Towne Auto Sales, LLC v. Tobsal Corporation et al

Filing 26

Opinion and Order. Defendant Bank of America's Motion to Dismiss (Related doc # 20 ) is granted in part and denied in part. Plaintiff's Second Amended Complaint is dismissed as against Defendant Bank of America. Judge Christopher A. Boyko on 11/14/2017. (H,CM)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

TOWNE AUTO SALES, LLC,
Plaintiff,
vs.
TOBSAL CORPORATION; TOBIAS
TRUCKS, LLC; BRYAN AVERY;
CHRIS GENTILE; SERGEJS
TRASKOVS; BANK OF AMERICA
NATIONAL ASSOCIATION; and
SUZEL YAPOR,
Defendants.

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CASE NO. 1:16-cv-02739
JUDGE CHRISTOPHER A. BOYKO

OPINION AND ORDER

CHRISTOPHER A. BOYKO, J.:

This matter comes before the Court on Defendant Bank of America’s (“BANA”) Motion
to Dismiss (ECF DKT #20) Plaintiff’s claims for failure to state a claim pursuant to Fed.R.Civ.P.
12(b)(6). Defendant’s Motion is granted in part and denied in part.
I. FACTUAL AND PROCEDURAL HISTORY
According to its Second Amended Complaint (ECF DKT #15), Plaintiff Towne Auto
Sales, LLC (“Towne”) is an Ohio limited liability company in the business of buying and selling
pre-owned vehicles. On or about November 5, 2015, Plaintiff negotiated with Defendant Tobias
Trucks for the purchase of a 1958 Corvette. As a result of this negotiation, Towne wired
$27,050 from its Chase Bank account to a BANA account believed to be that of Tobias. The

listed account holder, however, was Tobsal Corporation (“Tobsal”). Towne’s President, Mark
Powers, called BANA’s customer service line to inform a representative that he believed
something fraudulent was occurring. Although he instructed the representative not to process the
wire transaction, BANA processed it the following day. Tobias subsequently failed to deliver
the vehicle to Towne.
Plaintiff’s Second Amended Complaint also alleges that Sergejs Traskovs, the purported
President of Tobsal, opened a bank account at BANA on October 23, 2015 with the assistance of
Suzel Yapor, a BANA employee. Plaintiff’s Second Amended Complaint asserts that Yapor and
BANA negligently allowed Traskovs to open the account; and in doing so, violated the Bank
Secrecy Act and the Patriot Act.
II. LAW AND ANALYSIS
A. Legal Standard
When presented with a motion to dismiss, the Court must test the sufficiency of the
complaint and determine whether “accepting the allegations in the complaint as true and
construing them liberally in favor of the plaintiff, the complaint fails to allege ‘enough facts to
state a claim for relief that is plausible on its face.’” Ashmus v. Bay Vill. Sch. Dist. Bd. of Educ.,
2007 U.S. Dist. LEXIS 62208 (N.D. Ohio 2007), quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 554, 570 (2007). Claims alleged in the complaint must be “plausible,” not merely
“conceivable.” Id. Dismissal is warranted if the complaint lacks an allegation as to a necessary
element of the claim raised. Craighead v. E.F. Hutton & Co., 899 F.2d 485 (6th Cir. 1990).
B. Jurisdiction
While personal jurisdiction flows from the Due Process Clause, the requirement may be

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waived by the actions of the defendant. Days Inns Worldwide, Inc v. Patel, 445 F.3d 899, 905
(6th Cir. 2006). Plaintiff asserts that Defendant waived its ability to raise a defense for lack of
jurisdiction in its Motion (ECF DKT #20) in response to the Second Amended Complaint
because Defendant did not raise this defense in its previous Motion to Dismiss (ECF DKT #5).
“Although . . . an amended complaint supersedes the initial complaint and becomes the operative
pleading in the case, the filing of an amended complaint does not automatically revive all
defenses or objections that the defendant may have waived in response to the initial complaint.”
Krinsk v. SunTrust Banks, Inc., 654 F.3d 1194 (11th Cir. 2011) (citation omitted). Under
Fed.R.Civ.P. 12(h), a party waives the right to contest personal jurisdiction by failing to assert
the defense in a responsive pleading or by making a general appearance. Reynolds v. Int’l
Amateur Athletic Fed’n, 23 F.3d 1110 (6th Cir. 1994). However, a party is not entirely barred
from raising such defenses in the event of an amended complaint. The Krinsk court stated that a
defendant may raise defenses, which otherwise would have been barred, when the amended
complaint changes the theory or scope of the case. Krinsk, 654 F.3d at 1202.
Defendant argues that Plaintiff changed the theory of the case when it filed the Second
Amended Complaint, which included allegations of a phone call made by Towne’s President to a
BANA representative. Defendant claims that by adding an allegation that BANA assumed a
duty owed to Plaintiff based upon this conversation, Plaintiff changed its theory of liability by
changing the source of Defendant’s duty to Plaintiff, thus allowing a defense based upon lack of
personal jurisdiction to be raised. However, despite the new allegations in the Second Amended
Complaint, both the theory and the scope of the case remain the same. In Krinsk, the amended
complaint changed the definition of the class, increasing its size from hundreds to potentially

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tens of thousands of members. Id. at 1199-1203. The court stated that this change in the
potential putative class sufficiently changed the scope of litigation to allow defendant to rescind
its previous waiver. Id. at 1204. BANA points out, in reply to Plaintiff’s Brief in Opposition,
that it has participated in this litigation for far less time than the defendant in Krinsk, where the
court found no waiver. See Def.’s Reply Mem. Supp. Mot. Dismiss p. 4. However, the court in
Krinsk specifically relied on the expansion of the potential class (i.e., the expansion of the theory
and scope of the case) as the basis for reviving defendant’s affirmative defense for lack of
jurisdiction. Krinsk, 654 F.3d at 1204. Here, no additional claims have been alleged. Nor have
any claims been amended that would subject BANA to broader potential liability than was
claimed in the First Amended Complaint. Plaintiff’s Second Amended Complaint added
allegations of a telephone conversation between Towne’s President and a BANA employee in
support of its claim for negligence under the theory that this conversation resulted in a duty owed
by BANA. The argument remains that BANA breached a duty owed to Plaintiff. Importantly, at
this stage detailed factual allegations are not necessary. Twombly, 550 U.S. at 555. Since
neither the scope nor the theory of the case has changed as a result of Plaintiff’s Second
Amended Complaint, Defendant cannot raise a defense for lack of personal jurisdiction having
waived it by failing to present the defense in a prior motion. As such, jurisdiction over
Defendant BANA in this court is proper and Defendant’s Motion to Dismiss is denied as it
relates to lack of jurisdiction.
C. Negligence (Count IV)
In Ohio, a claim for negligence requires “the existence of a duty on the part of the one
sued not to subject the [one seeking recovery] to the injury complained of, a failure to observe

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such duty, and an injury resulting proximately therefrom.” Feldman v. Howard, 10 Ohio St. 2d
189, 193, 226 N.E.2d 564, 567 (1967). “Ohio follows the prevailing rule that a bank owes no
duty to a person who is neither a customer nor an account-holder.” Driessen v. Woodforest Nat.
Bank, 940 F.Supp.2d 584, 590 (S.D. Ohio 2013). In Driessen, as here, the defendant bank owed
no duty to the plaintiff since there was no evidence showing any relationship between the two
parties. Id. at 591. In this case, Plaintiff was a customer of Chase Bank, not of Defendant. (Pl.
Sec. Am. Compl. ¶ 15). Defendant, therefore, owed no duty to Plaintiff, a non-customer.
Plaintiff contends that BANA assumed a duty as a result of a telephone conversation that
Plaintiff’s President, Mark Powers, had with a BANA customer service representative. The
breach of this assumed contractual duty, the argument goes, is the foundation for a claim for
negligence. However, the Second Amended Complaint does not sufficiently state allegations
which would amount to a contract between the parties. Therefore, Plaintiff has not established a
contractual duty.
Because Plaintiff’s Second Amended Complaint does not set forth sufficient facts to
establish the element of duty required for a negligence claim, it is not necessary for the Court to
analyze proximate causation.
Defendant further asserts that Plaintiff’s negligence claims must fail because its injury is
only economic. “The general rule applicable to situations in which privity of contract is lacking
is there is no duty to exercise reasonable care to avoid intangible economic loss or losses to
others that do not arise from tangible physical harm to persons and tangible things.” Laurent v.
Flood Data Serv., Inc., 766 N.E.2d 221, 227 (Ohio Ct. App. 2001). Plaintiff did not have a
contractual relationship with BANA. Plaintiff’s only alleged injury is $27,050 it purportedly

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paid in exchange for a Corvette it did not receive. Since the general rule does not allow a
plaintiff to recover under a theory for negligence for loss that is solely economic, Plaintiff’s
claim fails. Floor Craft Floor Covering, Inc. v. Parma Community General Hosp. Ass’n, 560
N.E.2d 206 (Ohio 1990).
Defendant’s Motion to Dismiss Count IV is granted.
D. Negligence Per Se (Count V)
The Patriot Act and the Bank Secrecy Act impose a duty on banks and financial
institutions to report suspicious activity indicative of criminal activities to the government of the
United States. Spitzer Management, Inc. v. Interactive Brokers, LLC, 2013 WL 6827945 (N.D.
Ohio 2013). “Neither of these statutes creates a private cause of action. . . .” Id. at *2; see also
In re Agape Litig., 681 F.Supp.2d 352, 360 (E.D.N.Y. 2010) (“[B]ecause the Bank Secrecy Act
does not create a private right of action, the Court can perceive no sound reason to recognize a
duty of care that is predicated upon the statute’s monitoring requirements.”); Armstrong v.
American Pallet Leasing Inc., 678 F.Supp.2d 827 (N.D. Iowa 2009) (stating that neither the
Bank Secrecy Act nor the Patriot Act impose a duty of care to plaintiffs because neither creates a
private right of action). Since neither Act establishes a private cause of action, Defendant’s
Motion to Dismiss Count V is granted.
E. Respondeat Superior (Count VI)
In Ohio, “a principal or employer may generally be held liable for tortious acts
committed
by its agents or employees if such acts occur within the scope of the employment relationship.”
Riotte v. Cleveland, 195 Ohio App.3d 387, 960 N.E.2d 496 (8th Dist. 2011). Additionally,

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“employees do not possess a duty to a third party whom they deal with only on behalf of their
employer.” In re Donahue Sec., Inc., 318 B.R. 667, 676 (S.D. Ohio 2004). In the absence of a
duty, there can be no liability on account of negligence. Jaronovic v. Iacofano, 2012 WL
1187744, 2012-Ohio-1581 (11th Dist. 2012). Since Yapor, BANA’s employee, owed no duty to
Plaintiff, BANA cannot be held liable for negligence under a theory of respondeat superior.
As discussed supra, Section D, Plaintiff’s negligence per se claim must also fail since
neither the Bank Secrecy Act nor the Patriot Act establishes a private cause of action. Thus,
Defendant cannot be held liable for negligence per se under either respondeat superior or
vicarious liability.
Defendant’s Motion to Dismiss Count VI is granted.
III. CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss (ECF DKT #20) is denied in
part and granted in part. The Motion is denied as it relates to jurisdiction because Defendant
waived the defense by failing to raise it in an earlier motion. The Motion to Dismiss is granted
for failure to state a claim under Fed.R.Civ.P. 12(b)(6) as it relates to the claims of Negligence,
Negligence per se and Respondeat Superior (Counts IV-VI), the only claims asserted against
Defendant Bank of America, N.A.
Therefore, Plaintiff’s Second Amended Complaint is dismissed as against Defendant
BANA.
IT IS SO ORDERED.
s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge
Dated: November 14, 2017
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