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CUMIS INS. SOC'Y v. CITIBANK

March 31, 1996

CUMIS INSURANCE SOCIETY, INC., Plaintiff, against CITIBANK, N.A., and CORESTATES BANK, N.A., Defendants.


The opinion of the court was delivered by: KOELTL

 JOHN G. KOELTL, District Judge:

 This action involves two wire transfers from the account of Mario Adler at Benchmark Federal Credit Union ("Benchmark") to the account of Covacentro, S.A. ("Covacentro") at defendant Citibank, N.A. ("Citibank") which were allegedly sent by mistake by Benchmark and not returned by Citibank, and which plaintiff Cumis Insurance Society, Inc. ("Cumis"), subrogee of Benchmark, now seeks to recover by means of this lawsuit, having paid Benchmark for the loss pursuant to an insurance agreement. The second amended complaint pleads claims for fraud, negligent misrepresentation, conversion, and money had and received against Citibank. *fn1" Citibank moves to dismiss each of these claims pursuant to Fed. R. Civ. P. 12(b)(6), and, alternatively, under Fed. R. Civ. P. 9(b) with respect to the fraud claim. Cumis also sues CoreStates Bank, N.A. ("CoreStates") for alleged negligence in connection with its actions taken on behalf of Benchmark to recover the fraudulently transferred funds. CoreStates moves to dismiss that claim as barred by the statute of limitations and for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Jurisdiction is based on diversity of citizenship pursuant to 28 U.S.C. ยง 1332.

 I.

 On a motion to dismiss, the factual allegations of the complaint are to be accepted as true and all reasonable inferences are construed in the plaintiff's favor. See Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir. 1995); Hernandez v. Coughlin, 18 F.3d 133, 136 (2d Cir.), cert. denied, 130 L. Ed. 2d 63, 115 S. Ct. 117 (1994). A court should dismiss a complaint under Fed. R. Civ. P. 12(b)(6) only "if 'it appears beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief.'" Valmonte v. Bane, 18 F.3d 992, 998 (2d Cir. 1994) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). The second amended complaint alleges the following version of events.

 On November 5, 1991, a person identifying himself as "Mario Adler" called Benchmark's West Chester, Pennsylvania office and informed it that he would be sending an order for funds to be transferred from his account. This person proved later to be an impostor and he is herein after referred to as "Adler." The next day Benchmark received a faxed transfer order from "Adler" to the account of Covacentro, S.A. at Citibank in New York for $ 57,455. Benchmark made the transfer. On November 7, 1991, "Adler" informed Benchmark once again that he would like more money sent to the Covacentro account. The next day Benchmark received a faxed transfer order from "Adler" for $ 27,455 to the Covacentro account. Benchmark made this transfer as well.

 On November 18, 1991, "Adler" called Benchmark to ask for the street address for its West Chester, Pennsylvania branch, explaining that he would be sending a large check for deposit. Three days later, Benchmark received a United States Treasury Department check for $ 442,136 made payable to "Adler Mario," endorsed "Mario Adler," and presented for deposit into Adler's account. Believing the check to have been tampered with, Benchmark alerted the Secret Service which subsequently determined that the check indeed was altered and that the endorsement of "Mario Adler" was a forgery.

 On November 22, 1991, "Adler" called Benchmark to ask if the Treasury Department check had been received and if he could transfer $ 230,000 to the Covacentro account. The person taking the call told "Adler" that a bank supervisor would like to speak with him. "Adler" then hung up.

 Later in the day, at approximately 4:40 p.m., Benchmark caused CoreStates to send Citibank a federal wire message requesting the return of the wire transfers. Benchmark explains that it did not have access to the necessary Fedwire telex system, and that CoreStates had such access and agreed to send the telex on Benchmark's behalf. That evening, Michael G. Louis, Esq., attorney for Benchmark, called McIntyre to confirm that Citibank had received the wire message. Louis spoke with Carmona who informed him that the message had not been received. Louis then called CoreStates to ask that a duplicate be sent, but CoreStates declined, arguing that sending a duplicate would cause confusion.

 On December 9, 1991, Louis called Citibank again to confirm receipt of the wire message. Glendora Browne at Citibank informed him that the telex still had not been received. Louis then contacted William Reidy of Citibank's Fraud and Loss Prevention Department. Reidy reassured Louis that the Covacentro account had more than sufficient funds to cover the wire transfers.

 On December 11, 1991, Roseann Murphy of CoreStates sent a second telex to Citibank requesting the return of the wire transfers. The next day, Carmona at Citibank sent a telex to Murphy at CoreStates advising her that the December 11 telex was not tested and did not include an indemnification for Citibank. Tavares also contacted Murphy and stated, in the words that are at the heart of Cumis's fraud claim, that "Citibank could not return the Wire Transfers to CoreStates because they had been withdrawn by Covacentro and that it was futile for CoreStates to make any further attempts to retrieve them." (Compl. P 25.) In the meantime, Carmona had returned the wire transfers to the Covacentro account without informing CoreStates that he had received authority from Covacentro to do so. (Compl. P 22.)

 Murphy relayed to Benchmark what she had been told by Citibank about the withdrawal of the funds by Covacentro and Tavares's statement that the funds could no longer be recovered. Cumis alleges that Citibank's statement caused CoreStates not to resend the telex requesting the return of the wire transfers as a tested telex with an indemnification and caused Benchmark to forego other means by which it could have secured the return of the funds. Citibank never did return the transferred funds to CoreStates or Benchmark. Although Citibank told CoreStates that the wire transfers had been withdrawn by Covacentro, the Covacentro account retained a balance of more than $ 84,910 at the time.

 On February 5, 1992, Cumis paid Benchmark $ 85,380 under their insurance agreement, of which $ 84,910 covered the wire transfers and $ 470 represented a reimbursement of the cost of expert handwriting analysis to confirm that Adler had not signed the check or transfer orders.

 In November 1993, Cumis brought this action against Citibank. An amended complaint was filed in May 1994, and a second amended complaint adding a negligence claim against CoreStates was filed in March 1995. The pleading now before the Court is the second amended complaint, which both Citibank and CoreStates move to dismiss on every claim.

 II.

 A.

 Citibank argues that the allegedly fraudulent statement in not actionable, supporting that argument by parsing the statement into two discrete representations. The first part of the statement, that the funds were not available, Citibank contends is true because the funds represented by the two wire transfers had indeed been withdrawn. Citibank submitted, under seal, bank records reflecting activity in the Covacentro account in support of this contention. (See Affidavit of J. Kelley Nevling, Esq., sworn May 2, 1995, Ex. E.) Of course, submission of evidence is not proper on a motion to dismiss because it is only the sufficiency of the pleadings that are at issue. Even if the motion were transformed into one for summary judgment, Cumis would be entitled to appropriate notice and an opportunity to offer evidence in response. In any event, whatever the actual activity in the account reveals, the Court must draw all reasonable inferences in favor of Cumis, and a plausible inference to draw from Tavares's alleged statement is that all of the funds were gone from the account and no balance remained--a statement of fact Cumis claims was untrue.

 Citibank further argues that the second part of Tavares's statement about the futility of further attempts to retrieve the funds is not actionable because it merely reflected Citibank's future intentions. A false statement of present intent to perform a future act, however, can constitute actionable fraud under New York law. See Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994) (citing Chase Manhattan Bank, N.A. v. Perla, 65 A.D.2d 207, 210, 411 N.Y.S.2d 66, 68 (4th Dep't 1978)). Moreover, the two parts of Tavares's statement considered together support the inference that there was ...


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