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Thuney v. Lawyer's Title of Arizona

United States District Court, D. Arizona

February 5, 2019

Joseph and Carla Thuney, a married couple, Plaintiffs,
Lawyer's Title of Arizona, an Arizona Corporation, et al., Defendants.


          H. Russel Holland, United States District Judge.

         JPMorgan Chase Bank, N.A.'s Motion to Dismiss Plaintiffs' Complaint

         Defendant JPMorgan Chase Bank, N.A. moves to dismiss plaintiffs' first amended complaint.[1] This motion is opposed.[2] Oral argument has been heard on this motion.


         Plaintiffs are Joseph and Carla Thuney. Defendants are Lawyers Title of Arizona, Inc.; Julie-Ann Helms; Helms & Helms, PLLC; KeyBank N.A.; and JPMorgan Chase Bank, N.A.

         On May 9, 2017, plaintiffs executed an agreement to purchase a retirement home in Surprise, Arizona.[3] On that same day, plaintiffs allege that “Helms sent an unencrypted email with a copy of the Executed Contract for the property to Joe Thuney and advised him that the file had been sent to Lawyers to establish an escrow account and that Amanda Zalenski would be contacting [plaintiffs] by phone.”[4] Plaintiffs allege that the next day, May 10, 2017, they “received an unencrypted email from Amanda Zalenski at Lawyers with instructions for sending their $2, 000 earnest money deposit.”[5] Plaintiffs allege that they then “using a computer, sent the instructions received from Lawyers to KeyBank that in turn arranged for the payment of $2, 000 earnest money to the account they were directed to by Amanda Zalenski at Lawyers.”[6]

         Plaintiffs allege that on May 11, 2017, Zalenski, on behalf of Lawyers, “sent an unencrypted email [which] contained an introductory packet with the Thuneys' escrow number and applicable documentation[].”[7] Plaintiffs allege that on May 15, 2017, Zalenski “sent an unencrypted email to [them] which contained Lawyers Commitment for Title Insurance and the Schedule B Exception.”[8]

         Plaintiffs allege that around 9 a.m. on May 31, 2017, Mr. Thuney received an email that purported to be from Zalenski “stating that the Thuneys['] loan had been funded and that they were set to close on the 9th of June.”[9] Plaintiffs allege that “[t]his email included a signature line, logos, images, and other trade dress indicating it was from Lawyers” but that it was actually “a forged electronic document making it appear it was from Lawyers when it was not.”[10] Plaintiffs allege that “[t]he email also included a forged combined settlement statement and a letter apparently on Lawyers Title's letterhead showing the exact amount due at closing of $119, 555.73 and the specific branch of Chase to make the wire transfer to.”[11]That branch is alleged to be “located in Houston, Texas.”[12]

         Plaintiffs allege that around 9:08 a.m. on May 31, 2017, they “received another forged email telling them that the loan had been funded and asking that Joe Thuney call Lawyers to inform them once the transfer of funds was complete so the title could be filed for closing.”[13]Plaintiffs allege that at 11:38 a.m. on May 31, 2017, “using a computer, Joe Thuney sent the forged payment instructions to KeyBank.”[14]

         Plaintiffs allege that on June 2, 2017, they “received another forged email from the person impersonating Amanda Zalenski stating that Lawyers had not yet received the wire transfer.”[15] Later that same morning, plaintiffs allege that “the fraudulent Amanda Zalenski sent a forged email and updated set of wiring instructions for the closing funds. This forged email again had the look, feel, and trade dress of a document from Lawyers.”[16] Plaintiffs allege that shortly after receiving this email, “using his computer, Joe Thuney sent an email to KeyBank containing the updated forged wiring instructions.”[17]

         Plaintiffs allege that after KeyBank got Joe Thuney's email, someone from KeyBank

called the phone number on the instructions and spoke to the fraudulent Amanda Zalenski to confirm the correct account numbers to send the transfer to. KeyBank's agent stated that he was “hung up on” when he called the number and commented that the person he did eventually speak with talked with a “very heavy accent” and that the phone connection was very poor. Despite these facts, the KeyBank agent did not detect the fact that he was not dealing with Lawyers Title but was in fact talking to a participant in the fraud.[18]

         Plaintiffs allege that on June 5, 2017 at 9:53 a.m., they “received confirmation from the fraudulent Amanda Zalenski that the wire transfer of $119, 555.73 had gone through” and that attached to the email was “a Receipt for Deposit that appeared to be from Lawyers Title.”[19] Plaintiffs allege that “[t]his time, Joe Thuney noticed that the email addresses were slightly different” and thus he “called the number on the fake wire instructions, ” but there was no answer.[20] Plaintiffs allege that they were “becoming suspicious that something might be wrong” and so Joe Thuney called Helms around 3 p.m. on June 5, 2017.[21] Plaintiffs allege that at 3:36 p.m., Joe Thuney “emailed Helms a copy of the fraudulent Receipt for Deposit” and told her “that he thought there might be a fraud.”[22]

         About 3:50 p.m. on June 5, 2017, plaintiffs allege that “Joe Thuney received an email from the fraudulent Amanda Zalenski stating that she missed his call due to being in a ‘board meeting' and that [plaintiffs] did not need to appear in person to sign closing documents.”[23]Plaintiffs allege that “at 3:53 PM, Joe Thuney forwarded” this email “to Helms to see if it was legitimate.”[24]

         Plaintiffs allege that “at 3:57 PM, only hours after the money transaction, Joe Thuney emailed KeyBank stating that there was a potential problem and that they needed to cancel the wire transfer ASAP.”[25] Plaintiffs further allege that

[o]n or about June 5, 2017, between 3:27 PM and 5:57 PM, Joe Thuney called and emailed Rob Eagar at KeyBank, the real Amanda Zalenski, and Judith Meyer, assistant escrow officer at Lawyers, to try to determine what had occurred and attempt to stop the transaction, informing each of the professionals of the fraudulent activity. Judith Meyers also directed the Thuneys not to use Amanda Zalenski's email because Lawyers thought her [email] may have been compromised.[26]

         Plaintiffs allege that Lawyers “represented that it had contacted its fraud division to put a freeze on the funds at Chase and represented to Joe Thuney that [it] contacted the FBI too and told the FBI there had been a fraud.”[27] Plaintiffs further allege that “KeyBank . . .represented that [it] had contacted Chase and the FBI.”[28] Plaintiffs thus allege that “Chase knew that there was a fraudulent transfer” and they allege that Chase “represented to KeyBank that the money was being held in their wiring department and that the money was there, ” although Chase “would not verify the amount with either KeyBank or Lawyers.”[29]

         Plaintiffs allege that “[s]hortly after June 5, 2017, Chase . . . requested a recall and hold harmless from KeyBank to return the money once Chase's investigation was complete, which could potentially take up to thirty days.”[30] Plaintiffs allege that they “were told that KeyBank provided all the information and [an] indemnity agreement to Chase” and that “Chase told Lawyers that they had requested the pertinent information from KeyBank and that they were issuing a debit to release the money at the completion of the investigation.”[31]

         Plaintiffs allege that on “June 15, 2017, Chase informed Lawyers['] fraud representative that Chase was going to contact its account holder who had conducted the fraud to receive authorization to release the funds.”[32] Plaintiffs allege that on June 19, 2017, “the fraud representative from KeyBank confirmed that Chase had released the funds to the individuals or entities who had conducted the fraud.”[33]

         Plaintiffs allege that on July 3, 2017, they “received notice from Lawyers that their Contract for Purchase had been canceled and that the sellers had been given plaintiffs' $2, 000 earnest money deposit.”[34] Plaintiffs further allege that they have lost the $119, 555.73 that they instructed be wired from KeyBank to Chase, as defendants have not “agree[d] to make any credit or payment” to plaintiffs' account.[35] Plaintiffs allege that “[a]t no time has Lawyers, Helms, KeyBank, or Chase provided any report or written information to [them] about what occurred or even if there had been an investigation” into the fraudulent transfer.[36]

         Plaintiffs commenced this action on May 18, 2018. In their first amended complaint, they assert three claims against Chase: 1) an aiding and abetting claim, 2) an Electronic Funds Transfer Act (EFTA) claim, and 3) an Arizona Consumer Fraud Act (ACFA) claim.

         Pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, Chase now moves to dismiss plaintiffs' claims against it.


         “‘To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “A claim is facially plausible ‘when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Id. (quoting Iqbal, 556 U.S. at 678). “The plausibility standard requires more than the sheer possibility or conceivability that a defendant has acted unlawfully.” Id. “‘Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.'” Id. (quoting Iqbal, 556 U.S. at 678). “[T]he complaint must provide ‘more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.'” In re Rigel Pharmaceuticals, Inc. Securities Litig., 697 F.3d 869, 875 (9th Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “In evaluating a Rule 12(b)(6) motion, the court accepts the complaint's well-pleaded factual allegations as true and draws all reasonable inferences in the light most favorable to the plaintiff.” Adams v. U.S. Forest Srvc., 671 F.3d 1138, 1142-43 (9th Cir. 2012).

         In their opposition, plaintiffs “withdraw” their EFTA claim because they “are only seeking redress for what Chase did or did not do, after the funds transfer was completed[.][37]Thus, plaintiffs' EFTA claim against Chase is dismissed with prejudice.

         Turning then to plaintiffs' aiding and abetting and ACFA claims, Chase first argues that these claims are preempted by Article 4A of the Arizona Uniform Commercial Code. “Fund or wire transfers are governed by Article 4A of the U.C.C.” Koss Corp. v. American Exp. Co., 309 P.3d 898, 905 (Ariz.Ct.App. 2013). “Article 4A is ‘intended to be the exclusive means of determining the rights, duties and liabilities of the affected parties in any situation covered by particular provisions of the Article.'” Id. (quoting U.C.C. § 4A-102 cmt. (emphasis added)). “‘A review of Article 4A demonstrates that it carefully and comprehensively governs the rights and responsibilities between the originator and the originator's bank and between intermediary banks involved in payment orders . . . as well as between a beneficiary's bank and the beneficiary. . . .” Rock Point School, Inc. v. Wells Fargo Bank, N.A., No. CV-15-08057-PCT-SRB, 2015 WL 13123002, at *4 (D. Ariz. Aug. 4, 2015) (quoting Koss, 309 P.3d at 906). “‘[T]he actions of the parties involved in a funds transfer that implicate the transaction itself are exclusively governed by Article 4A.'” Id. ...

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