Jacob Barak v. Mack Obioha

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
NO. 02-3555
__________
JACOB BARAK,
Appellant
v.
MACK OBIOHA; HANES MORGAN & CO.;
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
f/k/a CREDIT SUISSE FIRST BOSTON
HUDSON PROPERTIES, INC.;
INTEGRITY LIFE INSURANCE COMPANY;
HUDSON PROPERTIES, INC.
__________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 01-cv-03071)
District Judge: Honorable William G. Bassler
__________
Argued July 28, 2003
Before: SCIRICA, Chief Judge, RENDELL, and AMBRO, Circuit Judges.
(Filed: August 13, 2003 )
Thomas B. Fiddler, Esq. [ARGUED]
Cozen & O’Connor
1900 Market Street, The Atrium
Philadelphia, PA 19103
Counsel for Appellant

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1 Our jurisdiction over the District Court’s final order is based on 28 U.S.C. § 1291.
2
Stephen L. Ratner, Esq. [ARGUED]
Proskauer Rose
1585 Broadway
New York, NY 10036
- and -
David A. Picon, Esq.
Proskauer Rose
One Newark Center, 18th Floor
Newark, NJ 07102
Counsel for Appellee
Donaldson, Lufkin & Jenrette
Securities Corporation, f/k/a
Credit Suisse First Boston Hudson
Properties, Inc.
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OPINION OF THE COURT
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RENDELL, Circuit Judge.
Jacob Barak appeals the District Court’s grant of Donaldson, Lufkin and Jenrette
(“DLJ”)’s motion to dismiss. We will affirm the dismissal of Barak’s claims of violations
of the Uniform Commercial Code (“UCC”) and breach of fiduciary duty, but will reverse
and remand on his claims of negligence and breach of contract.1
As we write solely for the parties, to whom the facts are well known, our recitation
of the facts will be brief. In his complaint, Barak asserted causes of action for breach of
fiduciary duty, breach of contract, negligence, and UCC violations, all of which arose out
of a banking relationship in which a partnership, of which Barak was one of the partners,

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opened an account, and Barak was one of two required signatories. Funds deposited in
the account by Barak were later withdrawn without Barak’s signature.
The District Court granted a motion to dismiss filed by DLJ, and in so doing
considered certain documents while excluding others, namely Exhibits 3-10. The District
Court based its decision not to consider these exhibits on Eli Lilly & Co. v. Roussel Corp.,
23 F. Supp. 2d 460, 475 n.21 (D.N.J. 1998), in which it was noted that “unless a Court
converts a Rule 12(b)(6) motion into a motion for summary judgment pursuant to Fed. R.
Civ. P. 56, the court cannot consider material outside the pleadings (i.e. facts presented in
briefs, affidavits or exhibits).” Despite concluding that it would not consider certain
materials, the District Court nonetheless did take note of Exhibit 10, a declaration in
which Barak stated that in a phone conversation, Marie Wayland, a DLJ representative,
had “represented” to him that two signatures would be required to withdraw funds from
the partnership account. The court concluded that a “single telephone call does not
establish” a relationship giving rise to tort liability.
Under Federal Rule of Civil Procedure 12(b)(6), a complaint will be dismissed on
the pleadings if it appears beyond a doubt that the plaintiff will be unable to prove any set
of facts consistent with the allegations of a claim that would entitle him to relief. Conley
v. Gibson, 355 U.S. 41, 48 (1957); Steamfitters Local Union No. 420 Welfare Fund v.
Phillip Morris, Inc., 171 F.3d 912, 919 (3d Cir. 1999). In deciding a motion to dismiss
for failure to state a claim, all allegations contained in the complaint must be accepted as

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true, and the plaintiff must be given the benefit of every favorable inference that can be
drawn from the allegations contained therein. Id. Our review of the District Court’s
decision to grant a motion to dismiss is de novo. Fed. R. Civ. P. 12(b)(6); Emerson v.
Thiel College, 296 F.3d 184, 188 (3d Cir. 2002). Subject matter jurisdiction over this
case is premised on diversity, 28 U.S.C. § 1332(a)(1), and the applicable state law is New
Jersey’s. Therefore, the District Court was required to predict what the New Jersey
Supreme Court would do under the same circumstances. Hakimaglu v. Trump Taj Mahal
Ass’n, 70 F.3d 291, 292-293 (3d Cir. 1995).
We will first address Barak’s claims of negligence and breach of contract, neither
of which is specifically premised on Barak’s being a “customer” of DLJ as that term is
defined under the UCC. The New Jersey Supreme Court has recently spoken to the issue
of when a financial institution may be liable in negligence to a non-customer. See City
Check Cashing Inc., v. Mfr.’s Hanover Trust Co., 764 A.2d 411 (N.J. 2001). City Check
Cashing teaches that the specific facts surrounding the relationship between a plaintiff
and a bank must be carefully examined, because they could give rise to a special
relationship, which may, in turn, give rise to a duty. Id. at 417. In that case, a check-
cashing service brought a negligence action against a bank to recover for the untimely
dishonor of a purportedly certified check. Id. at 411. The check-cashing service’s
employee had spoken by telephone to a bank’s employee to inquire if the check was
authentic, and later faxed the check to the bank requesting further information. Id. at 413.

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2 The court defined these as follows: “An agreement is essentially a meeting of the minds
between two or more parties on a given proposition. [citation omitted]. An undertaking is
the willing assumption of an obligation by one party with respect to another or a pledge to
take or to refrain from taking particular action. [citation omitted]. A contact is the
loosest of the three terms, defined as the “establishment of communication with
someone.” [citation omitted].” City Check Cashing, 764 A.2d at 418.
5
After not hearing from the bank, the check-cashing service cashed the check, which was
later returned unpaid. Id. The court held that, based on these facts, the bank did not owe
a duty to the check-cashing service. Id. at 419. However, in so holding, the court noted
that “the question of whether a duty exists is a matter of law to be decided by the courts,”
and is “an inquiry that ultimately involves a weighing of the relationship of the parties,
the nature of the risk, and the public interest” involved. Id. at 416. The court also
acknowledged that in the banking context a special relationship may be created by facts
that could establish any “agreement, undertaking or contact,” 2 between the bank and the
plaintiff. Id. at 418.
Similarly, the question of whether a contract exists between two parties is fact-
specific. Under New Jersey law, an enforceable contract is created when two parties
“agree on essential terms and manifest an intention to be bound by those terms.”
Weichert Co. Realtors v. Ryan, 608 A.2d 280, 284 (N.J. 2002). Such agreement may be
evidenced by an express written document or implied from the parties’ conduct and the
surrounding circumstances. Id.; see also Troy v. Rutgers, 774 A.2d 476, 482 (N.J. 2001)
(“The modern view is that, ‘[j]ust as assent may be manifested by words or other conduct,

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. . . so intention to make a promise may be manifested in language or by implication from
other circumstances.’”) (quoting Restatement (Second) of Contracts § 4 cmt. a (1981)).
In addition, the acceptance of mutual obligations must be accompanied by consideration,
which need be nothing more than a “very slight advantage to one party, or a trifling
inconvenience to the other.” Martindale v. Sandvik, Inc., 800 A.2d 872, 879 (N.J. 2002).
Given the fact pattern before us, we conclude that it was premature to dismiss
Barak’s complaint for negligence and breach of contract on DLJ’s motion. The District
Court should have permitted the parties to engage in discovery to develop more fully the
facts surrounding the relationship between Barak and DLJ. It is possible that further
evidence of what transpired between Barak and DLJ might evince some relationship that
gives rise to a duty or reveal the parties’ intent to form a contract regarding the necessity
of joint signatures. It cannot be said that Barak could prove no facts that would entitle
him to relief on those claims.
We will, however, affirm the dismissal of Barak’s UCC and breach of fiduciary
duty claims because there is no sufficient documentary or evidentiary basis to establish
that Barak was a “customer” as envisioned under the UCC, see N.J. Stat. Ann. § 12A:4-
104, or that Barak’s interaction with DLJ could give rise to the kind of unique, special
relationship that is fiduciary in nature. See United Jersey Bank v. Kensey, 704 A.2d 38,
44 (N.J. Super. Ct. App. Div. 1997) (“[T]here is no presumed fiduciary relationship
between a bank and its customer.”). American Insurance Co. v. Fidelity Bank & Trust

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Co. of New Jersey, 583 A.2d 361 (N.J. Super. Ct. App. Div. 1990), in which the New
Jersey Superior Court held that a bank was potentially liable to a surety company for
allowing funds to be withdrawn without its authorized signature, is not to the contrary, as
in that case there was an express “joint control agreement” between the surety company,
the account holder, and the bank, which is not present here.
Accordingly we will reverse the District Court’s dismissal of Barak’s negligence
and breach of contract claims, but will affirm the dismissal of his UCC and breach of
fiduciary duty claims, and remand for further findings consistent with this opinion.

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_______________________________
TO THE CLERK OF COURT:
Please file the foregoing opinion.
/s/ Marjorie O. Rendell
Circuit Judge

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