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Mamiye v. Fidelity Bank

argued: January 21, 1987.

J.E. MAMIYE & SONS, INC., APPELLANT
v.
THE FIDELITY BANK V. COMMONWEALTH MARINE AND GENERAL ASSURANCE CO., LTD.



Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil No. 84-5060.

Author: Mansmann

Opinion OF THE COURT

Before: SEITZ, BECKER and MANSMANN, Circuit Judges.

MANSMANN, Circuit Judge

In this action founded in negligent misrepresentation and estoppel, the plaintiff, J.E. Mamiye & Sons, Inc. ("Mamiye"), appeals from an order entering summary judgment in favor of the defendant, Fidelity Bank ("Fidelity").

Mamiye obtained a judgment against the Commonwealth Marine and General Assurance Co., Ltd. ("Commonwealth Marine"). Mamiye then served interrogatories in attachment upon Fidelity as garnishee. Fidelity initially indicated that it held two Commonwealth Marine checking accounts, but later disclosed that it serviced a third account -- a substantial trust account -- for Commonwealth Marine. Fidelity also provided Mamiye with a copy of the trust agreement. Fidelity failed, however, to report that it maintained a fourth account comprising the accrued interest on the trust principal. The parties entered into a stipulation which would protect Mamiye's rights, if any, in the trust account.

Three months later, Fidelity transferred without Mamiye's knowledge some $60,000 to Commonwealth Marine as interest on the trust corpus. A subsequent interpleader action resolved that Mamiye had perfected a claim to certain of the interpleaded funds not impressed with Commonwealth Marine's trust. By not stipulating with respect to the interest account, though, Mamiye lost all rights to the interest which Fidelity had paid over to Commonwealth Marine.

Mamiye thereupon filed this action against Fidelity, asserting that its failure to report explicitly the existence of the interest account had caused Mamiye to stipulate only as to the trust account. The district court granted Fidelity's motion for summary judgment on the ground that Mamiye had not demonstrated proximate cause between its loss and Fidelity's negligence. Specifically, the court found certain language in the trust agreement sufficient to indicate the presence of a distinct interest account.

Since we find, however, that a genuine issue of material fact exists as to whether the defendant's alleged negligence caused the plaintiff's loss, we will reverse the judgment of the district court.

I.

On May 28, 1982, the plaintiff filed with the Pennsylvania Court of Common Pleas a foreign judgment obtained against Commonwealth Marine. Mamiye also filed a writ of execution and interrogatories in attachment and served them upon Fidelity as garnishee. By answers to Mamiye's interrogatories dated June 7, 1982, Fidelity indicated that it held two Commonwealth Marine checking accounts with a combined balance of $31,147. Mamiye thereupon attached the two accounts. The court subsequently issued a customary provisional order vacating Mamiye's writ of execution upon Commonwealth Marine's posting a bond.

Shortly thereafter, Fidelity's in-house counsel discovered that Commonwealth Marine maintained with Fidelity yet a third account -- a trust account of over $500,000 consisting of a certificate of deposit, a United States Treasury bill, and cash. On June 24, 1982, Fidelity filed amended answers to Mamiye's interrogatories to reflect the trust account, and provided a copy of the trust agreement. Fidelity denied, however, that the trust account was attachable and, therefore, asserted that "the combined attachable balance is $31,147.00" [the current balance of the two checking accounts].

Notably, the trust agreement provided at Art. II, section 8, that

the Trustee shall collect and receive the income from the Trust Fund, and, after deducting any expenses or other charges properly chargeable against income, shall pay over the net amount of such income upon the written order of the Company.

The parties presently agree that Mamiye's counsel realized the existence of the interest component of the trust. Concededly, however, Fidelity failed to indicate that the interest which accrued on the trust principal was deposited into a separate account -- a fourth Commonwealth Marine account.

In light of Fidelity's amended answers to the interrogatories, Mamiye filed a motion to increase the bond for dissolution of attachment. The parties resolved this motion by stipulation and order on October 14, 1982. The order provided, inter alia, that Fidelity (and Commonwealth Marine) would give Mamiye at least 60 days notice of an account debit which would reduce the trust fund balance below $146,507.

On January 21, 1983, Fidelity transferred $60,339.84 to Commonwealth Marine's checking account, as interest proceeds on the trust account.

On February 23, 1983, Fidelity notified all parties that it would resign as trustee on April 23, 1983. On April 29, 1983, Fidelity filed in federal district court a complaint in interpleader including Mamiye and Commonwealth Marine among the defendants, and deposited $440,891.61 into the court's registry. Mamiye defended its claim by arguing that it had successfully attached the entire trust fund. See Fidelity Bank v. Commonwealth Marine and General Assurance Co., Ltd., 581 F. Supp. 999, 1013 (E.D. Pa. 1984).

The district court, however, held only that Mamiye "apparently perfected a claim to some of the funds paid into court, but on the present record the court cannot determine how much is subject to Mamiye's attachment." Id. at 1015. The district court later reiterated its holding: "[Mamiye's] attachment did not reach assets impressed with Commonwealth [] [Marine's] trust because Mamiye was not a creditor entitled to payment under the Trust Agreement. Because principal, but no income, became part of the Trust, I held that Mamiye could recover the full amount of the interpleaded sum not impressed with Commonwealth[] [Marine's] trust." Fidelity Bank v. Commonwealth Marine and General Assurance Co., Ltd., 592 F. Supp. 513, 517 (E.D. Pa,. 1984) (emphasis added).

On October 1, 1984, Mamiye filed this action against Fidelity. The gravamen of Mamiye's complaint was that Fidelity's failure to inform Mamiye explicitly that Commonwealth Marine maintained an interest account separate from its trust account caused Mamiye to stipulate only with respect to the trust account. As a result, Mamiye lost all rights to the $60,339.84 paid to Commonwealth Marine in January of 1983.

Following discovery, the parties filed, inter alia, cross-motions for summary judgment; Mamiye also filed a motion to amend its complaint. On June 12, 1986, the district court entered an order denying Mamiye's motion for summary judgment, granting Fidelity's cross-motion, and denying as moot Mamiye's motion to amend its complaint and Fidelity's motion for judgment on the pleadings.

In its bench opinion, the district court appeared to accept Mamiye's amended complaint. The court held, nonetheless, that "there is no demonstration of the requisite proximate cause" between Mamiye's alleged loss and any breach of duty on Fidelity's part to inform Mamiye of the separate income account. The court pointed out that Fidelity had provided Mamiye with a copy of the trust agreement which distinguished assets "in the hands of the trustee hereunder constituting principal" from the income thereon. The agreement likewise indicated that the trustee was paying over net income amounts on Commonwealth Marine's order. The district court, therefore, found nothing to justify the averred understanding of Mamiye's counsel that Fidelity commingled interest with the trust principal.

This appeal timely followed the court's final order. We possess jurisdiction pursuant to 28 U.S.C. ยง 1291 (1982).

II.

The plaintiff presents us with three issues on appeal. First, Mamiye contends that the district court erred in denying Mamiye's motion for summary judgment, Second, Mamiye attacks the district court's grant of summary judgment in favor of Fidelity. third, the plaintiff claims that the district court abused its discretion in denying the motion for leave to amend the complaint.

On review of the district court's grant of summary judgment, we likewise examine whether "no genuine issue as to a material fact remains for trial, and matter of law." Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977). In applying the law to undisputed facts, our review is plenary. Koshatka v. Philadelphia Newspapers, Inc., 762 F.2d 329, 333 (3d Cir. 1985). We may reverse the district court's refusal to permit the plaintiff to amend its complaint if the court abused its discretion with respect to the liberal ...


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