Gallagher v. J.P. Morgan Chase Bank

JAMES C. GALLAGHER, Plaintiff, v. J.P. MORGAN CHASE BANK, N.A., Defendant.

No. 21-cv-11411-DJC

United States District Court, D. Massachusetts

May 16, 2022

MEMORANDUM AND ORDER

Denise J. Casper United States District Judge.

I. Introduction

Plaintiff James C. Gallagher (“Gallagher”) has filed this lawsuit against Defendant J.P. Morgan Chase Bank, N.A. (“Chase”) alleging claims for breach of contract (Count I), breach of covenant of good faith and fair dealing (Count II), negligence (Count III), unjust enrichment (Count IV), promissory estoppel (Count V), conversion (Count VI) Mass. Gen. L. c. 93A, § 9 (Count VII) and Mass. Gen. L c. 200A, § 7A (Count VIII). D. 1-1. Chase has moved to dismiss all Counts. D. 6. Gallagher has voluntarily agreed to dismiss Count VIII. D. 11 at 20. For the reasons stated below, the Court ALLOWS the motion.

II. Standard of Review

On a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6), the Court must determine if the facts alleged “plausibly narrate a claim for relief.” Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012) (citation omitted). Reading the complaint “as a whole, ” the Court must conduct a two-step, context-specific 1 inquiry. Garda-Catalan v. United States, 734 F.3d 100, 103 (1st Cir. 2013). First, the Court must perform a close reading of the claim to distinguish the factual allegations from the conclusory legal allegations contained therein. Id. Factual allegations must be accepted as true, while conclusory legal conclusions are not entitled credit. Id. Second, the Court must determine whether the factual allegations present a “reasonable inference that the defendant is liable for the conduct alleged.” Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (citation omitted). In sum, the complaint must provide sufficient factual allegations for the Court to find the claim “plausible on its face.” Garda-Catalan, 734 F.3d at 103 (citation omitted).

III. Factual Background

The following facts are as alleged in the verified complaint, D. 1-1, including the documents fairly incorporated therein, Rodi v. S. New England Sch. of Law, 389 F.3d 5, 12 (1st Cir. 2004), and the Court accepts them as true for consideration of the pending motion to dismiss. On or around April 9, 1999, Henry Turecki (“Turecki”), the uncle of Gallagher's wife, purchased three certificates of deposit (“CDs”) with a combined total value of $75, 466.57 from a Florida branch of AmeriFirst Bank, FSB (“AmeriFirst”). D. 1-1 ¶¶ 4-6. The three CDs matured on July 12, 1991, August 1, 1991 and August 4, 1991, respectively. D. 19-2 at 2-4. As alleged, upon the date of maturity, the principal of each CD automatically renewed at the current rate, id., and according to Gallagher, “the CDs continually renewed between 1991 and 1998, ” D. 1-1 ¶ 11. At some point in 1991, Turecki transferred the CDs to Gallagher and Gallagher's wife, with survivor benefits. Id. ¶¶ 7-8. When Gallagher's wife later died, Gallagher became the sole owner of the CDs. Id. ¶ 9. Gallagher claims that funds in the CDs were never withdrawn and that he “has retained the original CDs in his possession, custody, and control . . . since 1991.” Id. ¶ 8 (internal citations omitted).

After the purchase of the CDs, the AmeriFirst branch from which Turecki purchased the CDs closed. Id. ¶ 10. Gallagher claims that through “merger, acquisition, or other reason, ” Chase held and renewed the CDs pursuant to an agreement with Gallagher (“Agreement”). Id. ¶ 12. Gallagher contacted Chase and “demanded” the bank turn over the funds. Id. ¶¶ 16-17. In response, Chase noted that the funds may have been transferred to the state Unclaimed Property Division as abandoned property. Id. ¶ 20.

IV. Procedural History

Gallagher instituted this action on July 20, 2021 in Plymouth Superior Court. D. 1-1. Chase removed the matter to this Court. D. 1. Chase has now moved to dismiss. D. 6. The Court heard the parties on the pending motion and took the matter under advisement. D. 21.

V. Discussion

A. Count I: Breach of Contract

To state a claim for breach of contract under Massachusetts law, a plaintiff must allege that “a valid, binding contract existed, the defendant breached the terms of the contract, and the plaintiff sustained damages as a result of the breach.” Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 232 (1st Cir. 2013) (internal citation and quotation marks omitted). Whether a contract exists is a matter of law for the Court to determine. Id. at 231; Lexington Ins. Co. v. All Regions Chem. Labs, Inc., 419 Mass. 712, 713 (1995). To avoid dismissal, “a complaint must describe the alleged terms of the contract with enough specificity to provide a defendant with the requisite notice of the nature of the claim.” Foss v. Marvic, 365 F.Supp.3d 164, 167 (D. Mass. 2019), aff'd sub nom. Foss v. Marvic, Inc., 994 F.3d 57 (1st Cir. 2021). A plaintiff must either quote specific contractual language, summarize the alleged legal effect of the contract, or attach the actual contract. Id. (citation omitted). Where a plaintiff has not provided the contract to the court, a plaintiff must “state the nature of the alleged contract with [ ] specificity.” Doyle v. Hasbro, Inc., 103 F.3d 186, 195 (1st Cir. 1996) (dismissing claim because, inter alia, plaintiff did not allege any contractual terms, when the contract was formed, the duration of the contract or the obligations the contract imposed upon the defendant). Courts have denied motions to dismiss even absent an attached contract where the plaintiff alleged the relevant terms, duration and when the contract was formed. See Lexington Ins. Co. v. Johnson Controls Fire Prot. Ltd. P'ship, 347 F.Supp.3d 61, 66-67 (D. Mass. 2018); see also FabriClear, LLC v. Harvest Direct, LLC, 481 F.Supp.3d 27, 33 (D. Mass. 2020) (finding pleading requirements satisfied where the plaintiff alleged that the parties entered into a contract and that the defendant breached same by failing to comply with certain terms). As to breach, a plaintiff must “do more than allege, in conclusory fashion, that the defendant breached the contract, by describing, with substantial certainty, the specific contractual promise the defendant failed to keep.” Brooks v. AIG SunAm. Life Assurance Co., 480 F.3d 579, 586 (1st Cir. 2007) (citation and internal quotation marks omitted).

Gallagher alleges that following the closure of the AmeriFirst branch where Turecki purchased the CDs, “[b]y way of merger, acquisition, or other reason, ” Chase held the CDs “pursuant to an agreement with [Gallagher].” D. 1-1 ¶¶ 10, 12. Gallagher has not provided a contract beyond the CDs themselves. Based on his allegations, however, it appears that Gallagher claims the Agreement is something separate from and in addition to the CDs. Gallagher outlines the alleged terms of the Agreement, including that: (1) Chase was required to allow Gallagher to access the funds; (2) interest continued to accrue on the value of the CDs; and (3) Gallagher was to receive notices regarding the CDs' maturity dates. Id. ¶¶ 26-28. Gallagher claims that Chase breached said Agreement and caused harm by failing to: (1) safeguard the funds associated with the CDs; (2) maintain records of the CDs; (3) properly notice Gallagher; (4) provide Gallagher with access to the funds; and (5) surrender the funds to Gallagher. Id. ¶ 30. Key to his claim is the allegation that the Agreement allowed for automatic renewal of the CDs such that Chase must turn over the funds to him upon his demand for same. Id. ¶¶ 11-12, 16-17; D. 19-1.

Gallagher has not plausibly alleged the existence of contract, particularly as to the renewal of the CDs; i.e., that the CDs “continually renewed between 1991 and 1998.” D. 1-1 ¶ 11; D. 7 at 4 (citing complaint); see Chasman v. JP Morgan Chase Bank, NA, No. 18-cv-6681, 2020 WL 207784, at *3 (S.D.N.Y. Jan. 14, 2020) (dismissing breach of contract claim regarding defendant's alleged failure to renew CDs at certain interest rate where plaintiffs failed to allege plausibly that CDs were perpetually renewable). Even where a CD is subject to automatic renewal upon its date of maturity (as the CDs in this case, D. 19-2), it is nevertheless deemed abandoned property at some point, depending on the length of the CD's term. 960 C.M.R. § 4.03(14)(b) (providing, in relevant part, that a CD “becomes reportable as abandoned property three years following the maturity date of the first rollover” and that “a six month Certificate of Deposit would be reported as abandoned property four years from the date the account was opened[ ] [and] a one-year Certificate of Deposit would be reported as abandoned property five years from the date the account was opened”). This is true unless the owner of the CD-Gallagher-consented to renewal in writing at or around the time of renewal. Id.; Mass. Gen. L. c. 200A, § 3A(a). Importantly, an automatic rollover clause regarding the CD is not sufficient to satisfy the requirement of written consent from the owner. 960 C.M.R. § 4.03(14)(b).

Here the CDs were issued in April 1991 and matured at some point between three and four months later. D. 19-2. Even applying the longer five-year timeframe provided under 960 C.M.R. § 4.03(14)(b) for a one-year CD, Gallagher's CDs would have become abandoned property in or before April 1996, see 960 C.M.R. § 4.03(14)(b); D. 7 at 5 n.2. AmeriFirst, however, merged with Washington Mutual Bank (“WaMu”) in 1997 and Chase subsequently acquired WaMu in 2008. D. 11 at 5-7 & nn.3-4; D. 11-1; D. 11-2.^[1] Because Gallagher does not allege that he made a written request at or around the time when the CDs renewed, 960 C.M.R. § 4.03(14)(b), the CDs became abandoned property...