Hospicomm, Inc. v. Fleet Bank, N.A.

• Decision Date: 30 September 2004
• Docket Number: No. CIV.A.03-6901.,CIV.A.03-6901.
• Citation: 338 F.Supp.2d 578
• Parties: HOSPICOMM, INC., Plaintiff, v. FLEET BANK, N.A., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

338 F.Supp.2d 578

HOSPICOMM, INC., Plaintiff, v. FLEET BANK, N.A., Defendants.

No. CIV.A.03-6901.

United States District Court, E.D. Pennsylvania.

September 30, 2004.

Craig Robert Lewis, Helen M. Braverman, Braverman Daniels Kaskey, Ltd., Philadelphia, PA, for Plaintiff.

Nicholas Deenis, Stradley Ronon Stevens & Young LLP, Philadelphia, PA, for Defendants.

MEMORANDUM & ORDER

SURRICK, District Judge.

Presently before the Court is Defendant Fleet Bank, N.A.'s Motion to Dismiss Plaintiff's Complaint Pursuant to Rule 12(b)(6) (Doc. No. 2). For the following reasons we will grant Defendant's motion, and we will permit Plaintiff to file an amended complaint.

Background

Plaintiff Hospicomm, Inc. is a Pennsylvania corporation with its principal place of business in Philadelphia, Pennsylvania. Plaintiff provides data processing, marketing, operations management, and other services to healthcare providers. (Compl. ¶ 2.) Defendant Fleet Bank, N.A., is a bank incorporated in Rhode Island with its principal place of business in Boston, Massachusetts.¹ (Id. ¶ 3.)

Pursuant to an agreement reached on November 21, 2002, Plaintiff began performing all day-to-day management services for Hamilton Continuing Care Center ("Hamilton"). On behalf of Hamilton, Plaintiff established numerous bank accounts with Defendant. Access to these accounts was limited to authorized account signatories and authorized account managers. Defendant issued "transfer cards" to these authorized persons, to allow them to transfer funds between the accounts. (Id. ¶ 10.) Plaintiff alleges that upon establishing these accounts, "an implied contract was entered" between Plaintiff and Defendant. (Id. ¶ 9.)

On or about April 15, 2003, Plaintiff terminated an employee named Guillermo A. Martinez. Martinez had been employed as a financial analyst and his duties included bookkeeping for facilities managed by Plaintiff, including Hamilton. (Id. ¶ 13.) After terminating Martinez, Plaintiff discovered bank statements for one of the accounts held by Defendant that indicated that ATM withdrawal transactions had been processed through the account. Plaintiff determined that Martinez, an employee without access to the accounts, gained access when he requested and received a "VISA ATM" card. (Id. ¶ 17.) Over the course of an eight-month period, Martinez allegedly used the ATM card issued to him by Defendant to make more than 400 transactions and/or cash withdrawals from the accounts totaling in excess of $148,000.² (Id. ¶ 18.)

After reimbursing Hamilton for the funds converted by Martinez, Plaintiff filed the instant action against Defendant. Plaintiff alleges that Defendant issued Martinez the ATM card without "prior notification, consultation, or approval" from Plaintiff or Hamilton; Defendant failed to detect these "highly suspect transactions and irregular withdrawals"; and Defendant failed to take any action or notify Plaintiff about the issuance of the ATM card or the suspicious activity connected to the account. (Id. ¶¶ 20-24.) On the basis of these allegations Plaintiff filed the instant Complaint, (Doc. No. 1 Ex. 1), in the Court of Common Pleas in Philadelphia County, alleging negligence; gross negligence; and breach of the duties to exercise ordinary care, due diligence, and good faith in violation of Article 4 of the Uniform Commercial Code ("UCC"). Defendant removed the case pursuant to 28 U.S.C. § 1441.

Defendant subsequently filed the instant motion to dismiss. Defendant contends that the entire Complaint should be dismissed because: (1) Defendant owed no duty of care to Plaintiff such that is would be responsible for negligence or gross negligence; (2) any duty Defendant has was the result of contract, such that the Plaintiff's tort claims should be barred by "the economic loss rule," and "the gist of the action doctrine"; and (3) Plaintiff's UCC Article 4 claim must be dismissed because Article 4 does not apply to ATM cards.

Standard of Review

Fed.R.Civ.P. 12(b)(6) allows a court to dismiss a complaint for failure to state a claim. The purpose of a Rule 12(b)(6) motion to dismiss is to test the sufficiency of a complaint, not to resolve disputed facts or decide the merits of the case. Tracinda Corp. v. DaimlerChrysler AG, 197 F.Supp.2d 42, 53 (D.Del.2002). Though Rule 8(a)'s "plain statement" requirement is construed quite liberally, the court need not credit a plaintiff's "bald assertions" or "legal conclusions" when deciding a motion to dismiss. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997). The court should not look to whether a plaintiff will "ultimately prevail." It should only consider whether the plaintiff should be allowed to offer evidence in support of their claims. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir.1997).

Discussion

Plaintiff's Complaint includes tort claims for negligence, and a claim under UCC Article 4. Defendant first contends that the tort claims must be dismissed because Defendant owed Plaintiff no duty as Plaintiff was not a customer of Defendant. Under Pennsylvania law the elements of a claim for negligence include: "(1) a duty or standard of care; (2) a breach thereof; (3) proximate causation; and (4) actual damages." Carlotti v. Employees of Gen. Elec. Fed. Credit Union No. 1161, 717 A.2d 564, 567 (1998) (citing Orner v. Mallick, 515 Pa. 132, 527 A.2d 521 (1987)).

Defendant contends that it owed no duty to Plaintiff because Plaintiff was not the bank's customer. The Complaint alleges that "[Plaintiff] established, on behalf of Hamilton ... numerous commercial and fiduciary accounts with Defendant Fleet Bank." (Compl. ¶ 8.) The Complaint further alleges that "Martinez solicited Fleet Bank through the internet for the issuance of a Visa ATM card allowing cash withdrawal access to a Hamilton payroll account maintained by Fleet Bank." (Id. ¶ 19.) Defendant argues that Plaintiff was an agent of Hamilton, and as such was not a party to any agreement formed between Defendant and Hamilton. Defendant contends that these allegations show that Hamilton was Defendant's customer and was thus the only party to whom Defendant owed a duty. (Doc. No. 2 at 5.) Defendant argues that this fact compels the conclusion that Plaintiff cannot bring a claim for negligence.

In support of its argument Defendant cites the case of Eisenberg v. Wachovia Bank, N.A., in which the Court of Appeals for the Fourth Circuit considered whether a bank owes a duty of care to a noncustomer. 301 F.3d 220, 225 (4th Cir.2002). In that case the plaintiff brought suit against the bank after he was defrauded by a customer of the bank. As a part of the scheme, the plaintiff wired a check to the customer's account with the bank. After this money was converted, the plaintiff brought suit alleging negligence on the part of the bank. The court ultimately held that the bank did not owe plaintiff a duty of care as he was not a customer of the bank. Id. This case as well as the other cases cited by Defendant stand for the proposition that banks do not owe a duty to those with whom the bank has no relationship. See Nat'l Union Fire Ins. Co. v. Allfirst Bank, 282 F.Supp.2d 339, 345 (D.Md.2003) (finding no duty of care owed by bank to noncustomer); City Check Cashing, Inc. v. Mfrs. Hanover Trust Co., 166 N.J. 49, 764 A.2d 411, 418 (N.J.2001) (concluding that a bank cannot be liable to a plaintiff under a theory of negligence where the record is barren of any unique relationship between the plaintiff and the bank).

Plaintiff contends that "through the establishment and continued use and maintenance of the Fleet Fiduciary Account, [Plaintiff] was a customer of [Defendant]." (Doc. No. 6 at 9.) The Complaint clearly alleges that Plaintiff established and managed bank accounts with Defendant for Hamilton. (Compl. ¶¶ 8, 9.) Plaintiff further argues that the account statements provided by Defendant (Doc. No. 2 Ex. C) show that Plaintiff was a customer of Defendant.³ Based on these allegations Plaintiff argues that it is an issue of fact as to whether Plaintiff is a customer of the bank such that it is owed a duty of care.

The bank records attached to the Motion to Dismiss indicate that the bank accounts were titled "Hamilton Continuing Care Center Payroll Account," and "Hamilton Continuing Care Center." (Doc. No. 2 Ex. C.) The address on the accounts was:

Hamilton Continuing Care Center

Lock Box Account

C/O Hopsicomm Inc — Attn: Mart

41 Nth 3rd Street — Suite 200

Philadelphia Pa 19106-4508

(Id.) This address illustrates that Plaintiff was at a minimum, receiving the account statements and managing the accounts for Hamilton. We believe that this fact, along with the allegations in the Complaint, are sufficient to allow the inference that Plaintiff was either a customer of Defendant or had some contractual relationship with Defendant that may be further developed through discovery.

Economic Loss Doctrine/Gist of the Action

Next, Defendant argues that because Plaintiff's tort claims are based on a contractual duty, the negligence claims are barred by the "economic-loss doctrine," and the "gist of the action doctrine." Under Pennsylvania law, "courts are cautious about permitting tort recovery based on contractual breaches." Pittsburgh Constr. Co. v. Griffith, 834 A.2d 572, 581 (Pa.Super.2003) (citing Glazer v. Chandler, 414 Pa. 304, 200 A.2d 416, 418 (1964)). Based on this notion, Pennsylvania courts have fashioned the "economic-loss rule," and the "gist of the action doctrine." Id. (citing eToll, Inc. v. Elias/Savion Adver. Inc., 811 A.2d 10, 14 (Pa.Super.2002)). "[T]he economic-loss doctrine `prohibits plaintiffs from recovering in tort economic losses to which their entitlement flows from a contract.'" Factory Market, Inc. v. Schuller Int'l Inc., 987 F.Supp. 387, 395 (E.D.Pa.1997) (quoting Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir.1995)); see also I & S Assocs. Trust v. LaSalle...