Prignoli v. Bruczynski

• Decision Date: 28 September 2021
• Docket Number: 20-CV-907 (MKB)
• Parties: ROBERT PRIGNOLI, Plaintiff, v. THATY BRUCZYNSKI a/k/a THATY MILAN a/k/a THATY ANNI BRUCZYNSKI a/k/a TATIANA MILAN a/k/a TATI-NANNIK MILAN, AMAZON.COM, INC., and SYNCHRONY BANK, Defendants.
• Court: U.S. District Court — Eastern District of New York

ROBERT PRIGNOLI, Plaintiff, v. THATY BRUCZYNSKI a/k/a THATY MILAN a/k/a THATY ANNI BRUCZYNSKI a/k/a TATIANA MILAN a/k/a TATI-NANNIK MILAN, AMAZON.COM, INC., and SYNCHRONY BANK, Defendants.

No. 20-CV-907 (MKB)

United States District Court, E.D. New York

September 28, 2021

MEMORANDUM & ORDER

MARGO K. BRODIE, UNITED STATES DISTRICT JUDGE

Plaintiff Robert Prignoli, proceeding pro se, ^[1] commenced the above-captioned action on January 13, 2020, in the New York Supreme Court, Richmond County, against Defendants Thaty Bruczynski - also known as Thaty Milan, Thaty Anni Bruczynski, Tatiana Milan, and Tati-Nannik Milan - Amazon.com, Inc. (“Amazon”), PayPal Holdings Inc., eBay Inc., and T-Mobile U.S. Inc. (Notice of Removal ¶ 1, Docket Entry No. 1; Compl., annexed to Notice of Removal as Ex. A, Docket Entry No. 1-1, at 4-5.) On February 18, 2020, Plaintiff filed an Amended Complaint, removing Defendant eBay Inc. and adding Defendant Synchrony Bank.^[2](Am. Compl., annexed to Notice of Removal as Ex. A, Docket Entry No. 1-1, at 50.) On February 19, 2020 Amazon removed the action to this Court on the basis of diversity jurisdiction, (Notice of Removal), and on May 15 2020, Plaintiff filed a proposed second amended complaint (the “SAC”) alleging that Bruczynski made unauthorized transfers of funds from Plaintiff's bank account to Defendants Amazon and Synchrony Bank (the “Corporate Defendants”) to pay for various expenses and that the Corporate Defendants processed these transfers without verifying the account holder. (SAC, annexed to Letter by Robert Prignoli dated May 28, 2020, as Ex. 1, Docket Entry No. 37-1).^[3] Plaintiff brings claims for violations of the Electronic Funds Transfer Act, 15 U.S.C. § 1693 et seq. (“EFTA”), and the New York General Business Law (“GBL”) §§ 349 and 380-s, as well as for conversion and negligence under the New York common law. (Id.) The Corporate Defendants now move to dismiss the SAC pursuant to Rules 8(a), 9(b), and 12(b)(6) of the Federal Rules of Civil Procedure, and Plaintiff opposes the motion.^[4] For the reasons set forth below, the Court grants Defendants' motion, dismisses the SAC, and grants Plaintiff leave to file a third amended complaint within thirty days.

I. Background

The Court assumes the truth of the factual allegations in the SAC for the purposes of this Memorandum and Order.

a. The parties

Prignoli is an attorney and resident of New Jersey, (Notice of Removal ¶ 1; see SAC 20), with an office located in New York, (SAC ¶ 1). Defendant Bruczynski is an individual residing in New York, and the Corporate Defendants - Amazon and Synchrony Bank - are foreign corporations with offices located in New York and New Jersey, respectively. (SAC ¶¶ 2-4.)

b. Alleged unauthorized electronic fund transfers

Plaintiff owns a “bank account” at Victory State Bank. (Id. ¶¶ 5, 7.) On February 1, 2019, Bruczynski began using her cellular telephone to initiate unauthorized electronic fund transfers (“EFTs”) from Plaintiff's account to the Corporate Defendants to pay for personal expenses, credit card invoices, and other transactions using their pay-by-phone systems, which did not require her to input the account owner's name.^[5] (Id. ¶¶ 10-15, 22.) The Corporate Defendants processed the EFTs without obtaining Plaintiff's consent or confirming whether Bruczynski was authorized to access Plaintiff's account or initiate the transactions. (Id. ¶¶ 19, 23-24.) Plaintiff was unaware of the EFTs until January 3, 2020. (Id. ¶¶ 20, 29.) By January 6, 2020, Defendants had withdrawn more than $103, 000 from Plaintiff's account. (Id. ¶¶ 7, 16.) c. Funds remitted and retained

Although Victory State Bank reversed approximately $55, 000 worth of the unauthorized EFTs, (id. ¶ 8), Amazon retains control of $23, 032.11 and Synchrony Bank retains control of $17, 841.22 from Plaintiff's account, including “$4, 752.61 for its E-Bay branded Credit Card and $13, 088.61 for its PayPal branded Credit Card, ” for a combined total of $40, 873.33, ^[6] (id. ¶¶ 16, 26; Pl.'s Opp'n 7). Accordingly, Plaintiff seeks damages in the amount of $40, 873.33, legal fees, and declaratory relief. (SAC 19-20.)

II. Discussion a. Standard of review

In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must construe the “complaint liberally, accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in the plaintiff's favor.” Vaughn v. Phoenix House N.Y. Inc., 957 F.3d 141, 145 (2d Cir. 2020). A complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Bacon v. Phelps, 961 F.3d 533, 540 (2d Cir. 2020) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002)). A claim is plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); Cavello Bay Reinsurance Ltd. v. Shubin Stein, 986 F.3d 161, 165 (2d Cir. 2021) (quoting Iqbal, 556 U.S. at 678). Although all allegations contained in the complaint are assumed to be true, this tenet is “inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678; Vaughn, 957 F.3d at 145 (same).

b. EFTA violations claims

Defendants argue that Plaintiff's claims for “violations of the EFTA” fail as a matter of law because Plaintiff's bank account is an attorney trust account and the EFTA does not apply to such accounts. (Defs.' Reply 3-4.) In addition, Defendants argue that the Court should dismiss these claims (1) as against Amazon because Amazon is not a “financial institution, ” (2) under Rule 8 because the SAC does not identify a provision of the EFTA that Defendants violated and instead merely cites 12 C.F.R. §§ 205.6 and 1005.3, and (3) under Rule 12(b)(6) because Plaintiff fails to state claims under these regulations. (Defs.' Mem. 4-6.) Defendants also argue that Plaintiff fails to state a claim under 15 U.S.C. § 1693h(a)(1), as raised in his opposition, because he alleges that they “accepted” rather than failed to make EFTs. (Defs.' Reply 4-5.)

Plaintiff argues that “individuals have a private right of action” under the EFTA's implementing regulations, commonly known as “Regulation E, ” against financial institutions that violate the EFTA and that the EFTA itself “provides consumers the ability” to recover from financial institutions for “unauthorized EFTs” and “failure to obtain written consent for a pre[-]authorized EFT.” (Pl.'s Opp'n 13.) Therefore, Plaintiff argues, Defendants violated the EFTA by “initiat[ing] unauthorized EFTs” from his account “without any written consent by him or written notice to him.” (Id.) In addition, Plaintiff argues that Defendants violated 12 C.F.R. § 1005.3 “by the failure to obtain Plaintiff's consent for the EFTs.” (Id. at 19.)

The EFTA “provide[s] a basic framework establishing the rights, liabilities, and responsibilities of participants in electronic fund and remittance transfer systems.” 15 U.S.C. § 1693(b). Section 1693h(a) of the EFTA sets forth the liability of financial institutions and provides that:

[A] financial institution shall be liable to a consumer for all damages proximately caused by -

(1) The financial institution's failure to make an [EFT], in accordance with the terms and conditions of an account, in the correct amount or in a timely manner when properly instructed to do so by the consumer . . .

(2) the financial institution's failure to make an [EFT] due to insufficient funds when the financal [sic] institution failed to credit, in accordance with the terms and conditions of an account, a deposit of funds to the consumer's account which would have provided sufficient funds to make the transfer, and

(3) the financial institution's failure to stop payment of a preauthorized transfer from a consumer's account when instructed to do so in accordance with the terms and conditions of the account.

15 U.S.C. § 1693h(a). The EFTA “contain[s] several relevant definitions that limit the reach of this substantive provision.” Fischer & Mandell LLP v. Citibank N.A., No. 09-CV-1160, 2009 WL 1767621, at *3 (S.D.N.Y. June 22, 2009). The statute defines “consumer” as a “natural person, ” 15 U.S.C. § 1693a(6), and “financial institution” as “a State or National bank, a State or Federal savings and loan association, a mutual savings bank, a State or Federal credit union, or any other person who, directly, or indirectly, holds an account belonging to a consumer, ” Id. § 1693a(9). The statute in turn defines an “account” as “a demand deposit, savings deposit, or other asset account . . . established primarily for personal, family, or household purposes.” Id. § 1693a(2); see also 12 C.F.R. § 1005.2(b). Finally, an EFT is defined as “any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account, ” 15 U.S.C. § 1693a(7), and a preauthorized EFT (“PEFT”) is defined as “an [EFT] authorized in advance to recur at substantially regular intervals, ” Id. § 1693a(10). Accordingly, “[t]o state a claim under the EFTA, [a] plaintiff must allege that the accounts in question 1) were ‘demand deposit, savings deposit, or other asset account[s]'; 2) ‘established primarily for personal, family, or household purposes'; and 3) that the unauthorized ‘electronic fund transfer' was ‘initiated through an electronic terminal, telephone, computer,...