                                    UNPUBLISHED

                       UNITED STATES COURT OF APPEALS
                           FOR THE FOURTH CIRCUIT


                                       No. 18-1961


GARY W. DAY, Individually and as Assignee of the Claims of Hudson Insurance
Company,

                    Plaintiff - Appellant,

             v.

UNITED BANK, f/k/a Bank of Georgetown,

                    Defendant - Appellee.


Appeal from the United States District Court for the District of Maryland, at Greenbelt.
Paula Xinis, District Judge. (8:16-cv-00975-PX)


Argued: January 29, 2020                                     Decided: February 20, 2020


Before WILKINSON, NIEMEYER, and MOTZ, Circuit Judges.


Affirmed by unpublished per curiam opinion.


ARGUED: David Hilton Wise, WISE & DONAHUE, PLC, Fairfax, Virginia, for
Appellant. Richard E. Hagerty, TROUTMAN SANDERS, LLP, Washington, D.C., for
Appellee. ON BRIEF: Brian S. Jablon, WELLENS & JABLON, LLC, Severna Park,
Maryland, for Appellant.


Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

       Gary W. Day, individually and as an assignee of Hudson Insurance Company,

appeals the district court’s judgment in favor of United Bank. Day alleges that the Bank’s

failure to notify him that it had been assigned certain claims resulted in significant losses

for which the Bank is liable. We affirm on the basis of the district court’s well-reasoned

opinion.



                                             I.

       In 2009, Andy Persaud, president of an eponymous construction company (Persaud

Companies, Inc., “PCI”), opened an account at the Bank of Georgetown (acquired in 2016

by United Bank) (the “Bank”). PCI obtained a line of credit from the Bank, secured in part

by PCI’s accounts receivables for its Government contracts. The Bank opened two

separate accounts for Persaud, one of which, controlled by the Bank, received money

deposited by the Government (among others) for work completed. Every month, PCI

would apply to borrow money based on the amount in the Bank’s account and the Bank’s

assessment of PCI’s finances. It is uncontested that, contrary to the requirements of the

Anti-Assignment Act, 41 U.S.C. § 6305, after 2009, the Bank did not provide Hudson with

notice of the assignment of PCI’s contracts. The Bank did, however, file a UCC Financing

Statement on August 7, 2009.

       In an unrelated series of events, in December 2010 Persaud established a bonding

program with Hudson Insurance Company (“Hudson”), a surety that agreed to issue

payment and performance bonds on PCI’s behalf. In the course of underwriting the

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bonding program, Hudson’s agent obtained from Persaud documents showing all banks

with a security interest in PCI as well as the promissory note and loan documents between

PCI and the Bank.       Pursuant to the bonding program, Persaud executed a General

Indemnity Agreement in favor of Hudson, and Hudson began issuing bonds for PCI’s

Government contracts.

       In late 2011, Persaud requested an expansion of the bonding program. Hudson was

wary, as it considered Persaud to be personally risky as a result of a contentious divorce.

Nonetheless, it agreed to execute an amended General Indemnity Agreement on two

conditions: first, that an additional indemnitor be added, and second, that all funds from

contracts relating to the Agreement run through “funds control” (a third-party escrow

account). PCI’s counsel introduced Gary W. Day to Persaud, and Day agreed to serve as

a second indemnitor in exchange for payment to Day of one percent of the face amount of

all bonds issued by Hudson. Persaud, Day, and Hudson executed the amended General

Indemnity Agreement in October 2011. Pursuant to this contract, Day and Persaud agreed

to exonerate and indemnify Hudson from and against any and all demands, losses, and

liabilities that Hudson might incur arising from the PCI bonds.

       A few months later in the spring of 2012, Hudson began receiving claims on PCI’s

projects. As surety, Hudson stepped in to cover these claims.        Hudson subsequently

initiated an investigation. In July 2012, after Persaud refused to provide Hudson with the




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information it requested, Hudson demanded collateral security pursuant to the General

Indemnity Agreement. 1 Contrary to the Agreement, Persaud did not pay.

       Hudson ultimately lost $3.7 million by paying out claims related to PCI, and it

sought to recoup these losses in an indemnification suit against Persaud and Day filed in

January 2013. Day cross-claimed against PCI and Persaud. During discovery in this

litigation, Hudson first learned the details of the loan arrangement between Persaud and

the Bank.

       Hudson and Day obtained default judgments against PCI and Persaud, who is

believed to be penniless.     Day and Hudson settled, and, pursuant to the settlement

agreement, Day obtained the assignment of Hudson’s claims against the Bank.

       Unable to recover directly from Persaud or PCI, Day brought this action against the

Bank. Day asserts that, had Hudson been aware of the nature of the banking relationship

between Persaud and the Bank, it would never have agreed to issue the bonds on which it

suffered losses. Day maintains that all of his injuries flow from the failure of the Bank to

alert Hudson to Persaud’s assignments, and that the Bank is therefore liable for breach of

statutory, tort, and common law duties to him.




       1  In this same period, Persaud asked, and the Bank granted, a significant increase
in his line of credit. Persaud defrauded the Bank in order to obtain this credit increase, a
federal crime to which he pled guilty in 2013.
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                                             II.

       The district court ruled for the Bank on alternative grounds. The court held Day

failed to state a claim and so dismissed his suit, and, alternatively, granted summary

judgment finding all of Day’s claims time-barred.

       With respect to the latter, the district court recognized that, under Maryland law, an

action only accrues when the claimant in fact knew or was on inquiry notice of the alleged

wrong. Reasoning that Hudson had both cause to investigate and the information that

suggested it was necessary to do so, the court concluded that Day was on inquiry notice no

later than October 2011, when Day, Hudson, and Persaud executed the amended General

Indemnity Agreement. At that time, Hudson was already concerned about the state of

Persaud’s finances and possessed the Bank’s UCC filing and the loan documents

memorializing the agreement between the Bank and Persaud. As the court explained:

       It blinks at reality to suggest that Hudson — already concerned about PCI’s
       financial health, on notice of a UCC filing, and in possession of the Bank’s
       security agreement reflecting its interest in PCI’s accounts receivable and of
       PCI’s debts owed — did not have sufficient facts from which to inquire
       further about the Bank and PCI’s relationship. Day and Hudson, as sureties
       in the industry, certainly should have known the import of such
       arrangements.

We agree with the district court’s analysis. The latest Day could have filed suit within the

limitations period was therefore October 2014; he did not actually file suit until April 2016.

Day’s claim is therefore time-barred.

       We also agree, for the reasons thoroughly explained by the district court, that Day’s

complaint fails to state a claim. The district court rejected Day’s negligence claim on

multiple grounds, concluding that the statute did not establish a duty to Day on the part of

                                              5
the Bank and that Maryland law precluded Day’s recovery in tort for purely economic

losses. Next, the court dismissed Day’s attempts to sue directly under the Anti-Assignment

Act, concluding that Day lacked a cause of action and that there was no authority to support

his argument that he may be subrogated to the Government. Day’s constructive fraud claim

also failed because, as the district court explained, Day could show neither violation of a

duty nor the existence of a confidential relationship between Day and the Bank, both

necessary prerequisites to stating a constructive fraud claim. Finally, the district court

properly dismissed Day’s counts seeking equitable relief, noting that Day could not meet

the elements of breach of trust, constructive trust, or accounting.   2   As the court explained,

“Day’s alleged rights to relief either are made pursuant to rights that Day cannot assert; are

brought for conduct for which the Bank is not liable; or seek remedies to which Day is not

entitled.” This analysis is sound.



                                             III.

       Finding no fault in the district court’s judgment that Day failed to state a claim and

that his claims were time-barred, the judgment of the district court is

                                                                                    AFFIRMED.




       2Day does not appeal the district court’s dismissal of Counts VII and VIII. We
therefore do not discuss these claims.
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