Wednesday, March 14, 2007

Bank of America v. Gibbons (Ct. of Special Appeals)

Filed March 13, 2007. Opinion by Judge Sally Adkins.

Over a six year period, the husband of appellee Gibbons (Mrs. Gibbons), pocketed proceeds from unauthorized sales of securities owned by several customers of his employer, appellant Bank of America Corporation (the Bank). The value of these misappropriated stocks allegedly exceeded $1.5 million. Mr. Gibbons deposited the proceeds in a solely-owned account. From there, he moved some of the funds into a jointly-owned account and a still smaller portion into another jointly-held account from which Mrs. Gibbons wrote checks, primarily for household and family purposes.

The Bank sought to recover the funds deposited in this final account from Mrs. Gibbons on a conversion and unjust enrichment theory. Mrs. Gibbons, who had no knowledge of her husband's theft, sought and obtained summary judgment, convincing the motion court that the Bank had no evidence to support any of the three elements of unjust enrichment.

"Under Maryland law, '[a] claim of unjust enrichment is established when: (1) the plaintiff confers a benefit upon the defendant; (2) the defendant knows or appreciates the benefit; and (3) the defendant's acceptance or retention of the benefit under the circumstances is such that it would be inequitable to allow the defendant to retain the benefit without the paying of value in return.' Benson v. State, 389 Md. 615, 651-52 (2005)."

On appeal, the court held that neither an implied-in-fact contract, nor direct dealings between the parties, nor the direct transfer of funds from plaintiff to defendant was required to meet the first element. Furthermore, it is not necessary to show that the recipient knew the funds were stolen to meet the second element. All that is required is that the recipient gave no consideration for the funds. Similarly, the lack of knowledge that the funds were stolen is not automatically fatal to proof of the third element. Instead, the motion court should have considered whether Mrs. Gibbons would have suffered any loss had she been ordered to make restitution, whether her husband had used the money without benefiting the family, or whether other equitable circumstances should come into play. Thus, under the reasoning of the court, it is legally possible that the Bank could recover funds from the completely innocent spouse of a thief.

The opinion is available in PDF.

1 comment:

Anonymous said...

I understand the legal reasoning, but in this instance, the notion that Mrs. Gibbons should need to repay funds her husband stole is ridiculous. I personally know the Gibbons family and it is the honest truth that Mr. Thomas Gibbons was completely wrong and needs to repay the $1.6 million COMPLETELY ON HIS OWN. Mrs. Gibbons is a mother of five children from this man. She works a full time job, but obviously that is not enough to support that size of a family. Her oldest child is going to college in the fall of 2007 and another one is just another year away. The three youngest are growing up without a father -- is a mountain of debt a suitable replacement for a father earning six figures? I think not.