Liberty West Regional Center LLC v. Carpanzano et al

Filing 50

ORDER denying 32 Motion to Dismiss for Failure to State a Claim. Signed by Judge David G Campbell on 2/18/2014.(DGC, nvo)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Liberty West Regional Center LLC, Plaintiff, 10 11 ORDER v. 12 No. CV-13-02021-PHX-DGC Salvatore Carpanzano, et al., 13 Defendants. 14 15 Defendant JP Morgan Chase Bank, N.A. (“JP Morgan”) has filed a motion to 16 dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil 17 Procedure. Doc. 32. The motion is fully briefed. For the reasons that follow, the Court 18 will deny the motion.1 19 I. Background. 20 On July 22, 2011, Plaintiff deposited $2,700,000 into an escrow account with JP 21 Morgan, pursuant to an escrow agreement. Doc. 1, ¶¶ 14-15. The following year, JP 22 Morgan notified Plaintiff that it was planning to “get out of the business” of providing 23 escrow services. Id., ¶ 17. Plaintiff was subsequently introduced to Defendant Samba 24 Financial Group Escrow & Consulting Services U.S.A. LLC (“Samba”), and its 25 representative, Defendant Salvatore Carpanzano. Id., ¶ 18; Doc. 37 at 3. Carpanzano 26 27 1 28 The request for oral argument is denied because the issues have been fully briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 1 allegedly represented that Samba would place Plaintiff’s funds “in an account at Citibank 2 at its branch office in Scarsdale, New York,” and further represented that Samba was a 3 subsidiary of Samba Financial Group. Doc. 1, ¶ 19, 20. Plaintiff alleges that during the 4 course of its investigation of Samba and Carpanzano, it contacted Gregory Shea, an 5 employee of JP Morgan, and “inquired if he had ever heard of [Carpanzano or Samba].” 6 Id., ¶ 23. Mr. Shea apparently said he had heard of both, but provided Plaintiff with no 7 additional information. 8 $2,700,000 in Plaintiff’s account to Citibank. Id., ¶ 26. Carpanzano is alleged to have 9 converted Plaintiff’s funds for his own personal benefit. Id., ¶ 33. Id., ¶ 24. On December 10, 2012, JP Morgan wired the 10 Prior to this transaction, JP Morgan was involved in litigation commenced on 11 December 20, 2011, by a man named Rick Scott in Texas state court (the “Texas 12 Action”). Id., ¶ 28. That action was removed to the United States District Court for the 13 Northern District of Texas. Id. The action centered around a claim by Scott that a 14 company called American National Trust, represented by Carpanzano, had absconded 15 with $2,000,000 he had deposited with JP Morgan in order to secure financing for a 16 Bahamian resort. Doc. 37 at 3-4. Plaintiff alleges that, as a result of the Texas Action, JP 17 Morgan “knew or had reason to know that Defendant Carpanzano was not trustworthy, 18 had perpetrated other fraudulent and otherwise dishonest schemes using escrow 19 arrangements, and was likely to abscond with or otherwise purloin any funds in escrow,” 20 and that it accordingly had a duty to warn Plaintiff of these facts. Doc. 1, ¶ 30. 21 JP Morgan claims that although it and one of its employees were named as 22 defendants in the Texas Action, it was dismissed when the plaintiff filed his first 23 amended complaint, only added back briefly as a “relief defendant,” and then ultimately 24 dismissed in May 2012. Doc. 32 at 3-4. JP Morgan claims that at the time of its final 25 dismissal, “there had been no finding that Carpanzano in fact controlled American 26 National Trust or that he had otherwise been involved in converting Scott’s funds.” Id. at 27 4. JP Morgan argues it was not in possession of any information that would have 28 triggered a duty to Plaintiff. Id. at 6. -2- 1 II. Legal Standard. 2 When analyzing a complaint for failure to state a claim to relief under 3 Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light 4 most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th 5 Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the 6 assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are 7 insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. 8 Litig., 610 F.3d 1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the 9 complaint must plead enough facts to state a claim to relief that is plausible on its face. 10 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This plausibility standard “is not 11 akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a 12 defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 13 556). “[W]here the well-pleaded facts do not permit the court to infer more than the mere 14 possibility of misconduct, the complaint has alleged – but it has not ‘show[n]’ – ‘that the 15 pleader is entitled to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). 16 III. Analysis. 17 Under Arizona law, there is generally “no duty to disclose information received by 18 an escrow agent unless such a duty is required by the terms of the agreement[.]” Berry v. 19 McLeod, 604 P.2d 610, 616 (Ariz. 1979). There is, however, an exception to this rule 20 “when the escrow agent knows that a fraud is being committed on a party to an escrow 21 and the failure of the escrow agent to disclose the information of the fraud will assist in 22 accomplishing the fraud[.]” Id. “[U]nder such conditions the escrow agent has a duty to 23 disclose the facts actually known.” Id. The Arizona Supreme Court has clarified that 24 although Berry “does not require [an] escrow agent to investigate and search for fraud,” it 25 also “does not permit [an] escrow agent to close its eyes in the face of known facts and 26 console itself with the thought that no one has yet confessed fraud.” Burkons v. Ticor 27 Title Ins. Co. of Cal., 813 P.2d 710, 718 (Ariz. 1991). Put another way, “if the facts 28 actually known to the escrow agent present substantial evidence of fraud, there is a duty -3- 1 to disclose.” Id. at 720 (emphasis in original). 2 JP Morgan argues that “Plaintiff’s theory of liability fails to meet the ‘plausibility’ 3 test necessary to state a claim for relief” under Iqbal, 556 U.S. at 678. Doc. 32 at 2. JP 4 Morgan asserts that “Plaintiff cannot plausibly demonstrate that [JP Morgan] had 5 sufficient (or even any) evidence that Carpanzano, as an alleged representative of Samba, 6 might abscond with Plaintiff’s funds[.]” Id. at 6. Additionally, it contends, neither 7 Carpanzano nor Samba was a party to the transaction it was overseeing and it was 8 therefore under no duty to disclose any allegations against them in the Texas Action. Id. 9 JP Morgan further asserts that Plaintiff has not pleaded any facts showing that “Mr. Shea, 10 their assigned escrow officer, had any knowledge regarding the allegations made against 11 Carpanzano in the Texas Litigation.” Id. at 7. 12 Plaintiff counters that an escrow agent is not required to have actual evidence of 13 fraud, but rather “what a ‘reasonable escrow agent would perceive as evidence of fraud.’” 14 Doc. 37 at 9 (citing Burkons, 813 P.2d at 718). Plaintiff further contends that it has 15 alleged sufficient facts to “trigger” JP Morgan’s duty to disclose because it has alleged 16 that Mr. Shea stated that he had heard of Carpanzano and Samba. Id. at 11. 17 Plaintiff has pleaded that JP Morgan was party to litigation involving allegations 18 of fraud against Carpanzano, namely that he absconded with funds placed in escrow, and 19 that JP Morgan was thus aware of those allegations. Plaintiff has also pleaded that an 20 employee of JP Morgan, when asked in connection with Plaintiff’s escrow transaction, 21 acknowledged that he had heard of both Samba and Carpanzano. 22 allegations as true, as the Court must at the motion to dismiss stage, the Court concludes 23 that Plaintiff has stated a claim for relief. Plaintiff could plausibly prove that the facts 24 actually known to JP Morgan would be perceived by a reasonable escrow agent as 25 “evidence of fraud.” See Burkons, 813 P.2d at 718. The Court cannot decide what facts 26 were actually known to JP Morgan in the context of a motion to dismiss. The Court will 27 therefore deny JP Morgan’s motion. 28 -4- Accepting these 1 IT IS ORDERED that JP Morgan’s motion to dismiss (Doc. 32) is denied. 2 Dated this 18th day of February, 2014. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -5-

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