Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Triffin v. Wachovia Bank


April 16, 2009


On appeal from the Superior Court of New Jersey, Law Division, Somerset County, DC-6158-05.

Per curiam.


Argued December 2, 2008

Before Judges Wefing, Parker and LeWinn.

Plaintiff Robert J. Triffin appeals from the January 11, 2008 order of the Special Civil Part granting summary judgment to defendant Wachovia Bank, N.A., dismissing his complaint. For the reasons that follow, we affirm.

The factual background of this matter may be summarized as follows.*fn1 In December 2005, plaintiff entered into separate assignment agreements with three check-cashing entities, in which he purchased those entities' rights and interests in certain dishonored checks. The assignors had received legally enforceable copies of those checks at the time they were dishonored.

On January 11, 2006, plaintiff filed a complaint in the Special Civil Part against Wachovia and fictitious parties, claiming that he was the assignee of three checks that were allegedly drawn on Wachovia or its predecessor, First Union National Bank, that were dishonored because of holds for uncollected funds, insufficient funds and stop-payment orders.

Plaintiff contended that Wachovia provided his three assignors with illegible check substitutes, which he claimed constituted a violation of warranties under the Federal Reserve Systems Practices, 12 C.F.R. § 229.52. Therefore, plaintiff alleged that Wachovia was liable under 12 C.F.R. § 229.56 for the amount of the original checks, together with pre-judgment interest and all expenses, for a total of $1,401.04. Plaintiff further alleged that Wachovia was liable for conversion and breach of the duty of good faith and fair dealing, and that the fictitious parties were also liable for the dishonored checks.

Wachovia answered the complaint and, ten days later, filed a motion for summary judgment. On April 18, 2006, the trial judge granted summary judgment to Wachovia. Plaintiff appealed, and we reversed and remanded the matter in Triffin v. Wachovia Bank, N.A., No. A-4942-05 (App. Div. September 27, 2007). The basis for the remand was our conclusion that the trial judge had "mistakenly adopted a procedure that denied plaintiff the full and fair opportunity to present his case." (Slip op. at 8). We added, however:

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 . . . . 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." [Slip op. at 8-9 (quoting 12 C.F.R. § 229.56 (3)(i)).]

On November 6, 2007, Wachovia renewed its motion for summary judgment on remand. Wachovia argued that (1) plaintiff lacked standing; (2) the warranties under 12 C.F.R. § 229.51 "et seq." did not apply because defendant did not receive consideration for the checks; (3) there was no nexus between the alleged violations and plaintiff's damages; and (4) plaintiff's common law claim for breach of the duty of good faith and fair dealing was preempted by the Uniform Commercial Code (UCC).

On November 15, 2007, plaintiff served Wachovia with a notice in lieu of subpoena to produce a witness to testify about the disputed checks and the account cards related to those checking accounts. Wachovia filed a motion to quash plaintiff's subpoena.

On January 11, 2008, Judge Anthony F. Picheca, Jr., heard oral argument, after which he rendered a decision from the bench granting Wachovia's motion for summary judgment and rejecting plaintiff's reliance upon Triffin v. TD Banknorth, N.A., 190 N.J. 326 (2007). Judge Picheca found that plaintiff did not have standing to pursue his claims because, similar to plaintiff's lack of standing to pursue claims under N.J.S.A. 12A:4-302 in Triffin v. TD Banknorth, N.A., id. at 328, plaintiff's claims under 12 C.F.R. §§ 229.52 and 229.56 were not assignable. Judge Picheca thereupon entered orders (1) granting summary judgment to Wachovia and (2) quashing plaintiff's notice in lieu of subpoena.

On appeal, plaintiff presents the following arguments for our consideration:




Legal Status of 12 C.F.R. 229.51 et se[q]. Claims The Supreme Court's Analytical Paradigm For Assignable Statutory Claims

Our standard of review of a motion for summary judgment mirrors that of the trial court, namely, whether there is a genuine issue of material fact and, if not, whether the moving party is entitled to summary judgment as a matter of law. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); Kopin v. Orange Prods., Inc., 297 N.J. Super. 353, 366 (App. Div.), certif. denied, 149 N.J. 409 (1997). Where, as here, we primarily review a trial court's conclusion of law, we "owe[] no deference to the lower court's interpretation of the law and the legal consequences that flow from established facts . . .," and apply a de novo standard of review. Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).

Plaintiff contends that "[t]he sole issue presented in this appeal . . . [is] the trial court's misapplication of the Court's TD Banknorth standard for assignable statutory claims," which, he notes, "is entirely a question of law."

As assignee of the dishonored checks in question, plaintiff premises his claim for damages upon 12 C.F.R. §§ 229.51 to .53, and .56. These regulations were adopted pursuant to the Check Clearing for the 21st Century Act (Check 21 Act), 12 U.S.C. §§ 5001 to 5018. Congress enacted the Check 21 Act to facilitate "the broader use of electronic check processing" by "authorizing the use of a new negotiable instrument called a substitute check . . . ."

Availability of Funds and Collected Checks, 69 Fed. Reg. 47,290 (Aug. 4, 2004)(codified at 12 C.F.R. § 229.51). These regulations impose several duties upon banks that process checks electronically. Specifically, 12 C.F.R. § 229.51 provides that:

(a) [A] substitute check for which a bank has provided the warranties described in § 229.52 is the legal equivalent of an original check for all persons and all purposes, including any provision of federal or state law, if the substitute check -

(1) Accurately represents all of the information on the front and back of the original check as of the time the original check was truncated; and

(2) Bears the legend, "This is a legal copy of your check. You can use it the same way you would use the original check."

(b) Reconverting bank duties. A bank shall ensure that a substitute check for which it is the reconverting bank -

(1) Bears all endorsements applied by parties that previously handled the check in any form (including the original check, a substitute check, or another paper or electronic representation of such original check or substitute check) for forward collection or return;

(2) Identifies the reconverting bank in a manner that preserves any previous reconverting bank identifications, in accordance with ANS X9.100-140 and appendix D of this part; and

(3) Identifies the bank that truncated the original check . . . .

[12 C.F.R. § 229.51(a)-(b)(3).]

The regulations under 12 C.F.R. § 229.52 then provide that

[a] bank that transfers, presents, or returns a substitute check (or a paper or electronic representation of a substitute check) for which it receives consideration warrants to the parties listed in paragraph (b) of this section that . . .

(1) The substitute check meets the requirements for legal equivalence described in § 229.51(a)(1)-(2); and

(2) No depositary bank, drawee, drawer, or indorser will receive presentment or return of, or otherwise be charged for, the substitute check, the original check, or a paper or electronic representation of the substitute check or original check such that that person will be asked to make a payment based on a check that it already has paid.

[12 C.F.R. § 229.52(a)(1)-(2).]

The recipients of the warranties listed in 12 C.F.R. § 229.52(a)(1)-(2) include:

(b) the person to which the bank transfers, presents, or returns the substitute check or a paper or electronic representation of such substitute check and to any subsequent recipient, which could include a collecting or returning bank, the depositary bank, the drawer, the drawee, the payee, the depositor, and any indorser. These parties receive the warranties regardless of whether they received the substitute check or a paper or electronic representation of a substitute check.

[12 C.F.R § 229.52(b).]

If a bank breaches the warranties under 12 C.F.R. § 229.52, the regulations pursuant to 12 C.F.R. § 229.56 provide, in relevant part, that the bank "shall be liable . . . 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; and

(ii) Interest and expenses (including costs and reasonable attorney's fees and other expenses of representation) related to 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)-(ii), (3)(i).]

Plaintiff contends, without support, that the statutory claims pursuant to the federal regulations are contractual in nature and, therefore, assignable. We are not aware of any determination, judicial, legislative, regulatory or otherwise, to the effect that the statutory claims are contractual in nature.

In TD Banknorth, supra, 190 N.J. at 328, plaintiff, once again as the assignee of dishonored checks, sought to hold the defendant banks strictly liable for those checks by enforcing the so-called "midnight rule" of N.J.S.A. 12A:4-302. That statute holds a bank "accountable for the amount of . . . a demand item, . . . if the bank . . . retains the item . . . beyond midnight of the banking day of receipt without settling for it . . . ." N.J.S.A. 12A:4-302. Plaintiff claimed the checks had been "wrongfully dishonored . . . in violation of the midnight rule and, accordingly, [the banks] were strictly liable for the amount of the checks." Ibid.

In affirming summary judgment for the banks, the Court held that plaintiff lacked standing to enforce a statutory duty upon the banks, and quoted our earlier decision in Triffin v. Bridge View Bank, 330 N.J. Super. 473 (App. Div. 2000). Id. at 328-29. In that case, we affirmed summary judgment for the banks, stating:

[A]fter [the check's] untimely return and with full knowledge of its dishonor, [the assignee] has no vested interest in the timely payment or return of these checks. . . . Any argument to the contrary would misconstrue the nature of an enforcement action under [N.J.S.A. 12A:4-302]. It is a cause of action for a breach of statutory duty, not an action for collection of a negotiable instrument.

[Id. at 329 (quoting Triffin v. Bridge View Bank, supra, 330 N.J. Super. at 478).]

Here, the trial court properly drew the analogy between the statutory duty in TD Banknorth and the regulatory duty at issue in this case. As the trial court held:

[I]t's really undisputed that Mr. Triffin purchased the checks at issue here after [they had been] dishonored -- [with] full knowledge of their dishonor. It appears to me that, as stated in these other cases, . . . plaintiff is seeking to recover under a statutory right and not a contractual right. And but for the statutory requirements of th[e] Check Clearing for the 21st Century Act or the Check 21 Act, 12 [U.S.C.A. §§] 5001, et seq., and the regulations of the Code of Federal Regulations, 12 [C.F.R. §§] 129.51, et seq., Mr. Triffin would not have a cause of action against the bank.

It appears that the claim is statutory in nature and in the case of Triffin versus TD Banknorth, the [C]court concluded the action was not based upon a contractual right and was therefore not assignable and, therefore, the plaintiff did not have standing to pursue the action.

The sole basis on which plaintiff premised his claim for payment of the dishonored checks was the federal regulatory scheme cited. Plaintiff presented no evidence to establish the existence of any contract either with his assignors or with the defendant banks that would create a right "contractual in . . . nature," as he claims.

Plaintiff lacks standing to bring assigned claims pursuant to 12 C.F.R §§ 229.51 to .53, and .56 Moreover, the assignment of statutory claims is strictly prohibited as a matter of law. "A right of action for personal injuries cannot be made the subject of assignment before judgment, in the absence of a statutory provision to the contrary. Except when otherwise provided by statute, nothing is assignable, either at law or in equity, that does not directly or indirectly involve a right to property." Weller v. Jersey City, H. & P. St. Ry. Co., 68 N.J. Eq. 659, 662 (E. & A. 1905). Furthermore, as the Court noted in TD Banknorth, supra, "[plaintiff] can garner no support from N.J.S.A. 2A:25-1, which, in relevant part, permits assignment of 'all choses in action arising on contract. . . .' The action pursued in this case is not based on a contractual right, consequently it is not assignable." 190 N.J. at 329.

Because we conclude that plaintiff lacked standing to pursue statutory claims as assignee of the dishonored checks at issue, we need not reach the issue of whether he sustained damages proximately caused by Wachovia's return of substitute checks. We note that the checks had all been returned to the assignors as unpaid; therefore, those checks had no worth at the time they were deposited. Had plaintiff received the original unpaid returned checks, his position would be identical to that which he presents now; he would be the holder of dishonored, and therefore, worthless checks. In other words, any loss that occurred took place at the time the checks were dishonored, and not because substitute checks had been returned to the assignors. Thus, plaintiff's allegation that the substitute checks did not legibly identify the name of the checks' drawers is not causally related to the fact that the checks had been dishonored for insufficient funds.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.