HV Assocs. LLC v. PNC Bank, N.A., Civil Action No. 17-8128 (SRC)

CourtUnited States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
Writing for the CourtCHESLER, District Judge
Docket NumberCivil Action No. 17-8128 (SRC)
Decision Date08 March 2018


Civil Action No. 17-8128 (SRC)


March 8, 2018



CHESLER, District Judge

This matter comes before the Court upon the filing by Defendant PNC Bank, National Association ("PNC") of a motion to dismiss the complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6). Docket No. 20. Plaintiff HV Associates LLC ("HVA") and Plaintiff Harshi Vashisht ("Harshi," collectively "Plaintiffs") oppose this motion (Docket No. 21), and PNC has filed a reply brief (Docket No. 22). The Court has reviewed the parties' submissions and proceeds to rule without oral argument. See Fed. R. Civ. P. 78(b). For the reasons set forth below, PNC's motion will be granted in part and denied in part.


Plaintiff HVA is a staffing services company owned by Plaintiff Harshi and located in Hoboken, New Jersey. Harshi's husband was formerly an executive for Defendant Royal Bank

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of Canada ("RBC"). In March 2012, RBC began an internal investigation of HVA as well as of Techno-Comp, Inc. ("TCI"), a staffing vendor of RBC owned by non-party Sanjay and/or Sashi Gundala. The investigation regarded kickbacks that TCI had allegedly paid HVA in exchange for Harshi's husband exploiting his executive position at RBC to ensure that the bank used TCI contractors. In an April 2012 letter, RBC invoked its rights under the vendor contract to request an audit of TCI's financial transactions, to which TCI responded by terminating the staffing contract.

In June 2012, RBC sent Plaintiffs and TCI a "Draft Complaint"—which RBC did not subsequently file in court—in which RBC alleged that Plaintiffs had received fraudulent kickbacks from TCI, in violation of various state laws and contractual obligations. In the Draft Complaint, RBC stated that "bank alert resources" had revealed that TCI issued thirteen checks payable to HVA for $20,000 each, which were deposited into HVA's business account at PNC and subsequently used to pay for Harshi's personal expenses. Am. Compl. ¶ 33. Plaintiffs do not have bank accounts at RBC, although Harshi and her husband have personal bank accounts with PNC and HVA has the aforementioned business account there. Plaintiffs allege that the "only way RBC would have known [about the TCI-HVA checks and HVA-Harshi transactions] is if PNC shared private banking information with RBC." Am. Compl. ¶ 34. Around this time, PNC's parent company acquired the American retail business of RBC, and Plaintiffs allege that Defendants employed this "significant business relationship" to "collude[] . . . to retrieve private and confidential banking information." Am. Compl. ¶ 14. Sometime after Plaintiffs received this Draft Complaint, PNC closed Harshi's personal bank accounts and HVA's business account.

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Plaintiffs filed their complaint in the Superior Court of New Jersey in September 2017, listing PNC Financial Services Group ("PNC Financial") as the sole defendant. PNC Financial removed the action to this Court in October 2017. Docket No. 1. Subsequent to a Rule 16 Scheduling Conference before Judge Waldor, Plaintiffs filed the Amended Complaint, which substituted PNC Financial with PNC, and joined RBC as Defendant.

The Amended Complaint asserts several causes of action against PNC for: violation of New Jersey privacy laws under the New Jersey Electronic Fund Transfer Privacy Act (Count I), common law invasion of privacy (Count II), breach of contract (Count III), tortious interference with contract and prospective economic advantage (Count IV), defamation and defamation per se (Count V), trade libel (Count VI), and intentional and/or negligent infliction of emotional distress (Count VII).


a. Motion to Dismiss Under Rule 12(b)(6)

Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." The Rule 8 pleading standard does not require "detailed factual allegations," but it demands "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. at 678 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 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."

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Id. (quoting Twombly, 550 U.S. at 556). Allegations that are "merely consistent with a defendant's liability or show the mere possibility of misconduct" do not satisfy the facial plausibility requirement. Santiago v. Warminster Twp., 629 F.3d 121, 133 (3d Cir. 2010). This plausibility determination is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (quoting Iqbal, 550 U.S. at 679).

Courts in the Third Circuit conduct a two-part analysis when presented with a motion to dismiss under Rule 12(b)(6). "First, the factual and legal elements of a claim should be separated." Fowler, 578 F.3d at 210. Courts are "required to accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable" to the nonmoving party. Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 2007) (internal citations omitted). While factual allegations must be accepted as true, courts should "not credit either 'bald assertions' or 'legal conclusions' in a complaint." Id. at 177; see also James v. City of Wilkes-Barre, 700 F.3d 675, 679 (3d Cir. 2012) (in deciding Rule 12(b)(6) motions, federal courts should "disregard rote recitals of the elements of a cause of action, legal conclusions, and mere conclusory statements"). To conduct this assessment, courts may consider allegations in the complaint, documents attached thereto or specifically referenced therein, and matters of public record. Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 259 (3d Cir. 1998). Once the factual and legal elements have been separated, courts in the Third Circuit "then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Fowler, 578 F.3d at 210-11.

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a. Plaintiffs Have Not Pleaded a Valid Claim Against PNC under the New Jersey Electronic Fund Transfer Privacy Act

Plaintiffs allege that "PNC, without notifying Plaintiffs, provided RBC with private and confidential banking information belonging to Plaintiffs." Am. Compl. ¶ 16. RBC allegedly otherwise lacked access to these banking records because neither HVA nor Harshi banked with RBC, and TCI had terminated its vendor relationship with RBC after it refused RBC's audit request under the terms of the vendor contract. Am. Compl. ¶¶ 12-13. Plaintiffs further allege that PNC and RBC shared this confidential banking information through "bank alerts," which are suspicious activity reports filed with the Financial Crimes Enforcement Network ("FinCEN") pursuant to the U.S. Bank Secrecy Act ("BSA"). Am. Compl. ¶ 17.

At the time RBC sent Plaintiffs the Draft Complaint, HVA had a business checking account and Harshi and her husband had personal bank accounts with PNC. See Docket No. 20, Exs. A-C (the "Business Account" between PNC and HVA); Docket No. 20, Exs. D-E (the "Personal Account" between PNC and Harshi and her husband). Plaintiffs do not allege, either affirmatively or indirectly through the evidence cited, that PNC shared banking information with RBC related to transactions in the Personal Account. Instead, Plaintiffs cite two paragraphs from RBC's 2012 Draft Complaint in support of their allegation that PNC improperly shared banking information related to HVA's Business Account:

23. Information obtained in RBC's investigation from bank alert resources ... revealed that during the course of TCI's relationship with RBC, TCI had been making regular payments to a company named HVA. RBC received information that from August 2011 through March 2012, TCI issued thirteen (13) checks payable to HVA for $20,000 each. These checks ... were deposited into HVA's bank account at PNC.

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29. The illegal funds deposited into the HVA account [at PNC] were for the mutual benefit of ... Harshi [and her husband] and were used, in part, to pay [their] personal expenses. For example, on August 30, 2011 Harshi wrote a check from the HVA checking account to pay down [her husband's] line of credit, and on January 18, 2012, Harshi wrote a check from the HVA checking account to pay ... [her husband's] Visa credit card. Am. Compl. ¶ 33.

As the first cause of action, Plaintiffs allege that PNC's sharing of this banking information violates the New Jersey Electronic Fund Transfer Privacy Act (the "Privacy Act"). N.J. Stat. Ann. § 17:16K et seq. The Privacy Act outlines the permissible circumstances, under New Jersey law, in which financial institutions and government agencies may disclose private banking account information with third parties. See N.J. Stat. Ann. § 17:16K-3. Critical to the motion at bar, the Privacy Act regulates 'accounts' that are "demand, time, or savings deposit, or other consumer asset account[s], other than an occasional or incidental credit balance, held either directly or indirectly by a financial institution and established for personal, family or household purposes." N.J. Stat. Ann. § 17:16K-2(b) (emphasis added).

In its capacity as a limited liability company, HVA executed an "Account Agreement for Business Accounts" with PNC in...

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