A federal district court in Florida has dismissed an insurance company’s lawsuit against a bank to recover losses it suffered when a personal injury attorney forged a client’s name on a settlement check, deposited the check and stole the funds.
Philip Bradford filed a personal injury lawsuit against the Florida Philharmonic Orchestra, Robert Williams Moving & Storage Inc. and Fisher Action Co. Inc.
Bradford’s attorney, Scott Rovenger, entered into a settlement agreement with the orchestra pursuant to which its liability insurer, Gulf Insurance Co., agreed to pay $280,000 to resolve Bradford’s claim against the orchestra.
Gulf issued a check for the settlement amount to Bradford and Rovenger’s law firm, which Rovenger deposited at Wells Fargo by forging Bradford’s signature.
Thereafter, Rovenger absconded with the settlement money. Rovenger subsequently pleaded guilty to defrauding clients and was sentenced to prison.
Bradford’s lawsuit was reinstated, and the orchestra and Bradford entered into a settlement agreement at the end of 2017 pursuant to which Gulf paid Bradford $500,000 in full settlement of his claims against the orchestra.
Gulf then sued Wells Fargo for negligence, asserting the bank wrongfully allowed Rovenger to deposit the initial settlement check in contravention of its own policies and procedures regarding check depositing.
Wells Fargo moved to dismiss. It argued, among other things, that whatever claim Gulf may have had against Wells Fargo was barred by the statute of limitations.
The District Court’s Decision
The district court granted the bank’s motion.
In its decision, the district court explained that, under applicable Florida law, a negligence action had to be filed without four years from the time the cause of action accrued. The district court pointed out that Florida courts have found that the limitations period did not begin to run until a plaintiff knew or should have known of the injury. Accordingly, the district court continued, “the determination of when Gulf knew or should have known that the settlement was fraudulent, and thus that it had sustained damages,” was “critical to its claim.”
The district court reasoned that once the initial settlement with Bradford had been vacated based on Rovenger’s fraud, Gulf had been damaged. This was true, the district court continued, regardless of whether Bradford’s case resolved by settlement or ultimate judgment, either for Bradford or the orchestra, because once it was established that the first settlement was a product of fraud, Gulf knew that it had paid $280,000 it otherwise would not have paid.
The district court noted that Bradford, through new counsel, moved to set aside the settlement and to vacate the dismissal based on the fraudulent settlement on August 16, 2012, and that the state court granted the motion on Dec. 31, 2012.
Thus, the district court found, as of Dec. 31, 2012 at the latest, Gulf knew or should have known that it had paid $280,000 it otherwise would not have, and it was damaged. As a result, the district court concluded, the four year statute of limitations for any claim based on negligence expired on Dec. 31, 2016 at the latest, nearly two years before Gulf filed its case against Wells Fargo, and its claim was time-barred.
The case is Gulf Insurance v. Wells Fargo Bank, No. 19-cv-60027-BLOOM/Valle (S.D. Fla. March 12, 2019). Attorneys involved include: For GULF INSURANCE, Plaintiff: Craig Mitchell Greene, LEAD ATTORNEY, Kramer Green Zuckerman Greene & Buchsbaum, Hollywood; Ryan Evan Michaels, LEAD ATTORNEY, Kramer,Green, Zuckerman, Greene & Buchsbaum P.A., Hollywood. For WELLS FARGO BANK, N.A., Defendant: Amy S. Rubin, LEAD ATTORNEY, David Andrew Greene, Fox Rothschild LLP, West Palm Beach