552 F.Supp.3d 490
E.D. Pa.2021Background
- PLA (Perlberger Law Associates, P.C.) was retained to collect a $199,550 debt from Derbyshire Machine & Tool Co.; purported payer (Tools & Equipment Supply) sent a forged Derbyshire check for that amount.
- On June 17, 2020, PLA deposited the check at a Wells Fargo branch via ATM (branch required ATM deposit due to COVID protocols); the ATM routing caused the check to be processed off-site.
- Online banking showed the funds as cleared; PLA authorized Wells Fargo to wire the funds per the payee’s instructions; Wells Fargo wired nearly $200,000 to a Nigerian bank on June 18, 2020.
- Wells Fargo later notified PLA the Derbyshire signature was forged, delayed availability, and debited PLA’s operating account for $199,500, producing an overdraft; PLA’s operating funds were SBA loans.
- PLA sued Wells Fargo alleging fiduciary duty, multiple Pennsylvania Commercial Code violations, conversion, unjust enrichment, and breach of contract. Wells Fargo moved to dismiss.
- The court dismissed the fiduciary and statutory PCC claims and claims for conversion/unjust enrichment, but allowed PLA’s breach-of-contract claim to proceed pending discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wells Fargo owed a fiduciary duty to PLA as SBA lender/agent | Wells Fargo’s role with SBA funds imposed a duty to monitor/protect against unlawful dissipation | Debtor-creditor/bank-customer relationship does not create fiduciary duties absent substantial control | Dismissed: Pennsylvania law does not support a fiduciary duty here (no control alleged). |
| Whether PCC provisions (§§3404, 3416, 4207, 4208, 4209, 4401, 4A202 and EFTA) give PLA a statutory remedy | PLA contends multiple PCC sections impose bank liability for imposters, warranties, encoding, overdrafts, and unauthorized wires | Wells Fargo argues facts do not satisfy statutory elements; some sections protect different parties/transactions or require authorization by customer | Dismissed: PLA’s facts do not fit the cited PCC provisions; statutory claims dismissed. |
| Whether common-law claims are displaced by the PCC (conversion/unjust enrichment/breach of contract) | PLA seeks to preserve common-law remedies; claims supplement the Code where Code doesn’t provide a comprehensive remedy | Wells Fargo argues PCC displaces conversion/unjust enrichment and may preempt contract claims where provisional settlement rules apply | Conversion and unjust enrichment dismissed as displaced; breach of contract not dismissed at this stage — may survive if Code doesn’t fully remedy PLA’s allegations. |
| Whether PLA adequately pleaded an enforceable contract (implied duties to detect fraud/verify wires) | PLA alleges implied contractual duties (fraud detection, verify wiring instructions, follow advertised security practices) | Wells Fargo contends no express contract and statute covers settlement/provisional nature of items; factual basis for implied terms is lacking | Survives to discovery: Court allows implied-contract claim to proceed to develop evidence of any banking practices/representations creating contractual duties. |
Key Cases Cited
- Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) (Fed. R. Civ. P. 12(b)(6) standard).
- Buzcek v. First Nat. Bank of Mifflintown, 531 A.2d 1122 (Pa. Super. Ct. 1987) (debtor-creditor relationship ordinarily not fiduciary).
- Temp-Way Corp. v. Continental Bank, 139 B.R. 299 (E.D. Pa. 1992) (fiduciary found only where lender exerts substantial control).
- Guardian Life Ins. Co. of Am. v. Weisman, 223 F.3d 229 (3d Cir. 2000) (forged check is not properly payable).
- New Jersey Bank N.A. v. Bradford Sec. Operations, Inc., 690 F.2d 339 (3d Cir. 1982) (test for when common-law claims are displaced by UCC/PCC).
- Bucci v. Wachovia Bank, N.A., 591 F. Supp. 2d 773 (E.D. Pa. 2008) (preemption is fact-intensive; breach-of-contract claims against banks may survive).
- Cohen v. Marian, 90 A.2d 373 (Pa. Super. Ct. 1952) (bank accounts may be governed by express or implied contract).