Kenneth Wallace, ex rel. DMT, LLC v. Truist Bank

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 21-2380
KENNETH WALLACE, ex rel. DMT, LLC,
Plaintiff - Appellant,
v.
TRUIST BANK,
Defendant - Appellee,
and
EDDIE R. HUGHES, JR.,
Defendant.
Appeal from the United States District Court for the Eastern District of Virginia, at
Alexandria. Leonie M. Brinkema, District Judge. (1:21-cv-00838-LMB-IDD)
Submitted: June 28, 2022 Decided: July 6, 2022
Before KING, WYNN, and HARRIS, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ON BRIEF: Laurin H. Mills, Mansitan M. Sow, SAMEK, WERTHER & MILLS, LLC,
Alexandria, Virginia, for Appellants. Mary Zinsner, Elizabeth M. Briones, TROUTMAN

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PEPPER HAMILTON SANDERS, LLP, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
Kenneth Wallace, who filed the underlying complaint derivatively on behalf of
DMT, LLC, appeals the dismissal of his complaint against Truist Financial Corporation.
The complaint alleged breach of contract and statutory business conspiracy. Specifically,
Wallace alleged that his business partner opened a bank account on behalf of DMT at a
Truist branch. Wallace averred that the partner did not have the authority to open such
account and that the partner then used the account to defraud and otherwise harm DMT.
We affirm.
We review an order granting a Fed. R. Civ. P. 12(b)(6) motion de novo. King v.
Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016). “To survive a motion to dismiss, 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
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Bare legal conclusions are not
entitled to the assumption of truth and are insufficient to state a claim.” King, 825 F.3d at
214 (internal quotation marks omitted).
Wallace first asserts that, while there is no specific provision of DMT’s and Truist’s
deposit agreement that supports his breach of contract claim, he nonetheless properly
pleaded a breach of contractual duties under Title 8.4 of the Virginia Uniform Commercial
Code (“UCC”). The district court ruled that Wallace failed to either identify the breached
portion of the contract or assert a UCC statutory claim. Further, the court determined that
Wallace could not use the UCC to somehow create a contractual obligation.

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Wallace did not plead a statutory claim under the UCC, and he did not seek
permission to amend either in district court or on appeal to add such a claim. In addition,
he admits that his breach of contract claim is not based on the deposit agreement. Thus,
Wallace’s claim and appeal rest on his assertions that the UCC creates contractual duties
between a customer and a bank.
Title 8.4 of Virginia's UCC “establishes the rights and duties between banks and
their customers with regard to deposits and collections.” Nat’l Title Ins. Corp. v. First
Union Nat’l Bank, 559 S.E.2d 668, 670 (Va. 2002). The UCC preempts any common law
claims inconsistent with its provisions. Collins v. First Union Bank, 272 Va. 744, 749-50
(2006). However, claims brought pursuant to the UCC are statutory claims, not contract
causes of action. See American Title Ins. v. Burke & Herbert Bank & Trust, 813 F. Supp.
423, 429 n.7 (E.D. Va. 1993), aff’d, 25 F.3d 1038 (4th Cir. 1994).
Moreover, even if a UCC claim sounded in contract, Wallace does not specifically
cite the portions of the UCC that were allegedly breached; instead, his complaint cites only
to the definition of “customer,” arguing that DMT was Truist’s customer to whom certain
duties were owed. See Va. Code Ann. § 8.4-104(a)(5). However, the statutory definition
does not describe any duties and responsibilities; it merely states that a customer is “a
person having an account with a bank or for whom a bank has agreed to collect items.” Id.
As such, even if a claim under the UCC could sound in contract, Wallace has failed to
plead a breach of contract.
Next, the district court denied Wallace’s statutory business conspiracy claim
because there was not a sufficient allegation of malice. To recover in an action for business

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conspiracy, a plaintiff must establish: “(1) a combination of two or more persons for the
purpose of willfully and maliciously injuring plaintiff in his business[;] and (2) resulting
damage to plaintiff.” Dunlap v. Cottman Transmission Sys., 754 S.E.2d 313, 317 (Va.
2014). “It is not necessary for a plaintiff to prove that the defendant conspirators acted
with actual malice, i.e., ill-will, hatred, or spite directed toward the plaintiff.” Id. “Rather,
a plaintiff must establish by clear and convincing evidence only that the conspirators acted
with legal malice, i.e., intentionally, purposely, and without lawful justification.” Id.
(internal quotation marks omitted).
We agree that Wallace failed to adequately allege malice. That is, the complaint did
not sufficiently allege that Truist acted intentionally or purposefully. See Rogers v. Deane,
992 F. Supp.2d 621, 635 (E.D. Va. 2021) (noting that plaintiff must show that defendant
“intended to hurt her business”). Here, Wallace alleged that Truist failed to investigate
Wallace’s business partner’s representations upon opening an account on behalf of DMT
and failed to take action after Wallace informed Truist that the account was unauthorized
and being used for fraudulent purposes. While Wallace does conclusorily allege that
“Truist acted intentionally, purposefully, and without lawful justification” because it
wanted “DMT’s business,” (J.A. 34), Wallace alleges no facts from which it could be
inferred that Truist acted intentionally to harm DMT or even that Truist was willfully blind
to the partner’s misdeeds in order to keep DMT’s business. See Skillstorm, Inc. v.
Electronic Data Sys., 666 F. Supp.2d 610, 618-19 (E.D. Va. 2009) (granting motion to
dismiss in face of allegations that defendant acted to “willfully and maliciously injure”
plaintiff’s business because there was no factual support for the allegation); Schlegel v.

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Bank of America, 505 F. Supp.2d 321, 329 (W.D. Va.) (holding that business conspiracy
must be pleaded “with particularity” in order to prevent every business dispute from
becoming a business conspiracy), aff’d, 258 F. App’x 543 (4th Cir 2007). Because the
complaint failed to properly allege that Truist acted knowingly with the intent to harm
DMT, the district court properly dismissed this claim.
Accordingly, we affirm. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials before this court and argument
would not aid the decisional process.
AFFIRMED

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