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Clinton Plumbing and Heating of Trenton, Inc. v. Ciaccio

October 22, 2010

CLINTON PLUMBING AND HEATING OF TRENTON, INC., ET AL., PLAINTIFFS,
v.
STEPHEN ANTHONY CIACCIO, NICOLE MARIE CIACCO, AND CAPITOL ONE BANK (USA), N.A., DEFENDANTS.



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

MEMORANDUM OPINION AND ORDER

In this case, Plaintiffs Clinton Plumbing and Heating of Trenton, Inc. ("CPH") and Peter and Nancy Pelicano ("Pelicanos"), bring multiple claims against Defendants, all relating to Stephen Anthony Ciacco's alleged fraudulent scheme to make unauthorized transfers from Plaintiffs bank accounts to Ciacco's outstanding credit balance held by Defendant Capital One Bank ("Capital One"). Presently before the Court is Defendant Capital One's Motion to Dismiss Counts II, VII, and XI of the First Amended Complaint.*fn1 For the reasons that follow, Capital One's Motion will be GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Procedural Background

Plaintiff Peter Pelicano is the president and sole shareholder of Plaintiff CPH, a corporation that provides plumbing and heating services in New Jersey and Pennsylvania.*fn2

Defendants are Stephen Ciacco ("Ciacco"), his wife, Nicole Marie Ciacco, and Capital One, the national bank that allegedly held Ciacco's outstanding credit balance and initiated the unauthorized debits from CPH's accounts.

Plaintiffs filed an Amended Complaint in this matter on August 24, 2009.*fn3 The amended complaint describes a scheme by Ciacco to defraud CPH and the Pelicanos by misrepresenting himself as authorized to initiate transfers from CPH's bank account to his outstanding balance at Capital One. Capital One is alleged to have participated, albeit unwittingly, in Ciacco's scheme by carrying out the unauthorized transactions. Against all Defendants, Plaintiffs bring claims for computer fraud in violation of the Computer Fraud and Abuse Act ("CFAA"), conversion, and identity theft in violation of the New Jersey Identity Theft Statute. Plaintiffs bring claims of fraud and fraudulent transfer against Ciaccio and claims for negligence and breach of warranty against Capital One.

Defendant Capital One has moved to dismiss Plaintiffs' claims against it for computer fraud, identity theft, and breach of warranty. The Court has considered the Motion, Response in Opposition, Reply and Sur-reply, and this matter is now ready for disposition.

B. Factual Background

Stephen Ciaccio is the sole proprietor of Krash Enterprises ("Krash"), a computer repair and management company.*fn4 On November 21, 2007, Ciacco, acting through Krash, entered into a service agreement with CPH.*fn5 Pursuant to that contract, Ciaccio was responsible for installing and managing CPH's network servers and office management software-which included the software for managing payables and receivables.*fn6

Allegedly, Ciacco soon sought greater responsibility for managing the accounts receivable software from CPH.*fn7 Plaintiffs claim they promoted Ciacco to comptroller of CPH because he told them he required greater access to their bank accounts in order to manage the complexity of the software and difficulties arising from its installation.*fn8 As comptroller, Ciacco was responsible for managing CPH's payables and receivables and was given access to CPH's bank accounts.*fn9 Ciacco also set up CPH's computer system so that he could remotely access CPH's account information from his home and personal computer.*fn10 However, Plaintiffs allege that Ciacco's authorized access was limited to monitoring the daily status of those accounts.*fn11 Plaintiffs also claim the Pelicanos had sole authority to authorize payments from the CPH accounts and to authorize automatic clearing house ("ACH") debit transfers on behalf of CPH.*fn12

In March of 2008, Ciacco allegedly began making unauthorized transfers from CPH's bank accounts to his personal Capital One credit card account.*fn13 Plaintiffs claim that Ciacco initiated the ACH debit transfers using Capital One's online credit card payment site.*fn14 Upon receiving Ciacco's transfer request, Capital One debited the funds from CPH's bank accounts and applied them to Ciaccio's outstanding credit balance.*fn15 Although the Pelicanos terminated Ciacco from his position as Comptroller in August 2008, he allegedly continued to remotely access the CPH servers and accounts until November 2008.*fn16

In November 2008, the Pelicanos discovered the electronic withdrawals by Capital One.*fn17

They immediately cut off Mr. Ciaccio's access to their bank accounts, suspended all remote access to CPH's computers, changed the passwords for their bank accounts, and informed Capital One of the improper withdrawals.*fn18 Capital One responded by advising the Pelicanos that it would investigate the allegations.*fn19 Although Capital One has since provided Plaintiff with statements regarding the Capital One account, it refuses to reimburse CPH for the amounts withdrawn from their accounts.*fn20

II. STANDARD OF REVIEW

A complaint can be dismissed for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) if the plaintiff has not presented "'enough facts to raise a reasonable expectation that discovery will reveal evidence' of [a] necessary element."*fn21 A court must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine, whether under any reasonable reading of the complaint, the plaintiff may be entitled to relief."*fn22 However, Plaintiffs' "bald assertions" or "legal conclusions" need not be accepted as true by the court.*fn23 At this stage, the court does not determine whether the non-moving party will prevail, but whether it will be permitted to offer evidence in support of the claims in the complaint.*fn24

This particular pleading standard, described in Federal Rule of Civil Procedure 8(a)(2) as "a short and plain statement of the claim showing that the pleader is entitled to relief"*fn25 has been addressed twice by the Supreme Court of the United States in recent years, first in Bell Atlantic Corp. v. Twombly*fn26 and then in Ashcroft v. Iqbal.*fn27 The Court in Twombly articulated a "plausibility" standard that a plaintiff must meet by its factual allegations to survive a motion to dismiss.*fn28 The Court described it as a level higher than suspicion or speculation.*fn29 The Iqbal Court clarified that "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not 'show[n]' - 'that the pleader is entitled to relief.'"*fn30

III. DISCUSSION

A. Count II: Computer fraud claim under 18 ...


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