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Bucci v. Wachovia Bank

June 17, 2009

RALPH S. BUCCI D/B/A ENVIRONMENTAL EQUIPMENT & SERVICE COMPANY, PLAINTIFF,
v.
WACHOVIA BANK, N.A., DEFENDANT.



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

MEMORANDUM

The Plaintiff in this case was defrauded by one of his employees, who conducted all of her fraudulent banking at a particular branch of Wachovia bank, N.A., in Linwood, Pennsylvania. The plaintiff seeks to hold Wachovia liable for either negligently, or fraudulently, negotiating the unauthorized checks. Wachovia moved to dismiss the complaint, and on December 23, 2008, I granted in part and denied in part Wachovia's motion. On December 31, 2008, the plaintiff filed an amended complaint, and Wachovia moved to dismiss certain counts of the amended complaint. The renewed motion to dismiss is granted in part and denied in part, as follows.

I. Factual Background*fn1

Plaintiff Ralph S. Bucci ("Bucci") founded his Environmental Equipment & Service Company ("EES") as a sole proprietorship in 1973. EES distributes water and sewage treatment equipment to municipalities. In 1980, Bucci hired Elizabeth Greenawalt ("Greenawalt") to perform bookkeeping and secretarial duties for the company. Greenawalt was charged with preparing checks payable to creditors for Bucci to review and sign, and maintaining the company's financial records.*fn2 She was also responsible for making 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

Bucci did all of his business and personal banking at the Linwood Wachovia from 1985 until December 2006, and he was known to the employees at the Linwood branch as the principal of EES. Likewise, Greenawalt was known to be the bookkeeper of EES. The employees at the Linwood branch also knew that Ralph Bucci and Stephen Bucci (Ralph's son and co-principal of EES), were the only persons authorized to sign checks on behalf of EES.*fn4

Greenawalt worked faithfully for EES for 13 years, conducting regular business at the Linwood Wachovia on behalf of EES. In late 1997 when Greenawalt allegedly began stealing money from EES by altering checks and altering the company's financial records to conceal her fraudulent activities. She endorsed and cashed checks made payable to AWHD, a web design company operated by her son that was a legitimate creditor of EES, but for which she was not an authorized signatory. She also presented EES checks made payable to "Cash" and negotiated them at the Linwood Wachovia. 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. These activities were drastically different from the regular banking activities she had conducted on behalf of EES for the previous thirteen years. Thus, Bucci alleges that one or more of Wachovia's employees knew that Greenawalt was perpetrating a long term fraudulent embezzlement scheme, and aided her in defrauding Bucci and EES.

Bucci himself did not begin to suspect that Greenawalt was defrauding EES until October 31, 2006. At that time, he spoke with a teller who confirmed that Greenawalt was routinely cashing checks from EES. He advised that teller that she was not authorized to do so. The next day, November 1, 2006, Bucci advised Wachovia's branch manger that Greenawalt had been cashing checks without his authorization. On November 2, 2006, Bucci confronted Greenawalt and she admitted to stealing money by altering checks. Greenawalt was subsequently arrested and is currently facing criminal prosecution in Delaware County, Pennsylvania. On August 29, 2007, Bucci contacted the Loss Management department at Wachovia to report the fraudulent scheme. Wachovia disclaimed liability for any of Bucci's losses in a letter dated the same day.

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 fraudulently or negligently complicit in Greenawalt's scheme.

On December 23, 2008, I granted in part and denied in part Wachovia's motion to dismiss the plaintiff's complaint. I dismissed for failure to state a claim upon which relief can be granted plaintiff's claims for conversion, negligent misrepresentation, constructive fraud, fraud, and violation of the Pennsylvania Commercial Code, 13 Pa. C.S.A. § 3307. I also found that plaintiffs claims under 13 Pa. C.S.A. § 3406 and 13 Pa. C.S.A § 4401 were partially barred by the statute of limitations. Plaintiff's claims for negligence, breach of contract, breach of duty of good faith and fair dealing, aiding and abetting, violation of 13 Pa. C.S.A § 4406, and violation of the Uniform Fiduciaries Act, 7 P.S. § 6351 et seq., remained in the complaint.

On December 31, 2008, Bucci filed an Amended Complaint (Doc. #35).*fn5 The Amended Complaint reasserts claims for fraud (Am. Count II), constructive fraud (Am. Count III), negligent misrepresentation (Am. Count IV), violation of 13 Pa. C.S.A. § 3307 (Am. Count VII), violation of 13 Pa. C.S.A. § 3406 (Am. Count VIII), and violation of 13 Pa. C.S.A § 4401 (Am. Count IX). In addition the Amended Complaint still contains claims for negligence, breach of contract, breach of duty of good faith and fair dealing, aiding and abetting, violation of 13 Pa. C.S.A § 4406, and violation fo 7 P.S. § 6351 et seq., (Am. Counts I, V, VI, XI, X, and XII, respectively).

On January 26, 2009, Wachovia moved to dismiss Plaintiff's amended fraud, constructive fraud, negligent misrepresentation, aiding and abetting, and Uniform Fiduciaries Act claims (Am. Counts II, III, IV, XI, and XII) and to dismiss in part amended counts VII, VIII, IX, and X (violations of 13 Pa. C.S.A. §§ 3307(b), 3406, 4401 and 4406), as barred by the statute of limitations with respect to all checks processed by Wachovia before February 25, 2005.

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

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 ...


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