                United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 13-2184
                        ___________________________

           National Union Fire Insurance Company of Pittsburgh, PA

                       lllllllllllllllllllll Plaintiff - Appellant

                                           v.

                               Yvonne Raczkowski

                            lllllllllllllllllllll Defendant

                              Hometown Bank, N.A.

                      lllllllllllllllllllll Defendant - Appellee

                              XYZ Corporation, 1-5

                            lllllllllllllllllllll Defendant

                                           v.

                              Hometown Bank, N.A.

                 lllllllllllllllllllllThird Party Plaintiff - Appellee

Mark Leon Henry; Leon Henry; Sheila Henry; Julie Balls; Steve Balls; Investment
   Centers of America, Inc.; Jack Howerton; Delbert Phipps; Wayne Roffman

                     lllllllllllllllllllllThird Party Defendants
                                      ____________
                      Appeal from United States District Court
                    for the Western District of Missouri - Joplin
                                  ____________

                              Submitted: June 12, 2014
                               Filed: August 13, 2014
                                   ____________

Before MURPHY, COLLOTON, and KELLY, Circuit Judges.
                         ____________

KELLY, Circuit Judge.

       This case stems from fraud committed by an investment advisor who opened
a doing-business-as ("d/b/a") bank account using the name of his employer when he
did not have the employer's authority to do so. The investment advisor used the d/b/a
bank account to steal money from his employer's customers. His employer settled
with the defrauded customers, and the employer's insurance company paid the
settlements. The insurance company then brought this suit against the bank, alleging
that the bank acted negligently by failing to inquire into whether the former advisor
had authority to open the d/b/a account. The district court1 granted the bank's motion
to dismiss, concluding that the bank owed no recognized duty to the employer. We
affirm.

                                          I.

      In 1994, Mark Henry began working for Investment Centers of America, Inc.
("ICA"), which provides investment and insurance products. ICA is insured by
National Union Fire Insurance Company of Pittsburgh, PA ("National Union"), the



      1
       The Honorable Gary A. Fenner, United States District Judge for the Western
District of Missouri.

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appellant. Henry worked as an investment advisor and agent for ICA in its Carthage,
Missouri, branch office.

      In November 2004, Henry opened a bank account at Hometown Bank, N.A.
("Hometown Bank"), under the name "Mark L. Henry d/b/a Investment Centers of
America." Henry did not have ICA's permission to open the account, and he was the
account's only signor. Because it was a d/b/a account, Hometown Bank allowed
Henry to accept checks made out to ICA from ICA customers and deposit them into
the Hometown Bank account. Henry deposited roughly $292,000 from ICA
customers into the account. He later withdrew this money for personal use.2 Henry's
fraud was discovered in August 2006. ICA later settled with the defrauded ICA
customers, and National Union paid claims on behalf of ICA because ICA had a
policy with National Union.

      The only identification Henry provided to Hometown Bank to open the d/b/a
account was a driver's license. Hometown Bank claims it believed that Henry was
self-employed and acting on his own behalf when it chose to open the d/b/a account
for Henry.

                                        II.

       National Union filed this diversity case in the Western District of Missouri,
alleging that Hometown Bank committed negligence by not confirming with ICA that
Henry had the authority from ICA to open the d/b/a account. National Union claims
this caused ICA damages resulting from ICA having to settle with customers Henry
defrauded. The district court granted Hometown Bank's motion to dismiss, finding



      2
      Henry also misappropriated ICA customer funds into his Hometown personal
bank account.

                                        -3-
that Hometown Bank owed no duty to ICA or National Union and therefore National
Union failed to state a cause of action. National Union appeals, and we affirm.



                                             III.

       The parties agree Missouri law applies to this diversity case. We review a
district court's grant of a motion to dismiss de novo. Bell v. Pfizer, Inc., 716 F.3d
1087, 1091 (8th Cir. 2013). On review, we "'assume all factual allegations in the
pleadings are true and interpret them in the light most favorable to the nonmoving
party.'" Id. (quoting Murphy v. Aurora Loan Servs., LLC, 699 F.3d 1027, 1033 (8th
Cir. 2012)). "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)). Granting a motion to dismiss is "appropriate only when
there is no dispute as to any material facts and the moving party is entitled to
judgment as a matter of law." Ashley Cnty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665
(8th Cir. 2009).

       To survive the motion to dismiss, National Union's complaint against
Hometown Bank must state a cause of action. In Missouri, "for a plaintiff to make
a submissible case of negligence, a plaintiff must establish that there was a duty and
that the breach of that duty was the proximate cause of his injury." Hoffman v. Union
Elec. Co., 176 S.W.3d 706, 708 (Mo. banc 2005). "In considering whether a duty
exists in a particular case, a court must weigh the foreseeability of the injury, the
likelihood of the injury, the magnitude of the burden of guarding against it and the
consequences of placing that burden on defendant." Id. Whether a duty exists is a
question of law. Id.




                                             -4-
       The Missouri Supreme Court has not decided whether a bank has a duty to
verify that an individual seeking to open a d/b/a account possesses legal authority to
use a particular d/b/a name. When a state court has not decided an issue, this court
looks "'to relevant state precedent, analogous decisions, considered dicta, and any
other reliable data'" to determine how the Missouri Supreme Court would construe
the law. Ashley Cnty., Ark., 552 F.3d at 665 (quoting In re W. Iowa Limestone, Inc.,
538 F.3d 858, 866 (8th Cir. 2008)).

                         A. Relationship Between the Parties

       When analyzing whether a duty exists, Missouri courts start "with an
examination of the source of the duty." Parra v. Bldg. Erection Servs., 982 S.W.2d
278, 283 (Mo. Ct. App. 1998) (citation omitted). "The common denominator that
must be present is the existence of a relationship between the plaintiff and defendant
that the law recognizes as the basis of a duty of care." Id. Hometown Bank points
out that ICA was never actually the bank's customer because Henry was merely an
imposter posing as an agent of ICA. Therefore, the bank argues it never had a
relationship with ICA that would impose any duty on the bank. National Union
argues that Hometown Bank believed it had a relationship with ICA, and that such
a belief is sufficient to establish a relationship between the parties that could serve as
the source of a duty owed.

       National Union cites Patrick v. Union State Bank, 681 So.2d 1364 (Ala. 1996),
for support. In Patrick, an imposter acquired Bridgette Patrick's temporary driver's
license. Id. at 1365. The driver's license contained her signature, but did not have her
photograph. Id. The imposter opened a bank account in Patrick's name. Id. The
bank failed to ask for other photo identification or other identification that would
confirm the person opening the account was actually Patrick. Id. The bank employee
did, however, compare the signature on the temporary license with the imposter's
signature. Id. The signatures did not match, but the bank employee still opened the

                                           -5-
account and issued the imposter checks. Id. The imposter then wrote several checks
against the account. Id. at 1366. Patrick was eventually arrested for writing bad
checks. Id. She sued the bank, arguing that the bank had a duty to confirm a person's
identity before opening a bank account. Id.

      The Alabama Supreme Court held that the bank owed Patrick a duty of care
because the bank believed it had a relationship with Patrick. The court reasoned as
follows:

      The bank undeniably thought that it had a relationship with Ms. Patrick
      when it opened the account for, and gave checks to, an imposter; and the
      fact that the bank opened a checking account under the name "Bridgette
      Lashawn Patrick," under Ms. Patrick's Social Security number, and
      based solely upon the presentation of Ms. Patrick's temporary driver's
      license as identification, persuades us that there is some relationship
      between the parties.

Id. at 1369.

       We find Patrick persuasive regarding the relative ease of a bank's ability to
discern the identity of a natural person. Discerning a person's authority to open a
d/b/a account using a particular name, however, is significantly more difficult.
Unlike a situation involving a natural person, who carries standard forms of
identification, complex laws govern rights to use fictitious names, labels, and other
entity monikers, making identification a much more difficult endeavor for a bank.
Further, Patrick is somewhat of an outlier, and other courts faced with this issue have
held that there is no relationship between the parties that could establish a duty. See,
e.g., Zabka v. Bank of America Corp., 127 P.3d 722, 724 (Wash. Ct. App. 2005)
("Many other jurisdictions have held that third party non-customers are not owed a
duty of care by a bank, absent a direct relationship or statutory duty."); Weil v. First
Nat'l Bank of Castle Rock, 983 P.2d 812, 815 (Colo. App. 1999) (declining "to create


                                          -6-
a new common law duty burdening banks and financial institutions with a duty to
inquire into a customer's authority to use an unregistered trade name"); Software
Design & Application, Ltd. v. Hoefer & Arnett, Inc., 56 Cal. Rptr. 2d 756, 760 (Cal.
Ct. App. 1996) (agreeing with "[r]ecent cases [that] have held that absent
extraordinary and specific facts, a bank does not owe a duty of care to a
noncustomer.").

       Hometown Bank also points to Eisenberg v. Wachovia Bank, N.A., 301 F.3d
220 (4th Cir. 2002). In Eisenberg, a man opened a Wachovia bank account in his
name d/b/a Bear Stearns. Id. at 222. He had no affiliation with Bear Sterns, but he
used the account to obtain funds from victims who believed their money was going
to Bear Stearns. Id. One of those victims sued Wachovia, asserting that the bank had
acted negligently by failing to investigate the man's authority to open the d/b/a Bear
Stearns account. Id. The Fourth Circuit held that the victim was a third party who
did not have a relationship with Wachovia, so Wachovia did not owe him a duty. Id.
at 225 ("Courts in numerous jurisdictions have held that a bank does not owe a duty
of care to a noncustomer with whom the bank has no direct relationship."). The court
noted that other cases had also rejected the notion that a bank owed a duty to a non-
customer even when that non-customer was the person whose name was fraudulently
used to open the account. See id. at 226. In Eisenberg, that particular non-customer
would have been Bear Stearns. The court did not reach the question of whether
Wachovia owed a duty to Bear Stearns, but nonetheless stated it was "persuaded by
the reasoning articulated in the numerous cases holding that a bank does not owe
noncustomers a duty of care." Id. at 227.

       Hometown Bank believed it was entering into a relationship with an entity
named "Investment Centers of America." However, without any Missouri precedent
on this issue and the weight of authority suggesting the court should not recognize
a relationship between the parties, we decline to find there was a fiduciary
relationship between the parties.

                                         -7-
                                B. Imposition of a Duty

      National Union argues that, based on the Missouri Supreme Court opinion in
Dalton & Marberry, P.C. v. Nationsbank, N.A., 982 S.W.2d 231 (Mo. banc 1998), the
Missouri Supreme Court would recognize a bank's duty to ascertain a person's
authority for opening a d/b/a account under a d/b/a name. Whether this argument is
separate from the relationship question is unclear. What is clear, however, is that the
the duty articulated in Dalton & Marberry was materially different and limited in
scope when compared to National Union's suggested duty in this case. It is also clear
that Dalton & Marberry illustrates the need to have some limiting principle (for
example, a customer relationship) in place when recognizing a new duty.

        In Dalton & Marberry, an accounting firm staff accountant withdrew blank
cashier's checks from the company's account with the bank. Dalton & Marberry, 982
S.W.2d at 232. The bank failed to inquire whether the employee was authorized to
obtain these blank cashier's checks. Id. The employee used the checks to embezzle
more than $130,000 over five years. Id. The accounting firm sued the bank for
negligence. Id. The Missouri Supreme Court concluded that the "bank can be liable
for failing to inquire as to the authority" of the employee. Id. at 234. The court stated
that a "bank is liable if it fails to inquire as to the authority of an agent of the drawer-
depositor who wrongfully diverts the proceeds of a check[.]" Id.

       Dalton & Marberry established that banks owe a duty of inquiry to customers;
however, we decline to extend that duty further in this case. In Dalton & Marberry,
the actual account holder was a legal entity and not a natural person—specifically, a
professional corporation was the bank's actual customer and the plaintiff in the action
asserting negligence claims. Id. at 232. Such legal entities may maintain bank
accounts, and it is standard practice for banks to permit certain authorized persons
acting as representatives of the legal entity to withdraw money or write checks on

                                            -8-
behalf of the legal entity. It is hardly surprising, then, that Missouri found that the
bank negligently breached a duty to its own customer/account holder (a legal entity
with which the bank indisputably had a relationship) by failing to check or verify a
purported representative's authority. See id. at 234. In Dalton & Marberry, the bank
and the account holder had a relationship, the scope of the bank's duty to verify a
representative's authority was easily defined and narrow in scope, and the nature of
the breach of that duty was rooted in and consistent with the law of negotiated
instruments in Missouri.

       In the current case, National Union suggests that Hometown Bank had a duty
to investigate whether ICA had given Henry the authority to open the d/b/a account.
This proposed duty is not like the one in Patrick, where the court said a bank has a
duty to inquire into the identity of a person opening a bank account, which is typically
easy to ascertain.3 See Patrick, 681 So.2d at 1366. This proposed duty is also not like
the Missouri Supreme Court's articulation of the duty of inquiry in Dalton &
Marberry, where the court said that a bank also has a duty to inquire into the authority
of a bookkeeper to withdraw cashier's checks from a business's account. 982 S.W.2d
at 234. Rather, National Union's suggestion that Hometown Bank investigate Henry's
authority to use the name "Investment Centers of America" is broad in scope and
admits of no practical limitation. We are hesitant to recognize such a duty in any
event and are particularly hesitant to recognize such a duty in the heavily regulated
and statutory laden fields of banking and negotiated instruments.

      Although National Union suggests Hometown Bank should have verified with
ICA Henry's authority to use the name, it is no simple matter to identify who exactly
holds rights in a name, trademark, or trade name. And, National Union proffers no



      3
       In this case, for instance, Hometown Bank verified Mark Henry's identity by
looking at his driver's license.

                                          -9-
explanation as to where the asserted duty might end.4 Essentially, if we followed
National Union's proposal, we would be requiring Hometown Bank to verify, as to
the world at large, whether there were any entities identically or similarly named
"Investment Centers of America," and once those entities had been ascertained,
whether Henry had the authority from any of those entities to open the d/b/a account.
The scope of this duty could be particularly burdensome in some cases, and imposing
the duty may not even generate the result National Union seeks because small
differences, such as name or location difficulties, may prevent a bank's search from
even locating the correct d/b/a entity. The Colorado Court of Appeals refused to
recognize a similar duty in Weil, 983 P.2d at 815, and the Fourth Circuit rejected a
similar duty in Eisenberg, 301 F.3d at 226. Importantly, our rejection of such an ill-
defined and potentially broad duty is consistent with the Missouri Supreme Court's
focus on the "magnitude of the burden" as a factor to consider when assessing the
existence of a duty. Hoffman, 176 S.W.3d at 708.

     We must apply the law as we believe the Missouri Supreme Court would, see
Ashley Cnty., Ark., 552 F.3d at 665, and we are not convinced that the Missouri
Supreme Court would extend the duty articulated in Dalton & Marberry to cover the

      4
        Notably, at oral argument, National Union's counsel could not articulate
exactly how the bank could fulfill this duty. National Union claims that Hometown
Bank could have (1) contacted someone other than Henry at ICA to verify Henry's
authority; (2) required a resolution from ICA that Henry had authority to open the
account; or (3) contacted the Missouri Secretary of State's office to confirm that
Henry was registered to do business as "Investment Centers of America." However,
it remains unclear what exactly the scope of that inquiry into the identity of the d/b/a
entity should be. Further, we note that ICA's formal name is "Investment Centers of
America, Inc." and that Henry's d/b/a account omitted the "Inc." It is possible,
therefore, that National Union is suggesting the proposed duty encompass even
entities with similar, but not exact, names, further expanding the breadth of a search
the bank would be required to undertake. While Hometown Bank may have done
more, we may not base our recognition of a legal duty upon what, in hindsight, might
have been prudent for the bank to have done in a particular instance.

                                         -10-
misuse of the d/b/a account in this case. The burden of imposing this ill-defined and
undisputedly broad duty is simply too great in this context. See Hoffman, 176
S.W.3d at 708.

                                        IV.

      We affirm the judgment of the district court.
                      ______________________________




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