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Barrett v. JP Morgan Chase Bank

United States District Court, S.D. California

June 27, 2016

RUBEN M. BARRETT, an individual, Plaintiff,
JP MORGAN CHASE BANK, a New York corporation, et al., Defendants.



         This case comes before the Court on the motion for summary judgment, or in the alternative, for summary adjudication of claims and issues filed by Defendant JP Morgan Chase Bank. Plaintiff Ruben Barrett filed an opposition to the motion, and Defendant filed a reply. For the reasons set out below, the Court denies the motion for summary judgment and grants in part and denies in part the motion for summary adjudication of claims and issues.

         I. BACKGROUND

         In May of 2012, Plaintiff Ruben Barrett, through a Hillcrest, San Diego branch of Defendant, JP Morgan Chase Bank (“Chase”), transferred $150, 000 to a client trust account of a third-party attorney, Larry Busch, for the purpose of investing in an “offshore oil” investment deal. (Def.’s Evidentiary App’x, Ex. A (Pl. Dep. at 15:8-12; 150:10-19; 153:11-18, Oct. 30, 2015).) Plaintiff believed that within three weeks of investing, he would gain profits of $2, 250, 000. (Id. at 36:7-25.) Instead, the deal turned out to be a scam. (Id. at 46:1-12; 68:3-19.) As a result, Plaintiff suffered economic loss of $150, 000. (See Id. at 68:8-19.)

         The deal called for Plaintiff to wire $150, 000 to Busch who would hold this money in escrow and combine it with the monies of a third-party individual, Jamario Dyson, to reach a total of $750, 000. (Id. at 34:3-16; 105:14-23.) Plaintiff was under the impression that Busch would then release the $750, 000 to a third-party corporation, SSMG, Inc., who would facilitate the off-shore oil transaction. (See generally Id. at 29:10-32:25; 105:6 -106:3.) Instead, upon receiving Plaintiff’s $150, 000, Busch sent $147, 000 to a company called Westbridge Mutual, LLC and retained $3, 000 as legal fees. (Def.’s Evidentiary App’x, Ex. E (Busch Letter to Pl., July 9, 2012).) Busch claims he acted pursuant to an escrow agreement sent to him by an individual named Michael Briscoe, who informed him that Plaintiff’s $150, 000 was really from SSMG, Inc. and instructed him to direct the money to Westbridge Mutual, LLC. (Def.’s Evidentiary App’x, Ex. A (Pl. Dep. at 53:2-54:6); Ex. E (Busch Letter to Pl.).) The escrow agreement sent by Briscoe to Busch listed Busch, Dyson, Briscoe, and Briscoe’s company, Frucom Capital, as the only parties to the transaction and did not mention Plaintiff’s involvement in the investment. (Def.’s Evidentiary App’x, Ex. A (Pl. Dep. at 55:21-56:3); Ex. E (Busch Letter to Pl.).)

         On May 7, 2012, Plaintiff visited his local Chase branch for the purpose of facilitating the $150, 000 funds transfer and worked with a Chase representative, Alex Fava. (Def.’s Evidentiary App’x, Ex. A (Pl. Dep. at 151:1-10; 153:11-16).) According to Plaintiff, prior to requesting the transfer, he asked Fava to “issue pre-advice” by way of calling Busch to inform him that the funds were being sent by Plaintiff and were to be used in furtherance of the off-shore oil investment with SSMG, Inc. (See Id. at 151:4-14.) Plaintiff claims Fava agreed to perform the “pre-advice” and then left his desk for roughly forty-five minutes. (Id. at 151:11-19.) When Fava returned, Plaintiff asked whether he had gotten in touch with Busch to which he replied “yes.” (Id. at 183:1-25.) Relying on the representation that “pre-advice” had been “issued, ” Plaintiff signed the wire transfer request and permitted the funds to be transferred to Busch. (See id.) Plaintiff testified he would not have agreed to send the funds unless he or a representative on his behalf communicated with Busch to confirm his knowledge of the transaction. (Id. at 23:4-23.) Despite Plaintiff’s own past failed attempts to connect with Busch, [1] he believed Fava was able to reach him. (Id.)

         Plaintiff states that in the months following the May 7 transaction, he called Chase customer claims roughly 100 times and spoke with many representatives who repeatedly assured him “pre-advice” had been given. (Pl.’s Evidentiary App’x, Ex. A (Pl. Dep. at 59:7 - 60:21).) Yet several months later, when Plaintiff had not heard back from anyone regarding the investment, he corresponded with Busch who claimed he had no knowledge of Plaintiff’s involvement in the transaction, and never received “pre-advice” from Defendant. (Id. at 53:17-54:15.) In 2013, Plaintiff filed a complaint against Defendant with the Consumer Financial Protection Bureau, and in response, a high ranking representative of the corporation sent him a letter informing him no “pre-advice” had been given as the payment did not require such a phone call be made. (Pl.’s Evidentiary App’x, Ex. D (JP Morgan Chase Response to Compl. filed by Pl. with Consumer Financial Protection Bureau, Dec. 9, 2013).)

         On November 13, 2014, Plaintiff filed the present case against Defendant in San Diego Superior Court alleging claims for professional negligence, negligent misrepresentation, and two claims for fraud. Defendant removed the case to this Court on December 19, 2014, on the ground of diversity jurisdiction. Defendant filed a motion to dismiss the claims, which this Court granted in part and denied in part. The remaining claims in controversy are Plaintiff’s claims for professional negligence, negligent misrepresentation, and one claim for fraud.


         Defendant moves for summary judgment, or in the alternative, for summary adjudication on all of Plaintiff’s claims for relief. First, Defendant argues Plaintiff’s professional negligence claim fails because Plaintiff did not designate an expert to testify as to the standard of care for bankers issuing wire transfers. (Mem. of P. & A. in Supp. of Mot. at 8-10.) Second, Defendant contends Plaintiff’s negligent misrepresentation claim fails because the evidence only supports a theory of intentional misrepresentation. (Id. at 10-12.) Third, Defendant argues Plaintiff’s claim for fraud fails as a matter of law because there is no adequate causal relationship between the alleged fraud and Plaintiff’s damages. (Id. at 12-13.) Fourth, Defendant alleges that Plaintiff’s request for punitive damages fails as a matter of law because Plaintiff has failed to provide evidence that any leader in the corporation participated in misconduct. (Id. at 13-14.) Fifth, Defendant argues the wire transfer form Plaintiff executed in connection with the transfer of his funds limits Defendant’s liability to amounts “specifically required by Article 4A of the Uniform Commercial Code.” (Id. at 14-15.) Defendant asserts Plaintiff’s claims do not arise under the UCC, therefore Defendant is not liable for Plaintiff’s alleged damages. (Id.)

         A. Standard of Review

         Summary judgment is appropriate if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party has the initial burden of demonstrating that summary judgment is proper. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The moving party must identify the pleadings, depositions, affidavits, or other evidence that it “believes demonstrates the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties’ differing versions of the truth.” S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir. 1982).

         The burden then shifts to the opposing party to show that summary judgment is not appropriate. Celotex, 477 U.S. at 324. The opposing party’s evidence is to be believed, and all justifiable inferences are to be drawn in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, to avoid summary judgment, the opposing party cannot rest solely on conclusory allegations. Berg v. Kincheloe, 794 F.2d 457, 459 (9th Cir. 1986). Instead, it must designate specific facts showing there is a genuine issue for trial. Id. See also Butler v. San Diego District Attorney’s Office, 370 F.3d 956, 958 (9th Cir. 2004) (stating if defendant produces enough evidence to require Plaintiff to go beyond pleadings, Plaintiff must counter by producing ...

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