United States District Court, S.D. New York
LUDLOW ESSEX PARTNERS LLC, NATHAN HALEGUA and MARTIN D. NEWMAN, Plaintiffs,
WELLS FARGO BANK, N.A., Defendant.
the Plaintiffs: Christopher R. Clarke Goldberg Weprin Finkel
the Defendant: Noreen A. Kelly McGuire Woods LLP Graham H.
Claybrook McGuire Woods LLP
OPINION AND ORDER
COTE United States District Judge.
Ludlow Essex Partners LLC (“Ludlow”), and two of
its members -- Nathan Halegua (“Halegua”) and
Martin D. Newman (“Newman”) -- bring this action
against the defendant Wells Fargo Bank, N.A. (“Wells
Fargo”), alleging that Wells Fargo was negligent in
allowing JGM Global Ventures Inc. (“JGM”) to open
a “fraudulent” Wells Fargo account, and that this
same activity violates New York's General Business Law
§ 349. The defendant has moved to dismiss the complaint
pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons set forth
below, the defendant's motion is granted.
following facts are drawn from the complaint and are
construed in favor of the plaintiffs. See Keiler v. Harlequin
Enters. Ltd., 751 F.3d 64, 68 (2d Cir. 2014). Ludlow is a New
York limited liability company. In November 2015, Ludlow
decided to make distributions to its members, including a
$250, 000 distribution to member David Levy
(“Levy”). Levy maintains an email account
(“Levy Email Account”).
December 1, 2015, at 9:46 a.m., Ludlow's controller
received an email from the Levy Email Account instructing
Ludlow to wire transfer Levy's distribution to a bank
account maintained by Signature Bank. At 10:02 a.m.,
Ludlow's controller received another email from that same
account (the “phishing email”) informing him that
the earlier referenced bank account could not accept wires
due to an audit, and to instead wire Levy's distribution
to the JGM Global Ventures Inc. bank account at Wells Fargo.
On December 14, 2015, Ludlow wired the distribution to the
JGM account at Wells Fargo. Levy never received the
learning that Levy had not received his distribution, Halegua
contacted a Wells Fargo employee who confirmed that the
distribution had been paid to the JGM account, and that $159,
247.55 had been withdrawn on December 16, 2015. Wells Fargo
returned the remaining $90, 752.45 to Ludlow, which Ludlow in
turn paid to Levy. Halegua and Newman personally paid Levy
the remaining $159, 247.55 owed to him as part of his
distribution. Ludlow was reimbursed a net total of $52, 500
by its insurance company. While Levy was paid the entire
amount he was owed, Halegua and Newman are owed $106, 747.55.
plaintiffs filed this action in New York state court on
February 22, 2017. Wells Fargo removed the case to this Court
pursuant to 28 U.S.C. § 1332 on March 21. The defendant
filed a motion to dismiss pursuant to Rule 12(b)(6) on April
On April 5, an Order provided the plaintiffs with the option
of opposing the motion or filing an amended complaint by
April 25. The Order noted that it is “unlikely that
plaintiffs will have a further opportunity to amend.”
No amended complaint was filed. The motion to dismiss became
fully submitted on May 19.
deciding a motion to dismiss, a court must “accept all
allegations as true and draw all inferences in the non-moving
party's favor.” LaFaro v. New York Cardiothoracic
Grp., PLLC, 570 F.3d 471, 475 (2d Cir. 2009) (citation
omitted). “To survive a motion to dismiss under Rule
12(b)(6), a complaint must allege sufficient facts which,
taken as true, state a plausible claim for relief.”
Keiler, 751 F.3d at 68; Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (“[A] complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.” (citation omitted)). A claim
has facial plausibility when “the factual
content” of the complaint “allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Tongue v. Sanofi, 816 F.3d
199, 209 (2d Cir. 2016) (citation omitted). “Where a
complaint pleads facts that are merely consistent with a
defendant's liability, it stops short of the line between
possibility and plausibility of entitlement to relief.”
Iqbal, 556 U.S. at 678 (citation omitted). In sum, “a
plaintiff's obligation to provide the grounds of his
entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (citation omitted).
establish a prima facie case of negligence under New York
law, a plaintiff must show: “(1) the existence of a
duty on defendant's part as to plaintiff; (2) a breach of
this duty, and (3) injury to the plaintiff as a result
thereof.” In re World Trade Ctr. Lower Manhattan
Disaster Site Litig., 758 F.3d 202, 210 (2d Cir. 2014)
(citation omitted). “Because a finding of negligence
must be based on the breach of a duty, a threshold question
in tort cases is whether the alleged tortfeasor owed a duty
of care to the injured party.” Aegis Ins. Servs., Inc.
v. 7 World Trade Co., L.P., 737 F.3d 166, 177 (2d Cir. 2013)
(citation omitted). “The existence and scope of an
alleged tortfeasor's duty is, in the first instance, a
legal question for determination by the courts.”
Id. (citation omitted).
a general matter under New York law, banks and other
financial institutions do not owe non-customers a duty to
protect them from the intentional torts of their
customers.” In re Terrorist Attacks on Sept. 11, 2001,
714 F.3d 118, 126 (2d Cir. 2013) (citation
omitted). The plaintiffs nevertheless maintain that
Wells Fargo owes a general duty of care in opening bank
accounts to ensure that such accounts are used only for
legitimate purposes. The plaintiffs have summoned no
authority to support the existence of ...