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Citibank, N.A. v. Jericho Baptist Church Ministries, Inc.

United States District Court, D. Maryland

May 17, 2017

CITIBANK, 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 Petition for Attorneys' Fees and Costs filed by Plaintiff Citibank, N.A. ECF No. 29. 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, Citibank's petition is granted in part.

         I. BACKGROUND[1]

         Jericho Baptist Church Ministries, Inc. (“the Church”), located in Landover, Prince George's County, Maryland, was incorporated in the District of Columbia in 1962 by Reverend James R. Peebles, Sr.; his wife, Betty Peebles; and Alice Harvey. The parties refer to this corporate entity as “Jericho DC” to distinguish it from a latter-formed entity incorporated in Maryland, also under the name “Jericho Baptist Church Ministries, Inc.” (“Jericho MD”). Since its founding, the Church has been operated and controlled by a Board of Trustees.

         In 1996, Jericho DC registered with the Maryland State Department of Assessment and Taxation (“SDAT”) to operate in Maryland. See Complaint, ECF No. 1 at 2. That same year, it received a letter from the IRS confirming its status as a validly constituted non-profit corporation and was provided with an Employer Identification Number (“EIN”). Id. When James Peebles, Sr. died in 1996, Betty Peebles become the acknowledged leader of the Church.

         On March 15, 2009, the Jericho DC Board members were summoned to Betty Peebles' office to sign “Resolution 1-09 of Board of Trustees” (“Resolution 1-09”). Resolution 1-09 established a new slate of Board members. The new Board consisted of former trustees Betty Peebles and Dorothy Williams, as well as new trustees Gloria McClam-Magruder, Denise Killen, Clarence Jackson, Jennie Jackson, Bruce Landsdowne, Norma Lewis, and Lashonda Terrell. By implication, Resolution 1-09 removed William Meadows, Anne Wesley, and Joel Peebles from the Board of Trustees.

         On October 12, 2010, Betty Peebles passed away. On November 1, 2010, six individuals, including four of the new purported Board members identified in Resolution 1-09 (Gloria McClam-Magruder, Denise Killen, Clarence Jackson, and Dorothy Williams) incorporated in Maryland as “Jericho Baptist Church Ministries, Inc.” (Jericho MD). The articles of incorporation identified the Jericho MD Board as operators of the Church. That same day, Jericho MD filed Articles of Merger with the D.C. Department of Consumer and Regulatory Affairs indicating that, pursuant to a vote by the Board of Trustees of Jericho DC, Jericho DC was merged into Jericho MD. The merger effectively eliminated Jericho DC and made Jericho MD the new governing body of the Church.

         Jericho MD first opened bank accounts at Citibank on October 14, 2011 and currently maintains nine bank accounts at Citibank, with an aggregate balance in excess of $2.1 million. See Complaint, ECF No. 1 at 6. Signature authority over the Citibank Accounts currently resides with individuals aligned with Jericho MD. When opening the Citibank Accounts, Jericho MD identified as its EIN the number that had been the EIN of Jericho DC before Jericho DC had merged into Jericho MD. A letter from counsel for Jericho MD dated December 16, 2010, and addressed to the IRS, explicitly states that Jericho MD would henceforth use the EIN that had been previously used by Jericho DC. See Complaint, ECF No. 1 at 6.

         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. 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); Franklin v. Jackson, No. DKC 14-0497, 2015 WL 1186599 (D. Md. Mar. 3, 2015); George v. Jackson, No. 2013 CA 007115 B (Sup. Ct. D.C. July 7, 2015) [hereinafter George v. Jackson], aff'd, Jackson v. George, 146 A.3d 405 (D.C. 2016); Chavez v. Jericho Baptist Church Ministries, Inc., No. CAL12-13537 (P.G. Cnty. Cir. Ct. Feb. 18, 2014); 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).

         In 2013, members of Jericho DC filed suit against members of Jericho MD in the Superior Court for the District of Columbia, alleging that they had been wrongfully excluded from the board of the Church. See George v. Jackson. On July 7, 2015, and after a three-day bench trial, the D.C. Superior Court ruled in favor of Jericho DC. It declared that the surviving members of Jericho DC constituted the valid governing Board of the Church, and ordered Jericho MD to cease exercising ownership or control over the Church and its assets. On September 22, 2016, the District of Columbia Court of Appeals affirmed that decision. See Jackson v. George, 146 A.3d 405 (D.C. 2016).

         On July 7, 2015, the same day the D.C. Superior Court rendered its decision in George v. Jackson, Jericho DC's counsel sent a letter to Citibank informing Citibank of the Superior Court's decision. See ECF No. 32-2. The letter states, “[e]arlier today, Judge Stuart G. Nash of the Superior Court of the District of Columbia issued an opinion and order determining the issue of the control and governing body of your account holder, Jericho Baptist Ministries, Inc.” The letter also states that “[t]he purpose of this letter is to provide notice to the Bank of the court's decision and to direct the Bank not to permit withdrawals or check disbursements of any kind pending further action and communication from the judicially-recognized board.” Id. Enclosed with the letter was a copy of the opinion and order. Citibank's counsel alleges that he never received this letter.

         Jericho DC also emailed Citibank's counsel on July 8, 2015, advising him that Jericho DC had sent a similar letter to Bank of America, the bank where Jericho DC held its assets, informing Bank of America of the D.C. Superior Court's decision. See ECF No. 33-2. Citibank's counsel responded to Jericho DC's letter, reminding Jericho DC that he represented Citibank, and that Citibank's customer was Jericho MD, not Jericho DC. See ECF No. 33-3.

         On August 10, 2015, Jericho DC's counsel sent an email to Citibank's counsel attaching the order from the District of Columbia Court of Appeals in Jackson v. George vacating the D.C. Superior Court's decision to administratively stay the injunctive relief established by its July 7th opinion and order. See ECF No. 33-4. The email did not explain the relevance of the D.C. Court of Appeals' decision to Citibank and, because Citibank's counsel never received the July 7th letter, was confused as to why he was receiving this email. Thus, Citibank's counsel responded with an email dated August 31, 2015, stating:

Thank you for sending the order from the DC Court of Appeals. I read it with interest, but I and my client had the same reaction as set forth in my July 9 letter to you, which responded to a letter from you enclosing the ...

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