Opinion
No. CV-23-01023-PHX-SPL
2023-11-20
ARUBAWATER CORP., Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.
Timothy M. Collier, William Andrew Weber, Law Office of Timothy M. Collier PLLC, Scottsdale, AZ, for Plaintiff. Carlie Shae Tovrea, Diamond J. Zambrano, Snell & Wilmer LLP, Phoenix, AZ, for Defendant.
Timothy M. Collier, William Andrew Weber, Law Office of Timothy M. Collier PLLC, Scottsdale, AZ, for Plaintiff.
Carlie Shae Tovrea, Diamond J. Zambrano, Snell & Wilmer LLP, Phoenix, AZ, for Defendant.
ORDER
Steven P. Logan, United States District Judge.
Before the Court is Defendant Wells Fargo Bank, N.A.'s ("Defendant") Motion to Dismiss. (Doc. 18). Defendant requests that the Court dismiss Plaintiff's Amended Complaint (Doc. 13), in its entirety and with prejudice, pursuant to Federal Rule of Civil Procedure 12(b)(6). The Motion has been fully briefed and is ready for review. (Docs. 18, 19, 20).
I. BACKGROUND
Plaintiff is a beverage distributing company who maintained a bank account through Defendant, a financial institution. (Doc. 19 at 2). Plaintiff mistakenly initiated two wire transfers to "Sourceline Machinery, Inc." when the intended recipient was "Sourceline Machinery, LLC." (Id.). The first wire transfer was for $100,000.00 and the second was for $72,500.00. (Id.). The wire transfers were fully processed by Defendant and the receiving financial institution, PNC Bank. (Id. at 4). The intended recipient never received the wire transfer, and PNC Bank was only able to recover a fraction of the transfer once Plaintiff realized the mistake. (Id.). Plaintiff brings several claims against Defendant stemming from this transaction; including: Count I, Breach of Contract, Count II Breach of Good Faith and Fair Dealing, and Count IV, violation of A.R.S. § 47-4A101 et seq. (Doc. 13 at 6-9). Specifically, Plaintiff claims that Defendant's actions during and after the wire transfers breached the Account Holder Services Agreement, the associated covenant of good faith and fair dealing, and Article 4A of the U.C.C. as codified in A.R.S. § 47-4A101 et seq.
On June 13, 2023, Defendant filed a Motion to Dismiss the instant suit. (Doc.
8). Plaintiff filed an Amended Complaint on June 27, 2023, which remains the operative document. (Doc. 13). On July 19, 2023, Defendant filed an Amended Motion Dismiss for Failure to State a Claim under Fed. R. Civ. P. 12(b)(6). (Doc. 18). This Court now rules.
II. LEGAL STANDARD
"To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must meet the requirements of Rule 8." Jones v. Mohave Cty., No. CV 11-8093-PCT-JAT, 2012 WL 79882, at *1 (D. Ariz. Jan. 11, 2012); see also Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 203 (5th Cir. 2016) (Rule 12(b)(6) provides "the one and only method for testing" whether pleading standards set by Rule 8 and 9 have been met); Hefferman v. Bass, 467 F.3d 596, 599-600 (7th Cir. 2006) (Rule 12(b)(6) "does not stand alone," but implicates Rules 8 and 9). Rule 8(a)(2) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2).
A court may dismiss a complaint for failure to state a claim under Rule 12(b)(6) for two reasons: (1) lack of a cognizable legal theory, or (2) insufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A claim is facially plausible when it contains "factual content that allows the court to draw the reasonable inference" that the moving party is liable. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Factual allegations in the complaint should be assumed true, and a court should then "determine whether they plausibly give rise to an entitlement to relief." Id. at 679, 129 S.Ct. 1937. Facts should be viewed "in the light most favorable to the non-moving party." Faulkner v. ADT Sec. Servs., Inc., 706 F.3d 1017, 1019 (9th Cir. 2013). "Nonetheless, the Court does not have to accept as true a legal conclusion couched as a factual allegation." Jones, 2012 WL 79882, at *1 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).
III. DISCUSSION
Defendant argues that Article 4 of the U.C.C., as codified in A.R.S. § 47-4A101 et seq., preempts Plaintiffs common law claims. (Doc. 18 at 5-7). In the alternative, Defendant argues that even if the Court considers Plaintiffs common law claims, they have failed to allege sufficient facts to establish a plausible claim for relief under all Counts. (Id. at 14). In doing so, Defendant seeks to incorporate by reference two documents, the Account Holder Services Agreement (Doc. 18-1 Ex. A) and an alleged copy of the wire recalls (Doc. 18-1 Ex. B). (Doc. 18 at 3-5). Plaintiff argues that the copy of the wire recalls should not be incorporated by reference, that the U.C.C. does not preempt the common law claims, and that they have stated sufficient facts to survive a motion to dismiss. (Doc. 19 at 6, 8, 11). Plaintiff contends Defendant's characterizations about the lack of factual support demonstrate a dispute of fact. (Id. at 11).
A. Incorporation by Reference of (Doc. 18-1 at Ex. A) and (Doc. 18-1 at Ex. B).
As an initial matter, the Court will resolve the issue surrounding incorporation by reference as it impacts all other aspects of the Motion. The parties only dispute whether the alleged copies of the wire recalls (Doc. 18-1 at Ex. B) are subject to the doctrine of incorporation by reference. Specifically, Plaintiff questions the authenticity of the alleged copy of the wire recalls, and the interpretation of their content. (Doc. 19 at 7). Defendant argues that
the copies of the wire recalls are essential to two of Plaintiff's claims, and are the same documents that Plaintiff provided in their initial disclosures as seen in (Doc. 20-1 at Ex. C). (Doc. 20 at 2-3).
Normally, if a court considers evidence outside the pleadings when ruling on a Rule 12(b)(6) motion to dismiss, the court must convert the 12(b)(6) motion into a Rule 56 motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 907-908 (9th Cir. 2003). In doing so, the court must give the nonmoving party an opportunity to respond. See Fed. R. Civ. P. 12(b). Although, a court may consider documents incorporated by reference in the complaint without converting the motion to dismiss into a motion for summary judgment. See Van Buskirk v. CNN, 284 F.3d 977, 980 (9th Cir. 2002); see also Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).
The doctrine of incorporation by reference permits a court to treat an extrinsic document as if it were part of the complaint "if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim." Ritchie, 342 F.3d at 907. "The doctrine prevents plaintiffs from selecting only portions of documents that support their claims, while omitting portions of those very documents that weaken—or doom—their claims." Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1002 (9th Cir. 2018). However, "[i]t is improper to assume the truth of an incorporated document if such assumptions only serve to dispute facts stated in a well-pleaded complaint." Id. at 1003. This is consistent with the prohibition against resolving factual disputes at the pleading stage. See In re Tracht Gut, LLC, 836 F.3d 1146, 1150 (9th Cir. 2016) ("At the motion to dismiss phase, the trial court must accept as true all facts alleged in the complaint and draw all reasonable inferences in favor of the plaintiff."); see also Sgro v. Danone Waters of N. Am., Inc., 532 F.3d 940, 942, n.1 (9th Cir. 2008) (finding it proper to consider disability benefits plan referenced in complaint, but declining to accept truth of the plan's contents where the parties disputed whether defendant actually implemented the plan according to its terms). Thus, incorporation by reference requires that all parties agree on the authenticity of a document. See In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999) (holding that the doctrine permits the court to take into account documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff's] pleading.").
In the present case, the parties do not dispute that the Court may incorporate by reference the Account Holder Services Agreement (Doc. 18-1 at Ex. A). In their Response, Plaintiff states "Exhibit A [] governs the Parties obligations and forms the basis of [Plaintiff's] claims for Breach of Contract and Breach of Good Faith and Fair Dealing. As such, Exhibit A to the Amended Motion is a document that is integral to [Plaintiff's] claims and extensively reference throughout the FAC." (Doc. 19 at 7). The Court finds that this
Later in their Response, Plaintiff hints that they question the authenticity of the provided Account Holder Services Agreement. (Doc. 19 at 12 "Attaching an unsigned Agreement to a Motion Dismiss is not admissible evidence, nor is it signed. Further, nowhere is it alleged in the FAC when the Agreement was given to [Plaintiff]."). It appears to the Court that Plaintiff is characterizing this document inconsistently within their Response in order to best fit their arguments. As the Court has previously relied on Plaintiff's assertion that the Account Holder Services Agreement is authentic, Plaintiff is judicially estopped from arguing its lack of authenticity later. See Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001) (holding that "[j]udicial estoppel is an equitable doctrine that precludes a party from gaining an advantage by asserting one position, and then later seeking an advantage by taking a clearly inconsistent position."); see also New Hampshire v. Maine, 532 U.S. 742, 749-50, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) (holding that judicial estoppel is designed to protect the integrity of the judicial process by "prohibiting parties from deliberately changing positions according to the exigencies of the moment."). It is also not clear if Plaintiff was explicitly challenging the authenticity of the document, or if they were only arguing that the Agreement does not meet the requirements of A.R.S. § 47-207(C)(2).
document is repeatedly mentioned in the Amended Complaint and forms the basis for Counts I and II. (Doc. 13 at 7-8). Further, this document is directly implicated by the analysis of Plaintiff's claims under A.R.S. § 47-4A101 et seq. Therefore, it is proper for the Court to incorporate by reference the Account Holder Services Agreement. See Van Buskirk, 284 F.3d at 980.
The alleged printout of the wire recalls (Doc. 18-1 at Ex. B) requires more discussion. These wire recalls are referenced 11 times throughout the 12-page Amended Complaint. (E.g., Doc. 13 at 4 "[Defendant] allegedly issue three (3) recalls regarding the $100,000.00, the first on October 31, 2022, the second on November 3, 2022, and the third on November 8, 2022. [] Each recall contained the same 'PEGA' number WFW221028-004550 and included the note 'Indemnity Intended.'"). These references to the wire recalls are central to Plaintiff's narrative in describing their attempts to retrieve the transferred funds. Additionally, these recalls form the basis for two of Plaintiff's claims for relief, Count I, Breach of Contract, and Count II, Breach of Good faith and fair dealing. (Doc. 13 at 7 "[Defendant] failed to maintain its intent to indemnify the partial funds recovered by PNC, as stated in three (3) of its recalls."). At first glance, this document also appears appropriate for incorporation by reference. However, incorporation of this document introduces two factual disputes that are inappropriate at the pleadings stage. First, Plaintiff questions the authenticity of these printouts. (Doc. 19 at 7). In viewing the facts in a light most favorable for the non-moving party, Plaintiff, the Court cannot assume the authenticity of this document for the purposes of incorporation. Defendant does provide a suitable response to this contention by providing a copy of the wire recalls that Plaintiff furnished in its initial disclosure. (Doc. 20-1 at Ex. C). Presumably Plaintiff would not object to the authenticity of this copy of the same document if they had initially provided it to Defendant, but this argument is moot as a larger issue of fact is at play here.
Defendant seeks to incorporate some form of the document in order to show that it stated "NO* INDEMNITY INTENDED." (Doc. 18 at 4). Conversely, Plaintiff claims that Defendants communicated via these wire recalls that they would indemnify the funds. (Doc. 13 at 4 "Each recall contained the same "PEGA" number WFW221028-004550 and included the note 'Indemnity Intended.'"). Thus, Plaintiff claims the document states the exact opposite assertion of what Defendant claims that it states. Upon inspection of the document, the Court can see how these differing interpretations might arise. The word "NO*" is separated from "INDEMNITY INTENDED" by appearing at the end of the preceding line. (Doc. 18-1 at 43). This "NO*" is also preceded by the acronyms "IN RTN" which neither party explains the meaning of. Thus, it is unclear if the "NO*" is a part of the sentence "NO* INDEMNITY INTENDED" or if it is to
be read only in the context of the preceding acronyms and not with the text on the next line. Therefore, there is a material dispute of fact as to whether the wire recalls ever communicated an intent to indemnify the funds. In viewing the facts in a light most favorable for the non-moving party, the Court cannot accept the document for the assertion that Defendant provides it for. Therefore, the Court will not accept the truth of the document's contents under the doctrine of incorporation given the presence of this dispute of fact.
B. Whether A.R.S. § 47-4A101 et seq., Preempts Plaintiff's Common Law Claims
Defendant argues that Plaintiff's common law claims are preempted by Article 4A of the U.C.C. as codified in A.R.S. § 47-4A101 et seq. (Doc. 18 at 6). Plaintiff claims that their common law claims are not preempted as the U.C.C. carves out an exception for express agreements and because Defendant's conduct occurred after the wire transfer was complete. (Doc. 19 at 8).
Article 4A of the U.C.C., codified in A.R.S. § 47-4A101 et seq., exclusively governs conduct directly related to the action of a wire transfer. Koss Corp. v. Am. Exp. Co., 233 Ariz. 74, 309 P.3d 898, 906 (Ariz. Ct. App. 2013), as amended (Sept. 3, 2013); see also U.C.C. § 4A-102 cmt. (stating that before the U.C.C. "there was no comprehensive body of law—statutory or judicial—that defined the juridical nature of a funds transfer or the rights and obligations flowing from payment orders"). Article 4A apportions liability among the parties involved in a wire transfer depending upon the point at which a failure in the funds transfer process occurs. U.C.C. § 4A-102 cmt. ("A deliberate decision was also made to use precise and detailed rules to assign responsibility, define behavioral norms, allocate risks and establish limits on liability."). Other courts have recognized that Article 4A does not preempt common-law claims when "the alleged misconduct occurred outside the wire transfer process." Koss Corp., 309 P.3d at 906; see also Ma v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 597 F.3d 84, 89 (2d Cir. 2010) ("Practically speaking, Article 4A controls how electronic funds transfers are conducted and specifies certain rights and duties related to the execution of such transactions ... Claims that, for example, are not about the mechanics of how a funds transfer was conducted may fall outside of this regime.").
In the present case, all the alleged conduct by Defendant, which forms the basis of Plaintiff's claims, comes from the mechanics of the wire transactions at issue. Plaintiff brings two common law claims, and one claim under Article 4A of the U.C.C. as adopted in Arizona. (Doc. 13 at 6-9). The two common law claims, Breach of Contract and Breach of Good Faith and Fair Dealing, concern Defendant's alleged failure to prevent the wire transfers from being routed to the wrong recipient. Plaintiff provides several theories as to why Defendant failed to do so, resulting in the alleged breach, but all of them involve critiques of the procedures for handling the wire transfers. For example, Plaintiff alleges that "The bank account holder services agreement requires [Defendant] to follow a commercially reasonable security procedure to verify the authenticity of an instruction received to send a funds transfer." (Doc. 13 at 7). Verifying the authenticity of an instruction is a procedure used by the bank to process a wire transfer. This situation is explicitly governed by the U.C.C. as adopted in Arizona. See § 47-4A205(A) ("If an accepted payment order was transmitted pursuant to a security procedure for the detection of error and
the payment order erroneously instructed payment to a beneficiary not intended by the sender ... the following rules apply"). The remainder of Plaintiff's allegations in Counts I and II mirror this analysis. Plaintiff does not allege misconduct outside of the wire transfer mechanics such as fraud or conversion, but instead charges Defendant solely based on how the funds were eventually transferred to the wrong beneficiary. Therefore, Article 4A preempts Plaintiff's common law claims.
Plaintiff's explanations for why Article 4A does not control here fall short. First, the portion of the U.C.C. that Plaintiff quotes is related to "Liability and duty of receiving bank regarding unaccepted payment order." § 47-4A1212. This is not the situation that occurred here as Defendant did accept the payment order. Further, this section does not state that the express agreement between the parties governs all conduct in the transaction, but that a bank owes no duty for failure to accept funds, unless that situation is provided for in their express agreement. Plaintiff does not allege that the parties contracted to a higher standard of care than that provided by the U.C.C. See Patco Const. Co. v. People's United Bank, 684 F.3d 197, 215 (1st Cir. 2012) ("At least in theory, there could be, either by contract or through assumption of fiduciary duties, higher standards which are imposed on the bank."). Instead, Plaintiff claims that Defendant "had a duty to use commercially reasonable standards." (Doc. 13 at 7). This is exactly what the U.C.C. requires. § 47-4A105(A)(6) ("'Good faith' means honesty in fact and the observance of reasonable commercial standards of fair dealing.").
Finally, Plaintiff alleges that Defendant's conduct did not occur during the wire transfer process, but after. (Doc. 19 at 8). For example, Plaintiff claims that Defendant failed in its duty to investigate the missing funds after the discovered mistake. (Doc. 13 at 7). However, an investigation only serves to allocate liability between the parties based on what went wrong in the wire transfer process. This would be contrary to § 47-4A102 which states that Article 4A is "intended to be the exclusive means of determining the rights, duties and liabilities of the affected parties in any situation covered by particular provisions of the Article." U.C.C. § 4A-102 cmt. (emphasis added). As previously stated, this situation fits squarely within what is described § 47-4A207. Thus, any investigation outside what is prescribed by the Article 4A would be an additional duty, and any remedy would affect the rights and liabilities of the parties. Moreover, the allocation of liability is already spelled out in another section, § 47-4A207(D). Allowing these inconsistencies to continue would be contrary to both the plain language and the purpose of Arizona's adoption of the U.C.C. See Trustmark Ins. Co. v. Bank One, Ariz., N.A., 202 Ariz. 535, 48 P.3d 485, 488 (Ariz. Ct. App. 2002) (holding that Arizona's Article 4A provides the "controlling body of law for those wire transfers within its scope"). Contrary to Plaintiff's objections, Article 4A preempts Plaintiff's common law claims and they are dismissed with prejudice.
C. A.R.S. § 47-4A101 et seq.
Defendant argues that Plaintiff has not plead sufficient facts to state a claim under Article 4A of the U.C.C. as codified in A.R.S. § 47-4A101 et seq. (Doc. 18 at 11). Specifically, Defendant points to three sections under Article 4A: (1) § 47-4A207(C), (2) § 47-4A205, and (3) § 47-4A303. (Doc. 18 11-13). Plaintiff argues that all of Defendant's contentions are questions of fact that are inappropriate at the pleadings stage. (Doc. 19 at 11). 1. § 47-4A207(C) Misdescription of Beneficiary
The case law surrounding the Misdescription of Beneficiary section of Article 4A is extremely sparse, including the synonymous sections of the U.C.C. for that issue in other jurisdictions. § 47-4A207(C) states:
"If the originator is not a bank and proves that the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator's bank proves that the originator, before acceptance of the originator's order, had notice that payment of a payment order issued by the originator might be made by the beneficiary's bank on the basis of an identifying or bank account number even if it identifies a person different from the named beneficiary. Proof of notice may be made by any admissible evidence. The originator's bank satisfies the burden of proof if it proves that the originator, before the payment order was accepted, signed a writing stating the information to which the notice relates."
Walking through these steps in the current case, all parties agree that the originator, Plaintiff, is not a bank. Further, it appears that Defendant concedes that the person identified by the account number, Sourceline Machinery, Inc., was not entitled to receive payment from the originator. (Doc. 18 at 12). Where the parties disagree is whether Plaintiff had notice that Defendant might exclusively rely on the account number regardless of whether it matched the name associated with the account. Defendant claims that Plaintiff had notice through the Account Holder Services Agreement (Doc. 18-1 Ex. A). As the Court has incorporated this document by reference, it may rely upon its contents here. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) ("A court may consider evidence on which the complaint 'necessarily relies' if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion."). The Account Holder Services Agreement states "If an instruction or order to transfer funds describes the party to receive payment inconsistently by name and account number, we'll rely on the beneficiary account number even if the account number identifies a party different from the named recipient... [y]ou could lose funds if you provide incomplete or inaccurate information in your payment orders." (Doc. 18-1 at 19). This is clear notice of Defendant's intent to use the account number as identification for wire transfers, even if the name does not match the account. Therefore, Defendant has met their burden under § 47-4A207(C). Given the plain language of the Agreement, Plaintiff has not sufficiently alleged facts that make it plausible that Defendant failed to provide notice. Nor could they as the Account Holder Services Agreement is explicit. Therefore, Plaintiff has failed to state a claim upon which relief can be granted and his claim under a theory of § 47-4A207(C) is dismissed.
2. § 47-4A205 Erroneous Payment Orders
§ 47-4A205 concerns wire transfers "transmitted pursuant to a security procedure for the detection of error." However, a "security procedure" as defined in Article 4A "means a procedure established by agreement of a customer and a receiving bank." § 47-4A201; see also U.C.C. § 4A-201 cmt. ("the definition of security procedure limits the term to a procedure 'established by agreement of a customer and a receiving bank.'"). The U.C.C. comment to § 47-4A201 further provides, "[t]he term does not apply to procedures that the receiving bank may
follow unilaterally in processing payment orders. The question of whether loss ... will be borne by the receiving bank or the sender ... is affected by whether a security procedure was or was not in effect and whether there was or was not compliance with the procedure." U.C.C. § 4A-201 cmt. The comment also specifically mentions § 4A-205, which deals with erroneous payment orders. Id. Comment 1 to U.C.C. § 4A-205 states that, "Section 4A-205 does not apply if the receiving bank and the customer did not agree to the establishment of a procedure for detecting error." That comment further states, "[t]he risk of loss is shifted to the bank only if the sender proves that the error would have been detected if there had been compliance with the procedure and that the sender (or an agent under Section 4A-206) complied." U.C.C. § 4A-205 cmt. 1.
In the present case, Defendant claims that Plaintiff "fails to (and cannot) allege facts supporting that it and [Defendant] ever agreed to any specific security procedure to detect an error in the content of a payment order." (Doc. 18 at 13). At first glance, this appears to be contradicted by the Amended Complaint which alleges that "[t]he bank account holder services agreement requires [Defendant] to follow a commercially reasonable security procedure to verify the authenticity of an instruction received." (Doc. 13 at 7). However, the specific language of the Account Holder Services Agreement states, "We have no obligation to detect errors you make in payment orders (for example, paying the wrong person or the wrong amount)." (Doc. 18-1 at 19). § 47-4A205 requires that this agreement establish "a procedure for detecting error" to qualify. U.C.C. § 4A-205 cmt. 1. The Account Holder Services Agreement does the opposite. In fact, the Agreement shifts the burden to the Plaintiff by stating, "[y]ou'll exercise ordinary care to determine whether a funds transfer to or from your account was either not authorized or erroneous." (Id.). Here, Plaintiff admits to providing the wrong name, account number, and routing number for the wire transfer. (Doc. 13 at 3). Furthermore, the "commercially reasonable security procedure" language that Plaintiff cites from the Agreement is used to verify "the authenticity of an instruction" not whether an error exists within in it. (Doc. 18-1 at 19). Additionally, the Agreement states that Defendant makes the unilateral choice of what that procedure entails, and that "[y]ou agree to be bound by any funds transfer request that Wells Fargo receives and verifies." (Id.). The U.C.C. explicitly states that security procedures do not include "procedures that the receiving bank may follow unilaterally." U.C.C. § 4A-201 cmt. In sum, the agreement does not establish a security procedure as required under § 47-4A205, and the statute does not apply. Therefore, Plaintiff has failed to state a claim under § 47-4A205.
3. § 47-4A303 Erroneous Execution of Payment Order
§ 47-4A303(C) states:
"If a receiving bank executes the payment order of the sender by issuing a payment order to a beneficiary different from the beneficiary of the sender's order and the funds transfer is completed on the basis of that error, the sender of the payment order that was erroneously executed and all previous senders in the funds transfer are not obliged to pay the payment orders they issued. The issuer of the erroneous order is entitled to recover from the beneficiary of the order the payment received to the extent allowed by the law governing mistake and restitution."
Here, both parties agree that § 47-4A303 relieves the sender of liability if a bank sends a wire transfer to a person
different than what was specified in the instructions. Defendant argues that Plaintiff has provided no evidence that they deviated from Plaintiff's instructions, and further that Plaintiff admits to the wire transfer having been completed as instructed. (Doc. 18 at 13). In their Response, Plaintiff argues that it is unknown at this point in the litigation whether Defendant completed their instructions correctly. (Doc. 19 at 13). However, in the Amended Complaint, Plaintiff admits to using the wrong name, account number, and routing number. (Doc. 13 at 3 "Upon information and belief, not only was the name of the account holder incorrect but the Wiring Routing Number and/or the Account number as well. Which again, should have caused the Wire Transfers to be halted by Wells Fargo as an incorrect account."). Plaintiff has provided no other facts suggesting that Defendant processed the wire transfer in any manner other than what was specified by Plaintiff. Thus, the idea that Defendant made a mistake in the process is purely speculative. This is insufficient to state a claim. Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (holding that a claim must provide enough facts to "plausibly give rise to an entitlement to relief"). It is not reasonable for the Court to draw an inference that this is plausibly what happened when Plaintiff's own admissions contradict this theory. Therefore, Plaintiff has failed to state a claim under § 47-4A303 and this portion of the Amended Complaint is dismissed.
IV. CONCLUSION
All told, "whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. When a complaint fails to comply with Rule 8(a), it may be dismissed pursuant to Rule 41(b). Hearns v. San Bernardino Police Dep't, 530 F.3d 1124, 1129 (9th Cir. 2008). Dismissal under Rule 41(b) operates as an adjudication on the merits and the action is dismissed with prejudice, unless the Court provides otherwise. Fed. R. Civ. P. 41(b). A district court should normally grant leave to amend unless it determines that the pleading could not possibly be cured by allegations of other facts. Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990).
While Plaintiff only needs to allege enough facts to "plausibly give rise to an entitlement to relief," that has not occurred here. Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. Therefore, the Amended Complaint fails to satisfy the pleading standards set forth by Rule 8 and 12(b)(6), and its dismissal is both warranted and necessary. Plaintiff's claims also cannot be cured with further amendment and are thus futile. See Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995) ("Futility of amendment can, by itself, justify the denial of a motion for leave to amend."). Specifically, Plaintiff's common claims, Count I for Breach of Contract and Count II for Breach of Good Faith and Fair Dealing, are preempted by A.R.S. § 47-4A101 et seq. Therefore, they are barred as a matter of law. Further, Plaintiff's third claim, Count IV under A.R.S. § 47-4A101 et seq., fails as the factual record makes it impossible to state a claim for relief.
Accordingly,
IT IS ORDERED that Defendant Wells Fargo Bank, N.A.'s Motion to Dismiss (Doc. 18) is granted and Plaintiff's claims are dismissed with prejudice and without leave to amend.
IT IS FURTHER ORDERED that the Clerk of Court shall terminate this action enter final judgment accordingly.