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Estate of Scherban v. Suntrust Bank

United States District Court, District of Columbia

February 26, 2016

ESTATE OF SCHERBAN, et al., Plaintiffs,
SUNTRUST BANK, aka SUNTRUST BANKS INC., et al., Defendants.



Plaintiffs and half-brothers Evgenyi, Ruslan, and Yevgen Scherban, all Ukrainian nationals, bring this action for recovery of any and all assets in the SunTrust Bank accounts of their deceased father, Yevgenyi Alexandrovich Scherban (Scherban), and his third wife and mother to Yevgen, Nadedja Nikitina Scherban (Nikitina). Scherban was allegedly a leading entrepreneur in Ukraine and one of the richest businessmen there in the early 1990s; according to Plaintiffs, his control over a natural-gas distribution network led to scuffles with criminal groups and ultimately to the 1996 assassination of him and his wife.

A few years before Scherban’s death, he set up several bank accounts with SunTrust in Boca Raton, Florida, near one of his vacation homes. These accounts were in Scherban and Nikitina’s names, but Plaintiffs state that the sons were the intended beneficiaries. Although their parents died about 20 years ago, the brothers have yet to obtain the assets. The quest of their suit - against SunTrust and a holding company in the British Virgin Islands - is to recover what remains of these accounts, as well as to remedy what they allege was an improper conversion or confiscation of funds out of one of the accounts by means of the forgery of Nikitina’s signature.

While there is much more to the story and this suit, an initial barrier blocks their claims: Yevgenyi and Nikitina’s estates are listed as plaintiffs along with the three half-brothers. As to the estates, SunTrust correctly points out that an estate itself cannot properly be a plaintiff; only a legal representative acting on behalf of the estate has that power. As to the brothers, the Bank questions whether they have established their legal right to act as representatives for the estates. Defendant also asserts that Plaintiffs have failed to serve it properly with the Complaint. While these procedural requirements are not insurmountable, the Court agrees that they temporarily stop Plaintiffs in their tracks. The Court will thus grant the Motion and dismiss the Complaint with leave to amend.

I. Analysis

At this point, the other named Defendant - Gwynfe Holding Ltd. - has yet to be served, so SunTrust has moved by itself to dismiss. Although the Bank raises various substantive defenses to Plaintiffs’ claims, the Court will separately consider the two aforementioned procedural challenges first.

A. Proper Plaintiffs

SunTrust initially asserts that Scherban and Nikitina’s estates have been improperly included as Plaintiffs in this action. It argues that “[t]he Complaint fails to identify any representative of the Estates much less allege that any person with authority to act on behalf of the Estates has in fact authorized the bringing of the suit.” Mot. at 8. Defendant maintains that only a duly appointed representative of the estates may bring claims on their behalf. Id. It is true that under Fed.R.Civ.P. 17(a), an estate may not be a real party in interest; instead, only the executor or administrator of an estate may sue on its behalf. Rule 17 further states that for an individual acting as a representative, his capacity to sue or be sued is determined “by the law of the state where the court is located.” Fed.R.Civ.P. 17(b)(3). In the District of Columbia, “[a] foreign personal representative administering an estate which has property located in the District of Columbia shall file with the Register a copy of the appointment as personal representative and a[n authenticated] copy of the decedent’s will.” D.C. Code § 20-341. “The term personal representative is strictly construed under D.C. law to mean only the decedent’s executor or administrator.” Estate of Manook v. Research Triangle Inst., Int’l & Unity Res. Group, L.L.C., 693 F.Supp.2d 4, 17 (D.D.C. 2010); see also Saunders v. Air Florida, Inc., 558 F.Supp. 1233, 1234 (D.D.C. 1983).

Plaintiffs counter that this requirement applies only “if the claimed property is within the District, ” which is “not the case here, [since] the claim is not for property in this District.” Opp. at 9. Although they do not spell this out, Plaintiffs presumably think the property is in Florida - where the accounts were first opened - and/or wherever the converted funds ended up. In taking such a position, Plaintiffs want to have their cake and eat it too. They claim that venue is proper in D.C. because “SunTrust does business in this District, and because all relevant documents, necessary for tracing the funds, and other relevant information, may be obtained in Washington, D.C.” Compl., ¶ 16. Yet they seek to avoid D.C. registration rules by claiming the property is not in the District. At a most basic level, since SunTrust is a national bank operating with branches in both Florida and D.C., Scherban’s assets in the Bank’s accounts could be thought to be property located in either place, since SunTrust would ultimately have to surrender funds from some branch were Plaintiffs successful. In another sense, Plaintiffs cannot even be certain of the location of the converted funds, which they allege the Bank initially wired to a bank in the Czech Republic. See Compl., ¶¶ 48-50.

As Plaintiffs desire SunTrust to grant them recovery of their deceased parents’ accounts and to compensate them for the wrongful conversion and confiscation of assets, see Compl. at 28-29, the Court believes the question more properly turns on whether the present action can be considered a form of property. District of Columbia law suggests that it can be. In Estate of Manook, the plaintiff - an Iraqi citizen’s estate - brought claims under D.C.’s wrongful-death and survival statutes for his killing by several American defense contractors operating in Iraq. See 693 F.Supp.2d at 9-10, 16. Defendants argued, as SunTrust does here, that the estate was not a proper plaintiff under the requirements of Rule 17 and D.C. law, and no personal representative of the estate had filed the requisite paperwork establishing their legitimacy. Id. The plaintiff countered that since it “ha[d] no property within the District, the Estate need not file with the Register.” Id. at 17. The district court rejected that argument, instead concluding that since “Plaintiff’s present action can be considered a form of property” under D.C. law, the failure to file proof of appointment of personal representative with the Register “prevents the Estate from bringing suit.” Id. (citing Bullard v. Curry-Cloonan, 367 A.2d 127, 132 (D.C. 1976)). The court determined, however, that “this procedural oversight is curable, ” and it directed the plaintiff to file its documents with the Register within several weeks of the issuance of the Court’s order. Id. A similar course of action is appropriate here.

This outcome seems particularly prudent since the brothers have not provided proper assurances to this Court that they are, in fact, legally able to bring claims on behalf of Scherban and Nikitina’s estates. Plaintiffs concede that while they were the intended beneficiaries, their names do not so appear on any of the accounts. See Compl., ¶¶ 34-42. Although they assert that the affidavits of the brothers “state under oath that they are duly authorized to make a claim to the estate, ” Opp. at 9, this is contradicted by the affidavits themselves, which include no such statements. See id., Attach. 1 (Affidavit of Ruslan Chtcherban); id., Attach. 2 (Affidavit of Yevgenyi E. Scherban); id., Attach. 3 (Affidavit of Yevgen E. Scherban). Further complicating matters is the existence of a so-called “Personal Representative’s Deed” of Scherban, which was attached to SunTrust’s Reply. See Reply, Exh. 2. This document appears to name an Alan Lindsay “as Personal Representative of the Estate of” Scherban. Id. at 1. It also appears to have enabled Lindsay to sell real estate owned by Scherban in 2001 and to transfer proceeds from the sale to the decedent’s SunTrust bank account. Id. at 5.

Given the Court’s uncertainty as to who the estates’ legal personal representatives actually are - including what role, if any, Lindsay has - it will not proceed without Plaintiffs’ first filing documents manifesting the appropriate appointment of a personal representative as well as authenticated copies of decedents’ wills. See D.C. Code § 20-341. As this is a procedural hurdle potentially within Plaintiffs’ ability to overcome, the Court will dismiss the Complaint with leave to amend so that they may remove the estates as parties and establish which named Plaintiffs are the proper representatives.

B. Service of Process

Defendant also alleges a second procedural defect that may halt this case, arguing that under Fed.R.Civ.P. 12(b)(5) service of process was insufficient. See Mot. at 6-7. In such a circumstance, “[t]he party on whose behalf service is made has the burden of establishing its validity when challenged” by “demonstrat[ing] that the procedure employed satisfied the requirements of the relevant portions of Rule 4 and any other applicable provision of law.” Light v. Wolf, 816 F.2d 746, 751 (D.C. Cir. 1987) (citations and internal quotation marks omitted). Adequate service of process requires “more than notice to the defendant, ” Omni Capital Int’l, Ltd. v. ...

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