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Song Chuan Technology (Fujian) Co. Ltd. v. Bank of America, NA

United States District Court, D. South Carolina, Charleston Division

May 8, 2017

Song Chuan Technology (Fujian) Co., Ltd., Plaintiff,
v.
Bank of America, NA, and John Doe, Defendant.

          ORDER AND OPINION

          Richard Mark Gergel United States District Court Judge

         This matter is before the Court on Plaintiff Song Chuan's motion to alter the Court's order dismissing claims against Defendant Bank of America with prejudice and claims against Defendant John Doe without prejudice. For the reasons set forth below, the Court grants in part and denies in part the motion.

         I. Background

         On September 30, 2016, Song Chuan filed a complaint alleging Song Chuan and a business partner (whom Song Chuan declines to identify, but who apparently is the Kansas-based "Meridian Chemicals Sales" identified in the wire transfer documentation attached to the complaint, see Dkt. No. 1-1) negotiated a sale of goods (which Song Chuan declines to identify) for $880, 000. (See Dkt. No. 1 ¶¶ 9-14.) According to the complaint, an "Advisor" located in Charleston, South Carolina (whom Song Chuan declines to identify) served as an intermediary for negotiations between Song Chuan and the business partner for the sale of the unidentified goods. (Id. ¶ 10.) "At some point during the course of th[ese] negotiations, " an unknown person allegedly hacked into Song Chuan's email account, and, posing as the business partner, transmitted his own Bank of America account details to Song Chuan to obtain fraudulently the sale proceeds due the business partner. (Id. ¶ 11.) On or about September 14, 2016, Song Chuan wired $880, 000 to John Doe's Bank of America account, believing the funds were being sent to its business partner. (Id. ¶ 15.) Song Chuan seeks to recover those funds from Bank of America, and damages, including treble damages, from John Doe.

         On November 10, 2016, Bank of America moved to dismiss Song Chuan's conversion claim. (Dkt. No. 11.) On February 1, 2017, Song Chuan moved to amend the complaint to add an allegation of personal jurisdiction over the parties, to remove a claim for injunctive relief against Bank of America, and to add statutory and constructive trust claims against Bank of America. On March 10, 2017, the Court granted Bank of America's motion to dismiss Song Chuan's conversion claim and denied Song Chuan's motion for leave to add statutory and constructive trust claims against Bank on America. The Court also sua sponte dismissed without prejudice claims against John Doe. The basis for the dismissal of the conversion claim against Bank of America and for the denial of leave to add statutory and constructive trust claims against Bank of America was failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The basis for the dismissal of claims against John Doe was the impropriety of proceeding only against and unserved, unnamed defendant and Song Chuan's failure plausibly to allege facts suggesting persona] jurisdiction over John Doe. On April 6, 2017, Song Chuan timely filed a motion to alter judgment under Rule 59 of the Federal Rules of Civil Procedure.

         II. Legal Standard

         Rule 59(e) of the Federal Rules of Civil Procedure governs motions to alter or amend a judgment; however, the rule does not provide a legal standard for such motions. The Fourth Circuit has articulated "three grounds for amending an earlier judgment: (1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct a clear error of law or prevent manifest injustice." Pac. Ins. Co, v. Am. Nat'l Fire Ins. Co., 148F.3d396, 403 (4th Cir. 1998) (citing EEOC v. Lockheed Martin Corp., 116 F.3d 110, 112 (4th Cir. 1997); Hutchinson v. Staton, 994 F.2d 1076, 1081 (4th Cir. 1993)). "Rule 59(e) motions may not be used, however, to raise arguments which could have been raised prior to the issuance of the judgment, nor may they be used to argue a case under a novel legal theory that the party had the ability to address in the first instance." Id. at 403 (internal citations omitted). Rule 59(e) provides an "extraordinary remedy that should be used sparingly." Id. (internal citation omitted). The decision to alter or amend a judgment is reviewed for an abuse of discretion. Id. at 402.

         III. Discussion

         Song Chuan does not allege any intervening change in law or newly discovered evidence. The basis for Song Chuan's motion, therefore, is correction of clear error of law or prevention of manifest injustice. The proposed amended complaint asserted three causes of action against Bank of America: a claim under "U.C.C. Article 4A, SC Code Ann. § 36-4A-101, et seq." asserting that Song Chuan "is entitled to return or reimbursement of the $880, 000 [that Song Chuan wired to Bank of America], plus any consequential and incidental damages" because the wire transfer order "contained a misdescription known to [Bank of America], " a claim for conversion, and a claim for constructive trust. (Dkt. No. 21-2 at 4-5.) Song Chuan's motion to alter concerns the Court's denial of leave to amend the complaint to assert a claim under the U.C.C. Specifically, Song Chuan argues the Court committed a clear error of law when it addressed only proposed claims under S.C. Code § 36-4A-207(a) and failed to address proposed claims under S.C, Code § 36-4A-207(b) ("§ 207(b)") or S.C. Code § 36-4A-211 ("§ 211"). Song Chuan also argues against the Court's determination that no plausible allegations suggested personal jurisdiction over the John Doe defendant.

         Nothing in the proposed amended complaint or Song Chuan's motion for leave to amend mentions anything regarding §§ 207(b) or 211. Song Chuan, however, did make arguments about those sections in its reply to Bank of America's opposition to the motion for leave to amend (Dkt. No, 29.) The Court therefore considers it proper to examine whether arguments about §§ 207(b) and 211 were overlooked and whether they have merit. The Court also considers Defendant's argument regarding personal jurisdiction over John Doe.

         A. Claims Under S.C. Code § 36-4A-207(b)

         Song Chuan argues the Court's order erred by considering its proposed U.C.C. cause of action under § 207(a) and but under § 207(b). Section 207(a) provides that "if, in a payment order received by the beneficiary's bank, the name, bank account number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance of the order cannot occur." Section 207(b) provides,

If a payment order received by the beneficiary's bank identifies the beneficiary both by name and by an identifying or bank account number and the name and number identify different persons, the following rules apply:
(1) Except as otherwise provided in subsection (c), if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. The beneficiary's bank need ...

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