The opinion of the court was delivered by: Walls, District Judge.
Defendant First Union National Bank brings this motion for
judgment on the pleadings. The motion for judgment on the
pleadings is granted. The Court dismisses the plaintiffs' claims
under common law negligence and conversion as a matter of law and
limits the claims brought under 13 Pa.C.S.A. § 3404(d) through
application of the statute of limitations found in 13 Pa.C.S.A. §
3118(g) of the Pennsylvania enactment of the Uniform Commercial
Plaintiffs Virginia and Alan Sebastian, mother and son
respectively, together own 50% of the stock of two corporations,
D & S Express, Inc. ("D & S") and Cargo Xpress, Inc. ("Cargo
Xpress"). D & S and Cargo Xpress are New Jersey corporations with
their principal place of business located in Greenbrook, New
Jersey. Both companies engage in the interstate shipment of goods
in an arrangement where Cargo Xpress's employees handle most of
the shipments while D & S provides the equipment and billing
The plaintiffs have brought this action on their own behalf and
derivatively against defendant First Union National Bank and
individual defendants as a result of long-standing embezzlement
and fraud, alleged to have been perpetrated by the former
president of the two companies, defendant Andrew Devery, Jr.
("Devery") and co-defendants Eileen Devery, Debra Buck, Gary
Buck, James Elliott, Lois Elliott and Wayne Elliott between 1990
and 1997. Specific to the action against First Union National
Bank, the plaintiffs have discovered at least eighty-seven checks
made out to fictitious payees between April 12, 1993 and July 22,
1997, which were later cashed at the Chester, Pennsylvania branch
of the First Union National Bank and its predecessors, First
Fidelity Bank and Merchant's Bank.*fn1 (V.Compl.Ex. B).
Most of these checks were mailed or otherwise transported to
Pennsylvania where defendant Debra Buck ("Buck"), Devery's
daughter, endorsed and cashed them after they were endorsed in
the name of the fictitious payee. The description on the checks
indicated that payment was being made for "maintenance" services
and some checks had invoice numbers noted. The plaintiffs state
that at no time did the fictitious payees render any maintenance
services and allege that the invoice numbers are fictitious.
(V.Compl. ¶¶ 41-48).
Plaintiffs direct three of the twenty-four counts in their
Verified Complaint against First Union. The plaintiffs assert
that First Union is legally liable pursuant to the Uniform
Commercial Code's "fictitious payee" provision in 13 Pa.C.S.A. §
3404, for failure to exercise ordinary care. (V. Compl. Count
XXII). Additionally, the plaintiffs assert claims for common law
negligence and common law conversion. (V. Compl. Counts
On a Rule 12(b)(6) motion, the court is required to accept as
true all allegations in the complaint and all reasonable
inferences that can be drawn therefrom, and to view them in the
light most favorable to the non-moving party. See Oshiver v.
Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir.
1994). The question is whether the plaintiff can prove any set of
facts consistent with his/her allegations that will entitle
him/her to relief, not whether the person will ultimately
prevail. See Hishon v. King and Spalding, 467 U.S. 69, 73, 104
S.Ct. 2229, 81 L.Ed.2d 59 (1984).
While a court will accept well-pleaded allegations as true for
the purposes of motion, it will not accept legal or unsupported
conclusions, unwarranted inferences, or sweeping legal
conclusions cast in the form of factual allegations. See Miree
v. DeKalb County, Ga., 433 U.S. 25, 27, 97 S.Ct. 2490, 53
L.Ed.2d 557 (1977); Washington Legal Found. v. Massachusetts Bar
Found., 993 F.2d 962, 971 (1st Cir. 1993); Violanti v. Emery
Worldwide A-CF Co., 847 F. Supp. 1251, 1255 (M.D.Pa. 1994).
Moreover, the claimant must set forth sufficient information to
outline the elements of the claims or to permit inferences to be
drawn that these elements exist. See Fed. R.Civ.P. 8(a)(2);
Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80
I. Claims Under 13 Pa.C.S.A. § 3404 and Applicable Statute of
Limitations for Checks Presented Earlier than Three Years
Before the July 31, 1998 Filing of the Verified Complaint.
The complaint charges that the First Union Bank is liable under
13 Pa.C.S.A. § 3404. The plaintiffs maintain that the statute is
applicable based on its "fictitious payee" provision. This
section, the Pennsylvania codification of the Uniform Commercial
Code ("UCC"), contains an outline of rules for the management of
instruments made out to a "fictitious person" (§ 3404(b)) and
grants a cause of action for failure to exercise ordinary care (§
With respect to an instrument to which subsection (a)
or (b) applies, if a person paying the instrument or
taking it for value or for collection fails to
exercise ordinary care in paying or taking the
instrument, the person bearing the loss may recover
from the person failing to exercise ordinary care ...