Montalvo v J.P. Morgan Chase

[*1] Montalvo v J.P. Morgan Chase 2009 NY Slip Op 52568(U) [25 Misc 3d 1244(A)] Decided on December 18, 2009 Supreme Court, Kings County Demarest, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 18, 2009
Supreme Court, Kings County

Maria Montalvo, Plaintiff,

against

J.P. Morgan Chase and Co. And Walter Mann, Defendants.



4221/09



Attorney for Plaintiff

Lee M. Zeldin, Esq.

180 East Main Street, Suite 308

Smithtown, NY 11787

Attorney for Defendants

Tara A. Griffin, Esq.

One Chase Manhattan Plaza, 26th Floor

New York, NY 10005

Carolyn E. Demarest, J.

Upon the foregoing papers, defendants J.P. Morgan Chase and Co. (JPMC) and Walter Mann (Mann) (collectively, defendants) move, pursuant to CPLR 3211 (a)(1) and (7) for an order dismissing plaintiff Maria Montalvo's complaint against them.

According to the allegations in plaintiff's amended complaint: -From May 1980 through December 22, 2008, plaintiff was employed by Washington Mutual Bank (WaMu), which is now owned by JPMC.-On December 22, 2008, plaintiff was interrogated and fired by JPMC and its employee, defendant Walter Mann, based upon allegations that she stole funds from the bank account of a JPMC customer, Carmen Seda. However, plaintiff did not wrongfully take any funds from Ms. Seda's account.-Although plaintiff offered to prove that she did not take any funds from Ms. Seda's bank account, defendants refused to accept plaintiff's offer of proof and further failed [*2]to conduct a full and fair investigation of the theft allegations prior to terminating plaintiff's employment.-During the course of defendants' investigation into the bank theft, defendant Mann said to plaintiff, "Do you like orange" and "Well, you are going to look good wearing orange." Plaintiff took these comments to be a threat that she would be arrested and incarcerated.-Upon plaintiff's termination, defendants froze four bank accounts plaintiff held at JPMC which collectively held funds totaling approximately $95,000.-Plaintiff maintained a 401K plan with JPMC which, as of December 22, 2008, had a value of $42,730.52. Plaintiff was also eligible to receive pension benefits from JPMC. However, defendants wrongly withheld from plaintiff the total amount of her pension benefits and the 401K plan.-Despite several requests by plaintiff's attorney that it do so, JPMC has refused to release the restraints placed upon plaintiff's accounts.-Following plaintiff's termination of employment on December 22, 2008, defendants terminated plaintiff's health care coverage which has resulted in her being denied needed medical and dental treatment. In addition, plaintiff's employee life insurance was stopped and she was unable to obtain unemployment compensation as a consequence of her being fired in connection with the alleged theft of funds.-Since her termination, plaintiff has sought treatment from a psychologist in connection with her emotional state resulting from her wrongful termination.

On or about March 2, 2009, plaintiff served an initial complaint naming WaMu, JPMC, and several "John Does" as defendants. On or about March 11, 2009, plaintiff was arrested in connection with the alleged theft of funds from Ms. Seda's JPMC bank account and charged with several crimes including Grand Larceny in the Third Degree, Criminal Possession of Stolen Property in the Third Degree, and Identity Theft. Plaintiff's criminal case is currently pending in Kings County Criminal Court. On March 18, 2009, plaintiff filed a stipulation discontinuing the initial action with prejudice as against WaMu. On or about March 20, 2009, plaintiff served the amended complaint naming JPMC and Mann as defendants. The amended complaint alleges nine causes of action based upon the above-cited allegations including: (1) conversion and wrongful retention of monies; (2) unjust enrichment; (3) larceny; (4) breach of fiduciary responsibility; (5) breach of contract; (6) intentional infliction of emotional distress; (7) negligent infliction of emotional distress; (8) wrongful termination; and (9) a cause of action for counsel fees and expenses.[FN1]

Defendants now move to dismiss the amended complaint pursuant to CPLR 3211 (a)(1) and (7). In support of their motion, defendants maintain that plaintiff's first five causes of action, as well as her claim seeking counsel fees and expenses must be dismissed inasmuch as documentary evidence provides defendants with a complete defense to these claims. In this regard, defendants note that these causes of action are based upon the allegation that they wrongfully restrained plaintiff's JPMC bank accounts without her consent and without authorization. However, defendants maintain that an express contractual agreement (the Agreement) between plaintiff and WaMu/JPMC [*3]definitively refutes this allegations. Specifically, defendants point out that plaintiff executed signature cards on the bank accounts at issue which state:

"By signing the below, I/we agree to be bound by the terms and conditions of this Master Account Agreement (the Agreement') as set forth herein . . . In addition, I/we acknowledge receipt of a complete set of the Account Disclosure and Regulations."

Defendants further note that the signature cards provide: "I/we (the Depositor) agree that the Account Disclosures and Regulations Relating to the Deposit Accounts and Other Services and Electronic Funds Transfer Agreement and Disclosures, including any amendments Bank may make from time to time and any related disclosures (the Account Disclosures and Regulations), shall govern all accounts, products, or services provided to Depositor by Bank. This Agreement and the Account Disclosures and Regulations shall govern all accounts, products, and services selected by Depositor now or in the future, regardless of whether the selection is made in person, in writing, orally, electronically or by use of account, product, or service."

In addition, defendants point to a provision in the Agreement duly executed and agreed to

by plaintiff which states:

"Conflicting Instructions and Disputes. We may restrict access to all or part of your account or refuse to honor transactions if there are conflicting instructions or there is a dispute (or we believe there is a dispute) over an account, whether the instructions are from, or dispute involves, an owner, signer or third party. We may, but do not have to, place the funds in a court for resolution. We will deduct from your account all expenses and fees which we incur, including attorney's fees. We may also continue honoring instructions based on the current Agreement or close the account and send a check for the balance to you (or any of you if more than one). We may take these actions without any liability and without advance notice, except where notice is required by law." [Emphasis added]

Finally, defendants note that the Agreement had a limitation of liability clause stating:

"Limit of Liability: UNLESS PROHIBITED BY LAW, YOU AGREE THAT OUR LIABILITY WILL BE LIMITED TO THE FACE VALUE OF ANY ITEM OR TRANSACTION IMPROPERLY DISHONORED OR PAID, OR THE ACTUAL VALUE OF ANY DEPOSITS NOT PROPERLY CREDITED OR WITHDRAWALS NOT PROPERLY DEBITED. YOU FURTHER AGREE THAT WE HAVE NO LIABILITY TO YOUR FOR CONSEQUENTIAL, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES."

According to defendants, these provisions in the Agreement flatly contradict plaintiff's allegations that she did not consent to the freezing of funds her accounts since the express terms of [*4]Agreement allow JPMC to restrain all or part of plaintiff's accounts "if there is a dispute (or [the bank] believe[s] there is a dispute) over an account, whether . . . the dispute involves, an owner, signer or third-party." Here, the allegations in plaintiff's amended complaint indicate that the funds in plaintiff's accounts were restricted based upon a potential dispute over the funds in said accounts - namely the allegation that plaintiff stole funds from the account of JPMC customer Carmen Seda and deposited said funds into her own bank accounts.[FN2]

In further support of their motion to dismiss, defendants maintain that plaintiff's first four causes of action must be dismissed inasmuch as they sound in tort while the relationship between the parties is defined by the terms of the Agreement. In this regard, defendants point to long standing law which stands for the proposition that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract has itself been violated. Thus, a cause of action sounding in tort may be alleged by a depositor against a bank only when an independent duty to the plaintiff apart from the obligations of the bank-depositor contract is violated. According to defendants, plaintiff has failed to allege the existence of such an independent duty.

Defendants also set forth additional grounds for the dismissal of plaintiff's first cause of action, which sounds in conversion. In particular, defendants maintain that a depositor cannot sue its bank in conversion over general non-segregated account funds. Instead, a claim for conversion of money will only lie where the money constitutes a specific identifiable fund. Here, the funds at issue were held in a general account. Moreover, defendants note that a cause of action for conversion must plead the unauthorized assumption and exercise of the right of ownership over property belonging to another to the exclusion of the owner's rights. Here, the amended complaint fails to allege that JPMC ever exercised ownership or dominion over the monies in plaintiff's account, except to state that the accounts were restrained.

With respect to plaintiff's third cause of action, which sounds in larceny, defendants maintain that this is not recognized as a civil claim under New York law. Additionally, defendants argue that fourth cause of action alleging breach of fiduciary duty must be dismissed since such a duty does not exist in a debtor-creditor relationship absent special circumstances which are not plead in the amended complaint. Finally, given the limitation of liability clause in the agreement between the parties, defendants argue that plaintiff's claims for attorney's fees, costs, and punitive damages must be dismissed.

With respect to plaintiff's sixth cause of action, which alleges intentional infliction of emotional distress, defendants maintain that the allegations in the amended complaint are clearly insufficient to satisfy the pleading requirements of this claim, which requires "extreme and outrageous" conduct on the part of defendants. In particular, defendants note that the amended complaint alleges that Mann merely asked plaintiff "Do you like orange?" and stated "Well, you are going to look good wearing orange." According to defendants, appellate courts throughout New York have routinely dismissed intentional infliction of emotional distress claims involving conduct far more outrageous and egregious.

Defendants also argue that plaintiff's seventh cause of action, which sounds in negligent infliction of emotional distress must be dismissed. In support of this argument, defendants maintain [*5]that the allegations in the amended complaint are insufficient to sustain the pleading requirements of this claim. Specifically, defendants note that such a cause of action must be premised upon a breach of a duty owed directly to the plaintiff which either unreasonably endangers a plaintiff's physical safety or causes the plaintiff to fear for his or her safety. According to defendants, the amended complaint fails to allege the existence and breach of a special duty. Furthermore, defendants aver that Mann's comments "Do you like orange?" and "Well, you are going to look good wearing orange" are insufficient to cause plaintiff to fear for her safety.

Finally, defendants argue that plaintiff's eighth cause of action for wrongful termination must be dismissed since plaintiff was an at-will employee who could be terminated at any time, for any reason. In this regard, defendants note that the amended complaint does not allege that plaintiff was employed pursuant to a contract of employment for a specified term.

In opposition to defendants' motion, plaintiff submits an affirmation by her attorney, Lee M. Zeldin, Esq. Counsel maintains that the first five causes of action in the amended complaint are viable because plaintiff did not consent to JPMC's wrongful retention of her monies and the Agreement between the parties did not authorize defendants to take away from plaintiff funds that were lawfully hers. Counsel further argues that JPMC's retention of plaintiff's funds based upon a "potential dispute" was improper inasmuch as JPMC repeatedly refused to accept and consider offers by plaintiff to produce documentation which would resolve the matter in plaintiff's favor. According to plaintiff's counsel, JPMC had a duty under the Agreement to accept and consider plaintiff's evidence in this regard. Counsel also argues that Mann's threatening of plaintiff with jail time during a formal interrogation is sufficiently outrageous and threatening to support her intentional and negligent infliction of emotional distress causes of action. Finally, counsel maintains that exceptions to the basic principles of employment at-will exist where, as here, defendants' firing of plaintiff was based upon false accusations of theft.

In reply to plaintiff's opposition papers, defendants maintain that plaintiff has failed to address the legal arguments raised in the motion papers. Defendants further contend that plaintiff cannot dispute the fact that she freely accepted and was bound by the terms of the Agreement, which allowed JPMC to freeze plaintiff's accounts based upon its belief that a dispute existed. Defendants also argue that plaintiff's contentions that defendants acted in bad faith and without any basis when it froze the accounts falls flat when considered against the backdrop of the criminal proceedings currently pending against plaintiff. In addition, with respect to plaintiff's intentional and negligent infliction of emotional distress claims, defendants argue that even if true, the allegations regarding Mann's remarks to plaintiff are insufficient to satisfy the pleading requirements of these claims. Finally, defendants maintain that plaintiff's argument that the rules regarding at-will employees should not apply here because defendants fired plaintiff based upon false accusations of theft is baseless in light of the criminal proceedings currently pending against defendant.

"On a motion to dismiss pursuant to CPLR 3211, the . . . complaint is to be afforded a liberal construction. The facts as alleged in the . . . complaint are accepted as true, the plaintiff is accorded the benefit of every possible favorable inference, and the court's function is to determine only whether the facts as alleged fit within any cognizable legal theory" (Goldfarb v Schwartz, 26 AD3d 462, 463 [2006].)Furthermore, "[a] party seeking dismissal on the ground that its defense if founded on documentary evidence under CPLR 3211 (a)(1) has the burden of submitting documentary evidence that resolves all factual issues as a matter of law, and conclusively disposes of the [*6]plaintiff's claim'" (Sullivan v State, 34 AD3d 443, 445 [2006],quoting Nevel v Laclede Professional Prods., 273 AD2d 453 [2000]).

The court turns first to plaintiff's fifth cause of action, which alleges breach of contract. As the amended complaint alleges, and defendants acknowledge, there was a contractual relationship between the plaintiff as the depositor and JMPC as the bank. However, defendants argue that the Agreement between the parties constitutes documentary evidence which conclusively disposes of plaintiff's entire breach of contract claim. Specifically, defendants maintain that inasmuch as the Agreement gives them a contractual right to freeze plaintiff's accounts in the event of a dispute involving the accounts, or in the event that JPMC believes that there is such a dispute, plaintiff's breach of contract claim must be dismissed. The court disagrees with this argument, which assumes that plaintiff's alleged theft of funds from Ms. Seda's accounts created a dispute, or otherwise provided defendants' with a basis for believing that there was a dispute, over plaintiff's separate accounts with the bank. Defendant has failed to submit any documentary evidence which establishes or even indicates a connection between the funds allegedly stolen from Ms. Seda account and the funds held in plaintiff's accounts. In the absence of such a connection, JPMC has failed to demonstrate that it had a good faith reason to believe that there was a dispute involving plaintiff's accounts. Furthermore, the amended complaint alleges that defendants refused plaintiff's repeated requests that she be given an opportunity to prove that the funds in her own accounts were unrelated to any dispute involving the alleged stolen funds from Ms. Seda's account. Accepting this allegation as true, defendants are further deprived of a basis for contending that they had reason to believe that there was a dispute involving plaintiff's JPMC accounts.

In any event, assuming, for the sake of argument, that the defendants had a contractual right to freeze plaintiff's four bank accounts based upon the allegations of theft, defendants have failed to point to any documentary evidence which would allow JPMC to freeze plaintiff's separate 401 K account or to deny plaintiff her pension benefits based upon such theft allegations. Indeed, the Agreement upon which defendants rely in support of their motion does not pertain to plaintiff's pension rights or the circumstances under which JMPC may freeze plaintiff's 401 K account. Thus, defendants have failed to meet their burden by submitted documentary evidence that resolves all factual issues as a matter of law. Accordingly, that branch of defendants' motion which seeks the dismissal of plaintiff's breach of contract action is denied. However, as set forth below, plaintiff's remaining causes of actions must be dismissed.

Plaintiff's first cause of action sounds in conversion. In order to state a claim for conversion, a plaintiff must allege "legal ownership or an immediate right of possession to specifically identifiable funds and that the defendant[s] exercised an unauthorized dominion over such funds to the exclusion fo the plaintiff's rights" (Whitman Realty Gp., Inc. v Galano, 41 AD3d 590, 592 [2007]). With respect to the "specifically identifiable funds" element, "funds deposited in a bank account are not sufficiently specific and identifiable, in relation to the bank's other funds, to support a claim for conversion against the bank" (Chemical Bank v Ettinger, 196 AD2d 711, 714 [1993], citing Geler v National Westminster Bank, USA, 770 F Supp 210, 215 [1991]; see also Calisch Assoc., Inc. v Manufacturers Hanover Trust Co., 151 AD2d 446, 448 [1989]). Accordingly, to the extend that plaintiff's conversion claim is based upon defendants' retention of the funds in plaintiff's JPMC/WaMu accounts, this cause of action must be dismissed. Further, to the extent that plaintiff's conversion claim is based upon an alleged improper denial of plaintiff's pension benefits, a claim in [*7]conversion must also fail. In this regard, it is well-settled that "[t]he mere right to payment cannot be the basis for a cause of action alleging conversion; the essence of such a cause of action is the unauthorized dominion over the thing in question'" (Selinger Enter., Inc. v Cassuto, 50 AD3d 766, 768 [2008], quoting Fiorenti v Central Emergency Physicians, 305 AD2d 453, 454-455 [2003]).

Plaintiff's second cause of action alleges unjust enrichment. However, with certain exceptions not present here, "the existence of a valid and enforceable written contract governing a particular subject matter precludes recovery in quasi-contract on theories of quantum meruit and unjust enrichment for events arising out of the same subject matter" (Marc Contr. Inc. v 39 Winfield Assoc. LLC, 63 AD3d 693, 695 [2009]). Here, the contractual agreement between plaintiff and JPMC precludes plaintiff's claim alleging unjust enrichment.

Plaintiff's third cause of action sounds is larceny. However, criminal offenses such as larceny, which are specifically defined in the Penal Law, may not be pleaded as separate causes of action in a civil action (Crandall v Bernard, Overton & Russell, 133 AD2d 878, 879 [1987], appeal dismissed, 70 NY2d 940 [1988]; see also General Motors Acceptance Corp. v Desbiens, 213 AD2d 886, 888 [1995]). Accordingly, this cause of action is dismissed.

Plaintiff's fourth cause of action alleges breach of a fiduciary responsibility. "In order to establish a breach of fiduciary duty, a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the defendant's conduct" (Kurtzman v Bergstol, 40 AD3d 588, 590 [2007]). "In general, the relationship between a bank and customer is that of debtor and creditor and, without more, is not a fiduciary relationship, even if the parties are familiar or friendly" (Call v Ellanville Nat. Bank, 5 AD3d 521, 523 [2004]). Here, the amended complaint fails to allege any additional facts that would give rise to a fiduciary relationship between her and JPMC. Accordingly, plaintiff's breach of fiduciary duty cause of action is dismissed.

Turning to plaintiff's sixth cause of action alleging intentional infliction of emotional distress, such a claim must be based upon allegations of "extreme and outrageous conduct, which so transcends the bounds of decency as to be regarded as atrocious and intolerable in a civilized society" (Murphy v County of Nassau, 203 AD2d 339, 341 [1994]). Here, the conduct which forms the basis for this cause of action consists of Mann's alleged comments during the course of his interrogation of plaintiff: "Do you like orange" and "Well, you are going to look good wearing orange" - which plaintiff took to be a threat that she would be arrested and incarcerated. However, allegations involving a threat to cause a plaintiff's arrest, or even to provide the police with false information to cause such an arrest are insufficient to support a cause of action sounding in the intentional infliction of emotional distress (Slatkin v Lancer Litho Packaging Corp., 33 AD3d 421, 422 [2006]; Brown v Sears Roebuck and Co., 297 AD2d 205, 212 [2002]); see also Wyllie v District Attorney of Kings County, 2 AD3d 714, 720 [2003]). Accordingly, plaintiff's sixth cause of action is dismissed.

Plaintiff's seventh cause of action, which sounds in negligent infliction of emotional distress, similarly requires a showing of extreme and outrageous conduct which transcends the bounds of decency (Tartaro v Allstate Indem. Co., 56 AD3d 758, 759 [2008]). As set forth above, the allegations in the amended complaint fail to satisfy this pleading requirement. Furthermore, the amended complaint fails to contain allegations of defendants' negligence or that defendants' conduct unreasonably endangered plaintiff's physical safety or caused her to fear for her own safety as [*8]required to support a claim for negligent infliction of emotional distress (Daluise v Sottile, 40 AD3d 801, 803-804 [2007]). Accordingly, plaintiff's seventh cause of action is dismissed.

Plaintiff's eighth cause of action alleges wrongful termination. It is well-settled that New York does not recognize a cause of action in tort for wrongful termination of an at-will employee (Lobosco v New York Tel. Co./NYNEX, 96 NY2d 312, 316 [2001]). Moreover, "[a]bsent an express agreement which establishes that the employment is for a fixed duration, an employment relationship is presumed to be at-will and can be freely terminated by either party at any time, for any reason or for no reason" (Daub v Future Tech Enter., Inc., 65 AD3d 1004, 1005 [2009]). Here, the amended complaint fails to allege that plaintiff was employed by JMPC/WaMu pursuant to an agreement for a fixed period of time. Consequently, plaintiff's eight cause of action must be dismissed.

Plaintiff's ninth cause of action (which is identified in the amended complaint as the "twelfth cause"), seeks recovery of the costs and expenses plaintiff has incurred in this action, including attorneys' fees. However, "[u]nder the general rule, attorneys' fees and disbursements are incidents of litigation and the prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties or by statute or court rule" (Matter of A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5 [1986]). Here, the amended complaint fails to allege or otherwise identify any agreement between the parties, statute, or court rule supporting the claim for attorneys' fees and costs. Furthermore, the limitation of damages clause in the Agreement executed by plaintiff specifically precludes plaintiff from seeking such damages. Accordingly, plaintiff's ninth cause of action is dismissed.

Finally, plaintiff may not seek punitive damages. In this regard, the Agreement executed by plaintiff precludes such damages. Further, in an action based upon breach of contract, punitive damages are only appropriate "upon an extraordinary showing of a disingenuous or dishonest failure to carry out the contract" (Spano v Kings Park Ctr. School Dist., 61 AD3d 666, 671; see also Tartaro, 56 AD3d at 758 [punitive damages meant to vindicate public rights and are not generally recoverable for a private breach of contract]). Here, the allegations in the amended complaint are insufficient to make such an extraordinary showing.

In summary, defendants' motion to dismiss is denied with respect to plaintiff's fifth cause of action, which alleges breach of contract. Defendants' motion to dismiss is granted with respect to the remaining causes of action in the amended complaint.

Counsel are directed to appear in Commercial Division I on February 17, 2010 for conference.

This constitutes the decision and order of the court.

E N T E R,

J. S. C. Footnotes

Footnote 1:The amended complaint identifies the cause of action for counsel fees and expenses as the "twelfth cause." In addition, the amended complaint seeks punitive damages.

Footnote 2:Copies of the signature cards executed by plaintiff as well as the Agreement are annexed as exhibits to defendants' motion papers.