MARK IV ENTERPRISES, INC., ET AL.
BANK OF AMERICA, N.A., ET AL.
28, 2018 Session
from the Chancery Court for Davidson County No. 14-1677-IV
Russell T. Perkins, Chancellor
employee embezzled funds from Appellants using the
employee's Bank of America account. The employee wrote
checks on Appellants' accounts to legitimate third party
vendors but deposited the checks into her own personal
account by way of Bank of America's ATMs. Appellants
filed suit against Bank of America alleging that the
bank's failure to either prevent this activity or alert
Appellants thereto constituted causes of action for aiding
and abetting conversion, aiding and abetting fraud, civil
conspiracy, and negligence. The trial court granted Bank of
America's motion to dismiss Appellants' claims for
aiding and abetting fraud and conversion and for civil
conspiracy based on Bank of America's lack of knowledge
of Appellants' employee's wrongdoing. The court
subsequently granted Bank of America's motion for summary
judgment on the remaining negligence claim finding that the
bank owed no duty to Appellants. We affirm.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed and Remanded
Dyer Harrison, Nashville, Tennessee, for the appellants, Mark
IV Enterprises, Inc., Legacy Project Resources, LLC, and
Tonya Gale Jones.
Taylor McKellar and Lyndsay Smith Hyde, Nashville, Tennessee,
and Graham H. Claybrook, Charlotte, North Carolina, Pro Hac
Vice, for the appellee, Bank of America, N.A.
Brandon O. Gibson, J., delivered the opinion of the court, in
which Arnold B. Goldin and Kenny Armstrong, J.J., joined.
BRANDON O. GIBSON, JUDGE.
Facts & Procedural History
Mark IV Enterprises, Inc. was a construction company in
Nashville, Tennessee, until on or about January 1, 2010.
Appellant Legacy Project Resources, LLC ("Legacy")
is a project management company that manages construction
projects in Nashville. Both entities share one principal,
Tonya Jones. Susan Bennett was the bookkeeper for both
companies. Appellants allege that from 2008 through 2010, Ms.
Bennett embezzled funds from their bank accounts by
depositing checks drawn on Appellants' accounts and made
payable to Appellants' vendors into Ms. Bennett's own
personal account at Bank of America, N.A. (the
"Bank"). These checks were not made payable to Ms.
Bennett, and many of them were unendorsed. At the time, the
Bank's software did not scan to confirm that the check
deposited in the ATM was made payable to the account holder
or that it was endorsed.
November 15, 2011, Appellants filed suit against the Bank in
the Chancery Court of Davidson County. The case was removed
to federal court by the Bank and then voluntarily nonsuited
by Appellants. The case was re-filed in chancery court on
December 3, 2014, then removed to federal court, and remanded
back to chancery court once again. On August 28, 2015, the
chancery court ("trial court") dismissed
Appellants' aiding and abetting conversion, aiding and
abetting fraud, and civil conspiracy claims, finding that
Appellants' Complaint failed to state a claim under any
of these theories. Although it is not clear from the trial
court's written order dismissing these claims, later
court orders appear to show the court's reasoning rested
on the Bank's lack of notice of Ms. Bennett's
Appellants' sole remaining claim against the Bank was
common law negligence. The parties engaged in discovery, and
the Bank filed a motion for summary judgment on
Appellants' negligence claim. The Bank argued that (1)
Appellants' claim for negligence was preempted by the
Uniform Commercial Code, and (2) in the alternative,
Appellants' negligence claim must fail because the Bank
did not owe a duty to Appellants as non-customers of the
Bank. On January 31, 2017, the trial court granted summary
judgment in favor of the Bank on the negligence claim,
agreeing that the Bank owed no duty to appellants.