United States District Court, W.D. Pennsylvania
ARTHUR J. MALETTO and M & M CONTRACTORS, INC., Plaintiffs,
CAPITAL ONE FINANCE CORP. and CAPITAL ONCE BANK USA, N.A., Defendants.
PARADISE BAXTER, UNITED STATES DISTRICT JUDGE
civil action, Plaintiffs Arthur J. Maletto and M&M
Contractors, Inc. ("Plaintiffs") have sued Capital
One Finance Corp. and Capital One Bank (USA), N.A.
(collectively, "Capital One" or
"Defendants") for alleged violations of the Truth
in Lending and Fair Credit Billing Act, 15 U.S.C.
§§1601, et seq. and related theories under
Pennsylvania common law. The claims arise from losses that
M&M Contractors, Inc. ("M&M") sustained
after an employee opened a credit account in the
company's name and surreptitiously misappropriated $446,
before the Court is the Defendants' motion to dismiss the
Plaintiffs' operative pleading. For the reasons that
follow, Defendants' motion will be granted in part and
denied in part.
M&M is a closely held Pennsylvania corporation whose
principal place of business is located in Elk County. First
Amended Compl. ("FAC"), ¶3. M&M's
corporate officers include Plaintiff Arthur J. Maletto,
Jeffrey Maletto, and James Maletto. Id. ¶15.
point in time not specified in the pleading, Arthur Maletto,
acting as President oil M&M, opened a corporate credit
card account with Capital One. FAC ¶12. The address of
record for the corporate credit account was M&M's
business address in Johnsonburg, Pennsylvania. Id.
¶13. Arthur Maletto authorized Capital One to issue
three cards on the M&M credit account - one in the name
of each corporate officer. Id. ¶14.
30, 2007, M&M hired Melissa Bittler ("Bittler")
to work as an administrator in M&M's business office.
FAC ¶16. Bittler's duties involved, among other
things, receiving statements for M&M's corporate
credit account with Capital One, reconciling charges on the
account with M&M's corporate records, and processing
payments on the account. Id. ¶17. By virtue of
her duties as M&M's office administrator, Bittler
gained access to the company's financial information, as
well as the officers' personal information. Id.
around 2012, Bittler surreptitiously opened a second Capital
One credit account (the "Second Credit Account") in
M&M's name, falsely identifying herself as one of the
company's officers and authorized users. FAC
¶¶19-22. Bittler then directed Capital One to issue
credit cards in the names of each of the three corporate
officers as well as herself. Id. ¶22. In the
credit application form, Bittler identified her own personal
residence as the address of record for the business.
Id. ¶23. Based on Bittler's fraudulent
application, Capital One issued credit cards in the name of
Arthur Maletto, Jeffrey Maletto, James Maletto, and Bittler.
Id. ¶24. The credit cards, opening
documentation, credit agreement forms, and all subsequent
statements were mailed to Bittler's personal address,
without the knowledge or consent of M&M's corporate
officers. Id. ¶¶24-25.
2012 and May of 2017, Bittler used the Second Credit Account
to make unauthorized cash withdrawals from ATM machines as
well as unauthorized purchases of personal, family, or
household goods. FAC ¶¶26-27. No. similar cash
advances were ever made on M&M's original credit
account, nor were any cash advances made by the corporate
officers on the Second Credit Account. Id. ¶28.
Moreover, the charges made to the Second Credit Account by
Bittler were of a wholly different nature, and far exceeded
in number and amount, the charges that were made by
M&M's officers on either account. Id.
¶29-30. All told, Bittler misappropriated some
$446, 550.60 from M&M through her unauthorized use of the
Second Credit Account. Id. ¶33. Bittler
accomplished this by stealing M&M's checks, forging
the signatures of its corporate officers, and using the
checks to pay off the Second Credit Account.
about May 2, 2017, M&M's corporate officers
discovered the misappropriation of corporate funds. FAC
¶34. On or around May 3, 2017, Capital One mailed
M&M copies of the billing statements it had issued to
Bittler relative to the Second Credit Account. Id.
¶61. Plaintiffs maintain that "M&M did not
receive the statements and/or did not have a reasonable
opportunity to evaluate and investigate the statements until
on or after May 6, 2017." Id. ¶62.
15, 2017, Plaintiffs registered a verbal dispute as to the
alleged fraudulent charges on the Second Credit Account.
See FAC Ex. A, ECF No. 11-1. Plaintiffs'
attorney followed up with a letter to Capital One on June 6,
2017, which stated the following:
On May 15, 2017, my clients and I spoke with Jordan M. in the
Capital One Fraud Department about disputed/fraudulent
charges made to the above account. Jordan M. was told during
the discussion that nearly every charge made on the account
since its inception was by an unauthorized card user. After
review of all of the account statements, it appears that
there were approximately $296, 416.5 8 in fraudulent
The purpose of this letter is to memorialize the May 15
discussion and to formally make a claim for a refund and/or
chargeback of the unauthorized charges, together with all
interest payments and fees related thereto. In addition, my
clients are hereby disputing their obligation to pay the
outstanding balance on the account. If there are forms that
need to be filled out for Capital One to process the
refund/chargeback request or the dispute related to the
account's outstanding balance, please send them to me as
soon as possible. I will also ask that you provide me with
instructions on how the at-issue charges should be
Jordan M. was not able to provide copies of any paper or
electronic applications that were made when the account was
opened or any subsequent applications for issuance of
additional cards. Please consider this letter as a request
for production of all applications (written or electronic)
related to this account. If any of the applications were made
electronically, I will ask that you provide the IP address
from which the application was submitted. In addition, please
provide all card holder agreements that apply to this
FAC Ex. A, ECF No. 11-1.
One did not respond to the foregoing correspondence until
June 25, 2018, more than one year later. FAC ¶36. When
it did respond, Capital One did not provide the information
that M&M's counsel had requested. Id.
to Plaintiffs, Bittler's activities relating to the
application, use, and payment of the Second Credit Account
should have been suspicious to Capital One and should have
led Capital One to investigate Bittler's application. FAC
¶¶39, 42. Had Capital One done so, Plaintiffs aver,
Capital One would have discovered that the application was
fraudulent. Id. Plaintiffs also fault Capital One
for not monitoring the activity on the Second Credit Account
after it was opened. Id. ¶41. Plaintiffs posit
that proper monitoring would have led Capital One to discover
that Bittler was using the account to make fraudulent charges
and misappropriating M&M's funds to pay off the
date, Capital One has not refunded, or charged back, the
amounts that M&M paid to cover Bittler's fraudulent
charges, nor has it written off the charges made by Bittler
that remain unpaid. FAC ¶¶44-45. Based on
"information and belief," Plaintiffs allege that
Capital One has submitted adverse reports about the
Plaintiffs' credit ratings to various credit reporting
agencies, or may soon do so. Id. ¶¶49, 76.
result of these alleged events, Plaintiffs commenced this
lawsuit on October 10, 2018. ECF No. 1. Plaintiffs'
operative pleading, the First Amended Complaint, sets forth
eight separate causes of action. ECF No. 11. Counts I through
IV assert claims under the Truth in Lending Act
("TILA") and Fair Credit Billing Act, 15 U.S.C.
§§ 1637, 1643, and §1666. Counts V through VI
set forth claims under Pennsylvania law for alleged
negligence, conversion, unjust enrichment, and breach of
filed the pending motion to dismiss, and accompanying brief,
on February 6, 2019. ECF Nos. 19 and 20. Therein, they argue
that Plaintiffs' various federal and state claims are
time-barred or otherwise fail to state a cognizable basis for
relief. Plaintiffs filed their brief in opposition to the
motion on February 25, 2019, ECF No. 23, and Defendants filed
their reply on March 8, 2019. ECF No. 26. As a result of
these filings, the motion is ripe for adjudication.
STANDARD OF REVIEW
12(b)(6) of the Federal Rules of Civil Procedure recognizes a
defense based upon the plaintiffs failure to state a claim
upon which relief can be granted. "When considering a
Rule 12(b)(6) motion, we 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." Wayne Land & Mineral Grp. LLC v.
Delaware River Basin Comm% 894 F.3d 509, 526-27 (3d Cir.
2018) (internal quotation marks and citations omitted). In
order to survive dismissal, "a complaint must contain
sufficient factual matter, accepted as true, to 'state a
claim to relief that is plausible on its face.'"
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl Corp, v. Twombly, 550 U.S. 544, 570
(2007)). Plausibility means "more than a sheer
possibility that a defendant has acted unlawfully."
Id. "A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Id. (citing
Twombly, 550 U.S. at 556).