Perlman, Esq.v. Wells Fargo Bank, N.A.
ORDER granting 80 Defendant's Motion for Reconsideration; denying 86 Plaintiff's Motion for Leave to File a Second Amended Complaint. Signed by Judge Daniel T. K. Hurley on 8/10/12. (lr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 10-81612-CV-HURLEY/HOPKINS
JONATHAN E. PERLMAN,
WELLS FARGO BANK, N.A.,
ORDER GRANTING MOTION FOR RECONSIDERATION
AND DENYING MOTION FOR LEAVE TO AMEND
THIS CAUSE is before the Court upon Defendant Wells Fargo Bank, N.A.’s (“the Bank’s”)
Motion for Reconsideration [ECF No. 80], in which the Bank requests that the Court revisit its
earlier decision not to dismiss the Plaintiff’s aiding and abetting and fraudulent transfer claims.
While that motion was pending, Plaintiff filed a Motion for Leave to File a Second Amended
Complaint [ECF No. 86]. For the reasons to follow, the Court will deny Plaintiff’s motion for leave
to file and grant the Bank’s motion for reconsideration.
Defendant’s Motion for Reconsideration
In a previous Order dated November 22, 2011 (the “Dismissal Order”) [ECF No. 52], the
Court dismissed certain claims in the original complaint with prejudice and allowed Plaintiff’s aiding
and abetting and fraudulent transfer claims to go forward. In the instant motion, the Bank asks the
Court to reconsider its decision in light of an intervening unpublished Eleventh Circuit opinion. See
Lawrence v. Bank of Am., 455 Fed. Appx. 904 (11th Cir. 2012) (“Lawrence II”).
In the Dismissal Order, the Court considered whether a plaintiff could properly plead the
actual knowledge element of an aiding and abetting claim by alleging atypical business transactions.
Dismissal Order 17-19 [DE # 52]. In concluding that such allegations could be sufficient, the Court
attempted to reconcile a variety of cases with conflicting outcomes. See, e.g., Woodward v. Metro
Bank of Dallas, 522 F.2d 84, 97 (5th Cir. 1975) (“[I]f the method or transaction is atypical or lacks
business justification, it may be possible to infer the knowledge necessary for aiding and abetting
liability.”); Lawrence v. Bank of America, N.A., No. 8:09-cv-2162-T-33TGW, 2010 WL 3467501,
*4 (M.D. Fla. Aug. 30, 2010) (“Lawrence I”). The Court was troubled by but disagreed with the
district court opinion in Lawrence I because it expressly considered atypical business transactions
and found them insufficient to allege actual knowledge of an underlying violation. 2010 WL
3467501 at *4.
Shortly after the Court issued the Dismissal Order, the Eleventh Circuit affirmed the district
court’s order in Lawrence, stating that “[a]lthough Plaintiffs alleged the transactions were atypical
and therefore [the Bank] should have known of the Ponzi scheme, such allegations are insufficient
under Florida law to trigger liability.” Lawrence II, 455 Fed. Appx. at 907. Although Lawrence II
is an unpublished opinion and therefore does not constitute binding precedent, see U.S.C.A. 11th Cir.
Rule 36-2, its reasoning sheds substantial light on the exact issue presented by the instant motion.
With the benefit of the Eleventh Circuit’s reasoning on this issue, the Court now concludes that
Plaintiff’s allegations are insufficient as a matter of law to state a claim for aiding and abetting
liability. Because banks have no duty to investigate even suspicious transactions, allegations of such
transactions do not demonstrate the actual knowledge required for aiding and abetting claims.
Lawrence II, 455 Fed. Appx. at 907. Under this analysis of its allegations of atypical transactions,
the complaint does not sufficiently allege that the Bank knowingly abetted the underlying scheme.
The Bank also asks the Court to reconsider Plaintiff’s claims for avoidance and recovery of
fraudulent transfers pursuant to the Florida Uniform Fraudulent Transfer Act (“FUFTA”), Fla. Stat.
§ 726.101. The Bank argues that Lawrence II also dictates dismissal of the Receiver’s fraudulent
transfer claims because, just as allegations of atypical transactions are insufficient to plead actual
knowledge, so too are they insufficient to allege bad faith under the bad-faith exception to the mere
conduit defense of a fraudulent transfer claim.
The mere conduit rule is an equitable exception to fraudulent transfer liability that requires
a defendant to “establish (1) that [it] did not have control over the assets received, i.e., that [it]
merely served as a conduit for the assets that were under the actual control of the [transferor] and
(2) that [it] acted in good faith and as an innocent participant in the fraudulent transfer.” In re
Harwell, 628 F.3d 1312, 1323 (11th Cir. 2010). Thus, the mere conduit rule is an affirmative
defense to fraudulent transfer liability. Under Florida law, a Court may consider an affirmative
defense in resolving a motion to dismiss when the complaint “affirmatively and clearly shows the
conclusive applicability of the defense to bar the action.” Jackson v. BellSouth Telecomms., 372
F.3d 1250, 1277 (11th Cir. 2004) (internal citations omitted).
In the instant case, the face of the Amended Complaint makes clear that the Bank acted as
a mere conduit of Theodule’s fraudulent transfers—that is, that the Bank never exercised dominion
or control over the funds and that the Bank acted with good faith. In evaluating the Bank’s good
faith, “[t]he relevant question is whether [it] had actual knowledge of the debtor's fraudulent purpose
or ‘had knowledge of such facts or circumstances as would have induced an ordinarily prudent
person to make inquiry, and which inquiry, if made with reasonable diligence, would have led to the
discovery of the [transferor's] fraudulent purpose.’” Wiand v. Waxenberg, 611 F. Supp. 2d 1299,
1319 (S.D. Fla. 2009) (quoting United States v. Romano, 757 F. Supp. 1331, 1338 (M.D. Fla. 1989)).
The Court has already concluded that the Receiver has not properly alleged the Bank’s actual
knowledge of the underlying violations. The Court further concludes that because banks have the
“right to assume that individuals who have the legal authority to handle [an] entity’s accounts do not
misuse the entity’s funds,” O’Halloran v. First Union Nat’l Bank of Fla., 350 F.3d 1197, 1205 (11th
Cir. 2003), the alleged atypical transactions and other red flags do not comprise “facts or
circumstances [that] would have induced an ordinarily prudent [bank] to make inquiry . . . .”
Waxenberg, 611 F. Supp. 2d at 1319 (internal citation omitted).
It is true that the threshold for granting a motion to dismiss based on the applicability of an
affirmative defense is higher than the one that applies to a Plaintiff’s duty to affirmatively allege the
elements of a cause of action. Jackson, 372 F.3d at 1277. However, as stated in Lawrence II,
“Florida law does not require banking institutions to investigate transactions.” 455 Fed. Appx. at
907. Clearly then, Plaintiff’s numerous allegations of atypical transactions, red flags, and the like
do not provide any basis to conclude that the Bank was anything more than “an innocent participant
in the fraudulent transfer.” In re Harwell, 628 F.3d at 1323. This being the case, although Plaintiff
may have alleged the basic elements of a fraudulent transfer claim, Plaintiff’s allegations also plainly
demonstrate that the mere conduit exception applies and that the fraudulent transfer claims must fail.
Moreover, the Court also finds fraudulent transfer liability of a bank under these
circumstances at odds with the reasoning in Freeman v. First Union Nat’l Bank, 865 So. 2d 1272
(Fla. 2004). In Freeman, the Florida Supreme Court rejected a cause of action for aiding and
abetting fraudulent transfers against a bank that was the primary banker for a Ponzi schemer after
it effectuated wire transfers on the schemer’s behalf even after the schemer was sued and a court
issued an injunction freezing the accounts at the bank. Id. at 1274 n.3. To allow Plaintiff in the
instant case to circumvent the outcome in Freeman by holding a bank liable for its customer’s
deposits into its own accounts would undermine the Florida Supreme Court’s demonstration of “the
narrow focus of the FUFTA and its limitations.” Id. at 1277.
In reconsidering the Dismissal Order and dismissing the aiding and abetting and fraudulent
transfer claims, the Court must also determine whether to dismiss the claims with or without
prejudice. Because this determination presents the same issues as Plaintiff’s motion for leave to
amend, the Court will address it in the following section.
Plaintiff’s Motion for Leave to Amend
Generally, leave to amend is freely given. Fed. R. Civ. P. 15(a)(2). However, leave to amend
may be denied if amendment would be futile—i.e., the proposed amended complaint would still fail
to state a claim. Spanish Broad. Sys. of Fla., Inc. v. Clear Channel Commc’ns, Inc., 376 F.3d 1065,
1077 (11th Cir. 2004). In the instant case, Plaintiff has already amended the complaint once. In
addition, upon review of the proposed second amended complaint, the Court finds that Plaintiff has
done little more than allege further “red flags” (or elaborate on those previously stated) that should
have, upon investigation, alerted the Bank to the ongoing Ponzi scheme. But as the Court has
discussed at length above, Florida law places no requirements on banks to investigate red flags.
Order Granting Motion for Reconsideration and Denying Motion for Leave to Amend
Perlman v. W ells Fargo Bank, N.A.
Case No. 10-cv-81612-DTKH
None of Plaintiff’s amended allegations would establish that the bank had actual knowledge of the
underlying violations. Thus, granting leave to submit the proposed complaint would be futile.1
Accordingly, it is hereby ORDERED and ADJUDGED that:
Defendant’s Motion for Reconsideration [ECF No. 80] is GRANTED.
Upon reconsideration, all of Plaintiff’s claims against Defendant in this action are
DISMISSED WITH PREJUDICE.
Plaintiff’s Motion for Leave to File a Second Amended Complaint [ECF No. 86] is
Pursuant to Fed. R. Civ. P. 58(a), the Court will enter final judgment by separate
DONE and SIGNED in Chambers at West Palm Beach, Florida this 10th day of August,
Daniel T. K. Hurley
United States District Judge
Copies provided to counsel of record
In a related action, the Court noted that certain new allegations that were untimely presented
may have been sufficient to warrant granting leave to amend. See Perlman v. Bank of Am., N.A., No.
9:11-cv-80331-DTKH (July 2, 2012) (ECF No. 94). The new allegations in the instant case,
however, while timely presented, are not of a similar character to those in Bank of America.
For updated court information, visit unofficial Web site
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?