Metz v. Unizan Bank

Summarized by J. Debbeler , Bricker Graydon LLP
14 years 6 months ago

Citation:

Metz v. Unizan Bank, Case Nos. 09-3751/3879/4363 (6th Cir. Aug. 19, 2011)

Tag(s):

Ruling:

Court of Appeals affirmed all of district court's rulings, holding as follows: (1) Discovery Rule applicable to some statutes of limitations does not apply to UCC claims arising under O.R.C. 1304.09 or O.R.C. 1303.16(G); (2) Plaintiffs' UCC claims arising under O.R.C. 1304.09 and 1303.16(G) were time-barred; (3) Plaintiffs' claims under the UCC could not be re-cast as claims for conversion; (4) Even if UCC claims could be interpreted as claims for conversion arising under O.R.C. 1303.60, they would be barred by the explicit language of the statute providing that the issuer of an instrument cannot sue for conversion of the instrument; (5) Plaintiffs' claims for fraud fell under the Ohio blue sky law statute of limitations applicable to securities fraud claims even though the purported securities at issue were fake and worthless; (6) Plaintiffs' claims for fraud were time-barred pursuant to the Ohio blue sky law statute of limitations; (7) Even if the statute of limitations for common law fraud were applied, Plaintiffs' fraud claims would be time-barred because they should have discovered the fraud more than four years prior to filing the complaint; (8) The district court retained subject matter jurisdiction under CAFA even though it declined class certification; (9) Plaintiff's settlement and release with individual employee of bank precluded further recovery from employer bank under the doctrine of respondeat superior.

Procedural context:

Appeal from the United States District Court for the Northern District of Ohio at Akron and Cleveland, Case Nos. 05-01510; 08-02301; 08-00971. Affirmed by Unites States Court of Appeals for the Sixth Circuit.

Facts:

James P. Carpenter III perpetuated a Ponzi scheme whereby he sold fraudulent securities in three sham companies. A class action settlement was reached in favor of several victims of that scheme. Thereafter, the Plaintiffs in this consolidated appeal filed actions against the drawee and depositary banks used in the scheme, pursuing claims grounded in the UCC and fraud theories. The three sets of Plaintiffs in this action are referred to as the "Metz Plaintiffs", the "Loyd Plaintiffs" and the "Blair Plaintiffs" (collectively, the "Plaintiffs"). The district court dismissed all claims filed by the Loyd and Blair Plaintiffs as time-barred. The district court also dismissed most claims filed by the Metz Plaintiffs as time-barred or for their failure to state a claim but allowed two fraud claims (conspiracy to commit fraud and aiding and abetting fraud) to proceed. After denying class certification, the district court granted the bank's motion for summary judgment on the conspiracy to commit fraud claim, and a jury trial verdict was issued in favor of the bank on the aiding and abetting fraud claim. The Plaintiffs appealed, arguing that (1) the district court erred by failing to apply a discovery rule to the statute of limitations related to the UCC claims; (2) the district court erred by failing to applying the Ohio blue sky law statute of limitations period rather than the common law fraud statute of limitations; (3) the district court lacked subject matter jurisdiction over the case after declining class certification; and (4) the district court erred by granting the bank's motion for summary judgment on the respondeat superior claim based on the release of claims as to the bank employee.

Judge(s):

Martin, Norris, and Siler

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