United States District Court, S.D. New York
MEMORANDUM & ORDER
REICE BUCHWALD UNITED STATES DISTRICT JUDGE.
Chasman and Haim Seth Chasman (together,
“plaintiffs”) move for leave to amend their
complaint against JP Morgan Chase Bank, N.A.
(“defendant”). Defendant cross-moves for judgment
on the pleadings. The Court grants defendant's motion and
denies plaintiffs' motion for the reasons stated herein.
1983, Rose Ann Chasman invested $3, 000 in an individual
retirement account certificate of deposit (the “IRA
CD”) with First National Bank of Chicago (“First
National”). Compl. ¶ 8. Plaintiffs allege that the
IRA CD had an initial three-year term at an interest rate of
12% per annum, and that it was renewable in perpetuity for
three-year terms at the 12% interest rate. Compl. ¶ 8.
complaint alleges that Ms. Chasman thereafter renewed the IRA
CD with First National, and, after First National merged into
Bank One, completed a new IRA application and agreement and,
in so doing, asserted an entitlement to the perpetual 12%
interest rate. Compl. ¶ 9-10; Answer
(“Ans.”) ¶ 10. Defendant later acquired Bank
One. Compl. ¶ 6.
Chasman passed away in August 2007. After her death,
plaintiffs -- Ms. Chasman's sons and the beneficiaries of
her IRA CD -- each executed with defendant a form titled
“Traditional IRA Election of Payment by
Beneficiary” (the “Beneficiary Form”)
pursuant to which they “request[ed] a withdrawal”
from Ms. Chasman's IRA due to her death. See
Declaration of Richard Farmer (“Farmer Decl.”),
Exs. 1 & 2 at 1. In the section of the Beneficiary Forms
titled “Beneficiary Acknowledgement, ” each
plaintiff “authorized and directed [defendant] to
distribute from my share of the deceased's IRA in the
manner requested above, ” and “agree[d] to the
terms that govern my share as contained in the IRA Custodial
Agreement and Disclosure Statement [(the ‘Custodial
Agreement')] and Account Rules and Regulations.”
Farmer Decl., Exs. 1 & 2 at 3 (emphasis deleted).
Account Rules and Regulations in effect when plaintiffs
opened their Beneficiary IRA CDs included the Deposit Account
Agreement, which provided that “[f]or automatically
renewable CDs, your CD will automatically renew for the same
time period as the initial term, and thereafter for
successive like periods of time, with an interest rate then
in effect on the renewal date for like term CD to be
applicable during such time period.” Declaration of
Laura L. Deck (“Deck Decl.”), Exs. 1 & 2 at
11. Meanwhile, under the Custodial Agreement, plaintiffs
“acknowledge[d] and agree[d] that nothing shall be
construed as conferring fiduciary status upon
[defendant].” Farmer Decl., Exs. 9 & 10 at 3.
to the Beneficiary Forms, defendant transferred
plaintiffs' respective portions of the balance of funds
in Ms. Chasman's IRA CD to separate Traditional
Beneficiary IRA Certificate of Deposit accounts (the
“Beneficiary IRA CDs”). See Compl.
¶¶ 13-14; Ans. ¶ 2. In 2009, defendant renewed
each plaintiff's Beneficiary IRA CD at an interest rate
of 12% per annum. Compl. ¶ 15; Ans. ¶ 15.
January 13, 2012, defendant provided plaintiffs with notices
that their Beneficiary IRA CDs were due to mature and
automatically renew on January 30, 2012. Farmer Decl., Exs. 3
& 4. The notices stated the terms and conditions that
would apply to the automatically renewed CDs, including that
(1) the CDs would renew “at the standard (non-special)
interest rate in effect on the renewal date”; (2) that
the standard interest rate in effect on January 13, 2012 was
0.35% APY; and, consistent with the Deposit Account
Agreement, that (3) the CDs would “automatically renew
for the same time period as the initial term, and thereafter
for successive like periods of time, with an interest rate
then in effect on the renewal date for like term CDs to be
applicable during such time period.” Farmer Decl., Exs.
3 & 4 at 1-2. Each plaintiff's Beneficiary IRA CD
automatically renewed on January 30, 2012 at the standard
interest rate of 0.35% per annum. Farmer Decl., Exs. 6 &
February 16, 2017, plaintiffs filed in this Court a complaint
against defendant, which they amended on March 2, 2017.
See No. 17 Civ. 1210, ECF Nos. 1 & 8. The
amended complaint alleged that the IRA CD's alleged
perpetual renewability at the 12% interest rate survived Ms.
Chasman's death as well as the disbursement of the IRA
CD's funds to plaintiffs, and that it therefore also
applied to the Beneficiary IRA CDs. Based on this contention,
the amended complaint asserted claims for breach of contract
and breach of fiduciary duty for defendant's failure to
renew the Beneficiary IRA CDs at an interest rate of 12% per
annum on January 30, 2012. However, on July 17, 2017,
plaintiffs voluntarily dismissed their amended complaint
without prejudice because they could not locate any contract
governing the IRA CD. See id., ECF No. 21.
on March 12, 2018, plaintiffs filed a virtually identical
complaint in the Supreme Court of the State of New York,
County of New York, which defendant removed to this Court on
July 25, 2018. Defendant answered plaintiff's complaint
on August 1, 2018, and contended that it had no obligation,
contractual or otherwise, to renew the Beneficiary IRA CDs at
an interest rate of 12% per annum. Ans. ¶¶ 15-16.
Plaintiffs conceded at an initial pretrial conference that
they had still failed to locate any contract governing the
IRA CD. Before the Court is plaintiffs' motion for leave
to amend their complaint and defendant's cross-motion for
judgment on the pleadings.
Judgment on the Pleadings