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1 in the United States District Court for The Case 2:08-cv-00785-NBF Document 34 Filed 09/16/08 Page 1 of 27 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA JOSEPHINE GRIMM and ) LESTER GRIMM, ) Plaintiffs, ) ) Civil Action No.08-785 v. ) Judge Nora Barry Fischer ) FIRST NATIONAL BANK OF ) PENNSYLVANIA, ) Defendant. ) JOSEPHINE GRIMM and ) LESTER GRIMM, ) Plaintiffs, ) v. ) Civil Action No. 08-816, related. ) Judge Nora Barry Fischer CHASE BANK USA, NA, ) Defendant. ) MEMORANDUM OPINION I. INTRODUCTION Plaintiffs Josephine Grimm and Lester Grimm (hereinafter “Plaintiffs”) filed the first styled civil action against Defendant First National Bank of Pennsylvania (hereinafter “FNB”), alleging nine causes of action arising out of alleged fraudulent activity associated with checking accounts Plaintiffs held with FNB. Specifically, Plaintiffs allege: (1) breach of contract; (2) negligence; (3) fraudulent misrepresentation; (4) negligent misrepresentation; (5) breach of fiduciary duty; (6) violation of the Pennsylvania Unfair Trade Practices/Consumer Protection Law (“UTP/CPL”); (7) 1 Case 2:08-cv-00785-NBF Document 34 Filed 09/16/08 Page 2 of 27 violation of the Uniform Commercial Code (“UCC”); (8) violation of Electronic Funds Transfer Act; and (9) negligence per se. Pending before the Court is Defendant’s Motion to Compel Arbitration or, in the alternative, Partial Motion to Dismiss Plaintiffs’ Amended Complaint [7] at Civil Action No. 08-785. Similarly, Plaintiffs filed the related lawsuit at Civil Action No. 08-816 against Defendant Chase Bank USA, NA 1 (hereinafter “Chase”), alleging eight causes of action arising out of alleged fraudulent activity associated with credit card accounts Plaintiffs held with Defendant. Specifically, Plaintiffs allege: (1) breach of implied contract; (2) negligence; (3) fraudulent misrepresentation; (4) negligent misrepresentation; (5) breach of fiduciary duty; (6) violations of the Pennsylvania Unfair Trade Practices/Consumer Protection Law (“UTP/CPL”); (7) violation of the Truth in Lending Act (“TILA”) and Consumer Credit Protection Act (“CCPA”); and (8) negligence per se. Pending before the Court is Defendant Chase’s Motion to Dismiss Plaintiffs’ Amended Complaint [3] at Civil Action No. 08-816. As said pending Motions are strikingly similar in their factual nature and the relief requested, the Court will address these Motions simultaneously. II. FACTUAL BACKGROUND A. Plaintiffs v. FNB (08-785) During the relevant time period, between October 2005 and April 2006, Plaintiffs allege that 1 Originally, Plaintiffs filed said action against JP Morgan Chase & Company. However, the parties filed a Joint Stipulation correctly identifying the Defendant as Chase Bank USA, NA. (Civil Action No. 08-816, Docket No. 27). 2 Case 2:08-cv-00785-NBF Document 34 Filed 09/16/08 Page 3 of 27 they held “at least” two checking accounts with FNB.2 (Civil Action No. 08-785, Docket No. 1, Exhibit A at ¶5).3 During this time period, Plaintiffs allege that these checking accounts were defrauded in an amount in excess of $131,952.00. (Id. at ¶6). Specifically, Plaintiffs allege that FNB failed to notify them of repeated withdrawals from their accounts, namely 25 withdrawals made over three days by the same entity, “OceanViewSA.” 4 (Id. at ¶¶7-8). In addition, Plaintiffs allege that they were disabled while the fraudulent activity occurred, and were thus unable to immediately detect the fraudulent charges. (Id. at ¶9). According to letters from their treating physicians attached to the Amended Complaint, Mr. Grimm suffers from severe cardiac problems, including the sequelae of three cerebral vascular accidents (“CVA”),5 while Mrs. Grimm suffers from fourth stage Lyme disease,6 depression, and neurological problems. (Id. at Exhibits 1-2). 2 Plaintiffs have attached the agreements governing their checking accounts with FNB to their Amended Complaint. (See Civil Action No. 08-785, Docket No. 1-3 at 22-86). 3 Hereinafter, the Court will cite Plaintiffs’ Amended Complaint as “Docket No. 1.” 4 According to internet blogs, “OceanviewSA” is a common unauthorized charge that appears on bank statements and is associated with identity theft through betting and or gaming. See Posting of vgyhnji, to http://www.casinomeister.com/forums/online-casinos/8958-oceanviewsa-can anyone- help.html (July 2005); see also Posting of Dan (el_passo) http://www.elpassoblog.com/ identify-spoof-emails-and-stop-identity-thef/ (Jun. 29, 2006). 5 A CVA is an apoplectic stroke, a hemorrage into the brain or blockage of a blood vessel in the brain. 1 J.E. Schmidt, M.D., Attorneys’ Dictionary of Medicine C-164 (2007). 6 Lyme disease is “a recurrent, multisystemic disorder caused by the sprochete Borrelia burgdoferi; vectors for human infection are the ticks ... It begins in most cases with erythema chronicum migran (at least 5 cm in diameter), which is followed by myalgia, arthritis of large joints, stiff neck, nervous system problems, cardiovascular problems, and other systemic symptoms, such 3 Case 2:08-cv-00785-NBF Document 34 Filed 09/16/08 Page 4 of 27 After detecting the alleged fraudulent activity, Plaintiffs notified FNB and the Secret Service of same. (Id. at ¶¶10-11). A special agent with the Secret Service conducted an investigation into the fraudulent activity associated with Plaintiffs’ account with Defendant, as well as their accounts with other credit lending institutions. In a letter addressed to Plaintiffs’ counsel dated December 11, 2006, the Secret Service agent stated that the Plaintiffs were defrauded by unknown individuals in an amount in excess of $600,000.00. (See Id., Exhibit 4). The agent further stated that it appeared that Plaintiffs were defrauded through the use of hidden computer software, known as spyware, associated with a company believed to be RiverBelleCasino.com,7 a subsidiary of Belle Rock Entertainment, an online gambling website. Id. During the course of the Secret Service’s investigation, Mrs. Grimm stated that she voluntarily submitted personal information to RiverBelleCasino.com in order to download online gambling software. Id. In the months after submitting this information, numerous individual credit cards were obtained by unidentified third parties in Mrs. Grimm’s name, and these credit cards accumulated large amounts of unauthorized charges. Id. Plaintiffs allege that FNB was obligated to provide fraud protection on their checking accounts and failed to satisfy this obligation by overlooking the fraudulent activity and refusing to as chills, fever, headache, malaise, and vomiting.” Dorland’s Illustrated Medical Dictionary 545 (31st ed. 2007). 7 River Belle Online Casino was launched in 1997, is a member of the Interactive Gaming Council (IGC), and is licensed to conduct business by the Government of Gibralter. “You can play for fun, or play for real money by downloading the Online casino software.” River Belle Online Casino offers over 200 interactive games. See http://www.riverbelle.com/portal/about- us.asp?VT=524285658&EventId=27227. 4 Case 2:08-cv-00785-NBF Document 34 Filed 09/16/08 Page 5 of 27 compensate Plaintiffs for the fraudulent withdrawals. (Docket No. 1 at ¶¶14-15). B. Plaintiffs v. Chase (08-816) Plaintiffs allege that between October 2005 and July 2006, they held “at least” five credit card accounts with Chase.89 (Civil Action No. 08-816, Docket No. 1, Exhibit C at ¶5). During this time period, Plaintiffs allege that there were fraudulent charges made to their credit cards with Chase in an amount in excess of $170,000.00. (Id. at ¶6). Plaintiffs also allege that Chase failed to notify them that unusually large amounts were being charged to their credit cards. (Id. at ¶7). For example, Plaintiffs allege that Chase failed to notify them that one entity, “Flightserv,” 10 made eight transactions in two days involving the Plaintiffs’ accounts, totaling approximately $5,800.00. (Id. at ¶8). As detailed above, Plaintiffs allege that they were disabled while the fraudulent activity associated with their credit card accounts occurred and were thus unable to detect the fraud until August of 2006. (Id. at ¶¶7-8). After detecting the alleged fraudulent activity, Plaintiffs notified Chase and the Secret Service of the fraudulent charges. (Id. at ¶¶8-9). As noted, a special agent with the Secret Service conducted an investigation into the fraudulent activity associated with Plaintiffs’ Chase accounts. Plaintiffs further allege that Chase was obligated to provide fraud protection on their credit cards and failed 8 Plaintiffs have attached credit card agreements governing their accounts with Chase to their Amended Complaint. (See Civil Action No. 08-816 at Docket No. 1, Exhibit 5-9). 9 Hereinafter, the Court will cite Plaintiffs’ Amended Complaint as “Docket No. 1.” Flightserv appears to be an Atlanta, Georgia based travel services company. See http://www.bizjournals.com/atlanta/stories/2004/06/21/story7.html 5 Case 2:08-cv-00785-NBF Document 34 Filed 09/16/08 Page 6 of 27 to satisfy this obligation by overlooking the fraudulent activity and only reimbursing the Grimms for approximately $112,000.00 of the fraudulent charges. (Id at ¶¶13-14).11 III. PROCEDURAL HISTORY A. Plaintiffs v. FNB (08-785) Plaintiffs filed an Amended Complaint on May 16, 2008 in the Court of Common Pleas of Westmoreland County, Pennsylvania.12 (Civil Action No. 08-785, Docket No. 1 at ¶ 3). On June 6, 2008, FNB timely removed the action to federal court based on this Court’s federal question jurisdiction pursuant to 28 U.S.C. § 1331 in that Plaintiffs’ claims assert a violation of the Electronic Funds Transfer Act, a law of the United States. (Civil Action No. 08-785, Docket No. 1). At that time, this case was assigned to Judge David S. Cercone. Thereafter, FNB filed its Motion to Compel Arbitration or, in the Alternative, Partial Motion to Dismiss Plaintiffs’ Amended Complaint on June 17, 2008. (Civil Action No. 08-785, Docket No. 7). On July 21, 2008, Plaintiffs filed a Response to FNB’s Motion to Compel Arbitration or, in the Alternative, Partial Motion to Dismiss Plaintiffs’ Amended Complaint along with a Motion to Strike.
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