United States District Court, D. Arizona
ORDER
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.
Background
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.
Discussion
“‘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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