NOT RECOMMENDED FOR PUBLICATION
                               File Name: 06a0020n.06
                                Filed: January 9, 2006

                                           No. 04-4372

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT


Lauren M. Pavlovich,                                  )
                                                      )
       Plaintiff-Appellant,                           )
                                                      )
v.                                                    )   ON APPEAL FROM THE UNITED
                                                      )   STATES DISTRICT COURT FOR THE
National City Bank,                                   )   NORTHERN DISTRICT OF OHIO
                                                      )
       Defendant-Appellee,                            )
                                                      )
                                                      )



BEFORE:        MERRITT, MARTIN, and COLE


       MERRITT, Circuit Judge. Plaintiff Lauren M. Pavlovich invested a small fortune in Rx

Remedy, Inc. (“Rx Remedy”), a privately-held health care company, with a dubious financial record.

A half-decade and a million-and-a-half dollars in losses later, Ms. Pavlovich now is trying to blame

defendant National City Bank (“the Bank”) for following her investment instructions and those of

her unscrupulous investment advisor, Cashel Management Company (“Cashel”). The District Court

granted summary judgment in favor of the Bank as to all claims and denied Ms. Pavlovich’s motion

for partial summary judgment. For the reasons set forth below, we affirm.

                                                 I.

       In 1992, the Mooney family sold its business, Mooney Chemical. Plaintiff Lauren (Mooney)

Pavlovich received approximately $2.5 million after taxes from selling her share. Her brother, Bob
No. 04-4372
Pavlovich v. National City Bank

Mooney, advised Ms. Pavlovich, as well as other family members, to invest the proceeds under the

direction of Cashel, an investment company led by Bob Mooney’s childhood friend Tom Durkin.

That same year, Ms. Pavlovich and Cashel executed an Investment Management Contract (“Cashel

Contract”) giving Cashel “complete discretion with respect to the investments of your funds and the

execution of purchase and/or sale orders through one or more broker-dealers and/or registered

representatives as [Cashel] deems appropriate.”

        Since the Cashel Contract precluded Cashel from having custody of her funds, Ms. Pavlovich

simultaneously signed a Custody Agreement with the Bank that generally required the Bank to

follow her written instructions regarding investment of the funds entrusted to the Bank. Also in

1992, a Trading Letter apparently executed by her granted Cashel “sole trading authority” over her

“Fixed Income Account” and directed the Bank “to accept all trades from [Cashel] unless notified

to the contrary . . . .”1

        Pursuant to these three documents, in 1995, Cashel began directing the Bank to disburse

some of her funds in Rx Remedy. This privately-held company sold health care information from

its large database, published a magazine, and, starting in 1997, provided personalized consumer

health news on the internet. Ms. Pavlovich’s initial disbursement purchased stock in Rx Remedy.

As the millennium approached, Rx Remedy became increasingly starved for cash. The company’s


        1
        There is some dispute as to whether Ms. Pavlovich actually signed the Trading Letter.
The copy of the letter in the record does not bear her signature, and she does not recall signing it.
However, she maintains on appeal that she executed the Trading Letter, and, in any event, the
document would have been required in order to have opened the custodial account in the first
place. Taking the facts in the light most favorable to Ms. Pavlovich, see Fed. R. Civ. P. 56(c),
Ms. Pavlovich executed the Trading Letter.

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Pavlovich v. National City Bank

net losses compounded each year, and its owners’ equity decreased over seventy-five-fold in five

years to a whopping -$37.8 million by the spring of 1999. Cashel heeded Rx Remedy’s calls for

cash by, between 1998 until well into 2000, investing the money of Ms. Pavlovich and other clients

each month in Rx Remedy promissory notes bearing 12% interest with warrants to buy Rx Remedy

stock.2          As she later testified, Ms. Pavlovich understood that this was a risky strategy; but it

was one with the potential for a big payoff: by the summer of 1999, the company’s management

propagated the prospect of an initial public offering (IPO) to capitalize on the booming demand for

internet IPOs. That same summer Ms. Pavlovich and her husband agreed with Tom Durkin to

increase her investments in Rx Remedy to generate more income.

          To prop up Rx Remedy and conceal the true state of Ms. Pavlovich’s investment funds,

Cashel devised a scheme of “rollover transactions” that eventually depleted her account:

          Typically, at the beginning of each month, Cashel requested money to be wired from
          the Account to Rx Remedy’s account; then on the last day of the month, a Cashel
          representative would hand deliver to NCB a check in the amount of the earlier wire
          transfer plus “interest” for deposit into the Account. This pattern of transactions
          would begin again on the first day of the next month. The net effect of these
          repeated transactions was that even before the funds represented by the checks had
          been deposited into the Account, those same funds had already been wired back to
          Rx Remedy.

Pavlovich v. Nat’l City Bank, 

, 721 (N.D. Ohio 2004). The Bank provided Ms.

Pavlovich with monthly statements depicting these transactions. In January of 2000, the Bank

instituted a “five day rule” prohibiting the Bank from approving “any wire transfers from Cashel


          2
         As discussed below, Ms. Pavlovich strenuously disputes this characterization, claiming
instead that the Bank simply transferred money to Rx Remedy without a stated purpose at
Cashel’s request.

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Pavlovich v. National City Bank

which were dependent on funds that had been deposited by check less than five days earlier.” 

That same month, Ms. Pavlovich’s husband called the Bank to complain about these

transactions, but no written correspondence terminated Cashel’s management authority until late

2000. By then, Ms. Pavlovich had lost roughly a million-and-a-half dollars once Rx Remedy filed

for bankruptcy.

       On April 12, 2001, Ms. Pavlovich sued the Bank in state court in Ohio, alleging various

claims under state and federal law. The Bank timely removed the case to federal court on the basis

of federal question jurisdiction. She subsequently amended her complaint to assert diversity

jurisdiction. Approximately a year after that amendment, she again amended her complaint to

withdraw those counts presenting federal questions. Ms. Pavlovich now appeals the District Court’s

grant of the Bank’s motion for summary judgment on all claims, and denial of Ms. Pavlovich’s

motion for partial summary judgment on Counts I and III.

                                                II.

                                         A. Jurisdiction

       The District Court had diversity jurisdiction over this case pursuant to 28 U.S.C. §

1332(a)(1) because, when the suit was initiated, Ms. Pavlovich was domiciled in Florida and the

Bank was a citizen of Ohio.3 See Grupo Dataflux v. Atlas Global Group, L.P., 

, 574

(2004) (“To our knowledge, the Court has never approved a deviation from the rule articulated by



       3
        The District Court improperly cited federal question jurisdiction as the basis of its
subject-matter jurisdiction. As noted earlier and discussed below in footnote 5, Ms. Pavlovich
amended her complaint to remove all claims arising under federal law.

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Pavlovich v. National City Bank

Chief Justice Marshall in 1829 that ‘[w]here there is no change of party, a jurisdiction depending

on the condition of the party is governed by that condition, as it was at the commencement of the

suit.’ ”) (quoting Conolly v. Taylor, 

, 565 (1829)) (emphasis in original). This Court has

jurisdiction under 28 U.S.C. § 1291 since the District Court’s order at issue here was a final

decision.

                                      B. Standard of Review

       We review a district court’s grant of summary judgment de novo. Nat’l Enters., Inc. v.

Smith, 

, 563 (6th Cir. 1997). Summary judgment is appropriate where “the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and that the moving party is entitled to

a judgment as a matter of law.” 

R. Civ. P. 56(c)). We must take the facts in the

light most favorable to the non-moving party. Brumbalough v. Camelot Care Ctrs., Inc., 

, 1000 (6th Cir. 2005).

                                                III.

                                 A. Breach of Contract (Count I)

       Ms. Pavlovich argues that the Bank breached the Custody Agreement by following Cashel’s

purportedly unauthorized instructions to direct money to Rx Remedy. This claim is without merit

because the Bank’s disbursements pursuant to Cashel’s written directives were authorized by

relevant agreements and, in any event, Ms. Pavlovich ratified the Bank’s activities.

       Under Ohio law, contract interpretation is a matter of law when a contract’s terms are clear

and unambiguous. See Long Beach Ass’n, Inc. v. Jones, 

, 209-10 (Ohio 1998). To

                                                 -5-
No. 04-4372
Pavlovich v. National City Bank

establish a breach of contract, a plaintiff must show that a contract existed, the plaintiff performed,

the defendant breached, and the plaintiff suffered damages. Wauseon Plaza Ltd. P’ship v. Wauseon

Hardware Co., 

, 957 (Ohio Ct. App. 2004). Since the other elements are undisputed,

the only issue here is whether the Bank breached the Custody Agreement.

        The Custody Agreement required the Bank to “be responsible for the safekeeping of” Ms.

Pavlovich’s investment assets entrusted to the Bank. Paragraph nine of the Custody Agreement

further provided:

        The Custodian may safely rely and act upon any written direction delivered to it as
        provided herein, if purported to have been signed by me or by any one or more
        persons specifically authorized in writing by me and reasonably believed by the
        Custodian to be genuine. The Custodian may rely upon the continuance of any such
        authorization until notified in writing to the contrary . . . .

In paragraph five, the Custody Agreement also limited the Bank’s obligations with respect to

investment recommendations:

        The Custodian shall have no duty to and shall not review or make investment
        recommendations with respect to any property held hereunder. The Custodian shall
        sell, exchange, invest, and otherwise deal with the property only as I may direct in
        writing.

As noted above, the concurrently executed Trading Letter gave Cashel “sole trading authority” over

her “Fixed Income Account” and required the Bank “to accept all trades from [Cashel] unless

notified to the contrary . . . .”

        The now disputed transactions involving Rx Remedy fell wholly within the framework of

the Custody Agreement and the Trading Letter and persisted for several years without written

objection.    The Trading Letter provided written authorization, as required by the Custody



                                                 -6-
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Pavlovich v. National City Bank

Agreement, for Cashel to direct the investment of Ms. Pavlovich’s funds. Cashel exercised that

authority by directing investments in Rx Remedy. The Bank had no reason to doubt the genuineness

of Cashel’s authorization; after all, she had granted Cashel in the Cashel Contract “complete

discretion” to invest her money. See Yochim v. First of Am. Bank-Michigan, No. 91-76283, 

, at **25-26 (E.D. Mich. Dec. 16, 1994) (holding that, even where the

plaintiffs alleged “obvious self-dealing,” the custodian bank “was authorized to act on instructions

of [a third party] it believed were genuinely made on behalf of clients”). The Bank did not violate

the Custody Agreement by weighing in on her risky investment strategies, but, instead and

unfortunately for her, followed Cashel’s written directions “to a tee.” See Abbott v. Chem. Trust,

No. 01-2049-JWL, 

, at *47 (D. Kan. Apr. 26, 2001) (upholding a

custodian agreement which required the bank to determine whether a particular investment was

administratively feasible, but not whether it was fraudulent). Moreover, the Bank’s delay in

instituting the five day rule was not a breach of the contract because the rule was not contractually

required. She received monthly statements depicting these transactions but did not terminate

Cashel’s authority until late 2000. When she did so, the Bank honored that written direction.

       Ms. Pavlovich’s primary argument to the contrary is that the Trading Letter limited Cashel’s

authority to executing “trades” as opposed to simply transferring money without a stated purpose.

This argument borders on the frivolous because, at least until the commencement of litigation, it was

undisputed that the challenged disbursements purchased promissory notes with 12% interest and

warrants to buy Rx Remedy stock. Ms. Pavlovich and her husband agreed with this characterization

in their deposition testimonies. In a letter to Ms. Pavlovich’s husband and other investors, Bob

                                                -7-
No. 04-4372
Pavlovich v. National City Bank

Mooney, the apparent “brains” behind the family’s investments in Rx Remedy, described the

investments as “loans” paying 12% interest “and about 18 warrants per $1000 per year.” Moreover,

Ms. Pavlovich reported over $50,000 in interest income from Rx Remedy on her tax returns. Thus,

since her money was exchanged for notes and warrants – albeit investments of dubious value –

“trades” occurred.

       Even if the transactions were somehow outside the scope of the Custody Agreement and

Trading Letter, Ms. Pavlovich ratified the Bank’s disbursements pursuant to Cashel’s directives, in

the words of the District Court, “by accepting its actions and their consequences over the course of

several years.” Pavlovich v. Nat’l City Bank, 

, 725 (N.D. Ohio 2004).

“Ratification may be implied when there is actual knowledge of an agreement, acceptance of its

benefits and a failure to repudiate within a reasonable time.” Young v. Int’l Bhd. of Locomotive

Eng’rs, 

, 425 (Ohio Ct. App. 1996); see also Campbell v. Hospitality Motor Inns,

Inc., 

, 242 (Ohio 1986) (per curiam). Ms. Pavlovich had actual knowledge of the

Bank’s disbursements pursuant to Cashel’s investment decisions over her funds, as manifested by

her deposition testimony and receipt of monthly statements for multiple years depicting the

challenged transactions. She accepted the benefits of this investment activity by accepting the

interest the notes paid and reporting the interest as income on tax returns. She further failed to

repudiate Cashel’s authority until roughly eight years after that authority was granted. This case

resembles others holding that a failure timely to object to transactions depicted in bank statements

generally amounts to ratification. See White Castle Sys. v. Huntington Nat’l Bank, Columbus, 

, 741 (Ohio Ct. App. 1941); First Nat’l Bank of Philadelphia v. Farrell, 

, 376

                                                -8-
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Pavlovich v. National City Bank

(3d Cir. 1921); V. H. Juerling & Sons, Inc. v. First Nat’l Bank of Richmond, Indiana, 

, 119 (Ind. Ct. App. 1968). Ms. Pavlovich argues to the contrary based on Cashel’s fraud in

concealing the true nature of the transactions and on Ohio law’s ban on ratifying illegal conduct.

These arguments focus on Cashel’s actions, not those of the Bank, and are unavailing because

nothing the Bank did was fraudulent or otherwise unlawful.

       Ms. Pavlovich further argues that she did not ratify transactions occurring after a phone call

from her husband to the Bank in January of 2000. In that conversation, Mr. Pavlovich recalled

telling a Bank representative that “these transfers are not supposed to happen.” Even assuming that

this instruction contained sufficient content to defeat ratification, the Custody Agreement prevented

the Bank from heeding this direction because Mr. Pavlovich was not a party to the Custody

Agreement and because the communication was not in writing as required by the Custody

Agreement.

                            B. Breach of Fiduciary Duties (Count II)

       Ms. Pavlovich claims that the Bank breached a variety of fiduciary duties including the duty

of good faith and the duty to disclose material facts. This claim also fails because the Bank upheld

its narrow and primary fiduciary duty not to make unauthorized distributions and because no

applicable fiduciary duty imposed any obligation separate from, and in addition to, that imposed on

the Bank by the relevant agreements.

       An agency relationship between the Bank and Ms. Pavlovich was created through execution

of the Custody Agreement. Under Ohio law, there are four elements of an agency relationship:

“Agency is the fiduciary relation which results from [1] the manifestation of consent by one person

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No. 04-4372
Pavlovich v. National City Bank

to another that the other shall [2] act on his behalf and [3] subject to his control, and [4] consent by

the other so to act.” Berge v. Columbus Cmty. Cable Access, 

, 531 (Ohio Ct. App.

1999) (quoting Restatement (Second) of Agency § 1 (1958)). By executing the Custody Agreement

and Trading Letter, Ms. Pavlovich manifested consent to the Bank’s custody of her funds and its

compliance with Cashel’s investment directives. The Bank acted on her behalf, and consented to

do so, in making distributions according to the Custody Agreement and Trading Letter. The Bank

was subject to her control because she had the sole power to authorize transactions or to delegate

that power and could have terminated the relationship at any time.

        An agency relationship gives rise to those fiduciary duties within the scope of the agency.



See Miles v. Perpetual Savs. & Loan Co., 

, 1365 (Ohio 1979) (per curiam). The

key issue here, therefore, is determining the scope of the agency and whether the accompanying

fiduciary duties differ from the Bank’s contractual obligations. Ms. Pavlovich’s account was

administrative and nondiscretionary in that the Bank would not distribute funds absent written

direction from her or an authorized third party. See Merrill Lynch Pierce Fenner & Smith, Inc. v.

Cheng, 

, 1128 (D.C. Cir. 1990) (“With respect to a non-discretionary account, the

customer must give prior approval for all transactions.”). In such nondiscretionary situations, a bank

owes primarily the very narrow fiduciary duty not to make unauthorized distributions. See Abbott

v. Chem. Trust, No. 01-2049-JWL, 

, at *43 (D. Kan. Apr. 26, 2001)

(“[T]o the extent [the Bank] owed a fiduciary duty to plaintiffs, that duty was limited to executing

the transactions requested by plaintiffs.”); cf. Tapia v. Chase Manhattan Bank, N.A., 

,

                                                 -10-
No. 04-4372
Pavlovich v. National City Bank

412 (5th Cir. 1998) (“[W]here the investor controls a nondiscretionary account and retains the ability

to make investment decisions, the scope of any duties owed by the broker will generally be confined

to executing the investor’s order.”); Hill v. Bache Halsey Stuart Shields, Inc., 

, 824

(10th Cir. 1986) (The fiduciary duty owed by a broker operating a nondiscretionary trading account

is “very narrow -- primarily not to make unauthorized trades.”). In the instant case, the Bank did

not violate its primary fiduciary duty not to make unauthorized distributions because all of its

disbursements were directed by Cashel pursuant to Ms. Pavlovich’s written authorization.

       In addition, having concluded that no breach of contract occurred, we cannot now find a

breach of a fiduciary duty where Ms. Pavlovich has identified no applicable fiduciary duty separate

from, and in addition to, that imposed on the Bank by the Custody Agreement and Trading Letter.

It is well established in Ohio that “[t]he duties of an agent to his principal are dependent upon the

agreement between them.” Orvets v. Nat’l City Bank, Northeast, 

, 119 (Ohio Ct.

App. 1999); see also Gem Sav. Ass’n v. Sterling Gold Props., Ltd., No. 12719, 1992 Ohio App.

LEXIS 4965, at *16 (Ohio Ct. App. Oct. 2, 1992) (“[T]he fact that this contract created an agency

relationship between [the parties] did not, without more, impose a fiduciary duty upon [the agent]

which was separate from, and in addition to, that imposed on it by the contract.”); Restatement

(Second) of Agency § 376 (1958) (“The existence and extent of the duties of the agent to the

principal are determined by the terms of the agreement between the parties . . . .”). The Bank

honored its contractual obligations and was bound to no fiduciary duty outside the terms of the

relevant agreements.

                          C. Unauthorized Wire Transfers (Count III)

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Pavlovich v. National City Bank

       Ms. Pavlovich’s unauthorized wire transfers claim also has no merit because Cashel had

actual and apparent authority to direct disbursements from the custody account and because Ms.

Pavlovich ratified Cashel’s directives. Under Ohio’s adoption of Uniform Commercial Code

provisions pertaining to wire transfers, a bank must refund its customers the amount of any

unauthorized transfers. See Ohio Rev. Code Ann. § 1304.59(A) (West 2005). A payment order is

authorized if the person identified as the sender “authorized the order or is otherwise bound by it

under the law of agency.”4 Ohio Rev. Code Ann. § 1304.57(A) (West 2005). The official comments

confirm that “[t]he issue is one of actual or apparent authority of the person who caused the order

to be issued in the name of the customer.” Ohio Rev. Code Ann. § 1304.58 cmt. 1 (West 2005).

       Cashel had actual authority in directing the disbursements. Actual authority is the authority

that the principal intentionally grants to an agent. See Nat’l City Bank v. Rhoades, 

,

804 (Ohio Ct. App. 2002) (citing Restatement (Second) of Agency § 7 (1958)). By executing the

Investment Management Contract with Cashel, Ms. Pavlovich expressly granted “complete

discretion” to Cashel to invest her funds. It is difficult to imagine a more intentional grant of actual

authority. See Grabowski v. Bank of Boston, 

, 124 (D. Mass. 1997) (“If [a third

party] had general authority over the account, the Bank is not liable for” the third party’s

unauthorized withdrawals.).

       In addition, Cashel had apparent authority to direct the Bank’s disbursements. Apparent




       4
       A bank may also avoid responsibility for improper transfers if the transfer is “verified”
pursuant to a statutory provision not applicable here. See Ohio Rev. Code Ann. § 1304.57(B)
(West 2005).

                                                 -12-
No. 04-4372
Pavlovich v. National City Bank

authority is “the power to affect the legal relations of another person by transactions with third

persons . . . arising from . . . the other’s manifestations to such third persons.” Master Consol. Corp.

v. BancOhio Nat’l Bank, 

, 822 (Ohio 1991) (quoting Restatement (Second) of

Agency § 8 (1958)). Ms. Pavlovich made a direct manifestation to the Bank of Cashel’s authority

to direct the investments of her funds when she executed the Trading Letter and Custody Agreement.

As discussed above, the Trading Letter authorized the precise activity of which Ms. Pavlovich now

complains.

        Under Ohio’s agency law, a principal may ratify the conduct of her agent even if that conduct

was initially unauthorized so that the conduct becomes binding on the principal. See Campbell v.

Hospitality Motor Inns, Inc., 

, 240 (Ohio 1986) (per curiam). Ms. Pavlovich ratified

Cashel’s authority to direct her investments because of her actual knowledge of the transactions

coupled with her acceptance of their benefits and her failure to repudiate within a reasonable period

of time. See 

Young v. Int’l Bhd. of Locomotive Eng’rs, 

, 425 (Ohio Ct.

App. 1996).

                   D. Negligence (Count IV) and Ohio’s Economic-Loss Rule

        Ms. Pavlovich claims that the Bank was negligent in failing to administer her account with

ordinary care and to safe-keep her investment assets. This negligence claim is barred by Ohio’s

economic-loss rule in that, although there is privity of contract between her and the Bank, recovery

for purely economic loss is not based upon a tort duty independent of contractually created duties.

        Under Ohio law, “[t]he economic-loss rule generally prevents recovery in tort of damages

for purely economic loss.” Corporex Dev. & Constr. Mgmt., Inc. v. Shook, Inc., 

,

                                                 -13-
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Pavlovich v. National City Bank

704 (Ohio 2005). The economic-loss rule applies in a tort action only when economic loss is

unaccompanied by personal injury or property damage. See Chemtrol Adhesives, Inc. v. Am. Mfrs.

Mut. Ins. Co., 

, 629-30 (Ohio 1989). Economic losses include not only diminution

in value and consequential losses like lost profits, see 

but also, as the term’s name implies,

the loss of electronic funds and failed investments. See Sovereign Bank v. BJ’s Wholesale Club,

Inc., 

, 204 (M.D. Pa. 2005) (money lost through unauthorized credit card

charges was purely economic loss); McCutcheon v. Kidder, Peabody & Co., 

, 823

(S.D. Fla. 1996) (applying the economic-loss rule to a securities case); Grynberg v. Agri Tech, Inc.,

, 1269-70 (Colo. 2000) (en banc) (losses from cattle investment program were purely

economic losses); Calcagno v. Personalcare Health Mgmt., Inc., 

, 1339 (Ill. App.

Ct. 1991)(“Economic losses encompass objectively verifiable monetary losses . . . .”). Following

this authority, Ms. Pavlovich’s monetary losses from funds disbursed to Rx Remedy were purely

economic losses.

        Ohio law prevents the recovery of purely economic losses in a negligence action either where

there is no “privity or a sufficient nexus that could serve as a substitute for privity” or where

recovery of such damages is not based upon a tort duty independent of contractually created duties.

See Corporex Dev. & Constr. Mgmt., 

, 705; Foster Wheeler Enviresponse,

Inc. v. Franklin County Convention Facilities Auth., 

, 529 (Ohio 1997). In the

instant case, the Custody Agreement and Trading Letter created privity of contract. However, Ms.

Pavlovich has not identified any tort duty owed by the Bank independent of contractually created

obligations. With respect to similar custody arrangements, courts in other jurisdictions have

                                                  -14-
No. 04-4372
Pavlovich v. National City Bank

prevented plaintiffs from bringing tort actions where the defendant bank owed no duty of care

independent of its contractual obligations. See Abbott v. Chem. Trust, No. 01-2049-JWL, 2001 U.S.

Dist. LEXIS 6214, at *32 (D. Kan. Apr. 26, 2001) (“Because the custodian agreement specifically

defined [the bank’s] duties with respect to these matters, extracontractual tort duties regarding these

matters are precluded.”); Yochim v. First of Am. Bank-Michigan, No. 91-76283, 1994 U.S. Dist.

LEXIS 19728, at **29-30 (E.D. Mich. Dec. 16, 1994) (“Because the Court has found that [the bank]

did not breach its fiduciary or contractual duties, and because plaintiffs have not identified any other

independent duties allegedly breached by [the bank], [the negligence count] will be dismissed.”).

Accordingly, we hold that the economic-loss rule bars Ms. Pavlovich’s negligence claim.

                     E. Aiding and Abetting Tortious Conduct (Count VII)

        Ms. Pavlovich’s final allegation is that the Bank aided and abetted the tortious conduct of

Cashel and others generally by executing Cashel’s instructions to transfer money from her custodial

account. This claim also must fail because Ohio law is unsettled whether this cause of action exists

and, regardless, Ms. Pavlovich cannot establish a prima facie case.

        It is unclear whether Ohio recognizes a common law cause of action for aiding and abetting

tortious conduct.5 Compare Aetna Cas. & Sur. Co. v. Leahey Constr. Co., 

, 533 (6th


        5
         A cause of action for aiding and abetting tortious conduct is created, if at all, by Ohio
law. Although the Bank argues that this claim raises a federal question, the Bank has fallen far
short of convincing us not to apply Justice Holmes’ statement, as more recently interpreted by
the Supreme Court, that, in the “vast majority” of cases, a “suit arises under the law that creates
the cause of action.” See Merrell Dow Pharms. Inc. v. Thompson, 

, 808 (1986)
(quoting Franchise Tax Bd. of the State of California v. Constr. Laborers Vacation Trust for S.
California, 

, 8-9 (1983), and Am. Well Works Co. v. Layne & Bowler Co., 

, 260 (1916)) (internal quotation marks omitted).

                                                 -15-
No. 04-4372
Pavlovich v. National City Bank

Cir. 2000) (“[W]e conclude that the Supreme Court of Ohio would recognize aiding and abetting

liability if squarely faced with the issue . . . .”) with Federated Mgmt. Co. v. Coopers & Lybrand,

, 853 (Ohio Ct. App. 2000) (“Ohio does not recognize a claim for aiding and abetting

common-law fraud.”); see also Pavlovich v. Nat’l City Bank, 

, 734-36 (N.D.

Ohio 2004) (discussing this conflict in more detail).

       Even if the Supreme Court of Ohio would recognize this claim, Ms. Pavlovich would not

prevail. Section 876(b) of the Second Restatement of Torts provides the basis for “modern

application of civil aiding and abetting” and requires two elements: “(1) knowledge that the primary

party’s conduct is a breach of duty and (2) substantial assistance or encouragement to the primary

party in carrying out the tortious act.” Aetna Cas. & Sur. 

(quoting Andonian

v. A.C. & S., Inc., 

, 192 (Ohio Ct. App. 1994)). The first element requires a showing

of “actual knowledge,” or perhaps merely “general awareness,” of the primary party’s wrongdoing.

See 

Ms. Pavlovich can establish neither for the reasons the District Court aptly

recounted:

       NCB had no duty to review the investment recommendations made by Cashel.
       Furthermore, Mrs. Pavlovich never shared her investment goals with NCB so as to
       make NCB aware that Cashel was perhaps overstepping its discretion . . . and she
       never objected to NCB after receiving and reading her monthly statements.
       Additionally, neither NCB employee responsible for administering Mrs. Pavlovich’s
       Account saw anything to raise a concern of possible fraud on the part of Cashel.
       Finally . . . Mr. Pavlovich’s January 2000 phone call was too vague to put NCB on
       notice of Cashel’s tortious conduct.

       In rather conclusory fashion, Plaintiff argues that NCB should have had a general




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Pavlovich v. National City Bank

       awareness of the tortuous conduct after having observed the rollover transactions, the
       rise and fall of the available cash balance in the Pavlovich Account, and the
       institution of the five-day rule in January 2000. However, this evidence, without
       more, does not give rise to a genuine issue of material fact. Plaintiff has not offered
       any evidence that these events were either caused by or the result of Defendant’s
       knowledge of tortuous conduct on the part of Cashel.

(internal citations to the record omitted). Accordingly,

whether or not Ohio law recognizes a common law action for aiding and abetting tortious conduct,

Ms. Pavlovich’s claim fails.

                                                IV.

       Since none of Ms. Pavlovich’s claims present triable issues, we do not address whether the

Uniform Fiduciary Act, Ohio Rev. Code Ann. § 1339.03-.13 (West 2005), as adopted in Ohio

protects the Bank from liability. For the foregoing reasons, we affirm the District Court’s grant of

summary judgment in favor of the Bank, and denial of Ms. Pavlovich’s motion for partial summary

judgment.




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