Opinion ID: 1059022
Heading Depth: 1
Heading Rank: 9

Heading: Wachovia's Participation

Text: As the trial court noted in its final order, a plaintiff asserting a claim for breach of fiduciary duty is required to allege more than mere knowledge that the breach of fiduciary duty has occurred. The Court stated that [f]or a claim to survive, the plaintiff must assert that the defendant somehow recruited, enticed, or participated in the fiduciary's breach of its duty, yet Halifax had not alleged that Wachovia recruited, enticed, encouraged, or benefited from Adams' breach of fiduciary duty. Halifax says that it alleged in its motion for judgment that Wachovia `participated' in the breach of fiduciary duty, and that this was sufficient to withstand Wachovia's motion for summary judgment. Halifax states that no allegation of affirmative, conspiratorial aid is required. Halifax cites Tysons Toyota, Inc. v. Globe Life Ins. Co., 1994 WL 717598, 1994 U.S.App. LEXIS 36692 (4th Cir. Dec. 29, 1994) (per curiam), which involved a corporate officer's diversion from the plaintiff corporation to the defendant insurance companies of a business opportunity belonging to the plaintiff. The plaintiff claimed that the defendants recruited and enticed [the corporate officer] to breach his fiduciary duty to [the corporation] and alleged facts supporting that claim. Id. at 1994 WL 717598, . The court held that the plaintiff had alleged sufficient participation by the defendants in [the corporate officer's] breach of fiduciary duty. Id. at 1994 WL 717598, . But Halifax made no allegation here that Wachovia recruited and enticed Adams to breach her fiduciary duty, and it alleged no facts that would have supported the allegation had it been made. Halifax also cites Patteson v. Horsley, 70 Va. (29 Gratt.) 263 (1877). There, a trustee, John Horsley, sold bonds for $9,000.00 he held in trust to G.A. Hancock, for which Hancock gave his bond for $8,280.00. When that bond fell due in 1863, Hancock proposed to pay the bond in Confederate money, and Horsley accepted payment in that currency. Upon a bill of complaint praying for the settlement of the accounts of Horsley, as trustee, the trial court ruled that neither Horsley nor Hancock was liable for any loss that had resulted to the trust fund. On appeal, this Court reversed, holding that the transaction between Horsley and Hancock was a breach of trust by the former in which the latter had participated, the same having been committed at [Hancock's] instance and for his benefit. Id. at 270. Nothing in Halifax's motion for judgment even comes close to an allegation that Adams' breach of fiduciary duty was committed at Wachovia's instance or for its benefit. Next, Halifax cites W.L. Chase & Co. v. Norfolk Nat'l Bank of Commerce & Trusts, 151 Va. 1040, 145 S.E. 725 (1928). There, Chase had an account with the Norfolk National Bank and another with a bank in Rocky Mount, North Carolina. An employee of Chase, J.C. Custis, without authority, drew a check on the Rocky Mount bank payable to the Norfolk Bank. That bank allowed the check, endorsed by Custis, to be deposited in his personal account, which Custis then used to pay off a debt he owed the Norfolk Bank. Chase brought an action in assumpsit, not aiding and abetting, against the Norfolk bank and was allowed to recover the amount of the check. This Court held that by complying with the employee's request to place the proceeds of the check in his personal account, the Norfolk Bank manifestly allowed him to exceed his authority and so participated in the diversion of funds under [its] control. Id. at 1057, 145 S.E. at 730. The dissimilarity between the present case and Chase is at once obvious. Here, Halifax was not Wachovia's customer, the checks in question were not made payable to Wachovia, and the proceeds from the checks were not used to pay an indebtedness due Wachovia. [12] Halifax also cites CaterCorp, Inc. v. Catering Concepts, Inc., 246 Va. 22, 431 S.E.2d 277 (1993). One of the claims asserted in the case was for tortious interference with contracts. We said that one of the elements of such a claim is  intentional interference inducing or causing a breach or termination of the relationship or expectancy, and we held that the plaintiff had alleged the element of intentional interference with sufficient specificity. Id. at 28, 431 S.E.2d at 281 (emphasis added). It is surprising that Halifax cites this case. It certainly does not support Halifax's argument, noted supra, that it was not required to allege affirmative ... aid as an element of its claim for aiding and abetting. This brings us to the crux of the issue whether Halifax's allegation that Wachovia participated in Adams' bank transactions is sufficient to state a claim of aiding and abetting. Generally speaking, the word participate, standing alone, is of a neutral and innocuous nature, importing no wrongdoing of any kind. See Black's Law Dictionary 1141 (7th ed.1999). However, its meaning can vary depending upon the context in which it is used. On the other hand, the term aiding and abetting invariably imports purposeful conduct. Id. at 69, 431 S.E.2d 277 (aid given with mens rea is abetment). When the word participate is used in the phrase, participate in aiding and abetting, it sheds its neutral and innocuous nature and takes on the characteristic of affirmative participation inherent in the other words of the phrase. The maxim noscitur a sociis instructs that `the meaning of a word takes color and expression from the purport of the entire phrase of which it is a part, and it must be read in harmony with its context.' Andrews v. American Health & Life Ins. Co., 236 Va. 221, 225, 372 S.E.2d 399, 401 (1988) (quoting Turner v. Commonwealth, 226 Va. 456, 460, 309 S.E.2d 337, 339 (1983)). A bank participates in numerous transactions every day involving the acceptance and deposit of checks. Yet, unless it actually knows a breach of fiduciary duty is occurring and participates with mens rea in the consummation of the breach, it should not be held liable for aiding and abetting the breach. Halifax's motion for judgment neither alleges affirmative participation by Wachovia nor states facts that would support such an allegation. Rather, Halifax's allegations are negative in nature, listing all the things Wachovia did not do that might have uncovered the embezzlement. This is insufficient to overcome the lack of allegations of affirmative participation on the part of Wachovia.