Williams v. J.P. Morgan Chase Bank, N.A.

Background

The litigation concerns a transfer of Michael Williams’s personal funds to a J.P. Morgan Chase Bank, N.A. (Chase) account opened in the name of Immunogenetics.com, a company Williams owned and controlled. Chase filed a motion to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a legal claim. The court stated that this was the second round of motions challenging the sufficiency of the pleadings.

Standing

Chase argued that the funds belonged to Williams rather than Immunogenetics.com and that the company therefore lacked standing, meaning the legal ability to bring the lawsuit. The court rejected that argument. It found that Immunogenetics.com had alleged a concrete injury because it was the intended recipient of the transfer and was denied the benefit of the funds.

California Commercial Code claims

The plaintiffs relied on California Commercial Code sections 3306 and 3307, which can permit claims against a person who takes an instrument, including in circumstances involving notice of a claim or a breach of fiduciary duty. The plaintiffs argued that Kazem wrote a check from the Chase account to her personal account and that Chase was a taker that had notice of her alleged breach of fiduciary duty.

The court found that theory inadequately pleaded. The amended complaint said that Chase sent, rather than received, a check or other payment method to Kazem’s home address, which conflicted with the plaintiffs’ later argument that Chase received and accepted the instrument. The plaintiffs also did not allege facts fitting any of the specific circumstances under section 3307 that could establish Chase’s notice of a breach of fiduciary duty.

The court rejected Chase’s argument that section 3405 was only an affirmative defense and did not create an independent claim. But it still found the plaintiffs’ section 3405 claim insufficient because they did not adequately identify the relevant instrument or allege facts showing that Chase failed to exercise ordinary care.

Negligence

The plaintiffs added a negligence claim even though the prior order said that no new claims or parties could be added without the court’s prior approval. The plaintiffs had not sought permission to add negligence. The court therefore found that adding the claim was improper.

The court also found the negligence claim inadequately pleaded. The plaintiffs alleged, without supporting facts, that Chase owed them a duty of care and that Immunogenetics.com was a Chase customer. The court said they did not plausibly allege a banking relationship that could establish such a duty.

Fraud and intentional infliction of emotional distress

The court dismissed the fraud claim because the amended complaint again did not adequately allege an intent to induce reliance or facts showing that the plaintiffs’ reliance was justified or reasonable. The plaintiffs’ allegations that Chase agents intended to induce reliance on a statement that the account was “frozen” were conclusory. The court also noted that fraud claims must identify details such as who made the statement, what was said, when and where it was said, how it was misleading, and why it was false.

The intentional-infliction-of-emotional-distress claim remained inadequately pleaded because the plaintiffs did not allege facts showing conduct by Chase that was outrageous, meaning beyond all bounds of reasonable decency. The court said that statements calling Chase’s agents “despicable” and “brutally uncivilized” were accusations rather than factual allegations. It did not address Chase’s statute-of-limitations arguments concerning this claim.

Unfair-competition claim

The plaintiffs alleged that Chase violated California Business and Professions Code section 17200, the state unfair-competition law, under its unlawful, unfair, and fraudulent categories. The court dismissed the claims under the unlawful and fraudulent categories because they depended on claims the court had already dismissed. As to the unfair category, the court said the plaintiffs had not addressed the deficiencies identified in the prior order and had not supplied supporting legal or statutory analysis.

Disposition

The court dismissed the amended complaint. It denied permission to amend again, stating that the plaintiffs had received multiple opportunities and substantial guidance about what was required to state a plausible claim and that nothing in the record indicated another amendment would be productive. The case was closed.