United States District Court, D. Maryland
JEFFREY J. SILVER Plaintiff
WELLS FARGO BANK, N.A., et al. Defendants
MEMORANDUM AND ORDER
J. GARBIS, UNITED STATES DISTRICT JUDGE
Court has before it Defendants' Motions to Dismiss [ECF
Nos. 17 and 18] and the materials submitted relating thereto.
The Court finds a hearing unnecessary. As discussed herein,
the Court shall grant the instant motions but permit
Plaintiff to file an Amended Complaint.
times allegedly relevant hereto,  Plaintiff, Jeffrey J. Silver
(“Silver”) was the victim of a check fraud scheme
perpetrated by one of his employees. The scheme involved the
preparation of fraudulent checks drawn on Silver's
checking account at PNC Bank, National Association
(“PNC”) and deposited in the employee's
account at Wells Fargo Bank, National Association
lawsuit,  Silver asserts claims against the Banks in
Count I: Lack of Ordinary Care and Good Faith - Violation of
Maryland Code, Commercial Law Article §§ 3-404,
Count II: Breach of Presentment Warranties - Violation of
Maryland Code, Commercial Law Article §§ 3-417,
Count III: Breach of Contract
Count IV: Negligence as to PNC
Count V: Negligence as to Wells Fargo
Count VI: Strict Liability - Violation of Maryland Code,
Commercial Law Article §§ 3-403, 4-401
Count VII: Negligent Hiring and/or Retention of Employees
Count VIII: Constructive Fraud
Count IX: Civil Conspiracy.
[ECF No. 2].
instant motions, the Banks seek dismissal of all claims
pursuant to Rule 12(b)(6).
motion to dismiss filed pursuant to Federal Rule of Civil
Procedure 12(b)(6) tests the legal sufficiency of a
complaint. A complaint need only contain “‘a
short and plain statement of the claim showing that the
pleader is entitled to relief, ' in order to ‘give
the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.'” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (alteration in
original) (citations omitted). When evaluating a 12(b)(6)
motion to dismiss, a plaintiff's well-pleaded allegations
are accepted as true and the complaint is viewed in the light
most favorable to the plaintiff. However, conclusory
statements or “a formulaic recitation of the elements
of a cause of action will not [suffice].” Id.
A complaint must allege sufficient facts “to cross
‘the line between possibility and plausibility of
entitlement to relief.'” Francis v.
Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting
Twombly, 550 U.S. at 557).
into whether a complaint states a plausible claim is
“‘a context-specific task that requires the
reviewing court to draw on its judicial experience and common
sense.'” Id. (quoting Twombly,
550 U.S. at 557). Thus, if “the well-pleaded facts
[contained within a complaint] do not permit the court to
infer more than the mere possibility of misconduct, the
complaint has alleged - but it has not ‘show[n]' -
‘that the pleader is entitled to relief.'”
Id. (quoting Ashcroft v. Iqbal, 556 U.S.
662, 679 (2009) (alteration in original)).
a motion to dismiss filed under Rule 12(b)(6) cannot reach
the merits of an affirmative defense. Goodman v. Praxair,
Inc., 494 F.3d 458, 464 (4th Cir. 2007). It is possible
to evaluate such a motion, however, if all the facts
necessary to the affirmative defense are clearly alleged on
the face of the complaint. Id. But if the complaint
does not clearly reveal the existence of a meritorious
affirmative defense, it is inappropriate for the court to
consider it under a Rule 12(b)(6) motion. Richmond,
Fredericksburg & Potomac R.R. Co. v. Forst, 4 F.3d
244, 250 (4th Cir. 1993).
times relevant, Silver, a Baltimore City attorney employed as
a legal assistant, Ms. Katherina Cheek (“the
Assistant”). For “several years, ” the
Assistant stole “hundreds” of Silver's blank
checks and made them payable to herself, unidentified
fictitious payees, friends, and her creditors. ¶ 8 [ECF
No. 2]. The Assistant forged Silver's
signature as the drawer on the checks, and she forged the
payee's indorsement on “the majority” of the
checks so that she could cash or deposit them into her
personal bank account at Wells Fargo. Id. The checks
were often presented two or three at a time, contained no
commercial stamp even though some were allegedly made out to
commercial businesses, and were payable to non-account
holders. Id. At no time did Silver authorize the
Assistant to sign Silver's name or indorse any checks.
Fargo, the “depositary bank, ” accepted the
stolen checks and presented them for payment to PNC, the
“drawee.” PNC accepted and paid the forged
first discovered the check fraud scheme on November 24, 2012,
several years after the scheme had started. Silver asked PNC
verbally and in writing to present warranty claims to Wells
Fargo for accepting “highly irregular checks”
with forged indorsements. ¶ 12. PNC refused to do so.
Neither PNC nor Wells Fargo has paid or credited Silver the
amounts charged against his account due to the check fraud
Uniform Commercial Code Claims (Counts I, II and VI)
I, II, and VI present statutory claims under Titles 3 and 4
of the Maryland Uniform Commercial Code
(“UCC”). The UCC governs negotiable instruments,
including checks, and the relationship between banks and
customers. Cf. Lema v. Bank of Am., N.A., 375 Md.
625, 633, 826 A.2d 504, 508-09 (Md. 2003)(“It is
undisputed that the UCC applies to commercial transactions in
Maryland, including the commercial dealings between a bank
and its customer.”).
Statute of Limitations
of the Maryland UCC provides that:
an action (i) for conversion of an instrument, for money had
and received, or like action based on conversion, (ii) for
breach of warranty, or (iii) to enforce an obligation, duty,
or right arising under this article and not governed by this
section must be commenced within 3 years after the cause of
Md. Code Ann., Com. Law § 3-118(g)(2013 Repl. Vol.). The
limitations period for Article 4 claims is the same. See
id. § 4-111. The UCC does not specify when a cause
of action accrues.
Complaint, filed November 23, 2015, does not allege when the
check fraud scheme began, only that Silver discovered it on
November 24, 2012. Silver contends that the three-year
limitations period commenced upon his discovery of the scheme
while PNC contends that limitations commenced as to each
check on the date the check was honored.
Maryland a discovery rule generally applies to civil causes
of action. Hecht v. Resolution Trust Corp., 333 Md.
324, 334, 635 A.2d 394, 399 (Md. 1994). However, there are
certain exceptions e.g., Advance Dental Care,
Inc. v. Suntrust Bank, 906 F.Supp.2d 442, 445 (D. Md.
2012)(holding the discovery rule does not apply to UCC
conversion claims). The Maryland appellate courts have not