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HomeMy WebLinkAbout2002-4950 Civil GREGORY SCOTT WHITEFORD, PLAINTIFF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. ALLFIRST FINANCIAL, INC., DEFENDANT 02-4950 CIVIL TERM IN RE: MOTION OF DEFENDANT FOR SUMMARY JUDGMENT AND MOTION OF PLAINTIFF TO AMEND COMPLAINT OPINION AND ORDER OF COURT Bayley, J., February 22, 2007:-- On October 10, 2002, plaintiff, Gregory Scott Whiteford, instituted this suit against defendant, Allfirst Financial, Inc., two days before the statute of limitations ran. Plaintiff avers that he owned a variable rate IRA issued by the Dauphin Deposit Bank and Trust Company that guaranteed a minimum interest rate of 10% until the IRA was withdrawn fully or otherwise terminated by the account holder. Plaintiff avers that: "Defendant Allfirst Financial, Inc., is the successor-in-interest to Dauphin Deposit Bank and Trust Company." (Emphasis added.) Plaintiff avers: 16. In a September 27, 2000 letter addressed to Plaintiff, Defendant stated, inter alia, the following: "On October 12, 2000, your 18 Month Variable Rate Account #8-700-024-0480001 in the amount of $115,761 .80 wi II mature. The 18 Month Variable Rate Account is no longer being offered. . .. If you do not select another CD, your Account will roll over to an 18 Month Floating Rate Account. . . earning the interest rate and annual yield for that product in effect on the maturity date of your Account." A true and correct copy of this letter is attached hereto as Exhibit C. (Emphasis added.)1 1 In contrast to this averment, the letter attached to as Exhibit C contains the heading of 02-4950 CIVIL TERM 17. In response to Defendant's September 27, 2000 letter, Plaintiff drafted a letter dated October 2, 2000, in which he stressed that Defendant is required to honor its contractual obligations pursuant to Plaintiff's IRA that he purchased from Dauphin Deposit and is now held by Defendant, and that if Defendant failed to so do Plaintiff would be compelled to initiate legal action. A true and correct copy of Plaintiff's October 2, 2000 letter is attached hereto as Exhibit D. (Emphasis added.)2 Plaintiff avers that on October 12, 2000, defendant terminated his IRA and converted the funds into a separate and distinct variable rate account which did not provide a guaranteed minimum interest rate of 10%. Plaintiff seeks damages against Allfirst Financial, Inc., on counts alleging violation of Pennsylvania's Unfair Trade Practices Act and Consumer Protection Law, fraud, breach of contract, breach of fiduciary duty, quantum meruit and promissory estoppel. Plaintiff also seeks a declaratory judgment. On December 9, 2002, defendant filed preliminary objections to the complaint limited to a demurrer to plaintiff's quantum meruit and promissory estoppel claims. Almost three years later on November 15, 2005, plaintiff listed the preliminary objections for argument. The objections were denied on February 14, 2006. Allfirst Financial, Inc. filed an answer with new matter to the complaint on April 19, 2006, in which it denied that it was the successor-in-interest to Dauphin Deposit Bank and Trust Company. It averred that "Plaintiff's losses, if any, were caused by persons, firms or Allfirst Bank, P.O. Box 1596, Baltimore, MD 21203, not Allfirst Financial, Inc. 2 In contrast to this averment, in the letter attached as Exhibit D plaintiff states, "Dear Allfirst Bank," not Allfirst Financial, Inc. -2- 02-4950 CIVIL TERM corporations other than Answering Defendant and for whom Answering Defendant is not responsible or liable." On November 17, 2006, Allfirst Financial, Inc., filed a motion for summary judgment in which it claims that it is the wrong party sued, and that the right party defendant would have been Allfirst Bank. On December 12, 2006, plaintiff filed a motion for leave to amend his complaint "to show Allfirst Bank as the Defendant in place of Allfirst Financial, Inc." The issues were briefed and argued on January 24, 2007. The parties do not dispute the following facts. Plaintiff established his IRA on December 15, 1977, in the Southern Pennsylvania Bank. Southern Pennsylvania Bank merged into the Dauphin Deposit Bank and Trust Company. Dauphin Deposit initiated a class-action suit in this court against the holders of its 18 month variable rate accounts to discontinue the guaranteed minimum interest of ten percent. Plaintiff herein opted out of the class of defendants in that suit. After extensive litigation the case was settled. Dauphin Deposit Bank and Trust Company was acquired by First National Bank of Maryland. First National Bank of Maryland was renamed FM Bank and later renamed Allfirst Bank. The holding company of Dauphin Deposit Bank and Trust Company was merged into First Maryland Bancorp. First Maryland Bancorp. was merged into Allfirst Financial, Inc.3 Allfirst Financial, Inc., a holding company, owned 3 Allfirst Financial, Inc., was later acquired by M & T Bank Corporation. Allfirst Bank was later acquired by Manufacturers and Traders Trust Company, trademarked, M & T -3- 02-4950 CIVIL TERM the stock of the separate corporation, Allfirst Bank, along with the stock of other corporate entities. On August 28, 2000, Allfirst Bank, on its letterhead, notified plaintiff that the class-action litigation had been settled. The Bank offered him the same settlement options that were offered to Class A Members. The letter stated: As you know, in 1994 Dauphin Deposit Bank and Trust Company (now, Allfirst Bank) and a class of over 4,000 customers went to court to determine whether the Bank had a right to terminate an 18 month variable rate account investment option held by the Class Members in their IRA custodial account. (Emphasis added.) The letter enclosed an Election Form which set forth in bold type: MUST BE RECEIVED BY ALLFIRST BANK BY NO LATER THAN SEPTEMBER 12,2000, OTHERWISE YOUR RENEWAL OPTIONS AT MATURITY OF YOUR 18 MONTH VARIABLE RATE ACCOUNT WILL BE AT THE THEN CURRENT MARKET RATE OF INTEREST. PLEASE USE THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. The letter attached a document titled: ALLFIRST BANK TEN PERCENT CERTIFICATE OF DEPOSIT TRUTH IN SAVINGS DISCLOSURE STATEMENT (Emphasis added.) Neither the letter nor the Election Form nor the Truth in Savings Disclosure Statement contained any reference to the holding company, Allfirst Financial, Inc. Plaintiff wrote to "Allfirst Bank" on October 2, 2000, stating: I feel that Allfirst Bank is obligated to honor my 10% minimum interest rate IRA CD. Dauphin Deposit Bank credited my IRA account Bank. -4- 02-4950 CIVIL TERM 10% or more interest for almost 7 years as guaranteed. Allfirst Bank knew or should have known what they were buying when they bought Dauphin Bank. I don't like saying this but if my IRA is not continued at 10% minimum interest when it matures October 2, 2000, Allfirst Bank can expect a lawsuit from me. (Emphasis added.) DISCUSSION In Powell v. Sutliff, 410 Pa. 436 (1962), defendants were designated as Ellis Sutliff and Leo E. Sutliff, individually and as partners, tld/b/a Sutliff Chevrolet Company. After the statute of limitations ran, plaintiff discovered that Sutliff Chevrolet was a corporation and not a partnership. He moved to amend the complaint to change the designation of the defendant company to a corporation. The trial court denied the amendment on the grounds that it would introduce a new party to the action after the statute of limitations had run. The Supreme Court of Pennsylvania reversed, stating: This case is governed by Gozdonovic v. Pleasant Hills Realty Co., 357 Pa. 23, 53 A.2d 73 (1947) . . .. In that case, the original complaint designated the defendant as the "Pleasant Hills Realty Company, a corporation." After the statute of limitations had run, plaintiff attempted to change the description of the business entity from a corporation to a partnership. The test laid down by Justice Stern was whether "the right party was sued but under a wrong designation"-in which event the amendment was permissible-or whether "a wrong party was sued and the amendment was designed to substitute another and distinct party"-in which event the amendment was not permissible. . . . In permitting the amendment from a corporation to a partnership in that case, we observed that the original complaint had sought to impose liability against the assets of a business entity known as Pleasant Hills Realty Company. The amendment was not an attempt to impose additional liability on the individual owners of the company, but rather merely sought to correct the description of the business entity already made a party to the proceedings. The assets subject to liability were the same both before and after the amendment. -5- 02-4950 CIVIL TERM Although our case presents the converse of the Gozdonovic situation, the reasoning of that case compels an identical result. Here, the original complaint sought to impose liability against the assets of the business entity known as Sutliff Chevrolet Company. As in Gozdonovic, the proposed amendment merely seeks to correct the designation of that business entity, in this case from a partnership to a corporation. Since the assets subject to liability will not be enlarged, the court below erred in not permitting the amendment. (Footnotes omitted) (Emphasis added.) In Jacob's Air Conditioning and Heating v. Associated Heating and Air Conditioning, 366 Pa. Super. 430 (1987), Jacob's Air Conditioning and Heating commenced an action against the defendant. In a preliminary objection, defendant maintained that Jacob's Air Conditioning and Heating did not have the legal capacity to institute suit because it was not registered as either a Pennsylvania Corporation or a foreign corporation authorized to do business within the Commonwealth of Pennsylvania. The court agreed and dismissed the suit. It also denied a motion by plaintiff to file an amended complaint after the statute of limitations had run to show that the individual, Fred P. Jacob and the fictitious name Jacob's Air Conditioning and Heating were one and the same entity or agent. The Superior Court of Pennsylvania reversed, stating: In situations where the statute of limitations had run and a party proposes an amendment to a complaint. . . the question to be resolved is whether the proposed amendment merely corrects a party name or adds a new party to the litigation. If an amendment constitutes a simple correcting of the name of a party, it should be allowed. *** Appellee understood that this legal action stemmed from a transaction he allegedly entered into with Jacob's Air Conditioning and Heating. The fact that Jacob's Air Conditioning and Heating was a -6- 02-4950 CIVIL TERM fictitious name or whether the fictitious name was owned by an individual or corporation does not affect appellee's alleged contractual obligations. There is no change of assets subject to liability by permitting appellant to amend its pleading. This is a common concern in case where a party has not been permitted to change the form of the business entity. Stated otherwise, appellee could not be prejudiced regardless of the form of the business entity if the assets subject to liability remain the same. Generally, when an appellee will not be prejudiced by the proposed change, courts are inclined to deem the change one of name only, not of party, and will permit the amendment to allow the change. (Emphasis added.) In Saracina v. Cotoia, 417 Pa. 80 (1965), the plaintiff was struck by an automobile driven by Robert Cotoia. Plaintiff's complaint named Robert's father, Anthony Cotoia, as the defendant. After the statute of limitations had run, the plaintiff attempted to amend the complaint to change the name of defendant from Anthony to Robert Cotoia. The Supreme Court, upholding an order of the trial court, concluded that the complaint could not be amended because Robert Cotoia was a new and distinct party. Plaintiff herein, citing In re Francis Edward McGillick Foundation, 406 Pa. Super. 249 (1991), argues that since Allfirst Bank was well aware of the disputes involving the variable rate accounts with a guaranteed interest rate of 10%, this action should not be dismissed and he should be allowed to amend his complaint to name Allfirst Bank as defendant. In McGillick, the Superior Court of Pennsylvania stated that, "absent prejudice to the opposing party, such amendments to the pleadings are to liberally allowed; the goal of the judicial system is to secure a determination on the merits, not enforce technical rules of pleadings." In McGillick, however, the court -7- 02-4950 CIVIL TERM concluded that changing the name of a party from the Roman Catholic Diocese of Pittsburgh to the name of the Bishop as trustee ad litem, did not name a new party, but rather corrected the name of the party. In the case sub judice, unlike the facts in Powell and Jacob's Air Conditioning, allowing plaintiff to amend his complaint to name Allfirst Bank as a defendant changes the assets subject to liability from Allfirst Financial, Inc., to Allfirst Bank. Like the facts in Saracina, Allfirst Bank is a new and distinct party. Despite the various changes in the name of the banks and holding companies, plaintiff could not have been misled as to what entity held his IRA when he instituted suit on October 10, 2002. The letter to him by Allfirst Bank dated August 28, 2000, with the enclosed Election Form and Truth In Savings Disclosure Statement, specifically advised that "Dauphin Deposit Bank and Trust Company" was "now Allfirst Bank." It was an "Allfirst Bank" Truth In Savings Disclosure Statement. Plaintiff was offered an election by "Allfirst Bank" to renew his IRA on the Bank's terms. Plaintiff then wrote "Allfirst Bank" on October 2, 2000, stating that "Allfirst Bank should have known what they were buying when they bought "Dauphin Bank," and that "Allfirst Bank can expect a lawsuit from me." Yet inexplicably, on October 1 0, 2002, he filed suit against Allfirst Financial, Inc. Plaintiff has sued a party that cannot be liable to him, and because the statute of limitations has expired, he cannot file an amended complaint to name as a new party, Allfirst Bank. Accordingly, the following order is entered. -8- 02-4950 CIVIL TERM AND NOW, this ORDER OF COURT day of February, 2007, IT IS ORDERED: (1) The motion of plaintiff to amend his complaint, IS DENIED. (2) The motion of defendant for summary judgment, IS GRANTED. -9- 02-4950 CIVIL TERM Thomas J. Weber, Esquire David M. Steckel, Esquire For Plaintiff Mary P. Patterson, Esquire F or Defendant :sal -10- By the Court, Edgar B. Bayley, J. GREGORY SCOTT WHITEFORD, PLAINTIFF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. ALLFIRST FINANCIAL, INC., DEFENDANT 02-4950 CIVIL TERM IN RE: MOTION OF DEFENDANT FOR SUMMARY JUDGMENT AND MOTION OF PLAINTIFF TO AMEND COMPLAINT ORDER OF COURT AND NOW, this day of February, 2007, IT IS ORDERED: (1) The motion of plaintiff to amend his complaint, IS DENIED. (2) The motion of defendant for summary judgment, IS GRANTED. By the Court, Edgar B. Bayley, J. Thomas J. Weber, Esquire David M. Steckel, Esquire For Plaintiff Mary P. Patterson, Esquire F or Defendant :sal