Cartwright v. Pinnacle National Bank

Filing 46

MEMORANDUM signed by Chief Judge Todd J. Campbell on 2/16/2012. (hb) Modified text on 2/16/2012 (hb).

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION

LEE ANN CARTWRIGHT, et al.
v.
PINNACLE NATIONAL BANK

)
)
) NO. 3-11-0655
) JUDGE CAMPBELL
)

MEMORANDUM

Pending before the Court is Third Party Defendant’s Motion to Dismiss Pinnacle’s Amended
Third-Party Complaint (Docket No. 36). For the reasons stated herein, the Motion to Dismiss is
DENIED.
FACTS
This action arises from the alleged misuse and misappropriation of funds by Third-Party
Defendant Anthony Myers (“Myers”) from the David L. Cartwright Family Trust (“the Trust”)
through an account which Myers opened in the name of the Trust at Defendant and Third-Party
Plaintiff Pinnacle National Bank (“Pinnacle”). The Trust filed this action against Pinnacle, alleging
negligence, recklessness, conversion and violation of the Uniform Fiduciaries Act in connection
with Myers’ alleged misuse and misappropriation of the funds. Docket No. 21.
The Trust contends that Pinnacle accepted from Myers a signature card bearing the forged
signature of Lee Ann Cartwright, widow of David L. Cartwright and a Co-Trustee (with Myers) of
the Trust. Ms. Cartwright asserts that she did not, in fact, sign that signature card. Docket No. 21.
Moreover, the Trust alleges that the initial deposit by Myers into the Pinnacle Trust account was a
check payable to Ms. Cartwright and fraudulently endorsed to the Trust. Id. The Trust asserts that
subsequent deposits to the Trust account by Myers were made by checks payable to Ms. Cartwright

and also fraudulently endorsed. Id. The Trust alleges that, without the knowledge or authorization
of Ms. Cartwright, Myers withdrew more than $445,000 from the Trust account at Pinnacle and
misappropriated those funds for himself. Id.
Pinnacle has filed a Third-Party Complaint against Myers, alleging that Myers made false
and fraudulent representations to Pinnacle in connection with the opening of this Trust account.
Docket No. 32. Among those representations which Pinnacle claims to be false were that his purpose
in opening the account was for the use and benefit of the Trust; that the signature on the signature
card and the signatures on the deposited checks were Ms. Cartwright’s; and that he had the authority
and permission to open the account and to make withdrawals therefrom. Id. Pinnacle also asserts
that, through this wrongful conduct, Myers breached his contract with Pinnacle and breached the
covenant of good faith and fair dealing. Id. Pinnacle claims that if it is found to be liable to the
Trust, then Myers is liable to Pinnacle for all misappropriated funds.
Myers has moved to dismiss Pinnacle’s Third-Party Complaint, arguing that he had no
contract with Pinnacle and that Pinnacle’s allegations of fraud and misrepresentation do not satisfy
the minimal pleading requirements for the element of reliance. Docket No. 37.
MOTIONS TO DISMISS
For purposes of a motion to dismiss, the Court must take all of the factual allegations in the
complaint as true. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). To survive a motion to dismiss,
a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face. Id. 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. Threadbare recitals of the elements of a cause of action, supported by mere conclusory

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statements, do not suffice. Id. When there are well-pleaded factual allegations, a court should
assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.
Id. at 1950. A legal conclusion couched as a factual allegation need not be accepted as true on a
motion to dismiss, nor are recitations of the elements of a cause of action sufficient. Fritz v. Charter
Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010).
ANALYSIS
Myers argues that he had no contract with Pinnacle, because the signature card did not
incorporate the Bank Depositor Agreement attached to Pinnacle’s First Amended Third-Party
Complaint. The Signature Card attached to the original Complaint herein reflects the following
language: “The undersigned also acknowledge the receipt of a copy and agree to the terms of the
following disclosure(s): Deposit Account, Funds Availability, Truth in Savings, Electronic Fund
Transfers, Privacy.” Docket No. 1-1.1 It is the Deposit Account Agreement which Pinnacle claims
that Myers breached. Docket Nos. 32 and 32-1.
The Third-Party Complaint sufficiently alleges that Myers breached his agreement with
Pinnacle. Even if the only agreement was the signature card itself, the Trust and Pinnacle allege that
Ms. Cartwright’s name thereon was forged, presumably by Myers. Dishonesty in implementing an
agreement would be a breach of that agreement.
The signature card does reference other documents, and Pinnacle has sufficiently asserted
that those documents were incorporated and agreed to by Myers through his signature on the
signature card. Pinnacle has also sufficiently alleged that Myers, in forming a banking relationship

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The Court can consider this signature card because it is attached to, referenced in, and
relied upon in the Complaint. The Court can also consider the Bank Depositor Agreement because
it is attached to, referenced in, and relied upon in the Third-Party Complaint.
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with Pinnacle, impliedly agreed not to engage in unlawful conduct, not to defraud the bank, and not
to misappropriate funds from the bank’s accounts.
Similarly, Pinnacle has sufficiently stated a claim for breach of the implied covenant of good
faith and fair dealing. Accepting all the allegations of the Third-Party Complaint as true, the Court
finds that Pinnacle has sufficiently alleged that such a duty was implied in the banking relationships
of the parties and that Myers’ allegedly unlawful conduct breached that duty.
Myers argues that Pinnacle has not satisfied the requirements of Rules 8 and 12 of the
Federal Rules of Civil Procedure with regard to its fraud and misrepresentation claims.2 Pinnacle
alleges that Myers made specific misrepresentations that he had permission and authority to open
the Trust account, that he had validly endorsed checks to make deposits, and that the signature of
Ms. Cartwright on the signature card was valid.
Whether Pinnacle reasonably relied upon Myers’ misrepresentations cannot be decided by
the Court on this Motion to Dismiss. Whether a person’s reliance on a representation is reasonable
generally is a question of fact requiring the consideration of a number of factors. Davis v.
McGuigan, 325 S.W.3d 149, 158 (Tenn. 2010); Carbon Processing and Reclamation, LLC v. Balero
Marketing and Supply Co., __ F.Supp.2d __, 2011 WL 4915863 at * 18 (W.D. Tenn. Oct. 17, 2011).
Pinnacle has sufficiently alleged fraud and misrepresentation, and Myers’ Motion to Dismiss those
claims is also denied.

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Pinnacle alleges intentional misrepresentation and, alternatively, negligent
misrepresentation. Obviously, the same representation cannot be both intentional and negligent.
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CONCLUSION
For these reasons, Third-Party Defendant Myers’ Motion to Dismiss (Docket No. 36 ) is
DENIED.
IT IS SO ORDERED.

___________________________________
TODD J. CAMPBELL
UNITED STATES DISTRICT JUDGE

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