The depositor opened four accounts with the bank over a two-year period. To open the accounts, the depositor signed the bank’s terms and conditions agreement. Subsequently, the bank amended the agreement on several occasions, provided the depositor notice, and posted the updated version on its website. Notably, the agreement required the depositor to provide written notification to the bank (depending on the issue, between 30 and 60 days) in the event of suspected fraud or unauthorized transactions. A few years later, the depositor appointed his sister as attorney-in-fact, giving her control over all of his banking activities. Meanwhile, the depositor was arrested and sentenced to five years in prison. While incarcerated, the depositor allowed his cellmate’s mother to enter his home (where he had left sensitive financial information and passwords in plain view) to care for his pets. Within the next year, the depositor contacted the police to report missing sums from his bank accounts and accused the cellmate’s mother of wrongdoing. The depositor and his sister, on separate occasions, also contacted the bank to report fraudulent activity. The bank froze the accounts, but the accounts had already been significantly depleted. Over the next few years, different individuals called the bank claiming to be the depositor to transfer money but were prevented from doing so by the freeze. The bank provided the depositor’s sister with statements from his account, but she was unable (or unwilling) to identify any potentially fraudulent transactions. The depositor then filed a lawsuit against the bank alleging “(1) breach of contract, (2) civil theft, (3) intentional breach of fiduciary duty, (4) fraud, and (5) constructive fraud.” The depositor alleged over $400,000 in damages due to the value of stolen money, damage to his credit score, and mental anguish. The bank moved for summary judgment on all counts.
In Johnstone v. Discover Bank, Case No. 23-14340-CIV-MAYNARD, 2025 WL 1285838, 2025 U.S. Dist. LEXIS 60730 (S.D. Fla. Mar. 28, 2025) (opinion not yet released for publication), the court granted summary judgment in favor of the bank on all counts. The court first dismissed the depositor’s argument that the court must first consider Uniform Commercial Code (UCC) Article 4A, as the depositor had waived the argument by failing to raise it sooner. Furthermore, the majority of the claims fell outside the scope of Article 4A. The court then addressed each of the depositor’s claims. First, the court summarily dismissed the depositor’s breach of contract claim. The depositor claimed that he had notified the bank of the suspected fraud and that the bank was liable for subsequent fraudulent transactions. However, the court disagreed, finding that the depositor did not provide written notice until well after the agreement required him to do so, and thus, the claims were barred. Further, the court stated that the depositor failed to “establish[] an essential element of his breach of contract claim—an actual breach.” Second, the court dismissed the depositor’s allegation that the bank had committed civil theft by denying him access to his bank accounts and refusing to return the allegedly stolen money. In Florida, a claim for civil theft in a contractual agreement “must go beyond, and be independent from, a failure to comply with the terms of a contract.” The court found that the depositor’s claims were “virtually identical” to his breach of contract claims and, therefore, were not independent and must be dismissed. In addition, the depositor failed to provide “clear and convincing evidence” of the bank’s “felonious intent” to steal from the depositor, which was required under Florida law. Fla. Stat. § 772.11. Third, the court dismissed the depositor’s breach of fiduciary duty claim. The depositor argued that an implied fiduciary duty existed between the bank and himelf. The court disagreed and found no evidence that the bank assumed a fiduciary role. Additionally, the bank had no responsibility to monitor or investigate transactions on the depositor’s accounts. Finally, the court dismissed the depositor’s claims of fraud and constructive fraud. The depositor claimed that the bank’s failure to prevent suspicious activity, notify him, and reimburse him amounted to fraud. The court found that the depositor failed to provide any “evidence to show that [the bank] knew or should have known about fraud relating to the [a]ccounts until it was first reported by [the depositor]” or that the bank made any false claim to the depositor. Therefore, the depositor failed to prove an essential element of fraud. Ultimately, the court found that there were no genuine issues of material fact and granted summary judgment in favor of the bank on all counts.
By Hayden Mariott [email protected]
Edited By Olivia Lewis [email protected]
Edited By Kristin Meurer [email protected]