Southland Health Services, Inc. v. Bank of Vernon (887 F. Supp. 2d 1158, 2012)

MEMORANDUM OF OPINION

L. SCOTT COOGLER, District Judge.

I. Introduction

Before the Court are three motions for summary judgment filed by the various Defendants; one from Citizens State Bank (“Citizens”), one jointly submitted by Bank of Vernon (“BOV”) and West Alabama Bank and Trust (‘WABT”), and one filed by Dudley Bell, Clanton Dubose, and T. Alan Walls (collectively the “individual defendants”). (Docs. 117, 118, and 119, respectively.) Each of these summary-judgment motions incorporates arguments that were made in earlier motions to dismiss. (See Doc. 117 at 4, 118 at 3, 119 at 4.) The Court therefore considers the arguments made in those earlier motions (Docs. 16, 19, 78, 80, and 83), and their associated briefs, in addition to the arguments presented in the present summary-judgment motions and briefs. Also before the Court are three motions to strike, filed by Defendant Citizens. All of these motions have been fully briefed and are now ripe for decision.

II. Facts

Plaintiff Southland Health Services, Inc., (“Southland”) was an ambulance and medical services company that operated across seven states through its various subsidiaries. At one point it employed over 800 people. Plaintiff Larry Lunan (“Lunan”) was the majority shareholder and CEO of Southland throughout the relevant time period, and was also the personal guarantor of Southland’s debt. Southland then became wholly owned by Paladin Holdings (“Paladin”). Lunan is also the sole shareholder and president of Paladin.

The Individual Defendants — Dudley Bell (“Bell”), Clanton Dubose (“Dubose”), and T. Alan Walls (“Walls”) — were officers of Southland. Plaintiffs claim that over the course of three years, the individual defendants engaged in a scheme of intentionally devaluing the plaintiff corporations through the “systematic theft of checks and negotiable instruments, unauthorized use of company funds for payment of personal expenses, misuse of corporate credit cards, unauthorized checks and wire transfers to personal accounts, and other unauthorized takings of corporate monies and assets.” (Doc. 75 at 6.) Plaintiffs claim that the defendant banks “disregarded obvious and suspicious circumstances, its own procedures, and industry norms in repeatedly cashing or accepting for deposit, without inquiry, over $3,000,000.00 in stolen checks that bore forged, unauthorized or missing endorsements.” (Doc. 21 at 2.) Plaintiffs filed suit in this Court on December 29, 2008, for “violations of state and federal lending laws, civil RICO violations, conversion, violations of certain sections of Title 7 of the Alabama Code, unjust enrichment, money had and received, and various and sundry other violations of statutory law, federal law and Alabama common law.” (Doc. 21 at 1.) The amended complaint, filed on May 2, 2011, listed a total of fourteen counts — some specific to the bank defendants, some specific to the individual defendants, and some against all Defendants. Since the filing of the amended complaint, the relevant issues have been somewhat narrowed by Plaintiffs’ voluntary dismissal of two other individual defendants, Susan Bell and Gary Bradford. (Doc. 87 at 4.) Plaintiffs have also voluntarily withdrawn Count Ten, alleging civil RICO violations, as to all defendants (Doc. 81 at 7, Doe. 82 at 1 n. 1) in addition to withdrawing Count Eleven— alleging fraudulent suppression — as against Citizens (Doc. 81 at 7).

III. Standard

Summary judgment is proper “if 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.” Fed. R.Crv.P. 56(c). The party moving for summary judgment “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the evidence] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The movant can meet this burden by presenting evidence showing that there is no genuine dispute of material fact, or by showing that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Celotex, 477 U.S. at 322-23,106 S.Ct. 2548. In evaluating the arguments of the movant, the court must view the evidence in the light most favorable to the nonmoving party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir.1996).

Once the movant has met its burden, Rule 56(e) “requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.’ ” Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (quoting Fed. R.Civ.P. 56(e)). “A factual dispute is genuine only if a ‘reasonable jury could return a verdict for the nonmoving party.’ ” Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir.2002) (quoting United States v. Four Parcels of Real Property, 941 F.2d 1428, 1437 (11th Cir. 1991)).

IV. Discussion

There are essentially three motions for summary judgment for the Court to consider. One was filed jointly by BOV and WABT, who share the same counsel. (Doc. 118.) Defendant Citizens filed its own motion. (Doc. 117.) Finally, the individual Defendants, who are represented jointly, filed a joint motion for summary judgment. (Doc. 119.) The analysis below addresses each of these three motions in turn.

A. Claims against BOV and WABT

BOV and WABT raise a host of arguments in support of dismissal or summary judgment, including arguments based on statute of limitations, preemption, and other defenses. They also point to the presence of arbitration agreements between them and the Plaintiffs. Notably, BOV and WABT raise arbitration last, asking the Court to first rule on their motions to dismiss and for summary judgment, and only then to send any remaining claims to arbitration. (Doc. 16 at 16, Doc. 118 at 34.) But as Plaintiffs point out, this would put the proverbial cart before the horse. (Doc. 21 at 2 n. 1) Addressing the dispositive motions before considering the arbitration agreements would frustrate the purpose of the arbitration clause, and would unfairly provide BOV and WABT with “two bites at the apple.” Instead, whenever enforcement of an arbitration agreement is requested, this Court is required to send the parties to arbitration “upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration.” 9 U.S.C. § 3. It does not matter that BOV and WABT wish to treat arbitration as a last-ditch effort rather than their first line of defense; since they have raised the issue, the first question for the Court is to determine whether the claims against them are “referable to arbitration.”

1. Arbitration

BOV and WABT argue that this claim is subject to binding arbitration as a result of several arbitration agreements, entered into by Lunan both in his personal capacity and as a representative of Southland, and by Dubose as Vice President of South-land. Arbitration agreements between BOV or WABT and one or more Plaintiffs were signed on March 3, 2006 (Doc. 16-5 at 1-2), October 7, 2006 (Doc. 16-7 at 1-2), January 31, 2007 (Doc. 16-9 at 1), and November 6, 2007 (Doc. 16-3 at 1). The material terms of these agreements are all identical:

Lender and the undersigned acknowledge that all the transactions contemplated by this Agreement have a substantial impact on interstate commerce and agree that all disputes, claims, or controversies whether based upon any prior, current, or future agreement, loan, account, service, activity, transaction (proposed or actual), event or occurrence (“Disputes”) whether individual, joint, or class in nature, including contract and tort disputes and any other matter at law or equity between them, their heirs, personal representatives, agents, employees, officers, directors, affiliated companies, parent companies, subsidiaries and shareholders, present, future or past (“Parties”) shall be resolved by arbitration upon request of either party at any time, notwithstanding the prior filing by either party of any legal action, except as indicated in this Agreement or agreed to in writing by the parties.... It is understood and agreed that arbitration pursuant to this agreement shall be binding upon the Parties.

(Docs. 16-3 at 1, 16-5 at 1, 16-7 at 1, 16-9 at 1.) Plaintiffs raise essentially two arguments against the enforcement of these arbitration agreements. First, they contend that the arbitration agreements do “not relate to the acts alleged in Plaintiffs Complaint,” making them inapplicable to the claims at issue. (Doc. 21 at 6.) Second, Plaintiffs challenge “whether the Plaintiffs have agreed to arbitrate their claims at all,” asserting they are “non-signatories” who are outside the arbitration agreements in question. (Doc. 21 at 10.)

a. Claims subject to the arbitration agreement

The crux of Plaintiffs’ first argument is that a dispute, in order to be arbitrable, must be “characterized as arising out of or relating to the subject matter of the contract.” (Doc. 21 at 7 (quoting Ex parte Cupps, 782 So.2d 772, 776 (Ala. 2000)).) Plaintiffs cite several Alabama and Eleventh Circuit cases in support of this position, including AmSouth Bank v. Dees, 847 So.2d 923 (Ala.2002), and Hemispherx Biopharma, Inc. v. Johannesburg Consol. Investments, 553 F.3d 1351 (11th Cir.2008). Plaintiffs claim that “[h]ere, just as in Hemispherx Biopharma, Inc., the dispute does not fall within the scope of the agreements’ arbitration clauses.” (Doc. 21 at 10.) But in making this argument, Plaintiffs gloss over the language of the applicable agreements. In Hemispherx, for example, the court emphasized the limited scope of the agreement at issue there:

This discussion takes place in the context of a class of arbitration agreements that use similar language, such as “arising from,” “arising under,” “pursuant to,” and “arising during” the contract in question. The clause at issue in this case uses “arising out of or pursuant to.” We do not believe there is a significant difference between these slightly different formulations, but do recognize that substantially broader language in the arbitration clause would alter the result of the analysis. See, e.g., Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1221 (11th Cir.2000) (discussing arbitration clause covering “any dispute between them or claim by either [party to the contract] against the other”).

553 F.3d at 1367 n. 1. In Hemispherx and the other cases cited by Plaintiffs, the court’s willingness to compel arbitration was limited because the scope of the agreement in question was itself limited. See also Dees, 847 So.2d at 936 (construing an arbitration clause applying only to claims “arising out of, in connection with, or relating to” the agreement it formed a part of). The arbitration agreements at issue here are far more expansive. Instead of being limited to claims “arising from” a single contract or transaction, the arbitration agreements apply to “any pri- or, current, or future agreement, loan, account, service, activity, transaction (proposed or actual), event or occurrence,” and even specifically “includ[e] contract and tort disputes and any other matter.” (Docs. 16-3 at 1, 16-5 at 1, 16-7 at 1, 16-9 at 1.) Plaintiffs’ argument that their “claims do not arise from the loan agreements” (Doc. 21 at 10) is therefore completely beside the point. Whether or not they arise from the agreement, their claims are clearly within the scope of claims subject to the agreement.

The wide scope of these arbitration agreements does not pose an obstacle to their enforcement. As explained by the Eleventh Circuit, a clear but broad provision is enforceable:

There also is nothing unusual about an arbitration clause, especially in an account agreement, that requires arbitration of all disputes between the parties to the agreement. We have enforced such a clause before because it “evince[d] a clear intent to cover more than just those matters set forth in the contract.”

Board of Trustees of City of Delray Beach Police and Firefighters Retirement System v. Citigroup Global Markets, Inc., 622 F.3d 1335, 1343 (11th Cir.2010) (quoting Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023, 1028 (11th Cir. 1982)). See also Brown, 211 F.3d at 1221 (enforcing agreement covering “any dispute” between the parties). Because Plaintiffs’ claims fall within the scope of the agreement, and the breadth of the agreement does not make it unenforceable, Plaintiffs’ first argument fails.

b. Parties subject to the arbitration agreement

The second objection Plaintiffs raise to arbitration is that “WABT and BOV seek to enforce an arbitration clause against non-signatories.” (Doc. 21 at 10.) Plaintiffs contend that “there is no evidence ... that Lunan signed any document other than as a guarantor on behalf of either Emergystat or Southland Health Services, Inc.” (Doc. 21 at 12.) This is patently untrue, as Lunan clearly signed an arbitration agreement on his own behalf (Doc. 16-9) in addition to those he signed as a corporate officer. (Docs. 16-3, 16-5.) Plaintiffs also state that “[i]t is uncontroverted that Defendants do not have a signed written agreement with Plaintiff subsidiary corporations and parent Paladin.” (Id.) But “signed written [arbitration] agreements” actually were made with both Southland Health Services and one of its subsidiaries, Emergystat. (Doc. 16-7, Doc. 16-3.) Plaintiffs are correct that Paladin Holdings is not a direct signatory to the agreements, but all of Paladin’s claims arise through — and therefore are subject to the arbitration agreements of — its subsidiaries.

The only mention of Paladin in the amended complaint is that it “purchased one hundred percent of the stock of South-land,” one of the signatories to the arbitration agreements. (Doc. 75 ¶ 15.) Paladin also purchased Emergystat, another of the signatories. (Doc. 124 at 4-5). Finally, the president and sole shareholder of Paladin is yet another signatory, Larry Lunan.

In their efforts to avoid arbitration, Plaintiffs emphasize that “[i]t is vital for this Court to understand” that each Plaintiff is a separate and distinct entity from the others. (Doc. 21 at 6 n. 2.) But untangling the various claims and interests of Paladin, Southland, and its myriad subsidiaries is made worse by Plaintiffs’ own treatment of them. Throughout the rest of their submissions to the Court, Plaintiffs ignore the “vital” distinctions and lump all the entities together. For example, in the amended complaint, Plaintiffs begin by explaining that all the various subsidiaries are “referred to collectively as ‘South-land.’ ” (Doc. 75 ¶ 1.) The reason for this is that “[b]y means of written assignments, all of Southland’s subsidiaries ... transferred to Southland Health Services, Inc. all right, title and interest to any and all claims.” (Doc. 75 ¶ 2.) Plaintiffs elsewhere emphasize “the fact that all of the subsidiaries’ claims ... were assigned, prior to litigation, to the parent Paladin, for value, in order to pursue litigation.” (Doc. 27 at 5.) In light of these assignments, Plaintiffs’ statement that “[n]o allegations have been or could be made that the acts of either Plaintiff Lunan or non-party Emergystat can or should be attributed to either the other subsidiaries or other Plaintiffs” is disingenuous at best. (Doc. 21 at 6 n. 2.) Because Paladin’s claims are inseparable from its subsidiaries’, Paladin appears to be properly bound by the arbitration agreements.

Adding to this conclusion is the arbitration language itself, which purports to bind “personal representatives, agents, employees, officers, directors, affiliated companies, parent companies, subsidiaries and shareholders, present, future[,] or past.” (Docs. 16-3 at 1, 16-5 at 1, 16-7 at 1, 16-9 at 1, emphasis added). In many circumstances, the ability of a corporation to bind its shareholders, parent companies, or officers would obviously raise serious concerns. In this case, however, Larry Lunan signed three of the arbitration agreements, one on behalf of himself (Doc. 16-9 at 1), one on behalf of Emergystat (Doc. 16-3 at 1), and one of behalf of Southland (Doc. 16-7 at 2). Significantly, Lunan also happens to be the sole shareholder and president of Paladin, and able, as such, to act on Paladin’s behalf. Especially in light of this, there appears to be little question that Paladin’s claims, in addition to Southland’s and Lunan’s, are subject to arbitration.

c. Scope of the arbitrator’s jurisdiction

Based on the discussion above, it appears to the Court that all of the claims and parties at issue are “referable to arbitration.” But deciding the exact scope of the arbitration agreement is not necessarily the job of this Court; the Court must determine if that question is more appropriately left to the arbitrator.

In First Options v. Kaplan, the Supreme Court addressed the issue of who should determine arbitrability. 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). The Court opined that questions regarding the jurisdiction of the arbitrator were “fairly simple.” Id. at 943, 115 S.Ct. 1920. In a unanimous opinion, the Court announced that “[j]ust as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, so the question ‘who has the primary power to decide arbitrability’ turns upon what the parties agreed about that matter.” Id. (internal citations omitted). In determining the parties’ intent, the Supreme Court warned that lower courts “should not assume that the parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so.” Id. at 944, 115 S.Ct. 1920 (internal citations omitted).

The Eleventh Circuit took up the question of “clear and unmistakable evidence” of arbitrability in Terminix Int’l Co. LP v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327 (11th Cir.2005). In Terminix, the court found that the parties clearly and unmistakably evidenced their intention to have arbitrability determined by the arbitrator by incorporating the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), which mandate that the arbitrator will determine his own jurisdiction. Id. at 1332 (quoting AAA Rule 8(a), now Rule 7(a), which states that “the arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement”); see also CitiFinancial Corp., L.L.C. v. Peoples, 973 So.2d 332, 340 (Ala. 2007) (“We find the reasoning of the Eleventh Circuit ... persuasive and hold that an arbitration provision that incorporates rules that provide for the arbitrator to decide issues of arbitrability clearly and unmistakably evidences the parties’ intent to arbitrate the scope of the' arbitration provision.”).

The arbitration agreements here clearly demonstrate the parties’ intent to empower the arbitrator with the authority to determine his own jurisdiction. Each agreement states that it is subject to the rules of the AAA. As discussed above, the relevant AAA rule grants the arbitrator “the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.” AAA Commercial Arbitration Rules and Mediation Procedures, Rule 7(a) (June 1, 2009) (.pdf version available for download at www.adr. org). Because the agreements empower the arbitrator to determine jurisdiction, this Court is bound by its obligation to “rigorously enforce agreements to arbitrate.” Hemispherx, 553 F.3d at 1366.

Plaintiffs’ only chance of avoiding arbitration would be to allege fraud in the procuring of the arbitration agreement itself, or else to challenge its very existence. The Supreme Court has cautioned that if a party alleges “fraud in the inducement of the arbitration clause itself — an -issue which goes to the making of the agreement to arbitrate — the federal court may proceed to adjudicate it.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006). This is the natural result of the rule in First Options: if the arbitration clause is void from the outset, there is no agreement to arbitrate, and therefore no authority to submit conflicts of any sort to an arbitrator. Buckeye, 546 U.S. at 445, 126 S.Ct. 1204. Here, although Plaintiffs claim to “challenge the very existence of a contract to arbitrate,” (Doc. 21 at 10), their actual challenge is only to the scope of the agreement. Plaintiffs certainly do not contend that the agreements themselves were procured by fraud, or are the product of forgery or duress. The Court’s analysis above, in Parts IV.A.l.(a)-(b), shows that the claims against BOV and WABT are, at a minimum, “referable to arbitration” for purposes of 9 U.S.C. § 3. To the extent that Plaintiffs wish to argue that claims or parties fall outside the arbitration agreement, it is the place of the arbitrator — not this Court — to decide.

Plaintiffs will be directed to arbitrate their claims against BOV and WABT. It is therefore unnecessary to consider the remaining arguments concerning such claims.

B. Claims against Citizens State Bank

There are seven counts against Citizens in Plaintiffs’ amended complaint. The first five of these — Counts One, Four, Five, Six, and Seven — are for violations of various provisions of the Alabama Code. (Doc. 75 at 12, 15-18.) Count Eight is a claim for common-law negligence. (Id. at 19.) The final claim against Citizens is Count Twelve, alleging civil conspiracy. (Doc. 75 at 27.) Before addressing each of these counts, and Citizens’ defenses to them, there are four preliminary matters to address.

1. Preliminary matters

Citizens has filed three motions to strike, each pertaining to an evidentiary basis relied upon by Plaintiffs in responding to the summary-judgment motion. The first seeks to exclude Plaintiffs’ two expert reports. (Doc. 129.) The second motion asks that Plaintiff Lunan’s declaration be struck for purposes of summary judgment. (Doc. 130.) The third asks the Court to disallow Plaintiffs’ reliance on their own unverified interrogatory responses and unauthenticated documents. (Doc. 131.) Before addressing these, however, there is a threshold matter to address: Plaintiffs’ standing to bring suit.

a. Standing

The issue of Plaintiffs’ standing is raised in both Citizens’ motion to dismiss and its summary-judgment motion. Acknowledging that “[standing is determined at the time a complaint is filed,” Citizens points out that the assignments of rights giving rise to some of Plaintiffs’s claims were executed after the filing of the complaint. (Doc. 117 at 30 (citing Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570-71, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004)).) In their response, Plaintiffs do not dispute that the assignments did take place after the original complaint was filed. (Doc. 124 at 10.) They add, however, that the assignments took place well before the filing of the amended complaint. (Id. at 33.) Citizens’ reply does not controvert this, or otherwise argue that Plaintiffs lack standing under the amended complaint. The Court is satisfied that Plaintiffs have standing to bring their claims.

b. Motion to strike expert reports

Citizens’ first motion to strike (Doc. 129) concerns two expert reports. One report was prepared by Dayne C. Gray, of the firm Matson, Driscoll, and Damico (“the Gray report”). (Doc. 127-19.) The other report was prepared by W. Timothy Finn II of the Financial Management Consulting Group (“the Finn report”). (Doc. 127-21.)

The Gray report purports to provide accounting expertise, and focuses on alleged discrepancies between amounts transferred to Southland from Defendants Dubose and Bell, and the amounts transferred from Southland accounts to Dubose and Bell. The report concludes that the amounts that Dubose and Bell received “are in excess of the funds provided by these gentlemen to Southland in the amount of $916,613 and $256,740 respectively.” (Doc. 127-19 at 6.)

The Finn report focuses on banking standards of care, and contains several opinions concerning Citizens. The report concludes that Citizens “failed to comply with standard banking practices, failed to exercise due diligence, and failed to observe reasonable commercial standards and adequate standard of care in the handling of many transactions involving Southland Health Services and Emergystat.” (Doc. 127-21 at 5.)

Citizens seeks to have these reports struck on several grounds, but primarily because they constitute mere “unsworn preliminary expert reports.” (Doc. 129 at 1-3.) Citizens contends that the reports, as such, fall outside the universe of materials that can properly be considered in reviewing a summary judgment motion. (Id. at 2 (citing Fed.R.Civ.P. 56(c)).) In support of this argument, Citizens cites to Carr v. Tatangelo, in which the Eleventh Circuit addressed the admissibility of an unsworn “preliminary report by [an] expert witness” as part of summary judgment review. 338 F.3d 1259, 1273 (11th Cir.2003). The court found that the district court properly excluded the report from its consideration:

Importantly, the alleged expert’s report is unsworn. Only “pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits” can be considered by the district court in reviewing a summary judgment motion. Fed.R.Civ.P. 56(c) (emphasis added).... Unsworn statements do not meet the requirements of [Rule 56] and cannot be considered by a district court in ruling on a summary judgment motion. Because the preliminary report was submitted without attestation, it had no probative value....

Carr, 338 F.3d at 1273 n. 26 (internal quotation and alteration omitted) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 158 n. 17, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). Under Carr, an unsworn opinion can be considered only if there are supporting affidavits, made on personal knowledge, that “show affirmatively that the affiant is competent to testify to the matters related therein.” Id. (quoting Fed.R.Civ.P. 56(e) (now 56(c)(4))). Plaintiffs have submitted no such affidavits from their experts.

Plaintiffs respond that although the “reports may be unsworn, this is not a bar to these reports’ admissibility.” (Doc. 137 at 4.) But although Plaintiffs criticize Citizens’ reliance on Carr as being “only a footnote in a single case,” they fail to provide any contrary Eleventh Circuit case law of their own. (Doc. 137 at 6.) Instead, Plaintiffs cite to a handful of district-court cases — some from other circuits — as evidence of what the law is “[i]n the Eleventh Circuit.” (Id. at 4.) Relying on a footnote themselves from Medtronic Xomed, Inc. v. Gyms ENT L.L.C., 440 F.Supp.2d 1300, 1310 (M.D.Fla.2006), Plaintiffs assert that “unsworn expert reports may be considered at summary judgment where the expert identifies the report at deposition and does not retract the opinions therein.” (Id., emphasis added.) But even assuming Plaintiffs’ standard to be correct, the admissibility of the reports is far from certain.

Both Grey and Finn were deposed and questioned about their respective reports. Plaintiffs’ characterization of these depositions is that both “experts repeatedly voiced their continued support for their conclusions and reaffirmed their opinions.” (Doc. 137 at 5.) The depositions themselves indicate otherwise.

i. Grey’s deposition

With respect to Grey, Plaintiffs rely on two sections of Grey’s deposition, which allegedly show that he “repeatedly affirmed his report’s conclusions,” and “was prepared to testify at trial to that extent.” (Doc. 137 at 9.) The first section cited by Plaintiffs does nothing of the kind. Instead, Grey merely affirmed the limited scope of his opinion, agreeing that the “sum total and limit of [his] expert opinion” was to examine the funds transferred from Dubose and Bell to Southland and vice versa. (Doc. 129-1 at 26.) Grey makes no statement regarding his continued support for his report’s conclusions.

The second cited portion of Grey’s deposition is, at first glance, more promising. Plaintiffs quote the following statement by Grey: “I believe my report states what my opinion is.” (Doc. 137 at 9, quoting Doc. 129-1 at 39.) In context, however, this statement is evidence against Plaintiffs’ contention. Grey was being questioned as to why, without knowledge of whether certain transactions had been authorized by Southland, his report labeled them as “illegitimate.” (Doc. 129-1 at 39.) When asked whether this language constituted an accusation of wrongdoing, Grey deflected the question by saying “I believe my report states what my opinion is.” (Id.) Grey could not remember whether he or his assistant had chosen the “illegitimate” label, but he admitted that they “perhaps could have used a different word.” (Id.) Far from an endorsement of his written opinion, the cited portion of Grey’s deposition only highlights misgivings about the language that he used in the report.

The rest of Grey’s deposition casts serious doubt on his continued support for his opinion. Grey admitted that he lacked relevant information in preparing it. He was unaware, for example, whether the supposedly “illegitimate” transactions he examined were made with Southland’s permission or not:

A.....Now, did we have any documentation to tell us whether anyone authorized them to write a check for cash and put it in their account? I don’t have that information.

Q. Did you have any information that would enable you to provide an opinion as to whether any specific transaction was authorized by the company?

A. No, not any specific information.

(Doc. 129-1 at 26.) Grey also acknowledged that although he scrutinized funds paid directly from Dubose and Bell to Southland, he failed to take account of any funds used to pay loans on Southland’s behalf:

Q. To the extent that money from Mr. Dubose’s loans went into a South-land account, you’ve noted it?

A. Yes.

Q. But you haven’t noted the flow of funds from any of Mr. Dubose’s loans directly to vendors or other parties?

A. I don’t — I don’t think I’ve seen those records.

Q. Okay. That information was not provided to you?

A. No.

(Doc. 129-1 at 31.) Even more concerning are transactions central to his opinion that Grey simply could not account for. Grey was questioned, for example, about a $65,000 transfer that was missing from his analysis, and he acknowledged its relevance:

Q. Okay. Why does that [$65,000] payment not appear as an outflow of funds to the company on Schedule A?

A. As I sit here today, I — I don’t — I cannot tell you why it’s not included there.

Q. Should it be included?

A. Well I see the deposit for the bank statement on 6/30; that it cleared. Unless there’s anything indicating that it — that it was sent back, I don’t understand why it’s not included.

Q. Assuming the check was not returned, would that affect your opinion in this case?

A. It — it could.

Q. In what way could it affect your opinion?

A. Well, again, looking at it, it appears to be a check written on Mr. Dubose’s account, deposited into a corporate account. So, you know, by what we were — what we were doing, all accounts, you know, sitting here today, this looks like it should have been included.

(Doe. 129-1 at 29.) When confronted with discrepancies between entries in his report and Citizens’ own account statements, Grey acknowledged that it “[i]t certainly is possible that I could have made a mistake,” and that “other errors in the entries that [he] made” were also possible. (Doc. 129-1 at 52-53.)

These facts, as Plaintiffs tacitly acknowledge, cast serious doubt on the reliability of Grey’s report. (Doc. 137 at 6.) But without even reaching the question of reliability, these facts are — under Plaintiffs’ own proposed standard — fatal to the report’s admissibility. It can hardly be said, from reading Grey’s deposition, that he affirmed the conclusions in his report. Medtronic, 440 F.Supp.2d at 1310.

Plaintiffs seemingly acknowledge that this is the case, and state that “even where an expert partially-disavows [sic] portions of an expert report, the report may nevertheless be admissible.” (Doc. 137 at 10.) In support, Plaintiffs rely on In re Mentor Corp. ObTape Transobturator Sling Products Liability Litigation, 711 F.Supp.2d 1348, 1368 (M.D.Ga.2010). Even if it were binding on this Court, the cited case would do nothing to help Plaintiffs. The court there noted that “[w]ith one exception, [the defendant did] not contend that any of Plaintiffs’ experts retracted or disavowed their opinions,” and concluded that “[u]nder these circumstances, the Court concludes that it may properly consider the unsworn expert reports.” Id. at 1309 (emphasis added). The circumstances here are quite different, as Citizens does contend that Grey’s deposition serves to discredit, rather than affirm, his report’s conclusions. In these circumstances, where a defendant does contend, supported by the record, that an expert “retracted or disavowed” his opinion, In re Mentor only suggests that an unsworn copy of the opinion should not be considered.

If this were not enough, the Grey report itself calls for the same result. The “Scope of Work” section of the report emphasizes that its “conclusions are dependent on [the] documentation being accurate and complete in all material respects.” (Doc. 127-19 at 6.) As Grey’s deposition shows, the documentation undergirding his opinion was manifestly not “accurate and complete in all respects.” In fact, Plaintiffs themselves highlight this fact at several points. They concede that Grey “had not finished his work,” and his final calculation “does not include [other] transactions identified by Plaintiffs.” (Doc. 124 at 11.) They also claim elsewhere that “Plaintiff Lunan has identified additional sums which were not included in the [Grey] report.” (Doc. 137 at 8-9.)

Because the Grey report is unsworn and unsupported by an appropriate affidavit, its consideration for summary-judgment purposes is improper. Even if Plaintiffs are correct that an expert’s affirmation of his report at deposition can take the place of an affidavit, no such affirmation can be found here. The Court therefore will not consider the report in its review of the summary-judgment motion.

ii. Finn’s deposition

The Finn report is similarly problematic. Plaintiffs cite the report several times in their summary-judgment response for the proposition that Citizens “ignored obvious conversion of corporate funds.” (Doc. 124 at 8, 9, 13, 15, 16.) The report itself references the “fraud being perpetrated” by the individual Defendants, and opines that many transactions “were improper, and involved conversion of corporate funds.” (Doc. 127-21 at 12.) The opinion then goes even further, claiming that many of Dubose’s transactions “were obvious conversion [sic] of corporate funds,” and that Citizens was clearly “aiding him in his conversion of company funds.” (Id.) But at his deposition, Finn retreated from this aspect of his opinion:

Q. And I assume you also conclude that they obtained those corporate funds improperly or without — without proper authorization; correct?

A. I’m not sure I would agree with the — that I assumed they obtained them without proper authorization .... I didn’t form an opinion about the propriety of receiving them. My opinion was based on how they got them.

Q. So, the ultimate question of whether they actually embezzled funds, you’re not — you’re not making a judgment as to that; correct?

A. That is not one of my opinions.

(Doc. 129-2 at 14-15.) Finn also admitted that he had “no idea” what happened with any of the funds after they were transferred. (Doc. 129-3 at 24.) As a result, he could not say they “were not used for company purposes.” (Id. at 26.)

From Finn’s deposition it is clear that he had no information concerning the very point for which Plaintiffs cite his report. It essentially assumes what it seeks to prove, or at least what Plaintiffs attempt to prove by it. To the extent that the Finn’s report opines that any transaction constituted conversion or fraud, or was otherwise wrongful, those opinions were retracted at Finn’s deposition. As a result, this Court should not rely upon them,

c. Motion to strike Lunan’s declaration

Citizens’ second motion to strike addresses the sworn declaration of Larry Lunan. (Doc. 130.) The motion does not seek to have the entire declaration struck, but targets approximately twenty specific portions which it alleges are “speculation, conclusory allegations, and statements that are in direct contradiction to the prior testimony in this case.” (Id. at 3.)

Rather than discuss each statement in order, the admissibility of contested portions will be addressed as they become relevant to the analysis below. The Court, however, can rely only on facts which are properly supported by the evidence, and “set forth by affidavit or otherwise.” Lewis v. Casey, 518 U.S. 343, 358, 116 S.Ct. 2174, 135 L.Ed.2d 606 (1996). The evidence in question must be such that it would be admissible at trial. See Echaide v. Confederation of Canada Life Ins., 459 F.2d 1377, 1381 n. 5 (5th Cir.1972) (“[Rule 56], of course, requires that affidavits be based on personal knowledge and contain only such evidence as would be admissible at a trial.”); see also Fed. R.Crv.P. 56(c)(2) (providing that a party may object to summary judgment materials that would not be admissible in evidence).

“A witness may not testify to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.” Fed. R.Evid. 602. Of course, this does not mean that the source of a witness’ knowledge always needs external corroboration, since “evidence to prove personal knowledge may ... consist of the witness’ own testimony.” Id. But a party cannot create a genuine issue of material fact simply by stating, without any apparent foundation, that one exists. If that were allowed, there would be no meaningful way to discern the issues of fact that are truly genuine. The very purpose of a summary-judgment motion is to “pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). To accept a party’s own unsupported statements as “proof’ would defeat the point of summary-judgment review. Accordingly, the Court will not — and can not — entertain testimony from Mr. Lunan which is beyond the scope of his own personal knowledge.

d. Motion to Strike Interrogatory Responses and Exhibits

The subject of Citizens’ third motion to strike is Plaintiffs’ supplemental interrogatory responses, which Plaintiffs rely on extensively in their response to summary judgment. (Doc. 131.) As with the contested portions of Lunan’s affidavit, Citizens objects to numerous assertions made within the discovery responses, on the basis that they are “conclusory and unsupported by specific facts.” (Id. at 4.) But unlike Lunan’s declaration, the discovery responses at issue were not originally made under oath. Accordingly, Citizens also objects to the supplemental interrogatory responses in their entirety, on the basis that they — like the expert witness reports discussed above — are unverified and unsworn.

Plaintiffs reply to this general objection that supplemental responses do not need to be verified. (Doc. 138 at 5.) The only case Plaintiffs cite for this proposition, however, determined that such responses do require verification. See Knights Armament Co. v. Optical Systems Technology, Inc., 254 F.R.D. 463, 467 (M.D.Fla. 2008) (“The purpose of verifying interrogatory responses is to have the party attest to the truth of the responses. Thus, if a party amends or supplements its response, the party must attest to the truthfulness of the new response.”). While consideration of unverified responses would likely be improper, Plaintiffs have also submitted, along with their response brief, signed verification pages from Larry Lunan. (Docs. 138-1,138-2.)

Even assuming that these now-verified responses are proper to consider, many of the individual assertions they contain are not. At best, Lunan’s verification of them puts the responses on the same footing as his declaration, and subject to the same qualifications. This is evidenced by Lu-nan’s own verification statement, which states that the supplemental interrogatory responses are “true and correct to the best of my knowledge.” (Doc. 138-1 at 10, emphasis added.) The Court cannot rely on them any further than this. Accordingly, any unsupported assertions in the interrogatory responses, particularly those outside the scope of Lunan’s personal knowledge, will be excluded from the Court’s consideration.

2. Plaintiffs’ Claims Against Citizens

a. Count One: Ala.Code § 7-3-420

The first of Plaintiffs’ claims against Citizens is for violating § 7-3-420 of the Alabama Code. Title Seven of the Alabama Code is the state’s codification of the Uniform Commercial Code (“UCC” or “the code”). This particular provision addresses conversion, as it applies to negotiable instruments:

An instrument is converted under circumstances which would constitute conversion under personal property law. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by ... the issuer or acceptor of the instrument. ...

Ala.Code § 7-3-420(a) (emphasis added). Citizens relies on the language in bold in making its motion for summary judgment. The UCC defines “issue” to mean “the first delivery of an instrument by the maker or drawer.” § 7-3-105(a). Thus, the word “[ijssuer ... means a maker or drawer of an instrument.” § 7-3-105(c). Citizens argues that Plaintiffs, as the issuers of the instruments in question, are barred under this section from bringing claims for the conversion of such instruments. (Doc. 117 at 30.)

Plaintiffs seemingly concede that this is correct; their only response is to assert that this argument “of course is inapplicable to the conversion claim based on checks made by customers of Southland,” since Southland was not the issuer of those instruments. (Doc. 124 at 28.) Plaintiffs do not, however, identify the checks to which they are referring, despite Citizens’ assertion that all of the of the conversion claims against it are “based upon checks in which either Southland was the issuer, or else it purports to assert rights on behalf of an assignor who was the issuer (i.e., Emergystat).” (Doc. 117 at 30.)

Because Plaintiffs do not identify which transactions they refer to, the Court has looked elsewhere for guidance, and has located an interrogatory addressed to this exact question. Interrogatory No. 8 asked Plaintiffs to identify, by date and amount, “all transactions involving Defendant Citizens State Bank that Plaintiffs claim violated Alabama Code § 7-3-420 as alleged in Count One of Plaintiffs’ Amended Complaint.” (Doc. 127-13 at 6-7.) In response, Plaintiffs do not identify these transactions “by date and amount.” Instead, they simply reference “Finn’s expert report and deposition transcripts” as well as “Exhibit B hereto.” (Id. at 7.) There is, however, no Exhibit B attached. Finn’s report, meanwhile, discusses several checks “written on Southland’s account [that were] payable to Clanton Dubose,” but makes no mention of any checks made by customers of Southland that were paid into the accounts of either Dubose or Bell. (Doc. 127-21 at 12-8, emphasis added.)

The Court has also looked to the contents of Plaintiffs’ “third supplemental answers and objections.” (Doc. 127-20.) It purports to provide “a specification as to the specific transactions that are at issue with respect to each specific count of the complaint asserted against [Citizens].” (Id. at 4.) With respect to Count One, Plaintiffs contend that the contents of “Schedules 1, 2, 3, and 5 are at issue.” (Id.) To the extent that Schedules 1-3 refer to checks, they are checks drawn on Southland accounts. (Doc. 127-20 at 5-9.) Schedule 5 claims to list amounts of “Southland receipts,” ostensibly from Southland’s customers. It does not, however, identify which amounts were alleged to have been taken by Dubose, much less identify any specific transaction, whether by check number, issuer, date, or even the account into which it was deposited. (Doc. 127-20 at 12.)

By its terms, § 7-3-420 applies only to instruments, and Schedule 5 does not identify any instruments that could give rise to such a claim. Although § 7-3-420 provides that conversion may occur “under circumstances which would constitute conversion under personal property law,” it is well established under common-law doctrine that undifferentiated funds may not be the subject of a conversion claim. See Hensley v. Poole, 910 So.2d 96, 101 (Ala.2005) (collecting cases). See also Part IV.C.l below. Because an issuer of an-instrument may not bring an action for its conversion, and Plaintiffs have not identified — much less provided actual evidence of — any specific instruments for which Southland was not the issuer, the Court must conclude that Plaintiffs’ claims under § 7-3-420 fail as a matter of law.

b. Count Four: Ala.Code § 7-3-307

Count Four alleges violations of § 7-3-307. Citizens has moved for dismissal of this Count on grounds that it does not “create an independent cause of action” and therefore “fail[s] as a matter of law.” (Doc. 117 at 30-18.) Plaintiffs respond by asserting that Citizens has failed to show “that a private right of action is precluded.” (Doc. 124 at 29.) But it is Plaintiffs, not Citizens, who bear the onus of showing that a particular statute provides a cause of action. See American Auto. Ins. Co. v. McDonald, 812 So.2d 309, 311 (Ala.2001) (“One claiming a private right of action within a statutory scheme must show clear evidence of a legislative intent to impose civil liability for a violation of the statute.”). This Court has a duty of “ascertaining and applying state law,” but is powerless to create a cause of action that is not already recognized. See Beasley v. Fairchild Hiller Corp., 401 F.2d 593, 596 (5th Cir.1968).

Notably, § 7-3-307 does not appear to supply the cause of action in any of the cases citing it. See, e.g., Brooks ex rel. Vickers v. First Fed. Sav. and Loan Ass’n of Sylacauga, 726 So.2d 640 (Ala.1998). At least one court has rejected the attempts of a plaintiff to use the provisions of § 7-3-307 to “piece together the elements” of a novel claim. See Continental Cas. Co. v. Compass Bank, 2006 WL 566900 at *10 (S.D.Ala.2006).

The approach used to determine whether a different UCC provision provides an independent cause of action is also instructive here. The Alabama Supreme Court addressed the question with regard to § 7-1-203 in Gov’t St. Lumber Co. v. Am-South Bank N.A., 553 So.2d 68, 72-73 (Ala.1989). Section 7-1-203 mandates an obligation of good faith in the performance of contracts. The court determined that § 7-1-203 “does not create a substantive cause of action.” Id. It rejected an attempt to imply an independent cause of action because “[tjhere [was] no indication, either in the text or the comments, that section 1-203 was intended to be remedial rather than directive.” Chandler v. Hunter, 340 So.2d 818, 821 (Ala.Civ.App.1976). See Gov’t St. Lumber Co., 553 So.2d at 72 (“We expressly adopt the reasoning of the Alabama Court of Civil Appeals in Chandler v. Hunter ... since § 7-1-203 is directive rather than remedial.”).

That same rationale applies here: there is nothing in the text or comments to § 7-3-307 that indicates that it is to be the source of any remedy. To the contrary, the first of the official comments explains the “directive” nature of the section:

This section states rules for determining when a person who has taken an instrument from a fiduciary has notice of a breach of fiduciary duty that occurs as a result of the transaction with the fiduciary. Former Section 3-304(2) and (4)(e) related to this issue, but those provisions were unclear in their meaning. Section 3-307 is intended to clarify the law by stating rules that comprehensively cover the issue of when the taker of an instrument has notice of breach of a fiduciary duty and thus notice of a claim to the instrument or its proceeds.

Ala.Code § 7-3-307 cmt. 1 (emphasis added). Aside from any relevance it may have to Plaintiffs claims, it is clear that § 7-3-307 does not provide a source of those claims. Plaintiffs have not produced a single authority to the contrary. Thus, Plaintiffs have failed to state a claim upon which relief can be granted, and Count Four is due to be dismissed.

c. Count Five: Ala.Code § 19-1-1 et seq.

The code section at issue in Count Five is “Alabama’s version of the Uniform Fiduciary Act,” or “UFA.” Heffner v. Cahaba Bank and Trust Co., 523 So.2d 113, 114 (Ala.1988). Citizens argues, as with the previous claim, that the UFA does not provide for an independent cause of action. (Doc. 117 at 30.) Plaintiffs merely respond that Alabama cases dealing with the statute “do not even dismiss the possibility that there might not be a private right of action.” (Doc 123 at 20.) Once again, Plaintiffs have failed to demonstrate that a separate cause of action was contemplated. The question is closer here, as the Alabama Supreme Court has at least discussed the possibility of being “subjected ... to liability under § 19-1-9.” Heffner v. Cahaba Bank and Trust Co., 523 So.2d 113, 115 (Ala.1988).

Even if an independent claim does exist, summary judgment would still be appropriate due to the defenses that the statute unmistakably does establish. For example, if a fiduciary deposits funds that he holds — as a fiduciary — into his personal account, the UFA provides that bank with significant protection:

[T]he bank receiving such deposit is not bound to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary; and the bank is authorized to pay the amount of the deposit or any part thereof upon the personal check of the fiduciary without being liable to the principal, unless the bank receives the deposit or pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in making such deposit or in drawing such check, or with knowledge of such facts that its action in receiving the deposit or paying the check amounts to bad faith.

Ala.Code § 19-1-9. Thus, even if the UFA does provide Plaintiffs a cause of action, it also requires Citizens to have had “actual knowledge” that the individual defendants were committing a breach of their fiduciary duties, or else knowledge of facts rendering its aid an act of bad faith. See Brooks, 726 So.2d at 643 (“The U.F.A. insulates banks that deal with wrongdoing fiduciaries from liability unless the beneficiary can show that the bank had actual knowledge of the wrongdoing or had knowledge of such facts that prove bad faith on the part of the bank.”) (emphasis added). Plaintiffs rely on the second of these, alleging that Citizens “had knowledge of such facts that their action in receiving the deposits or paying the checks amounted to bad faith.” (Doc. 123 at 20) (quoting Ala.Code § 19-1-9) (internal brackets omitted). But Plaintiffs fail to present facts supporting such knowledge.

The undisputed facts show that Citizens understood Dubose and Bell to be acting for Southland’s benefit. Southland opened an account at Citizens in October of 2006. Around that time, Southland also approached Citizens for a loan, and was denied “based on its financial issues.” (Doc. 117 at 9.) Citizens was, however, willing to make a loan to Dubose, based on his history with the bank, the fact that he had recently paid back another short-term loan, and because he was willing to pledge real property as collateral for the loan. (Id.) Plaintiffs themselves describe how Southland approached Citizens for a loan and was refused: “In October [of] 2006, [Citizens] refused to loan funds to the Company. However, [Citizens] agreed to loan to Dubose for the benefit of the company.” (Doc. 124 at 19) (emphasis added) (internal citations omitted). Citizens was given a written consent letter that bore Lunan’s signature, which purported to “approve and ratify Clanton Dubose to sign on ... any loan made to Southland Health Services, Inc. by Citizens Bank, Vernon, Alabama.” (Doc. 127-44.) Plaintiffs dispute the authenticity of this letter, but they do not dispute that Citizens received it without notice of any apparent fraud. Citizens relied on the letter, as Plaintiffs themselves put it, “to serve as authorization to debit Southland accounts for payments of debts.” (Doc. 124 at 20.) Plaintiffs also describe how Dubose presented Citizens with “evidence of a loan obligation from the Company to him.” (Id.) The appearance of Southland’s financial difficulties, and the need for loans from creditworthy individuals, was heightened by Southland’s request for “Bank Official checks” for the purpose of paying vendors that would no longer accept checks from Southland’s own accounts. (Doc. 116-4 at 18.)

When Southland’s Citizens account was established, Dubose was one of the authorized signatories on it — along with Lunan, Bell, and two others. (Doc. 116-4 at 29.) Because Dubose obtained loans in his own name for the benefit of Southland, and did so with the apparent authority of Lunan and Southland, there was nothing about Dubose’s actions, in general, that would indicate that Citizens had knowledge of fraud, or that would put Citizens on notice that honoring his transactions would be in bad faith.

In support of their opposition to summary judgment on their § 19-1-1 claims, Plaintiffs appeal to one of the provisions already discussed, § 7-3-307. But the comments to that very section refer to the rationale behind the UFA, and explain why — under similar circumstances — a bank can safely assume that an individual’s actions were proper:

For example, Doe as President of Corporation writes a check on Corporation’s account to the order of Doe personally.... In this case there is no notice of breach of fiduciary duty because there is nothing unusual about the transaction. Corporation may have owed Doe money for salary, reimbursement for expenses incurred for the benefit of Corporation, or for any other reason. If Doe is authorized to write checks on behalf of Corporation to pay debts of Corporation, the check is a normal way of paying a debt owed to Doe. Bank may assume that Doe may use the instrument for his personal benefit.

Ala.Code § 7-3-307 cmt. 4 (emphasis added).

In addition to general allegations that Citizens should have known that Dubose’s actions were unauthorized, Plaintiffs also point to specific “red flags” that they claim should have also triggered suspicion on Citizens’ part. One such “red flag” is the alleged overall discrepancy between the amounts that Dubose loaned to Southland and the amount that he received from Southland. This argument, however, is based on the discredited Grey report, which the Court has excluded from consideration. Moreover, the uncontroverted affidavit from Citizens’ expert, J. Wray Pierce, shows that the majority of these transactions can in fact be directly traced to “the benefit of Southland and its affiliates.” (Doc. 116-14 at 3.)

Plaintiffs also contend that the specific use of some of the funds- — -for things such as jewelry and car payments- — -should have triggered scrutiny. But the Alabama Supreme Court has found that there was no notice, under § 19-1-9, for exactly those sorts of transactions:

The plaintiff specifically points to certain checks, such as those to Weil Furs, Golbro Jewelers, and Cobb-Kirkland, an automobile dealership, to show that [the bank] should have been on notice that [the fiduciary] was breaching her fiduciary duty. We disagree.

We do not believe that the amount and number of transactions carried out on an account containing fiduciary funds, nor the mere names of payees on checks drawn on that account, are sufficient to create bad faith liability based on the bank’s action in paying such checks.

Heffner, 523 So.2d at 115.

In short, Plaintiffs have not provided any evidence from which Citizens’ liability under § 19-1-1 et seq. could be inferred, even if such an independent cause of action exists. In addition to disposing of any claims which Plaintiffs might have under the UFA, the UFA also provide Citizens with additional protections from its other claims.

d. Count Six: Ala.Code § 7-4-401 et seq.

Citizens makes two arguments with regard to Count Six, Plaintiffs’ claims under § 7-4-401 et seq. The first concerns Citizens’ defense under the statute of repose, § 7-4-406(f), which is addressed further below. The second argument is that Plaintiffs are barred from recovering consequential damages, by operation of § 7-4-103(5). Section 7-4-103(5) provides that the measure of damages for failure to “exercise ordinary care in handling an item” cannot exceed the amount of the item unless there “is bad faith.” See also Bar-Ram Irrigation Products v. Phenix-Girard Bank, 779 F.2d 1501, 1505 (11th Cir. 1986) (finding that consequential damages are subject to the bad faith standard of § 7-4-103(5)).

Plaintiffs do not dispute that consequential damages hinge on the presence of bad faith. (Doc. 124 at 32-33.) Instead, they merely argue that “there is ample evidence of Citizens State Bank’s knowledge and bad faith.” (Id. at 33.) As explained above in Part IV.B.2.C, Plaintiffs have failed to put forward any evidence from which a finding of bad faith could be made. Citizens is correct that consequential damages are precluded.

e. Count Seven: Ala.Code § 7-4A-201 et seq.

Article 4A of the UCC governs funds transfers. Ala.Code § 7-4A-102. Citizens’ motion to dismiss Count Seven is based on Plaintiffs’ failure to identify any funds transfers that are the subject of its Article 4A claims. (Doc. 117 at 31.) Citizens cites to interrogatory responses where Plaintiffs were asked to identify, by date and amount, “all transactions involving Defendant Citizens State Bank that Plaintiffs claim violated Alabama Code § 7-4A-201 et seq.” (Doc. 127-13 at 8.)

In their second supplemental answers, Plaintiffs did not provide any specific transactions in response. (Id.) In their third supplemental answers, Plaintiffs declare “that the specific transaction on Schedule 7 are [sic] at issue with respect to Count Seven.” (Doc. 116-13 at 4.) The only transaction mentioned in Schedule 7, however, is a check; not a wire transfer, nor other transfer subject to Article 4A. (Doc. 116-13 at 15.) Additionally, Plaintiffs’ only response to summary judgment is to flatly declare, without support or elaboration, that Citizens’ motion as to this claim “must be denied.” (Doc. 124 at 28.) Count Seven is therefore due to be dismissed.

f. Count Eight: Negligence

In addition to UCC and UFA claims, Plaintiffs make a common-law negligence claim in Count Eight. (Doc. 75 at 19.) Citizens has moved to dismiss Count Eight as “preempted by the specific statutory provisions of the Alabama Code dealing with unauthorized transactions.” (Doc. 117 at 29.)

The UCC contains an internal rule addressing