[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
SEPTEMBER 06, 2000
________________________
THOMAS K. KAHN
CLERK
No. 00-10730
Non-Argument Calendar
________________________
D.C. Docket 98-00239-CIV-OC-21C
STEPHEN GROSSMAN,
Plaintiff-Appellant,
versus
NATIONSBANK, N.A.,
Defendant-Appellee.
__________________________
Appeal from the United States District Court for the
Middle District of Florida
_________________________
(September 6, 2000)
Before TJOFLAT, BARKETT and HULL, Circuit Judges.
PER CURIAM:
Plaintiff-Appellant Stephen Grossman appeals the district court’s order
dismissing his complaint for failure to state a claim upon which relief could be
granted. Fed.R.Civ.P. 12(b)(6). This case arises out of Grossman’s claims that
Nationsbank improperly transmitted a fund transfer on his behalf through the
Federal Reserve Wire Transfer Network (“Fedwire”).1 Grossman alleged that the
improper transfer resulted in damages of over $200,000 to him. After review, we
affirm.
I. GROSSMAN’S COMPLAINT
We first review the allegations in Grossman’s complaint. Grossman’s
complaint alleges that he entered into a joint venture agreement (the “JV
agreement”) with HMF Management (“HMF”) in order to participate in an
investment program. On October 7, 1996, in furtherance of the JV agreement,
Grossman opened an account at First Union National Bank (the “HMF-Grossman
JV account”). Grossman received instructions from HMF for the wire transfer of
Grossman’s investment funds into the HMF-Grossman JV account at First Union.
Grossman attached to his complaint as Exhibit B a copy of the wire-transfer
instructions as he received them from HMF. The wire transfer instructions read as
follows:
1
Fedwire is the funds-transfer system owned and operated by the Federal Reserve Banks.
See 12 C.F.R. § 210.26(e). Fedwire is an “electronic funds transfer system which permits large
dollar fund transfers by computer-to-computer communications between banks.” Lopez v. First
Union National Bank of Florida, 129 F.3d 1186, 1188 (11th Cir. 1997).
2
WIRE TRANSFER INSTRUCTIONS
HMF-GROSSMAN JV
BANK NAME: AM SOUTH BANK
BANK ADDRESS: CLEARWATER, FLORIDA
ABA#: 063 210 112
ACCOUNT NAME: DIVERSIFIED VENTURES
ACCOUNT NUMBER: 3283155856
FOR FURTHER CREDIT TO:
BANK NAME: FIRST UNION
BANK ADDRESS: JACKSONVILLE, FLORIDA
ABA#: 063000021
ACCOUNT NAME: HMF-GROSSMAN JV
CAP ACCOUNT NUMBER: 9981575600 [handwritten]
(R1-2 at Exh. B). The wire transfer instructions thus directed that the funds be
wired to bank name “Am South Bank,” account name “Diversified Ventures,”
account number 3283155856, and then “for further credit to” bank name “First
Union,” account name “HMF-Grossman JV,” account number 9981575600.
On October 11, 1996, Grossman visited a Nationsbank2 branch office and
requested assistance in effecting the wire transfer of his funds to the HMF-
Grossman JV account. Grossman provided a copy of the wire-transfer instructions
to an employee of Nationsbank. The employee prepared a “Request for Funds
Transfer” form that Grossman signed. Grossman attached to his complaint at
Exhibit C a copy of the funds transfer form. The funds transfer form contained the
2
Grossman originally filed his complaint against Barnett Bank. After Barnett Bank merged
into Nationsbank, Nationsbank was substituted as the defendant in this case. To avoid
confusion, we will refer only to Nationsbank in this opinion.
3
following information, in pertinent part (the printed form headings are underlined):
WIRE AMOUNT $250,000.00
RECEIVING BANK (Use ONLY if different from Beneficiary’s Bank)
FINAL DESTINATION: FIRST UNION, JACKSONVILLE, FL R/T
# 06300021, HMF-GROSSMAN JV # 9981575600
BENEFICIARY’S BANK
FIRST DESTINATION: AM SOUTH BANK, CLEARWATER, FL R/T/ #063
210 112 DIVERSIFIED VENTURES
BENEFICIARY NAME
AM SOUTH BANK
BENEFICIARY ACCOUNT NUMBER (REQUIRED)
3283155856
ORIGINATOR TO BENEFICIARY INFORMATION (SPECIAL
INSTRUCTIONS, EX. ATTENTION, REFERENCE NUMBER, ETC.)
FINAL DESTINATION ADDRESS: FIRST UNION 2801 SOUTHWEST HIGH
MEADOWS AVE, PALM CITY, FL 34490
ORIGINATOR/BY ORDER OF
STEPHEN GROSSMAN METHOD OF PAYMENT: DBT ACCT # 2010788969
(R1-2 at Exh. C).
On October 17, 1996, Grossman was again in the Nationsbank branch office.
The employee who had prepared the funds transfer form asked Grossman if the
transfer had gone well. Grossman replied that he assumed it had gone well because
the funds had reached the HMF-Grossman JV account at First Union. The
employee then told Grossman that the “wire transfer room” had told her that
because both Nationsbank and First Union were “on line,” there was no need to
route the funds through Am South Bank. As a result, Nationsbank had wired the
4
money directly to First Union for credit to the HMF-Grossman JV account.
Grossman then reviewed the joint-venture documents, and determined that
the transfer directly from Nationsbank to the HMF-Grossman JV account
“appeared to be inconsistent with the wiring instructions given to him.” While the
funds had reached the ultimate intended account, the HMF-Grossman JV account,
the funds had gone to the account directly and not through Am South Bank and the
Diversified Ventures account. On October 18, 1996, Grossman again contacted the
Nationsbank branch office and requested that the “wire be sent in accordance with
the instructions he had been provided and, in turn, had provided the bank.” After
the same Nationsbank employee consulted with the “wire room,” she told
Grossman that the funds would be recalled and resent in conformity with the
instructions.
Within the next several days, Grossman received confirmation from both the
“wire room” and the same Nationsbank employee that the funds had been recalled
and resent. However, in early November, Grossman contacted First Union and
learned that no deposit had been received to the HMF-Grossman JV account.
Grossman immediately called Am South Bank to inquire as to why the funds had
not been forwarded to the HMF-Grossman JV account as the wiring instructions
had directed. Am South told Grossman that it could not provide him any
5
information regarding an account to which he was not a signatory, and that he
should contact the owner of the Diversified Ventures account at Am South to
which Nationsbank had wired the funds.
Over the next several months, Grossman tried unsuccessfully to determine
what had happened to the funds that were intended for deposit in the HMF-
Grossman JV account at First Union. Nationsbank continued to insist that it had
transferred the money to Am South according to Grossman’s instructions, and that
it was then Am South’s responsibility to complete the transaction pursuant to the
instructions that Nationsbank had forwarded to Am South with the funds. In
March 1997, Am South informed Grossman that the Diversified Ventures account
had been closed in February 1997.
HMF, the sole signatory to the Diversified Ventures account at Am South,
initially told Grossman that the delay in forwarding the funds to the HMF-
Grossman JV account at First Union had been due to a federal audit of Diversified
Ventures. However, on March 6, 1997, HMF wired $50,000.00 to Grossman’s
Nationsbank account in return for an agreement from Grossman authorizing HMF
to deduct $50,000.00 from the principle sum of the investment that it would soon
transfer to the HMF-Grossman JV account. Grossman attached to his complaint at
Exhibit D a copy of this agreement.
6
In August 1997, Grossman sought assistance from the Federal Reserve Bank
in Washington D.C. Officials there informed him that Nationsbank was
responsible for the loss of the funds due to its failure to execute the payment order
according to Grossman’s instructions. According to the Federal Reserve, the loss
of the funds was not to be blamed on Am South’s failure to forward the funds as
instructed. As a result, Grossman made a written demand for damages on
Nationsbank. Nationsbank promised to address Grossman’s demands “as
expeditiously as possible,” but never concluded its inquiry. Grossman’s complaint
alleges damages in excess of $200,000.00 as a result of Nationsbank’s “failure to
complete the wire transfer transaction in accordance with the instructions
Grossman had provided, or to advise Grossman that such transaction could not be
completed as structured.”
II. THE DISTRICT COURT’S ORDER
In its motion to dismiss, Nationsbank contended that Grossman failed to
plead the essential elements of a cause of action for the erroneous execution of a
Fedwire funds transfer. Fed.R.Civ.P. 12(b)(6). In granting Nationsbank’s motion
to dismiss, the district court noted that Grossman’s complaint had failed to specify
pursuant to which statute or statutes he had filed his claims, and whether he was
suing under Florida or federal law. After an analysis of the preemptive effect of
7
federal regulations, the district court concluded that even if Grossman had intended
to proceed under Florida law, the state law would be preempted by Subpart B of
Federal Reserve Board Regulation J (“Regulation J”),3 which governs wire
transfers effected through Fedwire.
Therefore, the district court analyzed the claims in Grossman’s complaint
exclusively using Subpart B of Regulation J, which applies U.C.C. Article 4A as
the governing statute for Fedwire funds transfers. See 12 C.F.R. § 210.25(b)(1)
(providing also that Regulation J controls in the event of inconsistencies with
U.C.C. Article 4A). All of the parties now agree that Nationsbank’s duty was
governed by Regulation J and U.C.C. Article 4A. The parties disagree regarding
whether the district court properly held that Grossman’s complaint failed to allege
a cause of action under Regulation J, 12 C.F.R. Part 210, Subpart B, App. B, § 4A-
302(a)(1).
III. STANDARD OF REVIEW
We review de novo a district court’s order dismissing a complaint for failure
to state a claim upon which relief could be granted. See Lopez v. First Union
National Bank of Florida, 129 F.3d 1186, 1189 (11th Cir. 1997) (citation omitted).
3
55 Fed. Reg. 40,791 (1990) (as amended Oct. 5, 1990) (codified at 12 C.F.R. Part 210
(Subpart B & Appendix B)).
8
When considering a motion to dismiss, all facts set forth in the plaintiff’s
complaint “are to be accepted as true and the court limits its consideration to the
pleadings and exhibits attached thereto.” GSW, Inc. v. Long County, 999 F.2d
1508, 1510 (11th Cir. 1993). A complaint may not be dismissed pursuant to Rule
12(b)(6) “unless it appears beyond doubt that the plaintiff can prove no set of facts
in support of his claim which would entitle him to relief.” Lopez, 129 F.3d at 1189
(internal quotations and citation omitted).
III. DISCUSSION
The district court held, and the parties agree, that the provisions of
Regulation J exclusively apply to the fund transfer in this case because it was
effected by the use of Fedwire, the Federal Reserve Banks’ wire-transfer system.
See 12 C.F.R. § 216.25-32. Regulation J applies U.C.C. Article 4A to wire
transfers conducted using Fedwire. See 12 C.F.R. § 210.25(b)(1); Appendix B to
Subpart B to Part 2104; see also Donmar Enters. Inc. v. Southern Nat’l Bank, 64
F.3d 944, 948 (4th Cir. 1995).
We address Nationsbank’s duty under Regulation J and U.C.C. Article 4A
once Grossman requested the fund transfer, so that we can determine whether
4
Subsection 210.25(b)(1) states that Subpart B to Part 210 (the codification of Regulation J)
“incorporates the provisions of Article 4A set forth in appendix B to this subpart. In the event of
an inconsistency between the provisions of the sections of this subpart and appendix B, to this
subpart, the provisions of the sections of this subpart shall prevail.”
9
Grossman’s complaint sufficiently stated a claim that Nationsbank breached its
duty under those provisions. However, we will first provide Article 4A’s
definition of the terms that are necessary to discuss the wire-transfer process in
this case.5 The originator is “the sender of the first payment order in a funds
transfer,” in this case, Grossman.6 12 C.F.R. Part 210, Subpart B, App. B, § 4A-
104(c). The payment order is the “instruction . . . to pay . . . a fixed or
determinable amount of money to a beneficiary.” Id. § 4A-103(a)(1). The
originator’s bank is “the receiving bank to which the payment order of the
originator is issued if the originator is not a bank.” Id. § 4A-104(d)(i). Because
Grossman is not a bank, he took his payment order to the originator’s bank, in this
case, Nationsbank. The beneficiary is “the person to be paid by the beneficiary’s
bank.” Id. § 4A-103(2). The beneficiary’s bank is “the bank identified in the
payment order in which an account of the beneficiary is to be credited pursuant to
the order or which otherwise is to make payment to the beneficiary if the order
5
We recognize that many other terms would need to be defined to allow a complete
understanding of the complex wire-transfer process. In an attempt to present this subject in the
most simple, yet comprehensive, manner, we have selected to define the following terms. We
believe that these definitions are sufficient to discuss the issues in this case.
6
A sender is defined as “the person giving the instruction to the receiving bank.” 12 C.F.R.
Part 210, Subpart B, App. B, § 4A-103(5). There is a sender at each step in the transfer chain,
but for our purposes, it is important to note that Grossman was a sender when he transmitted the
initial wire-transfer instructions to Nationsbank. A receiving bank is “the bank to which the
sender’s instruction is addressed.” Id. § 4A-103(4).
10
does not provide for payment to an account. Id. § 4A-103(3).
In the simplest Fedwire transfer, the funds to be transferred are debited from
the originator’s account, and travel from the originator’s bank to the beneficiary’s
bank, where the beneficiary’s account is credited.7 However, an originator can
instruct the originator bank that the funds are to travel through one or more
intermediary banks, defined by Article 4A as a “receiving bank other than the
originator’s bank or the beneficiary’s bank.” Id. § 4A-104(b). A receiving bank is
“the bank to which the sender’s instruction is addressed,” id. § 4A-103(4), or in
other words, each bank in the chain that receives a payment order, including the
originator’s bank, any intermediary banks, and ultimately the beneficiary’s bank.
Now we address whether Nationsbank complied with it’s duty under
Regulation J. Regulation J directs that Nationsbank’s duty as a receiving bank was
to issue a payment order that complied with the sender’s (Grossman’s),
7
This appears to be what happened in Nationsbank’s initial attempt to carry out Grossman’s
request. Nationsbank debited $250,000 from Grossman’s Nationsbank account, Nationsbank
transferred the money to First Union, and First Union credited the HMF-Grossman joint venture
account. We recognize that we are simplifying the process, in that we are leaving out the role of
the Federal Reserve Bank. Often, the actual transfer involves steps in which originator’s bank
sends a payment order to a Federal Reserve Bank (in this function, technically an intermediary
bank, to be defined and discussed below), and the reserve bank debits the account of the
originator’s bank at the reserve bank, and credits the reserve bank account of the beneficiary’s
bank. At that point, the reserve bank sends a payment order to the beneficiary’s bank, which
now has the money in its account and can credit the individual account of the beneficiary.
However, the steps involving the Federal Reserve Bank are not crucial to this case, so for
simplicity’s sake, we will leave them out of our descriptions.
11
instructions:
The receiving bank is obliged to issue, on the execution date, a
payment order complying with the sender’s order and to follow the
sender’s instructions concerning (i) any intermediary bank or funds-
transfer system to be used in carrying out the funds transfer, or (ii) the
means by which payment orders are to be transmitted in the funds
transfer. If the originator’s bank issues a payment order to an
intermediary bank, the originator’s bank is obliged to instruct the
intermediary bank according to the instruction of the originator. An
intermediary bank in the funds transfer is similarly bound by an
instruction given to it by the sender of the payment order it accepts.
12 C.F.R. Part 210, Subpart B, App. B, § 4A-302(a)(1) (emphasis supplied).
After analyzing Nationsbank’s duty under § 4A-302(a)(1), we conclude that
Grossman could not prove a set of facts in support of his claim which would entitle
him to relief. The instructions Grossman provided to Nationsbank did not identify
the banks by the terms “intermediary bank” and “beneficiary’s bank.” The
instructions were therefore non-specific. On appeal, Grossman argues that he
instructed Nationsbank to send the funds to the HMF-Grossman JV account at First
Union, using Am South as an intermediary bank. However, the instructions
Grossman gave Nationsbank cannot be read as indicating a normal transfer using
an intermediary bank, because funds traveling through an intermediary bank are
not deposited in an individual account at the intermediary bank.8 12 C.F.R. Part
8
Article 4A defines a “bank,” as used in the term “intermediary bank,” as a “person engaged
in the business of banking and includes a savings bank, savings and loan association, credit
union, and trust company. A branch or separate office of a bank is a separate bank for purposes
12
210, Subpart B, App. B § 4A-105(a)(2). The instructions Grossman gave to
Nationsbank specifically stated that the money was to reach the Diversified
Ventures account at Am South, account number 3283155856. The next line of the
instructions read “for further credit to” the HMF-Grossman JV account at First
Union, which indicates that the funds were first intended to be credited to the
Diversified Ventures account at Am South with instructions that the funds were
“for further credit to the HMF-Grossman JV account at First Union.” Indeed,
Nationsbank first sent the money directly to the HMF-Grossman JV account at
First Union, and Grossman told Nationsbank in no uncertain terms that was not
what he had instructed.
Grossman may not have understood that once the funds were deposited in
the Diversified Ventures account at Am South, neither he nor Nationsbank would
have any control over the money. Nonetheless, Grossman’s instructions told
Nationsbank to wire the funds to the Diversified Ventures account at Am South
with instructions to send the money on to the HMF-Grossman JV account at First
Union. Nationsbank did exactly that. The payment order form prepared by
Nationsbank, which Grossman signed, listed the “First Destination” as the Am
of this Article.” 12 C.F.R. Part 210, Subpart B, App. B § 4A-105(a)(2). Therefore, the term
“intermediary bank” does not seem to include an individual bank account.
13
South Diversified Ventures account, and instructed that the “Final Destination”
was to be the HMF-Grossman JV account at First Union. If this is not the
transaction Grossman desired, he has not alleged that he gave Nationsbank any
additional instructions, or that Nationsbank had any other way of knowing that
Grossman intended a different transaction. Because Nationsbank followed the
instructions that Grossman provided, Nationsbank complied with its duty under
Regulation J. Therefore, Grossman cannot state a claim for a violation of
Regulation J, and the district court did not err in granting Nationsbank’s Rule
12(b)(6) motion to dismiss.9
AFFIRMED.
9
Grossman also argues that the district court erred in dismissing his complaint with
prejudice, and without giving him an opportunity to amend. Because Grossman could not prove
that Nationsbank failed to comply with the instructions it received, we conclude that Grossman
could not amend his complaint so that it would state a claim under Regulation J. Thus, we
cannot find that the district court erred in dismissing Grossman’s complaint with prejudice.
14