Pincover v. JPMorgan Chase Bank, N.A.

Background

Edward Pincover alleged that thieves stole more than $325,000 from his Chase deposit accounts between approximately November 1, 2019, and June 3, 2020. The alleged thefts involved ATM withdrawals, automated clearing house transfers, and checks bearing forged signatures. Some of the money was deposited into accounts at KeyBank and Wells Fargo. Pincover alleged that Chase compensated him for part of his losses but that $150,000, plus interest, remained unpaid.

Pincover alleged that the thieves changed the mailing address for his Chase accounts, disabled paper statements, and changed the accounts to paperless statements. He alleged that he did not authorize those changes and did not receive account statements during the relevant period. He also alleged that Chase failed to notify him about suspicious transactions, including a reversed fraudulent check and a significant change in his account activity.

The First Amended Complaint asserted claims against Chase under New York Uniform Commercial Code § 4-401, which concerns charges that are not properly payable; a related negligence theory based on a bank’s failure to use ordinary care; breach of contract; the Electronic Fund Transfer Act; and unjust enrichment. It asserted negligence and unjust enrichment claims against KeyBank and Wells Fargo.

Rulings on Chase’s motion

The court granted in part and denied in part Chase’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court denied dismissal of the New York Uniform Commercial Code claim. Although the account agreement required notice within 30 days, the court held that dismissal was premature because Pincover alleged that Chase did not make the statements and checks available to him and that Chase may have failed to exercise ordinary care. The court also held that it could not yet decide whether applying the 30-day limit to Pincover would be manifestly unreasonable, given the allegations about his age, nursing-home residence, lack of computer and internet skills, and lack of authorization for the address and paperless-statement changes.

The court allowed Pincover to pursue his negligence claim, but understood it as a claim that Chase failed to exercise ordinary care under New York Uniform Commercial Code § 4-406(3), rather than as an independent common-law negligence claim. The court noted that this theory substantially duplicated the Uniform Commercial Code claim and that the relationship between the two claims might need attention later in the case.

The court also denied Chase’s motion to dismiss the breach-of-contract claim based on fraudulent transactions within 30 days of notice. The court held that the complaint adequately alleged that Chase had not made the statements available and that the pleadings did not establish that the same wrongdoer carried out every unauthorized transaction.

The court treated Pincover’s Electronic Fund Transfer Act claim as abandoned because he did not respond to Chase’s arguments that the claim was time-barred, and dismissed it. The court also treated the generic breach-of-contract claim as abandoned because Pincover did not identify a specific contract provision that Chase breached, and dismissed it. Pincover did not defend his unjust-enrichment claim against Chase, so the court treated that claim as waived.

The court also dismissed JPMorgan, described in the opinion as a holding company, because the complaint did not plead facts connecting it to the alleged wrongdoing. The opinion refers to the operating bank as Chase.

Rulings on KeyBank and Wells Fargo

The court granted KeyBank’s and Wells Fargo’s motions to dismiss in their entirety. It dismissed the negligence claims because Pincover did not allege that he was a customer of either bank or that either bank owed him a duty of care in connection with deposits into its customers’ accounts.

The court dismissed the unjust-enrichment claims because the complaint did not allege that either bank received a benefit from the deposits of stolen funds. The court explained that money deposited into a customer’s account generally creates a debt owed by the bank to that customer, rather than a benefit retained by the bank.

Other defendants and case status

The opinion states that PNC Bank had previously been dismissed from the case with prejudice. TD Bank had not appeared, and Pincover had not filed proof of service; the court stated that it was issuing an order to show cause concerning the failure to prosecute TD Bank.

Disposition

Judge Paul A. Engelmayer concluded that Chase’s motion to dismiss was granted in part and denied in part, and that KeyBank’s and Wells Fargo’s motions to dismiss were granted in full. The case was directed to proceed to discovery.