Wachovia Dealer Services, Inc. v. Chesapeake Financial Services, Inc. et al
MEMORANDUM AND ORDER granting 244 Plaintiff's Motion for Summary Judgment; and denying 253 Defendant's Motion for Summary Judgment. Signed by Judge Marvin J. Garbis on 1/24/14. (apls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
WELLS FARGO BANK, N.A.
* CIVIL ACTION NO. MJG-08-2439
SERVICES, INC. et al.
MEMORANDUM AND ORDER
The Court has before it Plaintiff Wells Fargo Bank, N.A.'S
Motion for Partial Summary Judgment as to Defendant Chesapeake
Financial Services, Inc.'s Affirmative Defense of Equitable
Estoppel [Document 244], Defendants Chesapeake Financial
Services' and Philip Colonna's Motion for Summary Judgment on
Grounds of Equitable Estoppel [Document 253], and the materials
submitted relating thereto. The Court has held a hearing and had
the benefit of the arguments of counsel.
In the Memorandum and Order Re: Motions for Summary
Judgment [Document 231] the Court presented the background of
the instant case and granted partial summary judgment to
Plaintiff Wells Fargo1 with regard to its contract claims against
Chesapeake Financial Services, Inc. and Phillip Colonna ("the
However, the Court stated:
Herein, "Wells Fargo" refers to all pertinent entities
related to Plaintiff, including Wachovia Dealer Services.
The Court finds that neither [the Chesapeake
include a request for summary judgment with
equitable estoppel. Inasmuch as the defense
was pleaded, the Court will not find waiver.
Thus the defense remains pending.
[Document 231] at 239.
The parties have filed the instant cross-motions for
summary judgment with regard to the affirmative defense.
Under the law of North Carolina, the law applicable to the
instant claim, to establish a claim of equitable estoppel, the
following elements must be met:
"amount to a false representation or
concealment of material facts or, at
least, [must be] reasonably calculated
to convey the impression that the facts
are otherwise than, and inconsistent
with, those which the party afterwards
attempts to assert";
"[I]ntention or expectation [of the
party being estopped] that such conduct
shall be acted upon by the other party,
or conduct which at least is calculated
to induce a reasonably prudent person
to believe such conduct was intended or
expected to be relied and acted upon";
"[K]nowledge, actual or constructive,
of the real facts [by the party being
"[L]ack of knowledge . . . of the truth
as to the facts in question [by the
party claiming estoppel]";
"[R]eliance [on the part of the party
claiming estoppel] upon the conduct of
the party sought to be estopped"; and
estoppel] thereon of such a character
Crisp v. E. Mortg. Inv. Co., 632 S.E.2d 814, 816 (N.C. Ct. App.
The Chesapeake Defendants base their equitable estoppel
defense upon two acts by Wells Fargo:
Action, described below, allegedly amounting to a
false statement that Wells Fargo had verified the
purported buyer's liquidity and a purported
survey of the boat, and
A statement by Wells Fargo, after the fraud was
discovered, that the FBI had been advised of the
loss and that the Chesapeake Defendants should
not undertake an investigation to recover the
funds from the criminals.
[Document 253-1] at 4-5, 11-12.
As to the first action, the evidence establishes that the
Chesapeake Defendants submitted documents in support of the loan
in question to Wells Fargo.
Wells Fargo responded with a
Decision approving the loan subject to conditions stated as:
ver [verification] $3mm [$3,000,000] liquid[ity]
Sat[isfactory] Review of Survey
In response, the Chesapeake Defendants submitted falsified
bank records and a falsified survey document that had been
obtained from the con men operating the fraud scheme.2
falsified documents were sent to Wells Faro with a copy of the
Wells Fargo Decision document and a note handwritten thereon:
Please review liquid and survey.
Remove [conditions] if OK.
Thereafter, Wells Fargo lifted the conditions and the
Chesapeake Defendants proceeded with the loan.
proceeding with the loan even though the purported buyer had not
complied with the condition of providing a $500,000 down
Pursuant to the summary judgment standard,3 the Court must
view the evidence as favorably for the non-movant as reasonably
Nevertheless, no reasonable fact finder could
conclude that, in context, Wells Fargo's action constituted a
statement that it had verified the bona fides of the false
There is no evidence indicating that the Chesapeake
Defendants were aware of the fraud scheme.
The Court may look at the evidence presented in regard to
the motion for summary judgment through the non-movant's rose
colored glasses, but must view it realistically. After so
doing, the essential question is whether a reasonable fact
finder could return a verdict for the non-movant or whether the
movant would, at trial, be entitled to judgment as a matter of
law. See, e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
documents submitted as distinct from reviewing the documents for
Such an undertaking on the part of Wells Fargo would have
been contrary to the essence of the agreement with the
Chesapeake Defendants whereby the risk of fraud was, as decided
by the Court, on the Chesapeake Defendants.
action taken by the Chesapeake Defendants "of such a character
as to change [their] position prejudicially" was to proceed with
a loan transaction with knowledge that the purported buyer had
failed to meet his obligation to provide a down payment.
As to the second action, the Chesapeake Defendants say that
Wells Fargo inaccurately told them that it had advised the FBI
of the theft and that this, in some manner, caused them to forgo
some sort of investigative efforts that might have resulted in a
recovery of a part of the amount lost.
Even assuming – and the
Court is not suggesting that such an assumption would be even
feasible – that the Chesapeake Defendants would have been able
to succeed in recovery efforts that were eventually beyond the
ability of all law enforcement personnel who worked on the case,
this would not estop Wells Fargo from enforcing the contract.
If the Chesapeake Defendants' contentions about the effect of
Wells Fargo's FBI statement had any conceivable relevant effect,
the effect would relate to some contention about a failure to
The bottom line is that Plaintiff is entitled to summary
judgment with regard to the Chesapeake Defendants' equitable
estoppel affirmative defense.
For the foregoing reasons:
Plaintiff Wells Fargo Bank, N.A.’S Motion for
Partial Summary Judgment as to Defendant
Chesapeake Financial Services, Inc.’s
Affirmative Defense of Equitable Estoppel
[Document 244] is GRANTED.
Defendants Chesapeake Financial Services’ and
Philip Colonna’s Motion for Summary Judgment on
Grounds of Equitable Estoppel [Document 253] is
SO ORDERED, on Friday, January 24, 2014.
Marvin J. Garbis
United States District Judge
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