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HomeMy WebLinkAbout2002-980 Civil GREAT-WEST LIFE & ANNUITY : IN THE COURT OF COMMON PLEAS INSURANCE COMPANY, : CUMBERLAND COUNTY, Plaintiff, : PENNSYLVANIA : : v. : : : PENN MUTUAL LIFE INSURANCE : COMPANY and TODD PERRY, : Defendants, : : : v. : : : FULTON BANK, : Additional Defendant : NO. 02-0980 CIVIL IN RE: MOTIONS FOR SUMMARY JUDGMENTS BEFORE OLER, J., GUIDO, J., AND EBERT, J. ORDER OF COURT AND NOW , this 5th day of September, 2007, upon consideration of the various Motions for Summary Judgment filed by all parties in this case, the briefs filed by the parties and after argument, IT IS HEREBY ORDERED AND DIRECTED that: 1. Plaintiff Great-West Life and Annuity Insurance Company’s Motion for Summary Judgment against Defendants Penn Mutual Life Insurance Company and Todd Perry is GRANTED and Judgment against the Defendants is awarded jointly and severally in the amount of $270,173.95 plus interest from January 21, 2001. 2. A. Defendant Penn Mutual Life Insurance Company’s Motion for Summary GRANTED Judgment against Defendant Todd Perry is . B. Defendant Penn Mutual Life Insurance Company’s Motion for Summary DENIED Judgment against Additional Defendant Fulton Bank is . 3. A. Additional Defendant Fulton Bank’s Motion for Summary Judgment against DENIED Plaintiff Great-West Life and Annuity Insurance Company is . B. Additional Defendant Fulton Bank’s Motion for Summary Judgment against DENIED Defendant Penn Mutual Life Insurance Company is . C. Additional Defendant Fulton Bank’s Motion for Summary Judgment against GRANTED Defendant Todd Perry is . By the Court, M. L. Ebert, Jr., J. Michael Socha, Esquire George Werner, Esquire Daniel S. Bernheim, III, Esquire Todd Perry GREAT-WEST LIFE & ANNUITY : IN THE COURT OF COMMON PLEAS INSURANCE COMPANY, : CUMBERLAND COUNTY, Plaintiff, : PENNSYLVANIA : : v. : : : PENN MUTUAL LIFE INSURANCE : COMPANY and TODD PERRY, : Defendants, : CIVIL ACTION – LAW : : v. : : : FULTON BANK, : Additional Defendant : NO. 02-0980 CIVIL IN RE: MOTIONS FOR SUMMARY JUDGMENTS BEFORE OLER, J., GUIDO, J., AND EBERT, J. OPINION AND ORDER OF COURT EBERT, J., September 5, 2007 - STATEMENT OF FACTS Defendant Todd Perry was one of four winners of the Pennsylvania Lottery Super Seven 1 drawing in 1988, winning approximately $7,024,522.70. He was to receive 25 annual installments of $94,525.43, after the withholding of federal taxes. The payments were to be distributed by Defendant Penn Mutual Life Insurance Company (“Penn Mutual”) as a result of an Annuity Certain Settlement Contract entered into with the Department of General Services, 2 acting on behalf of the Pennsylvania State Lottery. 1 Compl. ¶ 5. 2 Compl. ¶ 7-8; Pl. Ex. B as found in Appendix to Motion for Summary Judgment of Plaintiff Great-West Life & Annuity Insurance Company (hereinafter “Pl. App. Ex. __”). 3 In August 1997, Perry entered into a $1 million commercial loan with additional 3 Defendant Fulton Bank. In accordance with the loan, Perry executed an assignment and security agreement with Fulton Bank, whereby Perry assigned and pledged as collateral all of his rights, title and interest in the lottery prize payments until the full repayment of the loan. The payments would be electronically sent by Penn Mutual to a restricted account to which only 4 Fulton Bank had access. On May 20, 1999, Perry entered into an agreement to receive a single lump-sum payment 5 from Statewide Funding, LLC, instead of the remaining annual installments. Penn Mutual, pursuant to a Court Order, was directed to make the annual payments to Statewide, subject to the 6 satisfaction of the remainder of Fulton Bank’s loan to Perry. Shortly after entering this agreement with Perry, Statewide transferred its rights and obligations to the lottery installments 7 to Comet Financial Corporation; Comet then transferred the rights and obligations to Plaintiff, 8 Great-West Life and Annuity Insurance (“Great-West”). On January 20, 2000, the Department of Revenue sent Penn Mutual a memorandum indicating to Penn Mutual that upon satisfaction of the Fulton loan, Penn Mutual was to direct the remaining payments to Great-West. The memorandum further stated: “If verification of the satisfaction of the outstanding obligation to Fulton Bank is not received by the Lottery by January 10, 2001, and the underlying debt remains outstanding when the annual winnings payments are due January 20, 2001, the payment will be made pursuant to the herein mentioned obligation to Fulton Bank. Verification will be forwarded upon receipt along with final 9 acknowledgment.” 3 Pl. App. Ex. C. 4 Compl. ¶ 9-10; Pl. App. Ex. D. 5 Compl. ¶ 11; Pl. App. Ex. E. 6 Pl. App. Ex. F. 7 Pl. App. Ex. G. 8 Compl. ¶ 12-13; Pl. App. Ex. H. 9 Pl. App. Ex. I. 4 Penn Mutual then signed the acknowledgment provided in the memorandum: “This acknowledgment is subject to verification of the satisfaction of the outstanding obligation to Fulton Bank mentioned above. Please provide verification of the satisfaction of this debt to Penn Mutual Life Insurance Company. If no verification is received when the next annual winnings payment’s due, one (sic) or about January 20, 2001, no payment will be made 10 without further instructions from the Pennsylvania Lottery.” On or about February 23, 2000, Great-West fulfilled its obligations as assignee of the Statewide Agreement and paid Defendant Perry a lump sum of $1, 217,780.31; it also paid 11 $862,045.61 to Fulton Bank in order to satisfy the loan to Perry. On January 20, 2001, Penn Mutual issued the next annual lottery payment without having received notification from the Lottery of the Fulton loan satisfaction - despite having signed the acknowledgment to wait for notification before issuing the next payment. The payment was wired to the Todd Perry restricted account located at Fulton Bank, which had been closed upon 12 satisfaction of the loan. Upon finding that the account had been closed, the money was then 13 transferred by Fulton Bank into an unrestricted, personal account belonging to Perry. Fulton Bank did notify Penn Mutual on January 23, 2001, that the restricted account was closed and that Fulton Bank had instead deposited the proceeds into Perry’s personal account. Penn Mutual however maintains that it was unaware of the Fulton loan satisfaction until it received a phone call in March 2001 from Fulton Bank and did not have proof of said satisfaction until June 8, 14 2001, when it received a letter from Fulton. 10 Id. 11 Compl. ¶ 16. 12 Compl. ¶ 17. 13 Compl. ¶ 18. 14 Pl. App. Ex. O at P-37. 5 Eileen Quinn, Senior Vice President of E-Commerce Support Services and former Vice 15 President of Alternative Delivery Services testified to Fulton Bank’s typical protocol upon receiving a deposit for a closed account. She disclosed that normally in such a situation Fulton contacts the originating depository financial institution to verify the account information as correct and, if applicable, to check the validity of a second account. If Fulton is able to validate that the account belonged to another account holder at the bank, it would proceed with the 16 transaction and deposit the money into the second account. If the deposit is for a particularly large amount of money, as occurred in the present situation, an investigation into the history of the account and its recipient’s history at the bank would normally occur. In this case, Fulton discovered that Perry had a second account and that, on previous occasions, he had received deposits into that account for the same amount. Fulton rationalized that, since the restricted account had been closed, the restrictions no longer existed and chose to continue with the 17 transaction by depositing the money into Perry’s personal account. Perry proceeded to deplete 18 the checking account of nearly all of the deposited funds within a few weeks. Geraldine Dorwart, the Automated Clearinghouse Electronic Funds Transfer (ACH-EFT) Supervisor at Fulton Bank, was the on-site supervisor on the date of the transaction. While she claims to remember little about the transaction, she recalls that neither she nor the clerks at the bank conducting the transaction were aware of the restricted nature of the account, Perry’s relation to Fulton Bank, or that Perry was receiving these payments because he had won the 15 Eileen Quinn Dep. at 6, Defendant Penn Mutual Ex. G as found in Appendix of Documents for Penn Mutual’s Motion for Summary Judgment, (hereinafter “Def. Penn Mutual App. Ex. __ ”). 16 Id. at 74, 100-01. 17 Id. at 123 18 Pl. App. Ex. K at Dorwart Ex. 3. 6 19 lottery. She was also unaware that the funds were being deposited to satisfy a loan agreement 20 or that the funds were to go to another entity following the satisfaction of that loan. Great-West now brings this suit to be compensated for the money it was to receive from Penn Mutual, but which was instead transferred to and spent by Defendant Perry. PROCEDURAL HISTORY Though this case is rife with motions, withdrawals of counsel, and discovery issues, a brief summary of the procedural history is as follows: On or about February 27, 2002, Plaintiff Great-West commenced this civil suit by filing a Complaint against Defendants Penn Mutual Life Insurance Company and Todd A. Perry. The Complaint alleged that Perry was liable for Breach of Contract, Conversion, and Unjust Enrichment and that Penn Mutual was liable for Conversion, Negligence, and Breach of Contract. Both Defendants denied liability in their Answers and raised New Matters and/or Cross/Counterclaims. Penn Mutual cross-claimed that Great-West was negligent in not keeping in contact with Fulton Bank and that Perry was totally or jointly and severally liable for the 21 counts raised by Great-West. Perry requested Declaratory Judgment against Great-West and Penn Mutual and also accused Great-West of Breach of Contract, Unjust Enrichment, and 22 Conversion. On or about August 13, 2003, Plaintiff Great-West motioned for Summary 23 Judgment, which was later denied on November 12, 2003. On or about December 31, 2003, Defendant Penn Mutual motioned to join Additional 24 Defendant Fulton Bank. The motion was granted on or about March 7, 2005. On or about 19 Geraldine Dorwart Dep., Def. Penn Mutual App. Ex. E at 17 & 22. 20 Id. at 33. 21 Defendant Penn Mutual Life Insurance Company’s Answer, New Matter, and Cross-Claim, filed Mar. 6, 2002. 22 Answer of Todd A. Perry with New Matter, Cross-Claim, and Counterclaim, filed May 17, 2002. 23 See Order of Court, filed Nov. 12, 2003. 24 See Order of Court, filed Mar. 8, 2005, dated Mar. 7, 2005. 7 May 12, 2005, Additional Defendant Penn Mutual filed a Complaint against Fulton Bank, alleging Fulton to be solely liable or jointly liable with Penn Mutual on all of Great-West’s causes of action or alternatively that Fulton is jointly and severally liable with Perry and Penn Mutual on all of Great-West’s causes of action. Discovery ensued and on or about January 31, 2007, Defendants Penn Mutual and Fulton Bank filed Motions for Summary Judgment. Plaintiff Great-West followed suit and filed a motion for Summary Judgment on or about February 1, 2007. It is now before us to consider the Motions for Summary Judgment. DISCUSSION I. Summary Judgment Generally According to Pa. C.S.A. 1035.2, after the proper pleadings have occurred, a party may move for summary judgment in two instances: (1) Whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or (2) If, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury. “Because an order favorable to the moving party will prematurely end an action, , summary judgment is only appropriate in the clearest of cases.” Scopel v. Donegal Mut. Ins. Co. 698 A.2d 602, 605 (Pa. Super. 1997). II. Financial Institution Liability The case before us is complex to say the least. What is clear to us, having examined the evidence and pleadings, is that Plaintiff Great-West has undoubtedly been deprived of money to 8 which it was entitled. The remaining issue is merely that of who is responsible for this harm. Therefore, we grant Plaintiff Great-West’s Motion for Summary Judgment insofar as we concede that Great-West is entitled to the money which was apparently sent without authorization, deposited into the wrong bank account, and thereinafter spent by Defendant Todd Perry. We are however unwilling to grant any further requests for Summary Judgment against Penn Mutual or Fulton Bank. Despite having submitted a wealth of documents and deposition transcripts, Defendants have failed to provide this Court with clear evidence of who is truly liable for the loss suffered by Great-West. To provide just one clear example of factual uncertainty, Fulton Bank claims that Penn Mutual was notified, yet the manager who may have made the call is uncertain as to whether she contacted the originating source. Penn Mutual claims that it was unaware of the erroneous deposit until March 2001, yet contrasts this assertion in letters written by its own staff. Such factual aspects as timing, knowledge, and whether communication occurred are matters of consequence in this case which a jury must rightfully decide. As Summary Judgment is only to be granted in the clearest of cases, we do not find the facts pertaining to liability sufficiently clear to grant any of Defendants’ Motions for Summary Judgment. III.Unjust Enrichment “To sustain a claim of unjust enrichment, a claimant must show that the party against whom recovery is sought either ‘wrongfully secured or passively received a benefit that it would be unconscionable for her to retain.’” Torchia on Behalf of Torchia v. Torchia, 499 A.2d 581. 582-83 (Pa. Super. 1985), quoting Roman Mosaic & Tile Co. v. Vollrath, 313 A.2d 305, 307 (Pa. Super. 1973). “In order to recover, there must be both (1) an enrichment, and (2) an injustice 9 resulting if recovery for the enrichment is denied.” Id. at 582, quoting Samuels v. Hendricks, 445 A.2d 1273, 1275 (Pa. Super. 1982) (emphasis in original and citations omitted). We find that Defendant Todd Perry was unjustly enriched by spending the money wrongfully deposited into his account. While it is not necessary that Perry intended to deprive 25 Great-West of their due payment, he proceeded to spend $195,000 which he knew rightfully belonged to Plaintiff. We find this fact significant and can think of no better example of unjust enrichment than knowingly spending someone else’s money without reimbursement. Such an act, for all intents and purposes, under these circumstances is unconscionable. To permit such an action would clearly go against all sense of justice. There is no genuine issue of material fact. Todd Perry simply spent money which rightfully belonged to Great-West and accordingly Great- West’s Motion for Summary Judgment against him for unjust enrichment must be granted. Todd Perry will be held jointly and severally liable with whichever other defendant may be found by a jury to share responsibility for Great-West’s loss. Accordingly, the following Order will be entered. ORDER OF COURT AND NOW , this 5th day of September, 2007, upon consideration of the various Motions for Summary Judgment filed by all parties in this case, the briefs filed by the parties and after argument, IT IS HEREBY ORDERED AND DIRECTED that: 1. Plaintiff Great-West Life and Annuity Insurance Company’s Motion for Summary Judgment against Defendants Penn Mutual Life Insurance Company and Todd Perry is 25 See 499 A.2d at 583 (“[A] showing of knowledge or wrongful intent on the part of the benefited party is not necessary in order to show unjust enrichment. Rather, the focus is on the resultant unjust enrichment[,] not on the party's intention.”) (citation omitted). 10 GRANTED and Judgment against the Defendants is awarded jointly and severally in the amount of $270,173.95 plus interest from January 21, 2001. 2. A. Defendant Penn Mutual Life Insurance Company’s Motion for Summary GRANTED Judgment against Defendant Todd Perry is . B. Defendant Penn Mutual Life Insurance Company’s Motion for Summary DENIED Judgment against Additional Defendant Fulton Bank is . 3. A. Additional Defendant Fulton Bank’s Motion for Summary Judgment against DENIED Plaintiff Great-West Life and Annuity Insurance Company is . B. Additional Defendant Fulton Bank’s Motion for Summary Judgment against DENIED Defendant Penn Mutual Life Insurance Company is . C. Additional Defendant Fulton Bank’s Motion for Summary Judgment against GRANTED Defendant Todd Perry is . By the Court, M. L. Ebert, Jr., J. Michael Socha, Esquire George Werner, Esquire Daniel S. Bernheim, III, Esquire Todd Perry 11