                             UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                             No. 07-1140



MELLON INVESTOR SERVICES, LLC,

                                               Plaintiff - Appellant,

           versus


LONGWOOD COUNTRY GARDEN CENTERS, INCORPORATED,

                                                Defendant - Appellee.

------------------------------

SECURITIES TRANSFER ASSOCIATION, INCORPORATED,

                                       Amicus Supporting Appellant.



Appeal from the United States District Court for the Middle
District of North Carolina, at Durham. James A. Beaty, Jr., Chief
District Judge. (1:06-cv-00440-JAB)


Argued:   December 6, 2007                 Decided:   February 6, 2008


Before WILLIAMS, Chief Judge, DUNCAN, Circuit Judge, and John
Preston BAILEY, United States District Judge for the Northern
District of West Virginia, sitting by designation.


Affirmed in part, reversed in part, and remanded by unpublished per
curiam opinion.


ARGUED: Charles Gordon Brown, BROWN & BUNCH, Chapel Hill, North
Carolina, for Appellant. Mark A. Harmon, HODGSON RUSS, L.L.P., New
York, New York, for Amicus Supporting Appellant.        Sean Eric
Andrussier, WOMBLE, CARLYLE, SANDRIDGE & RICE, P.L.L.C., Raleigh,
North Carolina, for Appellee. ON BRIEF: Scott D. Zimmerman, BROWN
& BUNCH, Chapel Hill, North Carolina, for Appellant.      Jack M.
Strauch, WOMBLE, CARLYLE, SANDRIDGE & RICE, P.L.L.C., Winston-
Salem, North Carolina, for Appellee.


Unpublished opinions are not binding precedent in this circuit.




                                2
PER CURIAM:

      Mellon Investor Services, LLC (“Mellon”) filed a complaint

against    Longwood   Country      Garden    Centers,    Inc.     (“Longwood”),

asserting    a   warranty   claim    under     Article   8   of    the   Uniform

Commercial Code (“U.C.C.”) (Count I), as well as one count of

negligent misrepresentation (Count II), one count of equitable

subrogation (Count III), and two counts of indemnity (Counts IV and

V).   The district court granted Longwood’s motion to dismiss under

Federal Rule of Civil Procedure 12(b)(6), concluding that the

warranty created by Article 8 of the U.C.C. did not bear on

Mellon’s    relationship    with    Longwood    and   that   the    U.C.C.   had

displaced Mellon’s equitable and common-law tort claims.1

      We affirm in part and reverse in part.             We conclude, as the

district court did, that Mellon has failed to state a claim under

Article 8 of the U.C.C.     On the other hand, we hold that the U.C.C.

does not displace Mellon’s equitable and common-law tort claims.

Turning to the merits of these claims, we conclude that Mellon has

stated claims for negligent misrepresentation and indemnity, but

not for equitable subrogation. Accordingly, we affirm the district

court’s dismissal of Counts I and III and reverse the court’s

dismissal of Counts II, IV, and V.




      1
      The district court adopted and affirmed the findings of the
United States Magistrate Judge. In speaking of the proceedings
below, we will only refer to the district court.

                                       3
                                         I.

       Mellon    is   a   New   Jersey       limited-liability   company      that

specializes in serving as a stock-transfer agent for publicly

traded companies. In 2001, Principal Financial Group, Inc. (“PFG”)

hired Mellon as its stock-transfer agent. In this capacity, Mellon

registered 48,961 uncertificated shares of PFG stock in the name of

the    L.A.    Reynolds    Company   Salaried      Employees’    Pension   Trust

(“Trust”).

       L.A. Reynolds Company created the Trust in 1959, the same year

that   the    company     established    a    defined-benefit    plan   for    its

employees.      The Trust terminated in the 1970s after it had paid all

of its debts and had made all terminating distributions to plan

participants.      Over the course of many years, and through a series

of transactions, the Trust’s undistributed assets were converted

into the 48,961 uncertificated shares of PFG at issue in this

appeal.       Eventually, these shares came to reside in the Fisher

River Timber Land & Cattle Company (“Fisher River”), a successor

corporation to the original L.A. Reynolds Company.               As the shares

of PFG stock changed hands, however, confusion arose as to their

ownership.      For instance, the address of the Trust was unknown, as

evidenced by the fact that dividend checks were mailed to the Trust

and returned in 2002 and 2003 because the mailing address was

invalid.




                                         4
     In April 2004, Michael Franklin Smith, a New York attorney,

acquired information about the uncertificated PFG stock, including

the confidential account key necessary to access the shares.2

Although Mellon’s complaint does not shed light on how Smith

acquired the account key, Smith describes how he acquired the key

in an affidavit submitted in this case.   According to Smith, he was

a personal and professional acquaintance of Mike Ryan, the manager

of Mellon’s unclaimed property department.   Ryan gave Smith copies

of numerous confidential Mellon documents relating to unclaimed PFG

shares held by Mellon in the hopes that Smith would help Mellon

locate the owners.    Among those confidential documents was a

“screen shot” image from Mellon’s computer system showing Mellon’s

internal account information regarding the Trust’s PFG stock,

including the account key.

     Through his efforts to locate L.A. Reynolds Company, Smith

came upon Longwood, a North Carolina corporation doing business as

L.A. Reynolds Company.     Previously, in 1991, Longwood purchased

substantially all of the assets of L.A. Reynolds Landscaping, Inc.,

a company formed in 1977 by Fisher River’s sole shareholder Jon

Reynolds and two other men, and began to operate under the name

“L.A. Reynolds Company.”     It is at this point that things became

messy, for Longwood’s “L.A. Reynolds Company” had no relationship



     2
      In this opinion, “Smith” refers to Michael Franklin Smith as
well as his law offices.

                                  5
to the original L.A. Reynolds Company.             Thus, Smith had not

actually found the true owner of the uncertificated PFG shares.

       Unaware that Fisher River was the successor to the original

L.A.    Reynolds   Company    (and   hence   the   true        owner   of   the

uncertificated     PFG   shares),    Smith   offered      to     recover    the

uncertificated PFG shares for Longwood for a fee equal to one-third

of the stock value recovered.        Longwood accepted the contingency

agreement and retained Smith as its lawyer to obtain and liquidate

the PFG shares.

       In June 2004, Smith contacted Mellon about the uncertificated

PFG shares.    Instead of communicating with his acquaintance Mike

Ryan, however, Smith dealt with David Spritzer, who handled stock

transfers for Mellon. After Smith provided the account key for the

Trust account, Spritzer confirmed the name of the registered owner

of the account as “The L.A. Reynolds Company Salaried Employees

Pension Trust” and asked Smith for proof of his authorization to

represent the registered owner.          Smith provided a copy of the

power-of-attorney that Longwood Chairman Gerald Long signed on

behalf of “L.A. Reynolds Company” (the name under which Longwood

was doing business).         This convinced Spritzer that Smith was

authorized to represent the rightful owner of the PFG shares.

       At this point, Longwood, through Smith, sent an instruction to

Mellon to register a transfer of the uncertificated PFG shares to

Longwood and to remit the proceeds of the liquidated shares to


                                     6
Longwood as well. Relying on Smith’s knowledge of the confidential

account key and documents verifying his power-of-attorney, Mellon

registered a transfer of the uncertificated PFG shares and issued

checks for the proceeds and unredeemed dividends, payable to the

Trust    in    care   of   Smith.     The    unredeemed    dividends   totaled

$34,272.70, and the net proceeds from the registration of the

transferred shares totaled $1,680,117.33.

     Once he received the funds, Smith paid himself the one-third

contingency fee out of the funds and wrote a check in the amount of

$1,148,641.32 to “L.A. Reynolds Company.”           He mailed the check to

Longwood, accompanied by a document describing the source of the

funds.        Upon receiving this check and accompanying document,

Longwood became concerned that the funds did not belong to it.

Longwood thus deposited the funds from the check into an escrow

account and contacted Jon Reynolds, owner of Fisher River, the

successor      to   the    original   L.A.   Reynolds     Company,   about   the

liquidation of the assets.

     Thereafter, Fisher River filed suit against Longwood, Gerald

Long, Smith, and Mellon for common-law negligence and conversion in

North Carolina state court.3          Fisher River dismissed Longwood and



     3
      When served with Fisher River’s complaint, Mellon contacted
PFG to determine if PFG would indemnify Mellon under their
indemnity agreement, which excluded indemnity for losses resulting
from Mellon’s own negligence. PFG declined to provide a defense or
to indemnify Mellon. To preserve its business relationship with
PFG, Mellon did not pursue any indemnity claims against PFG.

                                        7
Gerald Long from the suit after they transferred the escrow account

to Fisher River in exchange for Fisher River’s promise not to sue

them in the future, but Fisher River maintained its claims against

Mellon    and     Smith.4   Mellon   cross-claimed      against   Smith   and

impleaded Longwood into the suit as a third-party defendant.

Fisher River later amended its complaint to add a claim against

Mellon under U.C.C. § 8-404 (2005) for wrongful registration of

transfer,5 and the state court entered summary judgment in favor of

Fisher River on that claim.        Mellon paid the judgment in full.6

     After paying the state court judgment in full, Mellon brought

the present suit against Longwood in the Middle District of North

Carolina, alleging claims for breach of the originator’s warranty

under    U.C.C.    §   8-108(e)   (2005),   negligent   misrepresentation,

equitable subrogation, and indemnity.7         Longwood moved to dismiss


     4
      Despite Jon Reynolds’s personal plea to Smith asking him to
return his contingency fee, Smith refused, taking the position that
he had earned his fee.
     5
      Section 8-404(a)(1) of the U.C.C. provides that “an issuer is
liable for wrongful registration of transfer if the issuer has
registered a transfer of a security to a person not entitled to it,
and the transfer was registered . . . pursuant to an ineffective
endorsement or instruction.” U.C.C. § 8-404(a)(1) (2005).
     6
      The state court judgment required Mellon to pay Fisher River
$31,008 for proportional dividends due Fisher River and $1,685.94
in court costs.    The judgment also required Mellon to acquire
16,320 shares of common PFG stock (at a total cost of $806,014) and
transfer this replacement stock to Fisher River.
     7
      Section 8-108(e) of the U.C.C. provides that “[a] person who
originates an instruction for registration of transfer of an
uncertificated security warrants to the issuer that:      (1) the

                                      8
the complaint, and Mellon responded by obtaining an assignment of

all of PFG’s rights of recovery against Longwood for breach of its

originator’s   warranty;   thereafter   Mellon    moved   for   summary

judgment.

     The district court granted Longwood’s motion to dismiss,

concluding that the originator’s warranty under U.C.C. § 8-108(e)

did not run to a transfer agent and that the U.C.C. displaced

Mellon’s equitable and common-law claims.        Mellon noted a timely

appeal, and we have jurisdiction under 28 U.S.C.A. § 1291 (2006).



                                 II.

     On appeal, Mellon argues that the district court erred in

dismissing its U.C.C. claim and in ruling that the U.C.C. displaced

its equitable and common-law tort claims.         We review de novo a

decision dismissing a complaint under Rule 12(b)(6) for failure to

state a claim.     Glaser v. Enzo Biochem, Inc., 464 F.3d 474, 476

(4th Cir. 2006).   We must dismiss a complaint if it does not allege

“enough facts to state a claim to relief that is plausible on its

face.”   Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007).

In reviewing the district court’s dismissal under Rule 12(b)(6), we

must view as true all of Mellon’s well-pleaded allegations, and we




instruction is effective; and (2) at the time the instruction is
presented to the issuer the purchaser will be entitled to the
registration of transfer.” U.C.C. § 8-108(e).

                                  9
must draw all reasonable inferences in Mellon’s favor. Glaser, 464

F.3d at 476.

                                            A.

      This case requires us to consider the law as it relates to

the transfer of securities.              Under Delaware law,8 the rights and

relations of parties to a securities transfer are governed by

Delaware’s version of Article 8 of the Uniform Commercial Code,

Del. Code Ann. tit. 6, § 8-101 et seq. (2005) [hereinafter Article

8].       In   a    direct    holding      system      such   as   Delaware’s,9    the

registration of a transfer is the point at which ownership rights

of the prior registered owner end and the ownership rights of the

new   registered          owner   begin.      Registering      a   transfer   of    an

uncertificated security initially requires that the issuer of the

security receive an instruction to register the transfer of the

security.          Del.    Code   Ann.     tit.   6,   §   8-102(a)(12)   (defining


      8
      In this diversity action, we apply North Carolina’s
substantive law, including its choice-of-law rules. See Private
Mortgage Inv. Servs., Inc. v. Hotel & Club Assocs., Inc., 296 F.3d
308, 312 (4th Cir. 2002). The district court concluded that under
North Carolina choice-of-law provisions, Delaware law controls the
U.C.C. claim and New Jersey law controls the common-law tort
claims. Because neither party contests this determination, we need
not review it. Casio, Inc. v. S.M. & R. Co., 755 F.2d 528, 530-31
(7th Cir. 1985)(“Parties can within broad limits stipulate the
substantive law to be applied to their dispute, and that is what we
deem them to have done here by not objecting to the district
judge’s application of the substantive law of Illinois to their
dispute.”).
      9
      Because the PFG shares were registered directly with PFG
rather than a securities intermediary like a brokerage firm, the
direct holding system rules apply.
                                            10
“[i]nstruction” as “a notification communicated to the issuer of an

uncertificated security which directs that the transfer of the

security be registered or that the security be redeemed”). For the

instruction to be effective under the statute, the registered owner

of   the    uncertificated   security    (or   its    agent)   must    make    the

instruction.      Del. Code Ann. tit. 6, § 8-107(a),(b) (explaining

that “[a]n . . . instruction . . . is effective if . . . made by

the appropriate person” and defining an “[a]ppropriate person” as

“the registered owner of an uncertificated security”). Conversely,

an instruction is ineffective if the originator of the instruction

is not the security’s registered owner.

      If,    pursuant   to   an   ineffective        instruction      (i.e.,   an

instruction not from the registered owner), an issuer registers a

transfer of a security to a person not entitled to the security,

the issuer is liable to the registered owner of the uncertificated

security for wrongful registration of transfer.                Del. Code Ann.

tit. 6, § 8-404(a).     Likewise, the transfer agent, the person who

helped effectuate the transaction, is also liable to the registered

owner.     Del. Code Ann. tit. 6, § 8-407 (“A person acting as . . .

transfer agent . . . for an issuer in the registration of a

transfer of its securities . . . has the same obligation to the

holder or owner of a[n] . . . uncertificated security with regard

to the particular functions performed as the issuer has in regard

to those functions.”).


                                    11
     To shift any loss arising out of a wrongful registration of

transfer to the person who actually caused the loss (i.e., the

originator of the ineffective instruction), Article 8 provides that

certain warranties are made by the originator of the instruction.

Specifically,   “[a]   person   who   originates   an    instruction   for

registration of transfer of an uncertificated security warrants to

the issuer that: (1) the instruction is effective; and (2) at the

time the instruction is presented to the issuer the purchaser will

be entitled to the registration of transfer.”      6 Del. C. § 8-108(e)

(emphasis added).

                                  B.

     In this case, Mellon seeks to sue Longwood under Article 8 for

breach of the originator’s warranty.       To start our analysis, we

note that the following facts are undisputed:       PFG was the issuer

of the shares; Mellon was PFG’s transfer agent; the PFG shares were

an uncertificated security because they were registered only in

book entry form and no physical certificate existed, see Del. Code

Ann. tit. 6, § 8-102(a)(18) (defining “[u]ncertificated security”

as “a security that is not represented by a certificate”); and the

instruction from Longwood to PFG was ineffective because Longwood

was not the registered owner of the shares.             The central issue

presented here -- one that, to our knowledge, no federal or state

appellate court has addressed -- is whether the word “issuer” in

U.C.C. § 8-108(e) also includes transfer agents. The answer is no.


                                  12
     Section 8-108 does not define the term “issuer,” but the Notes

accompanying § 8-108(e) cross-reference the definition of “issuer”

in § 8-201.     Section 8-201(c) provides that “[w]ith respect to a

registration of a transfer, issuer means a person on whose behalf

transfer books are maintained.” Del. Code Ann. tit. 6, § 8-201(c).

     In the registration of transfer at issue, Mellon maintained

the transfer books on behalf of PFG.                 Thus, under the plain

language of the Delaware statute, Mellon, as a transfer agent,

cannot    be   an   “issuer”   for   purposes   of   §   8-108(e).   We   are

unpersuaded by Mellon’s arguments to the contrary and therefore

conclude that Mellon has failed to state a claim against Longwood

for breach of the originator’s warranty under § 8-108(e).10



                                     III.

                                      A.

     In an effort to save the remainder of its complaint, Mellon

alternatively contends that the provisions regarding the transfer

of securities in Article 8 have not displaced any equitable or

common-law tort claims it might assert against Longwood.             “Unless

displaced by the particular provisions of the Uniform Commercial

Code, the principles of law and equity . . . supplement its


     10
      To the extent that Mellon contends that PFG has “assigned”
all of its rights to Mellon so that Mellon stands in the place of
PFG as an issuer under Article 8, we agree with the district court
that PFG has sustained no liability, i.e., no injury, and thus has
no claim against Longwood to assign to Mellon.
                                      13
provisions.”      Del. Code Ann. tit. 6, § 1-103(b) (2005).          Our task,

therefore, is “to determine whether [Article 8 of the UCC] is a

‘particular provision’ that displaces the common law.”               Equitable

Life Assurance Soc’y of the U.S. v. Okey, 812 F.2d 906, 909 (4th

Cir. 1987).

       In this case, the district court first concluded that “[t]he

applicable UCC provisions in Article 8 provide a comprehensive

remedial scheme regarding the rights and obligations of those

persons and entities involved in the wrongful registration of

transfers of securities.”           (J.A. at 485.)           Pursuant to this

conclusion, the district court held that “even despite the fact

that [Mellon] as a transfer agent has no recourse under the

warranty provisions of section 8-108, [Mellon]’s right to common

law remedies has been displaced by Article 8’s comprehensive

remedial scheme.”         (J.A. at 485); see also Okey, 812 F.2d at 909

(indicating that specific provisions may displace common law when

the U.C.C. “comprehensively covers the field of legal theories

available”); Yahn & McDonnell, Inc. v. Farmers Bank of Del., 708

F.2d   104,   113   (3d    Cir.   1983)    (“[W]here   the   Code   provides   a

comprehensive remedy for parties to a transaction, a common law

action is barred.         But a remedy in tort will be recognized where

the Code’s policy is furthered by placing the risk of loss on the

party most able to minimize that risk.” (internal quotation marks

and    citation     omitted));    N.J.     Bank,   N.A.   v.   Bradford   Sec.


                                          14
Operations, Inc., 690 F.2d 339, 346 (3d Cir. 1982)(same in Article

8 context).

      We disagree with the district court’s conclusion on this

issue.       Insofar    as    Mellon    has    brought   claims   for    equitable

subrogation and common-law indemnity, there is a presumption that

the U.C.C. does not displace claims based in equity.11               Adkinson v.

Int’l Harvester Co., 975 F.2d 208, 213 (5th Cir. 1992) (“[W]ith

regard to equitable principles, the presumption appears to be

against displacement. . . . Code sections do not occupy the equity

field. Rather, general equitable principles remain largely intact,

for   they    are   only     rarely     particularly     displaced.”     (internal

quotation marks and citations omitted)). Moreover, aside from this

presumption, there is no “particular provision” in Article 8 that

displaces Mellon’s equitable claims for subrogation and indemnity.

Likewise,     there    is    no    provision   in   Article   8   that   displaces

Mellon’s common-law tort claim for negligent misrepresentation. In

our view, the remedial scheme in Article 8 cannot be considered

“comprehensive” when transfer agents are provided with no remedies

at all under the Code.            We therefore conclude that Article 8 of the

U.C.C. does not displace Mellon’s equitable and common-law claims.




      11
      Common-law indemnity is “an equitable doctrine that allows
a court to shift the cost from one tortfeasor to another.” Harley
Davidson Motor Co. v. Advanced Die Casting, Inc., 696 A.2d 666, 670
(N.J. 1997).
                                          15
                                           B.

       Because we may affirm a dismissal for any reason in the

record, Catawba Indian Tribe of S.C. v. City of Rock Hill, 501 F.3d

368, 372 n.4 (4th Cir. 2007), however, it remains for us to decide

whether Mellon has stated any claims for relief under New Jersey

law    based    on     equitable    subrogation,    indemnity,       and   negligent

misrepresentation.         We will address each claim in turn.

                                           1.

       First,     we    turn   to    Mellon’s    claim     against    Longwood   for

equitable subrogation, which permits a person who has discharged

another’s debt to succeed to the rights and position of the

satisfied creditor under certain circumstances.                      73 Am. Jur. 2d

Subrogation § 5 (2001).            Mellon contends that it should be allowed

to assert the warranty claim against Longwood under a theory of

equitable subrogation because, in paying Fisher River’s state-court

judgment, Mellon actually paid the debt of PFG, on whom the U.C.C.

also    imposes      liability      for   the   wrongful    registration.        Even

assuming that equity applies, however, Mellon, as a subrogee, would

stand in the shoes of Fisher River, the subrogor Mellon paid, and

not the shoes of PFG.          In that posture, Mellon would be equitably

subrogated to Fisher River’s claims against PFG, but not PFG’s

potential warranty claim against Longwood. Because Mellon chose to

sue Longwood rather than PFG, we conclude that Mellon has failed to

state a claim for equitable subrogation.


                                           16
                                   2.

     We next turn to Mellon’s indemnity claims. “[C]ommon law

indemnification shifts the cost of liability from one who is

constructively or vicariously liable to the tortfeasor who is

primarily liable.”      Harley Davidson Motor Co. v. Advance Die

Casting, Inc., 696 A.2d 666, 671 (N.J. 1997).              “The right of

indemnity . . . enures to a person who, without active fault on his

own part, has been compelled, by reason of some legal obligation,

to pay damages occasioned by the initial negligence of another, and

for which he himself is only secondarily liable.” Adler’s Quality

Bakery, Inc. v. Gaseteria, Inc., 159 A.2d 97, 110 (N.J. 1960)

(internal quotation marks omitted) (indemnity claim by aircraft

owners on whom statute imposed strict liability).         In other words,

to recover indemnification, a party must not be “personally at

fault.”   Stephenson v. R.A. Jones & Co., 510 A.2d 1161, 1164 (N.J.

1986).    Here, § 8-404 imposed strict liability on Mellon for

registering   a   transfer   without    an   effective   instruction,   and

Mellon alleges that if it committed any wrong, the wrong was merely

“secondary” to Longwood’s negligence. Although a court could later

conclude after hearing all the evidence that Mellon was in fact

negligent in giving Smith the confidential account key and thus was

personally at fault (on this issue, we express no opinion), for the




                                   17
purposes of a Rule 12(b)(6) motion to dismiss, Mellon’s complaint

has stated claims for indemnity.12

                                    3.

     Finally, to state a claim for negligent misrepresentation, the

plaintiff must establish (1) that the defendant negligently made an

incorrect   statement   of   past   or   existing   fact,   (2)   that   the

plaintiff justifiably relied on it, and (3) that his reliance

caused a loss or injury.     Kaufman v. i-Stat Corp., 754 A.2d 1188,

1195 (N.J. 2000).   In its complaint, Mellon asserts that Longwood

is liable for the negligent misrepresentations of its agent Smith.

Rather than argue that Mellon has failed to allege any required

element of negligent misrepresentation, Longwood contends that

Smith, acting as Longwood’s attorney, was an independent contractor

and not its agent and that Longwood thus cannot be held liable for

Smith’s negligent misrepresentations.        Longwood’s argument fails,

however, because although lawyers are independent contractors, an

independent contractor may or not be an agent.       JMB Enters. v. Atl.


     12
       Longwood argues that Mellon’s indemnity claim based on
conversion must fail because, as Mellon argued in state court,
uncertificated securities are general intangibles that cannot be
converted.    Longwood further argues that Mellon may not claim
indemnity for conversion of the proceeds because Mellon had no
property right in the proceeds to support a conversion claim. Even
assuming that uncertificated securities may not be converted, we
find that Mellon has established a cognizable claim for indemnity
based   on   Longwood’s  conversion   of   the  proceeds   of  the
uncertificated securities because it is Longwood’s conversion of
the proceeds, not Mellon’s, that is at issue in the indemnity
claim.   Mellon needs no possessory interest in the proceeds to
assert its indemnity claim.
                                    18
Employers Ins. Co., 550 A.2d 764, 767 (N.J. Super. Ct. App. Div.

1988).    Whether an agency relationship exists is ordinarily a

question of fact within the province of the jury.        Antonio v.

Edwards, 74 A.2d 307, 308 (N.J. 1950).      Thus, although a court

could find that Mellon’s negligence limits or bars its recovery,

for purposes of a Rule 12(b)(6) motion to dismiss, Mellon has

stated a claim for negligent misrepresentation.



                                IV.

     Based on the foregoing, we find that Mellon has failed to

state a claim either for breach of the originator’s warranty under

Del. Code Ann. tit. 6, § 8-108(e) or for equitable subrogation, and

we thus affirm the district court’s dismissal of Counts I and III.13

Because we find that Mellon has indeed stated claims for negligent

misrepresentation and indemnity, however, we reverse the district

court’s dismissal of Counts II, IV, and V.        Accordingly, the

judgment of the district court is

                AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.




     13
      Mellon requested summary judgment only on Count I (Breach of
Originator’s Warranty) as supplemented by Count III (Equitable
Subrogation) and by PFG’s assignment to Mellon of its claim against
Longwood. Because we conclude that the district court correctly
dismissed Mellon’s U.C.C. claim as well as its claims based on
equitable subrogation and assignment, we, like the district court,
conclude that these issues are moot.
                                19
