SFS Check, LLC v. First Bank of Delaware
774 F.3d 351
6th Cir.2014Background
- SFS Check, LLC, a Michigan financial services company, processed transactions through its Fifth Third Bank account (not party to suit).
- FBD processed illegal gambling funds through SFS’s Fifth Third account; Fifth Third closed SFS’s account, leading to SFS’s bankruptcy.
- Kopko spoke with Bastable at FBD in Aug. 2010; Bastable allegedly said no account in SFS’s name.
- In Oct. 2010, SFS received a grand jury subpoena; Kopko spoke again and Bastable admitted FBD had an account in SFS’s name.
- In 2012, SFS filed federal suit for negligence and fraud against FBD, Bastable, and FBD directors; district court dismissed for lack of personal jurisdiction and failure to state a claim.
- This court affirms the dismissal, holding no personal jurisdiction over Bastable/directors, no duty of care owed to non-customers, and failure to plead fraud adequately.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bastable and directors are subject to personal jurisdiction. | Beydoun; long-arm theory via statements caused Michigan injuries. | Bastable lacks minimum contacts; only phone calls and unilateral actions. | Bastable lacked minimum contacts; no personal jurisdiction. |
| Whether bank owes duty of care to a non-customer in identity-theft context. | SFS seeks new duty for banks toward identity-theft victims. | Banks owe no duty to non-customers; Patrick disfavored; no new duty adopted. | No duty of care Owed to non-customers; rejects new duty. |
| Whether SFS state a cognizable fraud claim under Rule 9(b). | FBD misrepresented absence of an SFS account to Kopko. | Injury preceded the alleged misrepresentation; no causation pleaded. | Fraud claim not stated; injury not causally linked to alleged misrepresentation. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct. 2009) (pleading standard requires more than labels and conclusions)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct. 2007) (pleading must include factual enhancement)
- Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212 (6th Cir. 1989) (preponderance standard in jurisdiction questions with discovery)
- Beydoun v. Wataniya Rests. Holding, Q.S.C., 768 F.3d 499 (6th Cir. 2014) (minimum contacts and due process in jurisdiction analysis)
- International Shoe Co. v. Washington, 326 U.S. 310 (Sup. Ct. 1945) (establishes minimum contacts for jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (Sup. Ct. 1985) (purposeful availment and reasonable foreseeability)