SCOTT v. PNC BANK, NATIONAL ASSOCIATION

Filing 15

MEMORANDUM OPINION indicating that, for reasons more fully stated within, Defendant's Motion to Dismiss (Docket No. 11 ) is granted and Plaintiff's Amended Complaint is dismissed, with prejudice. An appropriate order follows. Signed by Judge Nora Barry Fischer on 9/24/18. (jg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
LORI A. SCOTT,
Plaintiff,
v.
PNC BANK, N.A.
Defendant.

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Civil Action No. 18-619
Hon. Nora Barry Fischer

MEMORANDUM OPINION
Plaintiff Lori A. Scott (“Plaintiff”) brings this action alleging that Defendant PNC Bank,
N.A. (“Defendant” or “PNC”) wrongfully interfered with and delayed her receipt of the proceeds
of her husband’s life insurance policy. Her Amended Complaint includes three causes of action:
(1) conversion; (2) fraud; and (3) breach of the covenant of good faith and fair dealing. The Court
has carefully considered the parties’ submissions (Docket Nos. 11, 12, 13, 14), and, for the reasons
stated more fully herein, the Defendant’s motion to dismiss (Docket No. [11]) is GRANTED.
I.

STATEMENT OF FACTS
This matter arises from an alleged dispute regarding a life insurance policy. The following

pertinent facts are set forth in the Amended Complaint, which the Court will accept as true for the
sole purpose of deciding the pending motion. See Eid v. Thompson, 740 F.3d 118, 122 (3d Cir.
2014).
Plaintiff’s husband, Harry W. Scott, Jr. (“the decedent”), died on August 2, 2017. (Docket
No. 9 at ¶ 6). Plaintiff is the sole heir to the decedent’s estate. (Id.). At the time of his death, the
decedent was the owner of Transamerica Life Insurance Policy No. 41951321 (“the Policy”). (Id.).
The Policy was issued in 2001 with a face amount of $1,000,000.00. (Id.). The Policy named
Plaintiff as the sole beneficiary and included an assignment in favor of RBC Centura Bank. (Id.).

As required by RBC Centura Bank, the decedent purchased the Policy in connection with a loan
transaction that was paid off and satisfied in 2004, effectively negating the assignment of the
Policy. (Id. at ¶ 7). Steps to eliminate and cancel the assignment of the Policy were overlooked
by the decedent and RBC Centura Bank. (Id.). After 2004, the decedent had no loans or other
financial dealings with RBC Centura Bank. (Id. at ¶ 8).
Defendant acquired RBC Centura Bank in March 2012. (Id. at ¶ 9). Following the
decedent’s death, Plaintiff filed a claim for the Policy’s proceeds on August 30, 2017, and was
advised by Transamerica of the RBC Centura Bank assignment. (Id. at ¶ 11). Plaintiff requested
that Defendant notify Transamerica that it had no interest in the Policy and that the RBC Centura
Bank assignment became a nullity in 2004. (Id.). Defendant refused and asserted an interest in
the Policy as a successor to RBC Centura Bank. (Id. at ¶ 12).
In March 2017, the decedent took out loans with Defendant for his business, AccuDoc
Solutions, Inc. (“AccuDoc”). (Id. at ¶¶ 10, 13). By virtue of her status as the sole heir to the
decedent’s estate, Plaintiff has full beneficial and eventual legal ownership in AccuDoc. (Id. at ¶
14). Following negotiations, Plaintiff and Defendant reached a contract agreement whereby the
Policy’s proceeds would be released to Plaintiff following her contribution of $500,000.00 to
AccuDoc, which would be used to immediately pay off Defendant’s purchasing card credit line.
(Id. at ¶¶ 15-16). The agreement also provided that Plaintiff’s contribution would be deemed to
be a note payable from AccuDoc to Plaintiff, to be subordinate to AccuDoc’s debt to Defendant.
(Id. at ¶ 16).
On January 31, 2018, Plaintiff loaned $500,000.00 to AccuDoc by wire transfer, which
AccuDoc used to pay off Defendant’s purchasing card credit line in the amount of $497,523.15.
(Id. at ¶ 17). Plaintiff’s counsel informed Defendant’s representative of the same and e-mailed

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copies of the signed six documents that Defendant had previously requested. (Id.). Thereafter,
Defendant’s representative e-mailed a subordination agreement, unlimited in amount, to Plaintiff’s
counsel. (Id. at ¶ 18). Plaintiff’s counsel telephoned Defendant’s representative to advise that the
parties’ agreement limited a subordination agreement to the $500,000.00 that Plaintiff had loaned
to AccuDoc. (Id. at ¶¶ 18-19). In a subsequent e-mail, Defendant’s representative described the
subordination agreement as a “standard” document. (Id. at ¶ 19). In response, Plaintiff’s counsel
requested that the subordination agreement be modified to reflect the agreement between the
parties. (Id.). Defendant’s representative replied, stating that “[u]pon receipt of the executed
subordination and original docs, we will issue the letter to Transamerica.” (Id. at ¶ 20). Plaintiff’s
counsel then e-mailed a copy of a complaint, threatening to file an action unless Defendant honored
the parties’ agreement to limit the extent of the subordination agreement and to notify
Transamerica to release the Policy’s proceeds to Plaintiff. (Id. at ¶ 21).
On February 1, 2018, Plaintiff’s counsel, Defendant’s representative, and Defendant’s
counsel participated in a teleconference, at which time Defendant did not offer to honor the
agreement between the parties. (Id. at ¶ 22). In the interim, Defendant’s representative informed
Transamerica by e-mail that it was “withdrawing its claim to the [life insurance] benefits and ha[d]
no objection to payment of all benefit proceeds directly to [Plaintiff].” (Id. at ¶ 23). Following
the teleconference, Defendant’s counsel e-mailed Plaintiff’s counsel a revised subordination
agreement that reduced the scope of the subordination agreement as originally agreed but added
language that would release Defendant from liability for its prior actions. (Id. at ¶ 24).
Plaintiff received the Policy’s life insurance proceeds from Transamerica on February 9,
2018. (Id. at ¶ 25). On February 14, 2018, Defendant’s representative e-mailed Plaintiff’s counsel
and offered to waive Plaintiff’s signing of a subordination agreement. (Id. at ¶ 26). Plaintiff

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alleges that Defendant’s conduct in failing to notify Transamerica that it had no interest in the
Policy and in attempting to change the terms of the parties’ agreement was outrageous, fraudulent,
and in bad faith, causing Plaintiff severe emotional distress, loss of opportunity, financial damages,
loss of earnings, and damage to her credit standing. (Id. at ¶¶ 27-28). Plaintiff asserts claims
against Defendant for conversion, fraud, and breach of the covenant of good faith and fair dealing.
(Id. at ¶¶ 29-47).
Plaintiff filed this action in the Court of Common Pleas of Allegheny County on April 20,
2018. (Id.). Defendant removed the action to this Court on May 9, 2018. (Docket No. 1).
Defendant filed a Motion to Dismiss Plaintiff’s Complaint and supporting briefing on May 30,
2018. (Docket Nos. 5, 7). After Plaintiff filed an Amended Complaint, Defendant filed a second
Motion to Dismiss and supporting briefing. (Docket Nos. 9, 11, 12). Plaintiff filed a response in
opposition, to which Defendant replied. (Docket Nos. 13, 14). This matter is now ripe for
disposition.
II.

DISCUSSION
A.

The Legal Standard

When reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6),
the Court must “‘accept all factual allegations as true, construe the complaint in the light most
favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint,
the plaintiff may be entitled to relief.’” Eid, 740 F.3d at 122 (quoting Phillips v. County of
Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). To survive a Rule 12(b)(6) challenge, a plaintiff's
“‘[f]actual allegations must be enough to raise a right to relief above the speculative level.’” Id.
(quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). “Thus, ‘only a complaint that states

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a plausible claim for relief survives a motion to dismiss.’” Id. (quoting Ashcroft v. Iqbal, 556 U.S.
662, 679 (2009)).
Although the Court must accept the allegations in the complaint as true, “‘[it is] not
compelled to accept unsupported conclusions and unwarranted inferences, or a legal conclusion
couched as a factual allegation.’” Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (quoting
Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007)). “Threadbare recitals of the elements of
a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at
678 (citing Twombly, 550 U.S. at 555). Instead, the plaintiff must plead facts which permit the
court to make a reasonable inference that the defendant is liable. Iqbal, 556 U.S. at 678; Twombly,
550 U.S. at 556-57.
Consistent with these principles, the Third Circuit Court of Appeals has prescribed a threestep analysis for purposes of determining whether a claim is plausible. First, the court should
“outline the elements a plaintiff must plead to a state a claim for relief.” Bistrian v. Levi, 696 F.3d
352, 365 (3d Cir. 2012). Second, the court should “peel away” legal conclusions that are not
entitled to the assumption of truth. Id.; see also Iqbal, 556 U.S. at 679 (“While legal conclusions
can provide the framework of a complaint, they must be supported by factual allegations.”). Third,
the court should assume the veracity of all well-pled factual allegations and then “‘determine
whether they plausibly give rise to an entitlement to relief.’” Bistrian, 696 F.3d at 365 (quoting
Iqbal, 556 U.S. at 679). This third step of the analysis is “a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.” Id. (quoting Iqbal, 556
U.S. at 679).

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B.

Conversion (Count I)

Under Pennsylvania law, the elements of a conversion claim are: (1) the deprivation of
another’s right of property in, or use or possession of, a chattel, or other interference therewith; (2)
without the owner’s consent and (3) without lawful justification. Gabriel v. Giant Eagle, Inc., 124
F. Supp. 3d 550, 573 (W.D. Pa. 2015); Norriton East Realty Corp. v. Central-Penn Nat’l Bank,
254 A.2d 637, 638 (Pa. 1969). Conversion can be committed in several ways, including: (1)
acquiring possession of the chattel with the intent to assert a right to it which is adverse to the
owner; (2) transferring the chattel and thereby depriving the owner of control; (3) unreasonably
withholding possession of the chattel from one who has the right to it; or (4) misusing or seriously
damaging the chattel in defiance of the owner’s rights. Fort Washington Res., Inc. v. Tannen, 846
F. Supp. 354, 361 (E.D. Pa. 1994) (citing Norriton East Realty Corp., 254 A.2d at 638). In
addition, a claim of conversion requires a plaintiff to establish an “immediate right to possession”
to the property at issue at the time the conversion is alleged to have occurred. Chrysler Credit
Corp. v. Smith, 643 A.2d 1098, 1100 (Pa. Super. Ct. 1994).
Here, pursuant to the assignment, the life insurance proceeds were being “held as collateral
security for any and all liabilities of [the decedent] . . . to the Assignee, either now existing or that
may hereafter arise in the ordinary course of business.” (Docket No. 12-1 at ¶ C).1 The assignment
further provides that the assignee had “[t]he sole right to collect from the insurer the net proceeds
of the Policy when it becomes a claim by death.” (Id. at ¶ A). Given same, Plaintiff cannot

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Plaintiff argues that the Court should disregard the assignment attached to Defendant’s brief because Defendant did
not include all operative documents between itself, AccuDoc, and the decedent. (Docket No. 13 at 4-5). Although a
district court generally may not consider matters outside of the complaint when ruling on a motion to dismiss, it is
well settled that a court may consider any undisputedly authentic document that a defendant attaches as an exhibit to
a motion to dismiss if the plaintiff’s claims are based on the document. See In re Burlington Coat Factory Sec. Litig.,
114 F.3d 1410, 1426 (3d Cir.1997); Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196
(3d Cir.1993)). There does not appear to be any dispute concerning the authenticity of the assignment. It is therefore
appropriate for the Court to consider the same in adjudicating the pending motion to dismiss.

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establish that she had possession of the Policy’s proceeds or an immediate right to them. To this
end, it is well established that “[n]o action for conversion will lie where a defendant is alleged to
have refused to return insurance premiums or refused to pay insurance proceeds.” Allstate Prop.
& Cas. Ins. Co. v. Vargas, No. 06-CV-3368, 2006 U.S. Dist. LEXIS 95608, at *12 (E.D. Pa. Dec.
28, 2006); see also Leonard A. Feinberg, Inc. v. Cent. Asia Capital Corp., 974 F. Supp. 822, 845
(E.D. Pa. 1997) (explaining that the customer has no immediate right to the possession of money,
and therefore no conversion claim, in cases involving loan repayment and the collection of
insurance proceeds); Corporate Plaza Partners, Ltd. v. Am. Employers’ Ins. Co., No. 95-CV-5234,
1996 U.S. Dist. LEXIS 4637, at *2 (E.D. Pa. Apr. 3, 1996) (granting motion to dismiss an
insurance company’s conversion claim to retrieve money it voluntarily advanced to an insured
because the insurance company “no longer had an immediate right of possession to it”);
Montgomery v. Fed. Ins. Co., 836 F. Supp. 292, 300-01 (E.D. Pa. 1993) (recognizing that “an
action for conversion will not lie where an alleged converter borrowed money, even though he had
an intent not to pay back the loan . . . . [or] when the money is collected to satisfy a debt” and
dismissing the plaintiff’s conversion claim based upon “the defendants’ refusal to pay proceeds on
plaintiff’s claim under the insurance contract”); Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co.,
860 A.2d 1038, 1043-44 (Pa. Super. Ct. 2004) (“[P]roceeds from an insurance policy are an
improper subject of a conversion claim.”). Accordingly, Plaintiff’s claim for conversion will be
dismissed, with prejudice.
C.

Fraud (Count II)

Under Pennsylvania law, which governs this matter, the elements of fraud are: (1) a
representation; (2) which is material to the transaction; (3) made falsely, with knowledge of its
falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into

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relying on it; (5) justifiable reliance on the misrepresentation; and (6) injury proximately caused
by the reliance. McWreath v. Range Res. - Appalachia, LLC, 81 F. Supp. 3d 448, 470 (W.D. Pa.
2015), aff’d, 645. App’x 190 (3d Cir. 2016); see also Batoff v. Charbonneau, 130 F. Supp. 3d 957,
969 (E.D. Pa. 2015). A victim of fraud may rescind the contract or affirm the contract and sue for
damages. Eigen v. Textron Lycoming Reciprocating Engine Div., 874 A.2d 1179, 1184 (Pa. Super.
Ct. 2005).
Rule 9(b) requires plaintiffs bringing a fraud claim to “plead the who, what, when, where,
why, and how: the first paragraph of any newspaper story.” Institutional Inv’rs Grp. v. Avaya,
Inc., 564 F. 3d 242, 253 (3d Cir. 2009).

“[P]laintiffs must plead with particularity the

circumstances of the alleged fraud in order to place the defendants on notice of the precise
misconduct with which they are charged, and to safeguard defendants against spurious charges of
immoral and fraudulent behavior.” Lum v. Bank of Am., 361 F.3d 217, 223-24 (3d Cir. 2004)
(citations and internal quotation marks omitted). “Plaintiffs may satisfy this [particularity]
requirement by pleading the date, place or time of the fraud, or through alternative means of
injecting precision and some measure of substantiation into their allegations of fraud.” Id.
Here, Plaintiff alleges that Defendant committed fraud when by “represent[ing] to Plaintiff
that a) it had the right to impede the payment of the Policy proceeds to Plaintiff, and b) that it did
not agree that the Subordination Agreement to be signed by Plaintiff . . . would be limited to the
loan amount made by Plaintiff to AccuDoc.” (Docket No. 9 at ¶ 36). With respect to the Policy’s
proceeds, as discussed above, the assignment expressly provides that Defendant, as an assignee,
had “[t]he sole right to collect from the insurer the net proceeds of the Policy when it becomes a
claim by death.” (Docket No. 12-1 at ¶ A). Thus, Defendant did not commit fraud by representing
that it had the right to impede the payment of the Policy’s proceeds. Further, Plaintiff alleges that

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she believed that Defendant had no interest in the Policy. (Docket No. 9 at ¶¶ 12, 15). Therefore,
she cannot establish that she relied upon Defendant’s representation. See, e.g., (finding that the
plaintiff had not relied on a misrepresentation and explaining that “[w]e have difficulty
understanding how he can claim to have relied on a provision that explicitly allows [future
premium] increases to believe that premiums would never increase”); 84 Lumber Co., L.P. v.
Gregory Mortimer Builders, No. 11-CV-548, 2017 U.S. Dist. LEXIS 25198, at *20 (W.D. Pa. Feb.
23, 2017) (noting that to recover on a claim for fraud, a plaintiff “must show, inter alia that she
not only relied upon the misrepresentation, but had a right to rely upon it in the full belief of its
truth, and would not have done the thing from which the injury had resulted had not such
misrepresentation been made”) (internal quotations omitted).
With respect to the subordination agreement, Plaintiff alleges that she disputed Defendant’s
position as to the scope of the subordination agreement and that Defendant later reduced the scope
of the subordination agreement as originally agreed. (Docket No. 9 at ¶¶ 18-26). Again, Plaintiff
cannot establish that she relied upon Defendant’s statement that the subordination agreement
would be limited to the loan amount made by Plaintiff to AccuDoc, as she disputed the same.
Moreover, Plaintiff cannot establish that an injury occurred because she alleges that Defendant
reduced the scope of the subordination agreement and that Defendant’s representative offered to
waive the signing of any subordination agreement by Plaintiff. (Id. at ¶¶ 24, 26). See, e.g., Baker
v. Inter Nat’l Bank, No. 08-CV-5668, 2012 U.S. Dist. LEXIS 6920, at *25 (D.N.J. Jan. 19, 2012)
(granting motion to dismiss a fraud claim because the plaintiff “has shown no concrete injury, no
ascertainable loss”). Accordingly, Plaintiff’s claim for fraud will be dismissed, with prejudice.

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D.

Breach of the Implied Covenant of Good Faith and Fair Dealing (Count III)

In Pennsylvania, the duty of good faith and fair dealing “does not create independent
substantive rights” and does not give rise to a cause of action separate from breach of contract.
Burton v. Teleflex Inc., 707 F.3d 417, 432 (3d Cir. 2013) (citing Commonwealth v. BASF Corp.,
No. 3127, 2001 Phila. Ct. Com. Pl. LEXIS 95, at *38 (Pa. Com. Pl. Mar. 15, 2001)); see also
Cummings v. Allstate Ins. Co., 832 F. Supp. 2d 469, 472 (E.D. Pa. 2011) (“Pennsylvania does not
allow an independent cause of action for a breach of the implied duty to act in good faith.”); LSI
Title Agency, Inc. v. Evaluation Servs., 951 A.2d 384, 391-92 (Pa. Super. Ct. 2008) (affirming the
trial court’s dismissal of a claim for breach of the implied covenant of good faith and fair dealing
as an independent claim). Therefore, a claim predicated on a breach of the covenant of good faith
is “‘subsumed in a breach of contract claim.’” Burton, 707 F.3d at 432 (quoting LSI, 951 A.2d at
392). Thus, Plaintiff’s claim must fail.
Even construing the complaint to allege a breach of contract claim cannot save Plaintiff’s
case. Under Pennsylvania law, a breach of contract claim has three elements: (1) the existence of
a contract; (2) a breach of a duty imposed by the contract; and (3) damages resulting from that
breach. Rendon v. Ragans, No. 08-CV-1665, 2009 U.S. Dist. LEXIS 45127, at *7 (W.D. Pa. May
29, 2009) (citing Novinger Group Inc. v. Hartford Ins., Inc. 514 F. Supp. 2d 662, 670 (M.D. Pa.
2007)). Here, Plaintiff has not even identified what contract was breached: the parties never
entered into the hotly disputed subordination agreement, and the Assignment expressly authorized
the conduct at issue. As this Court recently explained, “[t]he fact that the contracts at issue
expressly authorize the complained-of conduct also defeats any claims that [Defendant] breached
the implied covenant of good faith and fair dealing.” Daimler v. Moehle, No. 18-CV-165, 2018
U.S. Dist. LEXIS 126444, at *23 (W.D. Pa. July 27, 2018); see also Creeger Brick & Bldg. Supply

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Inc. v. Mid-State Bank & Trust Co., 560 A.2d 151, 153-54 (Pa. Super. 1989) (explaining that the
Supreme Court of Pennsylvania has refused to impose a duty of good faith that would alter or
defeat rights that have been granted by law or contract). Accordingly, Plaintiff’s claim for breach
of the implied covenant of good faith and fair dealing will be dismissed, with prejudice.
III.

CONCLUSION
For the foregoing reasons, the Court finds that Plaintiff has failed to state a claim upon

which relief can be granted. The Court also denies Plaintiff leave to amend her complaint a second
time because any such amendment would be futile. See, e.g., Alvin v. Suzuki, 227 F.3d 107, 121
(3d Cir. 2000) (“An amendment is futile if the amended complaint would not survive a motion to
dismiss for failure to state a claim upon which relief could be granted.”); Centifanti v. Nix, 865
F.2d 1422, 1431 (3d Cir. 1989) (“[A] district court may properly deny leave to amend where the
amendment would not withstand a motion to dismiss.”). Therefore, Defendant’s Motion to
Dismiss (Docket No. [11]) is GRANTED and Plaintiff’s Amended Complaint is DISMISSED,
with prejudice.
An appropriate order follows.

s/ Nora Barry Fischer
Nora Barry Fischer
United States District Judge
Date: September 24, 2018
cc/ecf: All counsel of record

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