Lapa v. JPMorgan Chase Bank, N.A.

Background

David Lapa sued his credit-card issuer, JP Morgan Chase Bank, N.A. (Chase), alleging breach of contract and breach of the implied covenant of good faith and fair dealing. He alleged that Chase terminated his credit-card account and his personal and business deposit accounts on May 14, 2021, without notice, even though he was not in default. He sought monetary damages and a permanent injunction requiring Chase to reopen the accounts.

Lapa originally filed the action in New York State Supreme Court, Rockland County. That court issued a temporary restraining order requiring Chase to reopen his accounts and restore his banking privileges. Chase removed the action to federal court. The temporary restraining order remained in effect until the court ruled on Chase’s motions.

Motion to dismiss

Chase moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not adequately state a legal claim. Lapa alleged that an agreement prohibited Chase from terminating his accounts without advance notice, but he did not provide the governing contracts or identify specific contractual language. He also disputed whether the agreements Chase submitted were the agreements governing his accounts.

The court explained that a breach-of-contract claim under the law applied by both parties requires an agreement, the plaintiff’s adequate performance, the defendant’s breach, and damages. The court concluded that Lapa adequately alleged only the existence of an agreement. Without the contract or specific contractual terms, the court could not determine whether Chase had breached the agreement or whether Lapa had suffered contract damages. The court therefore granted Chase’s Rule 12(b)(6) motion and dismissed the action without prejudice.

The court granted Lapa leave to amend. It stated that any new complaint would need to include the specific contractual terms at issue and attach the underlying contract documents as exhibits. The court reserved judgment on which state’s law governed the parties’ agreements because Chase had preserved an argument that Delaware law might apply to the credit-card claims.

Temporary restraining order

Chase separately moved under Rule 65(b)(4) to dissolve the temporary restraining order. The court stated that, after removal, federal procedural rules governed the case. Because Lapa had obtained the order, he bore the burden of justifying continued emergency injunctive relief. The court found that Lapa did not address the temporary restraining order in his opposition and offered no justification for keeping it in place.

The court also found that the state-court order did not satisfy the requirements for a federal temporary restraining order issued without notice. In particular, it did not show immediate and irreparable harm or state the hour it was issued, why the alleged harm was irreparable, and why the order was issued without notice. The court therefore granted Chase’s Rule 65(b)(4) motion and dissolved the temporary restraining order.

Ruling and effect

The court granted Chase’s motions to dismiss and to dissolve the temporary restraining order. Lapa was allowed until September 12, 2022, to file a second amended complaint. The order stated that if he failed to file one, any claims dismissed without prejudice would be deemed dismissed with prejudice.