Thomas Calvey v. Stifel, Nicolaus & Co. Inc. ( 2021 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 21a0121n.06
Case No. 20-3423
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
Mar 09, 2021
) DEBORAH S. HUNT, Clerk
)
THOMAS CALVEY,
)
Plaintiff-Appellant, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
v. ) COURT FOR THE NORTHERN
) DISTRICT OF OHIO
STIFEL, NICOLAUS & COMPANY, INC., )
Defendant-Appellee. ) OPINION
)
BEFORE: McKEAGUE, GRIFFIN, and NALBANDIAN, Circuit Judges.
McKEAGUE, Circuit Judge. After falling seriously ill with pancreatic cancer, Thomas
Calvey (“Thomas”) signed a Power of Attorney (“POA”) giving his brother, James Calvey
(“James”), authority to withdraw money from his accounts at his investment firm, Stifel, Nicolaus
& Company (“Stifel”). Years later, Thomas sued Stifel for negligence and other claims, arguing
that Stifel failed to properly verify the POA and so breached its duty of care in permitting James
to withdraw over $300,000 from Thomas’s accounts. After discovery, the district court granted
Stifel’s motion for summary judgment, finding that Thomas had failed to create a genuine issue of
material fact on any of his claims.
Finding no error in the grant of summary judgment, we AFFIRM.
Case No. 20-3243, Calvey v. Stifel, Nicolaus & Co., Inc.
I
In 2012, Thomas Calvey (“Thomas”) opened three investment accounts with an investment
firm named Stifel, Nicolaus & Company (“Stifel”). The two individuals that Thomas
communicated with most often were located at the Maryland office: his financial advisor,
Theodora Braver, and her assistant, Meekie Shiflett. A few years later, in 2014, Thomas was
diagnosed with pancreatic cancer. In January 2015, he called Braver from his hospital bed to
discuss his condition and changes to his investments. Braver spoke to Thomas in February 2016
and noted his health had improved, and then spoke to him again in December 2016 regarding his
accounts.
On April 10, 2017, Thomas signed a Power of Attorney (“POA”) designating his brother,
James Calvey (“James”), as the attorney-in-fact for all of Thomas’s accounts at Stifel. The POA
gave broad authority to James, authorizing him to “[c]onduct any business with any banking or
financial institution with respect to any of [Thomas’s] accounts, including, but not limited to,
making deposits and withdrawals.” The POA contained an acknowledgment indicating that
Thomas read and understood it, and included the following section:
13. Notice to Third Parties
Any third party who receives a valid copy of this Power of Attorney can rely on and act
under it. A third party who relies on the reasonable representations of my Attorney-in-fact
as to a matter relating to a power granted by this Power of Attorney will not incur any
liability to the Principal or to the Principal’s heirs, assigns, or estate as a result of permitting
the Attorney-in-fact to exercise the authority granted by this Power of Attorney up to the
point of revocation of this Power of Attorney.
The POA was notarized, and the notary filed an affidavit indicating that he spoke with
Thomas, that Thomas understood the POA and its contents, and that Thomas was of sound mind
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and exercising his free will in signing the POA. There were also two witnesses to the signing of
the POA.
Stifel received the POA in early May 2017. After reviewing the POA, Shiflett emailed her
supervisor and indicated she thought Thomas’s signature might not match his signature from other
documents. However, reviewing POAs was the responsibility of the Stifel New Accounts Group,
not individual employees at individual offices. The POA was sent to Stifel’s New Accounts Group
around May 8, 2017, which completed its standard extensive checklist regarding POAs and
reviewed the relevant documents to determine if the signatures were similar. After completing
this review, the New Accounts Group approved the POA around May 9, 2017.
On May 25, 2017, after James communicated with employees at Stifel regarding Thomas’s
worsening condition, James withdrew $312,000 from Thomas’s account to purchase a home for
Thomas and established a monthly distribution of $760–$1,520 to cover Thomas’s living expenses.
James submitted a form to Stifel to obtain authorization for the $312,000 transfer, and Stifel
obtained verbal approval from James before the transfer took place. On June 16, 2017, James
purchased a home titled in his and his mother’s name. Later that year, James withdrew another
$36,000 and told Stifel the money was to purchase a wheelchair van for Thomas. The total amount
of money disbursed to James from Stifel was $361,680.
Around May 31, 2018, Thomas called Braver and told her that he survived pancreatic
cancer, he never named James a POA holder, he had no house in his name, and no wheelchair van
was ever purchased for him. Stifel refused to return any of the money to Thomas. In response,
Thomas successfully sued James in Ohio state court seeking to recover the residence. In the
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complaint in that case, Thomas claimed he was “duped . . . into executing a Power of Attorney for
Financial Management which named [James] as [his] fiduciary.”
Subsequently, Thomas sued Stifel in Ohio state court on April 2, 2019, for negligence,
breach of fiduciary duty, conversion, and punitive damages. Stifel removed the case to federal
court on April 25, 2019. Thomas’s main claim against Stifel was its alleged failure to “properly
verify” the POA before sending money to James, and all four of his claims stem from the same set
of facts. After discovery, Stifel filed a motion for summary judgment on September 30, 2019. On
February 14, 2020, the district court granted Stifel’s motion for summary judgment, dismissing all
of Thomas’s claims.1
Thomas now appeals the summary judgment order dismissing all of his claims.
II
A. Standard of Review
We review the district court’s grant of summary judgment de novo, King v. United States,
917 F.3d 409, 421 (6th Cir. 2019), and view all the evidence in the light most favorable to the
nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
“The mere existence of a scintilla of evidence to support plaintiff’s position will be insufficient”
to avoid summary judgment; instead, “there must be evidence on which the jury could reasonably
find for the plaintiff.” Copeland v. Machulis, 57 F.3d 476, 479 (6th Cir. 1995).
B. Negligence and Breach of Fiduciary Duty
The standards for negligence and breach of fiduciary duty in Ohio are similar. To prevail
on a claim of negligence, the plaintiff must show that (1) the defendant owed him or her a duty of
care, (2) the defendant breached that duty of care, and (3) the breach proximately caused the
1
The district court also denied Thomas’s motion to strike three affidavits, which he did not appeal.
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plaintiff’s injury. Chambers v. St. Mary’s Sch., 697 N.E2d 198, 200 (Ohio 1998). For a breach of
fiduciary duty claim, the elements are the same except that the plaintiff must instead establish that
the defendant owed them a fiduciary duty, which is a “heightened duty of good faith and loyalty.”
Garvais v. Reliant Inventory Sols., Inc., No. 2:09–cv–389, 2012 WL 4057411, at *5 (S.D. Ohio
Sep. 14, 2012). “A claim of breach of fiduciary duty is basically a claim for negligence that
involves a higher standard of care.” All Star Land Title Agency, Inc. v. Surewin Inv., Inc., No.
87569, 2006 WL 3095701, at *6 (Ohio Ct. App. Nov. 2, 2006).
As Stifel served as Thomas’s investment firm in charge of over $800,000 of his money,
the existence of a duty of care is undisputed. Whether Stifel owed Thomas a fiduciary duty is a
closer question. Ohio law describes fiduciary relationships as ones “in which one party to the
relationship places a special confidence and trust in the integrity and fidelity of the other party to
the relationship” and indicates that “there is general agreement that a broker or financial advisor
is in a fiduciary relationship with his clients.” See, e.g., Mathias v. Rosser, Nos. 01AP–768, 01AP–
770, 2002 WL 1066937, at *4 (Ohio Ct. App. May 30, 2002) (collecting cases). But other cases
suggest that “no fiduciary duty arises between a broker and his client in relation to” accounts such
as the ones here. See Javitch v. First Montauk Fin. Corp., 279 F. Supp. 2d 931, 937 (N.D. Ohio
2003) (quoting J.C. Bradford Futures, Inc. v. Dahlonega Mint, Inc., 907 F.2d 150, 1990 WL
95625, at *5 (6th Cir. 1990) (table)). The parties dispute this question, and we need not answer it.
The outcome here would be the same even if Stifel owed Thomas a fiduciary duty of care. So,
assuming without deciding that Stifel owed Thomas a fiduciary duty of care, we analyze whether
Thomas has created a genuine issue of material fact on whether Stifel breached its duty of care to
Thomas.
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And that question turns on whether Stifel could rely on the POA that gave James broad
authority to make withdrawals from Thomas’s accounts. Ohio’s Uniform Power of Attorney Act
governs POAs in the state and confirms that signatures are “presumed to be genuine if the principal
acknowledges the signature before a notary public.” Ohio Rev. Code Ann. § 1337.25 (West 2019).
Further, the Act provides that a POA executed after March 22, 2012 “is valid if its execution
complies with section 1337.25 of the Revised Code.” Ohio Rev. Code Ann. § 1337.26(A) (West
2019). In other words, POAs in Ohio are presumed to be genuine and valid if they are signed and
notarized. The POA in this case clearly meets those requirements.
Third parties can rely on facially valid POAs like Stifel did here without facing liability.
In A.G. Financial, Inc. v. LaSalla, No. 84880, 2005 WL 730092 (Ohio Ct. App. Mar. 31, 2005),
the Ohio appellate court affirmed the granting of summary judgment to a defendant law firm when
it relied on a POA that was allegedly forged by the plaintiff’s brother. Id. at *4–5. The court held
that because the POA was notarized and contained two witness signatures, and because the notary
testified that she witnessed the plaintiff sign the POA, summary judgment was proper. Id. at *5–
6. So too here. The POA in this case was notarized, had two witness signatures, and the notary
witnessed Thomas sign it.
Indeed, Ohio law confirms that third parties have no duty to investigate the actions of valid
POA holders. Financial institutions that possess valid POAs have “no duty to investigate every
action that the holder of that power of attorney takes to ensure that each action is proper.”
Townsend v. Williger, No. 5:05-CV-02540, 2006 WL 721394, at *8 (N.D. Ohio Mar. 16, 2006)
(granting summary judgment in favor of the defendant bank and confirming that even if the POA
holder engaged in self-dealing, the bank “would be shielded from liability as it had no duty to
police [the POA holder’s] actions”); Thrower v. Bolden, No. 97813, 2012 WL 3765035, at *4
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(Ohio Ct. App. Aug. 30, 2012) (affirming summary judgment in favor of the defendant bank when
it relied on a notarized POA and rejecting the plaintiff’s argument that the bank had a duty to
investigate the POA holder’s actions); Gupta v. Lincoln Nat’l Life Ins. Co., No. 05AP-378, 2005
WL 3304019, at *3–4 (Ohio Ct. App. Dec. 6, 2005) (affirming summary judgment in favor of the
defendant financial institution after it relied on a facially valid POA, even though the POA holder
engaged in self-dealing).
These cases all establish the same principle: third parties must be able to rely on facially
valid POAs to conduct their business. An Ohio court which so held has reasoned that requiring
financial institutions to investigate the actions of POA holders before permitting withdrawal of
funds would be “an onerous requirement” that “would not only be impracticable, but would
essentially eliminate the power of attorney as a useful tool in the transaction of business of any
elderly, disabled, absent, or otherwise incapacitated individual.” Gupta, 2005 WL 3304019 at *4.
And this straightforward principle governs the outcome of this case. The POA here was signed,
witnessed, and notarized, and Stifel engaged in its normal process of verifying the POA before
approving it. Once that process was complete, Stifel was entitled to rely on it. As these cases
make plain, requiring Stifel to conduct further investigatory action before permitting James to
make withdrawals would undermine the purpose of POAs and is not a requirement under Ohio
law.
Thomas objects to the validity of Stifel’s reliance on the POA in four ways, which we
address in turn.
1. Thomas’s Approval
Much of Thomas’s briefing addresses how James was permitted by Stifel to make
withdrawals without Stifel first seeking approval from Thomas. As discussed above, Ohio law
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establishes that financial institutions need not investigate the actions of valid POA holders before
permitting them to withdraw funds. Stifel was entitled to rely on the facially valid POA and did
not need Thomas’s approval to provide funds to James.
2. Thomas’s Signature
Thomas accurately notes that Shiflett had concerns regarding his signature on the POA.
But multiple Stifel employees confirmed that Shiflett was not a “handwriting expert” and that she
had no experience or training in viewing signatures. Instead of relying on Shiflett’s suspicions,
Stifel followed its standard procedures in submitting the POA to the New Accounts Group, which
reviewed the POA, checked the signatures, confirmed it was notarized, and then approved the
POA. Thomas presents no evidence to the contrary on any of these points.
Further, Thomas entirely fails to address the affidavit of the notary public who notarized
Thomas’s signature on the POA. The notary confirmed he saw Thomas sign the POA, that Thomas
understood the POA, and that Thomas appeared to be of sound mind while signing it. Additionally,
in Thomas’s complaint against James, he claimed he was “duped into” signing the POA, not that
his signature was forged.2 Accordingly, Thomas’s arguments regarding his signature are
unpersuasive.
3. Missing Page
Thomas claims that the lack of attention that Stifel paid to a “missing page” from the POA
shows negligence. His evidence for this is that the POA’s header goes from “Page 7 of 9” to “Page
9 of 9.” Thomas claims that multiple employees from Stifel “did not see Page 8 was missing” and
2
Thomas argues that it is inappropriate to consider this complaint because “pleadings are not
evidence,” nor are “[u]nverified complaints.” He is wrong. “A party’s pleading in one case may
generally be used as an evidentiary admission in other litigation.” McCormick, Evidence § 257
(8th ed. 2020); see also Williams v. Union Carbide Corp., 790 F.2d 552, 556 (6th Cir. 1986)
(“Pleadings in a prior case may be used as evidentiary admissions.”).
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so “this is [an] issue of material fact.” Not so. If the missing page was from the early portion of
the POA containing the material terms of the agreement, perhaps a missing page could create a
genuine issue of material fact. See, e.g., First Star Logistics, LLC v. Bernard, No. 1:16-cv-1070,
2020 WL 7698130, at *1, *6 (S.D. Ohio Dec. 28, 2020) (denying summary judgment because a
contract was “undisputedly missing Page 6 . . . and the parties dispute what was contained on that
missing page”). But that’s not this case. Here, Page 6 of the POA contains the notary’s stamp and
two witness signatures. Page 7 is the notary acknowledgement form and Page 9 is a witness
certificate for the second witness listed on Page 6. We need not make unreasonable inferences on
summary judgment. Rather than assuming Stifel employees “did not see Page 8 was missing,” it
seems far more likely they simply assumed Page 8 was a missing witness certificate for the first
witness. Indeed, evidence in the record suggests that some employees drew this exact conclusion,
with one witness stating that if Page 8 contained “anything other than a witness certificate I’d be
shocked.” Regardless, Thomas fails to offer any explanation as to how this missing page could be
material. Simply noting that the page is missing is insufficient, and Thomas’s briefing offers no
other inferences we could draw from this evidence other than the one above.
4. Stifel’s Procedures
Lastly, Thomas claims that Stifel did not follow its internal procedures in handling his
documents or transfers. For example, he claims that Stifel approved the $312,000 wire transfer
without proper approval. Thomas is incorrect. Uncontested deposition testimony confirms that a
manager at Stifel “talked to James” and received the requisite approval before wiring the money.
Thomas’s other claims fare no better. He claims that the funds were required to be held in a “POA
bank account,” but no such requirement exists. He claims that Stifel had a policy of looking for
“unexplained and uncharacteristic withdrawals of large sums of money by . . . one with Power of
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Attorney,” but Stifel executives noted that “[e]very withdrawal had a valid explanation.” We share
the district court’s concern that “there are instances in which [Thomas] takes testimony out of
context” in his arguments.
***
The record is unclear on whether James misused the money withdrawn from Thomas’s
accounts. But that is not the question before us. Instead, we must determine whether Thomas has
created a genuine issue of material fact regarding whether Stifel breached its duty of care in relying
on a facially valid POA that gave James authority to make those withdrawals. And after drawing
all inferences in Thomas’s favor, he has failed to create a genuine issue of material fact that Stifel
breached its duty of care, even assuming a fiduciary duty existed. The POA was signed, witnessed
by two individuals, and notarized. When Stifel received the POA, Stifel reviewed it using the
same process it uses for reviewing any other POA by sending it to the New Accounts Group. This
process entailed a signature review, after which the POA was approved. And Thomas offers no
evidence to contest Stifel’s valid explanations for its actions. In sum, a concern by one untrained
employee regarding a signature that was later verified by Stifel’s New Accounts Group, a missing
page near the end of a POA, and alleged procedural failures without any evidence they occurred
are insufficient to create a genuine issue of material fact here.3
C. Conversion
A claim for conversion under Ohio law requires “(1) plaintiff’s ownership or right to
possess the property at the time of the conversion; (2) defendant’s conversion by a wrongful act
or disposition of Plaintiff’s property; and (3) damages.” Kuvedina, LLC v. Cognizant Tech. Sols.,
3
As we have concluded that Stifel did not breach its duty of care, we need not address Stifel’s
argument that Stifel did not proximately cause Thomas’s damages.
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946 F. Supp. 2d 749, 761 (S.D. Ohio 2013). As discussed above, Thomas has failed to create a
genuine issue of material fact on whether Stifel acted wrongfully in transferring funds from
Thomas’s account to James. Stifel lawfully transferred the funds pursuant to a valid POA, and so
the conversion claim was properly dismissed by the district court.
D. Punitive Damages
We have concluded that the district court properly dismissed all of Thomas’s other claims,
and “punitive damages are not an independent cause of action” in Ohio. Hitachi Med. Sys. Am.,
Inc. v. Branch, No. 5:09-cv-01575, 2010 WL 816344, at *11 (N.D. Ohio Mar. 4, 2010). “No civil
cause of action in [Ohio] may be maintained simply for punitive damages.” Niskanen v. Giant
Eagle, Inc., 912 N.E.2d 595, 599 (Ohio 2009) (quoting Bishop v. Grdina, 485 N.E.2d 704, 705
(Ohio 1985), superseded on other grounds by change to Ohio Civ. R. 54(C)). Therefore, we see
no error in the district court’s dismissal of this claim.
III
Accordingly, we AFFIRM the district court’s order.
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