On appeal from Superior Court of New Jersey, Law Division, Hudson County.
J.h. Coleman, Brody and Skillman. The opinion of the court was delivered by Brody, J.A.D.
[244 NJSuper Page 305] Plaintiff City Check Cashing, Inc. (plaintiff) opened a demand deposit account with defendant in 1985, a year in which plaintiff cashed a total of $19,000,000 worth of checks for its customers.
Plaintiff deposited its customers' checks in the account, and withdrew from the account the funds it needed to cash them. Defendant's Central Money Processing Unit, which serviced customers who needed a constant and large supply of cash for their businesses, kept plaintiff supplied with ready cash from the account. Defendant abruptly stopped supplying plaintiff with cash on April 30, 1988, a year in which plaintiff cashed $108,000,000 worth of checks.
We hold that though defendant wrongfully froze the account, in the circumstances of this case plaintiff was not a consumer and therefore was not entitled to recover under the Consumer Fraud Act.
Although plaintiff's account with defendant originally had the appearance of a simple demand deposit account, it gradually expanded to include what might be described as an informal unlimited line of credit. This change developed because as plaintiff's business grew, defendant permitted it to withdraw increasingly large sums of cash against deposits of checks that had not yet cleared. As these "overdrafts" increased, defendant became concerned that they posed a risk that was not adequately secured and for which it was not being adequately compensated.
The immediate reason for freezing plaintiff's account in April 1988 was defendant's discovery that the New Jersey Department of Banking was conducting an investigation into the affairs of plaintiff Edwin Siegel, plaintiff's principal, which jeopardized plaintiff's license to do business. However, a second reason was defendant's mounting concern over whether to continue what began as a demand deposit account but had grown into a risky, ill-defined arrangement.
Plaintiff immediately brought the present action in which it sought temporary restraints, pendente lite relief and damages. To relieve the crisis, the parties agreed that plaintiff would deposit $100,000 with defendant as security and in return defendant would unfreeze the account "on the understanding
that the parties will meet to discuss a broader resolution within the next seven days."
Negotiations between the parties continued until February 1989, when defendant's attorney wrote plaintiff's attorney that defendant had decided to terminate any further business relationship with plaintiff because of the parties' inability to agree upon "protection, comfort and security necessary for the Bank. . . ." Plaintiff, however, took the position that the negotiations had produced an oral contract.
Two months later, in April 1989, plaintiff filed an amended complaint in which it additionally sought pendente lite relief prohibiting defendant from closing the account and a declaration that as a result of their negotiations and prior dealings the parties had an oral contract that defendant had broken. The amended complaint described the parties' negotiations but did not specify the terms of the alleged oral contract. The underlying issue thus presented was whether the parties had an agreement, express or implied, that could not be terminated except for reasonable cause or whether defendant was free to close the account at any time subject only to giving plaintiff reasonable notice. Defendant consented to an order restraining it from closing the account until the issue was adjudicated.
The following month plaintiff moved to file a second amended complaint that contained an additional count charging that defendant had violated the Consumer Fraud Act (Act), N.J.S.A. 56:8-1 et seq. The violations alleged were general and all appear to be variations of a claim that defendant wrongfully closed plaintiff's account in April 1988. Judge Wefing ...