Squeeze Me Once, LLC v. SunTr. Bank

• Decision Date: 22 September 2022
• Docket Number: 19-787-JWD-RLB
• Parties: SQUEEZE ME ONCE, LLC v. SUNTRUST BANK, ET AL. CIVIL ACTION
• Court: U.S. District Court — Middle District of Louisiana

SQUEEZE ME ONCE, LLC v. SUNTRUST BANK, ET AL. CIVIL ACTION

No. 19-787-JWD-RLB

United States District Court, M.D. Louisiana

September 22, 2022

RULING AND ORDER ON MOTION FOR SUMMARY JUDGMENT

JOHN W. DEGRAVELLES, JUDGE UNITED STATES DISTRICT COURT.

I. INTRODUCTION

This matter comes before the Court on the Motion for Summary Judgment (Doc. 45) brought by Defendant SunTrust Bank (“SunTrust” or “Defendant”). It is opposed by Plaintiff Squeeze Me Once, LLC (“SMO” or “Plaintiff”). (Doc. 47.) SunTrust filed a reply brief. (Doc. 48.) Oral argument is not necessary. The Court has carefully considered the law, the facts in the record, and the arguments and submissions of the parties and is prepared to rule.

This case is about a fraudulent wire transfer. On April 23, 2019 SunTrust attempted to effectuate a wire transfer on behalf of SMO, but a hacker had provided false instructions to SunTrust. Consequently, there was a misdescription (that is the transferee's account number did not match its account name), and a large sum of SMO's money went to the hacker.

SMO originally filed suit against SunTrust asserting a number of claims. However, all have been dismissed except the one arising from the Uniform Commercial Code (“UCC”).

SunTrust' now moves for summary judgment on that claim. SunTrust argues it did not violate the UCC (specifically La. R.S. § 10:4A-207) because it did not have actual knowledge that the wire transfer at issue misdescribed the beneficiary prior to payment of the wire transfer as contemplated by that statute.

In sum, the Court finds that SunTrust is entitled to summary judgment. Even construing the evidence in a light most favorable to SMO and drawing reasonable inferences in its favor, no reasonable juror could find that SunTrust had actual knowledge of the misdescription. Consequently, SunTrust's motion will be granted, and SMO's remaining claim against SunTrust will be dismissed with prejudice.

II. FACTUAL BACKGROUND

A. Relevant Factual Background about the Wire Transfer

On April 23, 2019, plaintiff SMO authorized Hancock Whitney Bank (“Whitney”) to wire $400,000 to Main Squeeze Juice Company Franchise, L.L.C. (“MSJCF”). (Statement of Uncontested Material Facts in Support of Motion for Summary Judgment by SunTrust Bank (“SUMF”), Doc. 45-2 at ¶ 1; See Plaintiff's Opposing Statement of Material Facts (“POSMF”), Doc. 47-1 at ¶ 1.)^[1] SMO presented Whitney a wire transfer order that identified the beneficiary as MSJCF and reflected that the funds should be deposited into SunTrust account number [.. .9929] (“SunTrust Account”). (SUMF, Doc. 45-2 at ¶ 2; See POSMF, Doc. 47-1 at ¶ 2.) That same day, Whitney, following the instructions provided by SMO, initiated a wire transfer to SunTrust. (SUMF, Doc. 45-2 at ¶ 3; See POSMF, Doc. 47-1 at ¶ 3.) The SunTrust wire system received the wire from Whitney on April 23, 2019, at 2:46 p.m. (SUMF, Doc. 45-2 at ¶ 4; See POSMF, Doc. 47-1 at ¶ 4.)

SunTrust's “Wire Operations Data Entry Group Procedure” manual provides that “incoming wires from other banks should process directly to the client's account” unless the MTS (“Money Transfer System”) “is unable to successfully map those incoming messages into the standard format,” which “results in the wires stopping in the Repair Queue for further processing.” (SUMF, Doc. 45-2 at ¶ 7; See POSMF, Doc. 47-1 at ¶ 7.) The April 23, 2019, wire did not stop in the “repair queue” due to any issues with the format of the wire. (SUMF, Doc. 45-2 at ¶ 8; See POSMF, Doc. 47-1 at ¶ 8.) Further, nothing on the “History Detail” indicates that the wire should have stopped in the repair queue for further processing. (SUMF, Doc. 45-2 at ¶ 12; See POSMF, Doc. 47-1 at ¶ 12.) Under SunTrust's policies and procedures, had the wire stopped in the repair queue, the wire should have been manually reviewed to confirm whether the name and account number matched the name and account number on the wire transfer order. (SUMF, Doc. 45-2 at ¶ 10; See POSMF, Doc. 47-1 at ¶ 10.) Because the wire did not stop in the repair queue, there was no manual intervention/review by anyone at SunTrust prior to processing the wire transfer order. (SUMF, Doc. 45-2 at ¶ 9; See POSMF, Doc. 47-1 at ¶ 9.)

On or around May 9, 2019, SMO learned for the first time that MSJCF had not received SMO's payment. (SUMF, Doc. 45-2 at ¶ 13; See POSMF, Doc. 47-1 at ¶ 13.) SMO claims, “[on] information and belief,” that “an unidentified foreign hacker gained access to [MSJCF's] email, intercepted the correct wire account instructions from MSJCF, and emailed fraudulent SunTrust account numbers to SMO” for the April 23, 2019, wire transfer. (SUMF, Doc. 45-2 at ¶ 14; See POSMF, Doc. 47-1 at ¶ 14.)

On May 9, 2019, SunTrust received a “Uniform Identification Agreement” from Whitney. (SUMF, Doc. 45-2 at ¶ 15; See POSMF, Doc. 47-1 at ¶ 15.) At the time SunTrust received the Uniform Identification Agreement from Whitney, the majority of the $400,000 wired by Whitney at the direction of SMO had been withdrawn from the SunTrust Account. (SUMF, Doc. 45-2 at ¶ 16; See POSMF, Doc. 47-1 at ¶ 16.) SunTrust subsequently issued a check dated May 28, 2019, in the amount of $73,787.93 to Whitney, representing the portion of the funds that remained in the SunTrust Account. (SUMF, Doc. 45-2 at ¶ 17; See POSMF, Doc. 47-1 at ¶ 17.)

SMO filed this suit against SunTrust alleging (1) negligence and gross negligence; (2) violations of the Electronic Fund Transfer Act, 15 U.S.C. §§ 1693-1693r; (3) violation of the UCC, including but not limited to La. R.S. § 10:4A-207; and (4) aiding fraud. (Doc. 1-2.) On August 3, 2020, this Court granted SunTrust's Motion to Dismiss in part, dismissing all of SMO's claims except the one arising under the UCC. (Doc. 23.)

SunTrust's Motion for Summary Judgment asks this Court to find that it did not violate the UCC, specifically La. R.S. § 10:4A-207. (Doc. 45-1 at 1.) SunTrust asserts that it did not have actual knowledge that the April 23, 2019, wire transfer at issue misdescribed the beneficiary prior to payment of the wire transfer as contemplated by § 10:4A-207 (Id.)

B. Disputed Factual Background about SunTrust's Automated Systems

The parties write a great deal about SunTrust's automated systems, and the Court has thoroughly reviewed all of this testimony and evidence. However, as will be explained below, details and possible factual disputes about these systems are immaterial to this Court's decision.

Nevertheless, to briefly summarize, Defendant asserts that relying on the SunTrust Account number provided to it by Whitney, at 2:47 p.m., SunTrust's fully automated systems credited the funds to the SunTrust Account and made them immediately available for withdrawal by the SunTrust Account holder. (See Dyson Dep. 123-24, Doc. 45-4.) Defendant further asserts that the Karen Dyson deposition also supports the proposition that the April 23, 2019, wire was paid based on the account number only and was processed directly into the SunTrust Account. (See Dyson Dep. 93, Doc. 45-4.)

In response, Plaintiff contends that before crediting the SunTrust Account, SunTrust's systems validated the details of the incoming wire transfer dated April 23, 2019, from SMO to the SunTrust Account using the information that SunTrust maintains in its “host” or “mainframe” or “DDA” or “QBIQ” system. (See Pl. Ex. 1, Doc. 45-3; Watson Dep. 11, 13-14, 21-23, 27, Doc. 47-6). Thus, such information included not only the SunTrust Account number but the name of the SunTrust Account holder. (See Pl. Ex. 1, Doc. 45-3; Watson Dep. 11, 13-14, 21-23, 27, Doc. 47-6).

In reply, Defendant asserts that SunTrust's corporate representatives have testified to the fact that validation of the account number and name by way of manual intervention would have occurred if and only if the wire stopped in the repair queue due to issues with the format wire, which did not occur in the present case. (See Dyson Dep. 48, Doc. 45-4; Watson Dep. 31-32, Doc. 48-1.) SunTrust also refers to Stephanie Watson's testimony regarding the meaning of Autotrieve and the significance of related entries on the Automated “History Detail.” (See Watson Dep. 1113, 19, 28-32, Doc. 48-1.)

III. RULE 56 STANDARD

“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). If the mover bears his burden of showing that there is no genuine issue of fact, “its opponent must do more than simply show that there is some metaphysical doubt as to the material facts . . . [T]he nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.' ” See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (internal citations omitted). The non-mover's burden is not satisfied by “conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations and internal quotations omitted). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.' ” Matsushita Elec. Indus. Co., 475 U.S. at 587. Further:

In resolving the motion, the court may not undertake to evaluate the credibility of the witnesses, weigh the evidence, or resolve factual disputes; so long as the evidence in the record is such that a reasonable jury drawing all inferences in favor of the nonmoving party could arrive at a verdict in that party's favor, the court must deny the motion.

Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1263 (5th Cir. 1991).

IV. ARGUMENTS OF THE PARTIES

All parties agree...