Estate of William R. Barney, J v. PNC Bank, National Association
2013 U.S. App. LEXIS 8691
| 6th Cir. | 2013Background
- Manning, a lawyer, served as executor of the Barney estate and trustee of a trust, and opened separate estate and trust accounts at National City Bank.
- Manning wired about $1.25 million from those accounts to his company Manning & Banks, Inc., violating fiduciary duties.
- National City Bank did not notify Mrs. Barney about the transfers; Manning later confessed to diverting funds to his own company.
- Barneys sued Manning’s law firm in state court, which was resolved in the Barneys’ favor, and then sued National City Bank (PNC Bank) in state court; the case was removed to federal court and dismissed on the Uniform Fiduciaries Act defense.
- The district court granted dismissal under Fed. R. Civ. P. 12(b)(6); Barneys appealed, and the court affirmed, holding the Act bars claims unless the Barneys plead knowledge or bad faith.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §5815.07 bars liability at the pleading stage | Barneys argue the Bank may be liable despite the Act. | Bank contends the Act is an affirmative defense and may be invoked on dismissal. | Affirmative defense properly invoked; dismissal affirmed. |
| Whether Barneys pled actual knowledge or bad faith | Barneys plead Manning’s breach but not bank knowledge or bad faith. | Bank acted with knowledge of fiduciary relation; transfers were improper. | Barneys failed to plead facts showing actual knowledge or bad faith. |
| Whether Civil Aiding and Abetting Tortious Conduct exists under Ohio law | Barneys claim Bank knowingly aided Manning’s tortious conduct. | Such a tort is highly doubtful or not recognized; requires knowledge. | Claim properly dismissed; doubtful if cognizable. |
| Whether Negligent Supervision and Training can survive | Bank employees were inadequately trained; negligent supervision caused loss. | Bare, conclusory allegations fail to plead plausibly. | Dismissed for lack of plausible facts. |
Key Cases Cited
- Master Chemical Corp. v. Inkrott, 563 N.E.2d 26 (Ohio 1990) (§5815.07 is an affirmative defense; governs disposition when dealing with fiduciaries)
- Pavlovich v. Nat’l City Bank, 435 F.3d 560 (6th Cir. 2006) (requires actual knowledge or bad faith for aiding and abetting claims under fiduciary Act)
- Marsh v. Genentech, Inc., 693 F.3d 546 (6th Cir. 2012) (affirmative defense can support dismissal if the complaint shows the defense defeats relief)
- In re Colonial Mortg. Bankers Corp., 324 F.3d 12 (1st Cir. 2003) (definitively ascertainable facts may support dismissal on an affirmative defense)
- Inkrott v. Massie, 563 N.E.2d 26 (Ohio 1990) (reaffirmed that §5815.07 is an affirmative defense and the bank need not ensure proper use of entrusted funds)