Sur. Bank v. Dunbar Armored, Inc.

Decision Date25 February 2015
Docket NumberCASE NO. 14-81368-CIV-HURLEY
CourtU.S. District Court — Southern District of Florida
PartiesSURETY BANK, Plaintiff, v. DUNBAR ARMORED, INC., Defendant.
ORDER GRANTING IN PART & DENYING IN PART DEFENDANT'S MOTION TO DISMISS AMENDED COMPLAINT

THIS CAUSE is before the court on the defendant Dunbar Armored, Inc.'s motion to dismiss the plaintiff's amended complaint [ECF 28], together with plaintiff's response in opposition to the motion [ECF 30] and the defendant's reply [ECF 39]. For reasons stated below, the court has determined to deny the motion in part and grant the motion in part.

I. Background1

The plaintiff, Surety Bank ("Surety" or "the Bank") alleges that the defendant, Dunbar Armored, Inc. ("Dunbar"), an armored motor vehicle company, misdelivered cash under a change order fraudulently submitted by a bank customer, UR Check Cashing Store, Inc. ("UR Check Cashing" or "the customer"), resulting in the Bank's loss of $820,279.51 paid on forged checks negotiated by UR Check Cashing. The events leading up to this loss are set forth below.

On December 28, 2012, Surety and Dunbar entered into a written "Central Vault Agreement" ("CVA"), under which Dunbar agreed to provide "money room services" for the Bank's customers, i.e. to accept sealed deposit bags at "cash vault services facilities" from Bank customers, and to transport and deliver cash on behalf of Surety for its customers [ECF NO. 19-1]. On April 19, 2013, Dunbar provided Surety with a document entitled "Central Vault Agreement Endorsement to Add/Change/Delete Customer Locations," identifying "UR Check Cashing Store Inc." as a Bank customer located at "1241 S Military Trail STE B," in West Palm Beach, Florida, and authorizing Dunbar to provide that customer with cash services "as indicated above" in accordance with the terms of the CVA between Dunbar and the Bank. Surety alleges that Endorsement, an unsigned copy of which appears as an attachment to the amended complaint [ECF 19-2], was incorporated into the Central Vault Agreement between Dunbar and Surety.

Throughout the course of the parties' dealings, Surety used Dunbar's website to direct the delivery of specific amounts of cash to UR Check Cashing at a specific location, i.e. the 1241 S. Military Trail, West Palm Beach, Florida, address listed on the Endorsement, and, up through July 1, 2013, Dunbar followed those directions by delivering the cash to that address.

On July 1, 2013, UR Check Cashing closed its retail store operations on 1241 S. Military Trail, and moved to 8401 Lake Worth Road, Suite 2-216, Lake Worth, Florida, where it occupied an office located on a second-floor, interior corridor. At the same time, UR Check Cashing directly instructed Dunbar (without alerting Surety) to change its delivery address to the Lake Worth office. Dunbar complied with this direction - without notifying Surety or seeking its authorization for the change order -- and ultimately made eighteen deliveries of cash to UR Check Cashing at its Lake Worth office between July 2 and July 31, 2013 in the total amount of $1,924,000.00.

Surety later discovered that this change in delivery location coincided with UR Check Cashing's launch of a fraudulent bulk checking-buying scheme, resulting in the submission of numerous forged checks to Surety for negotiation. Ultimately, the presentation of forged checks caused Surety to lose $820,279.51 in monies delivered by Dunbar, on behalf of the Bank, to UR Check Cashing at its unauthorized, non-retail Lake Worth location.

According to Surety, had it known that UR Check Cashing had moved its business operation to the interior corridor of a building with no storefront, it would have immediately discovered the fraudulent scheme and ceased all deliveries of cash to it, thus averting the $820,279.51 loss which it claims Dunbar precipitated by its unauthorized misdelivery of cash to UR Cash Checking. In its current complaint, it sues Dunbar for breach of express contract, reformation of contract, and negligence based on Dunbar's implementation of the alleged unauthorized change order and failure to notify Surety of the customer's request for a change in delivery location.

II. Motion to Dismiss

Dunbar moves to dismiss the plaintiff's amended complaint for failure to state a claim on which relief may be granted under Rule 12(b) (6) on the following grounds:

(1) the breach of contract count fails to state a claim on which relief may be granted because (a) the Central Vault Agreement, on its face, does not contractually obligate Dunbar to deliver cash on behalf of Surety to specific locations, nor does it obligate Dunbar to notify Surety about customer delivery change orders; (b) the unsigned "Endorsement," purporting to create specific delivery location obligations, cannot serve to alter or amend the CVA because the CVA recites it may only be amended by a "written agreement signed by both parties;" (c) the Central Vault Agreement, onits face, contains a disclaimer of liability for consequential or incidental losses;2 (d) the amended complaint does not identity any specific provision of the CVA which has allegedly been breached, but rather makes nebulous references to breaches of the entire Central Vault Agreement; (e) the breach of contract claim is barred by the Florida statute of frauds, § 725.01, Fla. Stat., because the Endorsement purporting to create the specific delivery obligation is unsigned and the CVA recites a performance period of three years;

(2) the reformation of contract claim fails to state a claim on which relief may be granted because (a) Surety has an adequate remedy at law, to wit, its legal remedies against UR Cash Checking, against which it currently holds a final judgment in the amount of $3,199,844.13 predicated on the fraudulent conduct described in the amended complaint; (b) the reformation claim is barred by Florida's statute of frauds, where the CVA creates a three-year term of performance; (c)Surety has not pled facts suggesting "mutual mistake" or "inequitable conduct," the alternative grounds required to state a reformation claim under Florida law; (d) the allegations of the complaint do not describe the alleged "mistake" with particularity in violation of Rule 9(b).

(3) the negligence claim fails to state a claim on which relief may be granted because: (a) Dunbar does not owe a legal duty to protect Surety from the fraudulent activity of its customers; (b) Surety is unable to identify the breach of any duty owed by Dunbar, independent of its contractual obligations, on which a negligence claim may be premised; (c) the CVA on its face includes a disclaimer for negligence or other tort liability for losses caused by Dunbar's performance under thecontract, precluding the imposition of any independent tort duty of care; and (d) UR Check Cashing's alleged fraudulent activity constitutes a superseding intervening cause which breaks the chain of legal causation.

III. Discussion
A. Breach of Contract (Express)

The complaint alleges that the Surety and Dunbar supplemented the CVA with a written Endorsement specifying a delivery location for the Bank's UR Check Cashing customer, and that the defendant breached that Endorsement by making a misdelivery to a different address at the unilateral, unauthorized request of the Bank's customer. Dunbar challenges the existence of a writing which amended the CVA in this fashion (observing that the copy attached to the complaint appears unsigned by Dunbar), effectively denying the plaintiff's allegation of a writing and thereby raising matters outside the pleadings.

As a general proposition, the court may consider documents outside the pleadings in determining a motion to dismiss under Rule 12(b)(6) only if the document is central to the plaintiff's claim and its authenticity is not in dispute. See Perez v. Wells Fargo N.A., 774 F.3d 1329, 1340 n. 12 (11th Cir. 2014). In this case, the Endorsement is central to the plaintiff's complaint, but the authenticity of the document is in dispute, where plaintiff alleges the existence of a written agreement between the parties containing promises and obligations regarding the delivery location for UR Check Cashing, and Dunbar questions the existence of a fully executed writing governing that obligation.

Notably, Dunbar does not deny the existence of such a written, fully signed endorsement, but rather insists that Surety should have alleged that the endorsement was signed by all parties andattached a signed copy of it to its complaint. However, the court finds that imposing such a pleading technicality would be inconsistent with the notice-pleading requirements under the governing federal rules of procedure. The court is obligated to draw all reasonable inferences in favor of the plaintiff, and in doing so infers that the writing described in Count 1 of the plaintiff's amended complaint was indeed signed by both parties, even though the exemplar form attached to the complaint does not reflect all signatures.

With this, the court finds the plaintiff's allegations sufficient to state the existence of a breach of contract, based on Dunbar's alleged misdelivery of cash to UR Cash Checking at an unauthorized location, and further finds the allegations sufficient to avoid application of the Florida statute of frauds. See e.g. Caterpillar, Inc. v. Usinor Industeel, 393 F. Supp. 2d 659 (N.D. Ill. 2005).

To the extent that the existence of a signed endorsement, supplementing the CVA in the manner alleged by Surety, is in fact disputed by Dunbar, this is a matter for resolution on a fully developed fact record at the summary judgement phase of the proceedings. The defendant's motion to dismiss the breach of contract claim for failure to state a claim (failure to allege the existence of a signed endorsement) and failure to comply with the statute of frauds shall accordingly be denied, without prejudice for the issue to be renewed at the summary judgment stage.

Finally, with regard...

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