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Leibovic v. United Shore Financial Services, LLC

United States District Court, E.D. Michigan

October 28, 2016

AL LEIBOVIC, Plaintiff,




         Before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint.

         This action arises out of the alleged theft of Al Leibovic's (“Leibovic”) electronically stored personal identifiable information. Leibovic brings a multiple count class action suit against United Shore Financial Services, LLC (“United Shore”) and Xerox Mortgage Services, Inc. (“XMS”).

         In response, United Shore and XMS filed Motions to Dismiss Leibovic's Complaint pursuant to Fed R. Civ. P. 12(b)(6). The Court ruled on United Shore's Motion, granting the Motion to Dismiss Count III - Bailment, and denying the Motion to Dismiss Counts I - Breach of Implied Contract, II - Unjust Enrichment, and IV - Negligence. Without prejudice, the Court denied United Shore's request to strike class action allegations.

         XMS brings this Motion separate from United Shore pursuant to Fed R. Civ. P. 12(b)(6). It is GRANTED in part and DENIED in part.

         A. Statement of Facts

         Leibovic applied for and obtained a mortgage through United Shore. United Shore is a financial services company that provides mortgage lending, servicing, and other related products. As part of United Shore's mortgage application process, prospective borrowers are required to provide personally identifiable information (“PII”) and pay a loan application processing fee to United Shore. At the time of Leibovic's application, United Shore utilized BlitzDocs, a computer software program, to process and store loan documents. BlitzDocs is owned by XMS.

         Leibovic alleges a Mexico-based criminal enterprise gained unauthorized access to United Shore's files. As a result, his and other United Shore customers' PII were compromised. According to Leibovic, this breach occurred at least twice; December, 2012 and August, 2013. Leibovic alleges the criminal enterprise hacked directly into the BlitzDocs system in order to gain access to customers' PII. After obtaining the information Leibovic says the criminal enterprise used the information to acquire or attempt to acquire fraudulent credit cards, issue fraudulent checks, and liquidate brokerage accounts.

         Leibovic filed this complaint after several of his accounts were accessed and an attempt was made to liquidate his account with an investment company. Leibovic claims criminals attempted to open credit cards in his name and issued fraudulent checks from his bank account. He asks for attorneys' fees, and actual and punitive damages.

         XMS filed a 12(b)(6) motion to dismiss. XMS alleges all claims fail against it because: (1) Leibovic cannot establish himself as a third-party beneficiary under the breach of contract claim; (2) Leibovic cannot show that XMS owed him a duty separate and distinct from the contractual obligation under the negligence claims; (3) Leibovic fails to allege that he provided information with an understanding that the information would be returned or otherwise accounted for, as required by a bailment claim; and (4) Leibovic's unjust enrichment claim does not allege that a benefit is conferred directly upon XMS.


         A. Motion to Dismiss (12(b)(6))

         Fed. R. Civ. P. 12(b)(6) allows dismissal when a plaintiff fails to state a claim upon which relief can be granted. The motion tests the legal sufficiency of claims alleged in the complaint. Accordingly, “to survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain 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)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

         When presented with a Rule 12(b)(6) motion, the court looks to the factual content of the complaint to determine whether the plaintiff has raised a “plausible inference of wrongdoing.” Southfield Ltd. v. Flagstar Bank, 727 F.3d 502, 504 (6th Cir., 2013). The court must accept all allegations in the complaint as true and view them in the light most favorable to the plaintiff in order to determine whether a plaintiff “is entitled to offer evidence to support the claims.” Twombly, 550 U.S. at 563 n. 8. When presented with a 12(b)(6) motion, the court may consider the complaint and any attached exhibits, so long as they are referred to in the complaint and are central to the claims. See Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001).

         B. Choice of Law

         i. Breach of Contract

         Leibovic claims standing as a third party beneficiary to the services contract (“the Agreement”) between United Shore and XMS. XMS argues New York law should be applied to Leibovic's breach of contract claim. Leibovic does not disagree. Nonetheless, the Court must satisfy itself that the correct law is applied.

         Both parties cite to a Sixth Circuit decision, Davidson, which held that plaintiff's claim as a third party should be decided under the law of the state specified in the contract as the choice of law. Davidson & Jones Dev. Co. v. Elmore Dev. Co., 921 F.2d 1343, 1356 n. 15 (6th Cir. 1991). Because the Agreement has an explicit choice of law provision that relates to the claim and application of New York law is not adverse to ...

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