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Law Offices of Oliver Zhou v. CitiBank N.A.

United States District Court, S.D. New York

March 10, 2017

LAW OFFICES OF OLIVER ZHOU, Plaintiff,
v.
CITIBANK N.A., and PNC BANK, N.A., Defendants.

          OPINION AND ORDER

          Edgardo Ramos, U.S.D.J.

         The Law Offices of Oliver Zhou (“Plaintiff” or “Zhou”) alleges eleven different claims against Citibank, N.A. (“Citibank” or “Defendant”) and PNC Bank, N.A.[1] for failure to prevent Plaintiff's losses from what appears to have been a counterfeit check scheme. Before the Court is Defendant's motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

         For the reasons stated below, Defendant's motion is GRANTED.

         I. FACTUAL BACKGROUND[2]

         Zhou is a lawyer who has maintained an “IOLA Attorney Trust Account” (the “Account”)[3] at Citibank for twenty years. Amended Compl. ¶ 2. At the time he opened the Account, in 1996, Zhou signed a Citibank Signature Card (the “Signature Card”) when opening the Account. Id. at ¶ 2 & Ex. 1. The Signature Card includes Zhou's signature and the Account's basic identifying information- including, inter alia, its branch number, account number, date of opening, and number of signers. Id.

         On June 18, 2013, Plaintiff deposited into the Account a cashier's check displaying PNC Bank's logo and the routing number 071921891 for $297, 500 (the “Check”) that was given to him by a new purported client. Amended Compl. at ¶¶ 5-6 & Ex. 5. He alleges that the teller accepted the check “without examining … to determine whether it was fake or real, ” and provided Zhou with a bank receipt stamped with a notice of the funds' availability. Id. at ¶¶ 5-7, 8. The notice was dated June 18, 2013, and stated that $297, 500 was “Available Today.” Id. at Ex. 7. Zhou claims that he was not told that the sum “may not be available for immediate withdrawal.” Id. at ¶ 9.

         The next day, on June 19, 2013, Plaintiff asked John Huang (“Huang”), a Citibank clerk, whether the Check “was valid and equivalent to cash.” Id. at ¶ 12. Huang further confirmed that the money had been available since June 18, 2013. Id. Later that same day, at the direction of his purported client, Zhou requested a wire transfer of $287, 450 from the Account to a third party's account in Japan (the “Transfer”). Id. at ¶ 12 & Ex. 8. On June 20, 2013, PNC Bank returned the Check to Citibank as “Altered/Fictitious.” Consequently, Citibank debited the Account for the $297, 500 check and also charged Plaintiff a $12 service fee. Id. at Ex. 9.

         On June 24, 2013, one of Plaintiff's other clients notified him that a check Zhou had issued to him had been dishonored due to insufficient funds in the Account. Id. at ¶ 17. Zhou immediately contacted Citibank and was informed for the first time that PNC Bank had deemed the Check “a forged or counterfeit instrument” and that it would not be honored. Id. at ¶¶ 17, 21. Zhou requested that the Transfer to the Japan account be cancelled. Id. at ¶ 19. Although Citibank's representatives told Zhou that they would report back, Plaintiff claims that Citibank still has not contacted him. Id. at ¶ 20. He further alleges that the Transfer was never recalled, and that on June 26, 2013, Plaintiff received written notice from Citibank that the Check was returned as “bounced” because it was a counterfeit check. Id.

         II. PROCEDURAL BACKGROUND

         On May 18, 2015, Plaintiff brought an action in the New York County Supreme Court against Citibank and PNC Bank. Docs. 1-2. On July 7, 2015, then-defendant PNC Bank filed a Notice of Removal to this Court with Citibank's consent, which was granted on July 8, 2015. Id. Citibank and PNC Bank filed motions to dismiss Plaintiff's initial complaint following a pre-motion conference on September 18, 2015. Docs. 25-30. On May 17, 2016, the Court issued an Opinion and Order (“Zhou I”) dismissing PNC Bank as a party to the instant action while granting Plaintiff leave to amend only his claims for breach of contract and fraudulent concealment against Citibank. Doc. 38. Defendant filed the instant motion on August 1, 2016. Doc. 44.

         III. LEGAL STANDARD

         Under Rule 12(b)(6), a complaint may be dismissed for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When ruling on a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Koch v. Christie's Int'l PLC, 699 F.3d 141, 145 (2d Cir. 2012). However, the Court is not required to credit “mere conclusory statements” or “threadbare recitals of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)); see also Id. at 681 (citing Twombly, 550 U.S. at 551). “To survive a motion to dismiss, a complaint must contain sufficient factual matter…to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). If the plaintiff has not “nudged [his] claims across the line from conceivable to plausible, [the] complaint must be dismissed.” Twombly, 550 U.S. at 570.

         Relatedly, a complaint may also be dismissed if it contains claims that were previously dismissed with prejudice. Samuels v. N. Telecom, Inc., 942 F.2d 834, 836 (2d Cir. 1991) (“A dismissal with prejudice has the effect of a final adjudication on the merits favorable to defendant and bars future suits brought by plaintiff upon the same cause of action.”). In other words, Plaintiff is barred from pleading claims in an Amended Complaint that were asserted in the original complaint and were dismissed by a court. Id.; see also NBN Broadcasting v. Sheridan Broadcasting Networks, 105 F.3d 72 (2d Cir. 1997) (finding that res judicata is created by a prior dismissal with prejudice); Muhammad v. City of Peekskill, No. 06-CV-1899, 2008 WL 4452355, at *8 n.9 (S.D.N.Y. Sept. 30, 2008) (“[A] dismissal with prejudice causes claim preclusion (res judicata) to attach.”).

         IV. DISCUSSION

         Zhou asserts eleven claims against Citibank. Four of these claims have already been dismissed with prejudice by this Court in its May 17, 2016 Order and will not be reconsidered here.[4]See NBN Broadcasting v. Sheridan Broadcasting Networks, 105 F.3d 72 (2d Cir. 1997) (finding that res judicata bars claims already asserted and addressed by a prior dismissal with prejudice); Muhammad v. City of Peekskill, No. 06-Civ.-1899 (KMK), 2008 WL 4452355, at *8 n.9 (S.D.N.Y. Sept. 30, 2008) (“[A] dismissal with prejudice causes claim preclusion (res judicata) to attach.”). The balance of the claims are for: (1) breach of contract; (2) fraudulent concealment; (3) breach of privity ...


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