Blom v. UBS Financial Services Inc.

Background

Jan Blom reported his debit card lost or stolen and asked UBS to cancel it. Plaintiffs alleged that UBS assured him it would do so immediately but failed to cancel the card. Linus Blom, Jan Blom’s 17-year-old son, then used the card to obtain $1,250 in cash, which he used to purchase illicit drugs. Plaintiffs discovered Linus dead in his bed, and police later informed them that he had used the card to withdraw money to buy drugs.

Jan Blom and Ida Irena Kolankiewicz-Blom sued UBS Bank USA and UBS Business Solutions LLC. Their First Amended Complaint asserted wrongful death, negligent infliction of emotional distress, and breach of contract. UBS moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a legally sufficient claim. The court accepted well-pleaded factual allegations as true for purposes of the motion but required the claims to be plausible.

Wrongful Death

The court dismissed the wrongful-death claim because the complaint did not plausibly allege the negligence elements of legal duty, breach, proximate cause, and damages. Plaintiffs did not allege facts showing that UBS owed a duty to Linus, and they did not dispute UBS’s position that it owed him no such duty. Plaintiffs argued that UBS created a duty to them by assuring them it would cancel the card, but the court found that the complaint did not support that theory.

The court also held that the complaint did not plausibly allege proximate cause. It identified several intervening events: Linus obtained the card without authorization, obtained the personal identification number, used the card to withdraw cash and receive cash back, bought drugs from an illegal drug dealer, and ingested a fatal quantity of drugs. The court found this chain too attenuated to support liability for Linus’s death. The wrongful-death claim was dismissed with leave to amend.

Negligent Infliction of Emotional Distress

The court considered both possible theories of negligent infliction of emotional distress. Under the bystander theory, a plaintiff generally must be closely related to the injured person, be present at the injury-producing event while aware that it is causing injury, and suffer serious emotional distress. The court found that Plaintiffs alleged they discovered Linus dead later, rather than contemporaneously observing the event that injured him, so they did not state a bystander claim.

Under the direct-victim theory, the claim depends on an underlying negligence duty owed directly to the plaintiffs. The court found that Plaintiffs had not alleged facts establishing that UBS owed them such a duty. It also found that Plaintiffs had not plausibly alleged that UBS’s failure to cancel the card proximately caused their emotional distress. The court did not reach UBS’s alternative argument concerning the policy factors used to determine whether a duty exists, but instructed Plaintiffs to address those factors in any amended complaint. The emotional-distress claim was dismissed with leave to amend.

Breach of Contract

The court applied Utah law because the agreements contained a Utah choice-of-law provision. Plaintiffs did not identify the agreements or the specific terms on which they based the claim. The court held that this failure meant the complaint did not give UBS fair notice of the contract’s alleged requirements.

The court also held that the agreements waived consequential damages, which Plaintiffs sought based on the death of their son. It rejected Plaintiffs’ argument that the waiver did not cover personal-injury claims and concluded that the waiver applied without limitation to a particular type of claim. The court further rejected Plaintiffs’ argument that the waiver was unconscionable under Utah’s commercial code because the agreements primarily covered banking services, not the sale of consumer goods.

Finally, the court held that Plaintiffs had not alleged that damages arising from Linus’s death were foreseeable when the parties entered the agreements. The breach-of-contract claim was dismissed with leave to amend, although the court described the opportunity to plead around the contractual damages bar as unlikely to succeed.

Disposition

Judge Beth Labson Freeman granted UBS’s motion to dismiss with leave to amend. The court dismissed the wrongful-death, negligent-infliction-of-emotional-distress, and breach-of-contract claims with leave to amend. If Plaintiffs elected to amend, the court required a second amended complaint by February 20, 2023.