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Whitehead v. BBVA Compass Bank

United States District Court, N.D. Alabama, Southern Division

March 27, 2019

WILLIAM H. WHITEHEAD as power of attorney for LEWIS E. WHITEHEAD, JR., Plaintiffs,



         Acting in a representative capacity, William Whitehead filed this lawsuit through power of attorney for his father, Lewis Whitehead, Jr., alleging claims under § 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, 15 U.S.C. § 78(a) et seq., and negligence, breach of fiduciary duty, suppression, and fraud under Alabama law. Doc. 1. The court has for consideration BBVA Compass Bank (“Compass Bank”) and James Puckett's Motions to Dismiss, or in the Alternative, Motions for Summary Judgment, docs. 5 and 6, in which they seek dismissal on standing and a purported failure to raise a cognizable claim. See docs. 5 at 7-11; 6 at 7-11. Basically, Compass Bank and Puckett contend that L. Whitehead purchased the investment at issue in this case through a different subsidiary arm of BBVA and that they had no involvement in any of the decisions at issue in this case. They maintain that to the extent L. Whitehead has a cause of action, it is against the other entity and the individual broker he dealt with for this investment. The motions, which are fully briefed, docs. 5 - 9, and ripe for review, are due to be granted.


         In light of both parties submitting evidence and affidavits in support of and opposition to the Defendants motions, [1] the court considers this matter pursuant to the provisions of Rule 56 of the Federal Rules of Civil Procedure. “The court has discretion as to whether to accept material beyond the pleading that is offered in conjunction with a 12(b)(6) motion.” Property Management & Investments, Inc. v. Lewis, 752 F.2d 599, 604 (11th Cir.1985). However, once the court looks at matters outside of the pleading, “[t]he district court generally must convert a motion to dismiss into a motion for summary judgment.” Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005). Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is proper “if the movant shows that 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. “Rule 56[] mandates the entry of summary judgment, after adequate time for discovery and upon motion, 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) (alteration in original). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving party, who is required to “go beyond the pleadings” to establish that there is a “genuine issue for trial.” Id. at 324 (citation and internal quotation marks omitted). A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         On summary judgment motions, the court must construe the evidence and all reasonable inferences arising from it in the light most favorable to the non-moving party. Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 255. Any factual disputes will be resolved in the non-moving party's favor when sufficient competent evidence supports the non-moving party's version of the disputed facts. See Pace v. Capobianco, 283 F.3d 1275, 1276, 1278 (11th Cir. 2002) (a court is not required to resolve disputes in the non-moving party's favor when that party's version of events is supported by insufficient evidence). However, “mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560, 1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing Anderson, 477 U.S. at 252).


         The court turns first to the discovery related motions - the Defendants' motion to strike the affidavit W. Whitehead submitted in opposition to their motions for summary judgment, and W. Whitehead's request for the court to sanction the Defendants for making alleged false statements.

         A. Defendants' Motion to Strike

         Defendants move to strike W. Whitehead's affidavit, doc. 8-1, asserting that W. Whitehead “offers opinions on which he has no personal knowledge, and fails to even come close to meeting the standards for admissibility.” Doc. 10 at 1-2. An affidavit “must be made on personal knowledge [and] set out facts that would be admissible in evidence.” Fed.R.Civ.P. 56(c)(4). “Affidavits which fail to meet the standards set forth in Rule 56(e) may be subject to a motion to strike.” Thomas, 248 F.Supp.2d at 1112 (citation omitted). “However, if an affidavit contains some improper material, the court need not strike the entire affidavit, rather it may strike or disregard the improper portions and consider the remainder of the affidavit.” Id. In that respect, the court will focus only on the sentences in the affidavit that offer conclusory statements and legal conclusions, and lack the “basis for such personal knowledge.” Duke v. Nationstar Mortg., L.L.C., 893 F.Supp.2d 1238, 1244 (N.D. Ala. 2012). Consequently, the following portions of the affidavit are due to be stricken: (1) Paragraph 2 statement that “Mr. Puckett's affidavit is completely false;” (2) Paragraph 3 statement that “Mr. Puckett's affidavit is attempting to claim that he was vice president of only Compass Bank is false;” (3) Paragraph 6 statement that Puckett's affidavit regarding his involvement in the brokerage account “is an absolute lie;” (4) Paragraph 7 statement that Puckett's affidavit regarding his involvement in securities recommendation “is an absolute lie;” and (5) Paragraph 8 statement that Puckett's affidavit regarding his involvement in recommending the Bank of the West Certificate of Deposit (“CD”) “is an absolute lie.” Doc. 8-1 at 1-4.

         Finally, while Defendants are generally correct that W. Whitehead's statement in Paragraph 9 that he “see[s] absolutely no reason whatsoever that Puckett sold the CD other than to churn commissions, ” id. at 4, constitutes a personal opinion, it is unclear if this statement rises to a “level of conclusoriness below which an affidavit must not sink if it is to provide the basis for a genuine issue of material fact.” Orthopedic & Sports Injury Clinic v. Wang Labs., Inc., 922 F.2d 220, 224 (5th Cir. 1991). Therefore, although this personal opinion fails to “create an issue of fact sufficient to defeat a motion for summary judgment, ” Owens v. City of Fort Lauderdale, 174 F.Supp.2d 1298, 1311 (S.D. Fla. 2001), the court declines to strike this statement. Cross v. Stafford Hosp., Inc., No. CIV.A.7:07-CV-80-HL, 2009 WL 927763, at *3 (M.D. Ga. Mar. 31, 2009) (“[T]o the extent the individual [defendants] proffer their own personal opinion as to [plaintiff], the Court will consider those portions of the affidavits.”).

         B. Plaintiff's Request for Sanctions

         The Plaintiff asks the court in his brief to “sanction [the Defendants] for the deliberate and intentional false swearing of [Puckett].” Doc. 7 at 6. The motion is flawed in several respects. First, the Plaintiff has failed to file separately his “sanction motion from its opposition papers, ” as required by Rule 11(c)(2) of the Federal Rules of Civil Procedure. Second, the Plaintiff has failed to comply with Rule 11(c)(2)'s requirement that the movant provide notice and 21 days to correct the challenged conduct. Fed.R.Civ.P. 11(c)(2). Third, the Plaintiff concedes that he “discovered and has refuted the false statements and perjury of the Defendants before any actual harm has been done by the false statements.” Doc. 7 at 7. Finally, the Plaintiff failed to show that Puckett's affidavit contains false statements that “served no purpose other than to harass and intimidate opposing counsel.” Thomas v. Tenneco Packaging Co., 293 F.3d 1306, 1328 (11th Cir. 2002). For all these reasons, the request for sanctions is rejected. The court turns now to the underlying dispute and the motions for summary judgment.


         In 2012, W. Whitehead and his father, L. Whitehead, met Puckett, who at the time was a private banker at Compass Bank and vice president of the bank's wealth management program. Docs. 5-1 at 2; 7-1 at 2. The following year, Puckett introduced the Whiteheads to Wes McGugin, an investment officer at BBVA Compass Investment Solutions (“BCIS”). Doc. 5-1 at 3. L. Whitehead, with his son listed as a joint tenant and purchaser, subsequently opened a brokerage account with McGugin. Id. at 3, 15. The Whiteheads used this account to execute one investment in particular that is at issue in this case.

         The relevant facts began on April 10, 2015, when McGugin had a conversation with the Whiteheads about investing $450, 000 into a structured CD through the Bank of the West, during which he explained the risks of failing to hold the CD to maturity. Doc. 9-1. Two weeks later, L. Whitehead invested $450, 000 in the Bank of West CD. Doc. 5-1 at 16. The following year, McGugin advised the Whiteheads over the phone that they should sell the Bank of the West CD based on McGugin's impression “that the basket of stocks underlying the CD were down and [he] did not believe they were going to rebound.” Doc. 9-1 at 4. Thereafter, in November 2016, McGugin liquiDated: a capital loss of $38, 000 the Bank of West CD. Doc. 5-1 at 9, 16. W. Whitehead maintains that McGugin never informed him of the sale, that the Defendants here - Compass Bank and Puckett - intentionally omitted “risks factors” included in published documents about the Bank of the West CD, and that he “see[s] absolutely no reason whatsoever” for the sale “since if they were held to maturity there would be no loss.” Docs. 1 at 6; 8-1 at 5. Based on the loss of capital, W. Whitehead, in a representative capacity of his father through power of attorney, filed this lawsuit. Doc. 1.

         IV. ANALYSIS

         Compass Bank and Puckett seek summary judgment on two primary grounds: (1) that W. Whitehead lacks standing to prosecute this claim on behalf of his father, and (2) that they had no involvement with the securities at issue. See docs. 5 and 6. The court reviews each contention in turn.

         A. Whether W. ...

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