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Blaskovitz v. Dover Federal Credit Union

Superior Court of Delaware, Kent

June 15, 2017

JOSEPH J. BLASKOVITZ, JR., by and through his attomey-in-fact, DACE BLASKOVITZ and the Estate of DOTTIE C. BLASKOVITZ, by andthrough its executor, DACE BLASKOVITZ Plaintiffs,
v.
DOVER FEDERAL CREDIT UNION, Defendants.

          Submitted: May 25, 2017

         Upon Defendant's Motion to Dismiss. Granted in Part; Denied in Part.

          Jason C. Powell, Esquire of The Powell Firm, LLC, Wilmington, Delaware; attorney for the Plaintiffs.

          Michael C. Heyden, Esquire of The Law Offices of Michael C. Heyden, Wilmington, Delaware; attorney for the Defendant.

          ORDER

          WILLIAM L. WITHAM. JR., Resident Judge

         Before the Court are a Motion to Dismiss filed by Defendant Dover Federal Credit Union (the "Credit Union") and the Plaintiffs' response in opposition. The parties presented oral argument on May 25, 2017. The motion raises two issues for the Court's decision: (1) whether the Complaint's allegations of common-law negligence and breach of contract are displaced by Delaware's enactment of the Uniform Commercial Code (UCC) and, if not, (2) whether the Complaint's allegations are so vague as to warrant dismissal. Because the Court holds that the negligence claim is displaced but the breach of contract claim is not, the Motion to Dismiss will be GRANTED IN PART and DENIED IN PART.

         FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         This case centers around three members of the Blaskovitz family: Joseph and the late Dottie Blaskovitz, husband and wife, and their only son, Dace (collectively, the "Plaintiffs").[1] The Complaint alleges as follows:

         Joseph and Dottie were lifelong Delawareans who retired to Florida. Their assets consisted principally of accounts at the Credit Union and a mobile home park. While in Florida, Joseph and Dottie's health began to decline. Both would eventually develop dementia and, as a result of their declining health, the two moved back to Delaware in the fall of 2014.

         Joseph is a longtime customer of the Credit Union. In 1963, he became customer number "007."

         After Joseph and Dottie moved back to Delaware, their son Dace (who was and is their power of attorney) began making arrangements to protect the couple's assets. Among those arrangements was a June 2015 meeting with representatives of the Credit Union, including President and Chief Executive Officer Glen Daniels, to notify the Credit Union of the pair's declining health and potential susceptibility to fraud. In response, the Credit Union declined to list Dace as one of the owners on the account. But the Credit Union, at Dace's urging, promised to provide "additional protection and oversight" of his parents' accounts. Based on those promises, Dace began to focus on other matters on his parents' behalf. But the Credit Union did nothing to investigate or alert the Blaskovitzes when third parties (apparently residents of the Blaskovitzes' mobile home park) "were absconding with thousands of dollars" from the parents' accounts.

         It was not until over a year later, in February 2016, that Dace got access to account information for his parents' accounts at the Credit Union. What he found dismayed him: the account balances were significantly lower than he expected and included a "wrongful decrease" of at least $334, 445.00. As power of attorney for his parents, Dace notified the Credit Union, filed a claim, and provided an Affidavit of Forgery for the sixty days before February 18, 2016. The Credit Union told him that he could only recover losses going back sixty days, and in the end only returned $18, 100 to Joseph and Dottie's accounts.

         On behalf of his father and his mother's estate, [2] Dace sued the Credit Union for negligence and breach of contract.

         The negligence claim was based on a few separate alleged duties. The first was the Credit Union's duty to safeguard its customers' funds, which the Plaintiffs say was breached when the Credit Union "wrongfully honor[ed]" forged checks and failed to put a policy or process in place to review the authenticity of signatures on checks. The second and third duties arose under Delaware's enactment of the Uniform Commercial Code and the Credit Union's promise to the Plaintiffs after learning of the parents' incapacity. The Credit Union breached these duties, the Plaintiffs say, when they continued to pay forged checks. The final source of duties is unclear. The Plaintiffs allege that there were a number of procedures and protocols that are "customary or should be implemented... to combat... financial exploitation of the elderly."

         The breach of contract claim was based on "a Joint Share Account Agreement, among others" into which the parties entered. The agreements, the Plaintiffs allege, required sight review of checks, which the Credit Union failed to perform. The Plaintiffs also appear to allege that the agreements required full reimbursement of the forged payments under the circumstances described in the Complaint. Finally, the Plaintiffs allege that their damages are a result of the Credit Union's failure to follow through on its promises to Dace.

         The Credit Union filed a Motion to Dismiss, which the Plaintiffs oppose. This is the Court's ruling on the Credit Union's Motion to Dismiss.

         THE PARTIES' CONTENTIONS

         The Credit Union argues that bank customers may not assert common-law negligence and breach-of-contract claims against their bank when the bank pays on forged checks. The Credit Union contends that such claims are displaced by the Uniform Commercial Code. To the extent that there are any legally viable claims, the Credit Union argues, they are not alleged with sufficient specificity to survive a motion to dismiss.

         The Plaintiffs argue that both negligence and breach-of-contract claims are viable when a bank pays on forged checks, and are only displaced when the circumstances and duties fall within the scope of the UCC. The representations made by the Credit Union, the Plaintiffs contend, bring the claims outside the scope of the UCC. The Plaintiffs also argue that to the extent that the Complaint could be made more specific, a motion to dismiss is not the appropriate remedy.

         STANDARD OF REVIEW

         "Delaware is a notice pleading jurisdiction. Thus, for a complaint to survive a motion to dismiss, it need only give general notice of the claim asserted."[3] When deciding a motion to dismiss under Superior Court Rule of Civil Procedure 12(b)(6), (hereafter "Rule 12(b)(6)") all well-pleaded allegations in the complaint must be accepted as true.[4] The test for sufficiency is a broad one: the complaint will survive the motion to dismiss so long as "a plaintiff may recover under any reasonably conceivable set of circumstances susceptible of proof under the complaint."[5]However, the Court "will not accept conclusory allegations unsupported by specific facts or [] draw unreasonable ...


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