282 F. Supp. 3d 1033
M.D. Tenn.2017Background
- Belle Meade Title (Tennessee) received a counterfeit RBC check for $399,496.49 and deposited it into its escrow account at Fifth Third Bank.
- Belle Meade instructed Fifth Third not to wire funds to a Regions Bank account until the check cleared; Fifth Third wired $130,000 to a Regions Bank customer before the check cleared.
- Regions Bank customer withdrew $116,000 immediately; the RBC check was later dishonored, leaving Belle Meade with a $116,000 loss.
- Belle Meade sued Fifth Third and Regions in Tennessee state court asserting multiple claims; only two claims were asserted against Regions: negligent hiring/training/supervision (Count IV) and breach of customary financial practices (Count VIII).
- Regions removed to federal court and moved to dismiss, arguing (among other things) it owed no duty to a non-customer and the complaint lacked factual specificity.
- The court granted Regions’ Rule 12(b)(6) motion, dismissing all claims against Regions with prejudice for failure to allege a duty and for conclusory, insufficient factual allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Regions owed a duty to Belle Meade (non-customer) under negligence/ negligent hiring theory | Belle Meade alleges Regions had duties of care and should be liable for negligent hiring/training because its customer received and withdrew the wired funds | Regions contends banks owe duties only to their own customers; no special relationship or fiduciary duty is alleged | Court: No duty to non-customer; Tennessee law would not impose such a duty; negligence claim dismissed |
| Whether federal statutes (Patriot Act, Bank Secrecy Act, AML) give rise to a private cause of action or common-law duty to non-customers | Belle Meade contends Regions breached customary banking practices and statutory monitoring obligations | Regions argues those statutes do not create private rights or duties to third parties and thus cannot support tort liability | Court: Statutes do not create private right or common-law duty to non-customers; claim fails |
| Whether the complaint alleges facts showing Regions breached any duty or engaged in negligent hiring/training | Belle Meade pleads generally that Regions failed customary practices and failed in supervision/hiring | Regions notes complaint lacks concrete facts that any Regions employee knew of irregularities or mishandled the wire | Court: Allegations are conclusory and fail to show breach or culpable conduct by Regions; dismissal warranted |
| Whether plaintiff pleaded sufficient factual specificity to survive 12(b)(6) | Belle Meade relies on general factual narrative and statutory/regulatory discussion to support its claims | Regions argues Twombly/Iqbal require factual content plausibly showing liability and plaintiff offers only threadbare recitals | Court: Complaint fails plausibility standard; claims dismissed with prejudice |
Key Cases Cited
- SFS Check, LLC v. First Bank of Delaware, 774 F.3d 351 (6th Cir. 2014) (banks generally owe duties only to their own customers)
- Eisenberg v. Wachovia Bank, N.A., 301 F.3d 220 (4th Cir. 2002) (bank does not owe duty to noncustomer absent special relationship)
- AmSouth Bank v. Dale, 386 F.3d 763 (6th Cir. 2004) (Bank Secrecy Act does not create a private right of action)
- West v. E. Tenn. Pioneer Oil Co., 172 S.W.3d 545 (Tenn. 2005) (elements of negligence and the centrality of duty)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must plead factual content to show defendant is plausibly liable)