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Triffin v. Wachovia Bank


September 27, 2007


On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. DC-6158-05.

Per curiam.


Argued August 28, 2007

Before Judges Payne and Messano.

Plaintiff Robert J. Triffin appeals from an April 18, 2006, order granting defendant Wachovia Bank, N.A. (Wachovia) summary judgment. Because the procedure used by the motion judge deprived plaintiff of a fair opportunity to present his case, we reverse and remand the matter for further proceedings consistent with this opinion.

Plaintiff filed an amended complaint on January 11, 2006, in the Special Civil Part against Wachovia and six fictitious parties. He alleged he was the assignee pursuant to written agreements of all rights involving three dishonored checks that were attached as exhibits to the complaint. Each check was allegedly drawn on Wachovia, or its predecessor in interest, First Union Bank, and when they were dishonored, because of insufficient funds or stop payment orders, facsimiles were returned to plaintiff's assignor.

As to each of the three check facsimiles, plaintiff alleged that Wachovia was liable pursuant to Federal Reserve Systems Practices, 12 C.F.R. § 229.56 (2007). That regulation provides a cause of action if damages result from a bank's breach of certain warranties set forth in 12 C.F.R. § 229.52, which require the facsimile, or substitute check, to be the legal equivalent of the original check. Plaintiff alleged that the names of the individual drawers of the checks were "obliterated" and the required warranties, therefore, had been breached. He also alleged common law theories of conversion and breach of contract. The balance of the complaint alleged that a fictitious drawer and payee were also liable respectively on each of the three dishonored checks.

Wachovia filed its answer on March 24, 2006, and on April 4, 2006, moved for summary judgment. Relying upon Triffin v. Bridge View Bank, 330 N.J. Super. 473 (App. Div. 2000), it argued that plaintiff lacked standing to bring the action because he purchased his assignment rights after the checks were dishonored and with full knowledge of same.*fn1

Also on April 4, plaintiff served a notice in lieu of subpoena upon Wachovia seeking to have certain documents produced at trial, now listed for April 18, and to have individuals with knowledge of the facts of the case produced as witnesses. Defendant did not respond to the notice either in advance, or, as is apparent from the record, on the day of trial.

Wachovia's counsel requested by subsequent letter that the motion be heard "in advance of the trial." She also filed with the judge a copy of an unreported decision of another Law Division judge that dismissed a similar complaint brought by plaintiff. That judge found, among other things, that plaintiff suffered no loss as a result of any alleged violation of 12 C.F.R. § 229.56 by the bank because he knew of the condition of the facsimile prior to purchasing the assignment.

Plaintiff filed opposition to the motion and cited our opinion in Triffin v. Somerset Valley Bank, 343 N.J. Super. 73 (App. Div. 2001), in which we noted, "There is nothing in Bridge View Bank to indicate that the holding should be expanded beyond actions brought under N.J.S.A. 12A:4-302." Id. at 82. Plaintiff argued that since his cause of action was not brought pursuant to the "midnight deadline rule," he had standing to bring a claim under § 229.56.

On the trial date, the judge proceeded to consider Wachovia's summary judgment motion by asking plaintiff "how that obliteration [of information on the face of the check] caused your loss." Plaintiff responded to the judge's inquiry, but also noted,

The only issue we have [today] is a de facto motion to dismiss for failure to set forth a cause of action, which should not have been denominated as a motion for summary judgment . . . because the only issue that they raise is . . . standing.

We're not addressing the merits of the claim. We're simply addressing standing.

Plaintiff argued Bridge View Bank was not applicable to his claim in this case. The judge apparently agreed, noting, I got that point. You've definitely sidestepped the problems presented by Bridge View Bank by bringing the action under 12 C.F.R..

Wachovia, however, argued that plaintiff did not suffer any damage as a result of any obliteration of information on the facsimiles of the actual checks. It argued that plaintiff knew the condition of the facsimiles when he purchased them from his assignor and that the assignor had all the information on the original check before any obliteration occurred.

In reaching his decision, the judge found that plaintiff had standing to bring the action, but concluded that there was no "evidence . . . that the plaintiff suffered any damages by virtue of defendant's failure to comply with 12 C.F.R. [§ 229.56]." The judge also concluded that as to two of the three checks, the names of the maker were "unobliterated," and, as to the third, most of the name and address of the maker were legible. The judge concluded,

It is the obligation of this court on a motion for summary judgment to view the evidence in a light most favorable to the party opposing the motion. And under the trial equivalent of this dispositive motion,

R. 4:37-2, taking all favorable inferences which may reasonably be drawn from that evidence in plaintiff's favor in opposition to the motion this court can conclude as a matter of law that it can discern the ultimate outcome of this case . . . .

He then dismissed plaintiff's complaint.

Among plaintiff's contentions on appeal is his argument that the trial court decided the case, not by the proper application of the appropriate standards governing a motion for summary judgment, but rather by essentially trying the case without the production of witnesses or the admission of evidence. We agree.

In Triffin v. Quality Urban Housing Partners, 352 N.J. Super. 538, 543 (App. Div. 2002), we recognized the informality that accompanies practice in the Special Civil Part. Nevertheless, we noted, "[E]ven considering the character of that forum, we think it plain that critical facts must be proved and not merely assumed." Ibid.

Here, plaintiff was served with a motion seeking summary judgment asserting only that he lacked standing to bring the action. Defendant's motion was supported by a statement of undisputed material facts that relied solely upon the allegations in the amended complaint. Defense counsel's subsequent certification consisted solely of the unreported Law Division decision of another judge in another case.

Plaintiff, who appropriately opposed the motion on the grounds that were alleged, nevertheless found himself responding to inquiries from the bench as to issues that were not the subject of the motion. He was never placed under oath, the introduction of other evidence, if it existed, was never contemplated, and any issue regarding Wachovia's response to plaintiff's notice in lieu of subpoena was never addressed.

We gather that the judge's reference to R. 4:37-2, which permits dismissal of a plaintiff's case at trial "[a]fter . . . the presentation of the evidence on all matters other than the matter of damages," was recognition that the appropriate procedures for deciding a summary judgment motion pursuant to R. 4:46 had been abrogated. However, a motion to dismiss should only be entertained after plaintiff has completed his proofs. Perth Amboy Iron Works, Inc. v. Am. Home Assurance Co., 226 N.J. Super. 200, 215 (App. Div. 1988), aff'd o.b. 118 N.J. 249 (1990).

Unlike the rules governing summary judgment, R. 4:37-2 "is a rule of trial, not pre-trial, and accordingly is not available to the court as a basis of a sua sponte involuntary dismissal on a proffer of proof . . . prior to trial." Pressler, Current N.J. Court Rules, comment 2.2 on R. 4:37-2 (2008). In Klier v. Sordoni Skanska Const. Co., 337 N.J. Super. 76 (App. Div. 2001), we reversed the trial court's involuntary dismissal of plaintiff's complaint. Id. at 93. There, the trial judge adopted a procedure requiring plaintiff's counsel to proffer "his best case" to the judge before the trial started. Id. at 81. The judge thereafter ruled he would "hear argument and make a determination as to whether or not . . . there [was] something which should go to the jury." Id. at 81-82.

We concluded that this procedure unfairly denied plaintiff notice and an opportunity to be heard. Id. at 84. We contrasted the trial judge's impromptu procedure at trial with the appropriate pre-trial motion procedure contemplated by R. 4:46, and noted, "[t]he purpose of [the summary judgment] rules is obvious, that is, to afford the party against whom relief is sought notice of the application, together with a meaningful opportunity to respond." Ibid.

We conclude similarly that in these circumstances the trial judge mistakenly adopted a procedure that denied plaintiff the full and fair opportunity to present his case. Therefore, we reverse and remand the matter for further proceedings.

In doing so, we do not imply in any way that plaintiff can necessarily prevail. Plaintiff seeks to impose liability on Wachovia pursuant to 12 C.F.R. § 229.56, which provides in relevant part

[A]ny person that breaches a warranty described in § 229.52 or fails to comply with any requirement of this subpart with respect to any other person shall be liable to that person for an amount equal to the sum of --

(i) The amount of the loss suffered by the person as a result of the breach or failure, up to the amount of the substitute check;

(3) Comparative negligence. (i) If a person incurs damages that resulted in whole or in part from that person's negligence or failure to act in good faith, then the amount of any damages due to that person under paragraph (a)(1) of this section shall be reduced in proportion to the amount of negligence or bad faith attributable to that person.

[12 C.F.R. § 229.56 (1) (i) & (3) (i)]

In our view, in order to recover any damages, plaintiff must prove he suffered an actual loss occasioned by Wachovia's alleged breach of the warranties contained in § 229.52. Moreover, the trial judge will have to consider whether plaintiff's admitted purchase of the assigned rights to the dishonored checks 1) with knowledge that each check had already been dishonored, and 2) with knowledge of the actual appearance of the check facsimiles demonstrates that any loss he suffered "resulted in whole or in part from [his] negligence or failure to act in good faith." Ibid.

Reversed and remanded.

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