Opinion
CV-21-02220-PHX-DGC
10-31-2022
Aleksandr Kocharov, Plaintiff, v. JPMorgan Chase Bank, N.A., Defendant.
ORDER
David G. Campbell, Senior United States District Judge.
Defendant JPMorgan Chase Bank moves to dismiss Plaintiff Aleksandr Kocharov's amended complaint for failure to state a claim for relief. Doc. 22. The motion is fully briefed (Docs. 24, 26, 27), and oral argument will not aid the Court's decision. See Fed.R.Civ.P. 78(b); LRCiv 7.2(f). For reasons stated below, the Court will grant the motion in part and deny it in part.
I. Background.
Plaintiff had a bank account with Defendant in 2019. Proceeding pro se, he filed a complaint against Defendant in December 2021. Doc. 1. Plaintiff alleges generally that identity theft and a series of reversed transactions forced him into bankruptcy and caused him to lose his home and good health. Id. at 1-3. The Court granted Defendant's motion for a more definite statement because the complaint fails to comply with the pleading requirements of Federal Rule of Civil Procedure 8(a). Docs. 14, 20.
Plaintiff filed an amended complaint that asserts breach of contract and negligence claims. Doc. 21 at 4-5. Plaintiff seeks $12,370 for money lost from his bank account, $280,000 in medical costs, and unspecified damages for the loss of his home; related moving, storage, and rental costs; and pain and suffering. Id. at 5. Defendant moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. 22.
II. Rule 12(b)(6) Standard.
Rule 12(b)(6) allows a defendant to challenge the factual and legal sufficiency of a claim before discovery, but “is not a procedure for resolving a contest between the parties about the facts or the substantive merits of the plaintiff's case.” City of Oakland v. BP PLC, 969 F.3d 895, 910 (9th Cir. 2020) (citations omitted). A complaint that sets forth a cognizable legal theory will survive a Rule 12(b)(6) motion if it contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). A claim has facial plausibility when the plaintiff pleads “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Although the plausibility standard requires “more than a sheer possibility that a defendant has acted unlawfully[,]” it “is not akin to a ‘probability requirement[.]'” Id. (quoting Twombly, 550 U.S. at 556).
When deciding a Rule 12(b)(6) motion, the complaint's factual allegations are taken as true and construed in the light most favorable to the plaintiff. Twombly, 550 U.S. at 556. The court should limit its review to the contents of the complaint and generally may not consider extrinsic materials. Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001).
III. Defendant's Motion to Dismiss.
Defendant argues that the amended complaint fails to state a plausible claim for relief and that the purported breach of contract and negligence claims are time-barred. Doc. 22 at 2. In support, Defendant contends that the Court should consider a deposit account agreement that is not referenced in or attached to the complaint. Id. at 3 & n.1; see Doc. 22-1.
A. Breach of Contract Claim.
Defendant contends that the complaint fails to plead the necessary elements of a breach of contract claim. Doc. 22 at 6-7. The Court does not agree.
Under Arizona law, a breach of contract claim has three elements: (1) an agreement between the plaintiff and the defendant, (2) breach of the agreement by the defendant, and (3) resulting damage to the plaintiff. See Graham v. Asbury, 540 P.2d 656, 657 (Ariz. 1975); Narramore v. HSBC Bank USA, N.A., No. 09-CV-635-TUC-CKJ, 2010 WL 2732815, at *4 (D. Ariz. July 7, 2010).
Plaintiff alleges that Defendant provides measures to protect account owners from fraudulent transactions. Doc. 21 ¶ 7. Where an account has money removed due to fraud, Defendant's policy is to replace the money. Id.
In January 2019, an unauthorized third-party reversed several electronic bill payments Plaintiff made from his account and then withdrew the account balance, totaling $6,335. Id. ¶¶ 8-11. Upon learning of the fraudulent transactions, Plaintiff made a claim and requested assistance from Defendant. Id. ¶ 13. Defendant found no fraud, denied Plaintiff's claim, and refused to replace the money. Id. ¶¶ 15-16. As a result, Plaintiff became delinquent on his bills, was forced into bankruptcy, and lost his home to foreclosure. Id. ¶¶ 17-23.
Plaintiff claims that Defendant agreed to prevent, investigate, and reverse fraudulent transactions. Id. ¶ 32. Despite these obligations, Defendant failed to protect Plaintiff's account from fraudulent transactions and has refused to reimburse Plaintiff, resulting in the loss of his money and home and injury to his health. Id. ¶¶ 33-34. Accepting these allegations as true and construing them in the light most favorable to Plaintiff, see Twombly, 550 U.S. at 556, the Court finds that Plaintiff has stated a plausible breach of contract claim.
Defendant complains that Plaintiff provides no specificity regarding the terms of the agreement between the parties. Doc. 22 at 6 (citing Cameron v. Wells Fargo Bank NA, No. CV-13-01921-PHX-GMS, 2014 WL 3418466, at *5 (D. Ariz. July 14, 2014) (dismissing a breach of contract claim where the plaintiff's provided no “detail about [the] agreement that would show that they have a right to relief or that Wells Fargo breached”)). Plaintiff specifically alleges that “Defendant agreed to prevent, investigate, and reverse fraudulent or erroneous transactions[,]” and that “[d]espite Defendant's obligation to protect Plaintiff's account, it neither prevented the unauthorized party from accessing Plaintiff's account, nor did Defendant reimburse Plaintiff's loss.” Doc. 21 ¶¶ 32-33. The amended complaint could have provided greater detail about the alleged agreement between the parties, but while Rule 8's pleading standard “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation,” it “does not require ‘detailed factual allegations[.]'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555); see also Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008) (“To avoid a Rule 12(b)(6) motion, a complaint need not contain detailed factual allegations[.]”); Doc. 20 at 1-2 (Court's order in this case explaining that a complaint “need not contain detailed factual allegations; rather, it must plead ‘enough facts to state a claim to relief that is plausible on its face'”) (citing Clemens, 534 F.3d at 1022; Twombly, 550 U.S. at 570). The amended complaint alleges sufficient facts about the parties' agreement to survive dismissal.
Defendant's reliance on Cameron is misplaced because the plaintiffs in that case were represented by counsel. Plaintiff is proceeding pro se, and the Supreme Court has made clear that “[a] pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers[.]” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citation omitted). Indeed, courts must “continue to construe pro se filings liberally when evaluating them under Iqbal. While the standard is higher, [the] ‘obligation' remains . . . ‘to construe the pleadings liberally and to afford the [plaintiff] the benefit of any doubt.'” Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir. 2010) (citation omitted); see also Fed.R.Civ.P. 8(f) (“All pleadings shall be so construed as to do substantial justice”).
According to Defendant, Plaintiff “fails to allege any facts to show a causal nexus between [Defendant's] right to investigate Plaintiff's claims and his alleged damages.” Doc. 22 at 6. But Plaintiff does allege that Defendant breached an obligation to investigate the fraudulent transactions. He instead alleges that Defendant failed to prevent the third-party fraudster from accessing his account and refused to reimburse the stolen money. Doc. 21 ¶¶ 32-33. Plaintiff further alleges that Defendant's breach caused “the loss of [his] money, the loss of his home[,] and the injury to his health.” Id. ¶ 34. More specifically, Plaintiff alleges that because the money was not returned to his account, he could not pay his bills, became delinquent, had to file for bankruptcy in an unsuccessful attempt to save his home from foreclosure, and was forced to find a new place to live. Id. ¶¶ 17-24. These events caused Plaintiff much stress, which directly led to his hospitalization for a diabetic event and heart surgery. Id. ¶¶ 28-31. Contrary to Defendant's assertion, Plaintiff has pled sufficient facts to establish the causation element.
The Court concludes that the amended complaint's allegations “possess enough heft” to nudge the breach of contract claim “across the line from conceivable to plausible[.]” Twombly, 550 U.S. at 557, 570. The Court will deny the motion to dismiss with respect to this claim.
B. Negligence Claim.
To plead a negligence claim under Arizona law, the plaintiff must allege “four elements: (1) a duty requiring the defendant to conform to a certain standard of care; (2) a breach by the defendant of that standard; (3) a causal connection between the defendant's conduct and the resulting injury; and (4) actual damages.” Gibson v. Kasey, 150 P.3d 228, 230 (Ariz. 2007) (en banc); see Stage v. Stage, No. CV11-0936-PHX-DGC, 2012 WL 443834, at *1-2 (D. Ariz. Feb. 13, 2012) (same).
1. Plaintiff Sufficiently Alleges a Negligence Claim.
Plaintiff alleges that as a bank, Defendant has the duty to take reasonable steps to prevent theft of its customers' money and to restore money in the event of such loss. Doc. 21 ¶ 37. Defendant has held itself out to the public as having these duties and protections, and has advertised fraud prevention as one of the features of its bank accounts. Id. ¶¶ 36, 38. Defendant breached its duties to Plaintiff by allowing his account to be accessed and his money removed by an unauthorized third-party, and by refusing to reimburse Plaintiff for the money fraudulently removed from his account. Id. ¶¶ 39-40. These breaches resulted in the loss of Plaintiff's money, the loss of his home, and injury to his health. Id. ¶ 41. Accepting these allegations as true, the Court finds that Plaintiff has sufficiently stated a negligence claim against Defendant.
Defendant contends that Plaintiff's negligence claim essentially is a claim for “negligent breach of contract” and Arizona law does not recognize such a claim. Doc. 22 at 7 (citing Jones v. Bank of Am., N.A., No. CV-09-2129-PHX-JAT, 2010 WL 2228517 (D. Ariz. June 1, 2010)). In Jones, the plaintiff alleged that the defendant “owed a duty ‘to ensure that plaintiff's contractual rights would be protected, and specifically that [certain] contractual benefits be honored.'” 2010 WL 2228517, at *2. The district court rightly found that the plaintiff essentially alleged that the defendant “was negligent in breaching the contract.” Id.
Unlike the claim asserted in Jones, Plaintiff alleges that Defendant breached a standard of care owed to Plaintiff, causing actual damages. Doc. 21 ¶¶ 36-42. Plaintiff's negligence claim is not identical to his breach of contract claim. Doc. 22 at 7.
2. The Negligence Claim is Time-Barred.
Defendant argues that the negligence claim is barred by the applicable two-year statute of limitations. Doc. 22 at 8-9. The Court agrees.
A statute of limitations defense may be raised by a motion to dismiss where the running of the statute is apparent on the face of the complaint. Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980); see ASARCO, LLC v. Union Pac. R.R. Co., 765 F.3d 999, 1004 (9th Cir. 2014) (“Dismissal under Rule 12(b)(6) on the basis of an affirmative defense is proper only if the defendant shows some obvious bar to securing relief on the face of the complaint.”). Thus, “[a] motion to dismiss based on the running of the statute of limitations period may be granted only ‘if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove that the statute was tolled.'” Ortega v. Santa Clara Cnty. Jail, No. 19-17547, 2021 WL 5855066, at *1 (9th Cir. Dec. 9, 2021) (quoting Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1206-07 (9th Cir. 1995)).
Plaintiff's negligence claim is subject to the limitations period set forth in A.R.S. § 12-542(1), which provides that all personal injury claims “shall be commenced and prosecuted within two years after the cause of action accrues, and not afterward[.]” See Atkins v. Governing Bd. of Creighton Sch. Dist., 678 Fed.Appx. 585, 586 (9th Cir. 2017) (citing § 12-542 and finding that “[dismissal of Atkins's negligence claim was proper because it was barred by the . . . two year statute of limitations”); White v. Aurora Loan Servs. LLC, No. CV-14-01021-PHX-JAT, 2016 WL 3653958, at *4 (D. Ariz. July 6, 2016) (“The statute of limitations for a negligence claim in Arizona is two years.”) (citing § 12-542(1)). “Arizona follows the ‘discovery rule,' under which ‘a cause of action does not ‘accrue' until a plaintiff discovers or by the exercise of reasonable diligence should have discovered that he or she has been injured by the defendant's negligent conduct.'” 11333 Inc. v. Certain Underwriters at Lloyd's, London, 261 F.Supp.3d 1003, 1024 (D. Ariz. 2017) (citing Coulter v. Grant Thornton, LLP, 388 P.3d 834, 838 (Ariz.Ct.App. 2017)); see Doe v. Byzantine Cath. Diocese of Parma, No. CV-21-01424-PHX-JJT, 2022 WL 1664282, at *2 (D. Ariz. May 25, 2022) (“The discovery rule relies on the principle that ‘a cause of action does not accrue until the plaintiff knows or with reasonable diligence should know the facts underlying the cause of action.'”) (quoting Roe v. Doe, 955 P.2d 951, 960 (Ariz. 1998)).
The amended complaint alleges that Plaintiff “became aware” that his bank account had been fraudulently accessed by a third-party on January 16, 2019. Doc. 21 ¶ 9. Plaintiff “immediately” contacted Defendant to make a claim and request assistance. Id. ¶¶ 12-13. Defendant concluded that Plaintiff had initiated the transactions, denied his claim of fraud, and refused to repay the money removed from the account. Id. ¶¶ 15-16. Because the money was not repaid, Plaintiff “could not pay his bills and became delinquent.” Id. ¶ 17. This culminated in a notice of trustee sale for Plaintiff's property, which he received on April 27, 2019. Id. ¶ 18. Plaintiff filed for bankruptcy on September 18, 2019, two days before the scheduled trustee sale. Id. ¶¶ 18-19.
These allegations show that Plaintiff discovered Defendant's alleged negligence -the failure to prevent the fraudulent transactions and refusal to reimburse the lost money (id. ¶¶ 39-40) - as early as April 27, 2019, the date Plaintiff received the notice of trustee sale (id. ¶ 18). Plaintiff certainly knew of the facts underlying the negligence claim by September 18, 2019, when he filed for bankruptcy in an effort to save his home from foreclosure. Id. ¶¶ 18-19; see Doc. 22 at 9. But Plaintiff did not file his original complaint until December 29, 2021 (Doc. 1), several months after the two-year limitations period had expired. See A.R.S. § 12-542(1).
Defendant notes that Plaintiff's original complaint included, among other things, Defendant's April 26, 2019 letter to Plaintiff regarding his account, Defendant's investigation, and its ultimate decision regarding the alleged fraud. Doc. 22 at 9 n.2 (citing Doc. 1-1 at 12). While the letter shows that Plaintiff was aware of Defendant's decision in April or May 2019, the Court will not rely on the letter in ruling on the motion to dismiss because it is not part of the amended complaint.
Plaintiff does not dispute that he discovered the facts of Defendant's alleged negligence more than two years before he filed suit. Doc. 24 at 4. Plaintiff notes that he tried to get help from the Arizona Attorney General's Office and others before filing for bankruptcy (see id.), but such efforts do not toll the running of the limitations period. See Houston v. Ariz. State Bd. of Educ., 579 Fed.Appx. 591, 592 (9th Cir. 2014) (“Equitable tolling applies only in extraordinary circumstances and not to a garden variety claim of excusable neglect.”) (quoting Little v. State, 240 P.3d 861, 867 (Ariz. 2010)); Stulce v. Salt River Project Agr. Imp. & Power Dist., 3 P.3d 1007, 1015 (Ariz.Ct.App. 1999) (equitable tolling may apply “where plaintiffs were ‘lulled' or ‘misled' into an untimely filing by the actions of the defendant”).
In September 2019, the Attorney General's Office informed Plaintiff that no evidence supported criminal wrongdoing, that the issues Plaintiff identified were civil in nature, and that as a private citizen he had the right to bring a civil action. Doc. 1-3 at 51.
Because “it appears beyond doubt that . . . [P]laintiff can prove no set of facts that would establish the timeliness of the [negligence] claim[,]” the Court will grant Defendant's motion to dismiss the claim. Hernandez v. City of El Monte, 138 F.3d 393, 402 (9th Cir. 1998); see also Ochoa-Gonzalez v. United States Immigr. & Customs Enf't, No. CV-16-00363-PHX-DGC (DMF), 2017 WL 1650203, at *2 (D. Ariz. May 2, 2017) (dismissing complaint filed outside the two-year limitations period because “[r]eading [the complaint] with the required liberality, the Court finds no basis for tolling the statute of limitations”).
C. The November 2019 Deposit Account Agreement.
According to Defendant, any duties it may have owed Plaintiff are outlined in a deposit account agreement, which purportedly does not require Defendant to take any steps to prevent, investigate, or reverse fraudulent transactions. Doc. 22 at 3-6. Defendant further contends that two-year contractual limitations period in the deposit account agreement bars Plaintiff's breach of contract claim. Id. at 10-11. Defendant has attached the deposit account agreement to its motion to dismiss (Doc. 22-1), and asserts that the Court can consider the document without converting the motion to a motion for summary judgment, see Fed.R.Civ.P. 12(d), because the document forms the basis of the amended complaint. Doc. 22 at 3 & n.1. Defendant is incorrect.
“In ruling on a motion to dismiss, a district court generally ‘may not consider any material beyond the pleadings.'” Cooper v. Pickett, 137 F.3d 616, 622 (9th Cir. 1997) (quoting Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994)); see also Doc. 26 at 3 n.2 (same and citing United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003)). The district court may, however, consider a document that “is properly submitted as part of the complaint[.]” Cooper, 137 F.3d at 622 (emphasis in original). A document is part of the complaint where it is “attached to or incorporated by reference in the complaint[.]” Henderson v. Emps. Mut. Cas. Co., No. CV-13-01627-PHX-SRB, 2013 WL 12176848, at *2 (D. Ariz. Nov. 20, 2013) (citing Ritchie, 342 F.3d at 908). A document is incorporated by reference where the plaintiff refers extensively to the document in the complaint or the document forms the basis of the plaintiff's claim. Id. (citing Ritchie and Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)).
The deposit account agreement is not referenced in the amended complaint. See Doc. 21. Defendant nonetheless asserts that the agreement is the “operative contract” because Plaintiff agreed to the document when opening his bank account. Docs. 22 at 3, 26 at 2. But Plaintiff alleges that he has maintained his account with Defendant since 2000, nearly two decades before the deposit account agreement became effective in November 2019. Docs. 21 ¶ 6, 22-1 at 3. Defendant does not address this discrepancy, nor does it provide any earlier versions of the agreement. Because the agreement became effective several months after the alleged fraudulent transactions and Defendant's refusal to replace the lost money (see Doc. 21 ¶¶ 9-16), the Court cannot conclude that the agreement forms the basis of Plaintiff's claims. The Court will not consider the document in deciding Defendant's motion to dismiss. See Henderson, 2013 WL 12176848, at *2 (declining to consider two letters attached to a motion to dismiss because the complaint “do[es] not reference the letters and the letters are not an integral basis of Plaintiffs' claims”); Cooper, 137 F.3d at 623 (declining to consider transcripts of conference calls in reviewing the district court's dismissal order because the complaint “do[es] not expressly mention or refer to the transcripts, or even identify their existence”).
IT IS ORDERED:
1. Defendant's motion to dismiss the amended complaint (Doc. 22) is granted on the negligence claim (count two) and denied with respect to the breach of contract claim (count one).
2. The Court will set a case management conference by separate order.