United States District Court, D. Massachusetts
ALICE KING and JAMES C. KING, Plaintiffs,
WELLS FARGO BANK, N.A., Defendant.
MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.
Alice and James C. King (together, “the Kings”)
were victims of a fraud in which a third-party hacker
compromised wire instructions during a real estate closing
and diverted the payoff funds. See [ECF No. 1-1 at
5-15]. Defendant Wells Fargo Bank, N.A. (“Wells
Fargo”) was the intended recipient of the payoff funds
and the location of the fraudulent account into which the
funds were diverted. [Id. at 6-7, 11-12]. The Kings
“are simply seeking a discharge of mortgage” and,
to that end, have asserted several claims against Wells Fargo
including for declaratory relief, injunctive relief, quiet
title, unjust enrichment, violation of Massachusetts General
Laws ch. 93A (“Chapter 93A”), and violation of
Massachusetts General Laws ch. 183, § 55. See
[id. at 8-14; ECF No. 15 at 4]. Currently pending
before the Court is Wells Fargo's motion to dismiss the
complaint pursuant to Federal Rule of Civil Procedure
12(b)(6). [ECF No. 10]. Although the Court sympathizes with
the Kings, for the following reasons, Wells Fargo's
motion to dismiss [ECF No. 10] is GRANTED.
following facts are drawn from the complaint, the
well-pleaded allegations of which are taken as true for the
purposes of evaluating the motion to dismiss. See Ruivo
v. Wells Fargo Bank, N.A., 766 F.3d 87, 90 (1st
Cir. 2014). The Court also draws facts from documents
attached to and incorporated by reference into the complaint.
A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77,
80 (1st Cir. 2013).
Kings are the current owners of real estate located at 160
Burkhall Street, Unit 409, Weymouth, MA (the
“Property”). [ECF No. 1-1 at 5]. They purchased
the Property from the estate of George A. Gilboy, Jr.
(“Gilboy Estate”) for $216, 200. [Id. at
5-6]. Prior to his passing, Mr. Gilboy had granted a mortgage
on the Property to Mortgage Electronic Registration Systems,
Inc., which it later assigned to Wells Fargo. [Id.].
As part of the closing on the Property, the Gilboy Estate
sought to obtain a written payoff statement from Wells Fargo
for the underlying promissory note secured by the mortgage.
[Id. at 6].
August 13, 2018, a payoff statement was faxed to the
facsimile number provided by the Gilboy Estate's
attorney, Pamela Linskey (“Attorney Linskey”).
[Id. at 7]. The payoff statement appeared to be on
Wells Fargo's letterhead and indicated that $91, 667.06
was the amount outstanding on the mortgage. [Id. at
7, 64-65]. The payoff statement provided wiring information
and listed the beneficiary account name as “WF Payoff
Ifile.” [Id. at 67]. Attorney Linskey provided
the payoff statement to the Kings' counsel, who, pursuant
to the wiring instructions provided, then initiated a wire
transfer of $91, 762.55 from South Shore Bank to the
beneficiary account located at Wells Fargo that was listed on
the payoff statement. [Id. at 7, 71]. The wire went
through on August 15, 2018, but Wells Fargo did not issue a
discharge of the mortgage. [Id. at 7].
September 26, 2018, the Kings made a formal demand on Wells
Fargo pursuant to Chapter 93A seeking a discharge of the
mortgage. [Id. at 7, 71-73]. The demand letter
explained the circumstances of the wire transfer.
[Id. at 71-72]. It also explained that South Shore
Bank had been contacted by Wells Fargo regarding potential
fraud and that the Kings' attorney had spoken with a
representative from Wells Fargo on September 19, 2018,
“who confirmed that the 8/13/2018 Payoff Statement we
relied upon had been compromised.” [Id. at
72]. By comparing the August 13 payoff statement with a new
payoff statement from Wells Fargo, the Kings' attorney
identified that “the compromise of the 8/13/2018 Payoff
Statement related to the beneficiary account number and
name” and that “[t]he beneficiary account in the
8/13/2018 Payoff Statement was not an account in [Wells
Fargo's] name.” [Id.]. The demand letter
challenged Wells Fargo's procedures for wire transfers
and alleged that Wells Fargo “simply deposit[ed] its
funds into an account at [Wells Fargo] that did not belong to
[Wells Fargo] nor was titled in the name of “Wells
Fargo Bank, N.A ..... ” [Id.].
October 25, 2018, Wells Fargo responded to the Chapter 93A
demand letter, denied sending the August 13 payoff statement
that contained information about the “WF Payoff
Ifile” account, and refused to issue a discharge.
[Id. at 8, 87-88]. Wells Fargo informed the Kings
that it believed they had been a victim of a business
electronic mail compromise scheme that “was likely
conceived and executed by three or more persons, none of whom
are agents or employees of Wells Fargo.” [Id.
at 88]. Wells Fargo further detailed its efforts in
conducting an investigation of the incident, including
placing a hold on the bank account used by the suspected
perpetrators that resulted in recovering $11, 217.55 of the
funds. [Id. at 87-88]. Wells Fargo also confirmed
that the beneficiary bank account number that had been
provided to Attorney Linskey was erroneous and was not
provided to her by Wells Fargo or its authorized agents.
[Id.]. Finally, Wells Fargo categorically denied
receiving the funds wired by Attorney Linskey and further
denied having “any actual or constructive notice of the
perpetrator's fraudulent activity prior to the
STANDARD OF REVIEW
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), the Court must accept as true all well-pleaded
facts, analyze those facts in the light most favorable to the
plaintiff's theory, and draw all reasonable inferences
from those facts in favor of the plaintiff. United States
ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d
377, 383 (1st Cir. 2011). While detailed factual allegations
are not required, the complaint must set forth “more
than labels and conclusions, ” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007), and it must contain
“factual allegations, either direct or inferential,
respecting each material element necessary to sustain
recovery under some actionable legal theory, ”
Gagliardi v. Sullivan, 513 F.3d 301, 305 (1st Cir.
2008) (internal quotations and citations omitted). The facts
alleged must be sufficient to “state a claim to relief
that is plausible on its face.” Maddox, 732
F.3d at 80 (quoting Twombly, 550 U.S. at 570).
assessing the sufficiency of a complaint, the Court first
“separate[s] the complaint's factual allegations
(which must be accepted as true) from its conclusory legal
allegations (which need not be credited).” Id.
(quoting Morales-Cruz v. Univ. of P.R., 676 F.3d
220, 224 (1st Cir. 2012)). Next, the Court
“determine[s] whether the remaining factual content
allows a ‘reasonable inference that the defendant is
liable for the misconduct alleged.'” Id.
(quoting Morales-Cruz, 676 F.3d at 224).
“[T]he court may not disregard properly pled factual
allegations, ‘even if it strikes a savvy judge that
actual proof of those facts is improbable.'”
Ocasio-Hernandez v. Fortuño-Burset, 640 F.3d
1, 12 (1st Cir. 2011) (quoting Twombly, 550 U.S. at
foundation of the Kings' claims is their assertion that
“[on] or about August 15, 2018, [Wells Fargo] received
the Ninety One Thousand Seven Hundred Sixty Two Thousand and
55/100 ($91, 762.55) Dollars from the [Kings']
attorneys' bank, South Shore Bank.” See
[ECF No. 1-1 at 7]. In Count I, the Kings seek a declaratory
judgment that the mortgage on the Property is discharged and
allege that Wells Fargo “received the funds required to
payoff the underlying Note that secured the Mortgage . . .
.” [Id. at 8]. In Count II, the Kings seek to
quiet the title to the Property and a decree that the
mortgage has been discharged based on “receipt by
[Wells Fargo] of the required funds . . . .”
[Id. at 9]. Count III alleges that Wells Fargo would
be unjustly enriched if it is permitted to claim that the
mortgage has not been discharged “since they already
received [the funds] to payoff the underlying Note . . .
.” [Id.]. Count V claims that Wells Fargo has
violated Massachusetts General Laws ch. 183, § 55 by
failing to issue a discharge of mortgage after receiving
funds to pay off the note secured by the mortgage.
[Id. at 13]. Finally, Count VI requests that the
Court issue a declaration ordering Wells Fargo to show that a
preliminary injunction should not be issued prohibiting it
from foreclosing on the mortgage until the merits of this
action have been adjudicated because the Kings have
demonstrated that Wells Fargo “received the necessary
funds to pay off and discharge [the] Mortgage” on the
Property. [Id. at 13-14].
these claims fails because the foundational allegation that
Wells Fargo received the funds from the Kings' attorney
is belied by other allegations in the complaint as well as by
documents incorporated by reference into the complaint.
First, the complaint recognizes that the funds were wired to
a beneficiary account named “WF Payoff Ifile, ”
with account number 6352262031, pursuant to “a
purported payoff statement, ” and attaches and
incorporates by reference the fraudulent payoff statement and
the record of the wire transfer into account number
6352262031. See [id. at 10-11, 64-69]. The
complaint further alleges that the WF Payoff Ifile account
was a “Fraudulent Account” opened at Wells Fargo
and that Wells Fargo “allowed the holder of the
Fraudulent Account to infiltrate its payoff system so that
the payoff statement generated by [Wells Fargo] . . . was
altered so as to change the Beneficiary Bank Account and
Beneficiary Account Name to that of the Fraudulent ...