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Civelli v. J.P. Morgan Chase Securities, LLC

United States District Court, S.D. Texas, Houston Division

June 26, 2018

CARLO GIUSEPPE CIVELLI, et al., Plaintiffs,
J.P. MORGAN CHASE SECURITIES, LLC, et al., Defendants.



         This case is before the Court on the Motion to Dismiss [Doc. # 21] filed by Defendants JPMorgan Chase Securities, LLC, and JPMorgan Chase Bank, N.A. (collectively, “Chase”). Plaintiffs Carlo Giuseppe Civelli and Aster Capital S.A. (Ltd) Panama (“Aster Panama”) filed a Response [Doc. # 27], and Chase filed a Reply [Doc. # 29]. Having reviewed the record and the applicable legal authorities, the Court denies the Motion to Dismiss.

         I. BACKGROUND

         In 2009, Civelli's business partner, Defendant Phillippe Emanuel Mulacek, asked Civelli to loan him Civelli's shares of InterOil Corporation (“InterOil”).[1]Mulacek was a defendant in a lawsuit in Texas state court, styled Peters v. Mulacek (the “Texas Lawsuit”). Plaintiffs allege that Mulacek informed Civelli that he would need the shares to satisfy any judgment awarded against him in that lawsuit. Civelli alleges, on the other hand, that the loan would be repayable on demand. Civelli alleges also that the shares would be held “in the trust account of Mr. Dale A. Dossey, an attorney in Texas, who represented both Civelli and Mulacek in other matters.”[2]See Complaint [Doc. # 1], ¶ 15. Civelli alleges that he formed Aster Panama to hold the shares until he transferred them to Dossey.

         Civelli alleges that beginning on September 3, 2009, Dossey requested that the shares be transferred to Chase, where Dossey would “open a trust account for Aster.” See id., ¶ 18. On September 4, 2009, Civelli transferred 600, 000 InterOil shares “to the trust account of Dale Dossey at Chase Bank.” See id., ¶ 19. Additional shares were transferred on later dates. A total of 645, 000 InterOil shares were transferred by Civelli. In August 2011, Mulacek returned 105, 899 InterOil shares to Civelli.

         Civelli alleges that, without his knowledge or consent, Mulacek instructed Dossey to transfer some of the InterOil shares borrowed from Civelli. Civelli alleges that the InterOil shares were transferred to various entities owned or controlled by Mulacek. According to the allegations in the Complaint, the first transfer, on November 18, 2009, involved 45, 000 InterOil shares transferred “from the Dossey Chase Trust Account” to a separate Chase account. The second transfer, on December 24, 2009, involved 900, 000 InterOil shares (of which 527, 396 were shares borrowed from Civelli) transferred “from the Dossey Chase Trust Account” to a Deutsche Bank account belonging to PIE Group LLC (“PIE”). Civelli alleges that Mulacek was the sole beneficial owner of PIE, and that Mulacek and Dossey were its managers. The third transfer, on August 13, 2010, included the 527, 396 InterOil shares borrowed from Civelli, which were transferred from PIE's Deutsche Bank account to PIE's Chase account. A fourth transfer, on December 21, 2010, included the 527, 396 InterOil shares, which were transferred to another Chase account. Civelli alleges that Chase “knew the account was a Pie Group special account for Aster Panama.” See id., ¶ 37. The fifth transfer, on December 10, 2013, included the 527, 396 InterOil shares, which were transferred from the Chase account to an account at the Bank of Singapore. The account was in the name of “Aster Capital Inc.” (“Aster Brunei”), which is not affiliated with Aster Panama. Civelli alleges that Aster Brunei is owned by Mulacek's cousin, and is “beneficially owned and controlled by Mulacek.” See id., ¶ 28. This fifth transfer is the exclusive basis for Plaintiffs' claims against Chase in this lawsuit.

         Civelli alleges that in September 2016, he met with Mulacek in Singapore and “demanded that Mulacek return the remaining” InterOil shares that he had loaned to Mulacek. See id., ¶ 30. Civelli alleges that Mulacek refused to return the shares or to provide any information about their location. See id., ¶ 31. Civelli alleges that when he attempted to contact Dossey, he learned that Dossey had died. Civelli alleges that in May 2017, Dossey's son provided information showing that the InterOil shares at issue had been transferred to the Aster Brunei account in Singapore. Civelli alleges that until that time, he believed that the InterOil shares were being held in trust at Chase.

         Plaintiffs filed this lawsuit on December 11, 2017. In the Complaint, Plaintiffs assert claims against Chase for breach of trust, negligence, and civil conspiracy. Chase filed the pending Motion to Dismiss, which is now ripe for decision.


         A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure is viewed with disfavor and is rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)). The complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Harrington, 563 F.3d at 147. The complaint must, however, contain sufficient factual allegations, as opposed to legal conclusions, to state a claim for relief that is “plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Patrick v. Wal-Mart, Inc., 681 F.3d 614, 617 (5th Cir. 2012). When there are well-pleaded factual allegations, a court should presume they are true, even if doubtful, and then determine whether they plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679. Rule 8 “generally requires only a plausible ‘short and plain' statement of the plaintiff's claim, not an exposition of his legal argument.” Skinner v. Switzer, 562 U.S. 521, 530 (2011). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Thompson v. City of Waco, Tex., 764 F.3d 500, 503 (5th Cir. 2014). The Court's task is to determine whether the plaintiff states “a legally cognizable claim that is plausible, not to evaluate the plaintiff's likelihood of success.” Id.


         Chase argues that the breach of trust and negligence claims should be dismissed because Plaintiffs do not allege a factual basis for the existence of a duty that Chase owed to Plaintiffs. Under Texas law, if money is deposited into a special account with the bank, the fund is a trust fund. See Levine v. Steve Scharn Custom Homes, Inc., 448 S.W.3d 637, 659 (Tex. App. - Houston [1st Dist.] 2014, review denied). In that situation, the bank becomes a “trustee for the disbursement of the money according to the agreement under which the deposit was made.” Id. “When a trustee relationship is created, a fiduciary duty arises as a matter of law.” Id. (citing Meyer v. Cathey, 167 S.W.3d 327, 330 (Tex. 2005)). “It is a general rule that a bank is not only permitted to pay the checks drawn by a trustee on his bank account but is under a duty to do so unless the bank has knowledge that the trustee is converting or diverting trust funds, or is possessed of information putting it on inquiry.” Sorenson v. Elrod, 286 F.2d 72, 75 (5th Cir. 1960) (emphasis added).

         In this case, Plaintiffs allege that the InterOil shares Civelli loaned to Mulacek were held in a trust account or “special account” at Chase for the benefit of Aster Panama. See Complaint, ¶¶ 41, 47. Plaintiffs allege that, when the shares were transferred to a Chase account in December 2010, Chase “knew the account was a Pie Group special account for Aster Panama.” See id., ¶ 37. The allegations in the Complaint, which must be taken as true for purposes of the Motion to Dismiss, adequately allege the existence of “special accounts” at Chase in which the InterOil shares were held. Under Texas law, the “special accounts” and Chase's alleged knowledge that the shares were held in the special accounts for Aster Panama's benefit adequately states the existence of a fiduciary duty for purposes of the breach of trust and negligence claims.

         Chase argues also that the negligence claim against it is barred by the economic loss rule. The economic loss rule “generally precludes recovery in tort for economic losses resulting from the failure of a party to perform under a contract.” Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 12 (Tex. 2007); accord, Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014) (per curiam). The focus of the rule is “on determining whether the injury is to the subject of the contract itself.” Lamar Homes, 242 S.W.3d at 12. “In operation, the rule restricts contracting parties to contractual remedies for those economic losses associated with the relationship, even when the breach might reasonably be viewed as a consequence of a contracting party's negligence.” Id. at 12-13. In this case, there is no contractual relationship involving the “special accounts” between Chase and Plaintiffs. Therefore, the economic loss rule does not apply. Cf. Horton ...

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