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Setera v. National City Bank

September 26, 2008


The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer


Plaintiffs Roger and Lavergne Setera brought this suit against Defendant National City Bank, charging, among other things, that the bank failed to exercise the requisite amount of care when it deposited Plaintiffs' check into the account of one of the bank's account holders. Defendant has moved under Rule 12(b)(6) to dismiss the Plaintiffs' ten-count complaint, claiming that the bank's actions violated no legal duties it owed to Plaintiffs. For the reasons stated below, Defendant's motion to dismiss is granted.


For the purpose of deciding this Rule 12(b)(6) motion, the court accepts all well-pleaded facts in Plaintiffs' complaint as true. See Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). On or about January 4, 2005, Lavergne Setera wrote out a personal check for $500,000 (hereinafter "Plaintiffs' check"), payable to "M.B.S. Clearing." (Compl. ¶ 6.) The check indicated that it was for the purchase of an "F.D.I.C. C.D. at 5.69%." (Id.) The check was mailed to "BankWatch, Attn: Donna A Walls, 676 A Ninth Avenue, #260, New York, NY 10036." (Id. ¶ 7.) The following month, on or about February 4, 2005, the check was endorsed in the name of what appears to be "MBS Clearing Inc." and deposited into account # 0628500967 at the bank. (Id. ¶ 8.) That account number belonged to a checking account maintained at the bank in the name of "Management Pros Incorporated" ("MPI"), an account opened on October 8, 2002 by Brian Jines.

(Id. ¶¶ 9, 12.) Jines was the only authorized signatory for that account. (Id. ¶ 12.)

Between February and August of 2005, approximately $1.17 million in other checks were made payable to "M.B.S. Clearing" and deposited into the MPI account. (Id. ¶ 13.) For more than one year prior to his deposit of Plaintiffs' check, Jines had been withdrawing money from the MPI account. From December 2003 until February 2005, approximately eighty-seven checks, totaling $536,400, were made payable to Jines, negotiated for cash at the bank, and drawn against the MPI account. (Id. ¶ 14.) Beginning in February 2005 and continuing until August 25, 2005, Jines made an additional 143 checks, totaling approximately $973,590, payable to cash and drawn against the MPI account. (Id. ¶ 15.) In August and September 2005, the bank initiated an investigation into the MPI account, ultimately freezing the remaining funds. (Id. ¶ 17.)

Plaintiffs--who did not hold any account with the bank and were not otherwise customers of the bank--were informed of the suspicious activity on January 10, 2007, when they received a letter from the FBI informing them of an investigation into the matter. (Id. ¶ 18.) They initiated this suit against the bank a few months later.


In deciding a motion to dismiss for failure to state a claim upon which relief can be granted, the court not only accepts as true the well-pleaded facts of the complaint, but also draws all reasonable inferences in favor of the non-moving party. See, e.g., Tamayo, 526 F.3d at 633. The court need not, however, "accept as true legal conclusions or unsupported conclusions of fact" stated in the complaint. Hickey v. O'Bannon, 287 F.3d 656, 658 (7th Cir. 2002). In this diversity action,*fn1 Plaintiffs identify ten state and federal causes of action. For the reasons that follow, all counts are dismissed.

A. Civil Conspiracy

Plaintiffs' claim of civil conspiracy under Illinois law fails because they have not alleged sufficient facts giving rise to an inference that the bank was party to an agreement to defraud with either Jines, M.B.S. Clearing, or MPI. Plaintiffs claim that an implicit agreement existed, see McClure v. Owens Corning Fiberglass Corp., 188 Ill. 2d 102, 134, 720 N.E.2d 242, 258 (1999), based on the following facts: the bank allowed M.B.S. Clearing to open an account without a tax identification number; the bank failed to inquire into M.B.S. Clearing's corporate status; the bank failed to inquire into Jines's frequent withdrawals from the account; and the bank accepted Plaintiffs' check. (Compl. at Count I, ¶ 19.) These actions by the bank may show a less thorough investigation of the M.B.S. Clearing account than Plaintiffs would have liked, but they fall far short of establishing any agreement, whether implicit or explicit, with Jines or M.B.S. Clearing to defraud Plaintiffs. An implicit agreement does not require explicit acknowledgment of an agreement, but it does require that the defendant "knowingly agrees with another to commit an unlawful act." Adcock v. Brakegate, Ltd., 164 Ill. 2d 54, 64, 645 N.E.2d 888, 894 (1994).

This conclusion is bolstered by the requirements of Rule 9(b), which requires plaintiffs to plead fraud with "particularity." FED. R. CIV. P. 9(b); see also Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007) (heightened pleading standards also apply to claims alleging a conspiracy to defraud). Plaintiffs' allegations at most show that the bank should have noticed the conspiracy earlier, but a "defendant who innocently performs an act which happens to fortuitously further the tortious purpose of another is not liable under the theory of civil conspiracy." Adcock, 164 Ill.2d at 64, 645 N.E.2d at 894. The circumstances do not support Plaintiffs' conclusory statements that the bank "implicitly agreed" to assist the fraud. (Compl. at Count I, ¶ 22); see also Eisenhauer v. Stern, No. 99-6422, 2000 WL 136011, at *2 (N.D. Ill. Jan. 27, 2000) ("[S]imply mouthing conclusory assertions of 'conspiracy' in the context of an asserted fraud will not suffice."). Plaintiffs' conspiracy claim is dismissed.

B. Breach of the Fiduciary Obligations Act

Plaintiff's next cause of action purportedly arises under Illinois's Fiduciary Obligations Act, 760 ILCS 65 (the "Act"). As a general rule, the Act does not require a bank receiving deposits "to inquire whether the fiduciary is committing thereby a breach of his obligation as a fiduciary" and the bank is therefore authorized to pay the amount of the deposit to the fiduciary "without being liable to the principal." 760 ILCS 65/9. The Act carves out two exceptions to this rule, but--even assuming that Jines, M.B.S. Clearing, and/or MPI ...

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