288 A.3d 76
Pa.2023Background:
- David Marion, court-appointed receiver for Bentley Financial Services and Entrust Group, sued Bryn Mawr Trust Company (BMT) alleging breach of fiduciary duties, UFA violation, negligence, and aiding and abetting Bentley’s Ponzi/fraud scheme.
- Bentley perpetrated a long-running Ponzi scheme; a federal receiver was appointed and criminal proceedings followed.
- At trial (2018) the jury found for BMT; the trial court had earlier granted BMT summary judgment on aiding-and-abetting; Marion appealed.
- The Superior Court reversed, holding aiding-and-abetting under Restatement §876(b) is a viable Pennsylvania claim and that a defendant’s ‘‘should have known’’/intentional ignorance can satisfy scienter; it vacated the verdict and remanded for a new trial.
- The Pennsylvania Supreme Court granted limited review to decide (1) whether Pennsylvania recognizes aiding-and-abetting fraud and (2) what scienter is required, and whether the jury’s no-liability verdict barred relief.
- The Supreme Court held Pennsylvania recognizes aiding-and-abetting fraud but requires actual knowledge of the underlying fraud; it affirmed in part, reversed in part, and remanded for a new trial.
Issues:
| Issue | Plaintiff's Argument (Marion) | Defendant's Argument (BMT) | Held |
|---|---|---|---|
| Whether Pennsylvania recognizes a cause of action for aiding and abetting fraud | Court should recognize the tort (consistent with Superior Court precedent and Restatement) | Court should not create a new, duplicative cause of action; existing torts suffice | Court recognized the tort, finding support in precedent, Restatements, and policy reasons |
| Required scienter for aiding-and-abetting fraud | Lower standard (knowledge or should have known / intentional ignorance) suffices | Actual knowledge of the underlying fraud is required | Actual knowledge required; ‘‘should have known’’ or mere intentional ignorance insufficient (though willful blindness may support an inference) |
| Whether the jury’s no-liability verdict bars relief on remand | Jury verdict tainted by trial error; retrial warranted | Jury’s no-liability finding precludes relief | The Supreme Court did not address whether reversal of the verdict was correct (outside limited grant); because Superior Court vacated the verdict, nothing bars relief on remand |
Key Cases Cited
- Skipworth v. Lead Indus. Ass'n, 690 A.2d 169 (Pa. 1997) (endorsed Superior Court interpretations of Restatement §876(a) concert-of-action theory)
- Sovereign Bank v. Valentino, 914 A.2d 415 (Pa. Super. Ct. 2006) (Superior Court recognized aiding-and-abetting fraud claim in banking context)
- Kline v. Ball, 452 A.2d 727 (Pa. Super. Ct. 1982) (recognized potential applicability of §876 generally)
- Burnside v. Abbott Laboratories, 505 A.2d 973 (Pa. Super. Ct. 1985) (recognized concerted-activity claim under §876)
- Tincher v. Omega Flex, Inc., 104 A.3d 328 (Pa. 2014) (discussed the court’s authority to evolve common law and recognize new causes of action)
- Off. Comm. of Unsecured Creditors v. PriceWaterHouseCoopers, LLP, 989 A.2d 313 (Pa. 2010) (noted by defendant as contrary precedent regarding recognition of §876(b) aiding-and-abetting)
- Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) (discussed willful blindness as probative of actual knowledge)