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WAYE v. FIRST CITIZEN'S NATL. BANK

February 4, 1994

ROBERT D. WAYE and B. JOAN WAYE, d/b/a MEDFAX-SENTINEL, Plaintiffs
v.
FIRST CITIZEN'S NATIONAL BANK d/b/a CITIZEN'S FINANCIAL SERVICES, INC., Defendant



The opinion of the court was delivered by: JAMES F. MCCLURE, JR.

 BACKGROUND

 Plaintiffs Robert D. Waye and B. Joan Waye d/b/a Medfax-Sentinel filed this action to recover for alleged improprieties of defendant First Citizen's National Bank d/b/a Citizen's Financial Services, Inc. (First Citizen's or the bank) *fn1" in the handling of a business checking account which plaintiffs maintained with the bank. Plaintiffs' allegations arise out of the bank's notification, in February, 1991, to federal authorities of suspected check kiting by plaintiff Barbara Joan Waye and the events which preceded and followed that notification.

 Plaintiffs allege that the bank contacted federal authorities "to report that they had been defrauded by the Plaintiffs. The defendant reported that Mrs. Waye had used a business account at First Citizen's . . . to conduct an elaborate check kiting scheme." (Plaintiff's complaint, para. 1). The bank's charges led to the filing of federal criminal charges against the plaintiff, Barbara Joan Waye, for check kiting. *fn2"

 Plaintiffs allege that this report was false and that the bank's release of financial information to authorities was a violation of the Right to Financial Privacy Act (the Act), 12 U.S.C. ยงยง 3401-3422.

 Plaintiffs allege six instances types of wrongdoing by the bank in connection with its handling of plaintiffs' business account and matters related to it: 1) Count I alleges negligence and bad faith based on allegedly false reports made to federal banking authorities regarding the status of and transactions linked to plaintiffs' account and Barbara Joan Waye's suspected involvement in a check kiting scheme; 2) Count II alleges the violation of the Financial Privacy Act based on the bank's release of financial records on the Medfax-Sentinel business account to federal authorities; 3) Count III alleges claims of harassment and libel based on a letter sent to the plaintiffs on December 20, 1991 which plaintiffs alleged contained libelous remarks concerning Mrs. Waye; 4) Count IV alleges claims for demanding and receiving usurious interest based on the bank's alleged demand for interest charges of $ 1,295.40 and defendant's alleged seizure of $ 967.50 from the plaintiffs' bank accounts; 5) Count V alleges a claim for theft based on defendant's alleged failure to use funds in the amount of $ 81,803.85 for the purpose for which plaintiffs intended; and 6) Count VI alleges a claim for punitive damages based on, inter alia, defendant's alleged wanton disregard for their rights.

 Before the court are: 1) a Rule 12(b)(6) motion filed by defendant to dismiss plaintiffs' complaint for failure to state a cause of action; and 2) a motion to reconsider the court's order dated May 10, 1993 denying plaintiffs' motion for a default judgment. For the reasons stated below, defendant's motion will be granted. All claims will be dismissed with prejudice and without leave to amend. Plaintiffs' motion for reconsideration will be denied.

 PLAINTIFFS' MOTION FOR RECONSIDERATION

 Plaintiff's motion for reconsideration of the May 10, 1993 order was filed May 12, 1993. A motion for reconsideration, if served within ten (10) days of the entry of judgment, is properly characterized as a motion to alter or amend judgment under Fed. R. Civ. P. 59(e). Lavespere v. Niagara Machine & Tool Works, Inc., 910 F.2d 167, 173 (5th Cir. 1990), cert. denied, 126 L. Ed. 2d 131, 114 S. Ct. 171 (1993); Vreeken v. Davis, 718 F.2d 343, 345 (10th Cir. 1983); A.D. Weiss Lithograph Co., Inc. v. Illinois Adhesive Co., 705 F.2d 249, 249-50 (7th Cir. 1983); Taliaferro v. City of Kansas City, Kansas, 128 F.R.D. 675, 676-77 (D.Kan. 1989). A rule 59(e) motion must rely on at least one of three grounds: 1) intervening change in controlling law, 2) availability of new evidence not previously available, or 3) need to correct a clear error of law or prevent manifest injustice. *fn3" Atkins v. Marathon LeTourneau Co., 130 F.R.D. 625, 626 (S.D.Miss. 1990); Natural Resources Defense Counsel, Inc. v. U.S. E.P.A., 705 F. Supp. 698, 702 (D.D.C. 1989), vacated on other grounds upon agreement of the parties, 707 F. Supp. 3 (D.D.C. 1989).

 A motion for reconsideration is not to be used as a means to reargue matters already argued and disposed of. Davis v. Lukhard, 106 F.R.D. 317, 318 (E.D.Va. 1984), vacated on other grounds, 788 F.2d 973 (4th Cir. 1986). Nor is it to be used to put forth additional arguments which could have been made but which the party neglected to make before judgment. 106 F.R.D. at 318.

 Plaintiffs' motion raises no new issues of merit. The court's reasons for denying the motion for default initially are set forth at length in the prior order, and there is no need to revisit those issues. We therefore decline to reconsider plaintiffs' motion for a default judgment.

 DEFENDANT'S RULE 12(B)(6) MOTION TO DISMISS

 Rule 12(b)(6) standard

 Under a Rule 12(b)(6) motion, a complaint may not be dismissed for failure to state a claim upon which relief can be granted unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which could entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). The court must accept all material allegations in the complaint as true and construe them in the light most favorable to the party opposing the motion. Scheuer v. Rhodes, 416 U.S. 232, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Johnsrud v. Carter, 620 F.2d 29 (3d. Cir. 1980); and Truhe v. Rupell, 641 F. Supp. 57, 58 (M.D.Pa. 1985) (Rambo, J.). Although the complaint is to be liberally construed in favor of the plaintiff (See: Fed.R.Civ. 8(f)), the court does not have to accept every allegation it contains as true. Conclusory allegations of law, unsupported conclusions and unwarranted inferences need not be accepted as true. Conley, supra, 355 U.S. at 45-46.

 Claims of negligence and bad faith

 Count I of plaintiff's complaint asserts a cause of action based on the alleged disclosure of financial records to federal authorities. Although captioned a claim for negligence and bad faith, the claims asserted under Count I fall under the federal Right to Financial Privacy Act. Defendant's reporting of suspected check kiting on the part of plaintiff Barbara Joan Waye does not establish the violation of any legal right of plaintiffs.

 Plaintiffs' attempt to state a cause of action for such conduct is thwarted by the plain language of section 3403(c) of the Act, which authorizes such notification and declares financial institutions exempt from claims like those asserted here. Section 3403(c) provides, in relevant part:

 
Nothing in this chapter shall preclude any financial institution . . . from notifying a Government authority that such institution . . . has information which may be relevant to a possible violation of any statute or regulation . . . Any financial institution making a disclosure of information pursuant to this subsection, shall not be liable to the customer under any law or regulation of the United States or any constitution, law, or regulation of any State or political subdivision thereof, for such disclosure or for any failure to notify the customer of such disclosure.

 Under the plain language of the section 3403, plaintiffs have no cause of action against First Citizen's for its notification of suspected wrongdoing on the part of plaintiff Barbara Joan Waye.

 Moreover, plaintiff's negligence claim fails because no duty is alleged, and none is owed by the bank under the facts, as alleged, and as fleshed out in the numerous documents attached as exhibits to plaintiffs' complaint. Plaintiffs allege that the bank reported to the Federal Bureau of Investigation that their account was overdrawn by approximately $ 91,000.00 over a period of time.

 While it is never the province of the court to go behind factual allegations of plaintiffs' complaint in ruling on a Rule 12(b)(6) motion, this court is not required to accept plaintiffs' legal conclusions, particularly when the conclusions asserted are directly contrary to plaintiffs' conduct evidenced in documents attached to their complaint. Plaintiffs attach as exhibit "E" to their complaint a copy of a letter dated April 19, 1991 from their attorney at the time, Harry B. Goldberg, Esq., enclosing a check in the amount of $ 81,803.85 "representing payment of six checks returned to you [a reference to First Citizen's] from First Midwest Bank, the six checks being made payable to Medfax-Sentinel. . . ." (Plaintiff's complaint, exhibit "E"). Attached as exhibit "F" is the response of the bank solicitor, in which he states that: "We appreciate receipt of your check in the amount of $ 81,803.85 making good the principal amounts of the checks outlined in your letter." (Plaintiff's complaint, exhibit "F"). Attached as exhibit "H" is a letter dated May 29, 1991 from the bank, known at that time as Star Savings and Loan, demanding interest on the $ 81,803.85 in the amount of $ 1,295.40. Curiously, plaintiffs also attach to their complaint a letter from First Midwest Bank dated February 26, 1991 which states that the six checks sent to it for collection drawn on the account of Joan Waye, Medfax-Sentinel, of Waverly, New York, are being returned, because: "there are not funds in the accounts to cover the checks."

 Plaintiffs do not disclaim the statements in either letter or deny that the transaction occurred, but merely assert legal conclusions based on what they claim occurred instead, i.e. the allegedly false reporting by defendant of the overdrawn status of their account and allegedly false claims of losses sustained by the bank due to returned checks.

 If plaintiffs had any claim at all under the facts alleged, it would be in the nature of a claim for malicious prosecution based on the alleged false communications to regulatory and law enforcement authorities which resulted in the filing of federal criminal charges against plaintiff Barbara Joan Waye. However, plaintiffs cannot state a claim for such a cause of action at this time, because an essential element is lacking. To establish a claim for malicious prosecution, plaintiffs must allege the conclusion in her favor of criminal proceedings initiated against plaintiff Barbara Joan Waye. Allegation of that element at this time would be impossible. This court takes judicial notice of the fact that the criminal charges filed against Barbara Joan Waye are still pending, and trial on those charges is scheduled to occur some time this Spring.

 Plaintiffs' claim for bad faith fails as well. No such cause of action exists. "Bad faith" is not a cause of action. In addition, once again, no duty is alleged, and none exists under the facts pled.

 Plaintiffs' claims of negligence and bad faith asserted in Count I will, therefore, be dismissed.

 Claims asserted under the Financial Privacy Act

 Count II of plaintiffs' complaint asserts a claim under the federal Right to Financial Privacy Act. Plaintiffs allege that the bank improperly provided federal authorities with records pertaining to the Medfax-Sentinel account. Plaintiffs allege that their financial records, consisting specifically of six cancelled checks drawn on the Medfax-Sentinel account, were supplied pursuant to government subpoena. (Plaintiffs' complaint, pp. 3-5 and exhibits "E" and "F"). This was, they allege, a violation of their rights under the Act because they were not provided with a copy of the subpoena.

 The asserted bases for their claims are sections 3403 and 3405 of the Act. Section 3403(a) establishes a right of privacy in financial records held by a financial institution. It provides, in relevant part:

 
No financial institution . . . may provide to any Government authority access to or copies of, or the information contained in, the financial records of any customer except in ...

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