947 F.3d 1352
11th Cir.2020Background
- David Bass instructed Fidelity to issue a check for his entire Fidelity 401(k) to "Ruth A. Barr Plan Admin TR IRA FBO: David Bass" to set up an IRA administered by Ruth Barr.
- Ruth deposited the check into her business account at Regions Bank and misappropriated the funds; Bass died soon after.
- Bass’s estate sued Regions and Fidelity asserting common-law conversion and negligence, Georgia UCC and "banking laws" claims (Count II), and, against Fidelity only, breach of contract (Count III) and breach of fiduciary duty (Count IV).
- Regions and Fidelity moved to dismiss under Rules 12(b)(1) and 12(b)(6), arguing lack of standing under Ga. Code § 11-3-420 and that the UCC preempted Bass’s common-law claims; Fidelity also attacked the sufficiency of the contract and fiduciary- duty allegations.
- The district court dismissed the UCC claims for lack of standing and held Bass’s common-law conversion and negligence claims preempted by § 11-3-420; it also dismissed Bass’s breach of contract and fiduciary-duty claims for failure to plead.
- The Eleventh Circuit affirmed dismissal of the contract and fiduciary-duty claims and affirmed preemption of the common-law claims, but vacated the district court's 12(b)(1) dismissals of the Count II UCC claims as incapable of meaningful review and remanded for repleading/consideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to bring Georgia UCC claim under § 11-3-420 | Bass alleged UCC violations generally; he argued he had viable UCC claims despite uncertainty about § 11-3-420 entitlement rules | Regions/Fidelity argued Bass lacked Article III standing to assert UCC conversion under § 11-3-420, so Count II should be dismissed for lack of jurisdiction | Vacated the 12(b)(1) dismissal as incapable of meaningful review because Count II alleged violations of unspecified UCC provisions beyond § 11-3-420; remanded for proper pleading/consideration |
| Preemption of common-law conversion and negligence by UCC § 11-3-420 | Bass maintained common-law tort claims alongside statutory UCC claims | Defendants argued the UCC displaces common-law torts when it provides the specific remedy and elements (here § 11-3-420) | Affirmed: § 11-3-420 displaces Bass’s common-law conversion and negligence claims because it supplies the comprehensive statutory remedy and different legal standards |
| Sufficiency of breach of contract claim against Fidelity | Bass alleged Fidelity breached an unspecified contract governing handling of his funds by negotiating/paying an instrument with a forged/improper endorsement | Fidelity argued Bass failed to identify contract terms or allege how those terms were breached | Affirmed dismissal under Rule 12(b)(6): pleadings did not identify contract provisions or plausible breach facts |
| Sufficiency of breach of fiduciary duty claim against Fidelity | Bass alleged Fidelity owed fiduciary duties because of their contractual/ custodial relationship and breached them by negotiating a suspicious instrument | Fidelity argued no facts showed a fiduciary relationship or that it exercised controlling influence beyond following Bass’s instructions | Affirmed dismissal under Rule 12(b)(6): Bass failed to plead facts establishing a fiduciary relationship or breach |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain factual allegations sufficient to state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for federal complaints)
- Jackson v. Bank of Am., N.A., 898 F.3d 1348 (11th Cir. 2018) (court should strike and require repleading of shotgun pleadings)
- Davis v. Coca-Cola Bottling Co. Consol., 516 F.3d 955 (11th Cir. 2008) (criticizing shotgun pleadings)
- Kuritzky v. Emory Univ., 669 S.E.2d 179 (Ga. Ct. App. 2008) (elements required to plead a Georgia breach of contract claim)
- Griffin v. Fowler, 579 S.E.2d 848 (Ga. Ct. App. 2003) (elements of a Georgia breach of fiduciary duty claim)
- First Ga. Bank v. Webster, 308 S.E.2d 579 (Ga. Ct. App. 1983) (consideration of whether UCC provides comprehensive remedy)
- Jenkins v. Wachovia Bank, N.A., 711 S.E.2d 80 (Ga. Ct. App. 2011) (discusses entitlement to enforce an instrument under UCC and its effect on tort recovery)
- Johnson v. First Union Nat’l Bank, 567 S.E.2d 44 (Ga. Ct. App. 2002) (elements of common-law conversion under Georgia law)
- Lee St. Auto Sales, Inc. v. Warren, 116 S.E.2d 243 (Ga. Ct. App. 1960) (elements of common-law negligence under Georgia law)