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Maryland District Court Dismisses All Claims Against Bank That Unknowingly Offset Company Debt by Removing Private Funds From Company Account

Betskoff v. Bank of America
United States District Court for the District of Maryland, No. CCB-12-1998

by Jhanelle Graham, Law Clerk
Semmes, Bowen & Semmes (

In Betskoff v. Bank of America, Plaintiff Kevin C. Betskoff, Sr., proceeding pro se, filed a lawsuit against Bank of America (“BOA”), alleging five (5) causes of action arising out of an incident in which the Bank removed funds that Mr. Betskoff had deposited into an account owned by a third-party account holder to pay arrears on a credit card associated with that account. Writing for the district court, Judge Catherine Blake granted BOA’s motion to dismiss, pursuant to FED. R. CIV. P. 12(b)(6), finding that Betskoff failed to prove the elements of his five (5) causes of action against BOA.

In May 2009, Mr. Betskoff arranged to have his Maryland state income tax refund and unemployment benefits direct deposited into a BOA checking account owned by Iona Investment Group, LLC (“IIG”). Mr. Betskoff lacked a bank account of his own, so he received permission to use the limited liability company’s account from the company’s resident agent. Under this arrangement, IIG deposited a tax refund in the amount of $884.70 and two (2) unemployment payments totaling $180 during the month of May. On or around May 22, 2009, when Mr. Betskoff attempted to retrieve his money, he was notified that on May 13, 2009, BOA had “offset” the entirety of the deposited funds to pay arrears on an unsecured revolving credit card associated with the company’s account. Mr. Betskoff informed a BOA representative that he did not possess a credit card with the account and was not responsible for the debt associated with it. He requested that BOA return the funds he had deposited, but the bank denied his request. On May 23, 2009, Mr. Betskoff contacted BOA’s collection department and explained that he needed the funds to pay a fine so as not to violate a court order, which could lead to his arrest. Nonetheless, BOA again denied Mr. Betskoff’s request.

On May 11, 2010, Mr. Betskoff filed suit in the Carroll County Circuit Court against BOA, alleging five causes of action arising out of this incident: (1) violation of the Maryland Consumer Debt Collection Act (MCDCA); (2) violation of the Maryland Consumer Protection Act (MCPA); (3) trover and conversion; (4) intentional infliction of emotional distress; and (5) violation of 15 U.S.C. § 1666h of the Truth in Lending Act (TILA). Mr. Betskoff sought compensatory and punitive damages. The case was removed to the United States District Court for the District of Maryland on July 5, 2012, pursuant to 28 U.S.C. § 1441, on grounds of diversity and federal question jurisdiction. BOA moved to dismiss all five (5) counts of Mr. Betskoff’s complaint, and the district court granted BOA’s motion as to all five (5) counts.

First, the district court reiterated the standard for pleadings, based upon the Supreme Court case of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). There, the Court stated that, to survive a motion to dismiss, the factual allegations of a complaint “must be enough to raise a right to relief above the speculative level, . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555. (internal citations and alterations omitted). Thus, the plaintiff’s obligation is to set forth sufficiently the “grounds of his entitlement to relief,” offering more than “labels and conclusions.” Id. (internal quotation marks and alterations omitted). If a plaintiff fails to meet this obligation, “the complaint has alleged-but it has not . . .show[n] . . .that the pleader is entitled to relief.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) (citing Fed. R. Civ. P. 8(a)(2)).

With respect to Mr. Betskoff’s first allegation that the Bank’s actions violated the MCDCA, the court found fault with the sufficiency of Mr. Betskoff’s pleading under Bell Atlantic Corp. Mr. Betskoff did not specify the provisions of the MCDCA on which his claims were based, but cited broadly to Md. Code Ann., Com. Law § 14-201 et seq. The MCDCA prohibits certain acts by “collectors” in collecting or attempting to collect an alleged debt, where a “collector” is “a person collecting or attempting to collect an alleged debt arising out of a consumer transaction,” Md. Code Ann., Com. Law § 14-201(b); and “consumer transaction” is defined as “any transaction involving a person seeking or acquiring real or personal property, services, money, or credit for personal, family, or household purposes.” Id. at § 14-201(c). Here, BOA was attempting to enforce a consumer debt when it removed money from Betskoff’s account. Because the account belonged to IIG, not Betskoff, the district court found that there was no consumer transaction underlying the debt sought to be collected. Thus, the MCDCA was inapplicable and Mr. Betskoff’s MCDCA violation claim was dismissed.

The court then addressed Betskoff’s second claim, that BOA violated the MCPA by not providing reasons for the removal of his money and for committing “unfair and deceptive trade practices in violation of § 13-303.” The court emphasized that the purpose of the MCPA is to protect the consumer by setting minimum standards and to restore public confidence in merchants. Md. Code Ann., Com. Law § 13-303. In the instant case, however, Mr. Betskoff did not allege facts to indicate that the debt the Bank sought to collect was a “consumer debt” as defined under the MCPA, nor did he present case law establishing a bank’s duty to inform individuals depositing funds under the name of a third-party account holder of the ultimate fate of those funds. As such, the court dismissed Mr. Betskoff’s MCPA claim. Similarly, the court dismissed Mr. Betskoff’s allegation that the Bank violated 15 U.S.C. § 1666h of the Truth in Lending Act (TILA) by removing the deposited funds from the company’s account without his consent. It reasoned that the TILA did not apply to the account because there was no “consumer transaction” as defined by the statute. 15 U.S.C. § 1602(i).

With respect to Mr. Betskoff’s claim for conversion, the court found that although the Bank’s removal of $1,100 “was not previously agreed upon” by Mr. Betskoff, the account was owned by IIG; therefore, the Bank did not need Betskoff’s permission to transfer the funds. Rather, once Mr. Betskoff deposited funds into IIG’s account, he forfeited his right to those funds and his claim of wrongful conversion was dismissed.

Finally, the district court turned to Mr. Betskoff’s allegation that BOA’s conduct toward him amounted to intentional infliction of emotional distress. “To succeed on a claim for intentional infliction of emotional distress in Maryland, a plaintiff must demonstrate that the defendant intentionally or recklessly engaged in extreme and outrageous conduct that caused the plaintiff to suffer severe emotional distress.” Snyder v. Phelps, 131 S. Ct. 1207, 1215 (2011) (citing Harris v. Jones, 281 Md. 560, 565–66 (1977)) (emphasis added). Here, however, the court concluded that although Mr. Betskoff’s situation was “unfortunate,” the allegations against BOA were insufficient to prove that BOA’s conduct was “extreme and outrageous.” Therefore, the district court dismissed this claim as well as the other four (4) claims Mr. Betskoff asserted against BOA.