# Brandt Dealer Services, LLC v. Hancock Whitney Bank

> District Court, E.D. Louisiana · January 15, 2025

URL: https://www.frixlaw.com/law-library/cases/10781305

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** January 15, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

BRANDT DEALER SERVICES LLC CIVIL ACTION

VERSUS NO. 24-2264

HANCOCK WHITNEY BANK SECTION L (3)

ORDER & REASONS
Before the Court is Defendant Hancock Whitney Bank’s Motion to Dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6). R. Doc. 8. Plaintiff Brandt Dealer Services, LLC opposes
the Motion. R. Doc. 12. Defendant replied. R. Doc. 13. Considering the record, the briefing, and the
applicable law, the Court now rules as follows.
I. BACKGROUND
This case arises from alleged third-party fraud perpetrated against Plaintiff’s checking
account. Plaintiff is a LLC involved in the automobile dealership industry. R. Doc. 1-2 at 1. In June
of 2020, Plaintiff opened a checking account with Defendant, Hancock Whitney Bank. Id. Plaintiff
alleges that only two individuals were authorized to make withdrawals on the account: Jessica
Brandt, Plaintiff’s CEO, and Marlene Remondet, Plaintiff’s chief financial officer. Id. Plaintiff
alleges that in August of 2023, Ms. Remondet notified Plaintiff of suspicious activity in the checking
account. Id. at 2. Plaintiff made further inquiries with Defendant and discovered that Defendant had
debited its account to pay an invoice of a credit card issued in the name of Lindy Pousson Eshleman,
“a person who had no role in Plaintiff’s business.” Id. Plaintiff alleges that “it was believed at the
time that Lindy Pousson Eshleman was the wife of Roch Eshleman, who was employed in another of
the affiliated Brandt group of automobile dealerships.” Id. Plaintiff subsequently discovered that, in
fact, multiple electronic transfers had been made from its account to accounts controlled by Lindy
Pousson and Roch Eshleman over a period of many months. Id. These transfers were made using “a
network commonly called the Automated Clearing House (“ACH”). Id. Plaintiff contends that all
these transfers were unauthorized and for charges which had no relation to Plaintiff or its business.
Id. Overall, Plaintiff estimates that is has suffered losses of approximately $900,000.00. Id. at 3.
Plaintiff sued Hancock Whitney.1 Id. It alleges that Defendant is liable under theories of

breach of contract and unjust enrichment. Id. It also brings a negligence claim, alleging that
Defendant “was negligent in its handling of Plaintiff’s deposit account by allowing ACH payments
without authorization and without notifying Brandt it was making these ACH payments.” Id. Plaintiff
also “reserved the right to plead other causes of action as discovery develops in the matter.” Id.
Plaintiff originally brought suit in state court, but Defendant removed on the basis of diversity
jurisdiction. R. Doc. 1 at 1.
II. PRESENT MOTION
Defendant moves to dismiss Plaintiff’s suit pursuant to Federal Rule of Civil Procedure
12(b)(6). R. Doc. 8. Defendant contends that the Uniform Commercial Code (“UCC”), as adopted by
Louisiana, lays out a unique statutory scheme governing how a plaintiff may recover from its bank

for an unauthorized “funds transfer.” R. Doc. 8-1 at 1. Defendant argues that this UCC remedy
displaces all other theories of liability, such as breach of contract or negligence. Id. Thus, Defendant
avers that Plaintiff can only bring a claim under the UCC. Id. at 4. However, Defendant also contends
that any UCC claim is time-barred. Id. at 7. Defendant acknowledges that the relevant portion of the
UCC provides that a Plaintiff may bring suit regarding an unauthorized funds transfer “within one
year” of the date on which “the customer received notification reasonably identifying” the
transaction. Id. But, it argues that when Plaintiff opened the checking account at issue, it
contractually agreed to shorten this peremptive period. Id. at 8. First, the contract provided that:

1 The alleged perpetrators of the unauthorized transactions, Lindy Pousson and Roch Eshleman, are not
you agree that we will not be liable for the problem if you have not reported the problem to
us in a writing that is signed and dated by you within 30 days from when we first send or
make the statement available to you containing the problem (except to the extent that the
relevant law allocates responsibility otherwise).
R. Doc. 8-4 at 15. Further, the contract contained a “same wrongdoer” provision which provided
that:
you further agree that if you fail to provide us written notice of any unauthorized signatures,
alterations, or any other problem in your account within 60 days of when we first send or
make the statement available, you cannot assert a claim against us for any problem reflected
in that statement (or in subsequent statements, if the problem is caused by the same
wrongdoer) . . .
Id. Defendant alleges that it provided Plaintiff with monthly bank statements throughout the duration
of the fraudulent transactions, from September of 2020 through October of 2023. R. Doc. 8-1 at 9.
Defendant contends that Plaintiff only timely disputed the final transaction, a debit of $24,646.76, by
reporting it to Defendant within 30 days of Plaintiff’s receipt of the corresponding statement. Id.
Defendant alleges that it has refunded this final payment to Plaintiff, but that all prior alleged
unauthorized payments were not timely reported and are thus time-barred by contract. Id.
Accordingly, Defendant argues that Plaintiff’s UCC claim must also be dismissed. Id. at 10.
Plaintiff opposes the motion. R. Doc. 12. First, as to preemption, it seems to concede that its
breach of contract and unjust enrichment claims are preempted by the UCC, as it does not argue or
otherwise brief the persistence of these claims. Plaintiff does, however, argue that its negligence
claim should not be dismissed. Id. at 3-5. Although it admits that “the UCC may govern certain
aspects of this case,” it argues that “Brandt is entitled to discovery to further investigate the alleged
unauthorized funds transfers.” Id. at 5. Plaintiff maintains that discovery may reveal that Defendant
“breached an independent duty of care,” which would give rise to a negligence claim separate from
its UCC claim. Id. Second, as to the applicable prescriptive period for its UCC claim, Plaintiff
contends that the peremptive period should not begin to run from the date Defendant alleges it sent
the statements. Id. at 6. Plaintiff avers that “personnel of Hancock Whitney had extensive interaction
with the individual who is alleged to have stolen these funds and who actually received the monthly
statements from Defendant.” Id. Further, it avers that “[a]rguably, Hancock Whitney’s monthly bank
statements did not reasonably identify the payment order nor provide sufficient information to alert
Brandt to the fraudulent nature of the transfers.” Id. at 7. Overall, it alleges that it was not aware of

the unauthorized transactions until it conducted its own internal audit and received more information
from Defendant in October of 2023. Id. Thus, it asserts that its UCC claim is timely. Id.
Defendant replied, asserting that Plaintiff’s argument to retain its negligence claim is an
attempt to circumvent displacement, “which would entirely undermine the policies and purposes of
the UCC.” R. Doc. 13 at 3. Finally, it notes that Plaintiff’s contention that it did not know about the
alleged fraudulent transaction until October of 2023 is immaterial, as the peremptive periods began to
run when Plaintiff received its bank statements, regardless of whether it actually read the statements
or became aware of the fraud. Id. at 5.
III. LEGAL STANDARD & CONSIDERATION OF ATTACHED EVIDENCE
A. Motion to Dismiss Standard

Federal Rule of Civil Procedure 12(b)(6) provides that an action may be dismissed “for
failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim for 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 (2008)). “Factual allegations must be enough to raise a
right to relief above the speculative level.” Twombly, 550 U.S. at 556. A claim is plausible on its face
when the plaintiff has pled facts that allow the court to “draw a reasonable inference that the
defendant is liable for the misconduct alleged.” Id. at 570. Although a court must liberally construe
the complaint in light most favorable to the plaintiff, accept the plaintiff’s allegations as true, and

draw all reasonable inferences in favor of the plaintiff, Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.
1996), courts “do not accept as true conclusory allegations, unwarranted factual inferences, or legal
conclusions.” Arias-Benn v. State Farm Fire & Cas. Co., 495 F.3d 228, 230 (5th Cir. 2007) (quoting
Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005)).
B. Consideration of Documents Outside the Petition

Generally, a court may not look beyond the plaintiff’s complaint when deciding whether to
grant a 12(b)(6) motion. Scanlan v. Tex. A&M Univ., 343 F.3d 533, 536 (5th Cir. 2003); Williamson
v. Tucker, 645 F.2d 404, 412-13 (5th Cir. 1981). There is, however, an exception to the standard rule.
The Fifth Circuit in Collins v. Morgan Stanley Dean Witter held that a district court may rely on
evidence outside the complaint without converting the Rule 12(b)(6) motion into a summary
judgment motion when the evidence is: (1) attached to the motion, (2) referred to in the complaint,
and (3) central to the plaintiff’s claim or is subject to judicial notice. 224 F.3d 496, 498-99 (5th Cir.
2000); George v. SI Group, Inc., 36 F.4th 611, 619 (5th Cir. 2022). “The court has ‘complete
discretion’ to either accept or exclude the evidence for purposes of the motion to dismiss.” Knight v.
Am. Bankers Ins. Co. of Fla., No. CV 23-4834, 2024 WL 3742689, at *2 (E.D. La. Aug. 7, 2024)

(citing Isquith v. Middle South Utilities, Inc., 847 F.2d 186, 196 n.3 (5th Cir. 1988)).
Here, Defendant attaches two exhibits to its motion: (1) the contract which it alleges Plaintiff
agreed to when it opened the bank account at issue and (2) the monthly bank statements which it
alleges it sent to Plaintiff. As to the contract, the Court finds that this evidence is properly considered
on the instant 12(b)(6) motion. Plaintiff specifically alleges in its Petition that “Hancock Whitney
breached its contract of deposit with Brandt.” R. Doc. 1-2 at 4. The proposition that the parties
contracted wherein Plaintiff opened a checking account with Defendant is “central” to Plaintiff’s
claim. Collins, 224 F.3d at 498. Accordingly, the Court may consider the agreement.
However, the Court is not persuaded that the bank statements are properly considered on a

12(b)(6) motion. Although Plaintiff refers to unauthorized transactions in its complaint, it never
mentions the bank statements themselves. Thus, the evidence is not itself “referred to in the
complaint.” Id. Furthermore, even if the Court did consider the bank statements, the result would
remain the same because, as described more fully below, the Court finds that Plaintiff’s allegations
are sufficient to state a claim.

IV. ANALYSIS
The parties dispute two issues: (1) whether Plaintiff’s UCC claim is time-barred and (2)
whether the availability of a UCC remedy preempts all of Plaintiff’s other claims. The Court takes
each in turn.
A. Plaintiff’s UCC Claim is Not Time-Barred Because Parties Cannot Contractually
Shorten the One-Year Peremptive Period Mandated by the UCC.
Defendant contends that any UCC claim to recover the unauthorized payments is time-barred
because Plaintiff contractually agreed that it must report unauthorized payments to the bank within
30 days of Plaintiff’s receipt of its bank statement. Although Plaintiff does not specifically invoke the
UCC in its Petition, Louisiana follows a “fact-pleading system” whereby plaintiffs are not required to
“specifically label a claim” as such. See Greemon v. City of Bossier City, 2010-2828, p. 14 (La.
7/1/11); 65 So. 3d 1263, 1271 (“Plaintiffs should be awarded any recovery allowable under any legal
theory justified by the facts the plaintiff has alleged in his or her petition.”). Accordingly, Plaintiff’s
failure to specifically plead entitlement to a UCC remedy does not impact its ability to bring such a
claim. The Court briefly summarizes the applicable UCC remedy before explaining the split of
authority2 regarding whether parties can contractually shorten the applicable peremptive period.

2 Because the UCC is a state statutory regime, Louisiana law is applicable. However, the Louisiana Supreme
Court has held that “in deciding novel issues under the UCC, ‘we are authorized to consider the manner in which the
courts of our sister states have decided such cases.’” First Nat’l Bank of Picayune v. Pearl River Fabricators, Inc., 2006-
2195 (La. 11/16/07), 971 So. 2d 302; see also Brooks v. Transamerica, 45,833 (La. App. 2 Cir. 02/02/11), 57 So. 3d 1153,
1159 (“As such, jurisprudence from other jurisdictions is instructive when interpreting UCC provisions”). The parties do
not cite, nor could the Court locate, any Louisiana cases deciding whether the parties can contractually shorten the
statutory peremptive period in a Chapter 4A UCC case. Although Defendant cites a Louisiana case regarding the parties’
ability to shorten the peremptive period in a Chapter 4 case, this is not particularly helpful given the differences between
i. Chapter 4A of the UCC: Remedy for Unauthorized Funds Transfers
The parties agree that this dispute falls within the ambit of Chapter 4A of the UCC, as
codified in Louisiana law, which provides a cause of action for customers to sue their banks

regarding “unauthorized funds transfers.” La. Stat. Ann. § 10:4A-101 et seq. An unauthorized funds
transfer is one that is not actually made by the person “identified as sender.” See § 4A-202(a).
Essentially, unauthorized funds transfers are those fraudulently made by a third party. See § 4A-204
cmt 1. (“[U]nauthorized payment orders will almost always involve fraud.”).
“The default rule of the UCC is that the bank will bear the loss of any unauthorized funds
transfer.” Regatos v. N. Fork Bank, 257 F. Supp. 2d 632, 640 (S.D.N.Y. 2003) (citing § 4A–204(a)).
However, “[t]hat rule is subject to a broad exception.” Id. Where the bank and its customer agree to a
“security procedure” through which the bank will process payment orders, then payment orders
processed through that procedure will be considered “verified” and “effective as the order of the
customer” regardless of whether the orders were in fact authorized. § 4A–202(b). To qualify for this

exception, the security procedure must be “commercially reasonable,” and the bank must have
accepted the payment order “in good faith and in compliance with the bank’s obligations under the
security procedure.” Id. Overall, if a fraudulent payment order is “effective as the order of the
customer” because the bank met all requirements regarding the agreed-upon security procedure, then
the customer cannot recover the payment from the bank. Id. § 4A–204(a).
However, § 4A-204(a) provides that if the payment order was not “verified” using such a
commercially reasonable security procedure, or if the bank failed to comply with the procedure or act
in good faith, then “the bank shall refund any payment of the payment order received from the
customer.” Id. Subsection (b) further provides that “the obligation of a receiving bank to refund

payment . . . may not otherwise be varied by agreement.” Id. § 4A-204(b).
Finally, this Section also addresses whether the customer can recover interest on the refunded
payment order. It provides that if the order is unauthorized and unverified, then the bank:
shall pay interest on the refundable amount calculated from the date the bank received
payment to the date of the refund. However, the customer is not entitled to interest from the
bank on the amount to be refunded if the customer fails to exercise ordinary care to determine
that the order was not authorized by the customer and to notify the bank of the relevant facts
within a reasonable time not exceeding ninety days after the date the customer received
notification from the bank that the order was accepted or that the customer’s account was
debited with respect to the order.
Commentary to this section further clarifies that:
The customer has a duty to exercise ordinary care to determine that the order was
unauthorized after it has received notification from the bank, and to advise the bank of the
relevant facts within a reasonable time not exceeding 90 days after receipt of notification . . . .
The only consequence of a failure of the customer to perform this duty is a loss of interest on
the refund payable by the bank.
Id. cmt 1.
Overall, the statutory scheme contemplates that a customer may recover payment orders
which are both unauthorized and unverified by proper security procedure, regardless of whether the
customer has acted reasonably by reviewing her statement and notifying the bank of the unauthorized
nature of the transactions. However, the customer may only recover interest on the payments if she
properly reviews her statement and reports issues to the bank within a reasonable time.
ii. Chapter 4A’s Statute of Repose
Section 4A-505 provides a “statue of repose for objecting to debits made to the customer’s
account” pursuant to the provisions above. § 4A-505 cmt 1. It provides that:
If a receiving bank has received payment from its customer with respect to a payment order
issued in the name of the customer as sender and accepted by the bank, and the customer
received notification reasonably identifying the order, the customer is precluded from
asserting that the bank is not entitled to retain the payment unless the customer notifies the
bank of the customer’s objection to the payment within one year after the notification was
received by the customer.
Essentially, § 4A-505 provides the “peremptive period”3 for the cause of action established by § 4A-
204, that is, the customer’s right to recover a payment order that is both unauthorized and unverified.
iii. The Confused State of the Law
Here, Defendant contends that Plaintiff has contractually agreed to shorten the one-year

peremptive period provided in § 4A-505 down to only 30 days, meaning that its UCC claim is time-
barred. However, courts are split on whether parties may contractually shorten this peremptive
period.
Some courts allow such contracting. See Priority Staffing, Inc. v. Regions Bank, No. 11-0667,
2013 WL 5462239, at *3 (W.D. La. Sept. 30, 2013); Bonnema v. Heritage Bank NA-Willmar, No.
01-1940, 2002 WL 1363985, at *5 (Minn. Ct. App. June 19, 2002). First, these courts point to
another portion of Chapter 4A, § 4A-501, which provides that, “[e]xcept as otherwise provided in
this Chapter, the rights and obligations of a party to a funds transfer may be varied by agreement of
the affected party.” And, these courts reason, § 4A-505 does not expressly “disallow a contractual
limitation of the 1–year time period for disputing payment orders.” Priority Staffing, 2013 WL

5462239, at *3. Accordingly, they conclude that such contractual modification is permissible. Id.;
Bonnema, 2002 WL 1363985, at *5.
Other courts find that when read as a whole, the statute indicates that parties may not shorten
the peremptive period by contract. See JESCO Constr. Corp. v. Wells Fargo Bank, N.A., 579 F.

3 Because commentary to this provision describes it as a “statute of repose,” it imposes a “peremptive
period” rather than a “prescriptive period.” See Coleman v. OFS, Inc., 554 F. App’x 251, 253 (5th Cir. 2013)
(“‘Prescriptive periods’ are also known as statutes of limitation, while ‘peremptive periods’ are also known as
statutes of repose.”). The Fifth Circuit has explained that:
A statute of limitations extinguishes the right to prosecute an accrued cause of action after a period of time.
It cuts off the remedy. It is remedial and procedural. A statute of repose limits the time during which a
cause of action can arise and usually runs from an act of a defendant. It abolishes the cause of action after
the passage of time even though the cause of action may not have yet accrued.
Id.
Supp. 3d 827, 836 (S.D. Miss. 2022); Regatos, 257 F. Supp. 2d at 644. First, these courts note that §
4A-204, which lays out the underlying refund rule, provides that “the obligation of a receiving bank
to refund payment . . . may not otherwise be varied by agreement.” Regatos, 257 F. Supp. 2d at 642.
Thus, they reason, “the one-year notice provision strongly implicates the invariable right of refund

provided” in §4A-204. Id. (emphasis in original). And, “surely, a very short notice period would
effectively eviscerate the absolute duty” created by this section. Id.; see also Jesco, 579 F. Supp. 3d
at 836 (observing that “[w]hen analyzing the statutory framework as a whole, it becomes clear that [§
4A-501] and [§ 4A-505] are meant to interact with § 4A-204”).
iv. Discussion
The Court will follow Regatos and Jesco in finding that the one-year peremptive period
cannot be modified by agreement. As those courts observed, § 4A-204 explicitly states that the
customer has an invariable right to a refund where the payment order is unauthorized and unverified
by adequate security procedure. Allowing the parties to contractually limit this right goes against the
express directive of the statute that the bank’s “obligation to refund” cannot be “varied by

agreement.” § 4A-204. Furthermore, commentary to § 4A-204 explains that “the only consequence
of a failure of the customer to perform [her] duty”—that is, the duty to reasonably review bank
statements and report unauthorized transactions to the bank—“is a loss of interest on the refund
payable by the bank.” Allowing the parties to contractually shorten the peremptive period to 30 days
is inconsistent with this directive that the “only” consequence for the customer’s failure to promptly
review their bank statements is a loss of interest, not loss of the refunded payment itself.
Accordingly, the text of the statute supports the conclusion that the parties may not alter 1-year
statutory peremptive period by contract.
Moreover, the Court notes that the bank—and not the customer—will frequently be the party

to draft the contract. This seems to be the case here: Defendant maintains that it “mailed the Deposit
Account Agreement to Plaintiff” and “[n]either Plaintiff nor anyone on its behalf has objected to the
terms of the Deposit Account Agreement.” R. Doc. 8-3 at 2 (emphasis added). Allowing banks to
draft contracts which modify the customer’s right to a refund by extinguishing that right eleven
months earlier than contemplated would be contrary to the text and purpose of the statute.

Defendant’s arguments to the contrary are unpersuasive. Defendant cites Groue v. Capital
One, a Louisiana case in which the court held that the parties could, in fact, shorten a one-year
peremptive period in a UCC case. 2010-0476 (La. App. 1 Cir. 9/10/10), 47 So. 3d 1038, 1040.
However, this case is not instructive, as it was decided in the context of Chapter 4, which covers
disputes regarding “bank deposits and collection” issues such as forged checks, not Chapter 4A, the
applicable provision covering the instant “funds transfer” dispute. Unlike Chapter 4A, where the
customer has an invariable right to a refund regardless of whether they reasonably reviewed their
bank statements and timely reported issues to the bank, Chapter 4 requires such reasonable review
and reporting for the customer to make any recovery at all. See § 4-406. (providing that the customer
must “exercise reasonable promptness in examining the statement or items to determine whether any

payment was not authorized” and must “promptly notify the bank of the relevant facts” to recover
any portion of the deposit). Quite simply, because “funds transfers are inherently different from other
commercial transactions, the provisions of Article 4A do not mirror the rest of the UCC.” Regatos,
257 F. Supp. 2d at 643. Thus, decisions in the Chapter 4 context are only instructive to the extent that
they reinforce the Court’s conclusion that Chapter 4A is unique in imposing an invariable right to
refund which may not be cut off by a dramatically shortened peremptive period. Overall, the Court
finds that Plaintiff has plead a valid UCC claim as to any funds transfers which it disputed within one
year of the date on which it “received notification reasonably identifying the order.” § 4A-505.
Finally, the Court observes that dismissal of any part of Plaintiff’s UCC claim is not

appropriate at this stage. Plaintiff seeks recovery of payments that occurred more than one year
before Plaintiff disputed the transactions in October of 2023. However, the one-year peremptive
period only begins to run when the Plaintiff “received notification” of the transfers within the
meaning of § 4A-505. At this stage, the Court cannot determine when Plaintiff “received
notification” of the transactions. Although Defendant alleges that it provided Plaintiff with monthly

bank statements which showed the unauthorized transactions, the Court has already explained,
above, that these bank statements are not referred to in Plaintiff’s petition and thus not properly
considered on a motion to dismiss. Even if the Court did consider the evidence, Plaintiff raises
questions regarding whether it actually received the statements Defendant attaches. See R. Doc 12 at
6 (explaining that the “individual who is alleged to have stolen these funds” is the person “who
actually received the monthly statements from Defendant”). The Court must assume, at this stage,
that Plaintiff was not actually receiving the bank statements from Defendant. Thus, Plaintiff has
adequately plead a UCC claim as to all disputed funds transfers, not only those arising in the one-
year period preceding October of 2023, when it disputed the transfers.
B. Plaintiff’s Negligence Claim is Preempted by the UCC as Plead

Next, the parties dispute whether Plaintiff has plead an independent negligence claim which
is not preempted by the UCC. Section 1-103(b) of the UCC, as enacted by Louisiana, provides that:
“[u]nless displaced by the particular provisions of this Title, the other laws of Louisiana supplement
its provisions.” Comment 2 to this provision further clarifies that:
[W]hile principles of common law and equity may supplement provisions of the Uniform
Commercial Code, they may not be used to supplant its provisions, or the purposes and
policies those provisions reflect, unless a specific provision of the Uniform Commercial
Code provides otherwise. In the absence of such a provision, the Uniform Commercial Code
preempts principles of common law and equity that are inconsistent with either its provisions
or its purposes and policies.

The Comment, which was added in 2006, further explains that some decisions in other courts have
interpreted UCC displacement too narrowly:
Some decisions applied other law in situations in which that application, while not
inconsistent with the text of any particular provision of the Uniform Commercial Code,
clearly was inconsistent with the underlying purposes and policies reflected in the relevant
provisions of the Code. See, e.g., Sheerbonnet, Ltd. v. American Express Bank, Ltd., 951 F.
Supp. 403 (S.D.N.Y. 1995). In part, this difficulty arose from Comment 1 to former Section
1-103, which stated that this section indicates the continued applicability to commercial
contracts of all supplemental bodies of law except insofar as they are explicitly displaced by
this Act. The “explicitly displaced” language of that Comment did not accurately reflect the
proper scope of Uniform Commercial Code preemption, which extends to displacement of
other law that is inconsistent with the purposes and policies of the Uniform Commercial
Code, as well as with its text.
Overall, it is clear that Louisiana UCC preemption is fairly expansive, encompassing preemption of
any additional claim that is inconsistent not only with the text of the UCC, but also with its
overarching “purposes and policies.”
“Louisiana courts have not specifically addressed Chapter 4A displacement.” Ducote v.
Avery Interests, LLC, No. 15-256 (La. App. 5th. Cir. 4/24/15). However, other jurisdictions have
held that “[f]or Article 4A purposes, the critical inquiry is whether its provisions protect against the
type of underlying injury or misconduct alleged in a claim.” Ma v. Merrill Lynch, Pierce, Fenner, &
Smith, 597 F.3d 84, 90 (2d Cir. 2010). And, these other courts have found that the plaintiff’s
negligence claims were preempted by Chapter 4A under nearly identical facts to those presented
here. For example, in Ma v. Merrill Lynch, Pierce, Fenner, & Smith, the court held that the plaintiffs’
negligence claims were preempted by the UCC where they alleged that “Defendants . . . breached
their fiduciary obligations by . . . failing to contact Plaintiffs about the transactions taking place in
their account and allowing funds to be removed from the accounts without proper authorization.” Id.
The Court explained that “[s]ince all of [the plaintiffs’] claims are, at their core, assertions that he did
not order or approve any of the disputed electronic transfers of funds from his accounts, we are
bound to recognize the rights and duties [the UCC] provides for precisely these circumstances.” Id.;
see Gold v. Merrill Lynch & Co., No. 09-318 2009 WL 2132698, at *5 (D. Ariz. July 14, 2009)
(“Plaintiff’s Complaint alleges that Defendant breached duties related only to the payment of
unauthorized transfers. As discussed above, Article 4A of the [UCC] specifically addresses such
unauthorized transfers and provides an exclusive remedy for them.”).
Here, identically, Plaintiff alleges that that Defendant “was negligent in its handling of
Plaintiff’s deposit account by allowing ACH payments [funds transfers] without authorization and

without notifying Brandt it was making these ACH payments.” R. Doc 1-2 at 3. Accordingly, the
Court finds that Plaintiff’s negligence claim, in its present posture, focuses only on conduct that is
preempted by the UCC. Thus, the claim must be dismissed. Nevertheless, the Court understands
Plaintiff’s position that further discovery is necessary to fully understand the circumstances of the
case. Accordingly, the Court will dismiss Plaintiff’s negligence claim without prejudice. If discovery
supports claims that are truly “supplemental” to Plaintiff’s UCC claim and not “inconsistent with the
purposes and policies” of the UCC, the Court will consider a timely and appropriate request for
amendment of Plaintiff’s Petition to re-raise a negligence claim.
However, the Court cautions Plaintiff that Louisiana endorses an especially broad view of
UCC preemption. In its briefing, Plaintiff relies on the case Squeeze Me Once, LLC v. SunTrust

Bank, in which the court allowed various supplemental negligence claims to persist alongside
Plaintiff’s Chapter 4A UCC claim. No. 19-787, 2020 WL 12968001, at *10 (M.D. La. Aug. 3, 2020).
However, that case applied the North Carolina version of the UCC, which endorses a narrower view
of preemption than Louisiana. Id. Specifically, commentary to the North Carolina UCC preemption
provision explains that other state law is not preempted unless it is “explicitly displaced” by the
UCC. N.C. Gen. Stat. Ann. § 25-1-103. But commentary to Louisiana’s version of the UCC
expressly rejects this language and its narrower view of preemption. See § 1-103(b) cmt 1 (“The
‘explicitly displaced’ language of that Comment did not accurately reflect the proper scope of
Uniform Commercial Code preemption.”). Rather, Louisiana law extends UCC preemption more

broadly to claims that, while not directly preempted, would be inconsistent with UCC policy and
purpose. /d. Accordingly, the Court emphasizes that Squeeze Me Once is not especially instructive on
the issue of Louisiana UCC preemption.
V. CONCLUSION
For the foregoing reasons,
IT IS ORDERED that Defendant’s motion to dismiss is DENIED in part and GRANTED
in part. The motion is DENIED in that the Court finds that Plaintiff has plead a viable UCC claim.
The motion is GRANTED in that the Court will dismiss Plaintiffs non-UCC claims. Plaintiffs
negligence claim is dismissed without prejudice.
New Orleans, Louisiana this 15th day of January, 2025.
BW Cor
Eldon E. Fallon
U.S. District Court Judge

15

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10781305. Public record. Not legal advice.