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Lopes v. Mellon Investor Services LLC

December 3, 2007


The opinion of the court was delivered by: Denise Cote, District Judge


This action arises out of a fraudulent scheme perpetrated by an unknown person. The plaintiff, Carlos Lopes ("Lopes") filed this action on June 21, 2007 against Wachovia Bank, N.A. ("Wachovia"),*fn1 JP Morgan Chase & Co. ("Chase"), Mellon Investor Services LLC ("Mellon"), and several unknown defendants. On September 25, Wachovia filed a motion to dismiss all claims against it.


The following facts are taken from the Complaint unless otherwise noted. Lopes owned stock in defendant Chase. Mellon acted as Chase's agent for stock transfer services. In June 2004, an unknown imposter, pretending to be Lopes or someone acting on his behalf, instructed Mellon to sell plaintiff's shares and send the proceeds to an address in Rio de Janeiro, Brazil, the city in which Lopes resided. Someone who was not Lopez received the check and deposited in a Wachovia account that did not belong to Lopes. Wachovia negotiated the check. Lopez had no relationship with any account at Wachovia and did not receive any check or payment for his Chase stock.


Wachovia argues that the Complaint should be dismissed for failure to state a claim upon which relief may be granted.

Although Wachovia accompanied its motion to dismiss with affidavits, its motion is granted without consideration of those affidavits or any other matters outside the pleadings and therefore will not be converted to a motion for summary judgment. See Fed. R. Civ. P. 12(b); Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007). Under the pleading standard set forth in Rule 8(a) of the Federal Rules of Civil Procedure, complaints must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "[A] plaintiff is required only to give a defendant fair notice of what the claim is and the grounds upon which it rests." Leibowitz v. Cornell Univ., 445 F.3d 586, 591 (2d Cir. 2006). Rule 8 is fashioned in the interest of fair and reasonable notice, not technicality, and therefore is "not meant to impose a great burden upon a plaintiff." Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 347 (2005). When considering a motion to dismiss under Rule 12(b)(6), a trial court must "accept as true all factual statements alleged in the complaint and draw all reasonable inferences in favor of the non-moving party." McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007) (citation omitted). At the same time, "conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to defeat a motion to dismiss." Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 337 (2d Cir. 2006) (citation omitted). A court must apply a "flexible 'plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007) (citing Bell Atlantic Corp. v. Twombly, --- U.S. ----, 127 S.Ct. 1955, 1968-69 (2007)).

The Complaint does not specify the legal basis for the claim against Wachovia. Wachovia treats the Complaint as alleging conversion of an instrument under Article III of the Uniform Commercial Code ("UCC"), and Lopes does not dispute this characterization or identify any other legal theory to support his claim against Wachovia. Wachovia argues that the plaintiff's claim against it must fail because the plaintiff has conceded that he did not receive delivery of the check from Wachovia.

Since this is a diversity action, New York law governs the choice-of-law analysis. Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir. 2000). According to New York's Uniform Commercial Code,

The liability of a bank for action or non-action with respect to any item handled by it for purposes of presentment, payment or collection is governed by the law of the place where the bank is located. In the case of action or non-action by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.

N.Y. U.C.C. § 4-102. Wachovia's memorandum in support of its motion states that the bank is located in North Carolina and that the check was deposited in a Florida branch. Lopes suggests that it is "entirely possible" that the check was tendered to a Wachovia branch in a different state, but does not allege that it was actually tendered or deposited in any particular state. The Complaint alleges that Wachovia has an "office for service of process" in Pennsylvania. Regardless of whether this motion is considered under the law of Pennsylvania, Florida, or North Carolina, it must be granted.

Each of these states has adopted language from the 1990 Uniform Commercial Code ("UCC") that prohibits a "payee or endorsee who did not receive delivery of the instrument either directly or through delivery to an agent" or copayee from bringing an action for conversion of an instrument. 13 Pa. Stat. & Cons. Stat. § 3420(a); N.C. Gen. Stat. § 25-3-420(a)(ii); Fla. Stat. § 673.4201(1)(b); see Attorney's Title Ins. Fund, Inc. v. Regions Bank, 491 F.Supp.2d 1087, 1095 (S.D. Fla. 2007); Bumgarner v. Wood, 563 S.E.2d 309 (Table) (N.C. 2002); Manfredi v. Dauphin Deposit Bank, 697 A.2d 1025, 1029 & n.9 (Pa. Super. 1997).*fn2 Delivery may be actual or constructive.

Attorney's Title Ins. Fund, 491 F.Supp.2d at 1095. As the official comment to the 1990 revision pf the UCC makes clear, delivery to a third party who is not a copayee or agent of the payee does not give the payee standing to sue for conversion. Fla. Stat. § 673.4201, cmt. 1; N.C. Gen. Stat. § 25-3-420, cmt. 1; 13 Pa. Stat. & Cons. Stat. § 3420, cmt. 1; Attorney's Title Ins. Fund, 491 F.Supp.2d at 1093.

The Complaint concedes that Lopes did not receive the check. It does not support an inference that Lopez, an agent, or a copayee ever actually or ...

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