The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge
This case arises from an illegal scheme to embezzle funds from the Washington Teachers' Union, Local No. 6, AFL-CIO ("WTU"). Defendant Independence Federal Savings Bank ("IFSB" or "Bank") has moved for summary judgment. Upon consideration of the motion, responses and replies thereto, oral argument during the motions hearing, applicable law, and the entire record, the Court finds that this case is fraught with genuine issues of material facts in dispute. Accordingly, defendant's motion for summary judgment is DENIED.
Plaintiff, The American Federation of Teachers, AFL-CIO ("AFT"), is a national labor union for teachers, which is an affiliated international union of the AFL-CIO. AFT represents local labor unions primarily made up of public and private school teachers, paraprofessionals and higher education faculty. AFT is a national labor organization with which local and state labor organizations are affiliated. To affiliate with the AFT, local unions pay dues. Plaintiff Washington Teachers' Union, Local No. 6, AFL-CIO ("WTU") is the local affiliate of the AFT for teachers in Washington, D.C.
There are a number of individual defendants in this action (collectively, "Individual Defendants"). Defendant Barbara A. Bullock ("Bullock") served as the President of WTU from mid-1994 to September 2002. As President, Bullock was an officer, agent and representative of the WTU, had check-signing authority for the WTU's bank accounts, and had overall responsibility for administering the affairs of the WTU. Defendant James O. Baxter, II ("Baxter") served as the Treasurer of WTU during Bullock's tenure as President. Baxter was an agent, employee and representative of the WTU and had check-signing authority for WTU's bank accounts and financial responsibility for WTU's affairs. Defendant Gwendolyn M. Hemphill ("Hemphill") was an employee of the WTU and served as Bullock's Special Assistant during Bullock's tenure as President. Hemphill shared responsibility for WTU's day-to-day financial affairs with Baxter. Defendant Leroy Holmes was a WTU employee and worked as Bullock's chauffeur for some portion of the relevant time period.
Defendant Cheryl Martin is Hemphill's daughter. Defendant Michael Martin ("Martin") is Hemphill's son-in-law and husband of Defendant Cheryl Martin. Defendant Errol Alderman ("Alderman") is an acquaintance of Michael Martin. Defendant Gwendolyn B. Clark ("Clark") is Bullock's sister.
Defendant IFSB is a federally chartered commercial bank that was founded in 1968. IFSB has six branches in Washington, D.C. and Maryland. Between 1994 and 2002, WTU maintained several bank accounts at IFSB, including a "Premier Checking Account," with which the WTU conducted its day-to-day business, including payroll for WTU employees.
B. The Embezzlement Scheme
The Individual Defendants engaged in a scheme to embezzle, convert, and misuse the WTU's funds beginning in 1995 and ending in 2002. Def.'s Facts ¶ 38. There is no indication that the WTU Executive Board or the WTU's members authorized the Individual Defendants' appropriation of WTU funds for personal use. Id. ¶ 39. Between 1995 and 2002, Bullock, Baxter, and Hemphill wrote checks on the WTU's IFSB bank account for unauthorized, non-union business. Id. ¶ 40. Hundreds of these checks were made payable to Holmes, who then cashed the checks at IFSB, retained some of the cash for himself and returned the remainder of the cash to the other Individual Defendants. Def.'s Resp. To Pls.' Facts ¶¶ 15 - 19. Some of these checks cashed by Holmes exceeded $10,000. Id. ¶ 20. According to plaintiffs, between 1997 and 2002, the checks cashed by Holmes on the WTU's IFSB account totaled between $1.45 and $1.7 million. While not conceding the exact amount of each individual check, IFSB does not appear to dispute the total amount of the checks cashed, but maintains that the "amount and Plaintiff's characterization of each check ... is immaterial to resolution" of IFSB's motion for summary judgment. Id. ¶ 15.
In addition to the checks cashed by Holmes, the Individual Defendants also made purchases with personal and corporate credit cards and paid the credit card bills with checks written on the WTU's IFSB account. Def.'s Facts ¶¶ 41 - 44. Some of the Individual Defendants wrote and cashed checks on the WTU's IFSB account and kept the cash or deposited the cash in their personal bank accounts. Id. ¶¶ 45 - 50. Furthermore, some of the Individual Defendants embezzled WTU funds by causing checks to be written on the WTU's IFSB account and paid to an entity maintained by Defendants Martin and Alderman, Expressions Unlimited, and keeping the funds for personal use. Id. ¶ 51. Between 1995 and 2002, the Individual Defendants embezzled and misappropriated in excess of five million dollars ($5,000,000) from the WTU. Id. ¶ 54.
The government brought criminal charges against most or all of the Individual Defendants. Leroy Holmes pled guilty to Conspiracy to Launder Proceeds of an Unlawful Activity. See United States v. Leroy Holmes, Criminal No. 03-00032 (D.D.C. Feb. 6, 2003)(RJL). Michael Martin pled guilty to Conspiracy to Launder Proceeds of an Unlawful Activity. See United States v. Michael Wayne Martin, Criminal No. 03-00138 (D.D.C. April 11, 2003)(RJL). Barbara Bullock pled guilty to Mail Fraud and Aiding and Abetting and Conspiracy to Commit Crimes Against the United States. See United States v. Barbara A. Bullock, Criminal No. 03-00435 (D.D.C. Oct. 7, 2003)(RJL). Errol Alderman pled guilty to Conspiracy. See United States v. Errol Alderman, Criminal No. 03-00429 (D.D.C. Oct. 15, 2003)(RJL). Cheryl Martin pled guilty to Conspiracy. See United States v. Cheryl H. Martin, Criminal No. 04-00054 (D.D.C. Feb. 19, 2004)(RJL). On August 31, 2005, following a jury trial, Defendants Gwendolyn Hemphill and James Baxter were convicted on twenty-three criminal counts, including Conspiracy and Aiding and Abetting, Wire Fraud, Embezzlement from a Labor Organization, and Money Laundering. Those convictions were affirmed on appeal. See United States v. Hemphill, et al., 514 F.3d 1350 (D.C. Cir. 2008).
On April 18, 2006, this Court entered default judgments against Defendants Barbara Bullock, Gwendolyn Hemphill, James Baxter, Errol Alderman, individually and doing business as Expressions Unlimited, Cheryl Martin, and Michael Martin, individually and doing business as Expressions Unlimited. The Court ordered that the amount of the default judgment shall be determined pursuant to procedures set forth in Federal Rule of Civil Procedure 55. On September 28, 2007, the Court granted plaintiffs summary judgment against Defendant Leroy Holmes.
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be granted only if the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Waterhouse v. Dist. of Columbia, 298 F.3d 989, 991 (D.C. Cir. 2002). In determining whether a genuine issue of material fact exists, the Court must view all facts in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Plaintiffs AFT and the WTU assert four claims against IFSB:
(1) recredit of account for unauthorized payments and checks; (2) aiding and abetting the Individual Defendants' conversion and embezzlement; (3) aiding and abetting the Individual Defendants' breach of fiduciary duty; and (4) negligence. Each claim against IFSB is based on plaintiffs' allegations that IFSB wrongfully cashed numerous checks written on the WTU account. Plaintiffs seek damages from ISFB in excess of $1.45 million in checks made payable to certain Individual ...