Scura Wigfield Heyer Stevens & Cammarota, LLP. v. Citibank, Na

• Decision Date: 03 October 2022
• Docket Number: Civil Action 2:21-cv-12835 (ES) (LDW)
• Court: U.S. District Court — District of New Jersey
• Parties: SCURA, WIGFIELD, HEYER, STEVENS & CAMMAROTA, LLP Plaintiff, v. CITIBANK, NA, et al., Defendants.

SCURA, WIGFIELD, HEYER, STEVENS & CAMMAROTA, LLP Plaintiff,
v.
CITIBANK, NA, et al., Defendants.

Civil Action No. 2:21-cv-12835 (ES) (LDW)

United States District Court, D. New Jersey

October 3, 2022

Not for Publication

OPINION

ESTHER SALAS, U.S.D.J.

Plaintiff Scura, Wigfield, Heyer, Stevens & Cammarota, LLP (“Plaintiff”) initiated this action against Citibank, NA (“Citibank”), Diamond PLC (“Diamond”), Access Bank PLC (formerly Diamond Bank PLC) (“Access Bank”), and Miguel Francisco in connection with alleged wire fraud. (D.E. No. 1). In Count VI of its second amended complaint, Plaintiff brings a single claim against Defendant Citibank under N.J.S.A. 12A:4A-207 (“Section 207”). (D.E. No. 47 (“Second Amended Complaint” or “SAC”) ¶¶ 53-58). Before the Court is Defendant Citibank's motion to dismiss Count VI of the SAC pursuant to Federal Rule of Civil Procedure 12(b)(6). (D.E. No. 48 (“Motion”); D.E. No. 48-1 (“Mov. Br.”)). Having considered the parties' submissions, the Court decides this matter without oral argument. See Fed.R.Civ.P. 78(b); L. Civ. R. 78.1(b). For the reasons set forth below, Defendant Citibank's Motion is GRANTED.

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I. BACKGROUND

Plaintiff is a law firm providing legal services in Wayne, New Jersey. (SAC ¶¶ 8-9). Plaintiff maintains an attorney trust account with ConnectOne Bank (“ConnectOne”), a non-party to this case. (Id. ¶ 9).

On or about November 15, 2019, Plaintiff alleges that an individual named Miguel Francisco requested legal assistance in resolving an employment dispute. (Id. ¶ 10). On November 25, 2019, Plaintiff's office received a certified bank check in the amount of $119,000.00 made payable to Plaintiff. (Id. ¶ 11). Plaintiff's bookkeeper deposited the check with ConnectOne. (Id. ¶ 12). On November 26, 2019, Mr. Francisco instructed Plaintiff to wire $118,550.00 to “Diamond PLC.” (Id. ¶¶ 13-15 & 55). That same day, Plaintiff directed its bank, ConnectOne, to initiate the wire transfer. (Id. ¶¶ 14-15 & 55). Defendant Citibank then processed ConnectOne's payment order and wired the funds to Access Bank PLC (formerly Diamond Bank PLC) instead of to Diamond PLC. (Id. ¶ 56). Plaintiff alleges that there was a discrepancy on ConnectOne's payment order between the beneficiary's name and account number. (See id.; see also D.E. No. 52-1 at 17).^[1] On November 29, 2019, ConnectOne informed Plaintiff that the check in the amount of $119,000.00 was fraudulent. (SAC ¶ 16). Plaintiff believes the funds have been retained by Access Bank. (Id. ¶¶ 29, 41 & 51).

Plaintiff initiated this action on June 22, 2021. (D.E. No. 1). On February 1, 2022, Plaintiff filed the SAC, asserting a single claim against Defendant Citibank under Count VI pursuant to Section 207-a provision of Article 4A of the Uniform Commercial Code (“UCC”) as adopted in New Jersey. (SAC ¶¶ 53-58). On February 15, 2022, Defendant Citibank filed the instant Motion, which is fully briefed. (Mov. Br.; D.E. No. 52 (“Opp. Br.”); D.E. No. 53 (“Reply”)).

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II. LEGAL STANDARD

In assessing whether a complaint states a cause of action sufficient to survive dismissal under Rule 12(b)(6), the Court accepts “all well-pleaded allegations as true and draw[s] all reasonable inferences in favor of the plaintiff.” City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp., 908 F.3d 872, 878 (3d Cir. 2018). “[T]hreadbare recitals of the elements of a cause of action, legal conclusions, and conclusory statements” are all disregarded. Id. at 878-79 (quoting James v. City of Wilkes-Barre, 700 F.3d 675, 681 (3d Cir. 2012)). The complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face,” and a claim is facially 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.” Zuber v. Boscov's, 871 F.3d 255, 258 (3d Cir. 2017) (first quoting Santiago v. Warminster Twp., 629 F.3d 121, 128 (3d Cir. 2010); and then quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

Although the Court is generally confined to the allegations in the pleadings in ruling on a motion to dismiss under Rule 12(b)(6), it may, without converting the motion to one for summary judgment, consider a document “integral to or explicitly relied upon in the complaint,” as well as “an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (first quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1220 (1st Cir. 1996); and then quoting In re Donald J. Trump Casino Sec. Litig., 7 F.3d 357, 368 n.9 (3d Cir. 1993)); see also Lum v. Bank of Am., 361 F.3d 217, 221 n.3 (3d Cir. 2004) (“In deciding motions to dismiss pursuant to Rule 12(b)(6), courts generally consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.”).

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III. DISCUSSION

Defendant Citibank argues that Plaintiff lacks standing to assert a UCC claim under Article 4A because Plaintiff fails to allege either (i) that Plaintiff was Defendant Citibank's customer or (ii) that there was privity between Plaintiff and Defendant Citibank. (Mov. Br. at 3-9). In response, Plaintiff concedes that it was not a customer of Defendant Citibank, but nonetheless argues that the Court should not impose a privity requirement in this instance. (Opp. Br. at 1018). As explained below, the Court agrees with Defendant Citibank that privity is required and, because Plaintiff fails to allege privity, it lacks standing to assert a claim against Defendant Citibank under Article 4A.

Article 4A covers claims arising from electronic funds transfers, which are defined as “the series of transactions, beginning with the originator's payment order, made for the purpose of making payment to the beneficiary.” N.J.S.A. 12A:4A-104(1). Article 4A defines the different parties to a funds transfer as follows: “‘[o]riginator' means the sender of the first payment order in a funds transfer[,]” N.J.S.A. 12A:4A-104(3); “‘[o]riginator's bank' means the receiving bank to which the payment order of the originator is issued if the originator is not a bank[,]” N.J.S.A. 12A:4A-104(4); “‘[b]eneficiary' means the person to be paid by the beneficiary's bank[,]” N.J.S.A. 12A:4A-103(1)(b); and “‘[b]eneficiary's bank' means the bank identified in a payment order in which an account of the beneficiary is to be credited pursuant to the order[,]” N.J.S.A. 12A:4A-103(1)(c). A funds transfer is “complete” when there has been acceptance of a payment order. N.J.S.A. 12A:4A-104(1) (“[a] funds transfer is completed by acceptance by the beneficiary's bank of a payment order for the benefit of the beneficiary of the originator's payment order”) (emphasis added); see also N.J.S.A. 12A:4A-402, cmt. 2 (“[i]f that acceptance by Bank B does not occur, the funds transfer has miscarried”).

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Section 207(2) assigns the rights and liabilities of the parties in a funds transfer “[i]f a payment order received by the beneficiary's bank identifies the beneficiary both by name and by an identifying or bank account number and the name and number identify different persons”-in other words, if there is a conflict on the payment order between the name and the account number of the beneficiary. N.J.S.A. 12A:4A-207(2). Specifically, Section 207(2)(b) imposes liability when “the beneficiary's bank pays the person identified by name or knows that the name and number identify different persons[.]” N.J.S.A. 12A:4A-207(2)(b). In that circumstance, Section 207(2)(b) provides that “no person has rights as beneficiary” and “acceptance of the order cannot occur.” Id.

Section 402 provides a remedial scheme for claims brought under Section 207. See N.J.S.A. 12A:4A-402; see also Wellton Int'l Express, et.al. v. Bank of China (Hong Kong), et.al., No. 19-6834, 2020 WL 1659889, at *3 (S.D.N.Y. Apr. 3, 2020), appeal withdrawn sub nom., Wellton Int'l Express v. Bank of China (Hong Kong) Ltd., et.al., No. 20-1600, 2021 WL 2026845 (2d Cir. May 6, 2021); Simple Helix, LLC v. Relus Techs., LLC, 493 F.Supp.3d 1087, 1100 (N.D. Al. Oct. 8, 2020); N.J.S.A. 12A:4A-207, cmt. 2 (citing Section 402(2) for the rights and liabilities of the parties to a claim under Section 207(2)(b)). Specifically, Section 402(2) provides that, “[w]ith respect to a payment order issued to the beneficiary's bank, acceptance of the order by the bank obliges the sender to pay the bank the amount of the order, but payment is not due until the payment date of the order.” N.J.S.A. 12A:4A-402(2). Further, Section 402(3) provides that “[t]he obligation of the sender to pay its payment order is excused if the funds transfer is not completed by acceptance by the beneficiary's bank[.]” N.J.S.A. 12A:4A-402(3). And Section 402(4), known as the “money-back guarantee,” provides that, “[i]f the sender of a payment order pays the order and was not obliged to pay all or part of the amount paid, the bank receiving payment is obliged

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to refund payment to the extent the sender was not obliged to pay.” N.J.S.A. 12A:4A-402(4); see also N.J.S.A. 12A:4A-402, cmt. 2.

The parties have not provided, and the Court has not...