# Berry v. Regions Financial Corporation

> District Court, W.D. Tennessee · December 17, 2020

URL: https://www.frixlaw.com/law-library/cases/10440228

## Case

- **Court:** District Court, W.D. Tennessee
- **Decided:** December 17, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

DAVID BERRY and MELANIE BERRY, )
)
Plaintiffs, )
) Case No. 2:20-cv-2393-JPM-atc
v. )
)
REGIONS FINANCIAL CORPORATION; )
REGIONS BANK; TRUIST FINANCIAL )
CORPORATION; TRUIST BANK; )
SUNTRUST BANK; and BRANCH )
BANKING & TRUST COMPANY, d/b/a )
SUNTRUST BANK, )
)
Defendants. )

ORDER DENYING PLAINTIFFS’ MOTION TO AMEND COMPLAINT
ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS

Before the Court is Plaintiffs’ Motion to Amend Complaint (“Motion to Amend”), filed
on July 20, 2020. (ECF No. 25.) Plaintiffs move the Court pursuant to Federal Rule of Civil
Procedure 15 for leave to amend the Complaint “in order to correct and clarify the allegations
and averments of the Original Complaint.” (Id. at PageID 161.) Plaintiffs attached a copy of
the Proposed Amended Complaint to their Motion to Amend. (ECF No. 25 at PageID 163–70.)
Defendants Regions Bank and Regions Financial Corporation (“the Regions
Defendants”) filed their Response to Plaintiffs’ Motion to Amend on August 3, 2020. (ECF
No. 31.) The Regions Defendants argue that the Proposed Amended Complaint fails to state a
claim upon which relief can be granted, that each alleged claim in the Proposed Amended
Complaint is futile and that therefore this Court should deny the Motion to Amend. (See
generally id.)
Defendant Truist Bank1 filed its Response to Plaintiffs’ Motion to Amend on August 3,
2020. (ECF No. 32.) Truist adopts the arguments of the Regions Defendants. (Id. at PageID
203.) Additionally, Truist argues that Plaintiffs are not a customer of Truist and that they cannot
maintain a direct cause of action against Truist. (Id. at PageID 204.)

Plaintiffs filed a Reply2 on August 4, 2020. (ECF No. 34.) Plaintiffs argue that
Defendants’ arguments in opposition of the Motion to Amend are premature and effectively
turn the Motion to Amend into a summary judgment motion. (Id. ¶ 3.) Plaintiffs also argue
that the Tennessee Court of Appeals cases cited by Defendants in support of their assertion that
Plaintiffs’ common law claims are preempted by Article 4A of title 47 of the Tennessee Code
Annotated are inapplicable “as neither case deals with the issues presented by cyber criminals.”
(Id. ¶¶ 4–7.)
For the reasons set forth below, Plaintiffs’ Motion to Amend is DENIED.
I. BACKGROUND
A. Factual Background

This action arises out of a fraudulent wire transfer initiated by Plaintiffs on August 3,
2018. (Am. Compl., ECF No. 25 ¶ 8.) Plaintiffs entered into a contract to purchase real property
in July 2018 and retained the law firm of J. Gilbert Parrish (“Parrish Law Firm”) as their closing
attorney. (Id. ¶¶ 2–3.) The closing was scheduled for August 9, 2018. (Id. ¶ 10.)

1 Truist Bank is the successor organization of the following Defendants named by Plaintiffs: Truist Financial
Corporation, Truist Bank, SunTrust Bank, and Branch Banking & Trust Company, d/b/a SunTrust Bank. (Truist
Bank Mem., ECF No. 10-1 at PageID 83 n.1.) Truist Bank “was formed on December 7, 2019, by the merger of
SunTrust Bank into Branch Banking and Trust Company, and Branch Banking and Trust Company’s subsequent
change of its name to Truist Bank.” (Id.)
2 Plaintiffs’ Reply is titled “Reply of Plaintiffs to Memorandum of Regions Financial Corporation and Regions
Bank and Truist Bank in Support of Motion to Dismiss,” but substantively responds to Defendants’ Responses to
Plaintiffs’ Motion to Amend. (See generally ECF No. 34.)
Plaintiffs allege that on July 26, 2018, Jan Baugus at the Parrish Law Firm “received
fraudulent emails purporting to have been sent by Plaintiff David Berry requesting a copy of
the closing statement and wiring instructions.” (Id. ¶ 5.) Plaintiffs allege that those emails
“were in fact sent by an unknown 3rd party from the South African time zone.” (Id.) Plaintiffs

further allege that on August 1, 2018, they received fraudulent emails purporting to be from
Baugus and from their realtor with wire transfer instructions. (Id. ¶¶ 6–7.) The emails instructed
Plaintiffs to contact Baugus at Parrish Law Firm with any questions, but provided a fraudulent
email address for Baugus. (Id. ¶ 6.)
On August 3, 2018, Plaintiffs visited a Regions Bank branch in Shelby County and
caused a wire transfer order in the amount necessary to close the sale to be issued. (Id. ¶ 8.)
Plaintiffs allege that on August 7, 2018, a fraudulent wire transfer request was sent to and
processed by Regions Bank,3 resulting in $244,422.60 being wired to SunTrust Bank “who then
caused the funds to be deposited… into an account which had been fraudulently substituted for
the account number belonging to attorney J. Gilbert Parrish.” (Id. ¶ 9.) On August 9, 2018, the

scheduled date for the closing, Plaintiffs discovered that the closing attorney never received the
necessary funds. (Id. ¶ 9.)
B. Procedural Background
Plaintiff filed this action on April 27, 2020 in the Tennessee state court. (Compl., ECF
No. 1-1.) The Regions Defendants removed the case to this Court on June 3, 2020. (ECF No.
1.)
On June 10, 2020, the Regions Defendants filed a Motion to Strike Plaintiffs’ Jury
Demand and a Motion to Dismiss. (ECF Nos. 9 & 11.) The Regions Defendants cite to the

3 For a discussion regarding the alleged August 7, 2018 fraudulent wire transfer request, see infra, n.5.
arbitration and jury waiver clause contained within the Domestic Wire Transfer
Request/Authorization Form which Plaintiffs’ executed in support of their Motion to Strike
Plaintiffs’ Jury Demand. (See generally ECF No. 9-1.) The Regions Defendants’ Motion to
Dismiss alleges that Plaintiffs’ Complaint fails to state a claim for relief because: (1) Article 4A

of the U.C.C. preempts Plaintiffs’ common law negligence, breach of warranty, and conversion
claims; (2) Plaintiffs’ allegations “negate any basis for a conversion claim”; (3) Plaintiffs have
failed to “identify any provision of Article 4A [of the U.C.C.] allegedly breached by Regions,
let alone any ‘warranty’ made by Regions pursuant to Article 4A”; (4) Plaintiffs have not pled
the elements of their breach of contract claim under Tennessee law; and (5) Plaintiffs cannot
recover attorney’s fees or punitive damages. (ECF No. 11-1 at PageID 106–14.)
Truist filed its Motion to Dismiss on June 10, 2020. (ECF No. 10.) Truist’s Motion to
Dismiss alleges that Plaintiffs’ Complaint fails to state a claim for relief because: (1) Plaintiffs’
claims fail under Federal Reserve Board Regulation J and Article 4A of the U.C.C.; (2)
“Plaintiffs lack statutory standing to sue Truist”; (3) Plaintiffs’ common law claims are

preempted by Regulation J and Article 4A”; and (4) if Plaintiffs’ common law claims are not
preempted, they fail as a matter of law for a variety of reasons. (Mot. to Dismiss, ECF No. 10;
Mem. in Support of Mot. to Dismiss, Table of Contents, ECF No. 10-1 at PageID 79.)
Plaintiffs filed a Response and Motion for Leave to File an Amended Complaint on July
20, 2020. (ECF Nos. 24 & 25.) Plaintiffs, in their 3-page Response, assert that: (1) their
proposed Amended Complaint “references Section 4A [of the U.C.C.], which is virtually
identical to the Federal Counterpart, 12 C.F.R. Pt. 210, Subpt. B, App. B, Section 4A”; (2) the
claims for negligence against all Defendants arise out of conduct that occurred “antecedent to
the mechanics of the handling of the wire transfer instructions by the Defendants, which but for
such negligent conduct, the loss to Plaintiffs would not have occurred”; and (3) this antecedent
allegation of negligence entitles Plaintiffs to discovery and trial. (ECF No. 24 at PageID 150–
51 (emphasis in original).) Plaintiffs failed to respond to the Regions Defendants’ Motion to
Strike. (See generally ECF Nos. 24 & 25.)

On July 28, 2020, Plaintiffs filed a Reply (ECF No. 30) to a Supplemental Memorandum
filed by the Regions Defendants on July 27, 2020 (ECF No. 29). In their reply, Plaintiffs assert
that their Motion to Amend should “be heard prior to consideration of the pending Motions of
all Defendants to Dismiss.” (ECF No. 30 at PageID 178.) Plaintiffs concede that “if the Motion
to Amend the Original Complaint should be denied, the Motions to Dismiss must be granted.
There would be no need to Amend the Original Complaint filed in State Court if it complied
with the Federal Rules of Civil Procedure and Federal law in stating a claim for relief in this
Court.” (Id.)
On August 3, 2020, both the Regions Defendants and Truist filed Responses to
Plaintiffs’ Motion to Amend. (ECF Nos. 31 & 32.) All Defendants oppose Plaintiffs’ Motion

on the grounds that the claims in the Proposed Amended Complaint are futile. (See generally
id.) The Regions Defendants specifically assert that: (1) Plaintiffs’ negligence claim is
preempted by Article 4A; (2) the commercial reasonableness of Regions’ security procedures
under Tenn. Code Ann. § 47-4A-205 is irrelevant because Plaintiffs authorized the wire transfer
in person; (3) Plaintiffs’ allegations demonstrate that the Regions Defendants have no liability
under Tenn. Code Ann. § 41-4A-207(b); and (4) Plaintiffs’ Proposed Amended Complaint still
fails to identify a contract or any specific provision of an alleged contract that Regions
Defendants breached. (See generally ECF No. 31.) Truist adopts the Regions Defendants’
arguments and reiterates its assertion that Plaintiffs cannot maintain a direct cause of action
against Truist because they “are not a Truist customer” and “Truist is not in privity with
Plaintiffs”. (ECF No. 32 at PageID 203–04.)
On August 4, 2020, Plaintiffs filed their Reply. (ECF No. 34.) Plaintiffs argue that
Defendants’ responses to the Motion to Amend are premature. (Id. ¶ 3.) Plaintiffs dispute that

their negligence claim is preempted by Article 4A, stating that “neither [of the Tennessee Court
of Appeals cases] cited by Regions are in any way applicable to the instant case, as neither case
deals with the issues presented by cyber criminals[.]” (Id. ¶ 5 (emphasis in original).) Plaintiffs
do not otherwise respond to Defendants’ arguments regarding the futility of their claims.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 15(a)(2) provides that “a party may amend its pleading
only with the opposing party’s written consent or the court’s leave. The court should freely
give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). Leave should be granted under
Rule 15(a) unless there is “undue delay, bad faith or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the

opposing party by virtue of allowance of the amendment, [or] futility of amendment.” Brown
v. Chapman, 814 F.3d 436, 442 – 43 (6th Cir. 2016) (quoting Foman v. Davis, 371 U.S. 178,
182 (1962)). “A proposed amendment is futile if the amendment could not withstand a Rule
12(b)(6) motion to dismiss.” Riverview Health Inst. LLC v. Med. Mut. Of Ohio, 601 F.3d 505,
512 (6th Cir. 2010) (quoting Rose v. Hartford Underwriters Ins., 205 F.3d 417, 420 (6th Cir.
2000)).
III. ANALYSIS
Plaintiffs’ Proposed Amended Complaint appears to assert four claims against both
Truist and the Regions Defendants: (1) common law negligence; (2) breach of contract; (3)
violation of Tenn. Code Ann. § 42-4A-207(b); and (4) violation of Tenn. Code Ann. § 42-4A-
205. (See generally ECF No. 25.) The Court will address Defendants’ arguments regarding the
futility of each of those claims in turn.
A. Negligence

Defendants argue that Plaintiffs’ negligence claim is preempted by Article 4A of title
27 of the Tennessee Code Annotated. (ECF No. 31 at PageID 187–88.) Defendants cite to
numerous cases, including both a Sixth Circuit case and two Tennessee Court of Appeals cases,
in support of their assertion that “negligence claims relating to the processing of wire transfer
requests are preempted by Article 4A of the UCC.” (Id. at PageID 187.) Plaintiffs’ argue in
response that the Tennessee Court of Appeals cases cited by the Defendants do not apply to this
case because they dealt with “garden variety Fraudulent Ponzi schemes [] and employee
embezzlement” and not “cyber criminals.” (ECF No. 34 ¶ 5.)
The Sixth Circuit, in a case involving claims under Article 4A of title 27 of the
Tennessee Code Annotated, has held that where common-law claims arise out of a situation

covered by the provisions of Article 4A or attempt to create rights, duties, and liabilities
inconsistent with Article 4A, Article 4A preempts those claims. Wright v. Citizen’s Bank of
East Tennessee, 640 F. App’x 401, 406–09 (6th Cir. 2016) (finding persuasive a comment to
Tenn. Code § 47-4A-102 and the reasoning of other federal and state courts that claims arising
out of situations addressed by Article 4A are displaced and applying it to hold that the plaintiffs’
claims, fitting “squarely within Article 4A,” were displaced). The focus in Wright was on
whether the claims arose out of a situation covered by Article 4A; once that was determined to
be the case, the court held that those claims are displaced by Article 4A. Id. at 408 (discussing
cases cited by plaintiffs where courts found that Article 4A did not displace certain claims and
stating that “[i]n each of the[] cases, the alleged harm was the result of activity beyond the scope
of Article 4A,” or the case involved allegations of knowing or intentional misconduct by a
bank).
Plaintiffs’ negligence claims in the Proposed Amended Complaint arise out of a

situation covered by Article 4A. Plaintiffs’ principal allegations involve a failure to maintain
or abide by commercially reasonable security measures to prevent the fraudulent transfer of
funds. The extent of Defendants’ duty to maintain and abide by commercially reasonable
security procedures in relation to funds transfers is set forth in Article 4A. In fact, Plaintiffs’
Complaint acknowledges the applicability of Article 4A to its claims by alleging that their funds
“would not have been incorrectly deposited in the fraudulent account… but for the antecedent
negligence… [of the Defendants] in the processing of the fraudulent wire transfer request, [] in
violation of Sections 47-4A-205, 207(b), T.C.A.” (ECF No. 25 ¶¶ 12, 15 (emphasis added).)
Section 47-4A-205 establishes the parties’ duties, rights and liabilities in connection with
erroneous payment orders and section 47-4A-207(b) establishes the parties’ duties, rights and

liabilities in connection with the misdescription of a beneficiary’s bank. Because this case
involves factual allegations of a payment order being paid to the wrong account, it is a situation
covered by the same provisions of Article 4A that provide the basis of Plaintiffs’ other claims.
Plaintiffs’ Response to the Defendants’ Motions to Dismiss asserts that the facts in the
Complaint “establish negligence… which was antecedent to the mechanics of the handling of
the wire transfer instructions.” (ECF No. 24 ¶ 3 (emphasis in original).) But Plaintiffs do not,
in any of their filings, identify specific activity of the Defendants that is beyond the scope of
Article 4A and provides a basis for their negligence claims. See Wright, 640 F. App’x 401, 409
(distinguishing cases that found that Article 4A did not displace common law claims on the
basis that those cases alleged harm that was the result of activity beyond the scope of Article
4A and involved knowing misconduct). Plaintiffs’ characterization of Defendants’ negligence
as “antecedent” alone does not sufficiently allege that any part of the Defendants’ conduct was
beyond the scope of Article 4A.

Plaintiffs also argue in their Reply that the Tennessee state cases cited by the Regions
Defendants in support of their argument that Article 4A displaces Plaintiffs’ common law
negligence claims are distinguishable from the present case. (ECF No. 34 ¶ 5; see also ECF
No. 31 at PageID 187 (citing C-Wood Lumber Co., Inc. v. Wayne County Bank, 233 S.W.3d
263, 281–82 (Tenn. Ct. App. 2007) & Fuller v. Community National Bank, No. E2018-02023-
COA-R3-CV, 2020 WL 1485696, at *12 (Tenn. Ct. App. Mar. 27, 2020)).) Plaintiffs attempt
to distinguish C-Wood Lumber and Fuller on the basis that the former deals with employee
embezzlement and the latter deals with “garden variety Fraudulent Ponzi schemes,” while
Plaintiffs’ characterize the instant case as involving cyber criminals. (ECF No. 34 ¶ 5.) This is
not a meaningful distinction. The focus of Plaintiffs’ claims is the Defendants’ alleged failure

to maintain or abide by commercially reasonable security procedures. Article 4A’s provisions
regarding commercially reasonable security procedures apply to all funds transfers, regardless
of the alleged sophistication of third-party criminals.
In summary, Article 4A displaces Plaintiffs’ common law negligence claims against all
Defendants because the Defendants’ conduct alleged by the Plaintiffs is within the scope of
Article 4A. Therefore, Plaintiffs’ negligence claims, as set out in the Proposed Amended
Complaint, are futile.
B. Breach of Contract
“[T]he elements of a Tennessee breach-of-contract claim are (1) the existence of a valid
contract, (2) a deficiency in the performance of the contract amounting to a breach of the
agreement, and (3) damages because of the breach.” SPE GO Holdings, Inc. v. W & O Constr.,

Inc., 759 F. App’x 359, 365 (6th Cir. 2018) (citing Fed. Ins. Co. v. Winters, 354 S.W.3d 287,
291 (Tenn. 2011)). Both Truist and the Regions Defendants argue that Plaintiffs’ breach of
contract claims are futile because Plaintiffs fail to identify the allegedly breached contract or
provision of a contract.4 (ECF No. 31 at PageID 193–94.)
Defendants are correct. Plaintiffs’ Proposed Amended Complaint fails to identify a
specific contract that either Truist or the Regions Defendants breached. And, to the extent that
Plaintiffs’ Proposed Amended Complaint can be understood to identify the August 3 Wire
Request (ECF No. 31-1) as the contract the Regions Defendants allegedly breached, Plaintiffs
do not identify a provision that the Regions Defendants allegedly breached. Furthermore,
Plaintiffs’ allegations demonstrate that the Regions Defendants complied with the terms of the

August 3 Wire Request, rather than breaching those terms. Plaintiffs disclaimed the Regions
Defendants’ liability relating to any error resulting from their reliance on Plaintiffs’ instructions.
(ECF No. 31-1 ¶¶ 5–6 (agreeing that Regions Defendants would not be “responsible for
detecting any Customer error contained in any Transfer Instructions issued by Customer” and
that they “shall have no obligation to discover errors in Transfer Instructions and shall not be
liable to Customer for errors made by Customer, including errors made in identifying the
beneficiary”).)

4 Truist adopts the Regions Defendants’ arguments regarding the futility of Plaintiffs’ breach of contract claims in
the Proposed Amended Complaint. (ECF No. 32.) Truist also raised its own arguments regarding Plaintiffs’ failure
to identify a contract between Plaintiffs and Truist in its Motion to Dismiss. (ECF No. 10-1 at PageID 95–96
(“[T]he Complaint does not identify any contract between Plaintiffs and Truist.”.)
Because Plaintiffs fail to identify a contract or provision of a contract that either the
Regions Defendants or Truist breached, their breach of contracts claims in the Proposed
Amended Complaint are futile. See, e.g., Pearson v. Specialized Loan Servicing, LLC, No.
1:16-cv-318, 2017 WL 3158791, at *4 (E.D. Tenn. Jul. 24, 2017) (finding plaintiff’s failure “to

identify any provision in the security trust… that the [defendant] has breached” to be “fatal to
her claim [for breach of contract]” and dismissing claim for failure to state a claim upon which
relief can be granted); Simmons v. Countrywide Home Loans, No. 3:09-00621, 2010 WL
1408592, at *3 (M.D. Tenn. Feb. 25, 2010) (dismissing plaintiffs’ breach of contract claims
because they “fail[ed] to allege which provisions of the Loan Agreement were breached by
Defendants, or how those provisions were breached”).
C. Tenn. Code Ann. § 42-4A-207(b)
Tennessee Code Annotated § 42-4A-207(b) provides that where, as here, a payment
order “identifies the beneficiary both by name and by an identifying or bank account number
and the name and number identify different persons,” and “if the beneficiary’s bank does not

know that the name and number refer to different persons,” then the beneficiary’s bank “may
rely on the number as the proper identification of the beneficiary.” Tenn. Code Ann. § 47-4A-
207(b). “The beneficiary’s bank need not determine whether the name and number refer to the
same person.” Id.
Subsection 207(c) provides that, in the situation described by § 207(b) and where the
originator is not a bank, “the originator is not obliged to pay its order unless the originator’s
bank proves that the originator, before acceptance of the originator’s order, had notice that
payment of a payment order issued by the originator might be made by the beneficiary’s bank
on the basis of an identifying or bank account number even if it identifies a person different
from the named beneficiary.” Tenn. Code Ann. § 47-4A-207(c).
Here, Plaintiff Melanie Berry is the originator, the Regions Defendants are the
originator’s bank and Truist is the beneficiary’s bank. See Tenn. Code Ann. §§ 47-4A-103(a)(3)

& 47-4A-104(c)–(d). (See also ECF No. 10-1 at PageID 87–88.) Plaintiffs’ claim that Truist
violated § 47-4A-207(b) is futile because § 207(b) permits the beneficiary’s bank to rely on the
account number if the bank did not know that the name and number referred to different persons.
Plaintiffs make no allegations that Truist knew that the name and account number referred to
different persons.
Plaintiffs’ claim that the Regions Defendants violated § 47-4A-207(b) is futile because
Plaintiffs had notice that the beneficiary’s bank might rely on an identifying number in making
payment pursuant to the payment order even if the number identifies a person different from
the named beneficiary. See § 47-4A-207(c). Under the August 3 Wire Request, Plaintiffs
agreed to and had the required notice. (See ECF No. 31-1 ¶ 6 (“Customer acknowledges and

agrees that (a) if the identifying number or bank account number Customer has given in this
request is not the named beneficiary’s, the beneficiary’s bank may pay this funds transfer
according to the number rather than according to the beneficiary’s name.”).). Plaintiffs, as the
originator, were required to pay the order. See § 47-4A-207(c)(2).
Based on Plaintiffs’ allegations in the Proposed Amended Complaint, neither Truist nor
the Regions Defendants violated § 47-4A-207(b). Therefore, Plaintiffs claims against the
Defendants for violation of § 207(b) are futile.
D. Tenn. Code Ann. § 42-4A-205
Plaintiffs’ also claim that Truist and the Regions Defendants violated § 42-4A-205.
Truist argues that Plaintiffs “cannot maintain a direct cause of action against Truist” because
Plaintiffs are not a Truist customer and dealt only with Regions. (ECF No. 32 at PageID 204.)

The Regions Defendants argue that § 205 and the commercial reasonableness of their security
procedures are inapplicable to this case because Plaintiffs authorized the funds transfer in person
at a Regions bank branch. (ECF No. 31 at PageID 188–89.) Plaintiffs have not responded to
these arguments.
Truist argues that, as the beneficiary’s bank, it was not in privity with Plaintiffs and
they have no cause of action against Truist under Article 4A. (ECF No. 32 at PageID 204.) In
support of this assertion, Truist cites to Second Circuit caselaw interpreting Article 4A and
dismissing claims against a beneficiary’s bank on grounds of lack of privity. See Wellton Int’l
Express v. Bank of China (Hong Kong), --- F. Supp. 3d ----, 19-CV-6834 (JPO), 2020 WL
1659889, at *3 (S.D.N.Y. Apr. 3, 2020). The court in Wellton held that “as the beneficiary

bank, [defendant] was not a party to the payment order. … Because there is a lack of privity
between Plaintiffs and [defendant], Plaintiffs cannot maintain a cause of action against either
defendant.” Id. The quoted language was part of the court’s discussion regarding the plaintiffs’
§ 207 claim against the defendant, but its reasoning is applicable to § 205. The beneficiary’s
bank is not a party to the payment order at issue in both §§ 205 and 207; if there is a lack of
privity between plaintiffs and the beneficiary’s bank in cases involving alleged violations of
§207, that same lack of privity is a barrier to a plaintiff’s § 205 claim.
Even if lack of privity is not a barrier to Plaintiffs’ § 205 claim against Truist for the
same reasons as supported the court’s conclusion in Wellton, the claim is futile. Section 205
provides rules regarding the erroneous transmission of a payment order pursuant to a security
procedure; the beneficiary’s bank has no role in that transmission. The content of § 205’s rules
supports that conclusion. None of the rules provided for in § 205 are directed at the
beneficiary’s bank and there is therefore no means by which a beneficiary’s bank could violate

§ 205.
The Regions Defendants, as the originator’s bank, focus instead on the fact that the §
205 rules only apply “[i]f an accepted payment order was transmitted pursuant to a security
procedure for the detection of error.” Tenn. Code Ann. § 47-A-205(a). (See also ECF No. 31
at PageID 189.) The Regions Defendants argue that the payment order was authorized in person
by Plaintiffs and that therefore the commercial reasonableness of their security procedures is
irrelevant. (Id.)
It is clear from the Proposed Amended Complaint that Plaintiffs authorized the August
3 Wire Request in person.5 Plaintiff Melanie Berry’s signature on the August 3 Wire Request
is hand-written (see ECF No. 31-1 at PageID 198) and the terms of the August 3 Wire Request

state that “[t]his Funds Transfer Agreement governs only Transfer instructions issued in person
by Customer.” (ECF No. 31-1 ¶ 1.) When a payment order is authorized by the person
identified by the sender, security procedures for verifying the authenticity of a payment order
are irrelevant. See Tenn. Code Ann. § 47-4A-207 (subsection (a) states that “[a] payment
order… is the authorized order of the person identified as sender if that person authorized the
order…” whereas subsection (b) states that a payment order “is effective as the order of the

5 Plaintiffs are not entirely clear in the Proposed Amended Complaint regarding the alleged sequence of events.
They seem to allege that there was a second, electronic and fraudulent wire transfer request submitted on August
7, 2018 and that the Regions Defendants processed that request and not the August 3 Wire Request. (See ECF No.
25 ¶ 9.) But the Regions Defendants attached the Regions Wire Report to their Response to Plaintiffs’ Motion to
Amend, which confirms that the wire was conducted on August 3, 2018. (See ECF No. 31-2.) “When a written
instrument contradicts allegations in the complaint, the exhibit trumps the allegations.” Segrist v. Bank of New
York Mellon, No. 3:16-cv-00063, 2017 WL 3674841, at *3 n.4 (M.D. Tenn. Aug. 25, 2017).
customer” “[i]f the bank and its customer have agreed that the authenticity of payment orders
issued to the bank in the name of the customer as sender will be verified pursuant to a security
procedure.”).
Plaintiffs do not allege that the August 3 Wire Request was authorized or authenticated

pursuant to a security procedure. Instead, the allegations of the Proposed Amended Complaint
make clear that the August 3 Wire Request was authorized in person. The Regions Defendants
correctly argue that “[c]ommercially reasonable verification methods to test the authenticity of
the request are irrelevant and inapplicable to the facts at hand.” (ECF No. 31 at PageID 191.)
Commercially reasonable security procedures are necessary when payment orders are
electronically transmitted and there is therefore “no way of determining the identity or the
authority of the person who caused the message to be sent.” Tenn. Code Ann. § 47-4A-203,
cmt. 1. Because Plaintiffs authorized the wire transfer in person and not electronically, § 205
is inapplicable to the case and Plaintiffs’ § 205 claim against the Regions Defendants is futile.
IV. CONCLUSION

For each of the reasons set forth above, Plaintiffs’ claims in the Proposed Amended
Complaint are futile. Therefore, Plaintiffs’ Motion to Amend is DENIED. Furthermore,
Plaintiffs have conceded that “if the Motion to Amend the Original Complaint should be denied,
the Motions to Dismiss must be granted.” (ECF No. 30 at PageID 178.) Accordingly, the
Regions Defendants’ and Truist’s Motions to Dismiss (ECF Nos. 10 & 11) are hereby
GRANTED and Plaintiffs’ Complaint is DISMISSED WITH PREJUDICE. Because
Plaintiff’s Complaint is dismissed in its entirety, the Regions Defendants’ Motion to Strike
Plaintiffs’ Jury Demand (ECF No. 9) is DENIED AS MOOT.
SO ORDERED, this 17th day of December, 2020.
/s/ Jon P. McCalla
JON P. McCALLA
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10440228. Public record. Not legal advice.