480 F.Supp.3d 653
E.D. Pa.2020Background
- Fragale received an email impersonating his title company instructing a $166,054.96 wire to a Wells Fargo account opened in the name “Kelleen Chea.”
- Fragale wired the funds; Wells Fargo credited the account and the money was withdrawn almost immediately by two cashier’s checks; the account proved to be fraudulent and funds could not be recovered.
- Fragale sued Wells Fargo for negligence, alleging failures to verify the account opener’s identity and to prevent an immediate large withdrawal from a newly opened account.
- Wells Fargo moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing (1) Article 4A preempts the negligence claim and (2) Wells Fargo owed no duty of care to Fragale, a noncustomer.
- Fragale disclaimed any claim based on the wire-transfer instruction itself; his theory targeted pre- and post-transfer conduct (account opening and withdrawals).
- The Court granted Wells Fargo’s motion and dismissed the complaint in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Article 4A preempts Fragale’s negligence claim | Fragale disclaims any claim based on the wire transfer; his claim concerns account opening and withdrawals outside Article 4A | Article 4A governs wire-transfer disputes and displaces conflicting common-law claims | Not preempted: account opening occurred before the originator’s payment order and withdrawal occurred after beneficiary acceptance, placing Fragale’s theories outside Article 4A’s scope |
| Whether Wells Fargo owed a duty of care to Fragale (a noncustomer) | Banks have duties under Restatement principles (Dittman, Anderson) or, alternatively, a new duty should be recognized under Althaus factors due to widespread wire-fraud schemes | No duty to noncustomers; imposing one would expand liability indefinitely and conflicts with Pennsylvania and national precedent | No duty: plaintiff failed to plead facts showing a special relationship or sufficient foreseeability; Althaus factors (1,3,4,5) weigh against creating a new duty, so negligence claim fails |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not accepted as true on motion to dismiss)
- Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) (pleading standards and Twombly/Iqbal applied in Third Circuit)
- Phillips v. Cnty. of Allegheny, 515 F.3d 224 (3d Cir. 2008) (courts must accept well-pleaded facts as true)
- Dittman v. UPMC, 196 A.3d 1036 (Pa. 2018) (duty to protect employees’ sensitive data where actor’s affirmative conduct creates risk)
- Anderson v. Bushong Pontiac Co., 171 A.2d 771 (Pa. 1961) (Restatement §302(b) applied where third-party misconduct was foreseeable)
- Althaus v. Cohen, 756 A.2d 1166 (Pa. 2000) (five-factor test for recognizing new common-law duties)
- Walters v. UPMC Presbyterian Shadyside, 187 A.3d 214 (Pa. 2018) (discussion of duty and Althaus factors)
- Commerce Bank v. First Union Nat’l Bank, 911 A.2d 133 (Pa. Super. Ct. 2006) (declining to impose duty on bank to protect third-party from customer fraud)
- Bucci v. Wachovia Bank, N.A., 591 F. Supp. 2d 733 (E.D. Pa.) (Article 4A displaces conflicting common-law claims)
- Eisenberg v. Wachovia Bank, N.A., 301 F.3d 220 (4th Cir. 2002) (courts generally hold banks owe no duty to noncustomers)