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Bank of America, N.A. v. Jericho Baptist Church Ministries, Inc.

United States District Court, D. Maryland

January 18, 2017

BANK OF AMERICA, N.A., Plaintiff,
v.
JERICHO BAPTIST CHURCH MINISTRIES, INC. et al., Defendants.

          MEMORANDUM OPINION

          Paula Xinis, United States District Judge

         Pending in this interpleader action is a motion to dismiss Defendant Jericho DC's amended counterclaim filed by Plaintiff Bank of America, N.A. ECF No. 56. The issues are fully briefed and the Court now rules pursuant to Local Rule 105.6 because no hearing is necessary. For the following reasons, Bank of America's motion to dismiss is granted in part and denied in part.

         I. BACKGROUND[1]

         Underlying this action is a longstanding dispute over the control and governance of Jericho Baptist Church Ministries, Inc. (“the Church”), located in Landover, Prince George's County, Maryland. The Church was incorporated in the District of Columbia in 1962 by Reverend James R. Peebles, Sr.; his wife, Betty Peebles; and Alice Harvey. Amended Counterclaim, ECF No. 48 at 2. The dispute spawned much litigation during which the parties and the courts refer to the surviving members of the original board as “Jericho DC” to distinguish it from a later-formed Board that incorporated in Maryland, also under the name “Jericho Baptist Church Ministries, Inc.” (“Jericho MD”). Jericho MD's board members, comprised of current and former Church employees, are referred to by Jericho DC as “the Employees.”

         From the Church's inception, it has been governed by a Board of Trustees. The Amended Complaint alleges that as of March 2009, the Board members were Betty Peebles, Joel Peebles, William Meadows, Anne Wesley, and Dorothy Williams. Id. at 3. On March 15, 2009, unbeknownst to Joel Peebles, William Meadows, and Anne Wesley, the Employees, including Denise Killen, Clifford Boswell, Gloria McClam-Magruder, Clarence Jackson, and Dorothy Williams, created a document they called “Resolution 1-09 of the Board of Trustees, ” which purported to reflect an election of a new Board of Trustees. Id. The Employees claimed that Resolution 1-09 effected the resignation of William Meadows and Anne Wesley from the Church Board and the election of the Employees to the Board.

         Jericho DC board member Betty Peebles died on October 12, 2010. Within days of her passing, the Employees announced that they were members of the board, and that Joel Peebles, William Meadows, and Anne Wesley were not on the board. The Employees also seized control of the Church, its assets, and corporate records, and then formed a Maryland religious corporation under the name “Jericho Baptist Church Ministries, Inc.” (“Jericho MD”).

         Betty Peebles' passing and Jericho MD's takeover generated a vigorous legal feud over control of the Church. Since 2010, the parties in this action, along with several individual Church members, have participated in no fewer than six separate lawsuits in federal and state court attempting to determine fully and finally which entity rightfully governs the Church and its assets. See Jericho Baptist Church Ministries, Inc. v. Peebles, No. CAL10-33647 (P.G. Cnty. Cir. Ct. Oct. 25, 2011), rev'd, No. 2023 (Md. Ct. Spec. App. Sept. 19, 2012); Jericho Baptist Church Ministries, Inc. v. Gloria McClam-Magruder, No. CAL11-00873 (P.G. Cnty. Cir. Ct. Oct. 25, 2011), rev'd, No. 1953 (Md. Ct. Spec. App. Sept. 19, 2012); Chavez v. Jericho Baptist Church Ministries, Inc., No. CAL12-13537 (P.G. Cnty. Cir. Ct. Feb. 18, 2014); George v. Jackson, No. 2013 CA 007115 B (Sup. Ct. D.C. July 7, 2015), aff'd, 146 A.3d 405 (D.C. 2016); Franklin v. Jackson, No. DKC 14-0497, 2015 WL 1186599 (D. Md. Mar. 3, 2015); Jericho Baptist Church Ministries, Inc. v. Jericho Baptist Church Ministries, Inc., No. APM 16-647 (D.D.C. filed Apr. 6, 2016); Bank of America, N.A. v. Jericho Baptist Church Ministries, Inc., No. PX 15-02953 (D. Md. filed Sept. 29, 2015); Citibank, N.A. v. Jericho Baptist Church Ministries, Inc., No. PX 15-02953 (D. Md. filed May 27, 2016).

         The Church holds four corporate accounts at Bank of America, N.A. (“BOA”) that it opened between 1999 and 2002. Amended Counterclaim, ECF No. 48 at 6. Jericho DC alleges that both BOA and the Church understood that Betty and Joel Peebles were the primary and sole individuals authorized to act on behalf of the Church and control the Church's accounts with BOA. Id. at 7. It alleges that Joel Peebles had the power to establish deposit accounts on behalf of the Church and designate persons to operate such accounts. Joel Peebles also participated in many of the parties' borrowing agreements over the course of their relationship.

         On October 7, 2010, Jericho MD member Denise Killen signed the name of Betty Peebles to a signature card giving Killen signature authority on the BOA accounts. Id. at 8. BOA allegedly accepted the October 7th signature card via facsimile and without appropriate documentation in violation of BOA's policies and procedures. Jericho DC also alleges that on April 29, 2011, BOA permitted Killen to add herself and Employees Clarence Jackson and Dorothy Williams as signatories on all Jericho accounts. Id.

         Jericho DC alleges that it repeatedly notified BOA that the Employees should not be permitted to access the corporate accounts but the bank ignored these notices. Within weeks of the Employee's takeover of the Church, Joel Peebles informed a BOA executive of the dispute and the pending litigation and instructed her that the Employees should not be permitted to access the Church's corporate accounts. BOA allegedly ignored Joel Peebles' request. On April 1, 2011 Jericho DC again informed BOA by letter that the Employees had no lawful right to access the corporate accounts and gave BOA notice of the pending litigation. Again, BOA ignored this information. Jericho DC sent several more letters to BOA ordering them to prevent the Employees access to the accounts on or about April 16, 2011, September 24, 2012, April 16, 2014, and October 6, 2014. Despite Jericho DC's repeated protests, BOA continued to allow the Employees to access the Church's accounts. During this time, BOA also prevented Jericho DC from accessing the accounts. Thus, as Jericho DC puts it, BOA “took sides” in the ongoing Church governance dispute and decided to recognize the Employees as the lawful governing body of the Church. ECF No. 48 at 11.

         Jericho DC further alleges that during the five years that BOA allowed the Employees to access and control Jericho's accounts, the Employees misappropriated and wasted substantial corporate assets. At the time the Employees assumed control over the Church, the BOA accounts held collectively over $10, 000, 000. According to BOA, these same accounts now hold $7, 755, 199.00. Jericho DC alleges that the contract required BOA to allow only the Church's lawful board, Jericho DC, access to the Church's accounts. BOA breached this agreement by granting the Employees access to the Church's accounts and preventing Jericho DC's access to the same.

         On September 29, 2015, BOA filed the instant Interpleader action against Jericho MD, Jericho DC, and their respective board members. ECF No. 1. The Complaint, brought pursuant to 28 U.S.C. § 1335, sought an order determining which entity-Jericho DC or Jericho MD-owns and controls the assets held in four BOA corporate deposit accounts that had been established before the execution of Resolution 1-09.

         On December 10, 2015 Jericho DC filed its counterclaim against BOA (ECF No. 19) and then an amended counterclaim (ECF No. 48) on February 16, 2016, asserting various causes of action related to BOA's handling of the deposit accounts in question, including breach of contract, negligence, gross negligence, and a preliminary and permanent injunction. Bank of America moved to dismiss the counterclaims under Rule 12(b)(6) of the Federal Rules of Civil Procedure. ECF No. 56.

         On May 12, 2016, Jericho DC filed a motion for summary judgment on the question of which Board possesses current control and ownership of the assets in accounts deposited with BOA. ECF No. 68. On September 9, 2016, the Court granted Jericho DC's motion for summary judgment, see Bank of Am., N.A. v. Jericho Baptist Church Ministries, Inc., No. PX 15-02953, 2016 WL 4721257 (D. Md. Sept. 9, 2016), allowing it to proceed to BOA's motion to dismiss Jericho DC's amended counterclaim. For the following reasons, BOA's motion is granted in part and denied in part.

         II. STANDARD OF REVIEW

         When ruling on a motion under Rule 12(b)(6), the court must “accept the well-pled allegations of the complaint as true” and “construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). “Even though the requirements for pleading a proper complaint are substantially aimed at assuring that the defendant be given adequate notice of the nature of a claim being made against him, they also provide criteria for defining issues for trial and for early disposition of inappropriate complaints.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). “The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6).” Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To survive a motion to dismiss, the factual allegations of a complaint “must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). “To satisfy this standard, a plaintiff need not ‘forecast' evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those elements.” Walters, 684 F.3d at 439 (citation omitted). “Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is ‘probable, ' the complaint must advance the plaintiff's claim ‘across the line from conceivable to plausible.'” Id. (quoting Twombly, 550 U.S. at 570).

         III. ...


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