United States of America for the Use and Benefit of Pinnacle Environmental…

Background

Pinnacle Environmental Corporation sued Volmar Construction Inc. to collect an unpaid debt for construction work. Volmar then filed an amended third-party complaint against Bank of America, N.A. (BANA). Volmar alleged that it had been tricked by a business email compromise scheme into wiring the money owed to Pinnacle from its BANA account to an account at Truist Bank that was not associated with Pinnacle. Volmar asserted two breach-of-contract claims against BANA: one alleging that BANA failed to monitor and detect that the receiving account was fraudulent, and another alleging that BANA failed to conduct a proper investigation after learning of the fraud. The Pinnacle-Volmar dispute settled, leaving only the Volmar-BANA dispute.

Motion and analysis

BANA moved under Rule 12(b)(6), which allows dismissal for failure to state a legally sufficient claim. The court granted the motion.

First, the court held that both contract claims failed because Volmar did not allege the essential terms of the contracts in a nonconclusory way, including the specific provisions on which BANA’s alleged liability was based. Volmar conceded that it had not cited a specific contract provision. The court also noted that Volmar could not use its opposition to the motion to add a new claim for breach of the implied promise of good faith and fair dealing. In any event, the court said that proposed claim would fail because it would add contract terms that the parties had not negotiated and was based on the same allegations and sought the same relief as the contract claims.

Second, the court held that Volmar’s claim concerning BANA’s failure to monitor and detect the fraudulent receiving account was preempted by Article 4-A of New York’s Uniform Commercial Code. The court explained that Article 4-A governs the rights and duties of banks and customers concerning wire transfers when its provisions cover the transaction. The claim concerned BANA’s processing of the wire transfer and would impose a duty to monitor and investigate transfer instructions before sending a wire, a duty the court said was absent from Article 4-A.

Third, the court held that the claim concerning BANA’s post-transfer investigation was inconsistent with the parties’ agreements. Those agreements stated that Volmar had no right to cancel the transfer after BANA accepted it, that BANA was not required to try to cancel it, and that BANA would not be liable if cancellation failed. After reporting the fraud, Volmar also signed an acknowledgment stating that any recovery effort by BANA was voluntary, discretionary, and not guaranteed to succeed. The court concluded that this language defeated Volmar’s claim that BANA breached the agreements by failing to conduct a proper investigation. The court expressly said it did not need to decide whether this second claim was also preempted by Article 4-A.

Disposition

The court dismissed Volmar’s amended third-party complaint for failure to state a plausible claim. It declined to grant leave to amend, finding that the problems with the claims were substantive and that Volmar had not requested amendment or identified facts that would cure the defects. The clerk was directed to terminate BANA’s motion and enter judgment consistent with the opinion.