BULUT v. JP MORGAN CHASE BANK, N.A. et al

Filing 20

OPINION. Signed by Judge John Michael Vazquez on 5/1/2019. (sm)

Not for Publication

UNITED STATES DISTRiCT COURT
DISTRICT OF NEW JERSEY

SARAH A. BULUT,

Plain tff,
Civil Action No. 18-9303
V.

OPINION

JP MORGAN CHASE BANK, N.A., et al.,
Defendants.

John Michael Vazgucz, U.S.D.J.

Presently before the Court is Defendants JP Morgan Chase Bank, N.A. (“Chase”), Visa
USA, Inc. and Visa, Inc.’s (collectively “Visa”) motion to dismiss the Complaint pursuant to
Federal Rule of Civil Procedure 1 2(b)(6). D.E. 9. Plaintiff Sarah A. Bulut (“Bulut” or “Plaintiff’)
filed a brief in opposition (D.E. 12) to which Defendants replied (D.E. 15).’ The Court reviewed
the parties’ submissions and decided the motion without oral argument pursuant to Fed. R. Civ. P.
78(b) and L. Civ. R. 78.1(b). For the reasons set forth below, Defendants’ motion to dismiss is
GRANTED.

Defendants’ brief in support of their motion to dismiss (D,E. 9-1) will be referred to as “Defs.
Br.”; Plaintiffs opposition (D.E. 12) will be referred to as “PIf. Opp.”; and Defendants’ reply (D.E.
15) will be referred to as “Defs. Reply.”

I.

FACTUAL BACKGROUND2 & PROCEDURAL HISTORY

This case concerns allegedly fraudulent purchases on Plaintiffs Visa-branded credit card
that was issued by Chase. Chase’s obligations are set forth in the cardholder agreement. Plaintiff
complained about certain purchases oil her credit card, which total S94,447. to Chase and Visa on
numerous occasions and sought a chargeback. Plaintiff alleges that Chase and Visa knew the
charges were related to Rumelia Capital, which ran an “internet-based offshore binary option
scam,” and that they were “emanating from foreign countries” where binary option scams were
based. Compl. ¶ U. D.E. I. Chase reviewed Plaintiffs numerous disputes but determined that
there was no evidence that a billing error occurred. As a result, the transaction charges remain on
Plaintiff’s account such that Plaintiff is liable for the disputed amount. Set’ generally Compl.
Plaintiffs allegations are not entirely clear. At first blush, the Complaint appears to
indicate that Plaintiffs credit card was used without her knowledge or authorization. Yet, as
clarified in the briefing, it appears that Plaintiff fell victim to a scam; she voluntarily used her
credit card to provide ftnds to the scammers but incurred more charges than she anticipated.
Plaintiff now complains that Defendants should not have permitted her to do so or, alternately,

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The factual background is taken from Plaintiffs Complaint (D.E. I), as well as the exhibits
attached to the Complaint. D.E. 1-1. 1-2. When reviewing a motion to dismiss, a court accepts as
true all well-pleaded facts in the Complaint. Fattier v. UPMC Shadvside. 578 F.3d 203, 210 (3d
Cir. 2009). A court may also consider any document integral to or relied upon in the Complaint.
Schmidt v. Skolas. 770 F.3d 241, 249 (3d Cir. 2014) (citing in re Burlington Coat Factory Sec.
Litig.. 114 F.3d 1410, 1426 (3d Cir. 1997)). Here, Plaintiff attached the cardholder agreement and
Chase’s responses to Plaintiffs disputes as exhibits to the Complaint. The exhibits are referenced
in the Complaint, and the parties agree that the documents are authentic and critical to deciding
the current motion. Accordingly, the Court will consider the exhibits in deciding this motion to
dismiss.

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should have reftnded her the substantial charges that she incurred on her credit card. Plaintiff
does not allege that Defendants were part of the scam itself
Plaintiffs Complaint asserts the following claims: (1) violation of the New Jersey
Consumer Fraud Act (“CFA” or the “Act”); (2) consumer contract containing unlawthl provision
(presumably under the i’ew Jersey Truth-In-Consumer Contract Warranty and Notice Act); (3)
common law fraud; (4) breach of contract; and (5) breach of the implied covenant of good faith
and fair dealing. Id. Defendant responded with the instant motion to dismiss. D.E. 9.
IT.

STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) pennits a court to dismiss a complaint that fails

“to state a claim upon which relief can be grantcd[.” For a complaint to survive dismissal under
Rule l2(b)(6), it must contain sufficient factual matter to state a claim that is plausible on its face.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell AtL C’orp.

ic

Twombly, 550 U.S. 544,

570 (2007)). A claim is facially plausible “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. Further, a plaintiff must “allege sufficient facts to raise a reasonable expectation that discovery

will uncover proof of her claims.” Connellv v. Lane Const. Corp., 809 F.3d 780, 789 (3d Cir.
2016). In evaluating the sufficiency of a complaint, district courts must separate the factual and
legal elements. Fowler v. UPMCShadvside, 578 F.3d 203, 210-211 (3d Cr. 2009). Rcstatements
of the elements of a claim are legal conclusions, and therefore, are not entitled to a presumption of
truth. Bunch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court. however,
“must accept all of the complaint’s well-pleaded facts as true.” Fouler. 578 F.3d at 210. Even if

The factual allegations should have been clear in the Complaint and intentional, misleading
factual allegations could subject Plaintiffs counsel to sanctions under Rule II of the Federal
Rules of Civil Procedure.
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plausibly pled, however, a complaint will not withstand a motion to dismiss if the facts alleged do
not state “a legally cognizable cause of action.” Turner v. J.P. Morgan Chase & Co.,No. 14-7148,
2015 WL 12826480, at *2 (D.N.J. Jan. 23, 2015).
“Independent of the standard applicable to Rule 12(b)(6) motions, Rule 9(b) imposes a
heightened pleading requirement of factual particularity with respect to allegations of fraud.” In
re Rockefeller Cm Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002). Pursuant to Rule
9(b), when “alleging fraud or mistake, a party must state with particularity the circumstances
constituting fraud or mistake

.

.

.

[m]alice, intent, knowledge, and other conditions of a person’s

mind may be alleged generally.” Fed. R. Civ. P. 9(h). Thereffire. an allegation of fraud must be
supported by factual details such as “the who, what, when, where and how of the events at issue.”
U.S. cx reL Moore & so., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d 294, 307 (3d Cir. 2016).
This heightened pleading standard is designed to “ensure that defendants are placed on notice of
the precise misconduct with which they are charged, and to safeguard defendants against spurious
charges of fraud.” Craftmatic Sec. Litig.

i’.

Kraftsow, 890 F.2d 628, 645 (3d Cir. 1989) (internal

quotation marks omitted). In addition, the requirements of Rule 9(b) apply to claims brought under
the New Jersey CFA. See Schiano c MBNA, No. 05-1771, 2014 WL 1430034, at 5 (D.N.J. Apr.
9,2014).
III.

ANALYSIS
1. The New Jersey Consumer Fraud Act (Count I)
The CFA “seeks to protect consumers who purchase goods or services generally sold to

the public at large.” Cetel

i’.

Kinvan Fin. Grp., Inc., 460 F.3d 494, 514 (3d Cir. 2006). As

“remedial legislation,” the Act “should be construed liberally.” hit ‘I Union of Operating Eng rs
Local No. 68 Welfare Fund v Merck & Co., Inc., 192 N.J. 372, 389 (2007). To state a CFA claim,

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a plaintiff must allege “(I) unlawful conduct; (2) ascertainable loss; and (3) a causal relationship
between the unlawful conduct and the ascertainable loss.” Id. Unlawful conduct is defined by the
Act as “any unconscionable commercial practice, deception. fraud, false pretense, false promise,
misrepresentation, or the knowing, concealment. suppression. or omission of any material fact with
intent that others rely upon such concealment, suppression or omission.”

N.J.S.A. 56:8-2.

Generally, unlawful conduct falls into three categories: (1) affirmative acts; (2) knowing
omissions; and (3) regulation violations. Cox v. Sears Roebuck & Co., 138 N.J. 2, 17(1994).
In this instance, Plaintiffs CFA claim is premised on affirmative acts and knowing
omissions. Plaintiff alleges that between October 4.2016 and February 2, 2017. Rumelia Capital
illegally submitted unauthorized purchases to her credit card that totaled at least S94,447 through
third-party companies. Compl.
binary option scam.

¶

¶

10. Rumelia Capital allegedly runs an internet-based offshore

10. Plaintiff further alleges that Defendants knew Rumelia Capital was

affiliated with illegal and fraudulent binary option scams.

Compl. ¶fflj 24, 28-35.

Moreover,

Plaintiff alleges that when the illegal charges were placed on Plaintiffs credit card, Defendants
“knowingly and improperly reviewed, authorized, [andj approved” the illegal charges. Id, ¶ 25.
After the charges were posted, Plaintiff complained and sought a chargeback from Defendants. Id.
¶ 13.

Plaintiff alleges that Defendants continued to make knowing omissions and

misrepresentations regarding Rumelia Capital and the validity of the charges after Plaintiff’
contested the charges.4 Id.

¶‘J 25-26.

Thus, as pled, the alleged misrepresentations and omissions

occurred after Rumelia placed the fraudulent charges on Plaintiffs credit card. Accordingly,
Plaintiff cannot establish a causal relationship between any alleged unlawful conduct by

Plaintiff alleges that Chase and Visa have stopped “accepting credit card transactions submitted
by Rumelia Capital and similar illegal-based offshore binary option scams.” Compl. ¶ 17.
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Defendants and Plaintiff’s loss. Stated differently. Plaintiff cannot dcmonstrate that Defendants’
misrepresentations or omissions caused her to lose money because the charges were already made
before Defendants even had an opportunity to make an actionable misrepresentation or omission.
Plaintiff contends that Defendants should have known that Rumelia Capital “was basically
an offshore criminal enterprise before Plaintiff made any charges.” PIf. Opp. at 10. Thus, Plaintiff
appears to be arguing that Defendants had a duty to inform Plaintiff about Rumelia Capital even
before she decided to invest in the binary option scam. For an omission claim to be actionable, a
defendant must have a duty to disclose. Acaiic1 v. Brother

lilt?

Corp., 673 F. Supp. 2d 282, 297

(D.N.J. 2009) (“Obviously, there can be no fraud, or reliance for that matter, if the defendant was
under no obligation to disclose the information in the first place.”). Plaintiff, however, does not
point to any legal authority establishing a duty that required Defendants to disclose information
about Rurnelia to Plaintiff Moreover, the Court is not aware of any duty that requires credit card
issuers or payment networks to review a customer’s financial decisions. Without an actionable
duty, Plaintiff cannot state an CFA claim based on the omissions as alleged.
Plaintiff, therefore, fails to state a claim under the CFA. Accordingly, Count I is dismissed.
2. Common Law Fraud (Count HI)

Plaintiffs fraud claim fails for similar reasons. To state a common law fraud claim, a
plaintiff must plead (I) a material misrepresentation of a presently existing or past fact; (2)
knowledge or belief by the defendant of its falsity; (3) and intention that the other person rely on
it; (4) reasonable reliance; and (5) resulting damages. Gennari v. Weichert Co. Realtors, 148 N.J.
582, 6100997). Plaintiff does not establish that Defendants made any material misrepresentations
or omissions with an intent that she rely on such statements and fails to establish reasonable
reliance. As discussed, Defendants alleged misstatements and omissions were made after Plaintiff

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suffered the loss, and there was no duty that required Defendants to inform Plaintiff about Rumelia
Capital before she ever decided to make the investments.
Plaintiff relies on Network Commodities, LLC

i’.

Golondrinas Trading Co.. LTD., No. 11-

3119,2013 WL 1352234 (D.N.J. Apr. 1,2013) to argue that she properly pleads a claim for fraud.
PIf. Opp. at 12-13. In Network Commodities the parties entered in a master agreement and then a
series of shipping contracts under which the defendants were supposed to ship seafood from
Ecuador after the plaintiffs made cash advances. Id. at 1. The plaintiffs alleged that after a certain
point in time, the defendants had no intention of performing under the contract although the
plaintiffs continued to make cash advancements. Id. Among other things, the court determined
that the plaintiffs stated claims for fraud in the inducement of each separately negotiated
agreement. Id. at *9 Network Commodities is inapposite, as the case would support Plantiff’s
position if she was suing Rumelia Capital rather than Defendants. Rumelia Capital is the alleged
party who had no intent of performing although Plaintiff was still investing money. Plaintiffs
common law fraud claim is dismissed.
3. Breach of Contract Claims
At the outset, the parties applied different law when analyzing Plaintiffs contractual
claims. The cardholder agreement contains a choice-of-law provision stating that Delaware law
applies to the cardholder agreement and Plaintiffs account. Compl., Ex. A at 6. Accordingly’,
Defendants initially used Delaware law to argue that Plaintiffs contract-based claims should be
dismissed.5 Defs. Br. at 16. While Plaintiff acknowledges that the cardholder agreement has a

In their reply brief, Defendants maintain that Delaware law should apply but state that it is
unnecessary to conduct a choice-of-law analysis at the motion to dismiss stage because Delaware
and New Jersey law do not conflict. Defs. Reply at 9 n.4.
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Delaware choice-of-law provision, she contends that New Jersey law should apply because, with
respect to her contract claims, there is no conflict between Delaware and New Jersey law. Pif.

Opp. at

14-15, 17.
In diversity cases, courts look to the choice-of-law rules of the forum state, here New

Jersey, to decide which body of substantive law to apply when interpreting a contract provision.
Collins cx ref. Collins v. Mary Kay, Inc., 874 F.3d 176, 183 (3d Cir. 2017). “New Jersey choice
ot:law rules provide that bordinadly when parties to a contract have agreed to be governed by the
laws of a particular state, New Jersey courts will uphold the contractual choice.”6 Id. (quoting
Instructional Si’s., Inc.

i’.

Coniput. Curriculum Corp., 130 N.J. 324, 341 (1992)). As a result, the

Court will uphold the choice-of-law provision in the cardholder agreement and apply Delaware
law to the contract-based claims.7
“It is a general principal of contract law that only a party to a contract may be sued from
breach of the contract.’ Gotixani Partners, L.P. V Halluood Realty Partners, L.P., 817 A.2d 160,
172 (Del. 2002) (quoting Wallace v. Wood, 752 A.2d 1175, 1180 (Del. Ch. 1999)). Plaintiffs
allegations only involve the cardholder agreement between Chase and Plaintiff; Visa is not a party
to the agreement. See Compl. Ex. A. Accordingly, because Visa is not a party to the agreement
at issue the contract-based claims are dismissed as to Visa.
i.

Breach of Contract (Count TV)

Defendants contend that the breach of contract claim should be dismissed because Plaintiff
fails to identi& any obligations in the cardholder agreement that were actually breached. Defs.

Although there are exceptions to this general rule (Collins cx reL collins, 874 F.3d at 184), the
parties do not argue that an exception should apply here.

6

The Court notes that despite the choice of law clause, both parties used New Jersey law to analyze
Plaintiffs fraud-based claims.
$

Br. at 16-18. To state a claim for breach of contract, a plaintiff must allege (I) the existence of a
contract; (2) breach of the contract; (3) damages as a result of the breach; and (4) that plaintiff
perfonned its duties under the contract. VLIJV Tech., LLC i. Heiileu-Packard Co., 840 A.2d 606,
612 (Del. 2003). A plaintiff must identify the specific contract clause that was breached. Wal
Mart Stores, Inc. v. AIG Life Ins. Co., 901 A.2d 106, 116 (Del. 2006); see also Shaev

AdA-epson,

No. 10436-VCN, 2015 WL 5882942, at *4 (Del. Ch. Oct. 5, 2015) (“Where a plaintiff fails to
identify any contract provision that was breached, the count fails to state a claim upon which relief
may be granted.”).
Plaintiff maintains that Defendants breached contractual duties by improperly reviewing
and approving illegal transactions, denying Plaintiffs entitlement to a chargeback, and continuing
to hold Plaintiff liable for the charges she contested. Compl.

¶ 55-59.

But rather than identifying

specific provisions of the cardholder agreement, Plaintiff argues that Defendants breached various
“ffindamental contractual dut[ies].”

Plf. Opp. at 16.

Plaintiffs failure to identify specific

contractual provisions is fatal to her claim. See Shaei’. 2015 WL 5882942, at *4 Count Four,
therefore, is also dismissed as to Chase.
ii.

The Implied Covenant of Good Faith and Fair Dealing (Count V)

Defendants argue that Plaintiff fails to plausibly plead a claim for breach of the duty of
good faith and fair dealing. Like the breach of contract claim, Defendants contend that Plaintiff
does not identify a specific implied contractual obligation that was breached. Defs. Br. at 18-19.
Pursuant to Delaware law, every contract has an implied obligation of good faith and fair dealing
which requires that the parties “act reasonably to fulfill the intent of the parties to the agreement.”
Chamison v. Healthtrusr, Inc., 735 A.2d 912, 920 (Del. Ch. 1999). To state a claim for breach of
the implied covenant, a plaintiff must (I) identify a specific implied contractual obligation; (2) a

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breach of that obligation; and (3) resulting damage to the plaintiff Kurodu

1’.

SPJS Holdings,

L.L.C. 971 A.2d 872, 888 (Del. Cli. 2009). “General allegations of bad faith conduct are not

sufficient.” Id. Plaintiff fails to identify’ which implied contracwal obligation is at play. Plaintiff
only pleads that Defendants owe a duty “pursuant to the numerous express and implied agreements
and relationships between the parties.” Compl. ¶ 62. Consequently, Plaintiff fails to state an
implied covenant claim. Kuroda, 971 A.2d at 887 (dismissing implied covenant claim because
plaintiff “failed to articulate a contractual benefit he was denied as a result of defendants’ breach
of an implied provision of the contract”).
In her brief, Plaintiff argues that Defendants acted in bad faith because they did not inform
Plaintiff that she was dealing with “nothing more than a criminal enterprise.” and had Plaintiff
been informed, she would have disputed the charges within required the 60-day window. PIE

Opp.

at 18. Plaintiff cannot amend her pleadings by adding new details in her brief See Janowski

1.

City of North iVilthiood, 259 F. Supp. 3d 113, 120 (D.N.J. 2017). But even if the Court were to

consider these new allegations, Plaintiff still fails to state an implied covenant claim. First, general
allegations of bad faith are insufficient. Kuroda. 971 A.2d at 88$.

Second, the cardholder

agreement clearly sets forth Chase’s obligations for addressing potentially fraudulent transactions
and for responding the billing errors. An implied covenant claim “cannot be invoked to override
express provisions of a contract.” Id. Count V, therefore, is dismissed as to Chase.
iii.

Illegal Contract (Count II)

As pled, Count 11, which is entitled “Consumer Contract Containing Unlawful Provision,”
appears to be an attempt by Plaintiff to invalidate the alleged fraudulent charges because of an
unlawffil provision in the cardholder agreement. Compl. ¶Mj 36-42. In her brief, Plaintiff clarifies
that each of the fraudulent charges were made based on an illegal contract between Plaintiff and

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Rumelia Capital. Therefore, Plaintiff continues, Defendants cannot seek to enforce a debt based
on known illegal contracts. Plf. Opp. at 12. Again, Plaintiff cannot amend her complaint through
her brief. Janowski, 259 F. Supp. 3d at 120. Moreover, Bulut offers no legal authority for her new
theory that Chase is somehow responsible for a contractual relationship that she chose to enter into
with Rumelia Capital. Given the fact that Plaintiffs new theories are unsupported, Count II is
dismissed for failure to state a claim.
IV.

CONCLUSION

For the reasons stated above, Defendants’ motion to dismiss (D.E. 9) is GRANTED and
the Complaint is dismissed. A court must grant leave to amend a complaint “absent evidence that
amendment would be fUtile or inequitable.” Sliane v. Fauver, 213 F.3d 113, 116-17 (3d Cir. 2000).
An amended complaint would be fUtile if it “would fail to state a claim upon which relief could be
granted.” Id. at 115. Given Plaintiffs legal theories, the Court has serious concerns that any
attempted amendment will be fUtile. However, because this is the first motion to dismiss, the Court
will grant Plaintiff leave to file an amended complaint. Yet, in addition to her legal theories,
Plaintiff must plausibly and accurately set forth her factual allegations. The Court has concerns
that Plaintiffs Complaint attempted to obfuscate the underlying facts in this matter.
The dismissal is without prejudice and Plaintiff is granted leave to file an Amended
Complaint.

Plaintiff has thirty (30) days to file an Amended Complaint, if she so chooses,

consistent with this Opinion. If Plaintiff fails to file an Amended Complaint, the dismissal will be
with prejudice. An appropriate Order accompanies this Opinion.
Dated: May 1,2019

John Michael Vazqz’W.S.D.J.

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