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Hip Hop Beverage Corporation, A Nevada Corporation v. Juneice Deanna Michaux

February 1, 2013

HIP HOP BEVERAGE CORPORATION, A NEVADA CORPORATION, PLAINTIFF,
v.
JUNEICE DEANNA MICHAUX, AN INDIVIDUAL;
ANHM FZCO LLC, AN ORGANIZATION, FORM UNKNOWN; BANK OF AMERICA, DEFENDANTS.



The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

O

ORDER GRANTING MOTION TO REMAND AND VACATING MOTION TO DISMISS [Dkt. Nos. 8 & 10]

Presently before the court are Plaintiff Hip Hop Beverage Corporation ("Hip Hop Beverage")'s Motion to Remand and Defendant Bank of America, N.A. ("BANA")'s Motion to Dismiss. Having considered the parties' submissions, the court adopts the following order.

I. BACKGROUND

Plaintiff Hip Hop Beverage is an energy drink company based in Los Angeles. From 2006 to 2012, Defendant Deanna Michaux ("Michaux") worked as the Director of Sales for Hip Hop Beverage.

She terminated her employment on April 9, 2012. On April 10, 2012, while removing items from Michaux's office, Plaintiff found bank statements and records in the desk Michaux used. These statements and records caused Plaintiff's personnel to become suspicious that Michaux had embezzled funds from Plaintiff.

Plaintiff learned that on January 7, 2010, Michaux filed a Fictitious Name Statement in Los Angeles County stating that she was an individual conducting a business called "Hip Hop Beverage" and listing an address that at the time was Plaintiff's business address. That same month, Michaux opened a bank account at a branch of BANA. The account was opened in the name of Michaux as sole proprietor, doing business as "Hip Hop Beverage." In opening this account, Michaux presented as identification to BANA the tax identification number of Plaintiff, which is a corporation. Michaux used this account to embezzle funds belonging to Plaintiff by, for example, instructing Plaintiff's customers to wire funds due to Plaintiff into the account opened by Michaux at BANA.

Plaintiff makes the following allegations against BANA in its Fifth Cause of Action (Negligence): 39. When, during January, 2010, Michaux opened the above-alleged bank account at Bank of America, she did so in her name as a sole proprietor (i.e., an individual), doing business as "Hip Hop Beverage." Plaintiff alleges on information and belief that in opening this account, Michaux presented as identification to Bank of America the tax identification number of Plaintiff, which is a corporation.

40. Through the exercise of reasonable diligence, Bank of America should have determined that the tax identification number of Plaintiff belonged to it, a corporation, and not Michaux, an individual. Bank of America was required to form a reasonable belief that it knew the true identify of Michaux, by, among other things, establishing and implementing reasonable account opening procedures that verified Michaux's identity. Under 31 CFR 103.121, Bank of America was required to establish and implement a Customer Identification Program that, inter alia, contained procedures for opening an account that specified the identifying information that will be obtained from each customer opening an account. In the case of a "U.S. person," whom Michaux was, such identifying information includes "a taxpayer identification number." 31 CFR 103.121(b)(4)(l). Bank of America therefore had a duty to form a reasonable belief that it knew the true identify of Michaux.

41. Bank of America breached this duty to exercise reasonable diligence by failing to form a reasonable belief that it knew the true identity of Michaux. Bank of America permitted Michaux to open an account as an individual with the fictitious business name noted on the account by presenting the taxpayer identification number of a corporation, Plaintiff, of the same name as the fictitious business name utilized by Michaux. For these reasons, Bank of America also violated 31 CFR 103.121.

42. Bank of America's breaches of its duty to exercise reasonable diligence and to follow 31 CFR 103.121 each proximately caused Plaintiff damage as alleged above.

(Compl. ¶¶ 39-42.)

Plaintiff originally filed the Complaint in state court on October 16, 2012. Defendant BANA removed the action to federal court on November 5, 2012, on the ground that Plaintiff's claim arises out of federal law because Plaintiff's negligence cause of action "is based upon BANA's alleged violation of 31 C.F.R. § 103.121," an implementing regulation of the USA Patriot Act. (Notice of Removal ¶ 6. See Howe v. Bank of Am. N.A., 179 Cal. App. 4th 1443, 1452-53 (2009).)

Plaintiff now moves to remand the action to state court on the ground that it presents no federal question. BANA opposes the motion to remand and moves to dismiss the action, arguing that it fails to state a claim for relief because there is no private right of action to bring a suit for an alleged violation of the USA Patriot Act or Ban ...


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