April 9, 2010
JENNIFER LEONARDO, PLAINTIFF-APPELLANT/CROSS-RESPONDENT, AND JANET POLACHEK AND JOHN F. MORAN, JR., PLAINTIFFS,
BANK OF AMERICA, F/K/A/ FLEET BANK, N.A., DEFENDANT-RESPONDENT/CROSS-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-28-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: January 27, 2010
Before Judges Axelrad, Sapp-Peterson and Espinosa.
Plaintiff Jennifer Leonardo appeals the January 7, 2009 order dismissing claims against Bank of America, f/k/a Fleet Bank (referred to as "BOA") with prejudice following our remand to the trial court after we concluded the appeal was interlocutory. We affirm.
The facts before the court were contained in a statement of stipulated facts or are not in dispute. Plaintiff is the adult daughter of Janet Polachek. On Friday, April 23, 2004, Leonardo deposited into her BOA account two checks written by Charles Roper, a Florida resident, dated April l9, 2004, and drawn on his Sun Trust bank account (the "Roper checks"). The checks, numbers 1235 and 1236 in the amounts of $2,500 and $2,595, respectively, were made payable to the "Janet Polachek Racing Stables" and endorsed as payable to plaintiff by Polachek in her name only, there being no "Racing Stable" entity. According to plaintiff's bank statement, her balance prior to depositing the checks was -$155.46.
Plaintiff was notified by BOA by letter of April 28, 2004, that the Roper checks would take six business days from the date of deposit to clear because they were drawn on an out-of-state account. On April 29, plaintiff was told by a bank manager that the funds would be available on April 30, but on that date she was told the funds would not be made available because the checks were improperly endorsed. BOA dishonored several of plaintiff's checks, including: (1) check no. 1079 payable to "Arizona Premium Finance" in the amount of $55.48, dated April 24 and posted to her account on April 29; (2) check no. 1080 payable to "Dambly's" in the amount of $31.75, dated April 26 and posted to her account on April 28; and (3) check no. 1089 payable to "Dambly's" in the amount of $119.80 dated sometime in April, deposited by the payee on May 3 and presented for payment on May 4.*fn1
A hold was placed on plaintiff's account for the amount of the Roper checks and the account was turned over to the bank's fraud unit for investigation. According to the stipulated facts, plaintiff alleges that sometime after April 30, a BOA representative told Douglas Wells, payee of a check issued by plaintiff, that: "[t]here is plenty of money in the account but the account is frozen and being investigated by the bank's fraud unit." On or around May 4, 2004, plaintiff was informed of the fraud inquiry.
BOA suggested that if Polachek went to the bank and identified herself as the endorser and if Roper asked Sun Trust to request return of the funds, BOA would return the funds in exchange for the Roper checks. Sometime afterwards, Polachek presented BOA with a notarized statement confirming her identity as the endorser. Plaintiff brought to BOA an unsigned, typed letter dated May 3, 2004, purportedly from Roper to BOA, stating that the checks were made payable to the stables in error and should have been made payable to Polachek individually. She thereafter provided BOA with an undated, handwritten, signed letter from Roper evidencing the same.
Sun Trust made a written claim against BOA with respect to Roper check no. 1235, and BOA sent it $2,500 on July l2, 2004. Although BOA did not return the funds from check no. 1236 to Sun Trust in response to a similar demand, informing it on August 12, 2004 that plaintiff "[did] not have funds available at [that] time," the proceeds were paid to plaintiff by consent pursuant to an order dated May l5, 2007.*fn2
On December 30, 2004, plaintiff, Polachek, and John Moran*fn3 filed an eleven count complaint against BOA, asserting claims of conversion (count one), unjust enrichment (count two), wrongful dishonor of checks drawn on the account (counts three and four), breach of the implied covenant of good faith and fair dealing imposed by N.J.S.A. 12A:1-203 (count five), unconscionable commercial practices under the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -167 (count six), fraud, intentional and willful misconduct (count seven), negligent misrepresentation that the checks drawn on plaintiff's account would be honored (count eight), breach of fiduciary duty (count nine) and defamation (counts ten and eleven). BOA filed its answer in March 2005.
Plaintiff's theory against the bank was that the Personal Deposit Account Agreement makes deposits available after three business days and provides a general next-day availability for the first $100 of a deposit. Plaintiff contended the third business day was April 27 and, therefore, the Roper funds should have been credited to her account well before any of the aforementioned checks were returned. Then, despite plaintiff following the recommendation of BOA, the bank neither credited the Roper checks to plaintiff's account nor took action to facilitate issuance of a replacement check. Instead, BOA froze her account and referred it for a fraud inquiry. Plaintiff further contended BOA improperly continued to retain the funds and had use of the $2,595 until litigation. According to plaintiff, BOA's conduct constituted an unconscionable commercial practice within the CFA. Her claimed ascertainable loss and damages were: (1) the "NSF" check charges for the aforementioned checks; (2) the cancellation of Moran's automobile insurance policy on his vehicle, which she borrowed, due to the dishonor of check no. 1079 payable to Arizona Premium Finance; (3) Pennsylvania's cancellation of the registration privileges "on plaintiff's vehicle" for sixty days effective June l5, 2004; (4) plaintiff's resulting loss of her summer earnings of $300 per week for twelve weeks; and (5) BOA's retention of her funds until ordered to pay them over to her. She also asserted defamation in connection with BOA's representative's purported disclosure of the fraud inquiry to Wells.
By order of March l7, 2006, the court granted summary judgment against Polachek and Moran on all claims, and granted partial summary judgment against plaintiff on her CFA and unjust enrichment claims. The judge found that plaintiff was not a consumer within the CFA and BOA acted in accordance with reasonable commercial standards in reviewing the checks. In May, plaintiff filed a motion for reconsideration of her CFA claim based on a recently decided unpublished opinion of ours holding that a cause of action may be maintained against a banking institution under the CFA for a violation of a record retention policy, which the court denied by order of July 28, 2006.
Instead of proceeding to trial on the remaining claims, in concert with the parties, a different judge entered a May l5, 2007 order dismissing plaintiff's remaining claims without prejudice and permitting their reinstitution if she were unsuccessful on appeal of the CFA claim, and certifying the resulting judgment as final. Plaintiff appealed and in an unreported opinion of April 4, 2008, A-5448-06T2, we dismissed the appeal as interlocutory and remanded to the trial court.
The case proceeded on remand pursuant to stipulated facts and briefs. Following oral argument, Judge McMaster dismissed the balance of the counts of plaintiff's complaint in an order and written decision of January 7, 2009. The court noted that plaintiff was unable to prove she had title to the check or any ownership interest in the proceeds because the checks were issued to a non-existent entity and the checks were improperly endorsed. As BOA did not exercise dominion and control over plaintiff's funds, the court concluded that plaintiff could not maintain a cause of action for conversion. See Sun Coast Merch. Corp. v. Myron Corp., 393 N.J. Super. 55, 84 (App. Div. 2007). The court further found defendant acted in a commercially reasonable manner, in accordance with the Uniform Commercial Code (UCC) and its written agreement with plaintiff, by provisionally crediting the Roper funds, with the ultimate liability remaining with plaintiff until the funds could be fully credited. The court also found that BOA had no obligation to plaintiff, in fact or law, to honor checks drawn on the account when there were insufficient funds to pay them. Moreover, plaintiff did not rely on any alleged oral statements by BOA's representatives as to clearance of the checks because, even if made, any such statements were made after plaintiff issued the checks that were dishonored. The court concluded that plaintiff was not entitled to damages because she began writing checks before having any reasonable expectation that the funds were fully available under the scope of her written agreement with the bank.
In her analysis of the various claims, Judge McMaster emphasized, for example, the following facts that would justify BOA's further scrutiny of the account under banking law and contract: the Roper checks were drawn on an out-of-state bank, they exceeded the sum of $5,000, and they were payable to a nonexistent entity and not properly endorsed. The court concluded that the $2,595 was "appropriately submitted" to plaintiff's counsel pursuant to the May l5, 2007 order "based on the letter acknowledgement from Roper and the further acknowledgement" that plaintiff would hold BOA "harmless should there be any further action from Sun Trust." The court noted that prior to the order BOA "had no such assurance;" therefore, "it was not appropriate to return the balance of the proceeds" until that time.
The court also found that, based on the stipulated facts, plaintiff was unable to sustain her burden of proof on her defamation claim. The statement, allegedly made by an unidentified employee of BOA, was that plaintiff's account was frozen and being investigated by the bank's fraud unit. Assuming arguendo the statement was made, the court found it was truthful in that the account was subject to further investigation, and any allegations of fraud did not necessarily mean that plaintiff had engaged in the fraud. See McLaughlin v. Rosanio, Bailets & Talamo, Inc., 33l N.J. Super. 303, 312 (App. Div.) (holding that the "truth of the statement is a complete defense to a defamation action."), certif. denied, l66 N.J. 606 (2000).*fn4
After dismissal of plaintiff's complaint, BOA filed a motion for attorneys' fees pursuant to Rule l:4-8 and N.J.S.A. 2A:15-59.l for frivolous litigation. After oral argument, the motion was denied by the court by order of March 6, 2009. Plaintiff appealed dismissal of her claims and BOA cross-appealed denial of its motion for counsel fees.
On appeal, plaintiff challenges the court's rulings dismissing each count of her complaint and further argues the court erred in denying her a jury trial. We summarily reject plaintiff's belated challenge to the matter not proceeding as a jury trial. Although plaintiff sought a jury trial in her complaint, she thereafter agreed to proceed on stipulated facts to be submitted to the trial court, which was, in fact done, clearly abandoning her initial request.
Summary judgment was appropriately granted dismissing plaintiff's unjust enrichment claim. A cause of action for unjust enrichment requires proof that "defendant received a benefit and that retention of that benefit without payment would be unjust." VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994). The doctrine is generally applied when a plaintiff has not been paid despite having had a reasonable expectation of payment for services performed or a benefit conferred. County of Essex v. First Union Nat'l Bank, 373 N.J. Super. 543, 550 (App. Div. 2004), aff'd, l86 N.J. 46 (2006). The plaintiff must show it expected remuneration when it performed or conferred a benefit on the defendant and the latter's failure to remunerate enriched the defendant beyond its contractual rights. VRG Corp., supra, l35 N.J. at 554. Plaintiff cannot establish that she had a reasonable expectation to the use of the Roper funds under the circumstances of this case or that BOA's retention of the proceeds of the second Roper check until litigation conferred a benefit on the bank and enriched it beyond its contractual rights.
As to the balance of plaintiff's claims, with the exception of the CFA count, we affirm substantially for the reasons set forth in Judge McMaster's written opinion. We add the following comments. BOA's written agreement with plaintiff provides, among other items, that it is "legally entitled to a valid and unqualified endorsement" from its depositor and the depositor "will be liable for any losses or delays caused by nonconforming endorsements." The account may also be subject to automatically deducted fees and charges. The agreement also provides that deposits from non-local checks would be available on the third business day after deposit and, in some instances, funds may not be available until the fifth business day after deposit. In addition, funds may also be delayed for longer periods than specified if the bank "believe[s] a check you deposit will not be paid," the depositor has "overdrawn [the] account repeatedly in the last six months" or checks are deposited "totaling more than $5,000 on any one day."
Plaintiff's account was overdrawn prior to the provisional deposit of the Roper checks on Friday, April 23, 2004. Thus, any check plaintiff wrote at that time was at her peril. Moreover, under the express terms of her contract with the bank, plaintiff could not have had a reasonable expectation that the April 24 check to Arizona Premium Finance Company for Moran's vehicle insurance premium (no. 1079) and the April 26 check to Dambly's (no. 1080) would have cleared. Moreover, they were drawn prior to plaintiff's first communication with any representative of BOA (April 29, 2004) as to when funds from the deposit of the Roper checks might be available. As to the second Dambly check of unknown date in April (no. l089), which was not presented and dishonored until May 4, this, too, was apparently written either before the earliest date any funds from the deposit of the Roper checks would be available or after plaintiff was told no funds from that deposit would be available. Accordingly, plaintiff was not damaged by having to pay "NSF" charges for return of those checks.
We are further satisfied that even if plaintiff was a consumer within the CFA, which we need not decide for purposes of this appeal, she failed to sustain her burden of proving that BOA engaged in an unconscionable commercial practice. N.J.S.A. 56:8-2. It may have been preferable for BOA to have handled the situation differently after Sun Bank requested return of the proceeds of Roper's second check, such as offering plaintiff the opportunity to reimburse her outstanding overdraft fees if that was the holdup. However, considering that plaintiff's account was already overdrawn and the irregularities of the two large out-of-state checks that she deposited into her account, we are not persuaded she raised a debatable question of an unreasonable, let alone unconscionable, commercial practice by the bank in its conduct regarding this account and retention of the funds up to litigation.
Nor are we satisfied that a reasonable jury could find plaintiff suffered a resulting ascertainable loss. We previously explained the reasons why the bank had no liability for the "NSF" fees incurred by plaintiff for the dishonored checks and for its retention of the Roper funds until the May l5, 2007 court order. We additionally reject plaintiff's claim of loss of income for summer employment due to cancellation of Moran's vehicle insurance policy for dishonor of the premium check for a variety of reasons. First of all, as previously discussed, plaintiff sent the insurance premium at her peril knowing there were insufficient funds in the account. Secondly, according to the April 29, 2004 letter from Arizona Premium Finance Company, Moran's $55.48 premium was due April l; however, plaintiff did not timely mail it and did not include the $5.54 late charge. Thirdly, by letter of May 11, 2004, the Commonwealth of Pennsylvania advised Moran it was suspending his vehicle insurance for three months beginning June l5, 2004, for inability to provide proof of insurance at the time of a traffic offense on February 7, 2004. Accordingly, plaintiff would have been unable to use Moran's vehicle for her summer job.*fn5 Lastly, plaintiff's claim of lost earnings are speculative and unsubstantiated.
We turn now to BOA's cross-appeal. Judge McMaster denied the motion for frivolous litigation counsel fees on the basis there did not appear to be "bad faith, harassment, or delay" on plaintiff's part, considering the complexity of the issues and the fact that a court order was necessary for plaintiff to obtain the funds on check no. 1236. Such a sanction under Rule l:4-8 is within the discretion of the court. United Hearts, L.L.C. v. Zahabian, 407 N.J. Super. 379, 390 (App. Div.), certif. denied, 200 N.J. 367 (2009). Sanctions are not warranted where a "plaintiff has a reasonable good faith belief in the merit of [its] action." J.W. v. L.R., 325 N.J. Super. 543, 548 (App. Div. l999). See also First Atl. Fed. Credit Union v. Perez, 39l N.J. Super. 419, 432 (App. Div. 2007). We perceive of no basis upon which to second-guess the trial court's ruling denying such fees to BOA under the circumstances of this case.