## Facts

- Majestic Building Maintenance, Inc. opened a business checking account at Huntington National Bank and received a written “Master Services Agreement” for business accounts.
- The agreement stated Huntington offered fraud-prevention products (for unauthorized checks and ACH debits, forgeries, and alterations) and provided that if the customer did not use eligible products, Huntington would have “no liability” and “no duty to re-credit” for losses those products were designed to detect or prevent.
- Majestic’s president alleged he was not given a signed copy of the agreement and was not advised of the fraud-prevention services’ details at account opening.
- Majestic, concerned about check fraud, ordered checks with a third-party hologram feature.
- Four unauthorized checks totaling $3,973.96 were paid; the fraudulent checks lacked the hologram and duplicated numbers of checks previously paid.
- Huntington declined reimbursement, citing the agreement and asserting Majestic’s decision not to use the bank’s fraud-prevention services contributed to the loss.
- Majestic sued in federal court (putative class action), alleging the clause violated Ohio’s enactment of UCC Article 4 by impermissibly shifting fraud losses to depositors and effectively disclaiming the bank’s duties of good faith and ordinary care.
- The district court dismissed under Rule 12(b)(6), finding no UCC violation and concluding the clause was not “manifestly unreasonable” and the agreement preserved the bank’s duties; Majestic appealed.

## Issues

1. Whether UCC § 4-103(a) (as enacted in Ohio) permits a deposit agreement to eliminate the bank’s liability and duty to re-credit for fraud losses if the depositor declines the bank’s fraud-prevention products, or whether such a clause plausibly disclaims the bank’s duties of good faith and ordinary care.
2. Whether the complaint plausibly alleged the clause was prohibited or “manifestly unreasonable” under UCC § 4-103(a), such that dismissal under Rule 12(b)(6) was improper.

## Decision

- The Sixth Circuit reversed the Rule 12(b)(6) dismissal and remanded.
- The court held Majestic plausibly alleged the “no liability/no duty to re-credit” clause violated UCC § 4-103(a) by effectively disclaiming the bank’s statutory responsibilities to act in good faith and exercise ordinary care.
- The court ruled it was premature at the pleading stage to conclude the clause was not “manifestly unreasonable,” particularly without factual development concerning the fraud-prevention products, costs, and commercial reasonableness.
- The court instructed the district court to allow Majestic an opportunity to amend the complaint and to proceed to discovery.

## Legal Principles

- UCC § 4-103(a) allows parties to vary Article 4 by agreement, but they cannot disclaim a bank’s responsibility to act in good faith or exercise ordinary care.
- Contract terms that functionally eliminate a bank’s liability for a broad category of transactions may plausibly be treated as an impermissible disclaimer under UCC § 4-103(a), even if other provisions reference ordinary care or good faith.
- Whether a contractual variation is “manifestly unreasonable” may depend on facts such as the services’ operation and cost, industry practice, and the transaction context, and may not be resolvable on a bare pleadings record.
- On a Rule 12(b)(6) motion, courts accept well-pleaded factual allegations as true and determine only whether the claim is plausible, not whether the plaintiff will ultimately prevail.

## Conclusion

The Sixth Circuit held that a depositor plausibly stated a UCC Article 4 claim where a bank’s account agreement purported to eliminate liability and any duty to re-credit for fraud losses if the depositor did not purchase the bank’s fraud-prevention products, because such a clause could operate as an impermissible disclaimer of the bank’s duties of good faith and ordinary care; dismissal at the pleading stage was therefore reversed and the case remanded for amendment and discovery.


Majestic Bldg. Maint., Inc. v. Huntington Bancshares Inc., 864 F.3d 455 (6th Cir. 2017)