The account holder held both checking and savings accounts with the bank. The account holder alleged that fraudsters accessed their accounts and initiated unauthorized wire transfers. The account holder claimed the bank had promised “standard fraud protections and additional protections” under the account agreements, but failed to provide them. The account holder sued the bank for breach of contract and negligence. The bank filed a motion to dismiss, arguing that Article 4A of the Texas Business & Commerce Code preempted the account holder’s claims. The magistrate judge recommended dismissal, and the account holder objected, arguing that Article 4A does not contain a blanket preemption provision for “all common law claims between parties to funds transfer,” but instead preempts only common law claims that contradict Article 4A.
In Henderson v. Wells Fargo Bank, N.A., 779 F.Supp.3d 910 (S.D. Tex. 2025), the court found that Article 4A did not preempt the account holder’s claims. The court held that Article 4A’s preemption capabilities depend on whether the actions and facts giving rise to the claim are “squarely covered” by Article 4A. The court distinguished between pre-wire transfer and post-wire transfer conduct in terms of obligations. It concluded that Article 4A did not preempt contractual or negligence claims related to pre-wire transfer duties of the bank, such as providing agreed-upon fraud prevention services or properly training employees. The court found that the pre-wire transfer duties alleged by the account holder fell outside the statutory framework for issuing and executing wire transfers under Article 4A. On the other hand, negligence related to post-wire transfer duties, such as canceling or recalling a wire, is preempted under Article 4A.211.
By Deanna Dulske [email protected]
Edited By Kristin Meurer [email protected]
Edited By Hayden Mariott [email protected]