United States District Court, D. New Hampshire
Charles M. Johnson, Trustee for the Charles M. Johnson Revocable Intervivos Trust and Charles M. Johnson
People's United Bank, N.A. Opinion No. 2016 DNH 206
McCafferty United States District Judge
2013 and 2014, a trusted household employee with debit card
access allegedly stole $185,000 from Charles M.
Johnson’s checking accounts at People’s United
Bank (the “Bank”). Johnson, individually and as
trustee for the Charles M. Johnson Revocable Intervivos
Trust, brought suit against the Bank in New Hampshire
Superior Court, asserting that the Bank should have detected
suspicious activity related to his accounts and prevented the
unauthorized withdrawals. The Bank removed the case to this court
and now moves to dismiss (doc. no. 3). Johnson
objects. For the reasons that follow, the Bank’s motion
to dismiss is granted.
Federal Rule of Civil Procedure 12(b)(6), the court
must accept the factual allegations in the complaint as true,
construe reasonable inferences in the plaintiff’s
favor, and “determine whether the factual allegations
in the plaintiff’s complaint set forth a plausible
claim upon which relief may be granted.” Foley v.
Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014)
(citation omitted). A claim is facially plausible “when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
2013, Johnson had two checking accounts at the Bank: (1) an
account in his capacity as trustee for the Charles M. Johnson
Revocable Intervivos Trust (the “Trustee
Account”), and (2) a joint account with his father (the
“Joint Account”). On April 1, 2014,
Johnson’s father died and Johnson became the sole owner
of the Joint Account. A Consumer Deposit Account Agreement
(the “Agreement”) set forth the terms of these
early 2013, Johnson hired a personal assistant named Alex
Devine to help him and his father with household chores and
medical appointments. Johnson was 70 years old and his father
was 93 years old at the time. Devine “was a trusted
member of the household and essentially became a family
member.” Doc. no 1-1 at ¶ 17. As part of
the employment arrangement, Johnson provided Devine with his
Trustee Account debit card so that Devine could shop for him.
Johnson also authorized Devine to use the debit card to make
purchases of goods and services for herself, but he never
gave her permission to make cash withdrawals.
2013 and 2014, Devine and her then-boyfriend, Adam French,
made a number of unauthorized withdrawals from the Trustee
Account using Johnson’s debit card. The first such
withdrawal occurred on March 20, 2013, when the couple
withdrew doc. no. 5 at 16. The Bank attached
portions of the Agreement to its motion to dismiss (doc. no.
3-3), and Johnson attached the entire Agreement to
his objection to the Bank’s motion. Doc. no.
5-1. Because Johnson’s breach of contract
claim is dependent on the Agreement, and neither party
challenges the document’s authenticity, the court can
properly consider the Agreement in evaluating the
Bank’s motion to dismiss. See Beddall v. State St.
Bank & Trust Co., 137 F.3d 12, 16-17 (1st Cir.
1998); see also Clorox Co. P. R. v. Proctor & Gamble
Comm. Co., 228 F.3d 24, 32 (1st Cir. 2000). $120 from
the Trustee Account without Johnson’s permission. Prior
to that withdrawal, the Trustee Account had a balance of
$32,548.47. The couple continued making unauthorized
withdrawals until the Trustee Account balance was reduced to
$1,856.74 in September 2013.
on September 26, 2013, without Johnson’s permission,
the couple electronically accessed the Joint Account and
transferred $20,000 from the Joint Account to the Trustee
Account. Prior to that transfer, the Joint Account had a
balance of $282,701.76. On that same day, the couple withdrew
a total of $800 from the Trustee Account. Over the next year,
the couple continued this scheme of transferring funds from
the Joint Account to the Trustee Account and then withdrawing
cash from the Trustee Account with the debit card.
August 6, 2014, the couple withdrew $500 from the Trustee
Account. On August 7, they transferred $9,500 from the Joint
Account to the Trustee Account and then withdrew $500 from
the Trustee Account. But on August 8, the Bank froze the
Trustee Account because of possible fraudulent activity. On
that date, the couple attempted to withdraw money from the
Trustee Account but was unable to do so because the account
was frozen. French, impersonating Johnson, then called the
Bank’s “Call Center” and complained that he
was unable to withdraw money using the debit card. Johnson
alleges that French sounded much younger than Johnson during
the phone conversation. The Bank’s call center
representative asked French certain questions to verify
whether he was actually Johnson. Despite sounding hesitant,
French was able to answer most questions correctly, and the
call center representative asked French for a telephone
number where she could reach him if they were interrupted.
French put the representative on hold for quite some time and
then finally gave her a phone number that did not appear in
any of the Bank’s records on Johnson. The
representative conferred with the Bank’s Fraud Center
regarding this discrepancy. She then asked French to confirm
the amount of the August 7 funds transfer. French correctly
answered the question, and the Bank unfroze the Trustee
Account. The couple then continued using the debit card to
make unauthorized withdrawals.
September 2014, the manager of the Bank’s Stratham
branch and a Bank fraud investigator both called Johnson to
inform him that the Bank had frozen his accounts because of
what appeared to be fraud. Johnson told the Bank that he had
not authorized anyone to transfer funds from the Joint
Account or make cash withdrawals with the debit card.
alleges that between March 2013 and September 2014 the couple
wrongfully withdrew approximately $185,000. Johnson had not
reviewed any bank account statements during that period
because Devine hid them.
asserts that, because of his age, the Bank should have been
more suspicious of the large electronic transfers and
withdrawals. Johnson also alleges that he has a low
understanding of financial and banking matters, and that the
Bank knew he was an easy target for this type of fraud.
Johnson filed this lawsuit in New Hampshire Superior Court,
Rockingham County, alleging that the Bank failed to protect
his accounts when the couple transferred funds from the Joint
Account and withdrew money from the Trustee Account. The Bank
removed the case to this court on the basis of diversity
asserts four claims against the Bank: Negligence (Count I);
Misrepresentation (Count II); Breach of Contract (Count III);
and Failure to Meet Depository Obligations (Count IV). The
Bank moves to dismiss all claims.
Count I: Negligence
alleges that the Bank is liable for negligence because it
allowed the couple to wrongfully withdraw money from the
Trustee Account and transfer money from the Joint Account.
Johnson alleges that the Bank had a duty to use reasonable
care to ensure that such wrongful withdrawals and transfers
did not take place. The Bank, relying on Ahrendt v.
Granite Bank, 144 N.H. 308 (1999), contends that a bank
owes no such duty of care to protect its customers from the
fraudulent conduct of third parties. The court agrees.
establish negligence under New Hampshire law, the plaintiff
must demonstrate that the defendant breached a duty that it
owed to the plaintiff, and that the breach proximately caused
injury to the plaintiff. England v. Brianas, 166
N.H. 369, 371 (2014). The existence of a duty in a particular
case is a question of law. Id. “In New
Hampshire, the general rule is that an individual has no duty
to protect another from the criminal acts of third
parties.” Peterboro Tool Co. v. People’s
United Bank,848 F. ...