Case: 4:14-cv-00985-LRR Doc.

#: 26 Filed: 11/19/14 Page: 1 of 21 PageID #: 285

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
RICHARD AGUILAR et al.,
Plaintiffs,

No. 14-CV-985-LRR

vs.

ORDER

PNC BANK, N.A.,

Defendant.
____________________
TABLE OF CONTENTS
I.

INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II.

RELEVANT PROCEDURAL HISTORY. . . . . . . . . . . . . . . . . . . . . . . . . 2

III.

SUBJECT MATTER JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . 2

IV.

RELEVANT FACTUAL BACKGROUND .. . . . . . . . . . . . . . . . . . . . . . . 3

A.
B.

V.

ANALYSIS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
A.
B.
C.
D.
E.
F.

VI.

Parties.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Overview of the Dispute. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Standards of Review.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Count VSAiding and Abetting Breach of Fiduciary Duty. . . . . . . . . . 6
Count VISBreach of Fiduciary Duty. . . . . . . . . . . . . . . . . . . . . . . 9
Count VIISConspiracy to Breach Fiduciary Duty. . . . . . . . . . . . . . 11
Count VIIISNegligence.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Count IXSConspiracy to Violate RICO.. . . . . . . . . . . . . . . . . . . . 15
1.
Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.
Existence of an enterprise. . . . . . . . . . . . . . . . . . . . . . . . 18
3.
Objective manifestation of an agreement. . . . . . . . . . . . . . . 20

CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
I. INTRODUCTION
The matter before the court is Defendant PNC Bank, N.A.s (PNC Bank) Partial

Motion to Dismiss Counts IV-IX of Plaintiffs First Amended Complaint (Motion)

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(docket no. 17).

II. RELEVANT PROCEDURAL HISTORY
On May 23, 2014, Plaintiffs filed a Complaint (docket no. 1). On July 15, 2014
Plaintiffs filed a First Amended Complaint (Complaint) (docket no. 6) asserting eight
state law claims and a Racketeer Influenced and Corrupt Organizations (RICO) claim.
On September 3, 2014, PNC Bank filed the Motion. On September 15, 2014, Plaintiffs
filed a Resistance (docket no. 21). On October 2, 2014, PNC Bank filed a Reply (docket
no. 24). Plaintiffs request oral argument, but the court finds it to be unnecessary. The
matter is fully submitted and ready for decision.
III. SUBJECT MATTER JURISDICTION
The court has federal question jurisdiction over Plaintiffs claim against PNC Bank
in Count IX, which arises under RICO, codified at 18 U.S.C. 1962(d). See 28 U.S.C.
1331 (The district courts shall have original jurisdiction of all civil actions arising under
the Constitution, laws, or treaties of the United States.).
The court has supplemental jurisdiction over Plaintiffs state-law claims in Counts
IV, V, VI, VII and VIII because those claims are so related to the claim over which the
court has federal question jurisdiction that they form part of the same case or controversy.
See 28 U.S.C. 1367(a) ([T]he district courts shall have supplemental jurisdiction over
all other claims that are so related to claims in the action within such original jurisdiction
that they form part of the same case or controversy . . . .).1 In other words, the federallaw claim[] and state-law claims in the case derive from a common nucleus of operative
fact and are such that [a plaintiff] would ordinarily be expected to try them all in one
judicial proceeding. Kan. Pub. Emps. Ret. Sys. v. Reimer & Koger Assocs., Inc., 77

The court notes that it also has supplemental jurisdiction over Counts I, II and III.
However, those claims are not at issue in this Motion and are therefore not discussed in
the instant order.
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F.3d 1063, 1067 (8th Cir. 1996) (second alteration in original) (quoting Carnegie-Mellon
Univ. v. Cohill, 484 U.S. 343, 349 (1988)).
IV. RELEVANT FACTUAL BACKGROUND
Accepting all factual allegations in the Complaint as true and drawing all reasonable
inferences in favor of Plaintiffs, the facts are as follows:
A. Parties
Defendant PNC Bank is a nationally chartered bank with its principal place of
business in Pittsburgh, Pennsylvania. Plaintiffs are comprised of ninety-three individuals
who are citizens of various states and one company, Northwest Properties (1973) Ltd.,
with its principal place of business in St. Louis, Missouri.
B. Overview of the Dispute
The dispute in this case arises out of a scheme in which Martin Sigillito, a St. Louis
attorney, and others operated a fraudulent loan program called the British Lending
Program (BLP) in which individuals, including Plaintiffs, loaned money for purported
land purchases in England. Complaint 6. The BLP operated as a classic Ponzi scheme
in which payments on existing loans were paid with money from new loans. Id.
(emphasis omitted). Individual retirement accounts (IRA accounts) were the primary
source of BLP funds. Sigillito recruited investors for the BLP who would then establish
IRA accounts with a custodian, typically a bank, to invest on their behalf. Id. 8. PNC
Bank served as the IRA custodian for fourteen Plaintiffs. Interest on Lawyers Trust
Accounts (IOLTAs) were also an important component of the scheme. Id. 12.
Missouri law requires attorneys to maintain IOLTAs, which operate as a trust account for
client funds. Id. 23. There are rules regulating how attorneys may manage the funds
flowing into and out of IOLTAs, including rules against commingling client funds with the
attorneys business or personal funds. These rules render the attorney a fiduciary of the
client, and the attorney is subject to the heightened responsibilities associated with that

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role. Investment funds were deposited into Sigillitos IOLTAs at various banks, including
the predecessors to PNC Bank. Plaintiffs allege various instances of wire fraud and money
laundering involving funds in IOLTAs throughout the Complaint.
PNC Bank is the successor in interest to Allegiant Bank, National City Bank and
Pioneer Bank. Id. 5. Allegiant Bank was an initial IRA custodian for Sigillitos clients,
including fourteen of the Plaintiffs. Sigillito held multiple business and personal accounts
at Allegiant Bank, including an IOLTA. Id. 35. Allegiant Bank uncovered Sigillitos
fraud in early October 2001 when it learned that Sigillito was paying himself and others
up-front fees and paying interest on existing loans from fiduciary funds allocated for new
loans. Id. 10, 14. Allegiant Banks Chief Executive Officer, Shaun Hayes, and
President, Richard Markow, were very involved with Sigillito and his accounts at the bank
and had sufficient information to unmask Sigillitos misappropriation of fiduciary funds.
Id. 46-53. Once Allegiant Bank uncovered Sigillitos fraud, it conspired with him to
transfer the IRAs to Millenium Trust Company in 2001 without disclosing any information
regarding the fraud. Id. 10. After leaving Allegiant Bank, Sigillito opened multiple
accounts at Pioneer Bank, including an IOLTA. Id. 203-05. National City Bank
purchased Allegiant Bank in 2004, id. 15, and then purchased Pioneer Bank in 2006.
Id. 228. National City Bank and Pioneer Bank knew of Sigillitos illicit activities based
on his prior involvement with Allegiant Bank, yet assisted him in avoiding detection. Id.
231-38. In addition to the IRA accounts, Sigillito also maintained an IOLTA at
Allegiant Bank from 2000 to 2001, at Pioneer Bank from 2002 to 2006 and at National
City Bank during 2006. Id. 12. PNC Bank purchased National City Bank in 2009,
making it the successor in interest to Allegiant Bank, Pioneer Bank and National City
Bank. Id. 17.

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V. ANALYSIS2
The Motion requests that the court dismiss Counts IV-IX of the Complaint. In the
Resistance, Plaintiffs request that the court dismiss Count IV. Therefore, the remaining
claims at issue in the Motion are Count V (aiding and abetting breach of fiduciary duty),
Count VI (breach of fiduciary duty), Count VII (conspiracy to breach fiduciary duties),
Count VIII (negligence) and Count IX (conspiracy to violate RICO).
A. Standards of Review
The Federal Rules of Civil Procedure provide for the dismissal of a complaint on
the basis of failure to state a claim upon which relief can be granted. Fed. R. Civ. P.
(12)(b)(6). When analyzing a Rule 12(b)(6) motion, the court must accept all of the factual
allegations in the complaint as true. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(noting that for the purposes of a motion to dismiss [the court] must take all of the factual
allegations in the complaint as true). To survive a motion to dismiss under Rule 12(b)(6),
a complaint must contain sufficient factual matter . . . to state a claim to relief that is
plausible on its face. Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the

The court shall apply Missouri law in its analysis of the state-law claims. See
MRO Commcns, Inc. v. Am. Tel. & Tel. Co., 197 F. 3d 1276, 1282 (9th Cir. 1999) (In
a federal question action where the federal court is exercising supplemental jurisdiction
over state claims, the federal court applies the choice-of-law rules of the forum
state . . . .) (quoting Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1164
(9th Cir. 1996)) (internal quotation marks omitted); Am. Online, Inc. v. Natl Health Care
Discount, Inc., 121 F. Supp. 2d 1255, 1268 (N.D. Iowa 2000) (same). Missouri follows
the most significant relationship test from the Restatement (Second) of Conflicts of Laws
145 for resolving choice-of-law questions in tort actions. Am. Guarantee & Liab. Ins.
Co. v. U.S. Fid. & Guar. Co., 668 F.3d 991, 996 (8th Cir. 2012) (quoting Thompson by
Thompson v. Crawford, 833 S.W.2d 868, 870 (Mo. 1992)). The parties do not dispute
that Missouri law governs the state-law claims.
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misconduct alleged. Varga v. U.S. Bank Nat. Assn, 764 F.3d 833, 838-39 (8th Cir.
2014) (quoting Iqbal, 556 U.S. at 678) (internal quotation marks omitted). This standard
requires a complaint to contain factual allegations sufficient to raise a right to relief
above the speculative level. Parkhurst v. Tabor, 569 F.3d 861, 865 (8th Cir. 2009)
(quoting Twombly, 550 U.S. at 570).
Pursuant to Federal Rule of Civil Procedure 9(b), [i]n alleging fraud or mistake,
a party must state with particularity the circumstances constituting fraud or mistake. Fed.
R. Civ. P. 9(b). This particularity requirement appl[ies] to allegations of . . . wire fraud
. . . when used as [a] predicate act[] for a RICO claim. Murr Plumbing, Inc. v. Scherer
Bros. Fin. Servs. Co., 48 F.3d 1066, 1069 (8th Cir. 1995).

The Eighth Circuit

interpret[s] the requirements of Rule 9(b) in harmony with the principles of notice
pleading. Abels v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir. 2001)
(quoting Gunderson v. ADM Investor Servs., Inc., No. 99-4032, 230 F.3d 1363 (Table),
2000 WL 1154423, at *3 (8th Cir. Aug. 16, 2000)). Therefore,
[t]he special nature of fraud does not necessitate anything other
than notice of the claim; it simply necessitates a higher degree
of notice, enabling the defendant to respond specifically, at an
early stage of the case, to potentially damaging allegations of
immoral and criminal conduct. Thus, a plaintiff must
specifically allege the circumstances constituting fraud, Fed.
R. Civ. P. 9(b), including such matters as the time, place and
contents of false representations, as well as the identity of the
person making the misrepresentation and what was obtained or
given up thereby.
Id. (quoting Bennett v. Berg, 685 F.2d 1053, 1062 (8th Cir. 1982)).
B. Count VSAiding and Abetting Breach of Fiduciary Duty
In Count V of the Complaint, Plaintiffs allege that PNC Bank aided and abetted
Sigillitos breach of fiduciary duty. PNC Bank argues that the court should dismiss Count
V because Missouri does not recognize a cause of action for aiding and abetting breach of

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fiduciary duty.
The Missouri Supreme Court has yet to decide whether Missouri recognizes a cause
of action for aiding and abetting breach of fiduciary duty. When the highest state court has
yet to rule on a matter of law, the federal court must try to predict how the state court
would decide the issue. JPMorgan Chase Bank, N.A. v. Johnson, 719 F.3d 1010, 1015
(8th Cir. 2013). To do so, [the court] consider[s] relevant state precedent, analogous
decisions, considered dicta, and any other reliable data. Id. (quoting HOK Sport, Inc.
v. FC Des Moines, L.C., 495 F.3d 927, 935 (8th Cir. 2007)); Yoder v. Nu-Enamel Corp.,
117 F.2d 488, 489 (8th Cir. 1941) (stating that a federal court should have regard for any
persuasive data that [are] available, such as compelling inferences or logical implications
from other related adjudications). In Brandt v. Medical Defense Associates, the Missouri
Supreme Court heard a case alleging claims for aiding and abetting breach of fiduciary
duty, but it resolved the case on other grounds. Brandt v. Med. Def. Assocs., 856 S.W.2d
667, 674-75 (Mo. 1993). In Brandt, the Missouri District Court had granted a motion to
dismiss for failure to state a claim, but the Missouri Court of Appeals reversed, finding
plaintiffs had stated claims for breach of fiduciary duty and aiding and abetting breach of
fiduciary duty. Id. at 669. Although the Missouri Supreme Court did not rule on whether
aiding and abetting in the commission of a tort is a valid claim under Missouri law,
nothing in the opinion suggests that the Missouri Court of Appeals was incorrect in its
statement of the law. See id. at 669 (stating that the [Missouri Court of Appeals] also
held that plaintiffs petition stated a cause of action . . . for aiding and abetting . . . in the
commission of a tort, i.e., breach of fiduciary duty).
In Bradley v. Ray, the Missouri Court of Appeals rejected a claim for aiding and
abetting in the commission of a tort, noting that [p]laintiff has not cited any Missouri case
which recognizes a claim for aiding and abetting in the commission of a tort, and none
were located through the [Missouri Court of Appeals] own research. Bradley v. Ray,

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904 S.W.2d 302, 315 (Mo. Ct. App. 1995). However, the Missouri Court of Appeals
went on to reject the claim on the merits rather than as a matter of law, applying the test
for aiding and abetting. See id. (finding that the facts do not establish that defendants
affirmatively acted by giving substantial assistance or encouragement). The Western
District of Missouri also rejected a claim for aiding and abetting breach of fiduciary duty,
noting that Missouri courts have not expressly adopted aiding and abetting liability under
the Restatement of Torts. Omaha Indem. Co. v. Royal Am. Managers, Inc., 755 F. Supp.
1451, 1459 (W.D. Mo. 1991) (Plaintiffs citation of one New York district opinion does
not convince me that Missouri courts would recognize a cause of action for aiding and
abetting a breach of fiduciary duty.). The Eastern District of Missouri likewise rejected
such a claim in Jo Ann Howard & Assocs., P.C. v. Cassity, No. 4:09CV01252 ERW,
2012 WL 3984486, at *6-*10 (E.D. Mo. Sept. 11, 2012).
However, Missouri courts have recognized aiding and abetting claims in several
cases. See Curlee v. Donaldson, 233 S.W.2d 746, 752-55 (Mo. Ct. App. 1950) (applying
the rule for aiding and abetting trespass); Knight v. W. Auto Supply Co., 193 S.W.2d 771,
776 (Mo. Ct. App. 1946) (analyzing a claim for aiding and abetting an assault); Cooper
v. Mass. Bonding & Ins. Co., 186 S.W.2d 549, 551 (Mo. Ct. App. 1944) (applying the
rule for aiding and abetting trespass). In Lonergan v. Bank of America, N.A., the Western
District of Missouri rejected the argument that aiding and abetting in the commission of
a tort is not a viable claim in Missouri, citing Missouri cases recognizing aiding and
abetting in the context of battery, assault and trespass. Lonergan v. Bank of Am., N.A.,
No. 2:12-CV-04226-NKL, 2013 WL 176024, at *11-*12 (W.D. Mo. Jan. 16, 2013)
(noting that the defendant offer[ed] no principled reason why aiding and abetting would
exist for [some] torts, but not for . . . other intentional torts). The Lonergan court found
that the defendants had not shown that as a matter of law, aiding and abetting liability
does not exist for torts in Missouri. Id. at 12.

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In determining whether the Missouri Supreme Court would recognize a cause of

action for aiding and abetting breach of fiduciary duty, the court determines that based on
the states history of recognizing aiding and abetting in the context of other torts, it would
likely recognize a claim for aiding and abetting breach of fiduciary duty. Therefore,
Plaintiffs have stated a valid claim in Count V. Accordingly, the court shall deny the
Motion with respect to Count V, aiding and abetting breach of fiduciary duty.
C. Count VISBreach of Fiduciary Duty
In Count VI of the Complaint, Plaintiffs allege that PNC Bank breached its fiduciary
duty to Plaintiffs. The Complaint alleges that PNC Bank had a superior position
compared to Plaintiffs and possessed knowledge of material facts that were not disclosed
to Plaintiffs. Complaint 317. Additionally, the Complaint alleges that PNC Bank
made decisions that injured Plaintiffs interests. Id. 318. PNC Bank argues that the
court should dismiss Count VI because PNC Bank did not owe a fiduciary duty to the noncustomer Plaintiffs and because there was no fiduciary relationship between PNC Bank and
the customer Plaintiffs.
In deciding a claim for breach of fiduciary duty with respect to a bank in Missouri,
it is not certain whether the [Uniform Fiduciaries Law] and [Uniform Commercial Code]
have totally supplanted the common law claims against banks involving a breach of
fiduciary duty or whether those laws are seen only to supplement or modify the common
law causes of action. Chouteau Auto Mart, Inc. v. First Bank of Mo., 148 S.W.3d 17,
24 (Mo. Ct. App. 2004). For purposes of the Motion, the court will assume, arguendo,
that a common law claim of breach of fiduciary duty is a viable claim in Missouri.
To adequately plead a breach of fiduciary duty, Plaintiffs must demonstrate: (1)
the existence of a fiduciary relationship between the parties, (2) a breach of that fiduciary
duty, (3) causation and (4) harm. Koger v. Hartford Life Ins. Co., 28 S.W.3d 405, 411
(Mo. Ct. App. 2000). To show the existence of a fiduciary relationship, Plaintiffs must

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demonstrate certain elements:

(1) as between the parties, one must be subservient to the
dominant mind and will of the other as a result of age, state of
health, illiteracy, mental disability, or ignorance; (2) things of
value such as land, monies, a business, or other things of value
which are the property of the subservient person must be
possessed or managed by the dominant party; (3) there must be
a surrender of independence by the subservient party to the
dominant party; (4) there must be an automatic or habitual
manipulation of the actions of the subservient party by the
dominant party; and (5) there must be a showing that the
subservient party places a trust and confidence in the dominant
party.
Chmieleski v. City Prods. Corp., 660 S.W.2d 275, 294 (Mo. Ct. App. 1983). Although
Missouri courts do not appear to have addressed the question of fiduciary relationships in
the specific context of IRA account custodians, they have considered it in the more general
bank-depositor context. Generally, the relationship of a general depositor to its bank is
that of creditor-debtor, which does not arise to a fiduciary relationship. Pinkstaff v. Hill,
827 S.W.2d 747, 750 (Mo. Ct. App. 1992). Therefore, unless Plaintiffs can demonstrate
evidence establishing a fiduciary relationship between the customers and the bank, there
is no such relationship. Hall v. NationsBank, 26 S.W.3d 295, 297 (Mo. Ct. App. 2000);
see also Oliver v. Resolution Trust Corp., 747 F. Supp. 1351, 1356 (E.D. Mo. 1990)
(There is no confidential or fiduciary relationship between a bank and a customer
borrowing funds.). Furthermore, a bank has
no special duty to counsel the customer and inform him of
every material fact relating to [a] transaction including the
banks motive, if material, for participating in the transaction
unless special circumstances exist, such as where the bank
knows or has reason to know that the customer is placing his
trust and confidence in the bank and is relying on the bank so
to counsel and inform him.
Id. (quoting Pigg v. Robertson, 549 S.W.2d 597, 600 (Mo. Ct. App. 1977)). The court
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found a fiduciary relationship in Pigg when a customer told a purported bank

representative about his plans to purchase a farm, and the purported representative then
purchased the same farm for himself before the customer received the bank loan. Pigg,
549 S.W.2d at 599. The court found a confidential relationship existed between the
customer and the purported representative which could have formed the basis for breach
of fiduciary duty. Id. at 601-02. However, here, nothing indicates that the bank violated
a confidential relationship for its own advantage, therefore, the general rule that a
fiduciary relationship does not exist between a bank and customer applies. See UT
Commcns Credit Corp. v. Resort Dev., Inc., 861 S.W.2d 699, 710 (Mo. Ct. App. 1993).
With respect to PNC Banks argument that Count VI must be dismissed because
PNC Bank did not owe a fiduciary duty to the 77 non-customer Plaintiffs, the court agrees.
PNC Bank did not owe a common law fiduciary duty to the 77 non-customer Plaintiffs, as
they had no relationship with the bank other than that their attorney, Sigillito, held
accounts with PNC Bank and their funds were deposited in his IOLTA. That tenuous
connection does not give rise to a fiduciary duty on the part of PNC Bank.
With respect to PNC Banks argument that Count VI must be dismissed because a
fiduciary relationship did not exist between the bank and the 14 customer Plaintiffs, the
court also agrees. Although Plaintiffs allege that PNC Bank had more information than
the customer Plaintiffs regarding Sigillitos accounts and due to its position as an IRA
custodian, the Complaint does not sufficiently establish that a fiduciary relationship existed
between PNC Bank and the customer Plaintiffs.

There is no evidence of special

circumstances giving rise to a fiduciary relationship. Accordingly, the court shall grant
the Motion with respect to Count VI, breach of fiduciary duty.
D. Count VIISConspiracy to Breach Fiduciary Duty
In Count VII of the Complaint, Plaintiffs allege that PNC Bank conspired to breach
fiduciary duties. PNC Bank argues that the court should dismiss Count VII because

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Plaintiffs cannot state an independent claim for breach of fiduciary duty and, therefore, the
conspiracy claim must fail.
A civil conspiracy is an agreement or understanding between two or more persons
to do an unlawful act, or to use unlawful means to do an act which is lawful. Gettings
v. Farr, 41 S.W.3d 539, 541 (Mo. Ct. App. 2001) (quoting Mills v. Murray, 472 S.W.2d
6, 12 (Mo. Ct. App. 1971)). To establish a claim for conspiracy, there must be (1) two
or more persons; (2) with an unlawful objective; (3) after a meeting of the minds; (4)
committed at least one act in furtherance of the conspiracy; and (5) the plaintiff was
thereby damaged. Id. at 542.
The Complaint alleges that Allegiant Bank owed a special duty of trust to Plaintiffs
with IRAs at Allegiant, arising out of a special financial relationship of trust and
confidence. Complaint 322. Plaintiffs then allege that Allegiant Bank and Sigillito
conspired to breach the fiduciary duty that Allegiant Bank owed to Plaintiffs. Id. 323.
As noted above, PNC Bank, as successor in interest to Allegiant Bank, National City Bank
and Pioneer Bank, did not owe Plaintiffs a fiduciary duty. However, the Complaint also
alleges that PNC Bank, through Allegiant Bank, National City Bank and Pioneer Bank,
conspired with Sigillito with respect to breaching Sigillitos fiduciary duties to Plaintiffs.
See id. 14, 188-89, 236, 249, 254. For the purposes of a motion to dismiss, the facts
in the Complaint are sufficient to state a claim for conspiracy to breach a fiduciary duty.
Accordingly, the court shall deny the Motion with respect to Count VII, conspiracy to
breach fiduciary duty.
E. Count VIIISNegligence
In Count VIII of the Complaint, Plaintiffs allege that PNC Bank was negligent in
failing to ensure the safekeeping of Plaintiffs funds in Sigillitos IOLTA. PNC Bank
argues that the court should dismiss Count VIII because PNC Bank did not owe a common
law duty to Plaintiffs.

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Under Missouri law, a party may recover for negligence only after proving the
following elements: (1) the existence of a legal duty owed to the plaintiff, (2) breach of
that duty through a negligent act by the defendant, (3) proximate causation between the
breach and the resulting injury, and (4) resulting damages. Ostrander v. OBanion, 152
S.W.3d 333, 338 (Mo. Ct. App. 2004); MEMC Elec. Materials, Inc v. Sunlight Grp.,
Inc., No. 4:08CV00535 FRB, 2008 WL 4642866, at *4 (E.D. Mo. Oct. 17, 2008). To
determine whether a duty exists, Missouri courts start with an examination of the source
of the duty. Natl Union Fire Ins. Co. of Pittsburgh, Pa. v. Raczkowski, 764 F.3d 800,
803 (8th Cir. 2014) (quoting Parra v. Bldg. Erection Servs., 982 S.W.2d 278, 283 (Mo.
Ct. App. 1998). The common denominator that must be present is the existence of a
relationship between the plaintiff and defendant that the law recognizes as the basis of a
duty of care. Id. (quoting Parra, 982 S.W.2d at 283) (internal quotation marks omitted).
Plaintiffs allege that PNC Bank had the duty to use such skill, prudence, and
diligence as other banks commonly exercise, including the safekeeping of Plaintiffs funds
in Sigillitos IOLTA account, and that PNC Bank was negligent in performing that duty.
Complaint 328-29. PNC Bank argues that it did not owe a duty of care to the seventyseven Plaintiffs who were not customers of the bank. PNC Bank also argues that the only
duties it owed to the fourteen customer Plaintiffs were contractual duties related to the IRA
custodial accounts and that, therefore, there is no cognizable negligence claim.
Memorandum in Support of Motion (docket no. 18) at 17-18.
Missouri law recognizes that a tort may be committed in the nonobservance of
contract duties and that a negligent failure to perform a contractual undertaking may result
in tort liability. Preferred Physicians Mut. Mgmt. Grp. v. Preferred Physicians Mut. Risk
Retention, 918 S.W.2d 805, 813 (Mo. Ct. App. 1996). Additionally, [a]n obligation
may, likewise, be assumed by contract, out of which may arise a duty to others than the
party to the contract. Howell v. Welders Prods. and Servs., Inc., 627 S.W.2d 311, 313

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(Mo. Ct. App. 1981) (quoting Lowery v. Kansas City, 85 S.W.2d 104, 110 (Mo. 1935))
(internal quotation marks omitted). However, Plaintiffs negligence claim does not appear
to be related to PNC Banks duties as an IRA account custodian but rather to an alleged
duty on the part of PNC Bank to ensure that Sigillitos IOLTA was properly maintained
in accordance with how other banks oversee similar trust accounts. While Sigillito and
PNC Bank probably had a contract governing the operation of the IOLTA, nothing in the
Complaint alludes to the existence of this contract or references any way that PNC Bank
may have breached such a contract if one existed.
Plaintiffs rely on one case upholding a negligence claim against a bank for a
fiduciarys misappropriation of funds. See Lerner v. Fleet Bank, N.A., 459 F.3d 273 (2d
Cir. 2006). In Lerner, the Second Circuit applied New York law and found that a bank
had a duty to make reasonable inquiries and to safeguard attorney trust funds from [an
attorneys] misappropriation. Id. at 289. However, the Lerner court noted that this duty
arose only when a bank had been put on notice of the misappropriation, such as if there
were consistent overdrafts in the account. Id. at 287-88. Nothing in the courts research
uncovered anything in Missouri law supporting the existence of a common law duty to
safeguard funds in a trust account from a fiduciarys misappropriation.
With the enactment of the Uniform Fiduciaries Law (UFL), [t]he Missouri
Supreme Court held that mere negligence on the part of the depository bank is not
sufficient to hold it liable to the principal if the fiduciary in fact misappropriated the fund.
Dean v. Centerre Bank of North Kansas City, 684 S.W.2d 373, 374 (Mo. Ct. App. 1984).
The purpose of Missouris UFL is to reliev[e] banks of their common law duty of
inquiring into the propriety of each transaction conducted by a fiduciary. Watson
Coatings, Inc. v. Am. Exp. Travel Related Servs., Inc., 436 F.3d 1036, 1040 (8th Cir.
2006) (alteration in original) (quoting In re Lauer, 98 F.3d 378, 383 (8th Cir. 1996)).
Under the UFL, a bank must have actual knowledge or act in bad faith to be held liable

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for the misappropriation of fiduciary funds. In re Broadview Lumber Co., 118 F.3d 1246,
1251 (8th Cir. 1997) (explaining Missouris UFL). Bad faith requires something more
than mere negligence. Id.
Based on the UFL, the court finds that banks in Missouri do not have a common
law duty to safeguard funds in a trust account. Rather, the circumstances under which a
bank can be held liable for a fiduciarys misappropriation of funds are governed by the
standards set forth in the UFL.3 To ignore those standards would defeat the purpose of
relieving banks of the common law duty of inquiry. The court agrees that PNC Bank did
not owe a common law duty to the non-customer Plaintiffs. Although the Missouri courts
do not appear to have answered this question directly, there is an overwhelming consensus
that banks do not owe a duty of care to non-customers. See Natl Union Fire Ins. Co. of
Pittsburgh, Pa., 764 F.3d at 804. As for the Plaintiffs who were customers of the bank,
negligence is not a viable claim. Because state law relieves banks of certain common law
duties in Missouri, Plaintiffs cannot state a claim for negligence with regard to PNC
Banks supervision of Sigillitos IOLTA. Accordingly, the court shall grant the Motion
with respect to Count VIII, negligence.
F. Count IXSConspiracy to Violate RICO
In Count IX of the Complaint, Plaintiffs allege that PNC Bank violated RICO,
codified at 28 U.S.C. 1962(d). PNC Bank argues that the court should dismiss Count
IX because Plaintiffs have failed to allege the existence of an independent enterprise and
have failed to show that PNC Bank agreed to assist the enterprise.
Congress enacted RICO to curb the infiltration of legitimate business organizations
by racketeers. Sinclair v. Hawke, 314 F.3d 934, 943 (8th Cir. 2003) (quoting Atlas Pile
Driving Co. v. DiCon Fin. Co., 886 F.2d 986, 990 (8th Cir. 1989)) (internal quotation

Counts I, II and III of the Complaint allege violations of Missouris UFL. These
claims are not at issue in the instant Motion.
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marks omitted). To this end, Congress created a private cause of action for those injured
by racketeering activity. Pursuant to 18 U.S.C. 1964(c),
Any person injured in his business or property by reason of a
violation of [18 U.S.C. 1962] may sue therefor in any
appropriate United States district court and shall recover
threefold the damages he sustains and the cost of the suit,
including a reasonable attorneys fee, except that no person
may rely upon any conduct that would have been actionable as
fraud in the purchase or sale of securities to establish a
violation of [18 U.S.C. ] 1962.
18 U.S.C. 1964(c). Under 18 U.S.C. 1962(c), it is unlawful for any person
employed by or associated with any enterprise engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or participate, directly or indirectly, in the
conduct of such enterprises affairs through a pattern of racketeering activity or collection
of unlawful debt. Id. Racketeering activity includes the offenses of mail fraud, wire
fraud and money laundering. 18 U.S.C. 1961(1)(B).
Pursuant to 18 U.S.C. 1962(d), it is unlawful for any person to conspire to
violate any of the provisions of subsection (a), (b), or (c) of [18 U.S.C. 1962]. To
demonstrate a conspiracy to violate RICO, the Eighth Circuit Court of Appeals requires
a party to prove the first three elements of a substantive RICO offense: (1) that an
enterprise existed; (2) that the enterprise affected interstate or foreign commerce; [and] (3)
that the defendant associated with the enterprise. United States v. Darden, 70 F.3d 1507,
1518 (8th Cir. 1995). Additionally, a party must prove that: [t]he defendant . . .
objectively manifested an agreement to participate directly or indirectly, in the affairs of
an enterprise through the commission of two or more predicate crimes. United States v.
Bennett, 44 F.3d 1364, 1374 (8th Cir. 1995) (quoting United States v. Phillips, 664 F.2d
971, 1012 (5th Cir. 1981)) (internal quotation marks omitted). [S]tanding to bring a civil
suit pursuant to 18 U.S.C. 1964(c) and based on an underlying conspiracy violation of
18 U.S.C. 1962(d) is limited to those individuals who have been harmed by a 1961(1)
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RICO predicate act committed in furtherance of a conspiracy to violate RICO. Bowman

v. W. Auto Supply Co., 985 F.2d 383, 388 (8th Cir. 1993).
1.

Standing

A party must have standing to bring a claim of conspiracy to violate RICO under
18 U.S.C. 1962(d). PNC Bank argues that the seventy-seven Plaintiffs who were not
customers of the bank do not have standing and, therefore, the RICO claim should be
dismissed with respect to those Plaintiffs.
The class of persons who may sue under RICO is limited to those whose injuries
were directly caused by RICO violations. Hamm v. Rhone-Poulenc Rorer Pharm, Inc.,
187 F.3d 941, 953 (8th Cir. 1999). A plaintiff has standing only if, and can only recover
to the extent that, he has been injured in his business or property by the conduct
constituting the violation. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985).
Standing under RICO, like the statute itself, is to be liberally construed to effectuate its
remedial purposes. Id. at 498 (quoting Pub. L. 91-452, 904(a), 84 Stat. 947). In
bringing a RICO conspiracy claim, however, standing is limited to those individuals who
have been harmed by a 1961(1) RICO predicate act committed in furtherance of a
conspiracy to violate RICO. Bowman, 985 F.2d at 388.
Plaintiffs allege that PNC Bank, through its predecessor banks, conspired to violate
RICO through money laundering and wire fraud when it ignored its responsibility to notify
regulators, assisted Sigillito with bringing his accounts current before leaving the bank to
prevent inquiries from IRA account holders and accepted misappropriated fiduciary funds
for debt payments on loans. Resistance at 19-20. The Complaint alleges that this conduct
facilitated the BLPs continued existence and resulted in Plaintiffs continued investments
and subsequent financial losses. Complaint 386, 393, 395-99. Viewing the facts in the
light most favorable to the Plaintiffs and accepting the allegations as true, Plaintiffs have
adequately demonstrated standing to assert a RICO claim under 18 U.S.C. 1962(d).

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Accordingly, the court shall deny the Motion with regard to the seventy-seven noncustomer Plaintiffs standing to sue under RICO.
2.

Existence of an enterprise

To satisfy the first element of a claim under 18 U.S.C. 1962(d), a plaintiff must
establish the existence of an enterprise. Darden, 70 F.3d at 1518. An enterprise is
defined to include any individual, partnership, corporation, association, or other legal
entity, and any union or group of individuals associated in fact although not a legal
entity. Craig Outdoor Adver., Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001, 1026 (8th
Cir. 2008) (quoting 18 U.S.C. 1961(4)). An enterprise is proved by evidence of an
ongoing organization, formal or informal, and by evidence that the various associates
function as a continuing unit. United States v. Turkette, 452 U.S. 576, 583 (1981). To
demonstrate the existence of an association-in-fact enterprise, there must be at least three
structural features: a purpose, relationships among those associated with the enterprise,
and longevity sufficient to permit [the] associates to pursue the enterprises purpose.
Boyle v. United States, 556 U.S. 938, 946 (2009). Although the existence of an
enterprise is an element distinct from the pattern of racketeering activity and proof of one
does not necessarily establish the other[,] . . . the evidence used to prove the pattern of
racketeering activity and the evidence establishing an enterprise may in particular cases
coalesce. Id. at 947 (quoting Turkette, 452 U.S. at 583).
Under Boyle, the standard for demonstrating the existence of an enterprise is more
flexible than previous Eighth Circuit case law instructed. See United States v. Lee, 374
F.3d 637, 647 (8th Cir. 2004) (requiring a party to show an ascertainable structure
distinct from the conduct of a pattern of racketeering to satisfy a RICO conspiracy claim);
Handeen v. Lemaire, 112 F.3d 1339, 1352 (8th Cir. 1997) (same). The Supreme Court
emphasized that the term enterprise, like all provisions in the RICO statute, must be
construed broadly. See Boyle, 556 U.S. at 945. The Supreme Court then reiterated that

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it would not add structural requirements to RICO where none exist within the language of
the statute. Id. at 948. The Boyle Court approved of jury instruction language permitting
a jury to find the existence of an association-in-fact from what [the enterprise] does,
rather than by abstract analysis of its structure, noting that proof of a pattern of
racketeering activity may be sufficient in a particular case to permit a jury to infer the
existence of an association-in-fact enterprise. Id. at 951 (internal quotation marks
omitted).
PNC Bank argues that Plaintiffs have not alleged the existence of an independent
enterprise because each allegation only relates to the individual conduct of the enterprises
membersSnot to the enterprise itself. . . . The enterprise alleged by Plaintiffs existed solely
to operate the British Lending Program and to hide its illegal existence. Memorandum
in Support of Motion at 24-25. In the Complaint, Plaintiffs allege that the RICO enterprise
consisted of Martin Sigillito and his company, Martin T. Sigillito & Associates Ltd.; Scott
Brown and his companies, J. Scott Brown Associates and British American Group, Inc.;
Hal Milsap and his company, Retirement Benefit Solutions; Bob Mack and his company,
M&M Financial Investors, LLC; and David Fazio and his company, Fountain Capital
Management LLC. Complaint 342. Plaintiffs allege that the common purpose of this
enterprise was the operation and management of the BLP. Id. The Complaint goes on to
identify the relationships between the different members of the enterprise and how each
contributed to the operation of the scheme.
The court will only require Plaintiffs to plead, not to prove, their case at this early
stage of the proceedings.

After reviewing the Complaint in its entirety, the court

concludes that Plaintiffs adequately pled the existence of a RICO enterprise by showing
a common purpose, the relationships among the members of the alleged enterprise and
longevity sufficient to allow the associates to pursue the enterprises purpose.
Accordingly, the court shall deny the Motion with regard to pleading the existence of an

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enterprise.
3.

Objective manifestation of an agreement

Another required element of a claim under 18 U.S.C. 1962(d) is that the

defendant objectively manifested an agreement to participate . . . in the affairs of [the]
enterprise. Darden, 70 F.3d at 1518 (quoting Bennett, 44 F.3d at 1374). To show an
objective manifestation of an agreement, [p]roof of an express agreement is not required;
the [plaintiff] need only establish a tacit understanding between the parties, and this may
be shown wholly through the circumstantial evidence of [each defendants] actions.
Darden, 70 F.3d at 1518 (third alteration in original) (quoting United States v. Fregoso,
60 F.3d 1314, 1325 (8th Cir. 1995)); see also Handeen, 112 F.3d at 1355 (applying 18
U.S.C. 1962(d) in a civil case). Although Plaintiffs allege that PNC Bank conspired to
violate 18 U.S.C. 1962(c), they need not prove that each alleged conspirator agreed that
he or she would be the one to commit the two predicate acts required under that statute.
See Salinas v. United States, 522 U.S. 52, 64-65 (1997) (A conspirator must intend to
further an endeavor which, if completed, would satisfy all of the elements of a substantive
criminal offense, but it suffices that he adopt the goal of furthering or facilitating the
criminal endeavor.). Here, Plaintiffs allege that the predicate acts consist of various
instances of wire fraud and money laundering. Complaint 367.
PNC Bank argues that Plaintiffs failed to adequately allege that PNC Bank agreed
to assist the RICO enterprise because they have neither established that PNC Bank knew
of the enterprise prior to October 2001, Memorandum in Support of Motion at 26-27, nor
that PNC Bank assisted the enterprise after October 2001. Id. at 27-28. Plaintiffs allege
that Sigillito maintained IOLTA accounts at Allegiant Bank, Pioneer Bank and National
City Bank (subsequently acquired by PNC Bank) and that each of the three banks served
as IRA custodians for BLP investors. Complaint 347, 387. Plaintiffs allege that the
banks discovered Sigillitos misuse of fiduciary funds and facilitated the enterprise in

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moving funds to different banks to avoid disclosing the wrongdoing. Complaint 38084. Although it is true that Plaintiffs have not shown that PNC Bank entered into an
express agreement to participate in the enterprise, all that is required is that the conspirator
intend[s] to further an endeavor which, if completed, would satisfy all of the elements of
a substantive criminal offense or that the conspirator adopt[s] the goal of furthering . . .
the criminal endeavor. Salinas, 522 U.S. at 64-65. Construing the facts in the light most
favorable to Plaintiffs and accepting the allegations as true, Plaintiffs have adequately pled
that PNC Bank objectively manifested an agreement to participate in the RICO enterprise.
Accordingly, the court shall deny the Motion with respect to the objective manifestation
of an agreement.
VI. CONCLUSION
In light of the foregoing, the Motion to Dismiss (docket no. 17) is GRANTED IN
PART and DENIED IN PART. The Clerk of Court is DIRECTED to dismiss Count IV,
Count VI and Count VIII of the Complaint. Additionally, Plaintiffs motion requesting
oral arguments (docket no. 25) is DENIED.
IT IS SO ORDERED.
DATED this 19th day of November, 2014.

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