Szulik v. State Street Bank & Trust Co. (935 F. Supp. 2d 240, 2013)

ORDER

NATHANIEL M. GORTON, District Judge.

“After consideration of Plaintiffs’ Limited Objection (Docket No; 35), Defendant’s Objections (Docket No. 36) and the parties responses to their opponents objections (Docket Nos. 37 and 38) thereto, Report and Recommendation is accepted and adopted.”

REPORT AND RECOMMENDATION ON DEFENDANT’S MOTION TO DISMISS

DEIN, United States Magistrate Judge.

I. INTRODUCTION

This action arises out of five Custody Account Agreements which the plaintiffs, Matthew J. Szulik, individually and as trustee of the Raymond W. Szulik Trust, Raymond W. Szulik, as trustee of the Raymond W. Szulik Trust, Edward Adams, as trustee of the Kaitlin'Szulik Trust, Brendan Szulik Trust, and Keenan Szulik Trust, and Kyle M. Szulik (collectively, the “Szuliks”), entered into with defendant State Street Bank and Trust Company (“State Street”) and its predecessors, Chemical Bank and Investors Bank & Trust Company. Pursuant to the Agreements, the plaintiffs authorized State Street and its predecessors to establish and maintain custody accounts for the purpose of holding and disposing of cash and investments belonging to the plaintiffs, and to conduct certain transactions in accordance with instructions from the plaintiffs’ investment advisor, TAG Virgin Islands, Inc. (“TAG”).

The plaintiffs claim that during the time they maintained custody accounts with the defendant and its predecessors, TAG defrauded the Szuliks out of millions of dollars by liquidating their conservative investments in high-quality stocks and bonds, and investing their funds in suspicious, high-risk and illiquid- securities, as well as in real estate and personal loan instruments, which were incompatible with the Szuliks’ investments goals and for which TAG often received illegal kickbacks and other financial benefits. The plaintiffs contend that State Street, in its capacity as their custodian, was obligated to safeguard the Szuliks’ property from misappropriation or misuse by TAG. However, they claim that instead of protecting the plaintiffs’ assets, State Street engaged in conduct that violated its own contractual and legal duties to the Szuliks and enabled TAG to carry out its deceptive scheme. In particular, the Szuliks contend that State Street improperly disbursed the plaintiffs’ funds in exchange for securities that were defective on their face and were not delivered to the plaintiffs in a timely manner, failed to take proper custody of the plaintiffs’ assets, issued misleading and inaccurate account statements to the plaintiffs, and charged the plaintiffs excessive fees based on misleading and inflated account values. The plaintiffs allege that they have suffered and will continue to suffer damages as a result of State Street’s alleged misconduct. By their Complaint in this action, the plaintiffs have asserted claims against State Street for breach of contract (Counts I and II), negligence (Count III), unjust enrichment (Count IV), and breach of fiduciary duty (Count V).

The matter is presently before the court on “Defendant State Street Bank and Trust Company’s Motion to Dismiss Plaintiffs’ Complaint” (Docket No. 14), by which State Street is seeking an order dismissing each Count of the complaint for failure to state a claim pursuant to Fed.R.Civ.P. 8(a) and 12(b)(6). For all the reasons described below, this court recommends to the District Judge to whom this case is assigned that the defendant’s motion be ALLOWED IN PART and DENIED IN PART. Specifically, this court recommends that the motion to dismiss be allowed with respect to Count V, but otherwise that the plaintiffs be permitted to proceed with the remaining claims in accordance with this Report and Recommendation.

II. STATEMENT OF FACTS

When ruling on a motion' to dismiss brought under Fed.R.Civ.P. 12(b)(6), the court must accept as true all well-pleaded facts, and give the plaintiff the benefit of all reasonable inferences. See Cooperman v. Individual, Inc., 171 F.3d 43, 46 (1st Cir.1999). “Ordinarily, a court may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment.” Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir.2001). “There is, however, a narrow exception ‘for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs’ claim; or for documents sufficiently referred to in the complaint.’ ” Id. (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir.1993)). Applying this standard to the instant case, the facts relevant to State Street’s motion to dismiss are as follows.

The Parties

Plaintiff Matthew J. Szulik, his wife plaintiff Kyle M. Szulik, and Matthew’s father, plaintiff Raymond W. Szulik, are individuals who reside in Raleigh, North Carolina. (Compl. ¶¶ 1-2). Matthew and Raymond are the trustees of the Raymond W. Szulik Trust, which was established for the benefit of Raymond Szulik. (Id. ¶ 2). Plaintiff Edward Adams (“Adams”) is an individual who resides in Richmond, Vermont. (Id. ¶ 3). He is currently the trustee of three separate trusts — the Kaitlin Szulik Trust, the Brendan Szulik Trust, and the Keenan Szulik Trust (collectively, the “Szulik Children Trusts”) — that were established for the benefit of Matthew and Kyle Szulik’s children. (Id.). As detailed below, the custodial accounts at issue in this case were established for the benefit of Matthew and Kyle Szulik jointly, the Raymond W. Szulik Trust, and each of the Szulik Children Trusts.

The defendant, State Street,- is a trust company that is organized under the laws of the Commonwealth . of Massachusetts and maintains, a principal place of business in Boston, Massachusetts. (Id. ¶ 4). The plaintiffs claim that State Street succeeded to the rights, liabilities and obligations of Chemical Bank and Investors Bank & Trust Company (“IBT”) as a result of one or more corporate mergers or acquisitions. (Id. ¶¶ 10, 12). As the successor to Chemical Bank and IBT, State Street allegedly assumed responsibility as custodian of the plaintiffs’ custody accounts with those entities. (See id. ¶¶ 9-12). By their claims in this action, the plaintiffs áre seeking to hold State Street liable for the alleged misconduct of Chemical Bank and IBT, as well as for its own misconduct, in connection with the plaintiffs’ custody accounts.

The Custody Account Agreements

During the. time period from about 1996 until 2009, the Szuliks employed TAG as their investment advisor to manage various family investment portfolios, which at certain times had a combined value of over $80 million. (Id. '¶ 7). In order to ensure that their assets would be held by á qualified custodian that was entirely independent from TAG, the plaintiffs entered into a series of custodial agreements (the “Custody Account Agreements”) with State Street. • (Id. ¶8). Specifically, Matthew and Kyle Szulik entered into a Custody Services Custodian Account Agreement with the defendant on or about March 6, 1996 for the purpose of establishing a custody account for the joint benefit of Matthew and Kyle Szulik (the “Joint Account Agreement”), and Matthew and Raymond Szulik entered into a Custody Account Agreement with the defendant on or about December 28, 2004 for. the purpose of establishing a custody account for the benefit of the Raymond W.. Szulik Trust (the “Raymond Trust • Agreement”). (See Compl. ¶¶ 9, 11; Compl. Ex. A at 1-2; Compl. Ex. B at 1). In addition, on or ábout July 1, 2008, the then-trustee of the Szulik Children Trusts entered into three separate Custody Account Agreements with State Street in order to establish custody accounts for the benefit of the Szulik Children Trusts (the “Szulik Children Trust Agreements”). (See Compl. ¶ 13; Compl. Exs. C-E). The plaintiffs claim that the intended purpose of those Agreements was to limit the circumstances under which TAG could disburse or transfer their assets, and to safeguard those assets from misappropriation or misuse by TAG. (See. id. ¶¶8-9, 11, 13). As described below, the plaintiffs contend that State Street’s own misconduct and lack of oversight enabled TAG to defraud them out of millions of dollars .worth of investments.

The details of the Custody Account Agreements will be described below in connection with this court’s analysis. However, as a general matter, under the Agreements the plaintiffs authorized State Street to establish custody accounts for the purpose of holding and disposing of property that State Street received for the plaintiffs. (See Compl. Ex. A at preamble, Compl. Ex. B at preamble). They also authorized State Street to perform various transactions in accordance with TAG’S instructions, including but not limited to, transactions involving the disbursement of funds and the purchase and sale of securities. (See Compl. Ex. A ¶ 12; Compl. Ex. B ¶ 23; Def. Ex. A ¶ 1). In addition, the Agreements required State Street to issue periodic account statements describing' the transactions in the custody accounts, and listing the securities held in the accounts along with the current market value of those securities, if available. (See Compl. Ex. A ¶ 10; Compl. Ex. B 1115). The plaintiffs claim that State Street engaged in conduct which exceeded its contractual authority, and failed to carry out various duties and obligations that it owed , to the Szuliks under the terms of the parties’ Agreements.

The Custody Account Agreements set forth express limitations on State Street’s liability to the custody account holder. In particular, the Joint Account Agreement contained a provision entitled “Liability and Indemnification,” which provided in relevant part as follows:

You [the custodian] shall not be liable to any of the undersigned for any loss suffered by the undersigned (including reasonable attorney’s fees) in connection with, arising out of, or in any way related to the transactions contemplated under this Agreement, unless such loss is caused by your negligence or willful misconduct.

(Compl. Ex. A ■ ¶ 7 (emphasis added)). Similarly, the Raymond Trust Agreement and the Szulik Children Trust Agreements contained a provision authorizing the defendant to rely on instructions from the plaintiffs or TAG, which provided in relevant part that

[y]ou [the custodian] shall incur no liability to the undersigned or otherwise as a result of any act or omission by you in accordance with instructions on which you are authorized to rely pursuant to the provisions of this section unless your reliance is the result of your gross negligence or willful misconduct.

(Compl. Ex. B ¶ 13 (emphasis added)). They also contained a provision, entitled “Liability and Indemnification,” which included the following limitations on the custodian’s liability:

You [the custodian] shall not be liable to any of the undersigned for any loss suffered by the undersigned (including reasonable attorney’s fees) in connection with, arising out of, or in any way related to the transactions contemplated under this Agreement, unless such loss is caused by your gross negligence or willful misconduct.

(Id. ¶ 16(B) (emphasis added)). Although the. plaintiffs acknowledge these limitations, they claim that State Street is liable for their losses because it breached its contractual obligations through negligence, gross negligence and/or willful misconduct, and because it was negligent and/or grossly negligent in carrying out its custodial obligations.

State Street’s Alleged Misconduct

At some point during the period when the plaintiffs maintained their TAG-managed custody accounts with State Street, TAG, acting without the plaintiffs’ approval, began to liquidate the Szuliks’ holdings in conservative, high quality stocks and bonds, and to replace those investments with suspicious, high-risk, and illiquid securities, as well as investments in real estate and personal loan instruments. (Id. ¶ 17). According to the plaintiffs, this change in strategy was not only inconsistent with the Szuliks’ investment goals, but also was illegal. (Id.). In particular, they claim that TAG often accepted kickbacks and other financial benefits in exchange for making the unauthorized investments. (Id.). They further contend that TAG was able to defraud them out of millions of dollars as a result of its unscrupulous conduct. (Id.).

The plaintiffs maintain that State Street enabled TAG to implement its unlawful scheme by carrying out TAG’s instructions and otherwise performing its custodial duties in a manner that was incompatible with its obligations under the Custody Account Agreements and the duties that it owed to its clients. (See, e.g., id. ¶¶ 18-19, 23-24, 28-29, 35-39). They also assert that they have suffered and will continue to suffer damages as a result of State Street’s alleged misconduct. (See id. ¶¶55, 67, 78, 93).

Alleged Improper Disbursement of Funds

Pursuant to the Custody Account Agreements, State Street was authorized to disburse funds from the Szuliks’ accounts in order to purchase securities and make investments in accordance with TAG’s instructions. (See Compl. Ex. A ¶ 12; Compl. Ex. B ¶¶ 2, 23; Def. Ex. A ¶ 1). Thus, after TAG changed its investment strategy, it would instruct State Street to disburse funds from the Szuliks’ accounts for purposes of making investments. (See Compl. ¶¶ 17-19). The plaintiffs claim that State Street carried out those instructions in a manner which enabled TAG to use their funds for purposes that were impermissible under the Custody Account Agreements. (Id. ¶ 18).

As an initial matter, the plaintiffs claim that the defendant had limited authority under the Custody Account Agreements to disburse the Szuliks’ funds in exchange for the timely receipt of securities in good form. (Id. ¶ 19). However, on numerous occasions, State Street disbursed funds to TAG in exchange for securities that lacked any value because they were not in good form as a matter of law or as a matter of accepted business usage. (Id. ¶¶ 19, 22). For example, but without limitation, State Street allegedly disbursed $200,000 from Matthew and Kyle Szulik’s joint account in exchange for a purported promissory note issued by International Equine Acquisitions Holdings, Inc. (“International Equine”). (Id. ¶20). According to the plaintiffs, the note was not in good form and was worthless because it had never been signed. (Id.).

On other occasions, State Street allegedly disbursed at least $1,975 million from Matthew and Kyle Szulik’s joint account in exchange for promissory notes that were purportedly issued by International Equine, but were signed by the President of TAG. (Id. ¶ 21). The plaintiffs contend that those notes were not in good form and were worthless because TAG’s President did not purport to execute the note on behalf of International Equine and had no authority to bind that entity in,any event. (Id.).

The plaintiffs contend that State Street also allowed TAG to carry out its improper investment scheme by disbursing funds from their accounts for use in transactions that were so facially irregular that State Street should have refused to carry out the disbursements without first taking steps to assure itself that the transactions were legitimate. (Id. ¶ 38). For instance, but again without limitation, in 2006 State Street allegedly transferred at least $8,655 million from Matthew and Kyle Szulik’s account to an attorney named Barry Feiner for the purported purchase of securities. (Id. ¶ 39). The Szuliks assert that given the highly irregular nature of the arrangement, State Street should have investigated the matter before carrying out the transaction. (Id.). They maintain that if State Street had made an effort to inquire further, it would have discovered that the transactions involving Attorney Feiner were fraudulent. (Id. ¶ 40). The plaintiffs allege that State Street breached its custodial obligations, as well as a duty of care that it owed to the Szuliks, by carrying out such facially irregular transactions. (See id. ¶¶ 53, 65, 75, 90).

In addition to its alleged misconduct in executing transactions that involved defective securities or were suspicious on their face, the plaintiffs claim that State Street failed to fulfill its obligations to the Szuliks by disbursing funds from ■ their custodial accounts without taking timely delivery of the securities. (Id. ¶¶ 23-24). For instance, State Street allegedly disbursed at least $18 million from Matthew and Kyle Szulik’s account, for the purpose of purchasing stock in a company known as. Conversion Services International, Inc., without taking timely possession of the stock certificates. (Id. ¶ 25). According to the plaintiffs, State Street’s failure to obtain timely possession of the stock was evidenced by the fact that the certificates were not listed on the Szuliks’ account statements at the time the investments were made, and by the fact that State Street continued to receive newly issued shares of Conversion Services International stock more than two years, after the investments were completed. (Id.).

Allegedly, this was not the only instance in which State Street failed to take timely custody of securities that were purchased on the Szuliks’ behalf. (Id. ¶ 26). According to the plaintiffs, State Street made additional disbursements from their accounts for the purpose of purchasing stock from other companies without taking custody of those shares within an appropriate period of time. (Id.).

Alleged Failure to Take Custody of Assets

The Custody Account Agreements expressly authorized State Street to deposit all or a portion of the Szuliks’ property with a centralized securities depository system or with a sub-custodian selected by State Street. (Compl. Ex. A ¶ 1; Compl. Ex. B ¶ 1). A “sub-custodian” was defined to include “a branch of another U.S. bank, a foreign bank acting as custodian or a foreign securities depository” in which the defendant participated. (Compl. Ex. B ¶ 7). The plaintiffs claim that at various times State Street violated its custodial obligations by disbursing funds from the plaintiffs’ accounts without ever taking custody of the purchased assets or depositing those assets with a suitable or qualified sub-custodian. (See Compl. ¶¶ 28, 50, 62, 72, 87).

In particular, the plaintiffs allege that by December 2008, over $23 million worth of securities that had been purchased for Matthew and Kyle Szulik’s joint custody account were not being held by State Street. (Id. ¶ 29). Rather, according to the plaintiffs, many of those securities were being held by TAG, entities associated with TAG, or others who were not independent of TAG. (Id.). Neither TAG nor its affiliates fell within the definition of a “sub-custodian” or were qualified to hold the Szuliks’ assets under the parties’ Agreements. (See id. ¶¶ 28-30). The plaintiffs contend that State Street’s conduct in disbursing their funds to TAG for the purpose of purchasing securities, without taking custody of those securities itself or depositing them with a qualified and independent sub-custodian, was improper. (See id. ¶¶ 50, 62, 72, 87).

Allegedly Improper Reporting Activities

The Szuliks also allege that during the time when State Street served as custodian of their TAG-managed custody accounts, the defendant issued misleading reports concerning the assets held in their accounts. (See id. If SI). As described above, as part of its custodial responsibilities State Street was obligated to provide periodic statements listing all securities held in the Szuliks’ custody accounts, as well as the current market value of those securities, if available. (See Compl. Ex. A ¶ 10; Compl. Ex. B ¶ 15). The plaintiffs contend that State Street misrepresented the market value of various assets that it listed on their monthly account statements. (Compl. ¶ 31). In particular, the plaintiffs assert that State Street periodically listed promissory notes that had been issued by International Equine as maker of the notes at “par value.” (Id. ¶ 32). However, according to the Szuliks, those notes were worthless because they were unsigned or signed only by TAG, (Id.).

On other occasions, State Street allegedly listed promissory notes on the plaintiffs’ account statements that had long been in default. (Id. ¶ 33). The plaintiffs maintain that as a result of the defaults, the notes should have been heavily, if not entirely, discounted. (Id.). However, as in the case of the International Equine notes, State Street allegedly listed the defaulted notes at par value. (Id.). Thus, State Street inflated the value of assets included on the Szuliks’ account statements.

The plaintiffs contend that State Street eventually acknowledged the fact that it had improperly valued the plaintiffs’ assets. (Id. ¶ 34). In particular, they allege that in about February 2010, State Street began to include a disclaimer on their account statements which read, “[ijnformation provided on this account statement in connection with such held at source assets was not provided or verified for accuracy by State Street. These asséts are displayed for informational purposes only.” (Id.). They further allege that in April 2011, State Street sent a letter to its custodial clients in which it acknowledged that on prior account statements it had assigned values to securities that it was no longer comfortable valuing, and that it would not assign a value to those securities on future account statements. (Id.). Nevertheless, , the plaintiffs claim that State Street’s prior conduct in misreporting the value of the assets on their, account statements constituted a breach its custodial obligations. , .(See id. ¶¶ 51, 63, 73, 88).

According to the plaintiffs, State Street’s misrepresentations regarding the market value of their assets enabled the defendant to charge excessive .custodial fees. (See id. 41^14). Specifically, they claim that the fee which State Street charged for its services was based on a percentage of the value of the assets held by State Street in the Szuliks’ custody accounts. (Id. ¶¶ 14; 41). Thus, by providing inflated valuations- for the assets held in those accounts, State Street was able to obtain excessive custodial fees from the plaintiffs. (See id. ¶¶ 42, 44).

As an example of the defendant’s improper fee calculations, the plaintiffs allege that on one occasion in October 2007, the defendant issued an account statement indicating that it had charged a custodial fee that had been calculated based on approximately $80 million worth of assets. (Id. ¶ 43). However, the statement allegedly included about $2.8 million worth of promissory notes that had matured long before the date of the statement; and were therefore in default. (Id.). The plaintiffs contend that the promissory notes were worthless, and should not have been considered by State Street in connection with the calculation of its custodial fee. (Id.). Similarly, they claim that State Street should not have calculated fees based on other assets that were overvalued because they were in default or not in good form. (See id. ¶ 44).

Alleged Use of Fake CUSIP Numbers

The plaintiffs contend that their account statements also were misleading because State Street assigned phony CUSIP numbers to securities listed in the statements. (Id. ¶¶ 35-37). A CUSIP number is a unique, 9-character álphanumeric identifier that Standard & Poor’s assigns to North American securities in order to facilitate the clearing and settlement of securities trades. (Id. ¶ 35). Allegedly, State Street included CUSIP numbers for all of the securities that it listed on the Szuliks’ monthly account statements. (Id. ¶ 36). However, contrary to State Street’s representations, Standard & Poor’s had never assigned CUSIP numbers to many of those securities. (Id. ¶¶ 36-37). Therefore, according to the plaintiffs, many of the numbers that State Street listed as CUSIPs on their account statements were fake. (See id. ¶ 37).

The plaintiffs maintain that a CUSIP number is the hallmark of a legitimate domestic security. (Id. ¶ 35). Accordingly, they claim that State Street’s use of phony CUSIP numbers misled them into believing that the assets .in their custody accounts consisted of legitimate securities when, in fact, those assets consisted of highly speculative and illiquid securities and worthless promissory notes. (See id. ¶¶ 17, 32-33, 36-37).

According to the plaintiffs, State Street’s misconduct in carrying out its custodial activities, combined with its lack of oversight, enabled TAG to engage in unauthorized and illegal investment activity using the Szuliks’ funds. (Compl. at 1). By their claims in this action, the plaintiffs are seeking an award of damages against State Street, as well as disgorgement of all fees paid to the defendant in connection with its maintenance of their custody accounts. (See id. at 16 (Prayers for Relief)).

Additional factual details relevant to this court’s analysis are described below where appropriate.

III. ANALYSIS

A. Standard of Review

State Street has moved to dismiss the Szuliks’ claims pursuant to Fed.R.Civ.P. 8(a) and 12(b)(6). Rule 8(a) provides in relevant part that “[a] pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “[T]he pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007)).- Accordingly, “[a] pleading that offers ‘labels and. conclusions’ or ‘a formulaic recitation of the elements of .a cause of action will not do.’ ” Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. at 1965) . “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ ” Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. at 1966) .

Motions to dismiss under Rule 12(b)(6) test the sufficiency of the pleadings. Thus, when confronted with a motion to dismiss, the court accepts as true all well-pleaded facts and draws all reasonable inferences in favor of the plaintiff. Cooper-man, 171 F.3d at 46. Dismissal is only appropriate if the complaint, so viewed, fails to allege a “plausible entitlement to relief.” Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95 (1st Cir.2007) (quoting Twombly, 550 U.S. at 559, 127 S.Ct. at 1967).

Two underlying principles must guide the court’s assessment as to the adequacy of the pleadings to support a claim for relief. Maldonado v. Fontanes, 568 F.3d 263, 268 (1st Cir.2009). “ ‘First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions'. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.’ Such conclusory statements are ‘not entitled to the assumption of truth.’” Id. (quoting Iqbal, 556 U.S. at 678,129 S.Ct. at 1949) (internal citations omitted). “ ‘Second, only a complaint that states a plausible claim for relief survives a motion to dismiss.’ ” Id. (quoting Iqbal, 556 U.S. at 679, 129 S.Ct. at 1950). “This second principle recognizes that the court’s, assessment of -the pleadings is ‘context-specific,’ requiring ‘the reviewing court to draw on its judicial experience and common sense.’ ‘[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not show[n] — that the pleader is entitled to relief.’ ” Id. (quoting Iqbal, 556 U.S. at 679, 129 S.Ct. at 1950) (internal quotations and citation omitted; alterations in original).

B. Sufficiency of Plaintiffs’ Allegations Under Rule 8(a)

The defendant argues, as an initial matter, that the complaint should be dismissed for failure to comply with Fed. R.Civ.P. 8(a). Specifically, State Street asserts that the plaintiffs’ allegations are inadequate because they offer few specifics regarding the alleged misconduct, and lump together all accounts and the separate Custody Account Agreements governing them. It also argues that because the plaintiffs have failed to identify any challenged transaction in any custody account other than the account established under the Joint Account Agreement between the defendant , and Matthew and Kyle Szulik, it “falls entirely to State Street to devine, over a 12 year period, the remaining challenged transactions, if any.” (Def. Mem. (Docket No. 15) at 7). However, this court finds that the plaintiffs’ allegations are sufficient to meet the liberal notice pleading requirements of Rule 8(a).

“The purpose of the notice pleading requirements set forth in Fed.R.Civ.P. 8(a) is to ‘give the defendant fair notice of what the plaintiffs claim is and the grounds upon which it rests.’ ” Phelps v. Local 0222, No. 09-11218-JLT, 2010 WL 3342031, at *5 (D.Mass. Aug. 20, 2010) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 122 S.Ct. 992, 998, 152 L.Ed.2d 1 (2002) (quotations and. citations omitted)). In addition, the pleadings “must afford the defendants a meaningful opportunity to mount a defense.” Benyamin v. Commonwealth Med. UMass Med. Ctr., Inc., No. 11-40126-FDS, 2011 WL 2681195, . at *2 (D.Mass. July 6, 2011) (quoting Diaz-Rivera v. Riverar-Rodriguez, 377 F.3d 119, 123 (1st Cir.2004) (internal punctuation and additional citations omitted)). Thus, at a minimum, “the complaint should at least set forth minimal facts as to who did what to whom, when, where,, and why.” Id. (quoting Educadores Puertorriquenos en Accion v. Hernandez, 367 F.3d 61, 68 (1st Cir.2004)). “While a court may dismiss a pleading that does not comply with the notice pleading requirements of Rule 8, the exercise of this power is generally reserved for a pleading that is ‘so confused, ambiguous, vague, or otherwise unintelligible that its true substance, if any, is well disguised.’ ” Black v. UNUMProvident Corp., 245 F.Supp.2d 194, 197 (D.Me.2003) (quoting Simmons v. Abruzzo, 49 F.3d 83, 86 (2d Cir.1995) (internal quotations and citations omitted)). The complaint at issue in this case is not one of those pleadings.

Although the plaintiffs have not described every transaction in which State Street allegedly violated the terms of the Custody Account Agreements or otherwise engaged in misconduct, they have alleged a pattern and practice of behavior involving all of the Szuliks’ TAG-managed custody accounts during the time period from 1996 to 2009. Moreover, they have described the basis for their claim that State Street owed them certain duties and obligations, and have alleged facts detailing the specific types of activities that resulted in the alleged breaches of those duties or otherwise gave rise to their claims. In particular, the plaintiffs have provided specific examples of State Street’s allegedly unlawful conduct in order to illustrate how the defendant failed to honor its'alleged obligations as the Szuliks’ custodian, and they have even suggested a motive for State Street’s alleged misconduct: the defendant’s interest in collecting custodial fees based on inflated asset values. Therefore, the plaintiffs have alleged enough facts to establish who did what to whom, when, where, and why. As evidenced by the extensive arguments presented by State Street in its motion to dismiss, this is more than sufficient to notify State Streét as to the nature of the plaintiffs’ claims and grounds upon which those claims rest, and to enable State Street to mount a defense. No more is needed in order to meet the liberal notice pleading standard set forth in Fed.R.Civ.P. 8(a).

C. Counts I and II: Claims for Breach of Contract

In Counts I and II of their complaint, the Szuliks have asserted claims for breach of contract. Specifically, in Count I, the Szuliks claim that State Street breached the terms of the Joint-Account Agreement by negligently and/or willfully (1) disbursing Matthew and Kyle Szulik’s funds in exchange for securities that were not in good form as a matter of law or accepted business usage; (2). disbursing the plaintiffs’ funds for the purpose of purchasing stock that was not delivered on a timely basis; (3) disbursing the plaintiffs’ funds in connection with facially irregular transactions; (4) disbursing the plaintiffs’ funds without taking custody of the purchased securities or entrusting the securities to a qualified and independent custodian; (5) improperly reporting the value of the Szuliks’ assets; (6) listing fake CUSIP numbers on the plaintiffs’ account statements; and, (7) charging excessive custodial fees based on inflated asset values. (Compl. ¶¶:48-54). In Count II, the Szuliks claim that State Street breached the terms of the Raymond Trust Agreement and the Szulik Children Trust Agreements, through gross negligence and/or willful misconduct, by engaging in the same conduct alleged' in support of Count I. (See id. ¶¶ 60-66). State Street contends that Counts I and II must be dismissed because the Agreements do not impose the duties and obligations upon the custodian that State Street allegedly breached, and because any losses that the Szuliks sustained were caused by TAG’s or the plaintiffs’ own investment decisions rather than State Street’s alleged misconduct. (Def. Mem. at 8). This court recommends that the motion to dismiss Counts I and II be allowed in part arid denied in part as detailed below.

i. General Principles of Contract Interpretation

The parties’ dispute requires this court to interpret the provisions of the Custody Account Agreements. It is undisputed that the Joint Account Agreement is governed by New York law, and that the Raymond Trust Agreement and the Szulik Children Trust Agreements are governed by Massachusetts law. (See Def. Mem. at 8 n. 10; PI. Opp. Mem. (Docket No. 18) at 5 n. 6). However, the governing principles of contract interpretation are the same in both jurisdictions. Thus,

[a] court interpreting a contract must first assess whether the contract is ambiguous. See Bank v. Thermo Elemental Inc., 451 Mass. 638, 888 N.E.2d 897, 907 (2008). “To answer the ambiguity question, the court must first examine the language of the contract by itself, independent of extrinsic evidence concerning the drafting history or the intention of the parties.” Id. “Ambiguity is not created merely because the litigants disagree about the meaning of a contract.” Nicolaci v. Anapol, 387 F.3d 21, 26 (1st Cir.2004). Rather, “a contract is only ambiguous where an agreement’s terms are inconsistent on their face or. where the phraseology can support reasonable differences of opinion as to the meaning of the words employed and obligations undertaken.” Bank v. Int’l Bus. Machs. Corp., 145 F.3d at 424 (internal quotation marks and citation omitted).

The meaning of an unambiguous contract term is a question of law, while the meaning of an ambiguous contract term is a question of fact. Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 761 N.E.2d 946, 951 (2002); see also Fairfield 271-278 Clarendon Trust v. Dwek, 970 F.2d 990, 993 (1st Cir.1992). “Should the court find the contract language unambiguous, [it must] interpret it according to its plain terms.” Den Norske Bank AS, 75 F.3d at 52.

Farmers Ins. Exchange v. RNK, Inc., 632 F.3d 777, 783 (1st Cir.2011); accord Banks v. Corr. Servs. Corp., 475 F.Supp.2d 189, 195 (E.D.N.Y.2007).

Additionally, when interpreting a contract under Massachusetts or New York law, the contract should be read as a whole, and should be interpreted so as to give effect to the objective intent of the parties. See Postlewaite v. McGraw-Hill, Inc., 411 F.3d 63, 67 (2dCir.2005); Polito v. Sch. Comm, of Peabody, 69 Mass.App. Ct. 393, 396, 868 N.E.2d 624, 626-27 (2007). “ ‘Common sense is as much a part of contract interpretation as is the dictionary or the arsenal of canons.’ ” Cadle Co. v. Vargas, 55 Mass.App.Ct. 361, 366, 771 N.E.2d 179, 183 (2002) (quoting Fishman v. LaSalle Nat’l Bank, 247 F.3d 300, 302 (1st Cir.2001)); see also Postlewaite, 411 F.3d at 69 (rejecting proposed interpretation of contract that ignores common sense, as well as objective, reasonable- expectations of parties to such contracts).

ii. Claims Regarding Disbursement of Funds

As described above, the Szuliks claim, inter alia, that State Street breached its obligations under the Custody Account Agreements by disbursing the plaintiffs’ funds in exchange for securities that were not in good form and were not timely received, disbursing the plaintiffs’ funds in connection with facially irregular transactions, and disbursing the plaintiffs’ funds without taking proper custody of the purchased assets. State Street has moved to dismiss these claims on the grounds that the Agreements granted the custodian unrestricted authority to make disbursements in accordance with TAG’s instructions, imposed no obligations on State Street to receive securities at a particular time or in a particular form, and did not require the custodian to take custody of all the assets listed on the plaintiffs’ custody account statements. (Def. Mem. at 8-11). For the reasons that ■ follow, this court finds that the plain language of the Agreements absolved State Street from any duty to insure the timely receipt of securities, to take custody of assets that were not delivered to it, or to question the legitimacy of transactions before, making disbursements in accordance with TAG’s instructions. However, this court concludes that the plaintiffs have stated a claim for breach of contract based on State Street’s alleged disbursement of funds in exchange for securities that were not in good form as a matter of law or accepted business usage.

Alleged Untimely Delivery of Stock

The plaintiffs allege that under each of the Custody Account Agreements, State Street was authorized to disburse funds “in exchange for the timely receipt of securities in good form.” (Compl. ¶ 15). They further claim that the defendant breached those Agreements by disbursing funds from their custodial accounts, for the purpose of purchasing stock, without taking timely delivery of the stock certificates. (Id. ¶¶ 23-26, 49, 61). For the reasons that follow, this court finds that the unambiguous terms of the Custody Account Agreements undermine the plaintiffs’ timeliness claims.

Defendants Obligations Under the Joint Account Agreement

Pursuant to the Joint Account Agreement between Matthew and Kyle Szulik and the defendant, the plaintiffs authorized State Street to act upon TAG’s instructions “to purchase or receive securities and make payment therefor as set forth in such instructions.” (Compl. Ex. A ¶ 12(A)). However, there was no requirement that State Street receive securities within a particular time following its disbursement of funds to TAG or following TAG’s purchase of securities for the plaintiffs’ account. Rather, under paragraph 11 of the Agreement, which is entitled “Instructions,” State Street was directed as follows:

You are to follow and rely upon any instructions given pursuant to the terms of this Agreement which you believe to be genuine. Such instructions may, in your discretion, be written, oral, by telephone, by telecopy or electronic communication. Written confirmation, if any, of oral instructions shall in no way affect any action taken by you in reliance upon the oral instructions. When executing all instructions, you will effect all payment or delivery or take other relevant actions called for by the instructions in accordance with generally accepted industry practices.

You shall maintain regular business records documenting all instructions transmitted through any means previously described and any response by you. Such records shall be determinative of the form, content and time of all instructions and any response. With respect to any directions to receive securities, you shall have no duty or responsibility to advise the undersigned of non-receipt of, or to take any steps to obtain delivery of, securities from brokers or others either against payment or free of payment.

(Id. ¶ 11 (emphasis added)). Thus, under the express terms of the Joint Account Agreement, State Street was relieved of any duty to obtain delivery, much less timely delivery, of securities for which it disbursed payment in accordance with instructions from TAG. As alleged in the complaint, all of the disbursements at issue were made pursuant to TAG’s instructions. (See Compl. ¶¶ 18, 23). Therefore, the plaintiffs’ timeliness allegations are at odds with the plain language of the Joint Account Agreement.

It is undisputed that in June 1997, Matthew and Kyle Szulik entered into a Custody Account Funds Transfer Agreement (“Funds Transfer Agreement”), which supplemented and amended the Joint Account Agreement between the plaintiffs and State Street. (See Def. Mem. at 3 n. 4; PI. Opp. Mem. at 8; Def. Ex. A at preamble). Pursuant to the Funds Transfer Agreement, the Szuliks authorized the defendant “to execute funds transfer or withdrawal instructions (‘Payment Orders’)” as instructed by Matthew and Kyle Szulik or by TAG. (Def. Ex. A at preamble). Again, however, there was no requirement that State Street receive any securities that may have been purchased with the.plaintiffs’ funds, or that the delivery of any such securities occur within a particular time following the transfer or withdrawal of the plaintiffs’ funds. (See generally Def. Ex. A). Accordingly, nothing in Funds Transfer Agreement was inconsistent with or otherwise altered the Instructions provision of the Joint Account Agreement pertaining to nonreceipt of securities. Therefore, State Street did not breach the Joint Account Agreement by disbursing funds from the Joint Account without taking timely delivery of stock certificates.

Defendant’s Obligations Under the Raymond and Szulik Children Trust Agreements

The plain language of the Raymond Trust Agreement and the Szulik Children Trust Agreements also precludes the Szuliks’ claims for breach of contract based on the untimely receipt of securities. Under those Agreements, the defendant was authorized to act upon TAG’s instructions “to purchase or receive securities and make payment therefore as set forth in such instructions.” (Compl. Ex. B ¶ 23.a(A)). However, they contained no requirement that State Street take possession of such securities or that it do so within a particular time following. its disbursement of funds from the plaintiffs’ custody accounts or the purchase of securities by TAG. Moreover, as in the case of the Joint Account Agreement, the plain language of the Raymond and Szulik Children Trust Agreements undermines the plaintiffs’ efforts to hold State Street, liable for its alleged failure to take timely custody of securities that were purchased with funds from the Szuliks’ accounts. Specifically, the Agreements expressly provided , that “you [custodian] shall have no duty or responsibility ... for any act or omission ... of any agent selected by you ... or by the undersigned or any other person to effect any transaction for the Account” or “for any loss occasioned by delay in the actual receipt of notice by you or any. payment, redemption or other transaction in respect to which you are authorized to take some action pursuant to this Agreement.” (Compl. Ex. B ¶ 16(A)(c) and (e))., Thus, State Street cannot be held liable for any losses .that the plaintiffs may have sustained due to a delay in its receipt of securities that were purchased with funds from the plaintiffs’ custody accounts.

Alleged Failure to Take Custody of Purchased Securities

The plaintiffs’"claims that State Street breached the Custody Account Agreements by failing to take custody of the Szuliks’ assets or depositing them with an appropriate sub-custodian are similarly unsupported by the plain language of the Agreements. As described above, the Joint Account Agreement specifically absolved the custodian of any obligation to “take any steps to obtain delivery of, securities from brokers or others either against payment or free of payment.” (Compl. Ex. A ¶ 11). Moreover, none of the other Agreements imposed • an obligation upon State Street to obtain possession of assets that were never delivered to the custodian. Instead, all of the Agreements contemplated that the defendant would be responsible only for those securities that it actually received for the plaintiffs.

Under each of the Custody Account Agreements, State Street was authorized to establish custody accounts “for the purpose of- holding or disposing of any property received by [the custodian] for the [Szuliks.]” (Compl. Ex. A at preamble (emphasis added); see also Compl. Ex. B at preamble). Additionally, the Joint Account Agreement provided that “[y]ou [the custodian] may provide safekeeping of the property under your control according to your operational procedures[,]” and the Raymond and Szulik Children Trust Agreements provided that “[y]ou [the custodian] shall have no liability for any statement memo entries regarding assets not held or controlled by you.” (Compl. Ex. A ¶ 1; Compl. Ex. B ¶ 16(B)). Thus, under the plain language of the Agreements, State Street’s obligation to hold and safeguard the plaintiffs’ investments extended only to those investments that State Street actually received and over which it could exercise control. State Street could not have breached its contractual obligations by failing to take custody of assets that remained in the possession of TAG or an affiliate of TAG and were never delivered to the custodian.

The plaintiffs’ assertion that “State Street was contractually obligated to disburse cash or securities ‘against receipt’ of corresponding securities or cash” is not supported by the relevant terms of the Custody Account Agreements. (See PI. Opp. Mem. at 7). • The Szuliks’- argument is based on a provision in the Agreements which authorized the custodian to act upon TAG’S instructions “[t]o sell, deliver or exchange any securities or other property against receipt by you [the custodian] of such payment set forth in such instructions and to purchase or receive securities and make payments therefor as set forth in such instructions.” (See id.; Compl. Ex. A ¶ 12(A); Compl. Ex. B ¶ 23.a). By its plain terms, this language authorized the custodian to sell, deliver or exchange property “against receipt” of “payment” and to purchase or receive and pay for securities in accordance with TAG’S instructions. It did not require the defendant to make purchases against receipt of securities or otherwise take custody of purchased securities unless instructed to do so by TAG.

Similarly, despite the plaintiffs’ arguments to the contrary, neither the preamble -to the Agreements nor the provisions regarding the custodian’s use of depositories required the defendant to take custody of assets that it never received from TAG or were not otherwise delivered to it. (See PL Opp. Mem. at 10-11). As described above, the preamble to each of the Custody Account Agreements authorized State Street and its predecessors to establish custody accounts “for the purpose of holding or disposing of any property received by [the custodian]” for the Szuliks. (Compl. Ex. A at preamble (emphasis added); see also Compl. Ex. B at preamble). Thus, the preamble manifests an intent to make State Street responsible for property that it received, but not for property that was retained by TAG or others and was never in State Street’s possession.

With respect to the provisions concerning the use of depositories, the Joint Account Agreement provided that “[y]ou [the custodian] may provide safekeeping of the property under your control according to your operational proceduresf,]” and it authorized the custodian to deposit all or any part of such property with a centralized securities depository system (“SDS”) or sub-custodian of the defendant’s choosing. (Gompl. Ex A ¶ 1 (émphasis added)). It also required that “[a]ll stocks and other securities in registered form held in the Account are to be registered in the name of your nominee or a nominee of the relevant SDS or subcustodian.” (Id.). However, it did not require State Street to obtain custody of assets that remained in the possession of others or were not under its control.

Similarly, the “Use of Depositories” provisions of the Raymond Trust Agreement and the Szulik Children Trust Agreements authorized State Street to “provide safekeeping of the Property” that it received for the plaintiffs “according to your operational procedures[,]” and to deposit all or any part of such Property with an SDS or subcustodian selected by the defendant. (Compl. Ex. B ¶ 1). They also required that “stocks and other securities in registered form held in the Account are to be registered in the name of your nominee or a nominee of the relevant SDS or sub-custodian.” (Id.). However, the provisions relating to the use of depositories did not require State Street to obtain custody of assets that had not been delivered to it, or to provide safekeeping of securities that were not in its possession or control.

Finally, the plaintiffs’ argument that State Street’s status as a custodian rendered it the “guardian” of the Szuliks’ property does not alter this court’s determination that State Street had no contractual obligation to provide safekeeping of assets that it never received. As the plaintiffs point out, a “custodian” is defined as “one that guards and protects or maintains; especially: one entrusted with guarding and keeping property or records[.]” Merriam-Webster’s Online Dictionary, http://www.merriamwebster.com/ dictionary/custodian. However, there is no inconsistency between a custodian’s role in guarding and maintaining property and State Street’s contractual duty to hold and safeguard only those assets -that it received for the Szuliks. Indeed, the plaintiffs’ suggestion that State- Street was somehow responsible -for taking' custody of property that was never delivered to it defies common sense as well as the relevant language of the Custody Account Agreements. Accordingly, the plaintiffs have failed to state a breach of contract claim based on State Street’s alleged failure to take custody of all of the assets listed on the account statements or to deposit’such assets with a qualified sub-custodian. :

Alleged. Receipt of Securities That Were Not in Good Form

State Street also has moved to dismiss the plaintiffs’ claims that the defendant breached the Custody Account Agreements by disbursing funds in exchange for securities that were not in good form or accepted business usage because they were unsigned, or signed only by TAG. The defendant argues that such claims rest on the false allegation that the Custody Account Agreements only allowed State Street to disburse funds in exchange for securities , that were in good form, when in fact the Agreements say no such thing and instead granted State Street unqualified authority to make disbursements and receive securities at TAG’s direction. (Def. Mem. at 9-11). Although the Agreements lacked any affirmative requirement that State Street accept .only securities that were in good form, this court finds that at this stage in the, litigation, the plaintiffs have stated claims for breach of contract based on allegations that State Street continued to disburse the plaintiffs’ funds in exchange for obviously defective securities.

As asserted by State Street in support of its motion to dismiss, the Custody Account Agreements authorized the defendant to carry out TAG’s instructions, without further approval from the Szuliks, “to purchase or receive securities and make payment therefor as set forth in such instructions.” - (Compl. Ex. A ¶ 12(A); Compl. Ex. B ¶ 23.a)(A)). The Agreements contained no specific language that required State Street to accept securities only if they were in a particular form, and they expressly provided that State Street and its predecessors had no responsibility to supervise, recommend or advise the plaintiffs with respect to any investment decisions, including decisions relating to the purchase, sale or retention of property. (,See Compl. Ex. A ¶ 13; Compl. Ex. B ¶ 16(A)(a)). On the other hand, nothing in the Agreements authorized the defendant to accept unsigned and otherwise defective promissory notes that amounted to worthless pieces of paper rather than legitimate securities or other forms of property. (See Compl. ¶¶ 19-22). Because the parties agreed that the defendant would be responsible for holding and disposing of “property,” and for purchasing and receiving “securities” in accordance with TAG’s instructions (see Compl. Ex. A at preamble and ¶ 12(A); Compl. Ex. B at preamble and ¶ 23.a)(A)), it is unclear whether State Street exceeded its authority or otherwise breached its contractual obligations by accepting obviously defective and valueless securities in lieu of legitimate assets.

Indeed, under the Raymond' Trust Agreement and the Szulik Children Trust Agreements, State Street was granted specific authority to reject securities that were not in good form. As the Agreements provided, “[y]ou [the custodian] reserve the right to refuse to accept any investment for the Account, which is in a form, or condition which you, in your sole discretion, determine is not compatible with the services to be performed under this Agreement.” (Compl. Ex. B ¶3). The plaintiffs’ allegations that State Street repeatedly disbursed funds in exchange for securities that were not in good form and were defective on their face, notwithstanding its authority to reject such investments, raises a question of fact as to whether the defendant’s conduct frustrated the reasonable expectations of the contracting parties.

Facially Irregular Transactions

To the extent the plaintiffs’ breach of contract claims arise out of the defendant’s alleged conduct in disbursing funds for use in facially irregular transactions, such as the transfer of funds to an attorney for the purported purchase of securities, this court finds that those claims cannot survive the motion to dismiss. In support of those claims the plaintiffs allege that the. transactions “were so facially irregular that State Street should not have disbursed any funds without first taking further steps to assure itself that the transaction was legitimate.” (Compl. ¶ 38; see also Compl. ¶ 39). However, the plaintiffs’ assertion that State Street was obligated to question or investigate such transactions before disbursing the plaintiffs’ funds is belied by the express language of the Custody Account Agreements.

Pursuant to each of the Agreements, the plaintiffs authorized TAG, not State Street, to make all investment decisions for their accounts. Thus, State Street was directed to carry out TAG’s instructions to purchase and pay for securities, but was instructed not to- “supervise, recommend or advise the [Szuliks] relative to the investment,, purchase, sale, retention or other disposition of any property” held on their behalf. (See Compl. Ex. A ¶¶ 11-13; see also Compl. Ex. B ¶¶ 13, 16(A)(a), 23.-a)(A)). Moreover, the plaintiffs expressly authorized State Street to “execute funds transfer or withdrawal instructions (‘Payment Orders’)” in accordance with TAG’s instructions, and to do so “without inquiry into the circumstances[.]” (Def. Ex. A at preamble and ¶ 1; Compl. Ex. B ¶ 5 (emphasis added)). Accordingly, State Street’s alleged failure to inquire into the circumstances of an investment decision before disbursing funds in accordance with TAG’s instructions cannot form the basis for a breach of contract claim.

The plaintiffs nevertheless argue that the defendant had no authority to make such disbursements under the terms of the Joint Account Agreement. Specifically, they contend that under the provisions of the Agreement entitled “Limited Trading Authority,” the Szuliks expressly withheld permission for State Street to “issue checks drawn against the Account, payable to any payee” as directed by TAG. (PI. Opp. Mem. at 8 (quoting Compl. Ex. A ¶ 12(A))). Therefore, according to the plaintiffs, the Joint Account Agreement “cannot be read to bestow unfettered authority to make any disbursement.” (Id.).

The plaintiffs’ interpretation of the Joint Account Agreement is not supported by the record. As the plaintiffs acknowledge, that Agreement was supplemented and amended by the terms of a Funds Transfer Agreement. (See id. at 8; Def. Ex. A at preamble). Pursuant to the Funds Transfer Agreement, Matthew and Kyle Szulik explicitly authorized State Street “to execute funds transfer or withdrawal instructions (‘Payment Orders’) as instructed by the undersigned or the undersigned’s agent(s).” (Def. Ex. A at preamble). Additionally, under the Funds Transfer Agreement, the defendant was

authorized to honor and execute Payment Orders, including Payment Orders that may create an overdraft and those that are for the benefit of any authorized representative, officer, agent or employee of the undersigned, without inquiry - into the circumstances; the [custodian] has the right to refuse Funds Transfer instructions if sufficient funds are not available in the account. Except as otherwise modified hereby or ■by the' Custody Account Agreement(s), the parties intend that the transactions contemplated hereby are deemed funds transfers subject to the Uniform Commercial Code.

(Id. ¶ 1 (emphasis added)). Thus, although the defendant did not have unfettered authority to make any disbursements, it did have authority to disburse funds in accordance with TAG’s instructions, and to do so without any obligation to question the circumstances.

Equally unpersuasive is the plaintiffs’ argument that the Funds Transfer Agreement did nothing more than update the Joint Account Agreement “to clarify that wire transfers would be conducted according to the Uniform Commercial Code.” (PL Opp. Mem. at 8). Although the parties agreed that any Payment Orders executed pursuant to the Funds Transfer Agreement would be deemed subject to the Uniform Commercial Code, they also agreed that State Street would have authority to execute Payment Orders in accordance with TAG’s instructions and without inquiry into the circumstances of such Payment Orders. (See Def. Ex. A ¶ 1).

Finally, the plaintiffs’ argument that the Funds Transfer Agreement “expressly limited fund transfers to those for the benefit of any authorized representative, officer, agent, or employee’ ” of the Szuliks is at odds with the Agreement’s plain language. (See Pl. Opp. Mem. at 8). As quoted above,1 the Agreement authorized the defendant to execute Payment Orders, “including Payment Orders ... that are for the benefit of any authorized representative, officer,, agent or employee” of the Szuliks. (Def. Ex. A ¶ 1). It did not restrict the defendant’s authority to execute-Payment Orders that were not for the benefit of such individuals, as long as State Street was acting in accordance with the Szuliks’ or TAG’s instructions. Accordingly, the plaintiffs’ claim that State Street breached the terms of the Custody Account Agreements by disbursing funds in connection with facially irregular transactions should be dismissed.

iii. Claims Regarding Account Statements

In Count I of their complaint, the Szuliks claim that State Street breached thé Joint Account Agreement by negligently and/or willfully misreporting the value of the Szuliks’ assets and listing phony CU-SIP numbers on the plaintiffs’ • account statements. (Compl. ¶¶ 51-52). Similarly, in Count II of their complaint, the Szuliks claim that State Street engaged in gross negligence and/or willful misconduct, in breach of the Raymond Trust