MZL CAPITAL HOLDINGS, INC v. TD BANK, N.A. et al

Filing 20

OPINION. Signed by Judge Renee Marie Bumb on 8/18/2015. (dmr)

NOT FOR PUBLICATION

[Doc. No. 13]

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
MZL CAPITAL HOLDINGS, INC., on
behalf of themselves and all
others similarly situated,
Plaintiffs,

14-cv-05772 (RMB/AMD)
OPINION

v.

TD BANK, N.A. and UNIDENTIFIED
ENTITIES (A-Z),
Defendants.

Appearances:
Bruce H. Nagel
Andrew I. Pepper
Nagel Rice, LLP
103 Eisenhower Parkway
Suite 103
Roseland, NJ 07068
Attorneys for Plaintiffs
James S. Richter
Jeffrey P. Catenacci
Winston & Strawn LLP
The Legal Center
One Riverfront Plaza, Suite 730
Newark, NJ 07102
Attorneys for Defendant, TD Bank, N.A.

BUMB, United States District Judge:
This matter comes before the Court upon a motion by
Defendant TD Bank, N.A. (“Defendant”) to dismiss Plaintiff, MZL

1

Capital Holdings, Inc.’s (“Plaintiff”) putative class action
Complaint. For the reasons set forth below, this Court will
grant the motion to dismiss, but will provide Plaintiff with an
opportunity to file an amended complaint consistent with the
Opinion below.
I.

Factual Background 1

Plaintiff MZL, a New York entity, holds a commercial
checking account with TD Bank, a New Jersey corporation. Compl.
at ¶ 15. Plaintiff brings this putative class action on behalf
of itself and all others similarly situated. Compl. at ¶ 2. Many
TD Bank commercial business customers engage in international
transactions involving the sending or receipt of wired currency
from other countries. Compl. at ¶ 10.

The parties’ relationship

is governed by the Business Deposit Account Agreement
(“Agreement”), which states with respect to such transactions:
“Items sent for collection will be credited to your Account in
U.S. dollars, with the amount of U.S. dollars credited
calculated using our applicable exchange rate that is in effect
on the date when we credit the funds to your Account . . . .”

1

This Court will accept the Plaintiff’s well-pled
allegations as true for purposes of this motion to dismiss. See
Bistrian v. Levi, 696 F.3d 352 (3d Cir. 2012).
2

Cantenacci Decl. at Ex. B, Business Deposit Account Agreement at
p. 6. (emphasis added). 2
According to Plaintiff, on or about January 29, 2014, MZL
received a wire transfer from London, England in the amount of
£70,000.00. Compl. at ¶ 16. The amount credited to Plaintiff’s
account was $93,282.00. Id. Defendant sent a notice, which
referenced what appeared to be an exchange rate of 1.3355. Id.
However, Plaintiff contends that the exchange rate appearing in
the Wall Street Journal for January 30, 2014 was 1.3664. Id.
According to Plaintiff, on or about February 10, 2014, Alex
Dorian (“Dorian”), called TD Bank and made inquiries about what
appeared to be an incorrect exchange rate. Compl. at ¶ 17. A
representative from TD Bank responded on February 11, 2014
notifying Plaintiff that Defendant would make an adjustment to

2

On a motion to dismiss, only the allegations in the
complaint, and "matters of public record, orders, exhibits
attached to the complaint and items appearing in the record of
the case" are taken into consideration. Oshiver v. Levin,
Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994)
(citing 5A Wright & Miller, Fed. Prac. & Proc.: Civil 2d § 1357;
Chester Cty. Intermediate Unit v. Penn. Blue Shield, 896 F.2d
808, 812 (3d Cir. 1990)). An "extraneous" document may be
considered if it is "'integral to or explicitly relied upon in
the complaint[.]'" In re Burlington Coat Factory Sec. Litig.,
114 F.3d at 1426 (quoting Shaw v. Digital Equip. Corp., 82 F.3d
1194, 1220 (1st Cir. 1996)). Clearly, the Agreement is integral
to the Plaintiff’s Complaint in the instant case. See Pl.’s Br.
at 2 (noting that Plaintiff signed a New Business Account
Agreement with Defendant “which in turn incorporated the terms
contained in the Banks’ Deposit Account Agreement . . . .”).
3

the account. Id. Thereafter, a credit appeared in Plaintiff’s
account in the amount of $250.00. Compl. at ¶ 18.
Plaintiff further alleges that on or about February 13,
2014, Dorian received a letter from Defendant indicating that
Defendant acted not as an agent but as a principal in buying and
selling foreign currency. Compl. at ¶ 19. As such, the letter
continued to explain that TD Bank set its rates, including the
rate it applied to the January 29th transaction, based on
numerous criteria that did not represent the actual cost of
converting the currency given the risk that TD Bank assumes when
engaging in a foreign exchange transaction. Id. However,
Plaintiff claims, at that point, Defendant still did not
disclose the actual amount of the “fee.” Id. Plaintiff asserts
that given the exchange rate reported in the Wall Street
Journal, Defendant’s use of its own rate resulted in an illegal
surplus for Defendant. Compl. at ¶ 20.
Plaintiff’s Complaint alleges that TD Bank fails to
disclose to its customers a fee that it charges for the
conversion of foreign currency and misleads the customer by
concealing this charge. Compl. at ¶¶ 11-12. It is alleged that
when executing a retail foreign currency conversion transaction
(an “FX transaction”), Defendant levies an undisclosed “fee” by
adding a markup, and charging its customers more than the

4

Defendant paid for executing the conversion in the wholesale
currency market (an “FX conversion fee”). Compl. at ¶ 10 & 11.
Plaintiff further contends that by failing to disclose this
“fee,” it prevents consumers from making informed decisions with
adequate information. Compl. at ¶ 13. According to the
Complaint, “the foreign transaction fee is designed and
implemented so that it will be paid by, but concealed from the
Bank customer.” Id.
Based on these allegations, Plaintiff’s Complaint sets
forth several counts: (1) a violation of the New Jersey Consumer
Fraud Act (“NJCFA”);

(2) unjust enrichment; (3) violation of

Regulation E, 12 C.F.R. § 205.10(b) and the Electronic Fund
Transfers Act (“EFTA”), 15 U.S.C. § 1693, et seq.; (4) breach of
contract; and (5) violation of 48 other states’ (and the
District of Columbia’s) consumer protection laws. 3 Plaintiff
seeks to enjoin the alleged unlawful practices and acts of
Defendant, recover Plaintiff’s actual damages, treble damages
and attorney’s fees. Compl. at ¶ 20.

II.

Standard of Review

To withstand a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6), “a complaint must contain sufficient

3

Under Count V, Plaintiff provides a string cite to these
other 48 laws.
5

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 Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)). “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. at 663. “[A]n unadorned, the defendantunlawfully-harmed-me accusation” does not suffice to survive a
motion to dismiss. Id. at 678. “[A] plaintiff’s obligation to
provide the 'grounds' of his 'entitle[ment] to relief' requires
more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do." Twombly, 550
U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286
(1986)).
In reviewing a plaintiff’s allegations, the district court
“must accept as true all well-pled factual allegations as well
as all reasonable inferences that can be drawn from them, and
construe those allegations in the light most favorable to the
plaintiff.” Bistrian v. Levi, 696 F.3d 352 n.1 (3d Cir. 2012).
Only the allegations in the complaint, and “matters of public
record, orders, exhibits attached to the complaint and items
appearing in the record of the case” are taken into
consideration. Oshiver v. Levin, Fishbein, Sedran & Berman, 38
F.3d 1380, 1384 n.2 (3d Cir. 1994)(citing Chester County
6

Intermediate Unit v. Pennsylvania Blue Shield, 896 F.2d 808, 812
(3d Cir. 1990)).
III. Analysis
a. Fraud Claim
i.

Choice of Law

With respect to Plaintiff’s fraud claim, the parties
dispute whether New Jersey or New York law applies.

Plaintiff

contends that New Jersey law applies and that it is premature to
engage in a choice of law analysis at this stage of litigation.
Relying primarily on Harper v. LG Elecs. USA, Inc., 595 F. Supp.
2d 486 (D.N.J. 2009), Plaintiff argues that the “fact intensive”
analysis required for choice of law cannot be completed before
the facts are fully developed pending discovery. In response,
the Defendant contends that the choice of law analysis is
appropriate at this juncture.

Defendant argues that, as set

forth in Harper, “[s]ome choice of law issues may not require a
full factual record and may be amenable to resolution on a
motion to dismiss.” Id. at 491; see Montich v. Miele, 849 F.
Supp. 2d 439, 445-48 (D.N.J. 2012)(analyzing Harper and carrying
out choice of law analysis when, “plaintiff failed to indicate
what other facts would be necessary to decide this issue.”).
Defendant also contends that a choice of law analysis is
appropriate at the motion to dismiss stage because both parties

7

agree that an actual conflict exists and that New Jersey’s “most
significant relationship” test governs the analysis.
To determine the controlling law, a federal court sitting
in diversity applies the choice of law rules of the forum state
- here, New Jersey. Maniscalco v. Brother Int’l (USA) Corp., 709
F.3d 202, 206 (3d Cir. 2013). In New Jersey, the relevant test
is the most “most significant relationship” to the claim. P.V.
v. Camp Jaycee, 197 N.J. 132, 142-44 (2008). As agreed by the
parties, a true conflict exists between New York and New Jersey
consumer fraud laws.

Thus, this Court must next determine which

jurisdiction has the most significant relationship to the claim.
Maniscalco, 709 F.3d at 207. Where there has been a fraud or
misrepresentation alleged, the court will look to the factors
set forth in §148 of the Restatement (Second) of Conflict of
Law.

Id.
Under subsection (1) of § 148, when the "plaintiff's
action in reliance took place in the state where the
false representations were made and received," there
is a presumption that the law of that state applies.
Under subsection (2), when the plaintiff's action in
reliance takes place in a different state than where
the false representations were made and received,
courts weigh the following factors:
(a) the place, or places, where the plaintiff acted in
reliance upon the defendant's representations,
(b) the place where the plaintiff received the
representations,
(c) the place where the defendant made the
representations,

8

(d) the domicile, residence, nationality, place of
incorporation and place of business of the parties,
(e) the place where a tangible thing which is the
subject of the transaction between the parties was
situated at the time, and
(f) the place where the plaintiff is to render
performance under a contract which he has been induced
to enter by the false representations of the
defendant.
Id.

The factors enumerated above are to be evaluated on a

qualitative instead of quantitative basis, and the relative
importance of these factors should be determined in light of the
of the following: “(1) the interests of interstate comity; (2)
the interests of the parties; (3) the interests underlying the
field of tort law; (4) the interests of judicial administration;
and (5) the competing interests of the states.” Id.
At this juncture, the parties dispute where the alleged
misrepresentations emanated from.

For example, the Defendant

states that New York law applies because it is “the place where
the alleged false representations were made and received . . .
.”

Def.’s Br. at 7. Plaintiff, however, argues that “[d]espite

not having the benefit of discovery, it is likely that
Defendant’s misrepresentations can be traced back to, and
emanated from their headquarters [in New Jersey].”
Br. at 8.

Pl’s Opp.

In order to engage in the choice of law analysis

under either subsection (1) or (2) of §148 of the Restatement,
this Court must know from where the alleged misrepresentations
emanated.
9

After discovery provides the parties with more definitive
information on the relevant factors, particularly the location
of the alleged misrepresentations, this Court may revisit this
issue. While there are certainly instances where the Court will
engage in a choice of law analysis at the motion to dismiss
stage, those cases can be distinguished as there was no dispute
as to the geographic location of the alleged misrepresentations,
unlike the facts presently before this Court.

Compare,

Prudential Ins. Co. of Am. v. Goldman, Sachs & Co., No. 12-6590,
2013 U.S. Dist. LEXIS 50788, at *17-18 (D.N.J. 2013)(holding
that the court could not complete choice of law analysis, in
part, because the court did not know where the alleged
misrepresentations were made or relied upon), with Feldman v.
Mercedes-Benz, No. 11-984, 2012 U.S. Dist. LEXIS 178924, at *1617 (D.N.J. Dec. 18, 2012)(engaging in choice of law analysis at
the motion to dismiss stage where there was no dispute as to the
six factors under Section 148(2)). Thus, this Court lacks the
information required to engage in the choice of law analysis at
this time.

See Harper, 595 F. Supp. 2d at 490-91 (finding that

the Court was unable to undertake “the fact-intensive choice of
law determination on the record before it.”); Montich v. Miele
USA, Inc., 849 F. Supp. 2d 439, 445 (D.N.J. 2012)(“courts,
including the Third Circuit, have decided choice-of-law issues

10

on a motion to dismiss when the necessary facts are pled in the
complaint.”).

ii.

NJCFA

Based on the above analysis, for purposes of the instant
motion, this Court will apply New Jersey law to Plaintiff’s
fraud claim under the NJCFA.

Prudential Ins. Co. of Am. v.

Goldman, Sachs & Co., 2013 U.S. Dist. LEXIS 50788, at *17-18
(citing Snyder v. Farnam Companies, Inc., 792 F. Supp. 2d 712,
721 (D.N.J. 2011) (after determining that a choice-of-law
analysis was premature, the court noted that "[s]ince Plaintiffs
have made their allegations under New Jersey law, the Court will
apply New Jersey law for the purpose of examining Plaintiffs'
claim under the Rule 12(b)(6) standard"); Harper, 595 F. Supp.
at 491 (deferring choice-of-law determination and applying New
Jersey law for purposes of motion to dismiss because "Plaintiffs
have presented a set of facts where New Jersey law governs this
action")).
In order to state a NJCFA claim, a plaintiff must show
three elements: (1) unlawful conduct by the defendant; (2) an
ascertainable loss by plaintiff; and (3) a causal relationship
between the unlawful conduct and the ascertainable loss. See
Francis E. Parker Mem. Home, Inc. v. Georgia-Pacific LLC, 945 F.
Supp. 2d 543, 558 (D.N.J. 2013)(citing International Union of
11

Operating Engineers Local No. 68 Welfare Fund v. Merck & Co.,
192 N.J. 372, 929 A. 2d 1076 (2007)).
The heightened pleading standard expressed under Federal
Rule of Civil Procedure Rule 9(b) applies to Plaintiff’s NJCFA
claim. Dewey v. Volkswagen AG, 558 F. Supp. 2d 505, 526 (D.N.J.
2008).

To satisfy the standard, the plaintiff must plead with

particularity the circumstances constituting a fraud.
Civ. P. 9(b).

Fed. R.

This can be accomplished by pleading “the date,

time, and place” of the fraud or otherwise injecting “precision
or some measure of substantiation into the allegations.”

Slimm

v. Bank of Am. Corp., No. 12-5846, 2013 U.S. Dist. LEXIS 62849,
at *46-47 (D.N.J. May 2, 2013)(quoting Frederico v. Home Depot,
507 F. 3d 188, 200 (3d Cir. 2007)).

A plaintiff alleging fraud

must state the circumstances of the fraud with sufficient
particularity “to place the defendants on notice of the precise
misconduct with which they are charged.”

Lum v. Bank of

America, 361 F.3d 217, 223-24 (3d Cir. 2004).

In other words,

the Rule “requires plaintiffs to plead the who, what, when,
where, and how: the first paragraph of any newspaper story.”

In

re Advanta Corp. Sec. Litig., 180 F.3d 535, 534 (3d Cir. 1999).
Defendant argues that Plaintiff fails to adequately allege
unlawful conduct as required because there were no deceptive
acts or practices by TD Bank.

The Business Deposit Account

Agreement (“Agreement”) disclosed that Defendant would apply its
12

applicable exchange rate to any foreign currency transaction,
which the Plaintiff knew pursuant to that very Agreement.

More

specifically, the Agreement states: “Items sent for collection
will be credited to your Account in U.S. dollars, with the
amount of U.S. dollars credited calculated using our applicable
exchange rate that is in effect on the date when we credit the
funds to your Account. . . .”

Cantenacci Decl. at Ex. B,

Business Deposit Account Agreement at p. 6 (emphasis added).
Alternatively, the Defendant contends that Plaintiff fails to
allege an ascertainable loss in that no out-of-pocket loss is
stated and that Plaintiff cannot allege the requisite causation
between the Defendants’ conduct and any loss.
In response, Plaintiff avers that it has adequately pled
the requisite facts to support a claim for a NJCFA violation.
Namely, that the Defendant engaged in unlawful conduct by
failing to disclose an FX conversion fee, which resulted in an
ascertainable loss of damages when Plaintiff had to “pay an
added charge/markup that was not disclosed to them, and that its
damages were directly caused by Defendant’s business practice of
failing to disclose the exchange fee.” Pl.’s Opp. Br. at 24.
Much of the parties’ briefing focuses on whether the
alleged conversion fee is, in fact, a fee, as Plaintiff
contends, or whether it is simply a “spread between the retail
rate that TD Bank charges its customers for foreign currency
13

transactions and the wholesale rate at which it receives the
currency.”

Def.’s Br. at 11.

In response, Plaintiff contends

that this issue requires a fact intensive analysis inappropriate
on a motion to dismiss.

Plaintiff further argues that Defendant

failed to disclose an FX conversion fee: while the Agreement
states that Defendant will use its applicable exchange rate,
“[it] is devoid of any reference to any FX conversion fee.”
Pl.’s Br. at 2.
Per the Complaint, the Plaintiff alleges that the notice of
transfer for the transaction at issue referenced “what appeared
to be an exchange rate of 1.3355.

However, the exchange rate in

the Wall Street Journal for January 30, 2014 was 1.3664.”
Compl. at ¶ 16.

Plaintiff contends that in the February 13,

2014 letter from TD Bank, it “admitted to charging a fee in the
transaction” when it discussed that “it set its rates based upon
numerous criteria that did not represent the actual cost of
converting the currency given the risk that is assumed in the
timing of the trade.”

Id. at ¶ 19.

Plaintiff has not alleged,

nor does it argue, however, that TD Bank’s applicable exchange
rates were not available to it; similarly, it fails to present
facts showing that Defendant charged a rate other than the
“applicable rate” as quoted in the Agreement.
Plaintiff’s opposition brief relies heavily on a California
Superior Court case, Schwartz v. Visa Intern. Corp., No. 82240414

4, 2003 WL 1870370 (Cal. Sup. Ct. Apr. 7, 2003).

In Schwartz,

the plaintiffs sued Visa and MasterCard, arguing that defendants
failed to disclose currency conversion fees charged to
cardholders.

The Schwartz court found, inter alia, that:

The cost imposed on a consumer for using his credit card to
make a purchase denominated in another currency is a
function of an underlying exchange rate and one or two fees
that Visa calls “currency conversion” fees. The networks
select the basic exchange rate, which is either a market or
government mandated rate and impose the first fee, the 1%
conversion fee at issue in this case.

Id. at *7.

Based on the facts in Schwartz, the Court found that

the defendants had failed to adequately disclose the conversion
fee.

Id. at * 2.

The critical distinction between Schwartz and

the instant case, however, is that the 1% fee in Schwartz was a
fee applied regardless of and in addition to the variable
exchange rate also applied to the foreign currency transaction.
Here, the facts alleged do not show that there was additional
“fee” added, but that the Defendant charged a rate that was not
the rate quoted in the Wall Street Journal and that “did not
represent the actual cost of converting the currency . . . .”
Id. at ¶ 19.

In other words, as currently pled, Plaintiff’s

allegations amount to a contention of fraud based on the
Defendant’s failure to charge the customer simply the wholesale
rate.

15

Yet, as correctly pointed out by Defendant, there is
nothing in the Agreement that binds TD Bank to use any
particular rate – either the wholesale rate or rates as
published in the Wall Street Journal.

Instead, by the

Agreement’s explicit terms, Defendant was to apply “our
applicable exchange rate that is in effect on the date when we
credit the funds.” Cantenacci Decl. at Ex. B, Business Deposit
Account Agreement at p. 6.

There are no factual allegations to

support that Defendant did not use the “applicable exchange
rate,” and, therefore, no support for Plaintiff’s conclusion
that TD Bank failed to disclose a foreign currency exchange rate
or fee.
In La. Mun. Police Employees’ Ret. Sys. v. JPMorgan Chase &
Co., No. 12-6659, 2013 U.S. Dist. LEXIS 93692 (S.D.N.Y. July 3,
2013) (“JPMorgan”), the court granted a motion to dismiss under
analogous circumstances.

There, the plaintiff claimed that

JPMorgan charged undisclosed mark-ups on foreign exchange
transactions – i.e., “the Bank executed certain FX transactions
at one rate, but charged the custodial clients a different rate,
resulting in profit for the Bank, and that the Bank failed to
disclose this practice . . . .”

Id. at *3.

When an FX

transaction was executed, the monthly account statement
reflected the rate that the client was charged, but did not
“provide the rate at which the Bank itself had acquired the
16

currency it provided to the client . . . .”

Id. at *13.

Ultimately, the court, in granting a motion to dismiss, held
that the spread on the FX transactions (the difference between
what the Bank paid and what plaintiff paid) did not constitute a
“fee.” Id. at 24 (stating that a “fee” is a “sum paid or charged
for a service” and an “exchange rate” is “the ratio for
converting one country’s money into another country’s money.”
These definitions were found to be two distinct concepts).
Additionally, because the spreads were determinable via publicly
available databases, the court found there was nothing secret
about the alleged mark-ups and defendant’s failure to disclose
the spread on the FX transactions at issue would not deprive
plaintiff of the “fruits” of their Agreement.

Id. at 30-31.

Most importantly for purposes of the instant matter, the
JPMorgan court held “while there may be spreads between FX
transactions, the exchange rate a Bank charges its customers is
more naturally characterized as the price of the commodity the
customer has chosen to purchase, rather than a fee for the
provision of services.”

Id. at 33.

Furthermore, because the

contract at issue in JPMorgan, “imported no requirement that the
rate be the best available market rate, the rate at which the
Bank had originally procured the currency . . . or any other
particular measure,” the court granted the motion to dismiss.
Id. at 34.

Again, the Agreement in the case currently before
17

this court requires the use of “our applicable exchange rate
that is in effect on the date when we credit the funds to your
Account. . . .”

There is no allegation that the Agreement

imported a requirement that any other rate be used other than
“our applicable exchange rate.” 4
While Plaintiff contends that the adequacy of Defendant’s
disclosures is an inappropriate consideration on a motion to
dismiss, this Court finds that Plaintiff has failed to plead any
facts that support its legal conclusion that Defendant charged
an FX conversion fee that was not disclosed.

At this juncture,

the facts as pled show that Defendant stated it would apply its
“applicable exchange rate” and there is no allegation that it
failed do just that; instead, Plaintiff complains that the rate
cited in the Wall Street Journal was not used and the notice of
transfer “referenced what appeared to be an exchange rate of
1.3355.”

Compl. at ¶¶ 20 and 16.

Ultimately, there are no

4

Plaintiff’s attempt to distinguish the decision in
JPMorgan, is unavailing. In fact, some sections cited in
Plaintiff’s opposition brief are totally unrelated to the
court’s relevant breach of contract analysis. For example,
plaintiff notes that the court “stressed that plaintiff’s
‘Amended Complaint nowhere alleges that these services are
offered to a wide customer base, or that they are otherwise
likely to ‘have a broader impact on consumers at large.’” This
discussion, however, was with respect to N.Y. Gen.Bus.L. § 349,
which requires that “to maintain a cause of action under § 349,
a plaintiff must show: (1) that the defendant's conduct is
consumer-oriented . . . .” JPMorgan at *48.
18

facts alleged showing unlawful conduct by the Defendant, other
than the conclusory allegations that a “fee” was charged.
This Court’s finding that the Plaintiff has failed to plead
with particularity unlawful conduct as required under the NJCFA
is supported by case law from other courts facing issues similar
to those presented in the instant matter.

For example, while

Plaintiff attempts to make an issue out of the adequacy of the
Defendant’s disclosure, stating that the adequacy of the
disclosures is inappropriate on a motion to dismiss 5, other
courts have disagreed that such a disclosure duty even exists.
In Lipuma v. American Express Co., 406 F. Supp. 2d 1298,
1319 (S.D. Fl. 2005), the court addressed approval of a proposed
class action settlement in a matter where card holders sued
defendant based on its foreign currency exchange practices. The
Lipuma court found that:

5

The case cited by Plaintiff in support of this argument,
People ex rel. Schneiderman v. Bank of New York Mellon Corp., 40
Misc. 3d 1232(A), at *15-16 (N.Y. Sup. Ct. 2013), is inapposite.
That case deals with a claim under New York’s Martin Act,
General Business Law sections 352 et seq., and there, the court
held that the defendant “made affirmative representations to
sophisticated investors about the competitiveness of its pricing
and the favorable rates it would charge [for FX transactions].”
Id. at 15. Moreover, the court’s finding that a factual issue
remained was based on its holding that there were additional
facts needed to make a determination as to what information was
available to the plaintiffs at the time of the alleged
fraudulent transactions. Here, Plaintiff does not cite any
affirmative misrepresentations and there is no dispute about
what facts were available to Plaintiff at the time of the
transaction.
19

American Express clearly discloses in the cardmember
agreements that "if you initiate a transaction in a foreign
currency, it will be converted into U.S. dollars on the
date it is processed by us or our agents at a rate set by
us based on an interbank, tourist or (where required by
law) official rate, increased in each instance by [1-2%]."
Admittedly, this is not repeated in the monthly statements.
Id. (emphasis added).

With respect to the interbank rate, the

court went on to add:

As to the failure to disclose to cardmembers the interbank
rates American Express used, intervenors have cited no
authority to support a finding that a duty to disclose this
information to cardmembers exists.

Id. at 1319 (citing In re Mexico Money Transfer Litigation, 267
F.3d 743 (7th Cir. 2001)).

This Court similarly finds the

decision in In re Mexico Money Transfer Litigation instructive.
In In re Mexico, plaintiffs claimed that two wire-transfer
companies fraudulently represented that patrons could wire money
at a certain price (“$ 300 to Mexico for only $ 15”), and that
the representation was fraudulent because plaintiffs believed
that “the quoted price must include the difference in foreign
exchange rates (the ‘fx spread,’. . .) or that the defendants
must at least reveal the price that they pay for pesos, so the
customers may work out the spread themselves.”

Id. at 745.

In

response to this, the Court found:
No state or federal law requires either currency exchanges
or wire-transfer firms to disclose the interbank rate at
which they buy specie, as opposed to the retail rate at
which they sell currency (and the retail price is
20

invariably disclosed). That is why the plaintiffs have been
driven to make generic fraud claims. But since when is
failure to disclose the precise difference between
wholesale and retail prices for any commodity "fraud"?

Id. at 749 (emphasis added).
Again, Plaintiff’s allegations, in many ways, track the
allegations rejected in In re Mexico: as currently pled, the
Plaintiff in this case seeks to impose liability on Defendant
for failing to disclose the rate at which it acquired the
currency and to impose a requirement on Defendant to charge a
specific exchange rate not required by the parties’ Agreement.
As currently pled, Plaintiff has failed to satisfy the
requirements of Rule 9(b) with respect to unlawful conduct by
the Defendant; this Court will grant Defendant’s motion to
dismiss.

Plaintiff will, however, be given leave to file an

amended complaint, as requested, within twenty-one (21) days of
this Opinion.

b. Unjust Enrichment

Plaintiff next asserts a claim of unjust enrichment. “A
cause of action for unjust enrichment requires proof that
defendants received a benefit and that retention of that benefit
without paying would be unjust.” Ciser v. Nestle Waters North
Am., Inc., No. 13-4509, 2015 U.S. App. LEXIS 195, at *7-8 (3d
Cir. January 7, 2015)(quoting Goldsmith v. Camden Cnty.
21

Surrogate’s Office, 975 A.2d 459, 462 (N.J. Super. Ct. 2009)).
In New Jersey, “unjust enrichment is not an independent theory
of liability, but is the basis for a claim of quasi-contractual
liability.” Ciser, 2015 U.S. App. LEXIS 195, at *8.

Because the

parties agree that there is no actual conflict between the laws
of New York and New Jersey with respect to unjust enrichment,
the Court can definitively resolve the motion on this Count. 6
The Defendant argues that no claim for unjust enrichment
can be alleged in the instant matter because neither New York
nor New Jersey recognizes an independent tort cause of action
for unjust enrichment where such a claim simply duplicates a
plaintiff’s breach of contract claim.

In response, Plaintiff

contends that Defendant’s argument is premised on its contention
that it adequately disclosed its conversion methodology, and
“because Plaintiff has sufficiently pled an underlying tort
under the NJCFA . . . its claim for unjust enrichment is
similarly sufficiently pled . . . .” Pl’s Br. at 28.

6

"The basic elements of an unjust enrichment claim in New
York require proof that (1) defendant was enriched, (2) at
plaintiff's expense, and (3) equity and good conscience militate
against permitting defendant to retain what plaintiff is seeking
to recover." Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc.,
373 F.3d 296, 306 (2d Cir. 2004).

22

With respect to unjust enrichment, Plaintiff alleges that
“in paying a fee for the foreign currency transaction, Plaintiff
. . .

conferred a benefit on Defendant . . . [which] Defendant

accepted and unjustly retained . . . .” Compl. at ¶¶ 43-44.
Pursuant to paragraph 59 of the Complaint, Plaintiff alleges
that Plaintiff and Class Members entered into contracts with the
Defendant, but the Complaint contains no allegations at this
juncture that call into question the very validity of the
contract(s) at issue.

Thus, where the pleading supports the

existence of a valid contract, which has not been called into
question, an unjust enrichment claim cannot stand where there is
also a breach of contract claim.

RD Legal Funding, LLC v.

Cohen, 2013 U.S. Dist. LEXIS 110875, at *23 (D.N.J. Aug. 7,
2013)(“Since unjust enrichment is ‘not an independent theory of
liability, but is the basis for a claim of quasi-contractual
liability,’ a plaintiff may not recover on both a breach of
contract claim and an unjust enrichment claim.”)(quoting
Goldsmith v. Camden County Surrogate's Office, 408 N.J. Super.
376, 382, 975 A.2d 459 (App. Div. 2009)).

While pleading in the

alternative is permissible, 7 where a plaintiff “concedes that its

7

While the Defendant cites the decision in Swift v. Pandey,
No. 13-650, 2013 U.S. Dist. LEXIS 162029, at * 12 n.3 (D.N.J.
Nov. 13, 2013), for the proposition that an unjust enrichment
claim cannot be sustained where it simply duplicates a
conventional tort or breach of contract claim, this Court notes
23

relationship is governed—in its entirety—by a valid and binding
contract, Plaintiff has failed to state a facially plausible
claim of unjust enrichment under New Jersey law.”

Id. at *24.

Plaintiff’s opposition papers do not address this issue and,
like the Complaint, fail to contest the validity of the
underlying contract(s); as such, this Court will grant
Defendant’s motion to dismiss Plaintiff’s unjust enrichment
claim.

c. Violation of Regulation E, 12 C.F.R. § 205.10(b)
and the Electronic Fund Transfers Act (“EFTA”), 15
U.S.C. 1693 et seq.

With respect to the Electronic Fund Transfers Act,
(“EFTA”), 15 U.S.C. 1693 et seq. and Regulation E, 12 C.F.R. §
205.10(B), which implements the EFTA, Plaintiff claims that
these sections were violated when “Defendant made unauthorized
withdrawals from [Plaintiff’s] Commercial Account on a recurring
basis without obtaining a writing signed or similarly

that at this stage, other Courts, including the Court that
decided the Swift matter, have allowed an unjust enrichment
claim to proceed even where there is a concurrent breach of
contract claim because a “[p]laintiff is not barred from
offering alternative or inconsistent theories of recovery
arising out of the same facts.” Mizrahi v. Checkolite
International, Inc., No. 14-79876, 2015 U.S. Dist. LEXIS 91609,
at *7 (D.N.J. July 15, 2015).

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authenticated authorization for preauthorized electronic fund
transfers . . . .”

Compl. at ¶ 51.

Defendant argues that no such claim can stand because the
protections of the EFTA and Regulation E in this instance do not
extend to corporations like the Plaintiff.

Under Section 15

U.S.C. § 1693a(5), a consumer is defined as a “natural person”
and case law interpreting this issue has held that
“[c]orporations or other business entities are not ‘consumers’
for purposes of EFTA.

. . . Plaintiffs here are all business

entities, and hence do not fall within the definition of
‘consumers.’"

Ironforge.com v. Paychex, Inc., 747 F. Supp. 2d

384, 402 (W.D.N.Y. 2010).
The case cited by Plaintiff in its opposition brief only
serves to underscore the fact that the EFTA and Regulation E are
inapplicable here.

See Royal Arcanum Hosp. Assn. v. Capital One

Bank, 35 Misc. 3d 1205(A)(N.Y. Sup. Ct. 2012)(finding that
plaintiff the EFTA and Regulation E were “inapplicable to
business entities like plaintiff.”)(citing Ironforge.com v.
Paychex, Inc., 747 F. Supp. 2d 384, 402 (W.D.N.Y. 2010)).

Thus,

because the statute is inapplicable by its plain terms the
Defendant’s motion to dismiss the EFTA and Regulation E claim
shall be granted.

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d. Breach of Contract

With respect to Plaintiff’s breach of contract claim, the
parties agree there is no meaningful distinction between New
York and New Jersey law.

Plaintiff has alleged that Defendant

had a duty to adequately disclose its foreign currency
conversion methodology.

Again, Defendant repeats its arguments,

made in support of its motion to dismiss Plaintiff’s fraud-based
claim, that it “adequately disclosed its foreign currency
conversion methodology in the Deposit Account Agreement,” –
i.e., that it would use its “applicable exchange rate.”
To establish a breach of contract claim, a plaintiff must
demonstrate that (1) the parties entered into a valid contract,
(2) that the plaintiff honored his own obligations under the
contract, (3) that the defendant failed to perform his
obligations under the contract, and (4) that the plaintiff
sustained damages as a result.

See DeHart v. U.S. Bank, N.A.

ND, 811 F. Supp. 2d 1038, 1047-48 (D.N.J. 2011); Marks v. New
York Univ., 61 F. Supp. 2d 81, 88 (S.D.N.Y. 1999)(stating that
the elements of a breach of contract claim in New York are: (1)
the existence of a contract, (2) performance by the party
seeking recovery, (3) non-performance by the other party, and
(4) damages attributable to the breach).

26

For the reasons already set forth above, this Court finds
that as currently pled, Plaintiff has failed to adequately
allege a failure to perform under the Agreement by the
Defendant. 8

Plaintiff has not pled facts sufficient to sustain

its conclusory assertion that Defendant charged a “fee”;
instead, the allegations only state that the Agreement stated
that the Defendant would use its applicable exchange rate, and
it failed to use the rate quoted in the Wall Street Journal.
The allegations fail to demonstrate a breach of contract.

As

with the fraud claim, however, Plaintiff shall have leave to
amend.

e. Other States’ (and the District of Columbia’s)
Consumer Protection Laws.

The final count of Plaintiff’s Complaint, Count V, seeks to
assert claims for “violations of other states’ consumer
protection laws,” and cites, broadly, all other states consumer
protection acts.

Compl. at ¶ 64.

Because Plaintiff’s claims

are being dismissed as set forth above, it has no standing to
pursue additional allegations on behalf of class members at this
juncture as it has not sufficiently alleged that it was injured.
Zimmerman v. Schaeffer, No. 06-17845, 2008 U.S. Dist. LEXIS

8

Plaintiff acknowledges in its opposition brief that the
breach of contract arguments are identical to those asserted
with respect to the NJCFA claim. Pl.’s Opp. Br. at 28.
27

17845, at *12 (M.D. Pa. Mar. 7, 2008)(“If none of the named
plaintiffs can establish standing for himself, then none may
seek relief on behalf of the class.”).

Count V will similarly

be dismissed.

IV. Conclusion

For the reasons set forth above, this Court will grant
Defendant’s motion to dismiss.

Plaintiff’s will, however, be

granted leave to file an amended complaint within twenty-one
(21) days of entry of this Opinion in order to cure the
deficiencies identified herein.

s/Renée Marie Bumb
RENÉE MARIE BUMB
United States District Judge
Dated:

August 18, 2015

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