Clinton Plumbing and Heating v. Ciacco

In November 2007, Stephen Ciacco (defendant) was hired by Clinton Plumbing and Heating of Trenton, Inc. (CPH) (plaintiff) to install and maintain CPH’s network servers and office-management software. Ciacco was subsequently promoted to comptroller of CPH and given access to CPH’s bank accounts. In March 2008, Ciacco began making unauthorized Automated Clearing House (ACH) debit transfers from CPH’s deposit accounts at Capital One Bank (Capital One) (defendant) to his personal credit-card account at Capital One. Ciacco was terminated as comptroller of CPH in August 2008 but retained access to CPH’s bank accounts and computer network until the unauthorized transfers were discovered by CPH’s owner, Peter Pelicano (plaintiff) in November 2008. According to Pelicano, Ciacco was merely authorized to monitor CPH’s bank accounts, and only Pelicano and Pelicano’s spouse (plaintiff) had authority to direct payments from those accounts, including payments by ACH debit transfer. The Pelicanos and CPH sued Ciacco, Ciacco’s spouse, and Capital One. Among the claims asserted by CPH was that, as the depository institution that originated the ACH entries requested by Ciacco (originating depository institution), Capital One breached its warranty to CPH under the rules of the National Automated Clearing House Association (NACHA) that Capital One would not debit CPH’s accounts unless Ciacco was authorized to request those entries. Capital One moved to dismiss that claim on the grounds that CPH, as the receiver of the entries, was not an intended beneficiary of the NACHA rules’ warranty provisions.