Attorney's Title Ins. Fund, Inc. v. Regions Bank

491 F.Supp.2d 1087

ATTORNEY'S TITLE INSURANCE FUND, INC., a Florida Corporation, Plaintiff, v. REGIONS BANK, Defendant.

No. 06-61814-CIV-UNGARO.

United States District Court, S.D. Florida.

April 11, 2007.

Carlos David Lerman, Smoler Lerman Bente & Whitebook, Hollywood, FL, for Plaintiff.

David Stuart Garbett, Garbett Bronstein Stiphany & Allen, Elizabeth B. Dombovary, Lewis R. Cohen, Miami, FL, for Defendant.

ORDER ON DEFENDANT'S MOTION TO DISMISS

UNGARO, District Judge.

THIS CAUSE is before the Court upon Defendant's Motion to Dismiss Complaint, filed December 11, 2006. (D.E.2.) Plaintiff filed its Response on January 5, 2007, (D.E.7) to which Defendant replied on January 7, 2007. (D.E.8.) The matter is ripe for disposition.

THE COURT has considered the motion and the pertinent portions of the record and is otherwise fully advised in the premises.

BACKGROUND AND FACTS

On November 2, 2006, Plaintiff, Attorney's Title Insurance Fund, Inc., ("Attorney's Title Fund") filed this action against Defendant, Regions Bank, in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County Florida. (Notice of Removal ¶ 1.) On December 5, 2006, Defendant removed the action to this Court pursuant to 28 U.S.C. § 1332(a), § 1441(a), and § 1446(a). (Notice of Removal at 1.)

The Court recites the following facts taken from Plaintiff's complaint and accepted as true for the purpose of deciding Defendant's motion to dismiss. This action arises out of a fraudulent transaction that occurred on June 28, 2004, involving the sale of certain real property owned by Rae O. Chuven and Hyman Chuven. (Compl.¶ 4.) The Chuvens' property was sold by imposters purporting to be the true owners of the property to a buyer (Benoit Jacobs), who used the property as collateral to finance the purchase and procured a loan from Home Equity Mortgage Company. (Compl. ¶ 4.)

Pursuant to the closing statement, the closing agent (Maria Veronica Rivas) issued a check in the amount of $180,926.11, made payable to Rae O. Chuven and Hyman Chuven, which was drawn on Regions Bank, N.A. ("the Check"). (Compl. ¶ 4 & Ex. C.) According to Plaintiff, the maker of the Check (Rivas) intended that the Check would be an enforceable obligation against her according to its terms, and she surrendered control of the Check with that intention. (Compl.¶ 5.) The imposter sellers forged the endorsements of Rae O. Chuven and Hyman Chuven on the Check, and Defendant paid the Check on the unauthorized (forged) endorsement. (Compl.¶¶ 6, 9.)

Rae O. Chuven and Hyman Chuven subsequently filed an action to cancel the deed conveying the Chuvens' property to Jacobs and the mortgage loan given by Home Equity Mortgage Company. (Compl.¶ 6.) On March 23, 2005, the Circuit Court entered a final summary judgment in favor of the Chuvens, quieting title to the property. (Compl.¶ 7.) Plaintiff Attorney's Title Fund subsequently paid Home Equity Mortgage Company's unpaid balance on the mortgage loan and acquired the Chuvens' claims arising out of the transaction. (Compl. ¶ 8 & Ex. D.)

According to Plaintiff, Defendant Regions Bank is liable to the payee (the Chuvens) for the amount of the Check because Defendant paid the Check over the Chuvens' unauthorized (forged) endorsement. (Compl.¶ 9.) As the assignee of the Chuvens' claims, Plaintiff seeks to recover from Regions Bank damages in the amount of the Check, which equals $180,926.11, plus any accrued interest¹. (Compl.¶ 9.)

LEGAL STANDARD

On a motion to dismiss, "a complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Milburn v. United States, 734 F.2d 762, 765 (11th Cir.1984). Under the Federal Rules of Civil Procedure, a claimant does not need to "set out in detail the facts upon which he bases his claim." Gibson, 355 U.S. at 47, 78 S.Ct. 99. Rather, "all the Rules require is a `short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Id.; see Fed.R.Civ.P. 8. On a motion to dismiss, "the facts stated in [the plaintiffs] complaint and all reasonable inferences therefrom are taken as true." Stephens v. Dep't of Health & Human Servs., 901 F.2d 1571, 1573 (11th Cir.1990); Jackson v. Birmingham Bd. of Educ., 544 U.S. 167, 171, 125 S.Ct. 1497, 161 L.Ed.2d 361 (2005). The Eleventh Circuit has stated that "the threshold of sufficiency to which a complaint is held at the motion-to-dismiss stage is `exceedingly low.'" United States v. Baxter Int'l, Inc., 345 F.3d 866, 880 (11th Cir.2003).

ANALYSIS

In its motion to dismiss, Defendant argues that Plaintiffs complaint should be dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief may be granted. Defendant argues that Plaintiff lacks standing to bring a claim for conversion of a negotiable instrument pursuant to § 673.4201(1) because there was no constructive or actual delivery of the Check to the payees (the Chuvens) or their agent; therefore, as the Chuvens' assignee, Plaintiff cannot bring a claim for statutory conversion pursuant to § 673.4201(1). Defendant further argues that as a result of the action to quiet title to their property, the Chuvens had no financial interest in the Check at the time they assigned their claims to Plaintiff; therefore, as the Chuvens' assignee, Plaintiff has no financial interest in the Check and has no right to recovery pursuant to § 673.4201(2).

In response, Plaintiff argues that it has adequately alleged delivery-thus satisfying the pleading requirements of a claim for conversion of a negotiable instrument pursuant to § 673.4201(1)-by alleging that "the maker of the check intended that the check would be an enforceable obligation against her according to its terms," and that the maker "surrendered control of the check with that intention." (Resp. at 4; Compl. ¶ 5.) Plaintiff further argues that the Chuvens did have a financial interest in the Check at the time they assigned their rights to sue Defendant because, as alleged in the complaint, Plaintiff paid Home Equity Mortgage Company's unpaid balance on the mortgage loan thereby removing the encumbrance from the Chuven's property, and in exchange, it acquired the Chuvens' claims arising out of the transaction. (Resp. at 6-7; Compl. ¶ 8 & Ex. D.)

In deciding Defendant's motion to dismiss, the Court first must determine whether Florida law precludes a payee from bringing a claim for conversion of a negotiable instrument absent delivery (actual or constructive) of the instrument to either the payee, a copayee, or the payee's agent. Then the Court must determine whether Plaintiff has adequately alleged delivery of the Check in satisfaction of the pleading requirements of a claim for conversion of a negotiable instrument pursuant to § 673.4201(1). If the Court determines that Plaintiff has adequately alleged delivery of the Check, then the Court must consider Defendant's argument that the facts alleged in the complaint preclude any recovery in this action as a matter of law pursuant § 673.4201(2).

Florida Statutes section § 673.4201 provides in relevant part:

(1) The law applicable to conversion of personal property applies to instruments. 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 the payment. An action for conversion of an instrument may not be brought by:

(a) The issuer or acceptor of the instrument; or

(b) A payee or indorsee who did not receive delivery of the instrument either directly or indirectly or through delivery to an agent or copayee.

(2) In an action under subsection (1), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff's interest in the instrument.

Defendant contends that under § 673.4201(1)(b), a payee may only sue for conversion of a check if there was delivery of the check to either the payee, a copayee, or an agent of the payee. (MTD at 7-8.) According to Defendant, "even if the drawer issues a check and attempts to deliver it, and thereby evinces an intent to make the check enforceable against the drawer, delivery under § 673.4201 does not occur unless there is delivery to a person who is the payee, a copayee, or the payee's agent." (MTD at 9.) Defendant argues that the complaint misguidedly focuses on the "state of mind of the drawer of the Check rather than on the delivery to the agent or payee." (MTD at 9.) Defendant urges the Court to infer from the complaint that the Check was delivered to the imposter sellers or another person-not the Chuvens-who ultimately gave the Check to the imposter sellers. (MTD at 9.) According to Defendant, the only way Plaintiff can have standing to bring a claim for conversion pursuant to § 673.4201 is if the imposter sellers-having received delivery (actual or constructive) of the Check-were the Chuvens' agents for purposes of delivery. (MTD at 9-10.) Defendant argues that the complaint does not allege or establish an agency relationship between the Chuvens and the imposter sellers. (MTD at 10-11.) Thus, according to Defendant, because the complaint fails to allege or establish delivery of the Check either to the Chuvens or to an agent of the Chuvens, the complaint must be dismissed for failure to state a claim upon which relief may be granted pursuant to Rule 12(b)(6). (MTD at 11.) Plaintiff argues in response that an allegation of constructive delivery to any third person is sufficient to satisfy the pleading requirements of a claim for...