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Borenstein McConnell & Calpin, PC v. Bank of America Corporation

United States District Court, Third Circuit

January 8, 2014

BORENSTEIN McCONNELL & CALPIN, P.C., Plaintiff,
v.
BANK OF AMERICA CORPORATION D/B/A BANK OF AMERICA, N.A., JOHN DOE 1 AKA MICHELLE SEUNG, AND JOHN DOE 2 AKA HADRIAN SEUNG, Defendants.

OPINION

WILLIAM H. WALLS, Senior District Judge.

Before the Court are two motions: Defendant Bank of America, N.A.'s ("BOA") motion for summary judgment and Plaintiff Borenstein, McConnell & Calpin, P.C.'s ("BMC") cross motion to amend the complaint and for additional discovery. Under Federal Rule of Civil Procedure 78(b), these motions are considered without oral argument. The Court grants BOA's motion in part by deciding that BMC has failed to state a claim over which this Court has original subject matter jurisdiction. This leads the Court to conclude that it is inappropriate to continue to exercise jurisdiction over the state law claims or BOA's counterclaims. The complaint and counterclaims are dismissed without prejudice.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case involves the fall-out from BMC's deposit of a cashier's check in its attorney trust account at BOA. Many of the facts are not in dispute, but for purposes of BOA's motion for summary judgment the Court views any disputed facts in the light most favorable to BMC, the non-moving party.

On or about April 11, 2013, BMC, a New Jersey professional corporation and provider of legal services, received an email from someone named Michelle Seung ("Ms. Seung"), purportedly located in South Korea, requesting BMC's assistance with the collection of child support, spousal support, equitable distribution, and medical support from her ex-husband ("Mr. Seung"). Compl. ¶¶ 1, 13 (ECF No. 1); BOA's L. Civ. R. 56.1 Statement of Material Facts ("BOA's Statement of Facts") ¶ 2 (ECF No. 12-2); Resp. to Def. BOA's Statement of Facts ("BMC's Resp. to Statement of Facts") ¶ 2 (ECF No. 14-1). Ms. Seung provided BMC with her address in South Korea and also gave an address in Springfield, New Jersey for Mr. Seung. Compl. ¶ 17; BOA's Statement of Facts ¶ 2; BMC's Resp. to Statement of Facts ¶¶ 1-2. On April 16, 2013, Ms. Seung sent a follow-up email to BMC detailing her case and attaching copies of relevant documents. BOA's Statement of Facts ¶ 3; BMC's Resp. to Statement of Facts ¶ 3.

On April 17, 2013, Abraham Borenstein, Esq. ("Mr. Borenstein"), BMC's managing partner, responded to Ms. Seung, informing her that BMC could represent her upon receipt of an executed retainer agreement and retainer fee of $25, 000. BOA's Statement of Facts ¶ 4; BMC's Resp. to Statement of Facts ¶ 4. BMC then sent a retainer agreement to Ms. Seung, which she signed and returned on April 20, 2013. Compl. ¶¶ 19-20; BOA's Statement of Facts ¶ 5. BMC alleges that Ms. Seung informed BMC that she and Mr. Seung had agreed to settle the matter and that any payments BMC received from Mr. Seung should be deposited into BMC's attorney trust account. Compl. ¶¶ 18, 21.

On or about April 25, 2013, BMC received a message in a FedEx envelope from Mr. Seung. Compl. ¶ 22; BOA's Statement of Facts ¶ 6. He agreed to pay Ms. Seung's legal fees in the matter, and he also enclosed what appeared to be a cashier's check drawn on PNC Bank in the amount of $289, 100, in partial payment of settlement with Ms. Seung and BMC's attorney's fees. Compl. ¶ 22; BOA's Statement of Facts ¶ 6. On April 25, 2013, BMC deposited the check into its attorney trust account at BOA. BOA's Statement of Facts ¶ 7; BMC's Resp. to Statement of Facts ¶ 7. BMC then informed Ms. Seung, by email, that it had received a $289, 100 check from Mr. Seung and had deposited it in BMC's attorney trust account. BOA's Statement of Facts ¶ 8; BMC's Resp. to Statement of Facts ¶ 8. Ms. Seung responded later that day, requesting that BMC wire transfer the funds, minus the retainer fee of $25, 000, to Hamamatsu Shinkin Bank, Kamiaraya Branch, Shizuoka Ken, in Japan. BOA's Statement of Facts ¶ 9; BMC's Resp. to Statement of Facts ¶ 9. Ms. Seung added that the funds should be sent early the following morning, April 26, 2013, because her son was scheduled for surgery that afternoon and she needed the money to pay for the operation. BOA's Statement of Facts ¶ 10; BMC's Resp. to Statement of Facts ¶ 10.

On April 26, 2013, Mr. Borenstein went to BOA to make in-person arrangements to wire the $264, 100 to Ms. Seung. Compl. ¶ 29; BOA's Statement of Facts ¶ 11. In its complaint, BMC claims that "Mr. Borenstein was informed by representatives of BOA that the funds had not yet been received from PNC Bank, i.e. the PNC Cashier's Check had not cleared and the wire transfer processing system flagged that the funds were not available." Compl. ¶ 29. BMC further contends that "Mr. Borenstein was told that the wire transfer could not be processed and would not be processed until BOA cleared the PNC Cashier's Check." Id. ¶ 30. BMC alleges that a bank officer named Elvia and Christina Pena, the branch manager, "informed Mr. Borenstein that BOA would process the wire transfer when the PNC Cashier's check [sic], most likely on April 29, 2013." Compl. ¶ 31. BMC states that it "relied on BOA to send the wire transfer to Ms. Seung only when and if the PNC Cashier's Check cleared and there was sufficient liquid funds derived from the PNC Cashier's Check in the Attorney Trust Account to properly permit the wire to be transmitted...." Compl. ¶ 32. BMC also claims that on April 29, 2013 it "received a telephone call from Elvia at BOA stating that the PNC Cashier's Check had cleared and that the wire transfer had been processed by BOA." Compl. ¶ 35.

BOA, in characterizing these allegations, puts quotations marks around the word "cleared, " indicating its belief that BMC has alleged that this exact word was used in these conversations. See BOA's Statement of Material Facts ¶¶ 11-12. BMC disputes this, instead explaining that "the intent of this section of the Complaint was to express that the Defendant employee, in form or in substance, represented to Abraham Borenstein that the wire transfer would not be completed by BOA until the check had been honored' or finally settled.'" Pl.'s Br. in Opp'n to Def. BOA's Mot. for Summ. J. ("BMC's Opp'n Br.") at 13 (ECF No. 16-1). BMC explains that its proposed "Amended Complaint will allege that the bank teller, in addition to using the word cleared' when referencing the deposited check informed Abraham Borenstein, in form or in substance, that the check had been honored." Id.

The parties dispute what happened next. BMC alleges alternative scenarios in its complaint: Either (1) "BOA posted the funds from the PNC Cashier's Check as available in the Attorney Trust Account with the knowledge or constructive knowledge that [it] was fraudulent"; or (2) "BOA with knowledge that the [check] had not cleared and the funds were now [sic] liquid posted the funds... as available... and wired $264, 100 to Ms. Seung"; or (3) "BOA allowed the wire transfer to be processed despite the non-clearance of the funds... to gain economic advantage by such action"; or (4) BOA negligently posted the funds... as available in the Attorney Trust Account"; or (5) "BOA's system improperly did not indicate that the funds had actually not cleared." Compl. ¶¶ 36-40.

BMC asserts that after the funds had been wired, Elvia, the BOA employee, informed BMC that it could pick up a copy of the wire confirmation. Id. ¶ 42. BMC picked up the confirmation, scanned it, and emailed it to Ms. Seung. Id. On or about April 30, 2013, Ms. Seung emailed BMC to confirm receipt of the funds. Id. ¶ 43. BMC claims that it then received a telephone call from a BOA representative on or about May 3, 2013, informing BMC that the check it had presented for deposit was fraudulent. Id. ¶ 44. Upon learning this information, BMC alleges that it attempted to contact BOA numerous times over the next five days, but there was "no cooperation." Id. ¶ 45.

BOA presents a different, though not entirely inconsistent, account. BOA asserts that the cashier's check was returned by PNC Bank, unpaid, on April 29, 2013. BOA's Statement of Facts ¶ 13; Aff. of Marisa Bilog in Support of BOA's Mot. for Summ. J. ("Bilog Aff.") ¶ 8 (ECF No. 12-6). BOA contends it notified BMC on April 30, 2013, that the check had been returned unpaid. BOA's Statement of Facts ¶ 14; Bilog Aff. ¶¶ 8-9; Reply Certification of Eric Evans, Esq. in Further Support of Def. BOA's Mot. for Summ. J. ("Evans Reply Cert.") Ex. A (ECF No. 17-2).

What happened next is clear. On April 30, 2013, BOA charged back $289, 100, the amount of the check, to BMC's attorney trust account, which left the account in an overdraft position. BOA's Statement of Facts ¶¶ 15-16; BMC's Resp. to Statement of Facts ¶ 16; Bilog Aff. ¶ 10 Ex. C. Then on May 7, 2013, BOA advised the Office of Attorney Ethics of the Supreme Court of New Jersey ("Office of Attorney Ethics') that BMC's account was in an overdraft position. BOA's Statement of Facts ¶ 17; BMC's Resp. to Statement of Facts ¶ 17.

BMC filed its complaint on May 10, 2013, asserting eight causes of action against BOA and two causes of action against Ms. and Mr. Seung. BMC alleges BOA is liable for (1) violation of 18 U.S.C. § 1343 (wire fraud), (2) violation of 18 U.S.C. § 1962 (RICO), (3) negligence and/or gross negligence, (4) negligent and/or grossly negligent training, (5) negligent misrepresentation, (6) fraudulent misrepresentation, (7) breach of fiduciary duty, and (8) defamation. Compl. ¶¶ 52-110.

On May 31, 2013, BOA answered the complaint, generally denying the allegations and raising a series of affirmative defenses. See BOA's Answer (ECF No. 4). BOA also asserted counterclaims under state law against BMC. BOA alleges that BMC breached the warranties under N.J.S.A. §§ 12A:3-416, 12A:3-417, 12A:4-207 and § 12A:4-208 (West 2013) by presenting a fraudulent item for deposit. Id. at 13. BOA also claims that BMC is liable to BOA for negligence and under the parties' alleged contract for presenting a fraudulent item. Id. at 14. BOA asserts that BMC is therefore liable to BOA in the same amount as any claim asserted by BMC, as well as for the amount of BMC's overdraft. Id. at 13-14. BMC filed an answer to the counterclaims on June 10, 2013, denying the allegations. See BMC's Answer to Countercls. (ECF No. 6).

On September 16, 2013, BOA filed the instant motion for summary judgment. ECF No. 12. On October 29, 2013, BMC filed its opposition and cross motion for leave to amend its complaint and for additional discovery. ECF No. 16. BOA filed its reply on November 11, 2013. ECF No. 17. On December 11, 2013, the Court informed the parties by letter that it would benefit from further briefing by BMC addressing an exhibit that BOA filed with its reply brief after inadvertently omitting it from its initial papers. ECF No. 18. BMC then filed a reply brief on December 18, 2013. ECF No. 20. Finally, BOA submitted a letter on December 20, 2013, asking the Court to ...


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