Banking

This summary also appears under Litigation

 

Issues: Whether the district court had personal jurisdiction over the individual defendants; Fed.R.Civ.P. 12(b)(2); Beydoun v. Wataniya Rests. Holding, Q.S.C.; Neogen Corp. v. Neo Gen Screening, Inc.; Burger King Corp. v. Rudzewicz; Whether the plaintiff established a negligence claim against defendant-First Bank of Delaware (FBD); Brown v. Brown; Banks' duty of care; Contour Indus., Inc. v. U.S. Bank, N.A. (Unpub. 6th Cir.); Patrick v. Union State Bank (AL); Huggins v. Citibank, N.A. (SC); Whether the plaintiff was a bank "customer" under the Uniform Commercial Code (UCC); MCL 440.4104 & 440.4605; Hanover Ins. Co. v. M&T Bank (ED VA); Whether the plaintiff established its claim for "fraud"; Titan Ins. Co. v. Hyten; Lawrence M. Clarke, Inc. v. Richco Constr., Inc.; Fed.R.Civ.P. 9(b); Chesbrough v. VPA, P.C.; U.S. ex rel. SNAPP, Inc. v. Ford Motor Co.

Court: U.S. Court of Appeals Sixth Circuit

Case Name: SFS Check, LLC v. First Bank of DE

e-Journal Number: 58857

Judge(s): Siler, Sutton, and McKeague

 

[This appeal was from the ED-MI.] Where plaintiff (SFS) sued the defendant-bank (FBD) for negligence and fraud when another bank closed the plaintiff's account after it learned that an account associated with SFS at FBD was involved with illegal gambling transactions, the district court did not err by concluding that it lacked personal jurisdiction over the individual defendants (an FBD vice president and FBD's directors). The first critical issue in this case was "whether answering a phone call establishes personal jurisdiction in the state from which the phone call was made . . . ." The district court correctly concluded that it did not because the two calls between FBD's vice president, Bastable, and the plaintiff did not constitute "purposeful availment on the part of Bastable." Moreover, "the injury to SFS - Fifth Third's decision to terminate SFS's account - happened before either of these telephone conversations." The second critical issue was "whether a bank owes a duty of care to an identity theft victim who is not a customer." SFS did not claim that it had an account at FBD. Instead, it claimed that "an unnamed third party opened a fraudulent account at FBD in SFS's name." SFS asked the "court, as a matter of public policy, to adopt a new rule that banks owe a duty of care to a person whose name is attached to a fraudulent account." However, the court declined, noting that even though it "recognize[d] the serious threat posed by identity theft," it was "not prepared to impose a new duty on banks, particularly one that has been rejected by courts across the country." The court also rejected SFS's alternative argument that it was an FBD "customer" under the UCC. Further, it held that SFS failed to adequately plead a claim for fraud because it failed to successfully allege that "the company's injury resulted from the alleged fraud." The court affirmed the dismissal of SFS's complaint.

 

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