Zeal Global Servs. Private Ltd. v. SunTrust Bank

• Decision Date: 18 December 2020
• Docket Number: CIVIL ACTION NO. 1:20-cv-00908-AT
• Citation: 508 F.Supp.3d 1303
• Parties: ZEAL GLOBAL SERVICES PRIVATE LIMITED, Plaintiff, v. SUNTRUST BANK and Wells Fargo Bank, National Association (Inc.), Defendants.
• Court: U.S. District Court — Northern District of Georgia

508 F.Supp.3d 1303

ZEAL GLOBAL SERVICES PRIVATE LIMITED, Plaintiff,

v.SUNTRUST BANK and Wells Fargo Bank, National Association (Inc.), Defendants.

CIVIL ACTION NO. 1:20-cv-00908-AT

United States District Court, N.D. Georgia, Atlanta Division.

Signed December 18, 2020

Andrew J. Becker, David Jason Merbaum, Matthew Christopher Mikkelsen, Merbaum & Becker, P.C., Alpharetta, GA, for Plaintiff.

Elizabeth M. Briones, Pro Hac Vice, Mary C. Zinsner, Pro Hac Vice, Troutman Pepper Hamilton Sanders LLP, Washington, DC, Mark James Windham, Troutman Pepper Hamilton Sanders LLP, Atlanta, GA, for Defendant SunTrust Bank.

Benjamin Brock Coulter, Burr & Forman LLP, Birmingham, AL, Kevin Robert Stone, Burr & Forman LLP, Atlanta, GA, for Defendant Wells Fargo Bank, National Association (Inc.).

OPINION AND ORDER

Amy Totenberg, United States District Judge

This is a case of bank fraud, in which nefarious scammers, masquerading as legitimate business representatives, directed Plaintiff Zeal Global Services Private Limited ("Zeal") to transmit funds to their bank accounts via wire transfers. Zeal brings claims against SunTrust Bank ("SunTrust") and Wells Fargo Bank, National Association (Inc.) ("Wells Fargo") (collectively, "Defendants" or "the Banks"), alleging that the Banks violated various state laws when they knowingly allowed the fraudsters to bank with them and did not close their accounts despite being aware of their fraudulent activities. Defendants have filed Motions to Dismiss [Docs. 27, 29], which are now before the Court. For the reasons below, the Court GRANTS Defendants’ Motions. Zeal's Amended Complaint [Doc. 23] is DISMISSED WITH PREJUDICE .

I. BACKGROUND¹

Zeal is a private company based in India that provides cargo marketing, management, and administrative services to partner airlines and terminal operators across the globe. (Amended Complaint, "Compl.," Doc. 23, ¶¶ 1, 5.) In furtherance of its business, Zeal maintains a long-standing relationship with the airline Compania Panamena de Aviacion, S.A. ("COPA"). (Id. ¶ 6.) Zeal books cargo from India to various destinations through COPA; in turn, COPA sends Zeal monthly invoices for its services. (Id. ¶ 7.) Zeal pays these invoices via wire transfers, the instructions for which are typically emailed to Zeal by a representative of COPA. (Id. ¶¶ 7, 8.) In early 2018, fraudsters pretending to be COPA representatives sent Zeal emails providing new wire transfer instructions for the payments of Zeal's monthly invoices. (Id. ¶¶ 9, 16, 23.)

Based on these emails, Zeal initiated three separate wire transfers, described in greater detail below. (Id. ¶¶ 10,17, 24.) Zeal initiated these three transfers via payment orders that identified COPA as the named beneficiary but listed the beneficiary account numbers provided in the fraudulent emails. (Id. ¶¶ 11, 18, 25.) SunTrust and Wells Fargo were identified in the payment orders as the beneficiaries’ banks and, accordingly, were tasked with accepting the funds on behalf of the beneficiaries, their customers. See O.C.G.A. § 11-4A-104 (explaining that a funds transfer is a series of transactions, beginning with the sender's payment order, made for purpose of making payment to beneficiary of the order, and completed by acceptance of the payment order by the beneficiary's bank for the benefit of the beneficiary). Thus, Zeal was not a customer of either SunTrust or Wells Fargo, but because the fraudsters were customers of the Banks, the Banks were involved in accepting the payment orders and thereby completing the wire transfers.

The Three Wire Transfers

The first incident occurred on January 9, 2018, when Zeal received an email purportedly from E. Chavarria, a COPA representative, directing Zeal to wire funds to pay its monthly invoice to a new account, a SunTrust account in Spartanburg, South Carolina. (Id. ¶ 9.) On January 23, 2018, Zeal initiated a transfer of $268,887.87 to this account ("the First Account"). (Id. ¶ 10.)

On February 8, 2018, the fraudsters struck again. Zeal received another email purportedly from E. Chavarria (the COPA representative) instructing Zeal to change the wire transfer instructions, this time to deposit funds into a Wells Fargo account in Atlanta, Georgia. (Id. ¶16.) On February 26, Zeal transmitted a payment of $178,341.99 to that account (the Second Account). (Id. ¶ 17.)

Finally, on March 19, 2018, Zeal received a third email from "Mr. Chavarria" directing Zeal to wire payment of its monthly invoice to a different Wells Fargo account, also located in Atlanta. (Id. ¶ 23.) Zeal initiated a wire transfer of $293,362.40 to this Third Account on March 23, 2018. (Id. ¶ 24.)

The Receiving Accounts

As noted above, on all three wire transfers, Zeal identified the beneficiary of the payment as COPA Airlines. (Id. ¶¶ 11, 18, 25.) None of the accounts that received these three wire transfers were in the name of COPA Airlines. (Id. ¶¶ 12, 19, 26.) The Amended Complaint does not identify the name on the First Account, however, the names on the Second and Third Accounts were M. Unegbu and Olanrewaju Tijani, respectively. (Id. )

As to the First Account (the SunTrust account), Zeal alleges that, in the months preceding the first wire transfer, the account was never above $1,000 except for a single transfer of $16,900 that was immediately withdrawn upon deposit. (Id. ¶ 14.) Similarly, after Zeal sent payment of $ 268,887.87 to the First Account on January 23, 2018, the account holder immediately depleted the funds and closed the account. (Id. ¶ 15.)

The Second Account (the first Wells Fargo account) was opened approximately one month before the second wire transfer, and the signature card identified the purpose of the account as "Personal/ Household income." (Id. ¶ 19.) Zeal initiated the wire transfer to the Second Account on February 26, 2018; two date later, Wells Fargo placed a "hard hold" on the account. (Id. ¶ 20). However, this "hard hold" occurred only after the account holder (M. Unegbu) depleted the majority of the funds from the account, and no portion of the second wire transfer was recovered. (Id. ¶¶ 20-22.)

As with the Second Account, the signature card for the Third Account stated that it was a "Personal/ Household" account; further, Olanrewaju Tijani, the named account holder, was identified as a "Personal Trainer." (Id. ¶ 26.) With respect to this Third Account, Zeal alleges that before it initiated the third wire transfer (on March 23, 2018), Wells Fargo was informed by a noncustomer (on March 8, 2018) that her/ his company was instructed by fraudulent email to wire funds for a business purchase to the Third Account. (Id. ¶ 27.) Wells Fargo reviewed this fraud complaint from the noncustomer but did not close the Third Account or take further action at that time. (Id. ¶ 28.)

Then, on April 11, 2019, a few weeks after Zeal initiated the third wire transfer, Wells Fargo alerted COPA that it had been the target of fraud and instructed COPA to direct Zeal to recall the third wire. (Id. ¶ 29.) The next day, on April 12, a COPA executive advised Zeal of the fraud and the need to recall the third wire transfer. (Id. ¶ 30.) Two days later, on April 14, 2018, Wells Fargo sent Zeal's bank, HDFC Bank Limited ("HDFC"), a request to confirm that the third wire was legitimate. (Id. ¶ 31.) Days after that, on April 17 or 18, Zeal informed HDFC of the fraud and instructed it to recall the third wire. (Id. ¶ 32.) At some point before Zeal instructed its bank to recall the third wire, Wells Fargo placed a "hard hold" on the Third Account, preventing the account holder from withdrawing a portion of the funds. (Id. ¶ 33.) Ultimately, Wells Fargo was able to recover $179,447.88 of the total $293,362.30 of the third wire. (Id. ¶ 34.)

Zeal's Allegations

Zeal alleges that prior to the initiation of the three wire transfers, SunTrust and Wells Fargo knew that the three accounts were being used to defraud noncustomers and knew that the funds in the accounts were obtained by fraudulent activity, yet they "tacitly allowed" the holders of the three accounts to continue perpetrating fraud. (Id. ¶¶ 13, 43, 44, 49, 50.) By "tacitly permitting" the account holders to perpetrate fraud, and by failing to close their accounts, Zeal alleges that SunTrust and Wells Fargo became knowing members of a conspiracy with the account holders. (Id. ¶¶ 44, 51.) Accordingly, Zeal now brings claims against the Banks for (1) fraud; (2) conversion; (3) negligence; (4) money had and received; (5) tortious interference with business and contractual relations; (6) punitive damages; and (7) attorney's fees. Zeal does not bring any claims under Article 4A of the Uniform Commercial Code ("U.C.C.").

Zeal originally filed this action in the Superior Court of Gwinnett County on January 23, 2020. (Doc. 1 ¶ 1, Ex. A.) On February 27, 2020, Defendants removed this action under 28 U.S.C. § 1332 based on diversity of citizenship. (Doc. 1.) SunTrust and Wells Fargo filed their first set of Motions to Dismiss on March 2, 2020. (Docs. 5, 9.) Plaintiff then filed an Amended Complaint on March 23, 2020 (Doc. 23) and Defendants withdrew their first Motions as moot. (Docs. 31, 32.) Since then, Defendants have filed new Motions to Dismiss the Amended Complaint (Docs. 27, 29), which, after full briefing, are currently before the Court.

II. LEGAL STANDARD

To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). For the purposes of a motion to dismiss, the court must accept all factual allegations in the complaint as true; however, the court is not bound to accept as true a legal conclusion couched as a factual allegation. Twombly , 550 U.S. at 555, 127 S.Ct. 1955. "While legal conclusions...