., 350 F.3d 1197 (11th Cir. 2003).

Accordingly,

the motion to dismiss will be granted as to Count X.
Accordingly, it is now
ORDERED:
1.

SunTrust Bank’s Motion to Dismiss Plaintiffs’ Amended

Class Action Complaint (Doc. #35) is GRANTED, and Counts I, II,
III, IV, and V of the Amended Complaint (Doc. #24) are dismissed
with prejudice.
2.

Wells Fargo Bank, N.A.’s Motion to Dismiss Amended Class

Action Complaint (Doc. #43) is GRANTED in part and DENIED in part,
and Counts VIII and X of the Amended Complaint are dismissed
without prejudice.
-29-

3.

SunTrust’s Motion to Strike Paragraphs 42, 43, 70(v),

75(v), 83(v), and Exhibit 4 of Plaintiffs’ Amended Class Action
Complaint (Doc. #36) is DENIED as moot.
4.
Support

Plaintiffs’ Motion and Incorporated Memorandum of Law in
of

Class

Certification

(Doc.

#54)

is

DENIED

without

prejudice for plaintiffs to file an amended motion in light of this
Opinion and Order.
5.

Plaintiffs shall comply with the Order (Doc. #65) dated

August 2, 2012.
DONE AND ORDERED at Fort Myers, Florida, this 19th day of
March, 2013.

Copies: Counsel of record

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