UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ALABAMA Northern Division COMPLAINT INJUNCTIVE RELIEF SOUGHT

Transcription

1 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 1 of 14 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ALABAMA Northern Division Wells Fargo Bank, N.A., Plaintiff, v. Case No. 11-cv-303 Decagon Company Limited, Michael Jacobs, Ruby Handler Jacobs, and Lawrence Lester, Defendants. COMPLAINT INJUNCTIVE RELIEF SOUGHT Plaintiff Wells Fargo Bank, N.A. ( Wells Fargo ), by and through its undersigned counsel, for its Complaint against defendants Decagon Company Limited, Michael Jacobs, Ruby Handler Jacobs, and Lawrence Lester (collectively, defendants ), states as follows: PARTIES 1. Wells Fargo is a national banking association and a wholly owned subsidiary of WFC Holdings Corporation, a wholly owned subsidiary of Wells Fargo & Company. Wells Fargo s articles of association designate Sioux Falls, South Dakota as the location of its main office. Accordingly, Wells Fargo is a citizen of South Dakota and no other state for purposes of diversity jurisdiction. 2. Upon information and belief, defendant Decagon Company Limited ( Decagon ) is a for-profit corporation, incorporated in the State of Washington, with its principal place of business in Seattle, Washington. Lawrence Lester is registered as Decagon s President, Secretary, Chairman, and Registered Agent.

2 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 2 of Upon information and belief, defendant Michael Jacobs is a resident and citizen of Albuquerque, New Mexico. 4. Upon information and belief, defendant Ruby Handler Jacobs is a resident and citizen of Albuquerque, New Mexico. 5. Upon information and belief, defendant Lawrence Lester ( Lester ) is a resident and citizen of Seattle, Washington. JURISDICTION AND VENUE 6. This Court has original subject matter jurisdiction, pursuant to 28 U.S.C. 1332, because the parties are of diverse citizenship and the amount in controversy is over $75,000, exclusive of interest and costs. 7. This Court also has jurisdiction over this action pursuant to 28 U.S.C. 1331, because Wells Fargo is a federally regulated bank and this action presents a federal question under the National Bank Act of 1864, as amended, 12 U.S.C. 1 et seq. and 12 C.F.R Jurisdiction also is proper under 28 U.S.C et seq. because this is an actual controversy between parties who have adverse legal interests. 9. This Court has personal jurisdiction over the defendants and venue is proper in the Southern District of Alabama pursuant to 28 U.S.C. 1391(a) because a substantial portion of the acts described herein took place in the Southern District of Alabama, and the sovereign guarantees at issue herein state that they are payable at the City of Selma, which is located in the Southern District of Alabama. FACTUAL ALLEGATIONS 10. At all times material hereto, Charmaine Hardy ( Hardy ) has been an employee of Wells Fargo, holding the title of Store Manager and working primarily in Wells Fargo s Hueytown Store in Hueytown, Alabama

3 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 3 of At all times material hereto, Angela Powe ( Powe ) has been an employee of Wells Fargo, holding the title of Service Manager and working primarily in Wells Fargo s UAB Store in Birmingham, Alabama. 12. In mid-december 2010, Hardy and Powe were working at Wells Fargo s Flintridge Store in Fairfield, Alabama. A Wells Fargo customer, John Rogers ( Rogers ), visited the store and told Hardy that he needed to sign a series of documents in order to facilitate a project that would create jobs for the City of Selma, Alabama, and that he needed two bank employees to witness his signature and to affix the bank s official seal or stamp on the document. 13. Hardy asked Powe to witness Rogers signature with her. Rogers presented a series of documents entitled Sovereign Guarantees, which appeared to be on the City of Selma s letterhead. When presented to Hardy and Powe, the Sovereign Guarantees had been prepared to state that Rogers was signing for the City of Selma, Alabama as the authorized representative of The Shephard Group, L.L.C. 14. Hardy and Powe signed at least three Sovereign Guarantees, and Hardy stamped the bank s name and address on them using the Wells Fargo Flintridge Store s rubber stamp. Hardy and Powe may have signed one or more additional similar documents. 15. At all times material hereto, Arnold Hamilton ( Hamilton ) has been an employee of Wells Fargo, holding the title of Store Manager and working primarily in Wells Fargo s Southfield Store in Birmingham, Alabama. 16. At all times material hereto, Derrell Blackmon ( Blackmon ) has been an employee of Wells Fargo, holding the title of Personal Banker and working primarily in Wells Fargo s Southfield Store. Hamilton is Blackmon s direct supervisor

4 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 4 of In mid-december 2010, Rogers visited the Southside Store with Frederick Purchis ( Purchis ). Rogers advised Hamilton and Blackmon that he needed to sign a series of documents in order to facilitate a project that would create jobs for the City of Selma, Alabama, and that he needed two bank employees to witness his signature and to affix the bank s official seal or stamp on the documents. 18. Rogers presented Hamilton and Blackmon with four documents entitled Sovereign Guarantees, which appeared to be on the City of Selma s letterhead. When presented to Hamilton and Blackmon, the Sovereign Guarantees had been prepared to state that Rogers was signing for the City of Selma, Alabama as its Authorized Representative. These four Sovereign Guarantees did not mention The Shephard Group, L.L.C. 19. Hamilton and Blackmon signed at least four Sovereign Guarantees and stamped the bank s name and address on them using the Wells Fargo Southside Store s rubber stamp. 20. Each of the seven Sovereign Guarantees described above purports to reflect a promise by the City of Selma, Alabama to pay against this Guarantee to SIRIUS SAN-XING FINANCIAL SERVICES LTD, Company number OI or assigns an amount that exceeds $75,000. Each Sovereign Guarantee further states that it is extendable annually by Sirius San-Xing Financial Services Ltd or assigns for a maximum period of Ten (10) years. Each Sovereign Guarantee further states, The amount of this Guarantee is payable in the lawful money of the United States of America at the City of Selma, Finance Department, 222 Broad Street, Selma, AL USA. 21. The Wells Fargo employees signed the Sovereign Guarantees under the heading Authentication of Signature, which contained language stating: Wells Fargo Bank: We hereby certify that the signature given on behalf of City of Selma by Mr. John Rogers, authorized - 4 -

5 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 5 of 14 representative [and signatory], is in conformity with the specimens on file with us. We further declare that the said signature duly commits the City of Selma, Alabama. (The bracketed language appeared only in the Sovereign Guarantees signed by Hamilton and Blackmon.) 22. Neither Hardy, Powe, Hamilton, nor Blackmon had the actual authority 1) to authenticate signatures on behalf of Wells Fargo on sovereign guarantees, 2) to declare that a customer is authorized to sign on behalf of a governmental entity, or 3) to declare that a customer s signature commits a governmental entity in any manner. Accordingly, neither Hardy, Powe, Hamilton, nor Blackmon had the actual authority to sign the Sovereign Guarantees on behalf of Wells Fargo. 23. Neither Hardy, Powe, Hamilton, nor Blackmon made any representations that would suggest that they had apparent authority to 1) to authenticate signatures on behalf of Wells Fargo on sovereign guarantees, 2) to declare that a customer is authorized to sign on behalf of a governmental entity, or 3) to declare that a customer s signature commits a governmental entity in any manner. Accordingly, neither Hardy, Powe, Hamilton, nor Blackmon made any representations that would suggest that any of them had apparent authority to sign the Sovereign Guarantees on behalf of Wells Fargo. 24. Wells Fargo did not make any representations that would suggest that Hardy, Powe, Hamilton, and/or Blackmon had apparent authority 1) to authenticate signatures on behalf of Wells Fargo on sovereign guarantees, 2) to declare that a customer is authorized to sign on behalf of a governmental entity, or 3) to declare that a customer s signature commits a governmental entity in any manner. Accordingly, Wells Fargo did not make any representations that would suggest that Hardy, Powe, Hamilton, and/or Blackmon had apparent authority to sign the Sovereign Guarantees on behalf of Wells Fargo

6 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 6 of Hardy, Powe, Hamilton, and Blackmon were acting beyond the general usage, practice, and course of their duties with respect to Wells Fargo s banking business when they signed the Sovereign Guarantees. Wells Fargo did not authorize Hardy, Powe, Hamilton, and/or Blackmon to sign the Sovereign Guarantees by resolution or otherwise. 26. After the Sovereign Guarantees were signed, Rogers and/or Purchis retained the original Sovereign Guarantees. 27. Upon information and belief, on December 22, 2010, City of Selma Mayor George Evans notified Rogers in writing that the Sovereign Guarantees were executed without the authorization, consent, or approval of the City of Selma or any official of the City of Selma, and therefore were null and void, and that Rogers was not authorized to sign any documents on behalf of the City of Selma. 28. Notwithstanding the Mayor s December 22, 2010 communication with Rogers, Rogers and Purchis advised Hamilton that they were working with a team of individuals, including defendants Michael Jacobs, Ruby Handler Jacobs, and Lawrence Lester, to complete the transaction, which was supposed to create jobs for the City of Selma. Rogers and Purchis asked Hamilton to assist the team as needed, including transmitting the Sovereign Guarantees to other designated banks, in order to complete the transaction. 29. Defendants telephoned and ed Hamilton on multiple occasions and provided Hamilton with detailed instructions regarding how to transmit the Sovereign Guarantees to foreign banks. 30. In accordance with the instructions provided to him, on or about February 3, 2011, Hamilton sent the original Sovereign Guarantee Number SEL-SSFS-SG-1003 to Mirabaud (Middle East) Limited in Dubai via FedEx under cover of Wells Fargo letterhead

7 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 7 of In accordance with instructions from the defendants, Hamilton also ed copies of the Sovereign Guarantees to at least three foreign banks designated by the defendants. At the repeated request of defendants Lester and/or Jacobs, Hamilton ed to Lester at decagon@comcast.net copies of the s he sent to the designated banks. Upon information and belief, decagon@comcast.net is an address belonging to Lester s corporation, defendant Decagon Company Limited. 32. Hamilton did not advise his supervisors at Wells Fargo that he or Blackmon had signed the Sovereign Guarantees or had sent them to the designated foreign banks. 33. Hamilton and Blackmon lacked the actual or apparent authority to send the Sovereign Guarantees or copies thereof to the designated foreign banks on behalf of Wells Fargo. 34. On or about March 7, 2011, Wells Fargo s international operations department in New York received a SWIFT message from Mirabaud (Middle East) Limited, acknowledging receipt of an original Sovereign Guarantee and requesting formal authentication from Wells Fargo s legal and compliance department as well as from the City of Selma, Alabama. 35. Upon receiving the SWIFT message, Wells Fargo, through counsel, contacted Mirabaud in Dubai and asked for copies of the documents referenced in the SWIFT message. Mirabaud sent copies of the documents referenced in the SWIFT message. Wells Fargo, through counsel, gave written notice to Mirabaud that Wells Fargo s employees were not authorized to sign the Sovereign Guarantees or the transmittal documents on behalf of Wells Fargo, and that the Sovereign Guarantees and transmittal documents were executed without Wells Fargo s authorization or consent and, therefore, are invalid and unenforceable as to Wells Fargo. Wells Fargo requested that Mirabaud return the original and any copies of the Sovereign Guarantees - 7 -

8 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 8 of 14 and transmittal documents to Wells Fargo. On April 19, 2011, Mirabaud returned what had been described to it as the original Sovereign Guarantee Number SEL-SSFS-SG-1003 to Wells Fargo s counsel. 36. Upon learning that copies of the Sovereign Guarantees had been ed to three other foreign banks in Abu Dhabi and Geneva, Wells Fargo, through counsel, gave written notice to those banks that Wells Fargo s employees had not been authorized to sign the Sovereign Guarantees on behalf of Wells Fargo, and that the Sovereign Guarantees and transmittal documents were executed without Wells Fargo s authorization or consent and, therefore, are invalid and unenforceable as to Wells Fargo. Wells Fargo asked those banks to return any originals or copies of the Sovereign Guarantees to Wells Fargo. None of those banks has returned any originals or any copies of the Sovereign Guarantees. 37. On or about March 10, 2011 and again on March 28, 2011, a New York-based attorney, Stuart Jackson, called Wells Fargo to inquire about what he described as bonds supposedly issued by the City of Selma with the same face value as each of the Sovereign Guarantees. The attorney stated that he represented a client, Ammoura Zuhair, who was working with a bank in Dubai, and that Mr. Zuhair was supposed to receive the bonds to use as collateral for the transfer of a similar amount of money. He referenced the possibility of litigation if Wells Fargo did not issue a SWIFT message or otherwise confirm the existence of the so-called bonds. 38. Wells Fargo, through counsel, advised attorney Jackson that any documents that appeared to be executed on behalf of Wells Fargo in connection with the transaction were executed without Wells Fargo s authorization or consent, and that Wells Fargo would not be sending a SWIFT message or any other assurance regarding the purported City of Selma bonds. Wells Fargo requested return of the documents from attorney Jackson and his client. To date, - 8 -

9 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 9 of 14 neither attorney Jackson nor Mr. Zuhair has responded or returned any documents to Wells Fargo. 39. Upon learning that multiple Sovereign Guarantees apparently had been signed by Wells Fargo employees, Wells Fargo, through counsel, contacted the City of Selma to ascertain its position regarding the Sovereign Guarantees. The Mayor and the City Attorney advised that the City had never given Rogers authority to sign the Sovereign Guarantees on City of Selma letterhead. 40. Wells Fargo, through counsel, has advised Rogers and Purchis in writing that its employees were not authorized to sign the Sovereign Guarantees on behalf of Wells Fargo. Rogers and Purchis have advised Wells Fargo that all of the original Sovereign Guarantees, with the exception of the one returned by Mirabaud, have been shredded at the request of Sirius San- Xing Financial Services, Ltd. Rogers and Purchis have indicated that all of the Sovereign Guarantees are null and void, and that they are no longer pursuing a transaction involving the Sovereign Guarantees signed by Wells Fargo employees. 41. Wells Fargo, through counsel, also has provided written notice to all defendants that the bank s employees were not authorized to sign the Sovereign Guarantees or related documents, and demanded return of the originals and any copies of the Sovereign Guarantees. None of the defendants has returned any originals or copies of the Sovereign Guarantees, nor has any defendant admitted that the Sovereign Guarantees are null and void. Defendants Lester and Decagon have not responded to Wells Fargo s correspondence in any manner. 42. An attorney for Defendants Michael and Ruby Jacobs responded to Wells Fargo s counsel, stating that the Jacobses do not possess the Sovereign Guarantees nor do they exercise any dominion over them. However, counsel for the Jacobses also stated that Mr. Jacobs is - 9 -

10 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 10 of 14 working on a deal in the range of ten figures, and threatened the pursuit of legal remedies against Wells Fargo in the event [the bank s] unwarranted interference negatively impacts [the Jacobses ] endeavors. 43. Upon information and belief, one or more copies and/or originals of the Sovereign Guarantees are still in the possession of one or more of the defendants. Wells Fargo Did Not Guarantee Any Transaction 44. Wells Fargo has not attempted to guarantee, and cannot as a matter of law guarantee, the transaction at issue under these facts. 45. Wells Fargo is a national bank governed by the National Banking Act. The National Banking Act does not expressly authorize national banks to lend their credit to guarantee the debts of another party for that party s benefit. See 12 U.S.C The Office of the Comptroller of the Currency (OCC), as the regulatory agency charged with implementing the National Bank Act, has promulgated regulations that govern national banks at Title 12 of the Code of Federal Regulations. 47. Section of the Code of Federal Regulations on Banks and Banking provides that a national bank may only act as a guarantor if: i. The bank has a substantial interest in the performance of the transaction involved... ; or ii. The transaction is for the benefit of a customer and the bank obtains from the customer a segregated deposit that is sufficient in amount to cover the bank s total potential liability. 12 C.F.R Wells Fargo had no interest, much less a substantial interest, in the purported transaction involving the Sovereign Guarantees

11 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 11 of Wells Fargo did not receive any benefit related to the Sovereign Guarantees. 50. Wells Fargo never received any payment, any transfer of property, any security interest, or any other consideration in relation to the Sovereign Guarantees or any transaction involving those documents. 51. Wells Fargo never received any deposit from any of the parties hereto or the City of Selma that would cover the face value of a single Sovereign Guarantee, let alone all seven. COUNT I Declaratory Judgment / Permanent Injunction: The Sovereign Guarantees Are Void Ab Initio 52. Wells Fargo repeats and realleges the allegations set forth in paragraphs 1-51 above, as if fully set forth herein. 53. Hardy, Powe, Hamilton and Blackmon lacked the actual or apparent authority to sign the Sovereign Guarantees on behalf of Wells Fargo. 54. Pursuant to 12 C.F.R , Wells Fargo was not a guarantor of the Sovereign Guarantees because: i. Wells Fargo did not have a substantial interest in the Sovereign Guarantees. ii. Wells Fargo did not obtain a segregated deposit from any of the defendants or the City of Selma sufficient to cover Wells Fargo s total purported potential liability. iii. Wells Fargo did not receive any benefit for the issuance of the Sovereign Guarantees. 55. Pursuant to 28 U.S.C. 2201(a), Wells Fargo therefore seeks a declaration of this Court that the Sovereign Guarantees are void ab initio and unenforceable as to Wells Fargo

12 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 12 of Declaratory relief is appropriate because there is an actual justiciable controversy between the parties of sufficient immediacy to justify the relief sought, demonstrated by 1) the refusal of any of the defendants to return the originals or copies of the Sovereign Guarantees to Wells Fargo or even to admit that they are null and void; 2) the defendants continued pursuit of a transaction involving the Sovereign Guarantees even after the Mayor of Selma had notified Rogers that they were null and void; 3) the threat of litigation against Wells Fargo by the attorney for Zuhair if Wells Fargo did not assist in completing the transaction; and 4) the Jacobses continued pursuit of a large-dollar transaction apparently involving the Sovereign Guarantees, despite Rogers claims that Wells Fargo was no longer involved and that the Sovereign Guarantees had been shredded. 57. Moreover, the fact that a reputable financial institution such as Mirabaud (Middle East) Limited would seriously consider acting upon one of the Sovereign Guarantees demonstrates the real potential for reputational and financial harm to Wells Fargo if a third party were to rely on the representations made in the Sovereign Guarantees. 58. Because one or more of the Sovereign Guarantees or copies thereof may remain in the possession of one or more of the defendants, Wells Fargo will suffer irreparable harm if the Sovereign Guarantees are exchanged for value in the course of any subsequent transaction. PRAYER FOR RELIEF WHEREFORE, Plaintiff Wells Fargo Bank, N.A. respectfully requests that this Court enter an order: i. declaring the Sovereign Guarantees unenforceable as to Wells Fargo and void ab initio;

13 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 13 of 14 ii. permanently enjoining Defendants from selling, transferring, or otherwise attempting to enforce the Sovereign Guarantees as to Wells Fargo; and iii. awarding such other further legal and equitable relief as the Court deems just Dated: June 9, 2011 and reasonable. s/ Edward G. Bowron EDWARD G. BOWRON (BOWRE9029) OF COUNSEL: Attorney for WELLS FARGO BANK, N.A. BURR & FORMAN LLP RSA Tower 11 North Water Street Suite Mobile, AL Telephone: (251) Facsimile: (251) ed.bowron@burr.com and Barry R. Davidson Jamie Zysk Isani Fla. Bar Nos & HUNTON & WILLIAMS LLP 1111 Brickell Avenue, Suite 2500 Miami, Florida Telephone: (305) Facsimile: (305) bdavidson@hunton.com jisani@hunton.com Motions for Pro Hac Vice Admission Forthcoming

14 Case 1:11-cv CG-M Document 1 Filed 06/09/11 Page 14 of 14 PURSUANT TO THE FEDERAL RULES OF CIVIL PROCEDURE, PLEASE SERVE THE FOLLOWING DEFENDANTS VIA CERTIFIED MAIL: Decagon Company Limited c/o Lawrence Lester, Registered Agent rd Avenue, N.W. Seattle, WA Ruby Handler Jacobs 800 Calle Divina, N.E. Albuquerque, NM Michael Jacobs 800 Calle Divina, N.E. Albuquerque, NM Lawrence Lester rd Avenue, N.W. Seattle, WA