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Straughter-Carter Post No. 6627 v. Wachovia Bank

April 28, 2009


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


Presently before this Court are Plaintiffs' Motion to Remand to State Court (Doc. 7) and Defendant's Motion to Dismiss Count Two of Amended Complaint (Doc. 8). For the reasons stated below, this Court will deny both motions.


Plaintiffs, Straughter-Carter Post No. 6627, Veterans of Foreign Wars of the United States, and Veterans of Foreign Wars of Pennsylvania, bring this action against Defendant, Wachovia Bank, N.A., to recover funds from an allegedly unauthorized sale of property. Both Plaintiffs are nonprofit, Pennsylvania corporations. Defendant is a banking corporation with offices in Philadelphia, Pennsylvania.

On or around December 21, 2005, Plaintiffs allege that a Charles Covington ("Covington") participated in the sale of certain real property deeded to Plaintiffs, located at 4338-4344 Terrace Street, Philadelphia, PA. Am. Compl. ¶ 8. According to Plaintiffs, Covington was not authorized to sell this property on Plaintiffs' behalf, nor did Plaintiffs authorize the sale of the Property. Diversified Realty Services, Inc. ("Diversified"), a Pennsylvania corporation and the purchaser of the Property, provided Covington with a check in the amount of $372,156.80 payable to Plaintiffs, representing proceeds for the sale of the property. Am. Compl. ¶ 11.

Next, Plaintiffs allege that Covington opened an account with Defendant in the name of "Straughter Carter Post", which is an incorrect legal name. Plaintiffs assert that Defendant was not authorized to perform this transaction either, and further argues that Defendant did not perform the necessary due diligence before permitting Covington to open an account in Plaintiff's name. Am. Compl. ¶ 13-15. Plaintiffs aver that on or around December 22, 2005, Covington improperly endorsed the check made payable to Plaintiffs using his own name, and presented it for deposit into the account with Defendant mentioned above. Plaintiffs argue that Defendant accepted the check for deposit despite the allegedly improper endorsement, and presented it to PNC Bank, N.A., the payor bank, which paid the instrument. Am. Compl. ¶ 16-17.

After receiving the funds, Plaintiffs allege that Defendant credited the account, allowing Covington to withdraw the funds from the account for personal use. Am. Compl. ¶ 19. Plaintiffs assert that they have never received the funds nor any benefit from the funds. Plaintiffs now seek to recover this amount from Defendant, and with the recent amendment of their complaint, Diversified.


28 U.S.C. § 1332(a) provides that a federal court has original jurisdiction over all civil actions where the amount in controversy exceeds $75,000, and where there is diversity of citizenship between the parties. Federal Rules of Civil Procedure 19(a)(1) provides that a person must be joined as a party if in that person's absence, the court cannot accord complete relief among existing parties, or that person claims an interest relating to the subject of the action and is so situated that disposing of the action in their absence may impede that person's ability to protect their interest, or subject an existing party to a substantial risk of incurring multiple obligations.

Rule 12(b)(6) provides that an action may be dismissed where a plaintiff fails to state a claim upon which relief may be granted. In considering a motion to dismiss under Rule 12(b)(6), the Court must accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, viewing them in the light most favorable to the plaintiff. Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d. Cir. 2005). A Rule 12(b)(6) motion should be granted only if it appears to a certainty that no relief could be granted under any set of facts that could be proved. Id.


A. Motion to Remand to State Court

While joinder is permissible where a party's absence could render the court unable to accord complete relief, or subject an existing party to multiple obligations, there are instances where joinder is impermissible. Courts have found joinder to be impermissible, or fraudulent, "where there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or no real intention in good faith to prosecute the action against the defendants or seek a joint judgment." Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1994). To determine whether joinder is proper, courts evaluate a plaintiff's complaint at the time of removal, accepting as true all of the factual allegations in the complaint. Steel Valley Auth. V. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987).

Here, Plaintiffs sought joinder of Diversified, a Pennsylvania corporation, after Defendant filed for removal of this action to this Court. Plaintiffs argue that Diversified is an indispensable party, as it allegedly has a cause of action against PNC for paying the instrument, and further that PNC has a cause of action to recover funds from Defendant. Using this reasoning, Plaintiffs assert that it ...

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