Camenisch v. Umpqua Bank
- Richard Seeborg
- 5:20-cv-05905
- U.S. District Court · Northern District of California
- 3
In Camenisch v. Umpqua Bank, Judge Seeborg denied Umpqua Bank’s motion to dismiss the amended complaint in an alleged Ponzi-scheme case.
The ruling leaves the plaintiffs’ amended complaint pending against Umpqua Bank at the pleading stage; Umpqua’s motion to dismiss was denied.
What happened
Camenisch v. Umpqua Bank is a proposed class action by people who say they were harmed by an alleged Ponzi scheme carried out through two companies founded and controlled by Ken Casey. Casey is deceased, and the companies are in bankruptcy. The plaintiffs seek damages from Umpqua Bank, which handled the companies’ accounts.
Umpqua argued that the plaintiffs had not provided enough facts to show that the bank knew about the scheme, substantially helped the wrongdoing, or knew Casey and the companies were violating duties owed to the plaintiffs. Umpqua also argued that the amended complaint should be removed because the plaintiffs filed it without first obtaining the court’s permission. The plaintiffs responded that they filed it before the deadline requiring permission for further amendments. The amended complaint added two proposed class representatives but did not otherwise change the allegations.
Judge Richard Seeborg denied the motion to dismiss the amended complaint. He rejected Umpqua’s reliance on later decisions involving a different set of facts, explaining that those decisions did not establish new law and did not justify changing the court’s earlier decision on unchanged allegations. The court noted that the case remained close at the pleading stage and that the plaintiffs might ultimately be unable to prove the required knowledge.
The detailed version
- Camenisch v. Umpqua Bank · No. 5:20-cv-05905
- Richard Seeborg
- Jan. 20, 2022
Background
The plaintiffs brought a proposed class action against Umpqua Bank. They alleged that Ken Casey carried out a Ponzi scheme through Professional Financial Investors, Inc. and Professional Investors Security Fund, Inc., two companies he founded and controlled. Casey is deceased, and both companies are in bankruptcy. The plaintiffs therefore sought damages from Umpqua, the financial institution that handled the companies’ accounts.
Umpqua previously moved to dismiss the original complaint. It argued that the plaintiffs had not alleged enough facts to show that Umpqua had actual knowledge of the Ponzi scheme, substantially assisted Casey and the companies’ wrongdoing, or knew that Casey and the companies were violating fiduciary duties owed to the plaintiffs. The court denied that motion, while observing that the question was close.
Amended Complaint and Arguments
The plaintiffs later filed an amended complaint adding two proposed class representatives. They made no substantive changes to the other allegations. Umpqua argued that the amended complaint should be stricken because the plaintiffs had not obtained permission from the court before filing it. The plaintiffs responded that they filed the amended complaint before the scheduling-order deadline that required permission for later amendments. Umpqua did not pursue that argument in its reply. The court also noted that striking the amended complaint would leave the original complaint operative, and the original complaint had already survived dismissal.
Umpqua instead asked the court to reconsider its earlier decision and reach a different result on the unchanged allegations. It relied on an unpublished Ninth Circuit decision and related district court decisions involving alleged embezzlement from a tribal entity’s accounts at Umpqua. Umpqua acknowledged that those decisions were not controlling but argued that they were instructive.
Ruling
The court held that the cited decisions applied the same basic legal standards to a somewhat different set of facts and reached a different result. They did not represent new or different law. Although those decisions might reinforce how close the earlier pleading-stage decision was, they did not justify changing the result on allegations that had not changed.
The court denied Umpqua Bank’s motion to dismiss the amended complaint. The court also noted that the plaintiffs might ultimately be unable to establish the knowledge required to support liability, but it did not dismiss the amended complaint at this stage.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.