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Kahveci v. Citizens Bank, N.A.

United States District Court, D. Massachusetts

January 25, 2019

CITIZENS BANK, N.A., Defendant.



         This is an action by a customer against a bank arising from an employee's unauthorized depositing of company checks into her personal checking account. Plaintiff Mehmet Kahveci, doing business as Faneuil Hall Dental Associates, operates a dental practice in Boston, Massachusetts. His office manager, a trusted employee and friend, embezzled funds by depositing checks addressed to his practice into her own checking account at defendant Citizens Bank. The complaint contends that the bank was negligent in letting the employee deposit the checks by means of forged endorsements.

         Defendant has moved for summary judgment, contending that plaintiff's claims are barred by the statute of limitations. Plaintiff has opposed the motion and moved to amend the complaint, primarily to add a claim under Mass. Gen. Laws ch. 93A. For the reasons stated below, the motion for summary judgment will be granted, and the motion to amend will be denied.

         I. Background

         A. Factual Background

         Except where otherwise noted, the following facts are set forth in the record and are undisputed.

         Mehmet Kahveci is a dentist who operates his practice through a professional corporation, Mehmet Kahveci, P.C., doing business as Faneuil Hall Dental Associates (“FHDA”). The dental practice is located at 177 State Street, Boston, Massachusetts. Kahveci is the practice's primary dentist, and the only officer, director, and shareholder of the professional corporation. (MK Aff. ¶¶ 1-2; VC Aff. ¶¶ 2-3).

         Citizens Bank, N.A., is a national banking association, with a principal office located at 28 State Street, Boston, Massachusetts. (Compl. ¶ 2).

         As part of Kahveci's practice, he accepts payments from patients directly and from health insurance companies. (Compl. ¶ 5; MK Aff. ¶¶ 10, 22; VC Aff. ¶ 12). Any checks received were supposed to be deposited in the bank account used exclusively with the operation of the business: an account at Citizens Bank titled “Faneuil Hall Dental Associates.” (Compl ¶ 7; MK Aff. ¶ 3; RN Aff. ¶ 10(a), Ex. A; Kahveci Dep. at 31-32). The practice has maintained that account since at least April 2008. (Def.'s SMF ¶ 2).

         In 2003, Kahveci hired Julia Vaysglus as an office assistant. (Kahveci Dep. at 24-26; MK Aff. ¶¶ 8-9; VC Aff. ¶¶ 10-11). She was recommended to him by her cousin, Kahveci's domestic partner, who works as a dental hygienist at the practice. (Id.). Kahveci came to consider Vaysglus both a friend and a trusted employee, and also had a friendship with her husband. (Kahveci Dep. at 34-35, 80-81). As an office assistant, she was responsible for a variety of administrative tasks, including new patient intake and onboarding, preparing and submitting insurance claims, placing orders for dental supplies and materials, sorting the daily mail and dental supply deliveries, preparing payments due for various monthly expenses, processing and depositing payments received from patients and their insurers, and assisting with bookkeeping. (MK Aff. ¶ 10; VC Aff. ¶ 12).

         Sometime in 2007, Kahveci promoted Vaysglus to the position of office manager. (Kahveci Dep. at 26-27; MK Aff. ¶ 11; VC Aff. ¶¶ 13-14). As office manager, she acquired additional responsibilities; she became the primary bookkeeper, which entailed entering and categorizing all outgoing expense payments and incoming check and credit card payments into a bookkeeping software program, and processing biweekly payroll and making the associated payroll tax payments. (Kahveci Dep. at 27, 69-70; MK Aff. ¶ 12; VC Aff. ¶ 15). She also became the employee primarily tasked with entering and monitoring all insurance claims within the software program used by the practice as its patient-file and insurance-tracking system. (MF Aff. ¶ 16; VC Aff. ¶ 16). In her new position as office manager, Vaysglus reported directly to Kahveci. (Kahveci Dep. at 28).

         Sometime between December 15 and 30, 2014, Kahveci received a notice from the Internal Revenue Service stating that he had underreported his practice's gross income for the 2013 tax year by $96, 633.10. (Kahveci Dep. at 37-39, 43, Ex. 3 at No. 3.3). Shortly thereafter, he contacted the practice's outside accountants to determine the cause of the discrepancy. (Kahveci Dep. at 38-41; MK Aff. ¶¶ 38-39, Exs. A-B; KS Aff. ¶ 15).[1]

         On January 2, 2015, Kahveci and his accountants began their investigation (originally, with Vaysglus's assistance). As she was either unable (due to the recent birth of her child) or, more likely, unwilling (due to her embezzlement) to assist, Kahveci assigned one of his other front-desk employees to help. (Kahveci Dep. at 47-49; MK Aff ¶¶ 40-47, 55, Exs. B-C; VC Aff ¶¶ 8, 19-27, and Exs. A-2-C). It then took several weeks to obtain the necessary Form 1099s and detailed payment information from some 55 insurance companies that had made payments to the practice in 2013. (MK Aff. ¶¶ 46-57, Exs. B-G; VC Aff. ¶¶ 24-38, Exs. A-1-I; KS Aff. ¶¶ 16-19).

         On February 11 and 12, 2015, Kahveci and Vaysglus exchanged a series of texts messages about the discrepancy. (MK Aff. ¶ 62, Ex. F). During that conversation, he voiced his suspicions that the discrepancy was due to “either insurance error or embezzlement.” (Id.).

         On February 13, 2015, Kahveci received a telephone call from Vaysglus's husband. He told Kahveci that his wife had asked him to call and confess that she “had stolen money.” (Kahveci Dep. at 58-59; MF Aff. ¶¶ 66-68, Exs. B-G; VC Aff. ¶¶ 39-40). He terminated Vaysglus soon thereafter. (Kahveci Dep. at 61-62; VC Aff. ¶¶ 41-44, Exs. J-K).

         Over the course of the next several weeks, Kahveci, with the help of his accountants, learned the details of the embezzlement. (Compl. ¶¶ 12, 15; MK Aff. ¶¶ 69-74; VC Aff. ¶¶ 17, 39-43, 46-49, Exs. K, M-P; KS Aff. ¶ 31). The investigation was completed in March 2015. (Kahveci Dep. at 69; MK Aff. ¶¶ 72-74).

         Kahveci learned that Vaysglus had taken insurance checks payable to his practice and, instead of depositing them in the practice's account, deposited them into one of her two personal accounts, also at Citizens Bank. (Compl. ¶ 15; MK Aff. ¶ 5; RN Aff. ¶ 5). He discovered that between January 2009 and December 2014, she deposited at least 281 insurance checks into her personal accounts-bringing the total amount embezzled to $352, 913.28. (Compl. ¶¶ 11, 15-18; MK Aff. ¶¶ 4, 7; RN Aff. ¶¶ 4, 7). She was not, of course, authorized to deposit those checks into her own accounts. (Compl. ¶ 16; MK Aff. ¶ 6; RN Aff. ¶ 6).

         Vaysglus misappropriated the checks by endorsing checks payable to “Faneuil Hall Dental Associates” or “Mehmet Kahveci DMD” with the handwritten words “pay to the order of Julia Vaysglus, ” and then forging his signature underneath. (MK Aff. ¶ 6; RN Aff. ¶ 6). There were also at least two checks that she deposited directly into her account without any endorsement. (RN Aff. ¶ 6). Citizens Bank credited Vaysglus's accounts in the full amount of each check. (Compl. ¶ 18; MK Aff. ¶ 7; RN Aff. ¶ 7). In addition, it did not inquire as to whether Vaysglus was authorized to endorse the checks or deposit them into her own accounts. (Compl. ¶ 19).

         Kahveci filed suit against Vaysglus on September 23, 2015. (Kahveci Dep. at 76). More than two years later, on February 2, 2018, he filed this complaint against Citizens Bank. (Compl.)

         B. Procedural Background

         The complaint was filed in the Suffolk County Superior Court on February 1, 2018, asserting claims for conversion and negligence. Citizens Bank received a copy of the complaint on February 23, 2018. (Not. of Removal ¶ 5). It timely removed the action to this Court on March 9, 2018.

         On March 21, 2018, Citizens Bank moved to dismiss the complaint, contending that all claims are time-barred. The Court denied that motion on April 23, 2018.

         On May 31, 2018, the Court held a scheduling conference pursuant to Fed.R.Civ.P. 16(b). Two weeks prior to the conference, on May 17, 2018, the parties submitted a joint statement pursuant to Local Rule 16.1 proposing a pretrial schedule. The joint statement of the parties proposed a ...

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