United States District Court, W.D. Wisconsin
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, as subrogee and assignee of The Alexander Company, Inc., Plaintiff,
ASSOCIATED BANK, N.A., Defendant.
OPINION AND ORDER
WILLIAM M. CONLEY District Judge
Associated Bank, N.A. (“Associated Bank") accepted
for deposit a number of checks written on the account of The
Alexander Company, Inc., and payable to an allegedly
fictitious entity. Having reimbursed its insured, Alexander,
for the losses arising out of those deposits, plaintiff
Travelers Casualty and Surety Company of America
(“Travelers") brought this diversity action
against Associated Bank for violating Wis.Stat. §
403.404(4) by failing to exercise ordinary care. Pending
before the court is defendant’s motion to dismiss (dkt.
#7), which will be denied because plaintiff Travelers has
alleged enough facts to support a reasonable inference that
defendant Associated Bank failed to adhere to the applicable
standard of care by accepting checks payable to a fictitious
alleges that Travelers is a Connecticut corporation with its
principal place of business in Connecticut. Plaintiff further
alleges that Associated Bank is a citizen of Wisconsin under
28 U.S.C. § 1348 because it is a national banking
association with its main office in Wisconsin. Accepting
these facts as true, the court has diversity jurisdiction
under 28 U.S.C. § 1332 because the amount in controversy
exceeds $75, 000.
the merits, plaintiff alleges that an employee of The
Alexander Company, Gregory Hunt, perhaps working with his
daughter, Tiffany Hunt, carried out a scheme to steal money
from his employer by causing The Alexander Company to issue
checks payable to the order of “Floor-Tek."
Plaintiff alleges on information and belief that Floor-Tek is
a fictitious company with no business operations, employees,
records or physical presence.
being a fictitious company, plaintiff claims, Associated Bank
accepted the checks made payable to Floor-Tek, which it then
deposited into accounts at Associated Bank opened for Gregory
and/or Tiffany Hunt. Ultimately, plaintiff Travelers paid
Alexander’s insurance claim for losses amounting to
$503, 382.77, the total amount withdrawn from its account to
cover Floor-Tek’s checks.
resolving a motion to dismiss under Rule 12(b)(6), the court
takes all well-pled facts in the complaint as true and draws
all reasonable inferences in favor of the non-moving party.
Reger Dev., LLC v. Nat’l City Bank, 592 F.3d
759, 763 (7th Cir. 2010). A complaint survives a motion to
dismiss if it “contain[s] sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.’" Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.’" Id. “The plausibility
standard is not akin to a ‘probability requirement,
’ but it asks for more than a sheer possibility that a
defendant has acted unlawfully." Id. While far
from a compelling narrative, plaintiff’s pleading meets
this admittedly low bar, leaving defendant to move for
summary judgment if the record is in fact as one-sided as its
moves to dismiss the complaint on the basis that plaintiff
has failed to plead enough facts from which the court could
reasonably infer that it is liable under Wis.Stat. §
403.404(4), which underlies plaintiff’s statutory
negligence claim. Adopted from § 3-404 of the Uniform
Commercial Code, the Wisconsin statutes state generally that:
(1) If an imposter, by use of the mails or otherwise, induces
the issuer of an instrument to issue the instrument to the
imposter, or to a person acting in concert with the impostor,
by impersonating the payee of the instrument or a person
authorized to act for the payee, an endorsement of the
instrument by any person in the name of the payee is
effective as the endorsement of the payee in favor of a
person who, in good faith, pays the instrument or takes it
for value or for collection.
(2) If a person whose intent determines to whom an instrument
is payable under s. 403.110(1) or (2) does not intend the
person identified as payee to have any interest in the
instrument or if the person identified as payee of an
instrument is a fictitious person, the
following rules apply until the instrument is negotiated by
(a) Any person in possession of the instrument is its holder.
(b) An endorsement by any person in the name of the payee
stated in the instrument is effective as the endorsement of
the payee in favor of a person who, in good faith, pays the
instrument or takes it for value or for collection.
(3) Under sub. (1) or (2), an endorsement is made in the name
of a payee if it is made in a name substantially similar ...