Court Opinion

ID: 4115766
Source: CourtListenerOpinion
Date Created: 2017-01-13 20:01:24.365661+00
Date Added: 2024-06-11T07:46:15.553348
License: Public Domain

Case: 15-14944   Date Filed: 01/13/2017   Page: 1 of 19

                                                    [DO NOT PUBLISH]

          IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                           No. 15-14944
                     ________________________

              D.C. Docket No. 6:14-cv-00121-ACC-KRS

WILLIAM M. FREEMAN,

                                            Plaintiff - Appellant,

                                versus

JPMORGAN CHASE BANK N.A.,

                                            Defendant - Appellee.

                     ________________________

              Appeal from the United States District Court
                  for the Middle District of Florida
                    ________________________

                          (January 13, 2017)
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Before ROSENBAUM and JILL PRYOR, Circuit Judges, and UNGARO,*
District Judge.

PER CURIAM:

      This case requires us to consider whether the district court properly applied

the summary judgment standard to plaintiff William Freeman’s negligence and

aiding and abetting claims against defendant JPMorgan Chase Bank, N.A., after

fraudster Charles Gordon stole money that Freeman had deposited in an account

owned by Gordon’s company, OPT Title & Escrow, Inc. Because Freeman met

his burden of coming forward with evidence showing that OPT Title owed him a

fiduciary duty, the Bank knew or should have known that OPT Title was holding

Freeman’s money in escrow, and the Bank knew Gordon was stealing money from

OPT Title’s account, the district court should have denied the Bank’s summary

judgment motion. Accordingly, we reverse and remand for further proceedings.

                              I.      BACKGROUND

A.    Factual Background

      This case arises out of Gordon’s fraudulent scheme, which we described in

Chang v. JPMorgan Chase Bank, N.A., Nos. 15-13636, 15-14529,                F.3d ,

2017 WL 65371 (11th Cir. Jan. 6, 2017). Briefly stated, Gordon owned and

operated OPT Title, a Florida corporation, and Ziggurat (Panama), S.A., a

Panamanian corporation. Ziggurat’s purported business was to secure for its

clients multi-million dollar loans from global banking institutions and
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underwriters.1 Gordon told Ziggurat’s clients that because the lenders required

proof of their liquidity to obtain financing, the clients needed to deposit a

percentage of the total amount to be financed in an escrow account OPT Title

maintained with the Bank. Gordon had clients transfer the escrow funds into an

account at the Bank titled “OPT Title & Escrow Inc Escrow Account” (the “OPT

Escrow Account”). Instead of holding the funds in escrow, however, Gordon

diverted the money to pay Ziggurat’s operating expenses and his personal

expenses. Under this scheme, Gordon stole more than $3 million.

       Roland Larsen, an acquaintance of Freeman, wanted Ziggurat to secure $100

million in financing so that he could develop a project mining coal and drilling for

natural gas in West Virginia. He asked Freeman to provide $1 million to fund the

escrow deposit for his company, Sharpe Resources, Inc. In September 2011,

Freeman and Larsen, on behalf of Sharpe Resources, entered into a written

agreement in which Freeman would provide $1 million in escrow funds that would

be paid back if Ziggurat failed to obtain the financing. If Ziggurat obtained the

financing, Freeman would receive his money back plus $1 million in interest. The

day after signing the agreement, Freeman wired $1 million to the OPT Escrow

Account.

       1
        Because Freeman appeals the district court’s grant of summary judgment, we view the
evidence related to those claims in the light most favorable to Freeman, the non-movant. See
Valderrama v. Rousseau, 780 F.3d 1108, 1110 n.1 (11th Cir. 2015).

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      A few days later, Larsen decided that he needed Ziggurat to finance an

additional $30 million. To increase the financed amount, Larsen needed to deposit

an additional $300,000 in the OPT Escrow Account. Freeman agreed to provide

the money. Freeman and Larsen, on behalf of Sharpe Resources, amended their

agreement to reflect the additional money Freeman had provided and that Freeman

would receive an additional $300,000 if Ziggurat successfully obtained the

financing. The next day, Freeman wired $300,000 to the OPT Escrow Account.

      After Freeman sent the money, Larsen decided to use a different company he

controlled, Standard Energy Company, as the party to the transaction with

Ziggurat. The day after Freeman sent the second wire, Larsen, on behalf of

Standard Energy, and Ziggurat entered into a Memorandum of Understanding in

which Ziggurat promised to work to secure funding for Standard Energy and

Standard Energy agreed to place 1% of the requested loan amount in escrow with

OPT Title.

      Larsen, on behalf of Standard Energy, also entered into an escrow agreement

with OPT Title. OPT Title promised not to use the money for any purpose other

than as set forth in the Memorandum of Understanding between Ziggurat and

Standard Energy. OPT Title further agreed that “[i]n all instances, the Escrow, or

part thereof, will be returned to the same account of origination.” Escrow

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Agreement ¶ 2.1.6 (Doc. 95-26).2 Because OPT Title had received the money

directly from Freeman, it in effect pledged to return the $1.3 million to Freeman,

even though he was not a party to the escrow agreement. Despite these promises,

OPT Title did not hold Freeman’s money in escrow. Instead, Gordon stole the

money.

      Gordon was able to steal money OPT Title was holding in escrow at least in

part because of knowing assistance he received from Olga Padgett-Perdomo, a

Bank vice president beginning in 2009. She helped him by opening the OPT

Escrow Account, persuading potential targets that their money would be safe in the

OPT Escrow Account, and trying to keep other Bank employees from investigating

OPT Title’s accounts.

      First, she assisted Gordon in 2009 by opening OPT Title’s accounts with the

Bank. She allowed Gordon to name one of the accounts an escrow account, even

though she and Gordon failed to comply with the Bank’s procedures for opening

escrow accounts.

      Second, she helped Gordon thereafter by reassuring potential victims that the

money they sent to the OPT Escrow Account would be safe and lying to them to

cover up that Gordon had stolen their money. When investor Hsi Chang was

considering whether to fund a $750,000 liquidity deposit for another project

      2
          Citations to “Doc.” refer to docket entries in the district court record in this case.

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Ziggurat was financing, Padgett-Perdomo met with Chris Lim and William Lin,

who were working with Chang. She assured them that OPT Title had an excellent

relationship with the Bank and praised OPT Title’s business. When they showed

her a copy of Chang’s escrow agreement with OPT Title, which reflected that OPT

Title would hold Chang’s money in escrow at the Bank, Padgett-Perdomo

reassured them that OPT Title held money in escrow for others who were obtaining

financing with Ziggurat. After Chang sent the money, Lim and Lin would

occasionally call Padgett-Perdomo to check whether OPT Title was continuing to

hold Chang’s money in escrow. She continued to assure them that Chang’s money

was safe, even though Gordon had already stolen it.3

       Padgett-Perdomo assisted Gordon by making other representations about

OPT Title. Almost immediately after OPT Title opened its accounts at the Bank,

Padgett-Perdomo wrote letters vouching for OPT Title. In these letters, she stated

that OPT Title maintained excellent relationships with the Bank, without

mentioning that OPT Title had been a Bank customer only for a few days.

Padgett-Perdomo also wrote another letter, in October 2010, on the Bank’s

letterhead (the “Seven-digit Letter”) representing that OPT Title’s “[e]scrow

       3
        In a separate lawsuit, Chang sued the Bank. Although the district court dismissed
Chang’s claims, we reversed because Chang had stated claims for relief against the Bank for
negligence, gross negligence, aiding and abetting fraud, and aiding and abetting conversion. See
Chang, 2017 WL 65371, at *1.

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account currently has deposits . . . in the seven digit amounts” when in fact the

total balance in all OPT Title’s accounts with the Bank at that time was less than

$100,000. Seven-digit Letter (Doc. No. 85-3).

      Third, Padgett-Perdomo assisted Gordon in 2010 by trying to keep other

Bank employees from investigating the OPT Escrow Account. When a customer

brought the Seven-digit Letter to another Bank branch and asked whether the

information in the letter was accurate, a Bank employee recognized the inaccuracy

of Padgett-Perdomo’s statement in the letter that the OPT Escrow Account had a

balance of over a million dollars. When the employee confronted Padgett-

Perdomo about the letter, Padgett-Perdomo claimed that she had written it several

years earlier and that OPT Title no longer kept seven digit balances with the Bank.

She insisted that the employee allow her to handle the matter. When the Bank first

investigated the Seven-digit Letter, Padgett-Perdomo stated that she had written it

in 2009, but later denied writing the letter at all.

      In exchange for her ongoing assistance in the fraudulent scheme, Gordon

paid Padgett-Perdomo $100,000. In June 2010, Gordon wired the money to an

entity Padgett-Perdomo controlled, Infinit Management. The next day Padgett-

Perdomo transferred nearly all the money to Colombia so that her parents could

purchase a home. Although Padgett-Perdomo contends that the money was a loan

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from Gordon, there was no written loan agreement or agreed-upon repayment

terms, and she has never repaid Gordon.

B.    Procedural History

      Freeman sued the Bank in federal court asserting state-law claims for

negligence, gross negligence, aiding and abetting fraud, and aiding and abetting

conversion. After discovery, the Bank moved for summary judgment. The district

court granted summary judgment to the Bank on all of Freeman’s claims.

      With respect to the negligence and gross negligence claims, the district court

determined that Freeman had failed to come forward with evidence establishing

that the Bank owed him a duty. The district court explained that because Freeman

was not a Bank customer, the Bank owed him a duty only if there was a fiduciary

relationship between OPT Title and Freeman, the Bank knew or ought to have

known of the fiduciary relationship, and the Bank actually knew that Gordon was

misappropriating money. The district court concluded that Freeman failed to show

he had a fiduciary relationship with OPT Title because only OPT Title and

Standard Energy were parties to the escrow agreement. Thus, the Bank did not

owe him a duty, and the district court granted summary judgment to the Bank on

the negligence and gross negligence claims.

      With respect to the aiding and abetting claims, the district court determined

the claims failed because Freeman had come forward with no evidence showing

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that the Bank had actual knowledge of Gordon’s fraud or gave substantial

assistance to Gordon. Although Freeman argued that Padgett-Perdomo’s

knowledge of the fraud should be imputed to the Bank, the district court found the

evidence did not support an inference that she knew about Gordon’s scheme. The

court refused to consider any evidence related to Chang, even though the evidence

could be relevant to establish what Padgett-Perdomo knew about Gordon’s

scheme, because the court found the probative value of the evidence was

substantially outweighed by its prejudicial effect. Alternatively, the district court

concluded that even if Padgett-Perdomo knew about the fraud, her knowledge

could not be imputed to the Bank because she acted solely to further her own

interest.

       Additionally, the court concluded that Freeman had failed to show that the

Bank provided substantial assistance to Gordon because there was no evidence of

the Bank having provided affirmative assistance to Gordon, and the Bank’s

inaction was insufficient because the Bank owed no duty to Freeman. On these

grounds, the court granted summary to the Bank on the aiding and abetting claims.

This is Freeman’s appeal.

                         II.   STANDARD OF REVIEW

       We review the district court’s grant of summary judgment de novo.

Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318 (11th Cir. 2012).

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We must “draw all inferences and review[] all evidence in the light most favorable

to the non-moving party.” Id. (alteration in original) (internal quotation marks

omitted). Summary judgment is appropriate when there is “no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). A genuine dispute of material fact exists when “the evidence

is such that a reasonable jury could return a verdict for the nonmoving party.”

Likes v. DHL Express (USA), Inc., 787 F.3d 1096, 1098 (11th Cir. 2015) (internal

quotation marks omitted). Summary judgment should be entered “against a party

who fails to make a showing sufficient to establish the existence of an element

essential to that party’s case, and on which that party will bear the burden of proof

at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

                                     III.    DISCUSSION

       In this appeal, we must decide whether the district court erred in granting

summary judgment to the Bank. Because Freeman came forward with sufficient

evidence to support each of his claims, the district court erred in granting summary

judgment. 4

       4
          The Bank also argues that we lack jurisdiction because Freeman has no standing to
pursue these claims. The Constitution limits the jurisdiction of the federal courts to “cases” and
“controversies.” U.S. Const. art. III, § 2. To ensure that there is a case or controversy, a plaintiff
must establish his standing as the proper party to bring suit. To establish standing, a plaintiff
must show: “(1) he has suffered, or imminently will suffer, an injury-in-fact; (2) the injury is
fairly traceable to the defendants’ conduct; and (3) a favorable judgment is likely to redress the
injury.” Mulhall v. UNITE HERE Local 355, 618 F.3d 1279, 1286 (11th Cir. 2010).

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A.     Negligence Claim

       Under Florida law, “[t]o maintain an action for negligence, a plaintiff must

establish that the defendant owed a duty, that the defendant breached that duty, and

that this breach caused the plaintiff damages.” Fla. Dep’t of Corr. v. Abril, 969 So.
2d 201, 204 (Fla. 2007). As we explained in Chang, under Florida law a bank

generally does not owe a duty of care to a noncustomer. But under an exception to

this rule, “a bank may be liable to a noncustomer for its customer’s

misappropriation when a fiduciary relationship exists between the customer and

the noncustomer, the bank knows or ought to know of the fiduciary relationship,

and the bank has actual knowledge of its customer’s misappropriation.” Chang,

2017 WL 65371 at *4.

       The Bank contends that Freeman failed to offer evidence establishing an

essential element of his case, that is, that the Bank owed him a duty. We disagree.

Freeman came forward with evidence showing that: (1) OPT Title was holding the

money in escrow for the benefit of Freeman; (2) the Bank, through Padgett-

        The Bank contends that Freeman’s injury is not fairly traceable to the Bank’s conduct,
but we disagree. “A showing that an injury is ‘fairly traceable’ requires less than a showing of
‘proximate cause.’” Resnick v. AVMed, Inc., 693 F.3d 1317, 1324 (11th Cir. 2012). The fairly
traceable requirement is satisfied even if a “plaintiff’s injury is indirectly caused by a defendant’s
action.” Id. Freeman has shown that his injury is fairly traceable to the Bank’s conduct because,
as discussed below, the evidence, viewed in the light most favorable to Freeman, reflects that his
money was stolen at least in part because the Bank allowed Gordon to continue to use the OPT
Escrow Account, even though knowledge that Gordon was misappropriating money that OPT
Title was supposed to be holding in escrow can be imputed to the Bank.

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Perdomo, knew or should have known that OPT Title owed a fiduciary duty to

Freeman when he wired money to the OPT Escrow Account; and (3) the Bank,

through Padgett-Perdomo, knew that Gordon was misappropriating money from

the account. Under these facts, the Bank would owe Freeman a duty.

      1.     The Existence of a Fiduciary Relationship between Freeman and
             OPT Title

      Under Florida law, an escrow holder has “a fiduciary duty to exercise

reasonable skill and ordinary diligence.” Watkins v. NCNB Nat’l Bank of Fla.,

N.A., 622 So. 2d 1063, 1064 (Fla. Dist. Ct. App. 1993). An escrow holder may

owe a fiduciary duty to a third-party beneficiary, even though he is not a party to

the escrow agreement, when “the escrow agreement . . . show[ed] a clear intent to

directly and substantially benefit” the third party. Id. at 1065.

      Viewing the evidence in the light most favorable to Freeman, OPT Title

owed him a fiduciary duty because the escrow agreement between OPT Title and

Standard Energy conferred a direct benefit upon Freeman. In the escrow

agreement, OPT Title agreed that the “Escrow, or part thereof, will be returned to

the same account of origination.” Escrow Agreement at ¶ 2.1.6. (Doc. No. 95-26).

At the time OPT Title executed the escrow agreement, Freeman had already wired

$1.3 million from his account to the OPT Escrow Account. Under the terms of the

escrow agreement, OPT Title promised to return the money directly to Freeman,

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and thus it owed him a fiduciary duty, even though he was not a party to the

escrow agreement.

      2.    The Bank’s Knowledge of the Fiduciary Relationship

      Freeman also came forward with evidence showing that the Bank knew or

should have known about his fiduciary relationship with OPT Title. He showed

that Padgett-Perdomo knew OPT Title was holding funds in escrow for third

parties in the OPT Escrow Account and thus should have known about the

fiduciary relationship between Freeman and OPT Title. In addition, he came

forward with evidence that would allow Padgett-Perdomo’s knowledge to be

imputed to the Bank, her employer.

      First, a reasonable jury could find that Padgett-Perdomo knew OPT Title

was supposed to hold in escrow money deposited into the OPT Escrow Account.

A jury could draw this conclusion from evidence that Padgett-Perdomo assisted

Gordon in naming the account an “escrow account” and that, particularly as a Bank

vice president, she understood OPT Title would hold the money deposited in the

account in escrow. In addition, when she met with Lim and Lin, she reviewed a

copy of the escrow agreement between Chang and OPT Title, told them that OPT

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Title regularly held escrow funds in the account, and promised them Chang’s

money would be safe in the escrow account. 5

       Second, Padgett-Perdomo’s knowledge may be imputed to the Bank. Under

Florida law, her knowledge may be imputed to the Bank unless the adverse interest

exception applies, meaning her interests were entirely adverse to the Bank’s

       5
          In considering the summary judgment motion, the district court sua sponte refused to
consider the evidence related to Chang because the court concluded under Federal Rule of
Evidence 403 that the probative value of the evidence was outweighed by its prejudicial effect.
We review this evidentiary ruling for abuse of discretion. See Aycock v. R.J. Reynolds Tobacco
Co., 769 F.3d 1063, 1068 (11th Cir. 2014). “A district court abuses its discretion if it applies an
incorrect legal standard, applies the law in an unreasonable or incorrect manner, follows
improper procedures in making a determination, or makes findings of fact that are clearly
erroneous.” Id. (internal quotation marks omitted). But when the district court excludes
evidence without seeing the witnesses testify, such as at the summary judgment stage, we are
“freer to perform the Rule 403 balancing ab initio.” United States v. King, 713 F.2d 627, 631
(11th Cir. 1983).
         “Rule 403 is an extraordinary remedy which should be used sparingly” with a balance
“struck in favor of admissibility.” Aycock, 769 F.3d at 1069 (internal quotation marks omitted).
Evidence should be excluded under this rule “only when unfair prejudice substantially outweighs
probative value.” Id. (internal quotation marks omitted). “Rule 403’s major function is limited
to excluding matter of scant or cumulative probative force, dragged in by the heels for the sake
of its prejudicial effect.” Id. (internal quotation marks omitted).
        The evidence regarding Padgett-Perdomo’s involvement with Chang is essential to
several elements of Freeman’s claims, including that the Bank (through Padgett-Perdomo) knew
or should have known that OPT Title owed a fiduciary duty to those who deposited money in the
OPT Escrow Account and actually knew that Gordon was misappropriating money. The district
court discounted the probative value of the evidence because Gordon had stolen Chang’s money
more than a year before Freeman wired his escrow money to OPT Title. But the district court
overlooked that the evidence about Chang is probative because it shows the Bank knew for a
year that Gordon was stealing money from the OPT Escrow Account but took no steps to stop
him, which allowed him to continue to use the account for that purpose.
       We cannot say that the admission of evidence about Chang would be unfairly prejudicial.
The evidence suggests that Padgett-Perdomo (and the Bank) knew the details about Gordon’s
scheme, which is prejudicial to the Bank. But we cannot say that this evidence is unfairly
prejudicial because the Bank’s knowledge is at issue. Because the evidence is highly probative
and not unfairly prejudicial, the district court applied the law in an unreasonable or incorrect
manner and thus abused its discretion when it excluded this evidence under Rule 403.

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interests and the Bank received no benefit whatsoever. See Chang, 2017 WL
65371, at *4. As we explained in Chang, the adverse interest exception is

inapplicable here because there is evidence that Padgett-Perdomo’s actions

assisting Gordon brought a short-term benefit to the Bank. See id. at *5. With

OPT Title as a customer, the Bank was able to collect revenue in the form of wire

and service fees.

      At the time that Freeman deposited his money, both Padgett-Perdomo and

the Bank knew that OPT Title was acting as an escrow agent for those who

deposited money in the OPT Escrow Account. Although Padgett-Perdomo was no

longer working on OPT Title’s account at the time Freeman deposited money into

the OPT Escrow Account, Freeman came forward with evidence showing that the

Bank knew or should have known that OPT Title owed a fiduciary duty to those,

like Freeman, who wired money to the OPT Escrow Account.

      3.     The Bank’s Knowledge of Gordon’s Misappropriation

      Third, the evidence viewed in the light most favorable to Freeman reflects

that the Bank, through Padgett-Perdomo, knew Gordon was misappropriating

money held in the OPT Escrow Account. A reasonable jury could conclude that

Padgett-Perdomo assisted Gordon in carrying out his fraud based on evidence

showing she: (1) allowed OPT Title to label its account as an escrow account,

even though she and OPT Title had not complied with the Bank’s procedures for

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opening an authorized escrow account; (2) assured Lim and Lin before Chang

wired money to the Bank that Chang’s money would be safe in the OPT Escrow

Account; (3) continued to tell Lim and Lin that Chang’s money was being held in

the OPT Escrow Account even though Gordon had stolen it; (4) wrote the Seven-

digit Letter overstating the amount of money held in the OPT Escrow Account;

(5) tried to prevent a Bank employee from investigating the OPT Escrow Account

in connection with the Seven-digit Letter; and (6) surreptitiously received

$100,000 from Gordon. If Padgett-Perdomo was assisting Gordon in his

fraudulent scheme, it follows that she knew Gordon was misappropriating money

from the OPT Escrow Account. In addition, Padgett-Perdomo’s knowledge that

Gordon had misappropriated the money can be imputed to the Bank for the reasons

discussed in Section III.A.2 above

       Although banks generally owe no duty to noncustomers, Freeman has come

forward with evidence sufficient to establish that the Bank owed him a duty.

Accordingly, the district court erred when it granted summary judgment on

Freeman’s negligence claim. 6

       6
        For the same reasons, the district court erred in granting summary judgment to the Bank
on Freeman’s gross negligence claim.

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B.    Aiding and Abetting Fraud

      We now turn to whether the district court erred in granting summary

judgment to the Bank on Freeman’s aiding and abetting fraud claim. Although no

Florida court has explicitly recognized a cause of action for aiding and abetting

fraud, Florida courts have assumed that the cause of action exists. ZP No. 54 Ltd.

P’ship v. Fid. & Deposit Co. of Md., 917 So. 2d 368, 371-72 (Fla. Dist. Ct. App.

2005) (explaining that aiding and abetting fraud “may well be a valid cause of

action in Florida”). Florida courts have presumed that a tort claim for aiding and

abetting fraud has three elements: (1) the existence of “an underlying fraud”; (2)

that “[t]he defendant had knowledge of the fraud”; and (3) that the defendant

“provided substantial assistance to advance the commission of the fraud.” Id. at

372. The district court concluded that the Bank was entitled to summary judgment

because Freeman had failed to come forward with evidence the Bank knew of the

fraud or had provided substantial assistance. 7 We disagree. As we explained

above, Freeman came forward with sufficient evidence establishing that the Bank

knew about the fraud.

      Regarding the substantial assistance element, Freeman offered sufficient

evidence to establish the Bank provided substantial assistance to advance the

commission of the fraud. “Substantial assistance occurs when a defendant

      7
          It is undisputed that there was an underlying fraud.

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affirmatively assists, helps conceal[,] or fails to act when required to do so, thereby

enabling the breach to occur.” Lerner v. Fleet Bank, N.A., 459 F.3d 273, 295 (2d

Cir. 2006) (internal quotation marks omitted). Mere inaction “constitutes

substantial assistance only if the defendant owes a fiduciary duty directly to the

plaintiff.” Id. (internal quotation marks omitted). Because “banks do have a duty

to safeguard trust funds deposited with them when confronted with clear evidence

indicating that those funds are being mishandled,” a bank’s inaction—that is, its

failure to stop the theft of such trust funds—can constitute substantial assistance.

Id.; see In re First Alliance Mortg. Co., 471 F.3d 977, 995 (9th Cir. 2006)

(explaining that a bank’s performance of ordinary business transactions for a

customer “can satisfy the substantial assistance element of an aiding and abetting

claim if the bank actually knew those transactions were assisting the customer in

committing a specific tort” (internal quotation marks omitted)). Put another way,

to establish that a bank substantially assisted a fraudulent scheme to steal trust

funds, knowledge of the underlying fraud “is the crucial element.” In re First

Alliance Mortg. Co., 471 F.3d at 995 (internal quotation marks omitted).

      Here, a reasonable jury, viewing the evidence in the light most favorable to

Freeman, could find that the Bank provided substantial assistance through its

inaction. The Bank (through Padgett-Perdomo) knew that OPT Title was holding

the funds in escrow and about Gordon’s ongoing fraud. Under these

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circumstances, a reasonable jury could find that the Bank’s failure to warn

Freeman or to stop Gordon’s fraud constituted substantial assistance. See Lerner,
459 F.3d at 295. Because Freeman came forward with evidence to establish the

essential elements of his aiding and abetting fraud claim, 8 the district court erred in

granting summary judgment to the Bank.9

                                    IV.     CONCLUSION

        For the reasons set forth above, we reverse the district court’s order granting

summary judgment to the Bank and remand the case for further proceedings

consistent with this opinion.

       REVERSED AND REMANDED.

       8
         For the same reasons, the district court erred in granting summary judgment on
Freeman’s aiding and abetting conversion claim. The parties implicitly concede that Freeman’s
aiding and abetting conversion claim rises or falls with his aiding and abetting fraud claim.
       9
          The Bank argues in the alternative that we should affirm the district court because
Freeman loaned money to Sharpe Resources at a usurious rate of interest. But the Bank may not
assert a usury defense in this case because, as Florida courts have explained, “usury is purely a
personal defense” that belongs to the borrower, here, Sharpe Resources. Gunn Plumbing, Inc. v.
Dania Bank, 252 So. 2d 1, 4 (Fla. 1971); see Wulsin v. Palmetto Fed. Sav. & Loan Ass’n,
507 So. 2d 1149, 1150 (Fla. Dist. Ct. App. 1987). The Bank, which was not a party to the loan
agreement, cannot raise the affirmative defense. See Drill S., Inc. v. Int’l Fid. Ins. Co., 234 F.3d
1232, 1238 n.9 (11th Cir. 2000) (discussing that third party may not raise personal defenses).

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