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Busey v. Wells Fargo Bank, N.A.

United States District Court, W.D. Washington, Tacoma

October 23, 2019

JAMES BUSEY, individual, Plaintiff,
v.
WELLS FARGO BANK NA, a national banking institution, Defendant.

          ORDER ON DEFENDANT'S MOTION TO DISMISS

          ROBERT J. BRYAN United States District Judge.

         This matter comes before the Court on the Defendant Wells Fargo Bank NA's (“Wells Fargo”) Motion to Dismiss. Dkt. 11. The Court has considered the pleadings filed in support of and in opposition to the motion and the file herein.

         This case arises from Wells Fargo's alleged improper handling of bank accounts for two trust funds, the Busey Family Lopez Property Trust (“BFLIPT”) and the Ann Busey Revocable Living Trust (“ABRLT”) of which the Plaintiff, James Busey, was the co-trustee and successor trustee, respectively. Dkt. 1-1. Wells Fargo now moves to dismiss the case arguing that the lawsuit is barred by collateral estoppel and that the Plaintiff's negligence and contract claims fail as a matter of law. Dkt. 11. For the reasons provided below, Wells Fargo's Motion to Dismiss (Dkt. 11) should be granted, in part, and denied, without prejudice, in part.

         I. FACTS AND PROCEDURAL HISTORY

         A. FACTS

         In reviewing a motion to dismiss for failure to state a claim as is the case here, the court is generally limited to review of “the face of the complaint, materials incorporated into the complaint by reference, ” and matters of which judicial notice may be taken. In re Rigel Pharmaceuticals, Inc. Securities Litigation, 697 F.3d 869, 876 (9th Cir. 2012). “A court may take judicial notice of matters of public record without converting a motion to dismiss into a motion for summary judgment, as long as the facts noticed are not subject to reasonable dispute.” Id. (internal quotations omitted). The following facts are taken from the Plaintiff's Complaint and the public record.

         1. Wells Fargo Accounts

         The Complaint alleges that after the death of his parents, around December 26, 2014, the Plaintiff went to Wells Fargo in Chelan, Washington, where he lives, to open a checking and savings account for the ABRLT, in his capacity of trustee. Dkt. 1-1, at 3. It asserts that Wells Fargo filled out the paperwork for the “Certification of Trustee, ” that same day, December 26, 2014. Id.

         The Complaint maintains that around January 6, 2015, the Plaintiff went back to Wells Fargo to open a checking and savings account for the BFLIPT, in his capacity of co-trustee; (the Plaintiff was one of four trustees). Dkt. 1-1, at 3. It alleges that Wells Fargo “opened the BFLIPT checking account (ending in 9043) on January 6, 2015, and the BFLIPT savings account (ending in 1854) on January 21, 2015.” Id. The Complaint asserts that Wells Fargo “retrieved the Certification of Trustee form filled out on December 26, 2014 for the ABRLT and erroneously wrote in the account number for the BFLIPT savings account (ending in 1854)” on the form. Id. It maintains that Wells Fargo filled out the wrong certification of trustee form for the BFLIPT accounts - a “California Certification of Trustee” form for this Washington trust and includes a wrong account number. Id. The Complaint alleges around that same day, January 21, 2015, Wells Fargo “retrieved the Certification of Trustee form filled out on December 26, 2014 for the ABRLT and erroneously wrote in the account number for the BFLIPT savings account (ending in 1854) on line 2 under the ‘Account Information' section of the form.” Id., at 3.

         The Complaint asserts that the Plaintiff, James Busey, made “routine deposits as he was receiving checks from closing his mother's (Ann Busey's) multiple accounts after her passing.” Id., at 4. It maintains that the Plaintiff went to Wells Fargo and “asked the teller to transfer $200K out of the ABRLT checking account and into the ABRLT savings account Plaintiff believed had been opened pursuant to his instructions to Defendant in December 2014.” Id. The Complaint states that “shortly thereafter, ” he checked the account balances and discovered that Wells Fargo had mistakenly transferred the funds to the BFLIPT checking account. Id. The Plaintiff went into the branch and was informed that there was no ABRLT savings account. Id. At that point, a savings account was opened for the ABRLT and the money was taken out of the BFLIPT checking account and deposited into the newly opened ABRLT savings account. Id., at

         2. State Court Lawsuit brought by one of the Trustees of the BFLIPT, Jennifer Mavin, against the Plaintiff and other Trustees

         On July 13, 2016, Jennifer Mavin (the niece of the Plaintiff, a co-trustee of the BFLIPT, and a beneficiary of the BFLIPT) filed a lawsuit in San Juan County, Washington Superior Court, In re Busey Family Lopez Island Property Trust, case number 16-4-05055-5 (“State Case”). Ms. Mavin sought an order removing the Plaintiff, James Busey from being a co-trustee of the BFLIPT, appointing a successor trustee, and requiring an accounting. Dkt. 12-2. Ms. Mavin also sought declaratory relief and damages. Id.

         The Superior Court appointed an interim trustee, Marketa Vorel, and ordered an accounting. Dkt. 1-1, at 5. As part of the Superior Court's ordered report on September 30, 2016, the interim trustee noted that as one of 40 discrepancies between bank statements and trust accounting documents that caused the interim trustee “the most concern, ” was an “[u]nexplained deposit and withdrawal of $200, 000. On 2/5/15, the [Wells Fargo bank records for account ending in 9043] show a $200, 000 deposit, followed by $200, 000 withdrawal on the following day, but neither transaction is recorded in [James Busey's] records.” In re Busey Family Lopez Island Property Trust, San Juan County, Washington Superior Court case number 16-4-05055-5; filed here at Dkt. 14-5. In a November 30, 2015 report, the interim trustee stated that her “original conclusions regarding accounting and bank records prior to September 16, 2016, have not changed: [she] suspect[s] the removed trustees used bank account(s) to receive, hold and distribute trust assets which have not been disclosed to all beneficiaries, the Court or the court appointed trustee.” Id., filed here at Dkt. 14-6.

         (The Complaint filed in this case also alleges that during her investigation, Ms. Vorel, approached Wells Fargo, requested records related to BFLIPT. Dkt. 1-1, at 5. It maintains that Wells Fargo “compounded the errors described herein by then releasing all of [Plaintiff's] personal information to Ms. Vorel.” Id.)

Ms. Mavin filed an amended petition in the State Case, alleging in part, that:
[The Plaintiff here, James Busey] set up secret BFLIPT bank accounts to hide trust income, to the detriment of his dying brother Michael Busey [Ms. Mavin's father]. The story devised by James Busey explaining the BLFIPT account at North Cascades Bank is not plausible, and confirms [Ms. Mavin's] initial suspicion that [James Busey] was buying the cabin for himself. [James Busey] set up a BFLIPT bank account with money lent to him from himself and the Ann Busey Revocable Living Trust to buy the Lopez cabin, and not to help facilitate his personal loan to [others] as he claims, as he has provided no proof of this arrangement. The existence of the secret BFLIPT bank account was not disclosed to [Ms. Mavin] until her receipt of responsive records to her subpoena of Wells Fargo bank accounts in mid-March, 2017.

In re Busey Family Lopez Island Property Trust, San Juan County, Washington Superior Court case number 16-4-05055-5; filed here at Dkt. 14-7, at 7. In the amended petition, Ms. Mavin added the two other BFLIPT co-trustees, Steven Busey and Virginia Busey-Ferrari, in addition to naming James Busey. Id. They were each added in their capacity as co-trustees and individually as beneficiaries of the BFLIPT. Id.

         3. Award of Attorneys' Fees in State Court Case

         After the prevailing at trial in the State Case, the Plaintiff in this case, James Busey, and the others, Steven Busey and Virginia Busey-Ferrari, moved for an award of $345, 000 in attorneys' fees and costs. In re Busey Family Lopez Island Property Trust, San Juan County, Washington Superior Court case number 16-4-05055-5; filed here at Dkt. 1-7. In a letter explaining her decision, the superior court indicated that it would award them $184, 455.60 in attorneys' fees and costs. Id., filed here at Dkt. 1-8. That letter provided, in part:

In considering the equities of the parties' positions the Court has concluded that they were more or less equal at the inception of the litigation and remained so for some time thereafter. The Court expressed as much in its introductory remarks to [sic] the oral ruling at the close of [Ms. Mavin's] case in chief on November 15, 2017. Accordingly, the Court will not award [James Busey and the others] any attorneys' fees for any work performed prior to the time the North Cascades Bank (“NCB”) records were received by Petitioner. Up until the Court ordered the sale of the property . . . [Ms. Mavin] had a reasonable basis to question whether or not the Trust was contractually obligated to close that sale. Thereafter, and until she received the NCB records, she had a reasonable basis to believe her claims of wrongdoing by James Busey were well founded.
While [James Busey and the others] make much of the fact that early on [Ms. Mavin] did not avail herself of every opportunity to obtain the records she sought, and that she in fact already had some of what she was requesting, an equally important fact in the Court's perception of matters is that James Busey did not, for whatever reason, demonstrate a willingness to work proactively and with full cooperation in meeting [Ms. Mavin's] requests. He in fact demonstrated the opposite. That behavior only served to heighten [Ms. Mavin's] initial concerns and suspicions, leading quickly to the filing of the . . . Petition. Had that Petition not been filed, enabling [Ms. Mavin] to subpoena records, it is almost certain that James Busey would not have provided the NCB records to [Ms. Mavin]. Ironically, those are the records that finally provided the information which should have resolved [Ms. Mavin's] remaining concerns about financial wrongdoing by James Busey. Because [Ms. Mavin] elected to pursue her claims against [James Busey and the others] after receiving the NCB records, the Court considered the equities to have shifted substantially in [their] favor at that point. . . .
The Court would also note that, even after Ms. Vorel was appointed as Interim Trustee, James Busey continued to approach matters in an unnecessarily confrontational manner, thereby creating doubt and suspicion even for Ms. Vorel and unquestionably increasing [Ms. Mavin's] belief that Mr. Busey was hiding important financial information. The fees incurred by [James Busey and the others] in their effort to limit Ms. Vorel to serving as a placeholder, as the Court had intended, and for her to refrain from conducting a financial investigation regarding the extent of Trust assets, were perhaps unavoidable, but their effort might well have been unnecessary if Mr. Busey had elected to cooperate ...

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