UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

 

MEDILINK INSURANCE COMPANY, LIMITED,

Plaintiff/Counter-Defendant,

v. Case No. 09-13692

COMERICA BANK,

Defendant/Counter-Plaintiff.

/

OPINION AND ORDER

GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT,

GRANTING IN PART PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT,

AND DENYING AS MOOT DEFENDANT’S MOTION IN LIMINE

Pending before the court are cross motions for summary judgment by

Plaintiff/Counter-Defendant Medilink Insurance Company, Limited, and

Defendant/Counter-Plaintiff Comerica Bank, both filed on September 27, 2010. 

Responses and replies were timely filed. All told, the parties filed 168 exhibits

supporting or opposing the motions. In addition to this extensive record filed by the

parties, the court held a hearing on January 5, 2011. For the reasons stated below, the

court will grant Comerica’s motion for summary judgment and will grant in part

Medilink’s motion for summary judgment.

I. BACKGROUND

The instant case arises out of the fraud or false pretenses of John P. Bender,

J.P. Bender & Associates, Inc., and Bender, Inc., (collectively and individually “Bender”)

through 2007. At the relevant times, Medilink operated as a reinsurance company,

reimbursing payments of claims against certain hospitals in and around Detroit,

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Michigan. Medilink maintained certain accounts with the Institutional Trust Department

of Comerica bank, which were used to reimburse payment of such claims (“Trust

Accounts”) and which were covered by contracts (“Trust Agreements”) between

Medilink and Comerica. (Def. Mot. Ex. 19-21; Pl. Mot. 2-3.) The parties agree that

Comerica has not breached any provisions of these agreements. (Def. Mot. Facts 7; Pl.

Resp. Facts 7.) The Trust Agreements include various clauses limiting the liability of

Comerica, but Medilink challenges their applicability in this case. (Def. Mot. Ex. 22.)

Bender also maintained demand deposit accounts with Comerica, with terminal

digits x1154, x7866, and x7749 (collectively “Bender Accounts”). (Def. Mot. Ex. 26.) 

These accounts listed Bender as the sole owner and were covered by an account

contract between Bender and Comerica. (Def. Mot. Ex. 26 & 27.) The Bender

Accounts were unrestricted business checking accounts, and Bender had authority to

transfer funds from them for any purpose without obtaining the authorization of Medilink

or any other entity. (Def. Mot. Ex. 26 & 27.) The Bender Accounts were thus distinct

from the Medilink Accounts in both ownership and type. Bender also maintained with

Comerica an account with terminal digits x0973 (“Carlisle Account”) and an account with

terminal digits x4520 (“Personal Account”). (Def. Mot. Ex. 26.) In addition to

maintaining these accounts with Comerica, Bender had obtained various loans from

Comerica, secured in part by the Bender Accounts. (Def. Mot. Ex. 27 §§ 1.58, 2.12,

2.14; Def. Mot. Ex. 30.) 

In handling claims ultimately reinsured by Medilink, Bender acted as third-party

claims administrator. (Pl. Mot. Ex. 4 at 36.) Upon resolution of a claim, Bender would

submit a request for payment to Medilink. (Pl. Mot. Ex. 4 at 71-72.) Medilink would

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then review the claim and determine whether to approve it. (Pl. Mot. Ex. 4 at 72.) If

approved, the claim would then go to a subsidiary of Marsh & McLennan Companies

(“Marsh”) for additional approval. (Pl. Mot. Ex. 4 at 72-73.) Marsh would then direct

Comerica to transfer funds from a Trust Account to a Bender Account. (Pl. Mot. Ex. 4 at

73.) At this point, Bender was expected to pay the funds over to the claimant or

claimants. However, it is undisputed that on numerous occasions between 2005 and

2007, Bender had obtained funds for which there existed no legitimate claim; Bender

instead retained the funds for his personal and business use. (Pl. Mot. Ex. 4 at 131-32.)

One such instance of inappropriately obtaining funds from the Trust Accounts is

at issue in this case. It involves the false claim that ultimately led to the discovery of

Bender’s fraud. On August 21, 2007, Bender submitted a false claim to Medilink for

reimbursement of a claim payment to Louis Rahall. (Def. Mot. Ex. 32.) The request

was approved, and funds were transferred from a Trust Account to a Bender Account

on August 30, 2007. (Def. Mot. Ex. 32.) On August 31, 2007, Bender presented a

check in the amount of $318,048 for payment at a Comerica branch bank for deposit

into his Carlisle Account. (Def. Mot. Ex. 37; Def. Mot. Ex. 7 at 11.) The check issued

from Bender to Rahall and his attorney, Christopher Sciotti, was drawn on Bender

Account x1154, and was series number 2166 (“Rahall Check”). (Def. Mot. Ex. 39.) The

Rahall Check had been endorsed on the back with the names “Louis Rahall and

Christopher Sciotti” in a hand sufficiently similar to Bender’s to eventually lead to an

investigation. (Def. Mot. Ex. 38; Def. Mot. Ex. 39.) However, at that time, the check

appeared complete and properly endorsed. (Def. Mot. Ex. 7 at 64-65; Def. Mot. Ex. 39.) 

Immediately upon depositing the Rahall Check into the Carlisle Account, Bender issued

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a check drawn on the Carlisle Account for $300,000 and payable to cash (“Carlisle

Check”). (Def. Mot. Ex. 37.) Bender then deposited the Carlisle Check into his

Personal Account. (Def. Mot. Ex. 37.) Bender was authorized to sign on the Bender

Account, the Carlisle Account, and the Personal Account. (Def. Mot. Ex. 26.)

Noting that the endorsements on the Rahall check appeared to match the “very

distinctive” handwriting of Bender, branch manager Todd Salo filed an internal

suspicious activity form. (Def. Mot. Ex. 38.) When Christopher Curry, a fraud

investigator at Comerica, investigated this report, other suspicious transactions were

uncovered. (Def. Mot. Ex. 9 at 35-36.) On September 4, 2007, Comerica placed a

pledge on the Bender Account on which the Rahall check was drawn (x4520) in order to

protect itself should the check prove to be improperly paid. (Pl. Mot. Ex. 14 at # 2.) 

After further investigation, on September 10, 2007, Comerica exercised its discretionary

power to freeze the three Bender Accounts, the Carlisle Account, and the Personal

Account. (Pl. Mot. Ex. 14 at # 2; Def. Mot. Ex. 27 at § 3.05.) On the same day, Curry

contacted Ruth Goodell, Comerica’s contact at Marsh, with information regarding the

suspicious activity of Bender. (Def. Mot. Ex. 9 at 77-78; Def. Mot. Ex. 18 at ¶ 10.) On

September 11, 2007, Curry met with Goodell and Medilink chairman Gary Ley to

investigate the suspicious activity, at which point Goodell and Ley verified that the funds

transfers from the Trust Accounts to the Bender Accounts were validly authorized by

Marsh and Medilink. (Def. Mot. Ex. 9 at 80-83; Pl. Mot. 5 at 98-101; Def. Mot. Ex. 28 at

¶¶ 5-6; Def. Mot. Ex. 32.)

As far as the parties dispute the material facts, the disagreement concerns only

the events beginning with the September 11, 2007, meeting. Goodell states that her

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understanding, based upon the discussions at that meeting, was that the funds would

remain frozen if Marsh or Medilink notified the appropriate governmental agencies and

merely provided notice to Comerica that the transactions were disputed. (Pl. Mot. Ex. 5

at 144-45.) In an e-mail message sent to Curry on September 12, 2007, Goodell

declared that Medilink did dispute ten payments to Bender. (Def. Mot. Ex. 43; Pl. Mot.

Ex. 24.) Goodell claims to have added specific language disputing the accounts at the

direction of Curry, and she believed this notice would suffice to ensure the Bender

Accounts remained frozen. (Pl. Mot. Ex. 5 at 145; compare Pl. Mot. Ex. 23 with Pl. Mot.

Ex. 24.) On the same day, representatives of Comerica, Medilink, and Marsh conferred

regarding the Bender activities. (Goodell Dep., Def. Mot. Ex. 2 at 138; Peraino Dep.,

Def. Mot. Ex. 11 at 16-17, 26-27; Def. Mot. Ex. 42.) Comerica’s in-house counsel,

Frank Peraino, asserts that he informed Medilink of the Michigan Adverse Claim

Statute, Mich. Comp. Laws § 487.691, during that conference. (Def. Mot. Ex. 11 at 43-

44, 48-49.) Medilink disputes this. (Goodell Dep., Pl. Mot. Ex. 5 at 142-45.) Following

the meeting and Goodell’s e-mail, it appears Medilink believed the Bender Accounts

would be frozen indefinitely without further action. (Ley Dep., Pl. Mot. Ex. 4 at 122-23,

152; Goodell Dep., Pl. Mot. Ex. 5 at 145-46.)

On September 13, 2007, Ley and Goodell met with Bender, who confessed to

defrauding Medilink. (Ley Dep., Pl. Mot. Ex. 4 at 130-132.) Following the meeting,

Medilink contacted the Federal Bureau of Investigation and the Department of Justice. 

(Goodell Dep., Def. Mot. Ex. 226-27.) An investigation ensued, and a subpoena issued

to Curry on October 3, 2007, for Comerica’s records relating to Bender’s bank

transactions. (Pl. Mot. Ex. 27.) Ultimately, Bender was charged by information under

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18 U.S.C. 2314, to which he pled guilty, and was ordered to pay restitution to Medilink in

the amount of $3,619,765. United States v. Bender, No. 08-20465 (E.D. Mich. May 28,

2009). Medilink earlier brought a civil case against Bender and obtained judgment in

the amount of $4,749,920. Medilink Ins. Co. v. Bender, No. 07-15019 (E.D. Mich. Mar.

5, 2007).

Prior to this, on October 1, 2007, Comerica declared Bender’s loans in default for

“certain conduct” impairing the prospect of repayment. (Def. Mot. Ex. 44.) Comerica

simultaneously set off $382,812.37 against the Personal Account and another account

of Bender. (Def. Mot. Exs. 45-46; Pl. Mot. Exs. 37-38.) The parties dispute the exact

amounts and from which accounts the funds were set off. (Def. Mot. Facts ¶ 82; Pl.

Resp. Facts ¶ 82.) Following the default, Bender and Comerica negotiated a

forbearance agreement on October 19, 2007. (Def. Mot. Ex. 47.) As part of the

forbearance, Bender opened a new account with terminal digits x7687 (“Cash Collateral

Account”), which was to be frozen. (Def. Mot. Exs. 47-48.) The Collateral Account was

funded with substantially all the funds in two of the three Bender Accounts (x7749 &

x1154), totaling $350,000. (Ryan Dep., Def. Mot. Ex. 12 at 53; Def. Mot. Ex. 48; Pl.

Mot. Ex. 41.) Comerica then unfroze all of Bender’s accounts, with the exception of the

Cash Collateral Account. (Def. Mot. Ex. 48.) Bender thereafter removed nearly all of

the approximately $240,000 remaining in the third Bender Account (x7866). (Pl. Mot.

Ex. 41; Def. Mot. Ex. 28 at ¶ 47.) Medilink asserts it was unaware of either the Cash

Collateral Account or the removal of the restrictions on the Bender Accounts until some

later point.

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1 On September 27, 2010, Comerica also filed a motion in limine, which will be

denied as moot.

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In November 2007, Medilink initiated a civil case against Bender. On November

28, 2007, the court granted a TRO prohibiting all fund transfers from the Bender

Accounts. (Pl. Mot. Ex. 46.) After learning that the Cash Collateral Account had been

funded from two of the Bender Accounts prior to the TRO, Medilink filed a motion for a

second TRO on December 31, 2007. (Pl. Mot. Ex. 47.) Before that motion was

granted, Bender obtained access to the Cash Collateral Account, and withdrew

substantially all funds therefrom on January 10, 2008. (Dunleavy Report, Pl. Mot. Ex.

20 at Ex. M.). On January 17, 2008, the court granted the second TRO, at which point

little remained in the Cash Collateral Account. (Pl. Mot. Ex. 48.) The parties disagree

as to how Bender obtained access to the Cash Collateral Account, but it is undisputed

that the hold had not been properly placed on the account. (Def. Mot. Ex. 49.) As a

result, Bender transferred funds from the Cash Collateral Account to one of his personal

accounts, ultimately withdrawing the funds from that account. (Def. Mot. Ex. 50.)

Medilink brought suit against Comerica in Wayne County Circuit Court, and

Comerica timely removed the case to this court on September 19, 2009. On November

12, 2009, Medilink filed an amended complaint, alleging statutory and common law

conversion, the creation of a constructive trust, negligence, breach of fiduciary duty, and

unjust enrichment. In its answers on September 22, 2009, and November 27, 2009,

Comerica asserted a counterclaim for fees based on the account agreements between

Comerica and Medilink. On September 27, 2010, both parties filed motions for

summary judgment.1

 Medilink seeks summary judgment on Comerica’s counterclaim

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and partial summary judgment on Comerica’s affirmative defenses and notice of nonparty fault. Comerica seeks summary judgment on Medilink’s claims and Comerica’s

counterclaim.

II. STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment is proper when

there is no genuine issue as to any material fact and the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(a). “In deciding a motion for summary

judgment, the court must view the evidence in the light most favorable to the nonmoving party, drawing all reasonable inferences in that party’s favor.” Sagan v. United

States, 342 F.3d 493, 497 (6th Cir. 2003). “Where the moving party has carried its

burden of showing that the pleadings, depositions, answers to interrogatories,

admissions and affidavits in the record, construed favorably to the non-moving party, do

not raise a genuine issue of material fact for trial, entry of summary judgment is

appropriate.” Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir. 1987) (citing Celotex

Corp. v. Catrett, 477 U.S. 317 (1986)).

The court does not weigh the evidence to determine the truth of the matter, but

rather, to determine if the evidence produced creates a genuine issue for trial. Sagan,

342 F.3d at 497 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). 

The moving party discharges its burden by “‘showing’—that is, pointing out to the district

court—that there is an absence of evidence to support the nonmoving party’s case.”

Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004) (citing Celotex, 477 U.S. at 325). 

The burden then shifts to the nonmoving party, who “must do more than simply show

that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus.

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Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party must put

forth enough evidence to show that there exists “a genuine issue for trial.” Horton, 369

F.3d at 909 (citing Matsushita, 475 U.S. at 587). Summary judgment is not appropriate

when “the evidence presents a sufficient disagreement to require submission to a jury.” 

Anderson, 477 U.S. at 251-52.

The existence of a factual dispute alone does not, however, defeat a properly

supported motion for summary judgment—the disputed factual issue must be material. 

See id. at 252 (“The judge’s inquiry, therefore, unavoidably asks whether reasonable

jurors could find by a preponderance of the evidence that the plaintiff is entitled to a

verdict – ‘whether there is [evidence] upon which a jury can properly proceed to find a

verdict for the party producing it, upon whom the onus of proof is imposed.’” (alteration

in original) (citation omitted)). A fact is “material” for purposes of summary judgment

when proof of that fact would establish or refute an essential element of the claim or a

defense advanced by either party. Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.

1984) (citation omitted).

III. DISCUSSION

Medilink’s complaint states six claims in law and equity cognizable under the

laws of the State of Michigan, and Comerica’s sole counterclaim for indemnity and

breach of contract likewise arises under Michigan law. Because jurisdiction in this case

is solely based upon diversity of citizenship, the court must apply the law of the State of

Michigan. Erie R.R. Co. v. Tomkins, 304 U.S. 64 (1938); Stalbosky v. Beleu, 205 F.3d

890 (6th Cir. 2000). As Comerica’s counterclaim would also bar Medilink’s claims

through the release, indemnity, and no recourse clauses of the Trust Agreements, the

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court will consider it first. Finding the counterclaim to be legally untenable, the court will

then turn to Comerica’s motion for summary judgment. For the reasons stated below,

the court will grant Comerica’s motion for summary judgment.

A. Comerica’s Counterclaim

Comerica’s counterclaim against Medilink arises out of the exculpatory clauses in

the Trust Agreements. The terms of the provisions are unambiguous, so they must be

given their plain meaning and enforced as written. See In re Smith Trust, 745 N.W.2d

754, 758 (Mich. 2008); Meagher v. Wayne State Univ., 565 N.W.2d 401, 415 (Mich. Ct.

App. 1997). Both parties agree that the exculpatory provisions prohibit claims based

upon the Trust Agreements, absent willful misconduct, negligence, or lack of good faith. 

(Def. Resp. Ex. 19, §§ 5.1, 5.5; Def. Resp. Ex. 20, §§ 5.1, 5.5.) The only disagreement

appears to be whether Medilink’s claims implicate the Trust Agreements.

The language of the Trust Agreement provisions indicates that they bar actions

“based on or arising out of any provision [of the Trust Agreements] or on or out of any of

the instruments and agreements to be executed, delivered and performed [thereunder],

as to all of which [the parties] agree to look solely to the Trust Estate.” (Def. Resp. Ex.

19, § 5.5; Def. Resp. Ex. 20, § 5.5.) The Trust Agreements further require Medilink to

indemnify Comerica against any liabilities or costs “arising out of or in connection with

the performance of” Comerica’s obligations under the Trust Agreements. (Def. Resp.

Ex. 19, § 5.5; Def. Resp. 20 § 5.7.) Although ultimately without foundation, as

discussed below, all of Medilink’s claims avoid implicating the Trust Agreements. The

events and alleged duties arise not from the Trust Agreements, but rather from

Comerica’s dealings with Bender, contrary to Medilink’s interests, after learning that

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Bender obtained the funds by false pretenses. Medilink proceeds on the theory that it

retained ownership of the funds and that it sufficiently complied with the Adverse Claim

Statute, both of which are addressed below. Simply being incorrect about that is

insufficient to impose liability for the counterclaim. The pleadings indicate that

Comerica is not asserting any claims based upon the Trust Agreements, and the court

must enforce the indemnification provisions as written. Medilink does not deny that the

Trust Account transfers were authorized and the fund transfers proper. (Def. Resp. Ex.

28 at ## 5-6.) Nor does Medilink attempt to impose a general duty not to deal with

Bender. (See Def. Resp. Ex. 19 at § 4.2; Def. Resp. 20 at § 4.2.) Aside from the claim

of breach of fiduciary duty, no claim suggests any duty or obligation potentially based

upon the Trust Agreements.

Medilink’s claim for breach of fiduciary duty, however, presents a close question. 

Medilink has failed to provide any reasonable basis upon which to find that Comerica

owed it any fiduciary duty. As discussed further below, Medilink is unable to

successfully pursue this claim. A fiduciary duty must be based upon some fiduciary

relationship. See In re Jennings’ Estate, 55 N.W.2d 812, 813 (Mich. 1952). Although

no reasonable basis for finding such a fiduciary relationship exists, Medilink has

consistently disclaimed any assertion that Comerica stood in relation to Medilink as a

fiduciary with regard to the Bender Accounts simply because of the separate fiduciary

relationship between the parties concerning the Trust Accounts. Indeed, Comerica itself

asserts in its response that nothing in the Trust Agreements imposes upon it the duties

Medilink alleges Comerica breached, including fiduciary duties. (Def. Resp. 17-18.) 

Instead, Medilink unsuccessfully attempts to derive a fiduciary relationship from

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Comerica’s actions occurring on or after August 31, 2007, after Comerica became

suspicious of Bender’s deposit of the Rahall Check.

While Medilink’s argument may be unavailing, Comerica has presented no basis

upon which a reasonable jury could find that Medilink has violated the exculpatory

provisions of the Trust Agreements. Although Medilink did refer to the “ComericaMedilink contracts” in response to Comerica’s request for documents pertaining to the

alleged fiduciary relationship, this response was only one entry in an extensive list. 

(Def. Resp. Ex. 23 at # 41.) Medilink has since elaborated upon its position that the

preexisting relationship between the parties provided Comerica with constructive

knowledge of the purpose of the transfers to the Bender Accounts. (Def. Resp. Ex. 28

at # 38.) From this constructive knowledge, Medilink attempts to assert an ownership

interest in the funds placed in the Bender Accounts, which it argues were trust

accounts. Finally, Medilink argues that Comerica owed it a fiduciary duty as the owner

of the funds in the Bender Accounts because they are trust accounts. Though its

argument may be Byzantine and convoluted, Medilink has consistently adhered to it. 

Lacking sufficient evidence to support a reasoned finding that Medilink has attempted to

base its claim upon the Trust Agreements, Comerica’s counterclaim cannot survive. 

Therefore, Medilink’s motion for summary judgment on Comerica’s counterclaim will be

granted.

B. Ownership of the Funds

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As a first preliminary matter affecting all of Medilink’s claims, the court must

determine the ownership of the funds in the Bender Accounts. For the reasons stated

more fully below, Medilink had no title or other legal interest in the funds in the Bender

Accounts. The court need not reach the issue of whether Medilink had any interest in

the funds in the Trust Accounts. As Medilink had no legally cognizable interest in the

funds in the Bender Accounts, Medilink likewise had no property interest in the funds

after they left the Bender Accounts.

The analysis must necessarily begin with the ownership of the Bender Accounts. 

A deposit account is prima facie owned by the person or entity in whose name the

account exists. Muskegon Lumber & Fuel Co. v, Johnson, 62 N.W.2d 619, 622 (Mich.

1954). Despite the intent of the depositor, funds deposited in a general account remain

general credits of the account owner, unless the depositor has expressly created a trust. 

Portage Aluminum Co. v. Kentwood Nat. Bank, 307 N.W.2d 761, 764 (Mich. Ct. App.

1981). “A trust cannot be implied unless the understanding was that the money

deposited for a specific purpose was not to be mingled [with other money of the bank].” 

Id. The instant case evinces no such intent to create a trust. The funds were released

from the Trust Accounts to the Bender Accounts, which were unrestricted general

deposit accounts. (Def. Mot. Ex. 27.) Only Bender was listed as the owner of the

accounts in the account contracts, and only John P. Bender and Karen Leslie, an

employee of Bender, were signatories on the accounts. (Def. Mot. Ex. 26; Def. Mot. Ex.

27 at § 1.48.) Medilink has not presented any evidence that the accounts were other

than wholly owned by Bender. Therefore, it is reasonable to infer that Bender was the

sole owner of the Bender Accounts.

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Even so, Bender had only a contractual right to repayment of the funds deposited

into the accounts. It is well established under Michigan law that title to funds in a

general deposit account resides with the bank, and the account owner retains “only an

entitlement to recoupment of an equivalent sum upon demand, having loaned the bank

the amount deposited.” Riverview Co-op, Inc. v. First Nat. Bank & Trust Co. of

Michigan, 337 N.W.2d 225, 229 (Mich. 1983). A general deposit account results in the

commingling of currency and anticipates repayment of only an equivalent sum, rather

than the identical currency deposited; as a result of which, the account owner stands as

a creditor and the bank as a debtor. Owosso Masonic Temple Ass’n v. State Savings

Bank, 263 N.W. 771, 774 (Mich. 1935). “The title to the money constituting a general

deposit does pass to the bank.” Id. As the Bender Accounts were general deposit

accounts, title passed to Comerica when funds from the Trust Accounts were deposited

into the Bender Accounts. Comerica then owed a contractual obligation to Bender, as

the account owner. Regardless of any rights it may have enjoyed as trustor or depositor

of the Trust Accounts, Medilink retained no further rights in the funds once they passed

to the Bender Accounts.

To the preceding, Medilink counters that Bender could not have obtained title to

the funds because of his unlawful means of acquiring them, and, therefore, he could not

have passed title to Comerica. It is, indeed, an age-honored maxim of the common law

that a thief cannot convey good title. However, this applies only where, and only

because, a thief himself does not take title to the property, and one cannot pass that

which one does not have. In re Newpower, 233 F.3d 922, 930 (6th Cir. 2000). Here the

means by which Bender defrauded Medilink becomes significant. By submitting

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fraudulent claims and receiving funds with Medilink’s authorization, Bender obtained

both possession and title through false pretenses. “[T]he critical difference between

larceny crimes and false pretense crimes is the passage of title.” Id. at 929 (citing

People v. Malach, 507 N.W.2d 834, 837 (Mich. Ct. App. 1993)). Where the owner of

property intends to transfer title along with possession, albeit based upon a mistake of

fact brought about by the fraud of the recipient, the recipient acquires the property by

false pretenses. Id. One who takes by false pretenses does obtain good title to the

property, and he can pass good title to an innocent third party. Id.

Regardless of whether Medilink had any interest in the funds in the Trust

Accounts, the undisputed facts are susceptible of only one conclusion regarding intent

to transfer title. First, the Trust Agreements provide for the transfer of title free and

clear of any Trust Account assets by “[a]ny sale or other conveyance.” (Def. Rep. Ex.

19 at § 7.2, Ex. 20 at § 7.2.) The unambiguous text of the agreement provides that any

such disposition “shall be effective to transfer or convey all right, title and interest . . . in

and to such Trust Assets.” (Def. Rep. Ex. 19 at § 7.2, Ex. 20 at § 7.2.) Second, the

transfer of funds to an unrestricted account owned exclusively by Bender, and over

which Medilink maintained no control, further evinces an intent to pass title to the funds.

Medilink has presented no evidence to support a finding that Comerica had either

knowledge or notice of Bender’s actions prior to deposit of the funds in the Bender

Accounts. The earliest Comerica could be found by a jury to have had notice would

have been after the Rahall Check had been deposited on August 31, 2007. Upon

review of the Rahall Check after acceptance, Comerica admits it became suspicious of

Bender’s activities, and it was at this point that Comerica initiated an investigation of

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Bender’s activities. Medilink, likewise, does not contend that Comerica had actual

knowledge, or even a reasonable suspicion, of Bender’s fraud prior to deposit of the

Rahall Check on August 31, 2007. By that point, however, the payment from the Trust

Accounts to the Bender Accounts was final under UCC § 4A-406. Mich. Comp. Laws §

440.4906(1). Comerica had by then acquired both title to the currency and a perfected

senior security interest in the account funds. See Mich. Comp. Laws §§ 440.9104(a),

440.9314(1)-(2); Owosso Masonic Temple Ass’n, 263 N.W. at 774. Subsequent

discovery of Bender’s fraud came too late to divest Comerica of legal rights already

established. Therefore, Comerica held title to the funds in the Bender Accounts; Bender

had contractual rights to repayment of funds of equivalent value; and Medilink had no

legal interest in the Bender Accounts or the funds therein.

C. Adverse Claim Statute

As a second preliminary matter affecting multiple claims, the court now turns to

the effect of the Adverse Claim Statute, Mich. Comp. Laws § 487.691. The statute

specifies certain procedures adverse claimants to funds in deposit accounts must follow

before banks are required to recognize their claims. In relevant part, the Adverse Claim

Statute provides:

Notice to any bank . . . of an adverse claim to a deposit standing on its

books . . . shall not be effectual to cause said bank to recognize said

averse claimant unless said adverse claimant shall also either procure a

restraining order, injunction or other appropriate process against said bank

from a court of competent jurisdiction . . . or shall execute to said bank, in

form and with sureties acceptable to it a bond, indemnifying said bank

from any and all liability, loss, damage, costs and expenses for and on

account of the payment of such adverse claim . . . .

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Mich. Comp. Laws § 487.691. Only two means of establishing an adverse claim that a

bank is required to recognize are generally permitted: 1) procuring an appropriate court

order recognizing a potential claim to the funds, or 2) providing satisfactory

indemnification and a bond to the bank. Aside from two TROs issued by the court on

November 28, 2007, and January 17, 2008, the parties acknowledge that neither of

these specific requirements were met. Nonetheless, Medilink argues that the statute

should not bar recovery because Comerica knew of Bender’s suspicious activities.

No published opinion of the Michigan courts has directly addressed compliance

with the requirements of the Adverse Claim statute. The cases presented by Medilink

stand simply for the proposition that the later determination that an injunction was not

properly issued is irrelevant for purposes of providing notice. DeKuyper v. DeKuyper,

113 N.W.2d 804 (Mich. 1962); Owen v. Birminham Fed. Savings and Loan Assoc., 183

N.W.2d 403, 410-11 (Mich. Ct. App. 1971). The cases do not indicate that informal

notice should be given the same force as an injunction, as Medilink contends. There

yet remains a world of difference between the notice provided by court order and the

unsworn assertions of a private individual.

Lacking published cases on point, the court finds the unpublished opinion in Mid

Am Credit Corporation v. Joint Military & Veterans Credit Union, No. 216508, 2001 WL

1422147 (Mich. Ct. App. 2001), closely analogous to the instant case, and its analysis

of the Adverse Claim Statute is persuasive. Although the Mid Am court did not apply

the statute because the defendant in that case was a credit union, it found that no duty

was owed by the defendant where the plaintiff had provided “mere verbal notification.” 

Id. at *5-6. This court is in agreement with the Mid Am court; the Adverse Claim Statute

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“clearly requires a claimant to obtain an injunction or similar court process to pursue a

claim against funds deposited in another party’s account.” Id. at *5. Indeed, this

reading is the only interpretation allowed under the plain text of the statute. In

interpreting a statute, the court must give effect to the intent of the legislature. Sun

Valley Foods Co. v. Ward, 596 N.W.2d 119, 123 (Mich. 1999). The plain language of

the statute itself provides “the most reliable evidence of its intent.” Id. (quoting United

States v. Turkette, 452 U.S. 576, 593 (1981)). Where the statutory language is clear

and unambiguous, no interpretation is necessary, and “the statute must be enforced as

written.” Id. at 123. This court agrees with the court in Mid Am that the language of 

§ 487.691 establishes an unambiguous procedure for adverse claimants to protect their

interests. Therefore, failure to comply with the statutorily proscribed requirements of the

Adverse Claim Statute precludes the imposition of any duty upon a bank to recognize

any interests of adverse claimants in a deposit account.

This requirement of compliance with the unambiguous language of the statute

applies equally to notice under the fiduciary exception to the Adverse Claim Statute:

Provided, That this law shall not apply in any instance where the person to

whose credit the deposit stands is a fiduciary for such adverse claimant,

and the facts constituting such relationship, as also the facts showing

reasonable cause of belief on the part of the said claimant that the said

fiduciary is about to misappropriate said deposit, are made to appear by

the affidavit of such claimant.

Mich. Comp. Laws § 487.691. The statute lowers the hurdle for adverse claims to funds

held in accounts of fiduciaries, but it does not excuse such claimants from compliance

altogether. Although a mere affidavit suffices where the funds claimed are held in the

account of a fiduciary, the adverse claimant must comply with at least this requirement. 

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“Under Michigan law, a fiduciary relationship will arise ‘only when there is a reposing of

faith, confidence and trust and the placing of reliance by one upon the judgment and

advice of another.’” Rose v. Nat. Auction Group, Inc., 646 N.W.2d 455, 466 (Mich.

2002) (quoting In re Jennings’ Estate, 55 N.W.2d 812, 813 (Mich. 1952)). Whether

Bender was a fiduciary of Medilink is a question of fact that should be determined by a

jury if it were necessary to the disposition of this case, but it is not. See Taylor v.

Klahm, 198 N.W.2d 715, 720-21 (Mich. Ct. App. 1972). Even had Bender been a

fiduciary of Medilink, it is undisputed that Medilink never provided Comerica with any

affidavit averring 1) the fiduciary relationship and 2) reasonable grounds upon which to

freeze or limit withdrawals from the accounts. An affidavit consists of a written

statement of facts, voluntarily made, and “confirmed by the oath or affirmation of the

party making it.” Detroit Leasing Co. v. City of Detroit, 713 N.W.2d 269, 272 (Mich. Ct.

App. 2005) (quoting Holmes v. Michigan Capital Medical Center, 620 N.W.2d 319 (Mich.

Ct. App. 2000)). Goodell’s verbal notification and electronic mail message that Medilink

“is disputing the following payments” do not constitute an affidavit. (Pl. Mot. Ex. 23.) 

Even Comerica’s actual knowledge is irrelevant where the statutory language

establishes clear requisites to liability. 

Having thus failed to comply with the unambiguous terms of the Adverse Claim

Statute until obtaining the TROs, Medilink cannot now hold Comerica liable for refusing

to recognize Medilink’s adverse claims prior to or in addition to the TROs. Medilink

correctly states that it did—eventually—comply with the statute by obtaining a TRO on

November 28, 2007, freezing the Bender Accounts. Thus, the Adverse Claim Statute

would provide no protection to Comerica for releasing funds from those specific

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accounts after that date. Similarly, the January 17, 2008, TRO effected statutory

compliance with respect to the funds in the Cash Collateral Account as of January 17,

2008. The parties do not dispute that Comerica has kept these accounts frozen since

these TROs issued. The bank was not required to do more, nor do it earlier, than

required by these orders of the court.

D. Common Law Conversion

Conversion under Michigan law consists of a “distinct act of domain wrongfully

exerted over another’s personal property in denial of or inconsistent with the rights

therein.” Dept. of Agriculture v. Appletree Marketing, LLC, 779 N.W.2d 237, 244 (Mich.

2010) (quoting Foremost Ins. Co. v. Allstate Ins. Co., 486 N.W.2d 600, 606 (Mich.

1992)). From this definition, one cannot convert his own property. Foremost, 486

N.W.2d at 606; see also AFSCME v. Bank One, 705 N.W.2d 355, 360 (Mich. Ct. App.

2005) (discussing importance of title). As discussed above, Comerica was titular owner

of the funds once deposited, owning only contractual duties to repay Bender. Medilink

retained no interest or right in the property or the Bender Accounts. Therefore,

Comerica is not liable to Medilink for conversion under Michigan law.

Furthermore, Comerica could not be held liable for conversion because currency

deposited into a general account can never be the subject of a successful conversion

action. Medilink acknowledges that “[a]n action for the conversion of bank account

funds . . . can be maintained only if there was an obligation on the defendant’s part to

return or deliver the specific money entrusted to it.” Check Reporting Services, Inc. v.

Michigan Nat. Bank-Lansing, 478 N.W.2d 893, 900 (Mich. Ct. App. 1991) (emphasis

added) (quoted in Pl. Resp. 26-27). Any alleged obligation of Bender “to spend

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Medilink’s money to pay specifically approved claims” bears as much relation to any

alleged obligation of Comerica to return specific currency to Bender as it bears to this

court’s duty to decide specific motions filed by specific parties in specific cases. (Pl.

Resp. 27.) As discussed above, the Bender Accounts were not trust accounts, and the

currency deposited became property of the bank when it was commingled with other

deposits. Therefore, the funds are not subject to a conversion claim because Comerica

had only an obligation to return an equivalent sum and deliver currency of equivalent

nominal value. 

E. Statutory Conversion

Statutory conversion is, as the name implies, a creature of statute, imposing

liability for certain wrongful acts relating to “stolen, embezzled, or converted property.” 

Mich. Comp. Laws § 600.2919a. Unlike common law conversion, statutory conversion

extends liability to those dealing in stolen property. It also requires actual knowledge of

the underlying conversion, embezzlement, or theft before liability attaches. Echelon

Homes, L.L.C. v. Carter Lumber, Co., 694 N.W.2d 544, 549 (Mich. 2005). In relevant

part, the statute provides:

A person damaged as a result of either or both of the following may

recover 3 times the amount of actual damages sustained, plus costs and

reasonable attorney fees:

* * *

(b) Another person’s buying, receiving, possessing, concealing, or aiding

in the concealment of stolen, embezzled, or converted property when the

person buying, receiving, possessing, concealing, or aiding in the

concealment of stolen, embezzled, or converted property knew that the

property was stolen, embezzled, or converted.

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Mich. Comp. Laws § 600.2919a(1). Just as the statute requires actual knowledge, the

plain language limits its application to “stolen, embezzled, or converted property.” Mich.

Comp. Laws § 600.2919a(1). As discussed above, the funds in the Bender Accounts

were neither converted nor embezzled; they were obtained under false pretenses. 

Neither party has presented, nor has the court discovered, any case directly addressing

whether funds obtained by false pretenses are “stolen” for purposes of statutory

conversion. Fortunately, the court need not reach that issue.

Should the court read In re Newpower, 233 F.2d 922, 929-30 (6th Cir. 2000), as

indicating that funds obtained through false pretenses are not “stolen property,”

Medilink’s statutory conversion claim would necessarily fail. Such an interpretation of

the statute would limit “stolen property” to that property of which the thief obtains only

possession, as by larceny, embezzlement, or conversion. Each of these offenses

involve the wrongful taking of possession without the taking of title. Id. As such, the

owner from whom property is stolen retains an interest in the property.

An interpretation that funds obtained by false pretenses are not “stolen property”

would not be unreasonable in light of the interpretation of similar language in the

Michigan statute governing receipt of stolen property, Mich. Comp. Laws § 750.535. 

See People v. Pratt, 656 N.W.2d 866, 868-69 (Mich. Ct. App. 2002). Interpreting the

term “stolen” in that statute, the Pratt court found that “[f]or goods to be considered

stolen under this definition, they need only be taken without permission or right.” Id. at

869. Additionally, Black’s Law Dictionary defines “stolen property” as “goods acquired

by larceny, robbery, or theft.” Black’s Law Dictionary 1555 (9th ed. 2009). The

definition of “theft” may be so narrow as to encompass only larceny or broad enough to

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contain false pretenses. Id. at 1615. From these sources, the court could find that

property taken under false pretenses is not stolen. Under such an interpretation, false

pretenses cannot form the basis of liability for statutory conversion.

Should the court instead read “stolen property” as including funds obtained by

false pretenses, however, Medilink’s statutory conversion claim under § 600.2919a

would fail nonetheless. This interpretation, too, would not be unreasonable in light of

Lake v. United States, 338 F.2d 787 (10th Cir. 1964), which held that a motor vehicle

was “stolen” within the meaning of the National Motor Vehicle Theft Act where title and

possession were obtained by a false promise to repay existing loans secured by the

vehicle. The Lake court expressly included false pretenses in a list of theft offenses

involving “stolen” property. Id. at 789. Again looking to the Pratt court’s interpretation of

“stolen” as referring to property “taken without permission or right,” the holding does not

foreclose the inclusion of property obtained by false pretenses. 656 N.W.2d at 869. 

Indeed, the Pratt court held that “stolen property” encompasses more than property

acquired through larceny. Id. at 868.

Even assuming that money acquired by false pretenses can constitute “stolen

property”, Medilink has provided no evidence to allow a reasonable jury to find that

Comerica knew it to be such when it acquired title. Statutory conversion requires actual

knowledge at the time of the “buying, receiving, possessing, concealing, or aiding in the

concealment” of the stolen property. Echelon Homes, 694 N.W.2d at 547. Mere

suspicion or constructive knowledge will not suffice. Id. at 547-58. Under the facts

presented by Medilink, the strongest inference that may reasonably be drawn regarding

Comerica’s knowledge at the time it deposited the Rahall Check on August 31, 2007, is

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constructive notice. There is nothing in the record to indicate any level of knowledge or

notice at the time the funds were transferred into the Bender Accounts. Comerica had

title to the funds prior to gaining actual knowledge.

The court need not speculate as to when a reasonable jury could determine

Comerica first acquired actual knowledge, as no reasonable inference would support

finding that Comerica actually knew that the funds were “stolen”—even under a less

rigorous definition of the concept—when the funds were deposited into the Bender

Accounts. Having acquired the funds from the Trust Accounts without knowledge of

Bender’s false pretenses and with valid authorization, Comerica obtained ownership of

the funds as discussed above. Comerica also obtained automatic perfection of a

security interest in the Bender Accounts and the Personal Account, pursuant to UCC 

§§ 9-104 and 9-314. Mich. Comp. Laws §§ 440.9104(a) & 440.9314(1)-(2). Comerica

merely exercised its right to set off funds in the Bender Accounts against Bender’s debts

at a later time, at which point it may have had actual knowledge of Bender’s false

pretenses. See Mich. Comp. Laws § 440.9607(1)(d). As Comerica obtained title to the

funds without knowledge, its subsequent set off against the Bender Accounts and

release of the funds to the Cash Collateral Account likewise did not result in statutory

conversion, even if it had actual knowledge by such time. See Regions Bank v.

Provident Bank, Inc., 345 F.3d 1267, 1277 (11th Cir. 2003). 

Regardless of whether the funds were “stolen property” under § 600.2919a,

Medilink has not presented sufficient evidence to permit a reasonable jury to find

Comerica liable for statutory conversion. Comerica’s motion for summary judgment on

Medilink’s statutory conversion claim must be granted.

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F. Negligence

Under Michigan law, negligence comprises four elements: 1) duty, 2) breach of

duty, 3) causation, and 4) injury. Bialick v. Megan Mary, Inc., 780 N.W.2d 599, 602

(Mich. Ct. App. 2009) (citing Case v. Consumers Power Co., 615 N.W.2d 17 (Mich.

2000)). The existence of a duty upon which Plaintiff may base its negligence action

must be determined as a matter of law. Friedman v. Dozorc, 312 N.W.2d 585, 591

(Mich. 1981). Michigan courts look to a number of factors in determining whether a duty

exists, including:

foreseeability of the harm, existence of a relationship between the parties

involved, degree of certainty of injury, closeness of connection between

the conduct and injury, moral blame attached to the conduct, policy of

preventing future harm, and the burdens and consequences of imposing a

duty and the resulting liability for breach. 

Baker v. Arbor Drugs, Inc., 544 N.W.2d 727, 730 (Mich. Ct. App. 1996). A legal

relationship between the parties and foreseeability of the harm are necessary, though

insufficient, for the court to find the existence of a duty. In re Certified Question 14th

Dist. Ct. Tex., 740 N.W.2d 206, 213 (Mich. 2007). In the instant case, Comerica owed

no duty to protect Medilink, absent compliance with the Adverse Claim Statute.

As a general rule, “banks have no duty to pry into the affairs of their depositors in

order to protect third parties.” Blair v. Trafco Prods., Inc., 369 N.W.2d 900, 903 (Mich.

1985). The Adverse Claim Statute goes further by negating the possibility of a duty to

recognize (and, therefore, a duty to protect) the rights of adverse claimants of bank

deposits, unless and until certain statutory requirements are met. Mich. Comp. Laws 

§ 487.691. As discussed above, Medilink failed to assert a valid adverse claim pursuant

to statute. Therefore, Comerica had no duty to recognize any third-party claims by

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Medilink adverse to the interests of Bender—the account owner and presumed owner of

the funds deposited into the account.

Nor does Comerica’s action of placing a temporary hold on the accounts create

liability where there had otherwise been none. The court in Mid Am Credit Corporation

expressly rejected a negligence claim against a financial institution for its error in

implementing a stop payment order where the institution agreed to stop payment

without being under a legal obligation to do so, but where the error rendered the stop

payment order ineffective. 2001 WL 1422147, at *6. In some instances, the

undertaking of a gratuitous service to another may require the use of due care to avoid

leaving the other party in a worse condition. Id. (citing Lindsley v. Burke, 474 N.W.2d

158, 160-61 (Mich. Ct. App. 1991)). However, this is not such a case. When Comerica

instituted temporary holds on the Bender Accounts and later released them, it left

Medilink in no worse position than had it never frozen the accounts. Instead, Medilink

had the benefit of several weeks of additional time to assert a proper adverse claim,

which it did not do.

No duty to protect the funds for the benefit of Medilink existed before Comerica

implemented the temporary freezes, and no duty to maintain those freezes arose simply

because it did so. Therefore, Medilink cannot maintain an action in negligence against

Comerica based upon the facts presented.

G. Breach of Fiduciary Duty

A breach of fiduciary duties necessarily implies the existence of a fiduciary

relationship from which such duties attach. See In re Jennings’ Estate, 55 N.W.2d 812,

813 (Mich. 1952). The existence of fiduciary duties is a question of law to be decided

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by the court. Prentis Family Found. v. Barbara Ann Karmanos Cancer Inst., 698

N.W.2d 900, 906 (Mich. Ct. App. 2005) (citing Harts v. Farmers Ins. Exch., 597 N.W.2d

47, 50 (Mich. 1999)). As explained in Part III.A., above, “[a] fiduciary relationship exists

when there is a reposing of faith, confidence and trust and the placing of reliance by one

upon the judgment and advice of another.” Smith v. Saginaw Savings & Loan

Association, 288 N.W.2d 613, 618 (Mich. Ct. App. 1979) (citing Williams v. Griffin, 192

N.W.2d 283 (Mich. Ct. App. 1971) (citing In re Jennings’ Estate, 55 N.W.2d at 813)). 

However, trust and reliance must be reposed in the fiduciary based upon reasonable

grounds. Rose v. National Auction Grp., Inc., 646 N.W.2d 455, 469 (Mich. 2002); Beaty

v. Hertzberg & Golden, P.C., 571 N.W.2d 716, 722 (Mich. 1997); Prentis, 698 N.W.2d at

906. It is presumptively unreasonable to repose trust in one whose interests are, or

may be, adverse. Beaty, 571 N.W.2d at 722; Prentis, 698 N.W.2d at 906. For this

reason, Michigan courts have consistently rejected the imposition of fiduciary duties on

banks without more than a mere debtor-creditor relationship, even where the creditor

has offered advice. Ulrich v. Fed. Land Bank of St. Paul, 480 N.W.2d 910, 911 (Mich.

Ct. App. 1991); Farm Credit Services of Michigan’s Heartland, P.C.A. v. Weldon, 591

N.W.2d 438, 447 (Mich. Ct. App. 1998); Smith, 288 N.W.2d at 618 (finding duty where

the parties’ “relationship was not the general one existing between a bank and its

depositors”); Portage Aluminum Co. v. Kentwood Nat. Bank, 307 N.W.2d 761, 763-64

(Mich. Ct. App. 1981).

Medilink has presented no case in which a fiduciary relationship has been so

lightly foisted upon a defendant who had not undertaken some position of responsibility

or agency for the benefit of the plaintiff. The court agrees with the In re Jennings’

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Estate court that “the term should be held to mean what the word ‘fiduciary’ implies and

that the relationship exists only when there is a reposing of faith, confidence and trust

and the placing of reliance by one upon the judgment and advice of another.” 55

N.W.2d at 813. The court in Boden v. Renihan more clearly stated the requirement that

“the trust or confidence is accepted under circumstances which show that it was

founded on intimate personal and business relations existing between the parties.” 300

N.W. 53, 58 (Mich. 1941) (citation omitted) (emphasis added). Similarly, the court in

Ulrich v. Federal Land Bank of St. Paul compared ordinary borrower-lender relationship

in that case with the “active involvement” of the bank manager in Smith v. Saginaw

Savings & Loan Association, determining that the mere inexperience of the plaintiff or

the advertised expertise of the defendant had not established a fiduciary duty. 480

N.W.2d 911. Fiduciary duties are not imposed by an unfounded hope that another party

act for one’s benefit; they must be founded upon a fiduciary relationship giving rise to a

reasonable expectation that a party will undertake a binding legal obligation to act for

the benefit of another. 

As discussed above, Medilink has disclaimed fiduciary duties based upon the

Trust Agreements. This admission has far-reaching implications for Medilink’s breach

of fiduciary duty claim. Without invoking the Trust Agreements, Medilink cannot rely

upon any fiduciary relationship relating to or arising out of Comerica’s handling of the

Trust Accounts. Furthermore, any fiduciary duties Comerica owed Medilink or other

parties relating to the Trust Accounts were fulfilled when it properly transferred the funds

to the Bender Accounts as authorized. Medilink’s relationship with Comerica regarding

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the Trust Accounts must be contrasted against Medilink’s lack of a relationship with

Comerica regarding the Bender Accounts. 

To clarify this distinction, Comerica could have owed a fiduciary duty to warn of

known insolvency or fraud by Bender before transferring funds out of the Trust

Accounts, based upon the Trust Agreements or Comerica’s position with respect to the

Trust Accounts. This would be akin to the situation in Smith v. Saginaw Savings & Loan

Association, 288 N.W.2d 613, in which a bank manager served as agent for a distant

customer by overseeing a construction project and disbursing funds from the customer’s

account for progress payments as work was completed. Id. at 615. After discovering

that the builder was experiencing severe financial problems, which eventually led to

bankruptcy, the banker failed to warn the customer and disbursed funds for work not

completed. Id. at 618. The Smith court found that the “reposing of faith, confidence and

trust” in that case was sufficient to establish a fiduciary relationship and that the abuse

of that trust constituted a breach of fiduciary duties. Id. at 618. Such is not the case,

however, with respect to Comerica’s actions relative to Medilink regarding the Bender

Accounts and funds withdrawn therefrom. Comerica did not undertake any special

obligations to Medilink regarding the Bender Accounts. In fact, Medilink had no legal

interest in the Bender Accounts at all, as discussed above. Comerica’s early warning to

Medilink after investigating the Rahall Check appears to be the first communication

between the parties regarding the Bender Accounts. Medilink and Comerica lacked

even the ordinary borrower-lender relationship with respect to the Bender Accounts, let

alone a fiduciary relationship.

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From the preceding, it is apparent that Medilink’s proposed fiduciary relationship

with Comerica cannot be based upon any general relationship between the parties, nor

can it be based upon the longstanding relationship involving the Trust Accounts. After

extensive briefing and hearing, Medilink appears to ground its assertion of the existence

of fiduciary duties upon nothing more than Comerica’s actions in informing Medilink of

suspicious activity, continued communication following the notification, the placement of

temporary holds on the Bender Accounts, and a subjective belief that Comerica would

act to protect Medilink’s interests. Notably absent from this list is any action by

Comerica indicating that it would act for Medilink’s benefit that would make it reasonable

for Medilink to repose trust and confidence in Comerica despite the parties’ interests

being adverse. The rule Medilink asks the court to adopt would allow the unilateral

imposition of fiduciary duties—among the most encompassing and stringent class of

general duties recognized by law. Were the uninvited (and unreasonable) reposing of

trust in the actions of others the sole requirement to create a fiduciary relationship,

many a professional athlete could be called to answer for lackluster performance to

crowds of disappointed gamblers. To apply such a rule in the instant case would mark

“too radical a departure from well-established, traditional banking laws.” Portage

Aluminum, 307 N.W.2d at 764. Therefore, Medilink’s claim for breach of fiduciary duty

must fail as a matter of law.

H. Equitable Claims — Unjust Enrichment and Constructive Trust

The court finally considers Medilink’s equitable claims. At the outset, it is

important to note that a constructive trust is a remedy available to courts sitting in

equity, which may be imposed upon a defendant “where such trust is necessary to do

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equity or to prevent injustice.” Ooley v. Collins, 73 N.W.2d 464, 469 (Mich. 1955). This

remedy may be granted to impose a trust upon some identifiable property when title to

property “has been obtained through fraud, misrepresentation, concealment, undue

influence, duress, taking advantage of one’s weakness, or necessities, or any other

similar circumstances which render it unconscionable for the holder of the legal title to

retain and enjoy the property.” Kammer Asphalt Paving Co., Inc. v. East China Twp.,

504 N.W.2d 635, 641 (Mich. 1993) (quoting Potter v. Lindsay, 60 N.W.2d 133, 136

(Mich. 1953) (quoting Racho v. Beach, 236 N.W. 875, 877 (Mich. 1931))). “A

constructive trust may be based upon a breach of fiduciary or confidential relationship,

misrepresentation, concealment, mistake, undue influence, duress or fraud.” Id. at 641

n.28 (quoting Grasman v. Jelsema, 246 N.W.2d 322, 326 (Mich. Ct. App. 1976)). In the

instant case, the injustice alleged to support the constructive trust remedy is the same

as that alleged to support the claim for unjust enrichment. As the court finds that there

is no genuine issue of material fact and that Comerica obtained no inequitable benefit,

the two equitable claims will be considered together.

Unjust enrichment under Michigan law comprises “(1) the receipt of a benefit by

defendant from plaintiff, and (2) an inequity resulting to plaintiff because of the retention

of the benefit by defendant.” Belle Isle Grill Corp. v. City of Detroit, 666 N.W.2d 271,

280 (Mich. Ct. App. 2003); accord Dumas v. Auto Club Ins. Ass’n, 473 N.W.2d 652, 663

(Mich. 1993). There can be no doubt but that an unjust enrichment claim requires the

enrichment of some defendant. Likewise, a constructive trust cannot be imposed where

there is no long a res to be held in trust—where Comerica has not retained the funds for

its own benefit. See EBSCO Indust., Inc. v. Lilly, 840 F.2d 333, 338 (6th Cir. 1988). 

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Comerica did not, however, receive a benefit from the following funds: those funds

remaining in the Bender Accounts following the TRO of November 28, 2007, those

funds remaining in the Cash Collateral Account following the TRO of January 17, 2008,

and those funds removed by Bender from the Cash Collateral Account on January 10,

2008. There is no indication that these funds ever benefitted Comerica, and they may

be recovered by Medilink in due course from Bender. The only funds from which

Comerica received a benefit, potentially at the expense of Medilink, are the funds

against which Bender’s indebtedness to Comerica was off set on October 1, 2007. 

Medilink’s equitable claims, therefore, turn on whether Comerica’s retention of the funds

set off from the Bender Accounts on October 1, 2007, would work an injustice or

inequity.

Comerica asserts in its motion that it was not unjustly enriched by the set off of

part of the debt owed to it by Bender, as permitted under UCC § 9-607. Medilink argues

in response that “Medilink’s equities are clearly superior to those of Comerica” because

Bender defrauded it into releasing the funds to him. (Pl. Resp. Br. at 55.) Whether

Medilink would have a stronger equitable claim to the funds than would Comerica,

ceteris paribus, is irrelevant. To prevail upon its claim, Medilink must be able ultimately

to show that it would be unjust to allow Comerica to retain funds it set off against a

preexisting debt from the account of a nonparty shortly after discovering the nonparty

was in breach of covenants in a loan agreement.

As discussed above, Comerica had legitimate interests adverse to those of

Medilink, owed Medilink no duty to act for its benefit, and had already become the

owner of the funds by the time it discovered Bender’s fraud. Furthermore, to protect its

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interest in the funds in the Bender Accounts Medilink had an adequate remedy at

law—the Adverse Claim Statute—which it failed to pursue. This alone might bar any

resort to equity under Michigan law, but neither party has presented any case indicating

that failure to comply with the Adverse Claim Statute must necessarily cut off all

equitable claims where no other remedy at law exists. See Wild v. Wild, 103 N.W.2d

607, 610 (Mich. 1960) (equitable remedies remain viable where legal remedies are

“doubtful, incomplete or otherwise inadequate”); Everett v. Nickola, 599 N.W.2d 732,

735 (Mich. Ct. App. 1999) (resort to equity “is neither necessary nor appropriate where

a resolution under the law is available”). The parties also do not dispute that Comerica

discovered Bender’s activities and promptly informed Medilink and Marsh, both of which

were represented by counsel.

Comerica had a contractual and statutory right to set off the funds in Bender’s

accounts, which secured his preexisting debt. Under UCC §§ 9-104, 9-314, and 9-607,

Comerica had a perfected security interest in the funds as soon as they were placed in

the Bender Accounts and the right to set off these funds upon Bender’s default. Mich.

Comp. Laws §§ 440.9104(a), 440.9314(1)-(2), 440.9607(1)(d); (Def. Mot. Ex. 27,

Account Contract, at § 2.14); (Def. Mot. Ex. 23, Loan Documents). Where a defendant

merely exercises a right to obtain some lawful benefit, it generally is not unjustly

enriched. See Dumas, 473 N.W.2d at 663. Indeed, where one creditor obtains

repayment ahead of another creditor through lawful means and in the ordinary course of

business, it obtains no inequitable benefit. Comerica Bank v. Suburban Trust & Savings

Bank, 1996 WL 585888 (6th Cir. 1996); accord United States v. Goforth, 465 F.3d 730,

734 (6th Cir. 2006). The courts have recognized that competition in the marketplace

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between creditors for limited assets of a debtor need be neither unhealthy nor unjust. 

Id.

Viewing all facts in the light most favorable to Medilink, as the non-moving party,

the most than can be said is that Comerica zealously defended its own interests by

availing itself of its rights as a depository institution creditor of Bender. Indeed, Medilink

had every opportunity to assert an adverse claim to the funds because Comerica gave it

that opportunity by informing it of Bender’s activities and holding a meeting on

September 11, 2007. That a victim of a financial crime may be a more sympathetic

party than an undersecured lender will not support the imposition of an equitable

remedy where no fundamental injustice or inequity lies. Therefore, Medilink’s claims for

unjust enrichment and constructive trust must fail.

IV. CONCLUSION

As discussed above, there remains no genuine issue of material fact regarding

either Medilink’s claim or Comerica’s counterclaim. Viewed in the light most favorable

to Comerica, the counterclaim must fail as a matter of law because Medilink has not

sued Comerica under the terms of or in violation of the Trust Agreements. Viewed in

the light most favorable to Medilink, the complaint must fail because Medilink is not

entitled to relief under any of the claims presented in law or equity. As no claims will

remain in the above-captioned matter, the court will issue a judgment following this

opinion and order. Accordingly,

IT IS ORDERED that Defendant’s motion for summary judgment [Dkt. # 36] is

GRANTED.

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IT IS FURTHER ORDERED that Plaintiff’s motion for summary judgment [Dkt. 

# 33] is GRANTED IN PART. It is GRANTED IN PART with respect to Defendant’s

counterclaim. The remainder of Plaintiff’s motion for summary judgment is DENIED IN

PART AS MOOT.

IT IS FURTHER ORDERED that Defendant’s motion in limine [Dkt. # 35] is

DENIED AS MOOT.

 s/Robert H. Cleland 

ROBERT H. CLELAND

UNITED STATES DISTRICT JUDGE

Dated: March 23, 2011

I hereby certify that a copy of the foregoing document was mailed to counsel of record

on this date, March 23, 2011, by electronic and/or ordinary mail.

 s/Lisa Wagner 

Case Manager and Deputy Clerk

(313) 234-5522

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