June 3, 2008
ANGELA KHOROZIAN, PLAINTIFF-APPELLANT,
HUDSON UNITED BANCORP, TORONTO-DOMINION BANK, AND ITS SUBSIDIARY TD BANKNORTH, INC., DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-2017-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 16, 2008
Before Judges Lisa, Lihotz and Simonelli.
Plaintiff Angela Khorozian appeals from the dismissal of her amended complaint. Khorozian's claims are based on alleged tortious conduct that occurred at the time she opened a commercial bank account at Hudson United Bancorp (the Bank)*fn1 and attempted to deposit into the account two checks totaling more than twenty million dollars. The Bank discovered the checks were counterfeit and contacted the FBI. Plaintiff was arrested when she returned to the Bank anticipating the negotiation of the checks. She was tried and convicted of bank fraud and conspiracy to commit bank fraud. See United States v. Khorozian, 333 F.3d 498 (3d Cir.), cert. denied, 540 U.S. 968, 124 S.Ct. 450, 157 L.Ed. 2d 314 (2003). Almost six years after her attempted deposit, Khorozian filed her civil action, centered on the Bank's alleged breach of duties owed to her as a customer. The Bank moved to dismiss challenging the legal sufficiency of plaintiff's complaint. Judge Wenzel reviewed each of the eleven alleged causes of action. The judge dismissed several claims as time-barred and others for failure to state a cause of action. We affirm.
The facts undergirding plaintiff's action are taken from the Third Circuit opinion affirming her criminal convictions: In 2000, Khorozian was approached with a moneymaking opportunity by her longtime acquaintance Eduardo Queirolo, a businessman from Brazil. Queirolo told Khorozian that a third person, Mr. Camilo, had presented Queirolo with a scheme in which he could obtain . . . $6 million if he negotiated $20,398,872 in checks through a bank in the United States. Camilo said the checks needed to be negotiated in the United States to avoid high taxes that would result were they negotiated in Brazil. Queirolo requested Khorozian's assistance in this project. It was agreed that Khorozian would receive $3 million of the commission, Queirolo and Camilio [sic] would each receive $1 million, and other unnamed individuals would split the remaining $1 million.
To facilitate negotiation of the checks, Khorozian attempted to open a commercial bank account at [the Bank]. To find out how to open such an account, she spoke with John Demetrius, a personal friend who sits on [the Bank's] board of directors. Demetrius, in turn, referred Khorozian to David Yanagisawa, a Senior Vice President at [the Bank].
Yanagisawa established an account for Khorozian at a meeting in which she made three misrepresentations. First, Khorozian told Yanagisawa that she expected to make the initial deposit via wire transfer. Her statement is significant because a wire transfer is an instantaneous transfer of funds and thus would pose no financial risk to [the Bank]. Yanagisawa testified that, had he known the initial deposit would be $20 million in checks, he would not have opened the account because of the increased risk. Second, Khorozian represented that she would be using the deposited funds for investment in a sugar plantation in Africa when in fact she had no such plans. Third, she opened the account in the name of "Sugarbank," a New Jersey corporation whose authorization to do business had lapsed due to its failure to pay taxes.
On May 25, 2000, Queirolo received two checks. One was allegedly drawn on the account of Costco Wholesale Corp. and the other on Liberty Carton Co.'s account. The checks were both payable to an individual named Luiz Carlos Teixiera. At trial, Queirolo testified that he verified that the checks were not the result of drug or arms trafficking, that Costco and Liberty Carton had sufficient funds to pay the checks, and that the check numbers were "correct." He was unable to verify whether the signatures on the checks were genuine. Thus, because his investigative resources in Brazil were limited, he asked Khorozian to perform a more thorough investigation in the United States. She agreed and later told him that she investigated the checks and that they were good. On May 30, 2000, Queirolo arrived in the United States with the checks. Khorozian endorsed both checks as payable to Sugarbank.
The next day, Khorozian and Queirolo went to [the Bank] to deposit the checks. They were assisted by the Custom Branch Manager, Anthony Moscati. At this meeting, Khorozian introduced Queirolo as "Mr. Teixeira [sic]," the individual to whom the checks were payable-a fourth misrepresentation. Moscati showed the checks to Tom Shara, the Executive Vice President in charge of commercial loans, who accepted the checks, but subjected them to a thirty-day hold for verification, given the large sum at stake.
Upon returning home, Khorozian received a fax-sloppily handwritten-instructing her and Queirolo how to distribute the $20 million. Khorozian and Queirolo had expected that they would be asked to forward the funds to a single bank account, but the fax instead instructed them to wire money to "about five" accounts, some held by individuals with Arabic names. The fax's unexpected instructions and unprofessional appearance made Khorozian and Queirolo suspicious, according to Queirolo, but they nonetheless proceeded with their plan. In fact, Queirolo testified that, as a result of the suspicious instructions and because of concerns that [the Bank] might become suspicious when asked to effect the transfers, Khorozian drew up a two-page fake "investment contract" between Sugarbank and Teixiera. The agreement purported to contain the terms of a hotel development project in Africa valued at the exact amount of the two checks. The contract specified that Sugarbank would receive a 15% commission for its work-less than the agreed-upon $6 million commission, according to Queirolo, to make it appear more credible.
Queirolo testified that he and Khorozian planned to furnish the agreement to [the Bank] in the event that anyone at the bank inquired into their intentions with respect to the $20 million deposit.
Meanwhile, [the Bank] attempted to verify the validity of the two checks by calling Costco and Liberty Carton. Each confirmed that it did not issue its respective check. Upon discovering that they were counterfeit, the bank called the FBI, which arrested Khorozian and Queirolo. Queirolo pled guilty to conspiracy to commit bank fraud and appeared as a Government witness at Khorozian's trial, at which the jury found Khorozian guilty of both bank fraud and conspiracy to commit bank fraud.
[Khorozian, supra, 333 F.3d at 501-03 (footnote omitted).]
In his review, Judge Wenzel concluded Chapter 4 of the Uniform Commercial Code (UCC), N.J.S.A. 12A:4-101 to -216, governed disposition of plaintiff's tort claims against the Bank. Specifically, the judge determined the assertions for "breach of contract, breach of implied duty of good faith and fair dealing, breach of implied contract, promissory estoppel, bailment, and breach of fiduciary duty" arose from the banking relationship and were subject to the three-year limitations provision of N.J.S.A. 12A:4-111. Consequently, the claims were time-barred. Also, the defamation claim was barred by the one- year statute of limitations imposed by N.J.S.A 2A:14-3, and the claims for false imprisonment and negligence were barred by the two-year limitations period delineated in N.J.S.A. 2A:14-2. All remaining claims were dismissed pursuant to Rule 4:6-2(e) for failure to state a claim upon which relief could be granted.*fn2
On appeal, plaintiff presents the following arguments:
THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN WRONGFULLY DISMISSING WITH PREJUDICE THE CASE BELOW BASED ON THE ERRONEOUS ASSERTION THAT APPELLANT'S COMPLAINT IS CONTROLLED BY THE UNIFORM COMMERCIAL CODE.
TRIAL COURT ERRED IN DISMISSING APPELLANT'S CLAIMS WITH PREJUDICE IN ITS ENTIRETY BECAUSE ALL COUNTS IN APPELLANT'S COMPLAINT ARE GOVERNED BY UCC. THIS IS REVERSIBLE ERROR ESPECIALLY SINCE CERTAIN CAPTIONED RESPONDENTS, INCLUDING FICTITIOUS RESPONDENTS PLEADED, ARE NOT SUBJECT TO THE UCC.
TRIAL COURT COMMITTED REVERSIBLE ERROR IN DISMISSING WITH PREJUDICE APPELLANT'S COMPLAINT WITH A MEAGER AND INADEQUATE RECORD THAT DID NOT PERMIT INDISPENSABLE, NECESSARY DISCOVERY, TO BE PERFORMED, THEREBY MAKING DISMISSAL PREMATURE.
TRIAL COURT'S DISMISSAL BELOW WAS REVERSIBLE ERROR BASED ON RESPONDENT'S HAVING UNCLEAN HANDS, PERPETRATING WRONGFUL ACTS CONTRARY TO BOTH THE UCC AND THE PRIVATE RIGHTS OF THE APPELLANT UNDER N.J.S.A. 12A:4-101 ET SEQ.
In our discussion, we consolidate the arguments in the first three points, noting that Points I and II challenge the application of the UCC limitations period and Point III suggests full discovery would aid the determination of whether the UCC even applied to plaintiff's claims. Plaintiff has not specifically appealed that portion of the court's determination dismissing the claims for fraud, consumer fraud and tortious interference based on Rule 4:6-2(e). We determine the argument raised in Point IV lacks sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
"Chapter 4 of the UCC governs bank deposits and collections." Valley Nat'l. Bank v. P.A.Y. Check Cashing, 378 N.J. Super. 406, 416 (Law Div. 2004), (citing N.J.S.A. 12A:4- 101), aff'd, 378 N.J. Super. 234 (App. Div. 2005)). "The Uniform Commercial Code, augmented by federal regulation, provides a comprehensive framework for allocating and apportioning the risks of handling checks." City Check Cashing, Inc. v. Mfrs. Hanover Trust Co., 166 N.J. 49, 57 (2001). The UCC seeks to achieve uniformity in the law governing commercial transactions. N.J.S.A. 12A:1-102(2)(a).
Khorozian suggests her action was bottomed on common law, not the UCC, thus, the court erred when granting dismissal. Plaintiff's argument fails as generally, "the UCC displaces the common-law where reliance on the common law would thwart the purposes of the UCC." Psak, Graziano, Piasecki & Whitelaw v. Fleet Nat'l. Bank, 390 N.J. Super. 199, 204 (App. Div. 2007) (citing Sebastian v. D & S Express, Inc., 61 F. Supp. 2d 386, 391 (D.N.J. 1999)); see also N.J. Bank, N.A. v. Bradford Sec. Operations, Inc., 690 F.2d 339, 346 (3d Cir. 1982) (common-law tort action barred where UCC provides "comprehensive remedy"). "'Only in very rare instances should a court upset the legislative scheme of loss allocation and permit a common law cause of action.'" City Check Cashing, supra, 166 N.J. at 58 (citing Bank Polska Kasa Opieki, S.A. v. Pamrapo Savs. Bank, 909 F. Supp. 948, 956 (D.N.J. 1995)). See also Girard Bank v. Mount Holly State Bank, 474 F. Supp. 1225, 1239 (D.N.J. 1979) ("[c]courts should be hesitant to improvise new remedies outside the already intricate scheme of Articles 3 and 4"). Here, Khorozian's claims of wrongdoing are integrally related to the opening of a commercial bank account in the name of Sugarbank, N.A. and her attempted deposit of counterfeit checks into that account. Plaintiff presents no evidence of a breached common law duty actionable outside of the parameters of the UCC.
The three-year limitations period of N.J.S.A. 12A:4-111 applies to actions to enforce an obligation, duty, or right arising under Article 4, which governs the rights between the parties with respect to bank deposits and collections. Plaintiff's claims for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of implied contract, promissory estoppel, bailment, and breach of fiduciary duty, accrued in May 2000 and expired in May 2003. We further determine plaintiff's contention that she was "placed in harm's way" when the Bank "violated banking industry standards, rules and regulations that were established not only to protect the bank, but also the consumer" is specious. For example, she suggests the Bank failed to provide a complete account disclosure agreement making her unaware of bank policies regarding check deposits. This ignores the undeniable fact that she knowingly attempted to deposit counterfeit checks.
Finally, we reject plaintiff's theory advocating the need for further discovery to discern the application of the UCC. The UCC's applicability would remain unchanged despite the depth of discovery. Moreover, "pleadings reciting mere conclusions without facts and [a party's] reliance on subsequent discovery do not justify a lawsuit." Glass v. Suburban Restoration Co., Inc., 317 N.J. Super. 574, 582 (App. Div. 1998).