Titan Custom Cabinets, Inc. v. Truist Bank

505 F.Supp.3d 558

TITAN CUSTOM CABINETS, INC., et al., Plaintiffs,

v.TRUIST BANK, Formerly Known as SunTrust Bank, Defendant.

Civil Action No. RDB-20-2910

United States District Court, D. Maryland.

Signed December 8, 2020

Vicki L. Dexter, Law Offices of Vicki Dexter, LLC, Severna Park, MD, for Plaintiffs.

Mary Catherine Zinsner, Troutman Pepper Hamilton Sanders LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

Richard D. Bennett, United States District Judge This case involves claims brought by Plaintiffs Titan Custom Cabinets, Inc. ("Titan") and its owner Anders Johansson ("Johansson") against Defendant Truist Bank ("Truist"), successor by merger to SunTrust Bank ("SunTrust"). The Plaintiffs’ Complaint alleges that the Defendant violated Maryland common law (Counts I, III, and IV) and the Uniform Commercial Code ("UCC") as adopted by Maryland, Md. Code. Ann., Com. Law § 1-101, et seq. (Count II), as a result of events that took place in 2017 with respect to Titan's two SunTrust bank accounts. (See ECF No. 2.) Defendant Truist has filed a Motion to Dismiss (ECF No. 6) arguing that the Plaintiffs’ Complaint fails to state a claim for relief. The parties’ submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2018). For the reasons that follow, the Defendant's Motion to Dismiss (ECF No. 6) is GRANTED IN PART and DENIED IN PART. Specifically, the Motion is GRANTED with respect to Plaintiff Johansson's claims under Count I and Count II. These claims are DISMISSED WITH PREJUDICE. The Motion is also GRANTED with respect to both Plaintiffs’ claims under Count III. All claims under Count III are DISMISSED WITH PREJUDICE. Additionally, the Motion is GRANTED with respect to the Plaintiffs’ claim for punitive damages under Count IV, and such claim is DISMISSED WITHOUT PREJUDICE. Finally, the Motion is DENIED with respect to Plaintiff Titan's claims under Counts I and II and with respect to both Plaintiffs’ claims under Count IV.

BACKGROUND

This Court accepts as true the facts alleged in the Plaintiff's Amended Complaint (ECF No. 10). See Aziz v. Alcolac, Inc. , 658 F.3d 388, 390 (4th Cir. 2011). Plaintiff Titan is a closely held corporation in the business of cabinetry work, primarily creating custom built kitchens for a variety of appliance vendors at trade shows, permanent sales displays, and other similar venues. (ECF No. 2 at ¶ 1.) Plaintiff Johansson is the principal owner and sole shareholder of Titan. (Id. at ¶ 2.) More than twenty years ago, Titan, and Johansson personally, began banking with SunTrust. (Id. at ¶ 6.) Titan had two accounts with SunTrust: a payroll account and an operating account. (Id. at ¶ 15.) Defendant Truist Bank was formed as a result of a merger between SunTrust and BB&T in December 2019. (Id. at ¶ 3.)

In early May of 2017, Johansson deposited a check from a customer into one of Titan's accounts at SunTrust. (Id. at ¶ 8.) The Plaintiffs allege that this check (hereinafter referred to as "Check A") was properly processed. (Id. ) Approximately two weeks later, a different check (hereinafter "Check B") in the same dollar amount was deposited by a different SunTrust customer into an unrelated SunTrust checking account. (Id. ) SunTrust returned Check B for "insufficient funds." (Id. at ¶ 9.) However, the amount of Check B was allegedly deducted from Titan's business account, as opposed to the account identified on Check B. (Id. ) Titan subsequently received notice that Check A had been dishonored. (Id. ) SunTrust's local branch in Baltimore investigated the matter, and ultimately, the funds were credited back to Titan's account. (Id. at 10.)

On June 30, 2017, SunTrust reopened the matter. (Id. at ¶ 11.) A fraud investigator of the bank contacted Johansson to report that as a result of the investigation, SunTrust believed that Titan, through Johansson, had acted in a criminal and fraudulent manner and that the bank intended to take back the money from Check A that it had credited to the Titan account. (Id. ) The investigator further advised Johansson that SunTrust would be closing Titan's accounts. (Id. at ¶ 12.) On July 13, 2017, Titan received written notice dated July 6, 2017 that both of its bank accounts had been closed, and in the envelope were two checks for the amounts remaining in each account. (Id. at ¶ 15.) Johansson stated that he "simply did not believe that [the investigator] would close [Titan's] accounts" and, therefore, he "did not deposit the checks into another bank." (Id. at ¶¶ 15, 16.)

On July 13, 2017 Titan began to receive notices from its customers and vendors of checks that SunTrust had dishonored. (Id. at ¶ 18.) The entities to whom Titan had issued checks and for whom SunTrust dishonored those checks included Harper's Appliances, Keystone Woodworking, Verizon, and TimePays (Titan's payroll service). (Id. ) Titan tried to retract payments and reissue checks, but the checks were returned for insufficient funds. (Id. at ¶ 19.) At some point, Titan deposited the two checks from SunTrust into a new bank account at another facility. (Id. at ¶ 20.) Plaintiffs allege that at this time, Titan's employees, vendors, and customers had begun to lose confidence in Titan and believed it was no longer "reputable or solvent." (Id. )

Nevertheless, the next day, July 14, 2017, SunTrust advised Johansson that Titan's accounts would be reopened. (Id. at ¶ 21.) SunTrust then issued a stop payment on the two checks sent with its Notice Letter received by Johansson on July 13, 2017. (Id. at ¶ 22.) This caused Titan to "unknowingly" issue checks on the new accounts for which the deposited checks were worthless. (Id. ) This created problems for Titan, which had been attempting to "mend its relationships" with its customers, vendors, and employees. (Id. ) Plaintiffs claim that Titan did not have access to an online banking system, so Johansson could not determine which checks were dishonored and which were cashed, and he was forced to spend weeks trying to correct errors, banking transactions, and automated payments. (Id. at ¶¶ 22, 23.) Plaintiffs claim that these problems ultimately led Johansson to spend $20,000 of his own funds "to keep his business alive." (Id. at ¶ 24.)

Plaintiffs allege further errors on behalf of SunTrust after reopening Titan's accounts. In October of 2017, SunTrust deposited a check payable to Titan into its payroll account, instead of the operating account as Titan had designated. (Id. at ¶ 25.) As a result, more checks were returned for insufficient funds because Johansson thought that the funds were available for use in its operating account when in fact they were in the payroll account. (Id. ) Additionally, in November of 2017, SunTrust honored a check negotiated more than 180 days after issuance, even though it bore the legend that it would only be good for 90 days. (Id. at ¶ 26.) The Complaint in this case makes no further allegations against the Defendant Truist Bank with respect to the years 2018 and 2019.

Ultimately, on July 24, 2020, almost three years after the events of 2017, the Plaintiffs filed the subject Complaint in the Circuit Court for Baltimore City, titled Titan Custom Cabinets, Inc. v. Truist Bank , No. 24-C-20-002986, alleging that Titan and Johansson personally:

have sustained significant financial losses, including but not limited to, damage to the reputation of both Plaintiffs, loss of business from referrals through Titan's vendors, loss of Titan's employees’ confidence and increased turnover, increased expenses by accountants [and] advisors, and the hours spent by Mr. Johansson to discover and try to repair damage to Titan, as well as the diminished value of Titan to prospective purchasers of the business.

(Id. at ¶ 27.) The Complaint further alleges that Johansson planned to sell Titan and become a consultant, "using his education and expertise as a consultant to larger companies," and that such plan is no longer viable "as a result of the actions of Defendant." (Id. at ¶ 28.) The case was removed to this Court on October 8, 2020 pursuant to 28 U.S.C. §§ 1332, 1367, and 1441. (See ECF No. 1.) The Plaintiffs seek relief under both the common law, as well as the Uniform Commercial Code as adopted in Maryland, Md. Code. Ann., Com. Law § 1-101, et seq. Specifically, the Complaint alleges the Defendant is liable for breach of contract (Count I); violation of Maryland Commercial Law § 4-402, Md. Code. Ann., Com. Law § 4-402 (Count II); lack of good faith and fair dealing (Count III); and negligence (Count IV). On October 15, 2020, Defendant Truist filed a Motion to Dismiss (ECF No. 6).

STANDARD OF REVIEW

A court may dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6) ; In re Birmingham , 846 F.3d 88, 92 (4th Cir. 2017) ; Goines v. Valley Cmt'y Servs. Bd. , 822 F.3d 159, 165-66 (4th Cir. 2016). A properly pled complaint must provide "[a] short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2) ; Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). While Rule 8 does not require detailed factual allegations, it demands "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citations omitted). "Factual allegations must be enough to rise above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citation omitted); see also Paradise Wire & Cable Defined Benefit Pension Plan v. Weil , 918 F.3d 312, 317 (4th Cir. 2019) ; Willner v. Dimon , 849 F.3d 93, 112 (4th Cir. 2017).

In Iqbal , the Supreme Court clarified the two-step approach district courts are...