Case 1:10-cv-22961-JJO Document 148 Entered on FLSD Docket 01/03/14 13:37:01 Page 1 of 16 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO. 10-22961-CIV-O’SULLIVAN [CONSENT] PABLO BARBACHANO, Plaintiff, v. STANDARD CHARTERED BANK INTERNATIONAL (AMERICAS) LIMITED, / ORDER THIS MATTER is before the Court on the Plaintiff’s Motion for Summary Judgment and Memorandum of Law of Summary Judgment on Counts One, Two, and Three (DE# 106, 7/2/13) and the Defendant’s Motion for Summary Judgment and Incorporated Memorandum of Law (DE# 108, 7/2/13). Having carefully reviewed the motions, responses, replies and evidence in the record, it is ORDERED AND ADJUDGED that the Plaintiff’s Motion for Summary Judgment and Memorandum of Law of Summary Judgment on Counts One, Two, and Three (DE# 106, 7/2/13) is DENIED and the Defendant’s Motion for Summary Judgment and Incorporated Memorandum of Law (DE# 108, 7/2/13) is GRANTED in part as to the plaintiff’s statutory claim (Count I) and DENIED in part as more fully discussed below. PROCEDURAL BACKGROUND The plaintiff, Pablo Barbachano (“Barbachano”) filed his complaint alleging that the defendant, Standard Chartered Bank International (Americas) Limited (“SCBI” or “defendant”), “executed” certain “unauthorized” transactions in his “accounts.” (DE# 3-1, Case 1:10-cv-22961-JJO Document 148 Entered on FLSD Docket 01/03/14 13:37:01 Page 2 of 16 ¶¶ 1,29). In his complaint, the plaintiff asserts three claims against the defendant: 1) violations of Florida Statute § 517.301 (Count I); 2) breach of fiduciary duty (Count II); and 3) negligence (Count III). The plaintiff seeks summary judgment on all three counts because the plaintiff claims that no genuine issue of material fact exists as to SCBI’s alleged unauthorized purchase of the Fairfield Sentry Limited shares on July 9, 2008 in the Mirage Account (Rupa Trust). Plaintiff’s Motion pp. 7-8 (DE# ). SCBI filed its Amended Answer and Affirmative Defenses (DE# 27, pp. 9-11). In its cross motion for summary judgment, the defendant asserts that the defendant is entitled to summary judgment because the plaintiff has failed to join two necessary and indispensable parties – Standard Chartered Trust (Cayman) Ltd., formerly known as AMEX International Trust (Cayman) Ltd. (hereinafter “SC Trust”), and Standard Chartered Bank (Switzerland) S.A., formerly American Express Bank (Switzerland) S.A. (hereinafter “SCB Switzerland”). The defendant maintains that a “contracting party is the ‘paradigm’ of an indispensable party ... [and] that a trustee is an indispensable party to an action affecting the subject trust.” Defendant’s Motion p. 1 (DE# 108, 7/2/13). SCBI also contends that because SCBI is not a party to the applicable account documents and did not execute the purchase of the alleged “unauthorized” transactions in question, that this Court should find that SCBI did not owe Barbachano a duty with respect to the Mirage Account to support his claims of breach of fiduciary duty and negligence. Additionally, SCBI argues that the plaintiff ratified the alleged “unauthorized” transactions at issue. Finally, the defendant contends that it is entitled to summary judgment on the Florida Statute § 517.301 claim (Count I - Unauthorized Trading) because the plaintiff cannot establish that any privity exists between himself 2 Case 1:10-cv-22961-JJO Document 148 Entered on FLSD Docket 01/03/14 13:37:01 Page 3 of 16 and SCBI. First, the plaintiff fails to plead his claim with the particularity required under Rule 9(b) of the Federal Rules of Civil Procedure. Second, the defendant maintains that “SCBI, as a non-party to the trust agreement and account documents that govern the account in which the alleged ‘unauthorized transactions were made, owed no duty to Barbachano to support any claim of breach of fiduciary duty or negligence.” Id. Third, “the relationship between SCBI, a bank, and Barbachano, its customer, was one at arms-length, and therefore, no fiduciary duty is imposed on SCBI as a matter of law.” Id. The account at issue, referred to herein as the “Mirage Account,” was opened and maintained at SCB Switzerland in Geneva, Switzerland. A careful review of the filings and the record reveals that genuine issues of material fact exist that preclude entry of summary judgment in either party’s favor on Counts II (breach of fiduciary duty) and III (negligence). FACTUAL BACKGROUND Barbachano opened an investment account (CIF 15530), which was maintained by SCBI in Miami, Florida. That account was held in Barbachano’s name and designated as an “individual” or “personal” account (hereinafter referred to as the “Personal Account”). The account at issue in this lawsuit, referred to as the Mirage Account, was opened and maintained by Mirage Investment Ltd., a personal investment company beneficially-owned by Barbachano, at SCB Switzerland (formerly known as American Express Bank (Switzerland) S.A.) in Geneva, Switzerland. Pursuant to the terms of the March 29, 1997 letter, a Trust Agreement (“Trust Agreement”) was made between Barbachano as grantor, and AMEX International Trust (Cayman) Ltd now Case 1:10-cv-22961-JJO Document 148 Entered on FLSD Docket 01/03/14 13:37:01 Page 4 of 16 known as Standard Chartered Trust (Cayman) Ltd. (“SC Trust”), as Trustee on September 5, 1997, which established the Rupa Trust. In April 1997, Mirage executed with SCB Switzerland certain documents to open the Mirage Account, including the “Agreement to Open an Account for Legal Entities” entered July 4, 1997, and “General Business Conditions.” SCBI Stmt. Facts, ¶ 24. The Trust Agreement provides for the administration of the Rupa Trust’s assets by SC Trust, not SCBI: “The Trustee shall, during the term of the trust, hold, manage, invest and reinvest the trust fund . in such manner as the Grantor shall from time to time direct in writing.” Complaint, Ex. H (DE# 3-2, p. 16, ¶ 1.1); Barb. Stmt. Facts ¶ 33; SCBA Stmt. Facts ¶ 29. The assets underlying the transactions at issue in this lawsuit were Rupa Trust assets and the transactions were executed in the Mirage Account. The Trust Agreement provided: 1.1 Management of Trust Fund. The Trustee shall, during the term of the trust, hold, manage, invest and reinvest the trust fund (except as provide [sic] for a Special Company” as defined hereinafter in Article 7) in such manner as the Grantor shall from time to time direct in writing .... Trust Agreement (DE# 3-2 at 12-30)(DE# 3-3 at 10). SCBI is not a signatory to any of the contracts regarding the Mirage Account or the Rupa Trust. DISCUSSION I. Standard of Review on Motion for Summary Judgment The court, in reviewing a motion for summary judgment, is guided by the standard set forth in Federal Rule of Civil Procedure 56( c), which states, in relevant part, as follows: 4 Case 1:10-cv-22961-JJO Document 148 Entered on FLSD Docket 01/03/14 13:37:01 Page 5 of 16 The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party bears the burden of meeting this exacting standard. Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). That is, "[t]he moving party bears 'the initial responsibility of informing the . court of the basis for its motion, and identifying those portions of the 'pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.'" U.S. v. Four Parcels of Real Property, 941 F.2d 1428, 1437 (11th Cir. 1991) (quoting Celotex, 477 U.S. at 323). In assessing whether the moving party has satisfied this burden, the court is required to view the evidence and all factual inferences arising therefrom in the light most favorable to the non-moving party. Batey v. Stone, 24 F.3d 1330, 1333 (11th Cir. 1994); Sheckells v. Agv-Usa Corp., 987 F.2d 1532, 1534 (11th Cir. 1993); Browning v. Peyton, 918 F.2d 1516, 1520 (11th Cir. 1990); Clemons v. Dougherty County, Ga., 684 F.2d 1365, 1368 (11th Cir. 1982); Augusta Iron & Steel Works, Inc. v. Employers Ins. of Wausau, 835 F.2d 855, 856 (11th Cir. 1988)(per curiam). Summary judgment is appropriate when there is no dispute as to any material fact and only questions of law remain. Reich v. John Alden Life Ins. Co., 126 F.3d 1 (1st Cir. 1997). If the record presents factual issues, the court must deny the motion and proceed to trial. Adickes, 398 U.S. at 157; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). 5 Case 1:10-cv-22961-JJO Document 148 Entered on FLSD Docket 01/03/14 13:37:01 Page 6 of 16 Despite these presumptions in favor of the non-moving party, the court must be mindful of the purpose of Rule 56 which is to eliminate the needless delay and expense to the parties and to the court occasioned by an unnecessary trial. Celotex, 477 U.S. at 322-323. Consequently, the non-moving party cannot merely rest upon his bare assertions, conclusory allegations, surmises or conjectures. Id. As the Supreme Court noted in Celotex, [T]he plain language of Rule 56( c) mandates the entry of summary judgment .