Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Bucci v. Wachovia Bank

December 23, 2008


The opinion of the court was delivered by: Brody, J.


On February 25, 2008, Plaintiff, Ralph S. Bucci ("Bucci"), doing business as Environmental Equipment & Service Company ("EES"), filed a complaint in the Delaware County Court of Common Pleas against Defendant Wachovia Bank, N.A. ("Wachovia"). On March 27, 2008, Wachovia removed the case to this court.*fn1 Bucci's complaint alleges that Wachovia was complicit in an embezzlement scheme perpetrated by one of EES's employees and should be held liable for: negligence (Count I), negligent misrepresentation (Count II), constructive fraud (Count III), fraud (Count IV), conversion (Count V), breach of contract (Count VI), breach of duty of good faith and fair dealing (Count VII), violations of Pennsylvania's Commercial Code sections 3307 (Count VIII), 3406 (Count IX), 3420 (Count X), 4401 (Count XI), and 4406 (Count XII), aiding and abetting (Count XIII), and a violation of Pennsylvania's Uniform Fiduciaries Act, 7 P.S. § 6351 et seq. (Count XIV).*fn2 On April 22, 2008, Wachovia filed a motion to dismiss the complaint pursuant to Rule 12(b)(6). For the reasons stated below, Wachovia's motion is granted in part and denied in part.

I. Factual Background

Bucci formed EES as a sole proprietorship in 1973. EES distributes water and sewage treatment equipment to municipalities. Compl. at ¶ 2. In 1980, Bucci hired Elizabeth Greenawalt ("Greenawalt") to perform bookkeeping and secretarial duties for the company. As part of her responsibilities Greenawalt took weekly trips to the Linwood branch of Wachovia in Linwood, Pennsylvania (the "Linwood Wachovia") to conduct financial activities on behalf of EES, such as depositing checks.*fn3 Compl. at ¶¶ 10-12, 17. Greenawalt was also responsible for preparing checks payable to creditors for Bucci to review and sign and she maintained the company's financial records. Compl. at ¶ 12.

Greenawalt worked faithfully for EES for 13 years, until late 1997 when Greenawalt allegedly began stealing money from EES by altering checks and altering the company's financial records to conceal the fraud.*fn4 Compl. at ¶ 19. Bucci claims that from 1998 through 2006, Greenawalt wrongfully negotiated over $925,000.00 in altered checks from EES, all of which were cashed or deposited at the Linwood Wachovia. Compl. at ¶ 23. Bucci began to suspect Greenawalt was defrauding EES on October 31, 2006. On November 1, 2006, Bucci advised Wachovia's branch manger that Greenawalt had been cashing checks without his authorization to do so. Compl. at ¶ 36. On November 2, 2006, Bucci confronted Greenawalt and she admitted to stealing money by altering checks. Compl. at ¶ 39. Greenawalt is currently facing criminal prosecution in Delaware County, Pennsylvania. Compl. at ¶ 39. Wachovia disclaimed liability for any of Bucci's losses in a letter dated August 29, 2007. Compl. at ¶ 41. On February 25, 2008, Bucci filed suit against Wachovia alleging that, by permitting Greenawalt to improperly cash hundreds of checks containing obvious alterations, Wachovia was either fraudulently or negligently complicit in Greenawalt's scheme. Compl. at ¶¶ 23-25.

II. Fed. R. Civ. P. 12(b)(6) Legal Standard

Wachovia moves for dismissal of the complaint pursuant to Fed. Rule Civ. P. 12(b)(6).

To survive a 12(b)(6) motion to dismiss, the claimant must "set forth sufficient information to outline the elements of the claims or to permit inferences to be drawn that these elements exist." Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). This means the plaintiff must plead facts sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007). The factual claims must be accepted as true and viewed in the light most favorable to the plaintiff, but a court is not bound to accept as true unsupported conclusions or conclusory allegations. In re Tower Air, Inc., 416 F.3d 229, 236 (3d Cir. 2005); Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir. 1997). A motion to dismiss should be granted under Rule 12(b)(6) if the moving party has established that the plaintiff would not be entitled to relief under any reasonable reading of the complaint. Brown v. Card Service Center, 464 F.3d 450, 452 (3d Cir. 2006).

III. Discussion

A. Displacement of Common Law Claims by the Pennsylvania Commercial Code

Wachovia first contends that Bucci's common law claims for negligence (Count I), conversion (Count V), breach of contract (Count VI), and breach of the covenant of good faith and fair dealing (Count VII) should each be dismissed as displaced by Bucci's claims under Articles 3 and 4 of the Pennsylvania Commercial Code, 13 Pa. Cons.Stat.Ann. § 1101 et seq. The Pennsylvania Commercial Code (the "PCC" or the "Code") is Pennsylvania's version of the Uniform Commercial Code (the "UCC"). Article 3 of the Code regulates negotiable instruments, including checks and the check collection process. See 13 Pa. C.S.A. § 3102. Article 4 defines the rights between parties with respect to bank deposits and collections involving banks located in Pennsylvania. See 13 Pa. C.S.A. § 4102(b). When and whether common law claims are displaced by the Code is covered in section 1103 of the Code. Section 1103 explains that:

Unless displaced by the particular provisions of this title, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions. 13 Pa. C.S.A. § 1103. The Third Circuit in New Jersey Bank N.A. v. Bradford Sec. Operations, Inc., read this section to mean that there is a "presumption" that "supplementary principles of law. . . continue to operate in conjunction with the UCC" unless a provision of the UCC provides a "comprehensive remedy for parties to a transaction." 690 F.2d 339, 346-47 (3d. Cir. 1982). A comprehensive remedy is one that would be rendered meaningless by allowance of common law claims. Id. at 346 (citing Brannon v. First Nat. Bank of Atlanta, 137 Ga. App. 275, 278 (1976)). In addition, the UCC will displace the common law where "reliance on the common law would thwart the purposes of the Code."*fn5 Id. In sum, parallel Code and common law claims may be maintained except in circumstances where (1) the Code provides a comprehensive remedial scheme, and (2) reliance on the common law would undermine the purposes of the Code. Id.; See also Yahn & McDonnell, Inc. v. Farmers Bank of the State of Delaware, 708 F.2d 104, 109 (3d Cir. 1983) (following New Jersey Bank); Citizens Bank of Pennsylvania v. Chevy Chase Bank, No. 03-5208, 2004 WL 875499, at *2 (E.D.Pa. 2004) (applying principles set forth in New Jersey Bank when dismissing common law conversion claim); Progressive Casualty Ins. Co. v. PNC, No. 98-6480, 1999 WL 557292, at *7 (E.D.Pa. 1999) (employing a two-part inquiry based on New Jersey Bank and Yahn).

Consistent with the analysis set forth below, I will grant Wachovia's motion to dismiss Bucci's common law conversion claim (Count V) and I will deny without prejudice Wachovia's motion to dismiss Bucci's negligence, negligent misrepresentation, breach of contract, and breach of duty of good faith and fair dealing claims (Counts I, II, VI, and VII).

1. Conversion (Count V)

Under Pennsylvania law, common law conversion requires the "deprivation of another's right of property, or use or possession of a chattel, or other interference therewith, without the owner's consent and without legal justification." Universal Premium Acceptance Corp. v. York Bank & Trust Co., 69 F.3d 695, 704 (3d. Cir. 1995). Bucci claims that Wachovia committed conversion by unlawfully negotiating checks in accordance with Greenawalt's instructions, depriving Bucci of the use of his funds. Compl. at ¶ 68. Bucci also claims that Wachovia violated section 3420 of the Pennsylvania Commercial Code, 13 Pa. C.S.A. § 3420 ("section 3420"), entitled "Conversion of Instrument." Wachovia contends that Bucci cannot maintain parallel Code and common law claims for conversion because section 3420 of the Code provides a comprehensive remedial scheme which displaces plaintiff's common law conversion claims. Section 3420 of the Pennsylvania Commercial Code provides that:

The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by the issuer or acceptor of the instrument or a payee or endorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a copayee. 13 Pa. C.S.A. § 3420(a). The first sentence of this section makes clear that the law applicable to the conversion of personal property (i.e. common law) is intended to apply under this statute to instruments. Thus, an action based on the deprivation of property, where that property is an instrument, is subsumed and displaced by section 3420. See Citizens Bank of Pennsylvania v. Chevy Chase Bank, 2004 WL 875499 (E.D.Pa. Sept. 15, 2003) (applying principles of New Jersey Bank in finding that the plaintiff's common law claim for conversion was barred by the UCC); Gress v. PNC Bank, 100 F.Supp.2d 289 (E.D. Pa. 2000) (predicting that Pennsylvania courts would hold that common law claims for conversion, "insofar as they relate to conversion of a negotiable instrument," would be displaced by section 3420); Sebastian v. D&S Express, Inc., 61 F.Supp.2d 386, 390 (D.N.J. 1999) ("By its plain language § 3420 codifies, and subsumes a cause of action for conversion based on the facts of this case" which involve a bank accused of cashing checks made out to fictitious payees).

Permitting a parallel common law conversion claim where recovery is specifically provided for by the Code would render the Code meaningless. Furthermore, this is a situation where allowing an action at common law would thwart the purposes of the Code. See e.g., Citizens Bank of Pennsylvania v. Chevy Chase Bank, 2004 WL 875499 (E.D.Pa. Sept. 15, 2003) (allowing plaintiff to bring parallel common law conversion claim, "would thwart the purposes of the UCC, one of which is to standardize the commercial laws of the various ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.