Kazak v. Truist Bank

692 F.Supp.3d 1112

Linda KAZAK and Kazak Real Estate, LLC, Plaintiffs, v. TRUIST BANK, Defendant.

Case No.: 2:23-cv-40-SPC-KCD

United States District Court, M.D. Florida, Fort Myers Division

Signed September 11, 2023

Charles R. Gallagher, III, Gallagher & Associates Law Firm, PA, St. Petersburg, FL, for Plaintiffs.

Nicholas Steven Agnello, Burr & Forman, LLP, Fort Lauderdale, FL, David Alan Elliott, Burr & Forman, LLP, Birmingham, AL, for Defendant.

OPINION AND ORDER

SHERI POLSTER CHAPPELL, UNITED STATES DISTRICT JUDGE

Before the Court is Defendant Truist Bank's Amended Motion to Dismiss Plaintiffs' Amended Complaint. (Doc. 37). Plaintiffs Linda Kazak and Kazak Real Estate, LLC oppose. (Doc. 40). For the following reasons, the Court denies Truist's motion.

BACKGROUND¹

This case centers around a fraudulent wire transfer. Plaintiffs had bank accounts at Branch Banking and Trust Company ("BB&T"), which merged with SunTrust and created Defendant Truist. As banking customers, Plaintiffs had written contracts, which they call Agreements, with Truist. (Doc. 34 at 61-63).

On January 18, 2022, Kazak received a call from what she thought was the Truist fraud department—a valid Truist number. Kazak says she did not give any identification information but the representative she spoke with sent several one-time passcodes to her phone. After the call, Kazak received an email from Truist saying Plaintiffs' accounts were enrolled in wire transfer services. Kazak never initiated any wire transfers.

Kazak then took several immediate steps to alert Truist that her account may have been compromised—and indeed third parties gained control of Plaintiffs' accounts and took over $112,000. She called the Truist number in the email. While on hold, she called Ashley DiMirco, the relationship manager at the local branch, and instructed her to lock Plaintiffs' accounts and terminate all wire transfers. DiMirco said she did and would contact the fraud department. Kazak asked about notifying the fraud department herself and DiMirco directed Kazak to the number on the back of her debit card. That number turned out to be the Zelle fraud department, which instructed Kazak to go to her local branch and open new accounts.

The following day, Kazak opened new accounts at her local branch. Multiple times Truist told Kazak it would refund the money taken by the fraudulent wire transfers. This did not happen. And the Truist fraud department told Kazak they didn't get her case until three days after she first alerted Truist to the issue.

Plaintiffs sue, each alleging (1) breach of contract, (2) breach of contractual obligation of good faith and fair dealing, (3) breach of fiduciary duty, and (4) noncompliance with security procedures in violation of Fla. Stat. §§ 670.202(2) and (3). Kazak Real Estate alleges a further count of negligence. Truist moves to dismiss.

LEGAL STANDARD

A complaint must recite "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). A complaint must "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

To survive a Rule 12(b)(6) motion, a complaint must allege "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Bare "labels and conclusions, and a formulaic recitation of the elements of a cause of action," do not suffice. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. A district court should dismiss a claim when a party does not plead facts that make the claim facially plausible. See Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A claim is facially plausible when a court can draw a reasonable inference, based on the facts pled, that the opposing party is liable for the alleged misconduct. See Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. This plausibility standard requires "more than a sheer possibility that a defendant has acted unlawfully." Id. (citing Twombly, 550 U.S. at 557, 127 S.Ct. 1955 (internal quotation marks omitted)).

When considering dismissal, courts must accept all factual allegations in the complaint as true and draw all reasonable inferences in the light most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008).

DISCUSSION

Truist raises a myriad of arguments in its motion to dismiss. It argues: (1) Plaintiffs' breach of contract and implied covenant of good faith and fair dealing claims fail because Plaintiffs do not identify the agreements with enough specificity and the agreements themselves foreclose these claims; (2) Article 4A of the Uniform Commercial Code ("UCC") preempts Plaintiffs' common law claims; and (3) Plaintiffs do not plausibly state claims for negligence, breach of fiduciary duty, and UCC claims. Finally, Truist argues Plaintiffs' demand for a jury trial is contrary to the parties' agreement, so it must be stricken. Plaintiffs oppose.² The Court takes each in turn.

A. The Agreements

Truist argues Plaintiffs' breach of contract and implied covenant of good faith and fair dealing claims fail because Plaintiffs do not identify the agreements with enough specificity. The Court disagrees. Plaintiffs had bank accounts at Truist. They claim the parties had a written contract—the agreements—that govern all matters between the parties. (Doc. 34 at 61-63, 75-77). Plaintiffs allege the agreements contain obligations to honor cancel pay request, and refund money fraudulently transferred out of accounts. (Doc. 34 at 64-65, 78-79). The Court finds this gives Truist fair notice of the breach of contract and implied covenant of good faith and fair dealing claims and the grounds upon which they rest and creates plausible breach of contract and implied covenant of good faith and fair dealing claims. See Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

Next Truist argues the agreements foreclose the breach of contract and implied covenant of good faith and fair dealing claims. While the agreements are not attached to Plaintiffs' complaint, Truist attaches to its motion to dismiss an Online and Mobile Banking for Business Service Agreement ("OBBA") (Doc. 37-1) and Commercial Bank Services Agreement ("CBSA"), which it says governs Kazak Real Estate's business account, and an Online Banking Agreement ("OBA") and Bank Services Agreement ("BSA"), which it says governs Kazak's personal account (collectively "the agreements.").

Truist's argument is misplaced at this motion to dismiss stage. When faced with such a motion, courts limit their review to the allegations in the complaint. See Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005). To consider materials beyond the pleading, courts must convert a motion to dismiss into a motion for summary judgment. Id. at 1275-76. But there is an exception. No conversion is needed if a document is "referred to in the complaint, central to the plaintiff's claim, and of undisputed authenticity." Hi-Tech Pharm., Inc. v. HBS Int'l Corp., 910 F.3d 1186, 1189 (11th Cir. 2018).

Truist claims the Court can consider the agreements because they are central to Plaintiffs' claims and "their authenticity is undisputed." (Doc. 37 at n.2). Not so. Plaintiffs do dispute the agreements' authenticity. According to Plaintiffs, the attachments are "not the operative agreements." (Doc. 40 at Pg. 5). Further, none are signed by Plaintiffs, and it is unclear the dates Plaintiffs may have agreed to them. (Doc. 37-2; Doc. 37-3; Doc. 38-1). So the Court will not consider the agreements at this stage. See, e.g., Thompson v. City of St. Cloud, No. 6:23-cv-283-WWB-LHP, 2023 WL 3931952, at *2 (M.D. Fla. June 9, 2023) (finding defendants did not satisfy the incorporation-by-reference doctrine because, in part, the plaintiff did not concede the authenticity to extrinsic videos); Palm Devs., Inc. v. Ridgdill & Sons, Inc., No. 2:08-cv-322-FTM-DNF, 2009 WL 513027, at *3 (M.D. Fla. Feb. 27, 2009) (declining to convert a motion to dismiss to one for summary judgment when the plaintiff claimed some dispute over the documents attached to the motion).

One further point: without considering the agreements, Truist's arguments that the agreements bar Plaintiffs' negligence, breach of fiduciary duty, and UCC claims must also fail.

B. UCC Preemption

Truist argues all of Plaintiffs' common law claims are preempted by Article 4A of the Uniform Commercial Code. Article 4A, codified in Florida Statutes § 670.102, et seq., "controls how electronic funds transfers are conducted and specifies certain rights and duties related to the execution of such transactions." Valdes v. Customers Bank, Inc., No. 8:19-CV-2603-T-33AEP, 2020 WL 13357817, at *2 (M.D. Fla. Feb. 10, 2020) (cleaned up). "Parties whose conflict arises out of a funds transfer should look first and foremost to Article 4A for guidance in bringing and resolving their claims." Regions Bank v. Provident Bank, Inc., 345 F.3d 1267, 1274 (11th Cir. 2003) (cleaned up).

But "Article 4A is not the exclusive means by which a plaintiff can seek to redress an alleged harm arising from a funds transfer." Regions, 345 F.3d at 1274-75 (quotation omitted). "Claims that, for example, are not about the mechanics of how a funds transfer was conducted may fall outside of this regime." Valdes v. Customers Bank, Inc., No. 8:19-cv-2603-T-33AEP, 2020 WL 13357817, at *4 (M.D. Fla. Feb. 10, 2020) (quoting Ma v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 597 F.3d 84, 89 (2d Cir. 2010)). Simply put, when an issue does not clearly fit within the UCC. provisions, common law claims may supplement the UCC if they would not create rights, duties, or liabilities inconsistent with the UCC. See Regions, 345 F.3d at 1274-75.

Importantly, two related but separate allegations of Truist wrongdoing form the basis of Plaintiffs' complaint. First, Kazak claims Truist's normal security...