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Union Street Corridor Community Development Corp. v. Santander Bank, N.A.

United States District Court, D. Massachusetts

June 13, 2016

UNION STREET CORRIDOR-COMMUNITY DEVELOPMENT CORPORATION Plaintiff
v.
SANTANDER BANK, N.A. Defendant.

          MEMORANDUM AND ORDER

          DOUGLAS P. WOODLOCK UNITED STATES DISTRICT JUDGE

         Before me is a Motion to Dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) regarding a bank check matter governed by the Uniform Commercial Code.

         Plaintiff Union Street Corridor-Community Development Corporation alleges that defendant Santander Bank, N.A. caused it injury by cashing 97 checks submitted by individuals associated with Union Street who were not authorized signatories on the Union Street account held at Santander. I conclude that Union Street may not collect on any of its claims related to the checks in question. I will therefore grant Santander's motion to dismiss this case.

         I. BACKGROUND

         In October of 2007, Union Street opened a business bank account with Santander. As part of the standard signup process, Union Street identified certain affiliated individuals as authorized signatories for the account by listing them on a signature card. From November 29, 2011 to July 13, 2015, three unauthorized board members, Michael Phelps, Norman Cole, and Edward Battle, and one non-board member, Steve Godfrey, are alleged to have signed checks for payment from the account. In all, it appears they signed 97 checks - the value of which totaled $143, 191.77 - that were ultimately paid out of Union Street's account by Santander.

         The dates of the first checks signed by each individual were as follows:[1]

- Godfrey - November 29, 2011
- Cole - February 15, 2012
- Battle - August 6, 2012
- Phelps - November 15, 2013

         At no point had any of those individuals been added to the signature card on file with Santander for Union Street's account.

         During the period in question, Santander sent Union Street monthly statements detailing all of the check payments. On November 2, 2015 - apparently after a change in leadership - Union Street sent Santander notice that the 97 checks in dispute had been signed by unauthorized persons.

         Union Street asserts four state law claims against Santander. Claim I is a claim for common law negligence, alleging that Santander did not comply with applicable law or its own policies in allowing the checks to be paid despite being signed by unauthorized signees. Claim II is for fraud. In this claim, however, Union Street does not adequately plead fraud. It simply lists some of the consequences of the payment of the checks, and restates its allegation that Santander paid the checks without determining whether the signatures on them were authorized. Claim III alleges a violation of Massachusetts General Laws Chapter 93A. Union Street claims that the terms of the agreement it had to sign in order to open an account were deceptive and unfair, and that Santander breached its own agreement by allowing payment of checks signed by unauthorized persons. Count IV alleges breach of contract based on the same underlying agreement.

         II. ANALYSIS

         In support of its motion to dismiss, Santander makes two main arguments.

         The first is that Union Street should be prevented from collecting anything on its common law claims because the UCC displaces common law claims such as the ones alleged here.[2] The second is directed to the Chapter 93A claim; Santander argues that Union Street has failed adequately to allege any unfair or deceptive business practices undertaken by Santander.

         A. ...


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