Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-02976/USCOURTS-casd-3_14-cv-02976-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RUBEN M. BARRETT, an individual,

Plaintiff,

CASE NO. 14cv2976 DMS (WVG)

ORDER GRANTING IN PART AND

DENYING IN PART

DEFENDANT’S MOTION TO

DISMISS

vs.

JPMORGAN CHASE BANK, a New

York corporation, et al.,

Defendants.

This case comes before the Court on Defendant JP Morgan Chase Bank, N.A.’s

motion to dismiss Plaintiff’s Complaint. Plaintiff filed an opposition to the motion, and

Defendant filed a reply. For the reasons set out below, the Court grants in part and

denies in part Defendant’s motion. 

I.

BACKGROUND

In May 2012, Plaintiff Ruben M. Barrett entered into an investment agreement

with SSMG, Inc. (Compl. ¶ 6.) It appears the agreement required Plaintiff to provide

$150,000 to SSMG to be placed towards an off-shore oil investment. (Id.) Plaintiff

was to send his investment to the client trust account of Arizona attorney Larry Busch

of the Larry Busch Law Center, where the monies would be held in escrow subject to

their release to the entity making the actual purchase. (Id.) SSMG was serving as an

/ / /

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intermediary, allegedly combining Plaintiff’s money with other investments to

accumulate a total of $750,000. (Id.) SSMG would then be the name on the investment

prior to its release to the actual buyer of the fuel, Nacim Energy, LLC. (Id.) 

On or about May 8, 2012, Plaintiff went to his local Chase bank located in

Hillcrest, California. (Id. ¶ 7.) Plaintiff informed a Chase representative that he wished

to execute a wire transfer. (Id.) Plaintiff was led to a private desk where he was

assisted by a single Chase employee. (Id.) 

Plaintiff informed the employee that he wished to execute the transfer and

provided him with specific wiring instructions. (Id. ¶ 8.) Plaintiff alleges he informed

the employee he would need pre-advice to be sent to Busch to confirm the transaction

was executed properly. (Id.) Plaintiff alleges he specifically requested pre-advice in

the following form: “Pre-Advice payment and Transaction Codes Must Be Sent to

Larry@Buschlawcenter.Com Please call 6238261995 To Notify That Wire Has Sent.” 

(Id.) 

Plaintiff alleges the employee then left the desk for several minutes before

returning and informing Plaintiff that the pre-advice had been sent, and that the

transaction had been successful. (Id. ¶ 10.) 

Plaintiff alleges that within a matter of days, it became clear to him that things

were not moving as planned. (Id. ¶ 11.) He contacted SSMG in an attempt to recover

his funds, but those attempts were unsuccessful. (Id.) He also contacted Busch and

demanded return of the funds. (Id.) Busch informed him that the funds had been

released pursuant to an escrow agreement between him, SSMG and a Colorado

corporation entitled FRUCOM CAPITAL. (Id.) Busch informed Plaintiff that he had

never heard of him, and told Plaintiff he was under the impression the funds were

coming directly from SSMG and were to go directly to FRUCOM. (Id. ¶ 11.) 

Immediately after the transfer and on several occasions over the following years,

Plaintiff spoke with Chase representatives about the transfer. (Id. ¶ 12.) Plaintiff

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alleges the Chase representatives repeatedly reassured Plaintiff that pre-advice had been

issued to Busch. (Id.) 

In the months following the transfer, Plaintiff learned that he was the victim of

a scam and had been defrauded out of $150,000 by SSMG and FRUCOM. (Id. ¶ 13.) 

Plaintiff notified federal law enforcement authorities and law enforcement in California

and Arizona about the scam, but he was unable to secure a return of his funds. (Id.) 

At some time in 2013, Plaintiff was informed by a Chase representative that he

could request a recall of the May 2012 wire transfer, which Plaintiff did. (Id. ¶ 14.) 

Chase denied Plaintiff’s request on October 25, 2013. (Id. ¶ 15.) 

In November 2013, Plaintiff filed a complaint against Chase with the Consumer

Financial Protection Bureau (“CFPB”) regarding its refusal to recall the wire transfer. 

(Id. ¶ 16.) In response to the claim and in its defense, Chase sent a letter to the CFPB

stating it did not perform the pre-advice instruction as Plaintiff requested. (Id.) Shortly

after receiving this letter, the CFPB closed Plaintiff’s claim. (Id. ¶ 18.) 

On November 13, 2014, Plaintiff filed the present case against Chase in San

Diego Superior Court alleging claims for professional negligence, negligent

misrepresentation, and two claims for fraud. Chase removed the case to this Court on

December 19, 2014, on the ground of diversity jurisdiction. The present motion

followed. 

II.

DISCUSSION

Defendant Chase moves to dismiss the Complaint in its entirety. It argues

Plaintiff’s first three claims are foreclosed by the California Uniform Commercial Code,

and Plaintiff’s fourth claim is legally incognizable. Plaintiff has agreed to dismiss his

fourth claim, therefore the Court will address only the first three claims for relief. 

/ / /

/ / /

A. Standard of Review

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In Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly,

550 U.S. 544 (2007), the Supreme Court established a more stringent standard of review

for 12(b)(6) motions. To survive a motion to dismiss under this new standard, “a

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to

relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S.

at 570). “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. (citing Twombly, 550 U.S. at 556).

“Determining whether a complaint states a plausible claim for relief will ... be a

context-specific task that requires the reviewing court to draw on its judicial experience

and common sense.” Id. at 679 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir.

2007)). In Iqbal, the Court began this task “by identifying the allegations in the

complaint that are not entitled to the assumption of truth.” Id. at 680. It then considered

“the factual allegations in respondent’s complaint to determine if they plausibly suggest

an entitlement to relief.” Id. at 681.

B. California Uniform Commercial Code

Defendant argues Plaintiff’s first three claims for relief are barred by the

California Uniform Commercial Code. The California Supreme Court has stated “[t]he

California Uniform Commercial Code does not automatically displace all other legal

principles.” Zengen, Inc. v. Comerica Bank, 41 Cal. 4th 239, 251 (2007). Other legal

principles will apply “unless some particular provisions of the California Uniform

Commercial Code have displaced them.” Id.1

 

1

 Defendant relies heavily on Zengen in support of its motion. Although there are some similarities between the facts of Zengen and the facts of this case, there are

also significant differences between the cases. First and foremost, Zengen was decided

on a motion for summary judgment. Presumably, the parties in that case had an opportunity to develop the facts underlying the claims, which has not occurred here. 

Second, in Zengen there was no dispute “that the four transactions involved in this case

were funds transfers and, accordingly, division 11 of the California Uniform

Commercial Code applies to them.” Id. at 249. That is not the case here. Indeed,

Plaintiff specifically disputes that the transaction at issue here was a funds transfer

under the Code, which is a prerequisite to finding that Plaintiff’s claims should be

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Here, Defendant relies on Division 11 of the Code, which applies to “funds

transfers defined in Section 11104.” Cal. Comm’l Code § 11102. Section 11104

defines “funds transfers” as: 

the series of transactions, beginning with the originator’s payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator’s bank or an intermediary bank intended to carry out the originator’s payment order. A funds transfer is completed by acceptance by the beneficiary’s bank of a payment order for the benefit of the beneficiary of the originator’s payment order. 

Cal. Comm’l Code § 11104(a). Defendant argues the wire transfer at issue in this case

constitutes a funds transfer under the Code, therefore the Code displaces Plaintiff’s

common law claims. Plaintiff disagrees, for two primary reasons. 

First, Plaintiff asserts the transaction at issue here does not fall within the

definition of a “payment order.” The Code defines a “payment order” as: 

an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if all of the following apply: 

(i) The instruction does not state a condition to payment to the beneficiary other than time of payment. 

(ii) The receiving bank is to be reimbursed by debiting an account of, or otherwise receiving payment from, the sender. 

(iii) The instruction is transmitted by the sender directly to the receiving

bank or to an agent, funds-transfer system, or communication system for

transmittal to the receiving bank. 

Cal. Comm’l Code § 11103(a)(1). Plaintiff argues the transaction at issue here did not

begin with a payment order because it included pre-advice instructions. Defendant

responds that the pre-advice instructions did not state “a condition to payment to the

beneficiary,” therefore the transaction did involve a payment order. 

/ / /

displaced. Thus, although the Court finds Zengen informative and important to the issues raised in this case, it is not dispositive of this motion. 

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In the Complaint, Plaintiff alleges he provided the Chase employee “with specific

wiring instructions.” (Compl. ¶ 8.) Those instructions required that payment and

transaction codes be sent to “Larry@Buschlawcenter.Com[.]” (Id.) They also required

that Chase call “6238261995 To Notify That Wire Has Sent.” (Id.) Based on these

allegations, it is unclear whether the pre-advice instructions stated “a condition to

payment to the beneficiary other than time of payment.” Without further information

about the pre-advice instructions, the Court cannot say whether this transaction

involved a “payment order,” and thus whether it is governed by that portion of the 

Code devoted to “funds transfers.” 

Defendant argues, in the alternative, that even if the pre-advice did place a

condition on payment to the beneficiary, the pre-advice was not followed, therefore the

payment was issued without any conditions. In support of this argument, Defendant

relies on the Official Comment to the Uniform Commercial Code § 4A-104, which

discusses payment orders. See U.C.C. § 4A-104, Official Comment ¶ 3.2

 Noticeably,

Defendant omits a large portion of the Comment from its brief, and when the Comment

is read in its entirety, it does not support Defendant’s position. The Comment describes

a situation where the receiving bank places a condition on payment to the beneficiary

bank. Under those circumstances, the Comment explains that the transaction is not

covered by Article 4A. The Comment goes on to state that if the receiving bank “had

erroneously sent an instruction to the [beneficiary bank] unconditionally instructing

payment[,]” then the transaction would be covered by Article 4A, even though the

instruction was erroneous. Defendant takes the example of an erroneous instruction and

argues that the same result applies if there is a condition on payment, but that condition

is not met. However, the Comment does not speak to that situation. Rather, it makes

clear that if there is a condition placed on payment to the beneficiary bank, the

transaction is not covered by Article 4A, whereas if payment is made unconditional,

2

 The California Legislature enacted Article 4A of the Uniform Commercial

Code as Division 11 of the California Commercial Code. Zengen, 41 Cal. 4th at 247. 

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even if that is in error, the transaction will be covered by Article 4A. The Comment

says nothing about whether a transaction is covered by Article 4A if there is a condition

on payment but that condition is not met. Accordingly, this argument does not

demonstrate the transaction at issue in this case is covered by Article 4A. Absent such

a showing, the Court declines to dismiss Plaintiff’s claims on the ground they are

displaced by the California Uniform Commercial Code.3

III.

CONCLUSION AND ORDER

For these reasons, the Court grants in part and denies in part Defendant’s motion

to dismiss. Specifically, the Court grants Defendant’s motion to dismiss Plaintiff’s

fourth claim for relief, and denies Defendant’s motion to dismiss Plaintiff’s other claims

for relief. 

IT IS SO ORDERED.

DATED: February 13, 2015

HON. DANA M. SABRAW

United States District Judge

3

 Plaintiff raises another argument for why his claims are not displaced by the Code, namely that his claims are based on misconduct outside the wire transfer process. Specifically, Plaintiff asserts his claims are based on Defendant’s repeated misrepresentations that it complied with his pre-advice instructions. In light of Defendant’s failure to show that the wire transfer at issue here is covered by the Code, the Court need not reach this argument. 

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