                         RECOMMENDED FOR FULL-TEXT PUBLICATION
                             Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                    File Name: 17a0158p.06

                  UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT



 MAJESTIC BUILDING MAINTENANCE, INC.,                  ┐
                              Plaintiff-Appellant,     │
                                                       │
                                                        >      No. 16-4342
       v.                                              │
                                                       │
                                                       │
 HUNTINGTON BANCSHARES INCORPORATED, d/b/a The         │
 Huntington National Bank,                             │
                            Defendant-Appellee.        │
                                                       ┘

                        Appeal from the United States District Court
                       for the Southern District of Ohio at Columbus.
                   No. 2:15-cv-03023—James L. Graham, District Judge.

                                   Argued: June 21, 2017

                             Decided and Filed: July 20, 2017

                  Before: SILER, CLAY, and McKEAGUE, Circuit Judges.
                                  _________________

                                        COUNSEL

ARGUED: Troy J. Doucet, DOUCET & ASSOCIATES, CO., L.P.A., Dublin, Ohio, for
Appellant. Lisa M. Ghannoum, BAKER & HOSTETLER LLP, Cleveland, Ohio, for Appellee.
ON BRIEF: Troy J. Doucet, Zachary T. Donovan, DOUCET & ASSOCIATES, CO., L.P.A.,
Dublin, Ohio, for Appellant. Lisa M. Ghannoum, Brett A. Wall, Kenneth G. Prabucki, BAKER
& HOSTETLER LLP, Cleveland, Ohio, for Appellee.
                                    _________________

                                         OPINION
                                    _________________

      CLAY, Circuit Judge. Plaintiff Majestic Building Maintenance, Inc., appeals from the
order entered by the district court granting the motion to dismiss of Defendant Huntington
 No. 16-4342         Majestic Building Maintenance v. Huntington Bancshares Inc.          Page 2


Bancshares, Inc., d/b/a The Huntington National Bank, thereby dismissing all of Plaintiff’s
claims against Defendant for violating the Uniform Commercial Code, U.C.C. §§ 4-103(a), 4-
401, codified as Ohio Revised Code, O.R.C. §§ 1304.03, 1304.30, whereby Defendant refused to
assume liability for monies paid out of Plaintiff’s bank account on four fraudulent checks.

       For the reasons that follow, we REVERSE the district court’s order of dismissal and
REMAND with instructions to allow Plaintiff an opportunity to amend the complaint and
conduct discovery.

                                         BACKGROUND

A. Factual History

       Plaintiff specializes in commercial cleaning services.      In November 2010, Plaintiff,
through its president, Luther McNeil (“McNeil”), opened a business checking account with
Defendant and received a “Master Services Agreement” (“Agreement”) that contained the rules
and regulations for business accounts. The section of the Agreement at issue in this case states:

       [W]e have available certain products designed to discover or prevent unauthorized
       transactions, including unauthorized checks and ACH debits, forgeries, and
       alterations (all such activities referred to as “fraud”). While no such product is
       foolproof, we believe that the products we offer will reduce the risk of loss to you
       from fraud. You agree that if your account is eligible for those products and you
       choose not to avail yourself of them, then we will have no liability for any
       transaction that occurs on your account that those products were designed to
       discover or prevent, nor will we have any duty to re-credit your account for any
       such losses.

(R. 1-1, Agreement, Page ID # 35.) McNeil opened the account at a computer repair shop with
assistance from a representative of Defendant. At the time McNeil opened the account, he was
not given a signed copy of the Agreement, nor was he advised of the details contained in the
Agreement, including the nature of the fraud prevention services offered by Defendant. After
opening the account, McNeil ordered hologram checks from a third party as a protective measure
to avoid fraudulent activity on Plaintiff’s account.
 No. 16-4342         Majestic Building Maintenance v. Huntington Bancshares Inc.                      Page 3


        On November 24, 2014, McNeil noticed four unauthorized checks that had been debited
from Plaintiff’s account totaling $3,973.96.1           The unauthorized checks did not contain the
hologram that McNeil ordered for Plaintiff’s business account checks, and the check numbers on
the fraudulent checks were duplicative of checks that Plaintiff had already written and that
Defendant had properly paid. Within 24 hours of discovering the fraud, McNeil contacted
Defendant to request reimbursement for the fraudulent checks debited from Plaintiff’s account.
Defendant responded in a letter stating that “reasonable care was not used in declining to use our
Check Positive Pay/Reverse Positive Pay services, which substantially contributed to the making
of the forged item(s),” and that “[a]s a result, we will not reimburse you for these
unauthorized/forged item(s).” (R. 1-4, First Huntington Letter, Page ID # 46.)

        Plaintiff then hired an attorney who sent another letter to Defendant and submitted
complaints to the Federal Reserve and the Federal Deposit Insurance Corporation (“FDIC”) in
December 2014 and February 2015. As a result of the complaints, the Office of the Comptroller
of the Currency (“OCC”) was contacted, and the OCC contacted Defendant regarding the
allegations in the complaints. On March 17, 2015, Defendant sent a second letter to Plaintiff,
reiterating that Defendant “will have no liability for any transaction that occurs on [Plaintiff’s]
account” due to the fact that Plaintiff did not avail itself of the products and services designed to
discover or prevent the type of fraudulent activity that occurred on Plaintiff’s account. (R. 1-7,
Second Huntington Letter, Page ID # 54.) On April 15, 2015, the OCC sent a letter to Plaintiff
stating that it would not intervene in a private party dispute where the dispute involves the
interpretation and enforcement of a contract.

B. Procedural History

        On November 20, 2015, Plaintiff filed a putative class action complaint in district court
pursuant to the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d), alleging that
Defendant: (1) breached its obligations under U.C.C. § 4-401, codified at O.R.C. § 1304.30(A),
when it made unauthorized payments from four fraudulent checks that were not properly
payable; and (2) unreasonably shifted all liability to Plaintiff and improperly disclaimed its
        1
          Plaintiff’s counsel stated at oral argument that the perpetrator personally took the four unauthorized
checks to a teller window at one of Defendant’s branches and the teller immediately cashed the checks.
 No. 16-4342       Majestic Building Maintenance v. Huntington Bancshares Inc.             Page 4


responsibility to act in good faith and exercise ordinary care by incorporating such terms and
standards into the Agreement, in violation of U.C.C. § 4-103(a), codified at O.R.C.
§ 1304.03(A). On January 19, 2016, Defendant moved to dismiss the complaint for failure to
state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). On February 19, 2016,
Plaintiff responded, and on March 7, 2016, Defendant replied to Plaintiff’s response.

       On November 3, 2016, the district court granted Defendant’s motion to dismiss. The
district court held that Defendant is not liable for the loss associated with the cashing of the
unauthorized checks on Plaintiff’s account because the Agreement does not violate § 1304.03(A)
or § 1304.30(A). The district court concluded that the Agreement is not manifestly unreasonable
and does not absolve Defendant of its duties to act in good faith and exercise ordinary care
because several provisions in the Agreement “plainly reaffirm [Defendant’s] duties to act in
good faith and exercise ordinary care.” (R. 19, District Court’s Order, Page ID # 162.) The
district court thus found that the terms and conditions of the Agreement which shifted liability to
Plaintiff for any fraudulent activity occurring on its account did not violate § 1304.03(A) or §
1304.30(A), and pursuant to the Agreement, Defendant was not liable for Plaintiff’s loss. On
November 23, 2016, Plaintiff timely appealed.

                                          DISCUSSION

A. Standard of Review

       We review de novo the district court’s dismissal of Plaintiff’s complaint for failure to
state a claim. Ass’n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548
(6th Cir. 2007). We must accept the factual allegations in the complaint as true and construe the
complaint in the light most favorable to the plaintiff. Hill v. Blue Cross & Blue Shield of Mich.,
409 F.3d 710, 716 (6th Cir. 2005). We may affirm the district court’s dismissal of the plaintiff’s
claims on any grounds present in the record, including grounds not relied upon by the district
court. In re Comshare, Inc. Sec. Litig., 183 F.3d 542, 548−49 (6th Cir. 1999).

       To survive a motion to dismiss, the plaintiff must allege facts that if accepted as true, are
sufficient to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555 (2007). “A claim has facial plausibility when the plaintiff pleads factual
 No. 16-4342       Majestic Building Maintenance v. Huntington Bancshares Inc.            Page 5


content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

B. Analysis

       Plaintiff argues that Defendant violated § 1304.03(A) by disclaiming all responsibility
through its Agreement. Section 1304.03(A) provides that parties may vary the default provisions
of the Ohio Revised Code by agreement only if that agreement does not disclaim a bank’s
responsibility to act in good faith and exercise ordinary care. Plaintiff further argues that
Defendant violated § 1304.30(A) by charging Plaintiff for four unauthorized checks. Section
1304.30(A) provides that a bank may charge a customer’s account for an item that is properly
payable from that account. Conversely, Defendant argues that it is not liable for the fraud on
Plaintiff’s account because the Agreement does not disclaim Defendant’s duties to act in good
faith and exercise ordinary care.

       The record indicates that the provision at issue in the Agreement might improperly
disclaim Defendant’s basic responsibility to act in good faith and exercise ordinary care.
We find that the complaint sufficiently states a claim to survive Defendant’s motion to dismiss.

           1. Relevant Legal Principles

       Chapter 1304 of the Ohio Revised Code, Ohio’s version of the Uniform Commercial
Code, governs the relationship between banks and depositors. The default rule states that
“[a] bank may charge against the account of a customer an item that is properly payable from
that account.” O.R.C. § 1304.30(A). “An item is properly payable if it is authorized by the
customer and is in accordance with any agreement between the customer and bank.” O.R.C.
§ 1304.30(A). “An item containing a forged drawer’s signature or forged indorsement is not
properly payable.” U.C.C. § 4-401, cmt. 1. The default rule, however, may be varied by the
parties pursuant to an agreement.

       Section 1304.03(A) explains that “[t]he effect of the provisions of this chapter may be
varied by agreement, but the parties to the agreement cannot disclaim a bank’s responsibility for
 No. 16-4342       Majestic Building Maintenance v. Huntington Bancshares Inc.             Page 6


its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the
lack or failure.” Notwithstanding, “the parties may determine by agreement the standards by
which the bank’s responsibility is to be measured if those standards are not manifestly
unreasonable.” O.R.C. § 1304.03(A). In other words, “regardless of the terms and conditions of
the parties’ contractual relationship . . . Huntington cannot remove by contract its statutory duty
to act in good faith and to exercise ordinary care toward its depositors.” Alotech, Ltd. v.
Huntington Nat’l Bank, No. 1:13-cv-01971, 2014 WL 281973, at *4 (N.D. Ohio Jan. 14, 2014).
Thus, if a bank attempts to contract out of their duty of ordinary care, then such an attempt would
be considered manifestly unreasonable.

           2. Sufficiency of Plaintiff’s Allegations

       The provision at issue, which is buried towards the end of the Agreement, refers to
nondescript products Defendant has available in order to reduce the risk of fraud on a customer’s
account.   The provision goes on to completely absolve Defendant of all liability for any
fraudulent transaction that occurs on the customer’s account that the anti-fraud products “were
designed to discover or prevent” so long as the customer’s account is eligible for such products
and the customer voluntarily chose not to enroll in the products. (R. 1-1, Agreement, Page ID
# 35.) The contested provision does not specify the types of products offered, what type of fraud
would be prevented and/or discovered, how an account becomes eligible, whether the customer’s
account is eligible, or how much the products would cost the customer. Plaintiff argues that
Defendant violated § 1304.03(A) by attempting to absolve itself of its duties to exercise ordinary
care and act in good faith by inserting the contested provision into the Agreement.

       The district court dismissed Plaintiff’s contention on the basis that other provisions in the
Agreement “plainly reaffirm [Defendant’s] duties to act in good faith and exercise ordinary
care.” Majestic Building Maintenance, Inc. v. Huntington Bancshares, Inc., No. 2:15-cv-3023,
2016 WL 6525387, at *3 (S.D. Ohio Nov. 3, 2016). For instance, the district court noted that the
Agreement’s “Limitation of Liability” section provides that Defendant “will use ordinary care in
performing such Services and with processing Transactions,” and that Defendant’s “liability
relating to any Service or Transaction shall be limited to actual proven damages sustained by
Company arising directly from Bank’s own gross negligence or willful misconduct.” (R. 1-1 at
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19.)    The district court thus concluded that because other provisions in the Agreement
purportedly acknowledge Defendant’s duties of ordinary care and good faith, the provision at
issue does not run afoul of § 1304.03(A).

        We find that the district court erroneously and prematurely dismissed Plaintiff’s putative
class action complaint. First and foremost, Plaintiff properly alleged that the provision at issue
violates § 1304.03(A) because it unreasonably disclaims Defendant’s basic duties of ordinary
care and good faith. In order to survive Defendant’s motion to dismiss, Plaintiff must allege that
the standards regulating Defendant’s responsibility to monitor Plaintiff’s account for fraudulent
activity were manifestly unreasonable. See O.R.C. § 1304.03(A). The standards regulating such
conduct are discussed in the contested provision of the Agreement. (See R. 1-1, Agreement,
Page ID # 35.) Plaintiff states a plausible claim that such standards are unreasonable; Plaintiff
contends that the contested provision essentially allows Defendant to proclaim that it is not
responsible for any unauthorized transaction that occurs on Plaintiff’s account.

        Defendant does not appear to dispute that it charges the customer additional fees for these
extra anti-fraud protection services. Despite charging these extra fees, Defendant does not
indicate in the Agreement that these anti-fraud products cost extra, what the costs of these
products would be to the customer, and how the costs are calculated (i.e., whether the costs are
different for each customer depending on the type of account, etc.). Left unanswered by the
record below is whether, by charging the customer additional fees for these anti-fraud protection
services, Defendant is effectively charging the customer for something it should arguably do at
no additional cost—which is to exercise its ordinary duty of care.2

        Defendant argues that it “limited its liability only for those unauthorized transactions that
the anti-fraud products were designed to detect and prevent, and only if the customer failed to


        2
           Defendant contends that the district court did not err in granting the motion to dismiss because Plaintiff
did not allege anything about the cost of implementing the anti-fraud products, thus we should not consider the issue
of Defendant’s lack of disclosure about the cost of these products. Defendant’s counsel admitted at oral argument
that these products do cost extra and that the customer incurs those extra costs. However, Defendant’s counsel did
not know how much Plaintiff would have to pay if it were to avail itself of these anti-fraud products.
Notwithstanding, the fact that this allegation was not expressly mentioned in the complaint constitutes an additional
reason why the district court prematurely dismissed the complaint without giving Plaintiff an opportunity to amend
or pursue discovery.
 No. 16-4342       Majestic Building Maintenance v. Huntington Bancshares Inc.             Page 8


avail itself of those products.” (Def.’s Appellate Br. 18.) This contention is unpersuasive at this
stage of the litigation given the practical effect of the provision. The provision, as mentioned
above, exculpates Defendant from liability for all fraudulent transactions that occur on a
customer’s account as long as: (1) the customer’s account was eligible for the anti-fraud products
and the customer did not sign up for them; and (2) the transaction is one which the anti-fraud
products “were designed to discover or prevent.” (R. 1-1 at 35.)

       Nowhere in the Agreement are the details of the anti-fraud products mentioned, nor is
there any information on how or who determines what transactions would arguably have been
detected. Given the bank customer’s lack of information about the anti-fraud products, such a
one-sided determination could be incredibly arbitrary.        Defendant could argue that every
fraudulent transaction would have been discovered or prevented by the anti-fraud products even
though there is no procedure for a customer, like Plaintiff, to be involved in or contest that
determination. Based on the record before us, we find that Plaintiff states a plausible claim that
it was unreasonable for Defendant to absolve itself from liability for any fraudulent transaction
that occurs on a customer’s account when the anti-fraud products cost extra, the nature of the
anti-fraud products is not revealed, and when the determination of what unauthorized
transactions would have been discovered or prevented is left unexplained.

       It is important to note that we are not making a determination on the merits of whether
the contested provision is “manifestly unreasonable.” See O.R.C. § 1304.03(A). The district
court dismissed the complaint on a motion to dismiss without giving Plaintiff the opportunity to
amend its complaint or an opportunity for the parties to conduct any significant discovery. The
primary cases that both parties cite in their briefs are cases in which the district courts ruled on
motions for summary judgment, after having given the parties a chance to conduct proper
discovery. See Cumis Ins. Society v. Girard, 522 F. Supp. 414 (E.D. Pa. 1981) (holding that the
agreement between the bank and the commercial customer relating to forged checks and the
bank’s limited liability contained conflicting interpretations which indicated that the bank failed
to establish immunity from liability under Pennsylvania law); see also Cincinnati Ins. Co. v.
Wachovia Bank, Nat’l Ass’n, No. 08-cv-2734, 2010 WL 2777478 (D. Minn. July 14, 2010)
(holding that agreement which transferred liability to customer for failure to implement bank’s
 No. 16-4342       Majestic Building Maintenance v. Huntington Bancshares Inc.             Page 9


fraud detection program was not manifestly unreasonable under Pennsylvania law because it was
undisputed that program would have discovered fraud and customer did not argue that fraud
would have occurred even if bank had exercised basic duty of ordinary care). These cases are
thus not helpful to us at this stage in the proceedings since these decisions are based on facts not
developed in this case, the courts interpreted Pennsylvania law rather than Ohio law, and the
parties had the benefit of discovery whereas the parties in this case have not had the opportunity
to conduct significant discovery.

       Secondly, the district court’s brief analysis of the other provisions in the Agreement was
unnecessary. Plaintiff’s dispute was not with the other provisions in the Agreement that the
district court discussed in its opinion. The complaint specifically challenged the provision
related to Defendant’s fraud prevention services and that provision’s absolute disclaimer of
liability. The district court dismissed the complaint primarily because other unrelated provisions
of the Agreement “plainly reaffirm[ed]” Defendant’s duties to exercise ordinary care and act in
good faith. It is irrelevant whether other parts of the agreement “plainly reaffirm” Defendant’s
basic duties; and by so holding, the district court failed to review and properly analyze the
provision being challenged. Again, Plaintiff states a plausible claim that it is unreasonable for
the provision at issue to disclaim Defendant’s basic duties if the customer does not enroll in and
pay extra for the unspecified fraud prevention services.

       Third, some of the district court’s findings are not supported by the record. The district
court held that Plaintiff’s complaint fails to survive Defendant’s motion to dismiss because the
complaint did not “contain specific allegations that the terms and conditions by which
[Defendant] provided fraud prevention services were manifestly unreasonable.”              Majestic
Building Maintenance Inc., 2016 WL 6525387, at *4. The district court stated that “[t]he
complaint does not allege that [Defendant] breached its duties in processing the four forged
checks.” Id. at *4. This holding is erroneous.

       Under the allegations pertaining to Count I, paragraph 99 of the complaint alleges that
Defendant “breached its obligation to Plaintiff under the UCC when it made unauthorized
payments and charged $3,973.96 against Plaintiff’s account upon a fraudulent presentment of the
altered checks.” (R. 1, Compl., ¶ 99, Page ID # 15.) The complaint identifies the bases for
 No. 16-4342       Majestic Building Maintenance v. Huntington Bancshares Inc.             Page 10


Defendant’s breach by specifically alleging that the four unauthorized checks “were obviously
altered, out of sequence, and did not match Plaintiff’s typical checks.” (Id.) Contrary to what
the district court found, we find that the language in the complaint expressly alleges that
Defendant breached its duties to Plaintiff when it credited the four forged checks against
Plaintiff’s account.

       Further, the district court misstated the record when it found that the complaint does not
“contain specific allegations that the terms and conditions by which [Defendant] provided fraud
prevention services were manifestly unreasonable.” 2016 WL 6525387, at *4. Given that
Plaintiff’s main contention is with the terms and conditions by which Defendant notified
customers of its fraud prevention services, this finding by the district court was erroneous.

       Moreover, the district court could not have expected Plaintiff to provide too much detail
about the fraud prevention services given that the case was dismissed prior to discovery being
completed and without an opportunity for Plaintiff to amend the complaint. In fact, we are still
unaware of the specifics pertaining to Defendant’s fraud prevention services, how much these
services would cost, and whether Plaintiff’s account was eligible for such services. The district
court contended that Plaintiff does not dispute that its account was eligible for the fraud
prevention service “Check Positive Pay” and that this fraud prevention service “was designed to
discover or prevent the type of loss suffered by” Plaintiff. Id. at *4. Nevertheless, we were
unable to find in the record where Plaintiff admits that its account was eligible for this fraud
prevention service and that Defendant’s Check Positive Pay service would have caught the fraud
on Plaintiff’s account.

       Nowhere in Plaintiff’s complaint or response to Defendant’s motion to dismiss is it
clearly indicated that these facts are undisputed. We do note a statement in Plaintiff’s brief on
appeal that could arguably indicate that Defendant’s Check Positive Pay service would have
caught the fraud. In its brief, Plaintiff stated that “[a]ny exercise of ordinary care by Huntington
would have caught these forgeries.” (Pl.’s Appellate Br. 16.) This statement is not definitive for
two reasons. First, this statement was made after the district court issued its order, so it was not
in the record when the district court made its finding that this fact was undisputed. More
importantly, Plaintiff’s response to the motion to dismiss expressly states that “there is no way to
 No. 16-4342         Majestic Building Maintenance v. Huntington Bancshares Inc.           Page 11


know whether [Plaintiff’s] account was in fact ‘eligible’ because that term is not defined in the
Agreement, nor is there any reference to any other section or document elaborating on what
‘eligible’ means.” (R. 10, Pl.’s Resp. to Mot. to Dismiss, Page ID # 103.) At oral argument,
Plaintiff’s counsel asserted that Plaintiff had never admitted these facts to be undisputed.

                                         CONCLUSION

       In conclusion, we find that Plaintiff has alleged facts that, if accepted as true, would be
sufficient to state a claim to relief that is plausible on its face. Plaintiff’s contention is quite
simple: the provision at issue improperly disclaims Defendant’s duties to act in good faith and
exercise ordinary care.     We find that Plaintiff states a plausible claim that the provision
unreasonably disclaims all liability under the circumstances of this case. Because the U.C.C.,
and by implication the O.R.C., expressly forbids a bank from disclaiming all of its liability to
exercise ordinary care and good faith, Plaintiff’s complaint survives Defendant’s motion to
dismiss. Therefore, we hold that the district court erred in dismissing Plaintiff’s complaint.

       For the foregoing reasons, we REVERSE the district court’s order of dismissal and
REMAND with instructions to allow Plaintiff an opportunity to amend the complaint and
conduct discovery.
