Lemelson v. Wells Fargo Bank, N.A.

641 F.Supp.3d 1005

Carolyn LEMELSON, et al., Plaintiffs, v. WELLS FARGO BANK, N.A., Defendant.

CASE NO. C22-1202JLR

United States District Court, W.D. Washington, at Seattle

Signed November 21, 2022

Emanuel Fraser Jacobowitz, Nathan J. Arnold, Arnold & Jacobowitz PLLC, Seattle, WA, for Plaintiffs.

Kelly H. Dove, Snell & Wilmer, Las Vegas, NV, Joshua A. Rataezyk, Snell & Wilmer, Bellevue, WA, for Defendant.

ORDER

JAMES L. ROBART, United States District Judge

I. INTRODUCTION

Before the court is Defendant Wells Fargo Bank, N.A.'s ("Wells Fargo") motion to dismiss Plaintiffs Carolyn Lemelson and Pacific Doodles, LLC's ("Pacific Doodles") (collectively, "Plaintiffs") amended complaint. (Mot. (Dkt. # 15); Reply (Dkt. # 19).) Plaintiffs oppose Wells Fargo's motion. (Resp. (Dkt. # 17).) The court has considered the motion, all materials submitted in support of and in opposition to the motion, and the governing law. Being fully advised,¹ the court GRANTS Wells Fargo's motion to dismiss Plaintiffs' amended complaint and DISMISSES Plaintiffs' claims with prejudice.

II. BACKGROUND

On May 31, 2022, Ms. Lemelson was depositing funds at a Wells Fargo branch in Mount Vernon, Washington. (Am. Compl. (Dkt. # 13) ¶ 7.) Plaintiffs allege that the bank's manager and security guard "verbally accosted" Ms. Lemelson's family, "with two small children present," called the police, and falsely accused the family of trespass after "apparently taking issue with how Ms. Lemelson's significant other parked." (Id. ¶ 8.) Ms. Lemelson then instructed the bank manager to close her accounts, "as she had the right to do under RCW 62A.4-403(a)." (Id. ¶ 9.) The bank manager, however, refused to close the accounts as the police arrived to take statements. (Id. ¶ 10.)

According to Ms. Lemelson, after this encounter, Wells Fargo made multiple unauthorized transfers of funds from her account and the account of her business, Pacific Doodles, to third parties who were not authorized to receive those funds. (Id. ¶¶ 1, 11.) Plaintiffs allege that these transfers "were not properly payable and were not properly charged against the subject account as required by RCW 62A.4-401." (Id. ¶ 12.) They further allege that the unauthorized transfers resulted in Plaintiffs missing payments, including real estate mortgage payments. (Id. ¶ 13.)

Plaintiffs filed this lawsuit against Wells Fargo in Skagit County Superior Court on July 29, 2022, alleging claims against Wells Fargo for breach of contract; unfair or deceptive business practices in violation of the Washington Consumer Protection Act, RCW 19.86.010 et seq. ("WCPA"); and the tort of outrage. (Compl. (Dkt. # 1-1) ¶¶ 14-27.) On August 29, 2022, Wells Fargo timely removed the action to this court on the basis of diversity jurisdiction. (Not. of Removal (Dkt. # 1).)

On October 3, 2022, the court granted in part and denied in part Wells Fargo's motion to dismiss Plaintiffs' original complaint. (10/3/22 Order (Dkt. # 12); see 1st MTD (Dkt. # 5-1).) First, the court dismissed Plaintiffs' breach of contract claim with leave to amend because Plaintiffs did not identify the contract or contractual provision(s) that they alleged Wells Fargo breached and because Plaintiffs did not allege that they completed the conditions precedent to maintain a claim under RCW 62A.4-401(a). (10/3/22 Order at 4-5.) Second, the court denied Wells Fargo's motion to dismiss Plaintiffs' WCPA claim because it moved to dismiss solely on the ground that Plaintiffs failed to adequately allege a per se violation of the WCPA based on a violation of RCW 62A.4-401. (Id. at 5-7.) Finally, the court dismissed Plaintiffs' outrage claim with leave to amend because Plaintiffs did not sufficiently allege conduct by Wells Fargo that was so "outrageous in character, and so extreme in degree" as to impose liability. (Id. at 7-9 (quoting Reyes v. Yakima Health Dist., 191 Wash.2d 79, 419 P.3d 819, 825 (2018)).) The court warned Plaintiffs that failure to timely file an amended complaint that addressed the deficiencies identified in its order would result in the dismissal of Plaintiffs' breach of contract and outrage claims with prejudice. (Id. at 9-10.)

Plaintiffs timely filed their amended complaint on October 14, 2022, again bringing claims against Wells Fargo for breach of contract, unfair or deceptive business practices, and the tort of outrage. (See generally Am. Compl.) They also added a new claim for conversion. (See id.) Wells Fargo filed the instant motion to dismiss Plaintiffs' amended complaint on October 26, 2022. (Mot.)

III. ANALYSIS

Below, the court sets forth the legal standard for reviewing motions to dismiss before considering Wells Fargo's motion.

A. Legal Standard

Federal Rule of Civil Procedure 12(b)(6) provides for dismissal when a complaint "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Under this standard, the court construes the complaint in the light most favorable to the nonmoving party, Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005), and asks whether the complaint contains "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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The court is not, however, required to accept as true legal conclusions or "formulaic recitation[s] of the legal elements of a cause of action." Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

A district court that dismisses a claim under Rule 12(b)(6) should generally grant leave to amend, "unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). The court has especially broad discretion to grant or deny leave to amend where the plaintiff has already filed an amended complaint. Sisseton-Wahpeton Sioux Tribe v. United States, 90 F.3d 351, 355 (9th Cir. 1996).

B. Breach of Contract

Plaintiffs allege that Wells Fargo breached its "standard depository account contract" and "acted contrary to RCW 62A.4-401," a provision of Washington's codification of the Uniform Commercial Code ("UCC"), by refusing to close their accounts when Ms. Lemelson instructed it to do so and by making unauthorized transfers of funds from Plaintiffs' accounts to other unspecified accounts. (Am. Compl. ¶¶ 15-17.) Plaintiffs appear to base their claim on RCW 62A.4-401(a), which states:

A bank may charge against the account of a customer an item that is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and the bank.

RCW 62A.4-401(a).

Wells Fargo contends that Plaintiffs' amended complaint still does not plausibly allege a breach of contract claim because, although Plaintiffs now allege that Wells Fargo breached its "standard depository account contract," they have not identified the contractual provision or provisions that they allege Wells Fargo breached. (Mot. at 4-5 (citing 10/3/22 Order at 4).) They further argue that Plaintiffs still have not alleged that they met the conditions precedent to maintain a claim under RCW 62A.4-401. (Id. at 5-7 (citing 10/3/22 Order at 4).)

As it did in its prior order, the court begins with Wells Fargo's first argument. A plaintiff in a contract action must allege the existence of a valid contract between the parties, breach, and resulting damage. See Lehrer v. State, Dep't of Soc. & Health Servs., 101 Wash.App. 509, 5 P.3d 722, 727 (2000). A breach of contract is actionable only if the contract imposes a duty, the duty is breached, and the breach proximately causes damage to the claimant. Nw. Indep. Forest Mfrs. v. Dep't of Lab. & Indus., 78 Wash.App. 707,899 P.2d 6, 9 (1995). Here, although Plaintiffs now allege that their interactions with Wells Fargo were governed by Wells Fargo's "standard depository account contract," they neither provide a copy of the contract nor identify the contractual provision or provisions that they allege Wells Fargo breached.² (Am. Compl. ¶¶ 15-17.) Because Plaintiffs provide neither the contract nor the terms that they allege were breached, the court cannot determine what duties that contract imposes on Wells Fargo and whether Wells Fargo breached those duties. Indeed, Plaintiffs acknowledge that the contract is silent regarding the alleged conduct. (Resp. at 3 (stating that "Wells Fargo's standard depository contract does not specifically forbid diverting funds from a customer's account").) Plaintiffs ask the court, therefore, to either "incorporate[ ] into the contract" RCW 62A.4-401 and RCW 30A.22.090 (stating that "during the lifetime of a depositor . . . funds on deposit in a single account belong to the depositor") or infer a "term which is reasonable in the circumstances" to enforce the contract against Wells Fargo. (Resp. at 3-4 (quoting Estate of Carter v. Carden, 11 Wash.App.2d 573, 455 P.3d 197, 202 (2019)).) The court declines Plaintiffs' invitation to infer or incorporate additional terms into a contract that it has never seen. See Estate of Carter, 455 P.3d at 203-05 (discussing in detail the terms of the contract at issue). Accordingly, the court GRANTS Wells Fargo's motion to dismiss Plaintiffs' breach of contract claim. Because the court has already given Plaintiffs an opportunity to cure the deficiencies in their breach of contract claim, the court DISMISSES the claim with prejudice. See Lopez, 203 F.3d at 1127.

Wells...