A Lakeview hotel business will not be allowed to press its class
action claim JP Morgan Chase should be held responsible for fraud perpetrated
by people using Chase’s mobile banking app to double-deposit checks, creating
legal and financial headaches for those issuing the checks.
On Aug. 3, U.S. District Judge Samuel Der-Yeghiayan tossed
the complaint brought late last year by plaintiff 1409 West Diversey
Corporation, which does business as the Bellwood Hotel in Chicago, against
According to that complaint, Chase’s mobile check capture
service, which allows customers to deposit checks remotely through the bank’s
smartphone app, also allows customers to deposit checks more than once.
As an example, the hotel related the tale of an employee who
in early 2014 deposited her $473 paycheck through the Chase app, but then also
cashed the check at a currency exchange. When the hotel company refused to honor
the checks, the currency exchange sued, forcing the business to spend more than
$2,000 to settle the matter in court.
Asserting such fraud is increasing and becoming commonplace,
the Bellwood Hotel operators had asked to expand the case to a class action
involving others who had been defrauded by people double-depositing checks
through Chase’s app.
The case had originally been filed in Cook County Circuit
Court, but was removed to federal court earlier this year.
And in this case, Judge Der-Yeghiayan said the Bellwood
Hotel group was asking too much of Chase under the law.
Der-Yeghiayan noted Chase and the hotel business have no
contractual relationship, and “under Illinois law, a bank such as Chase owes no
duty to a non-customer under circumstances such as in this case.”
Further, the judge said, if the bank has a cause for action
against anyone in connection with the double-deposit problems, any litigation
should be directed against the individuals, including its employees, seeking to
double-deposit the checks.
“Nothing in this ruling prevents the Hotel from pursuing
such a remedy against such an employee,” the judge wrote. “In addition, if the
Hotel faces a repetition of such conduct by its employees with Chase accounts
and the Hotel is dissatisfied with the services it receives, the Hotel can
always choose in this free market system to switch to a new bank.
“Neither the law nor equity supports creating a new common
law claim under the circumstances in this case to protect the Hotel from
potential fraud by its own employees.”
According to state corporation records, David S. Labunski is
listed as president of 1409 West Diversey Corporation. Labunski also is listed
as managing broker at Cedar Realty in Chicago.
1409 West Diversey Corporation was represented in the legal action
against Chase by attorneys Edward A. Berman
and Terrence Buehler, both of Chicago.
Chase was represented by the
firm of Greenberg Traurig, of Chicago.