253 A.3d 682
Pa. Super. Ct.2021Background
- Robert Bentley ran a large Ponzi-like scheme (1996–2001); the SEC sued and the federal district court appointed David H. Marion receiver and froze Bentley’s/BFS/Entrust assets in 2001.
- Bentley used Entrust (a sole proprietorship custodian he controlled) and BFS to commingle investor funds and sell fictitious or misrepresented CDs; many investors believed they were buying FDIC‑insured CDs.
- Bentley opened deposit and wire accounts at Bryn Mawr Trust Company (BMT) after a referral; BMT offered favorable terms, did not verify a critical $2 million Main Line credit facility, and allegedly failed to follow its Know‑Your‑Customer (KYC) procedures.
- The receiver sued BMT (2004; amended 2012) alleging aiding and abetting fraud (§ 876 Restatement), breach of the UFA, and negligence; trial court granted summary judgment on the aiding‑and‑abetting claim (concluding PA does not recognize it) and denied other claims.
- At jury trial (2018) the jury returned a defense verdict on the remaining claims; Marion appealed, arguing (1) summary judgment on aiding and abetting was error and (2) the court wrongly admitted prejudicial evidence about the receiver’s attorneys’ fees and early CD redemptions (mitigation). The Superior Court vacated and remanded for a new trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pennsylvania recognizes an aiding‑and‑abetting‑fraud claim under Restatement (Second) of Torts § 876(b) | Marion: PA recognizes § 876 causes of action (concerted tortious conduct / aiding & abetting); his amended complaint pleaded § 876(b)-style facts | BMT: Pennsylvania law doesn’t recognize aiding & abetting fraud as a separate cause (trial court granted SJ) | Superior Court: PA jurisprudence (Valentino et al.) effectively recognizes § 876 claims; trial court erred — summary judgment vacated and § 876(b) claim reinstated |
| Whether evidence of the receiver’s aggregate attorneys’ fees and litigation strategy was admissible (mitigation/failure to mitigate) | Marion: Fees were irrelevant, court‑approved, and their admission unfairly suggested he sued for law‑firm profit; admission required new trial | BMT: Fees relevant to mitigation — receiver’s aggressive litigation depleted estate and reduced funds for investors; expert supported fee estimates | Superior Court: Admission of fee evidence was irrelevant and prejudicial; expert testimony on fees was speculative; error was not harmless — new trial required |
| Whether evidence/argument about early liquidation/redemption of CDs (receiver’s strategy) could be used to show failure to mitigate damages | Marion: CD redemptions were court‑approved, reasonable, and responsive to investor/agency pressure; BMT’s alternative plan would have mimicked Bentley’s wrongful withholding of matured funds | BMT: Early redemptions reduced income and harmed claimants; a different strategy (holding CDs) could have paid 100% of allowed claims sooner | Superior Court: State law allows mitigation defenses against a receiver; but under these facts BMT’s proposed mitigation was flawed and implicated the same wrongful conduct as Bentley; admitting that defense on these facts was error — supports new trial |
Key Cases Cited
- Skipworth v. Lead Indus. Ass'n, Inc., 690 A.2d 169 (Pa. 1997) (adopted Pa. Super. interpretations limiting § 876 where actors cannot be identified)
- Sovereign Bank v. Valentino, 914 A.2d 415 (Pa. Super. 2005) (treated "aiding and abetting" and "concerted tortious conduct" under Restatement § 876 interchangeably and upheld § 876(b) recovery)
- HRANEC Sheet Metal v. Metalico Pittsburgh, Inc., 107 A.3d 114 (Pa. Super. 2014) (intentional ignorance can satisfy knowledge element for § 876 liability)
- Grimm v. Grimm, 149 A.3d 77 (Pa. Super. 2016) ( § 876(b) requires knowledge or reasonable foreseeability of the tortious act)
- O’Melveny & Myers v. Federal Deposit Ins. Corp., 512 U.S. 79 (U.S. 1994) (state law governs available defenses to a receiver’s state‑law causes of action)
- Deeds v. Univ. of Pennsylvania Med. Ctr., 110 A.3d 1009 (Pa. Super. 2015) (erroneously admitted evidence can taint liability determinations and require a new trial)
- Hart v. W.H. Stewart, Inc., 564 A.2d 1250 (Pa. 1989) (erroneous damages evidence may be harmless if jury finds for defendant on liability — cited and distinguished)