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Robert J. Triffin v. Progressive Freedom Insurance Company A/K/A Progressive Direct

November 18, 2011

ROBERT J. TRIFFIN, PLAINTIFF-APPELLANT,
v.
PROGRESSIVE FREEDOM INSURANCE COMPANY A/K/A PROGRESSIVE DIRECT INSURANCE COMPANY, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT, AND ERIC J. SCHMIDT AND KIMBERLY A. HUMPHREYS, DEFENDANTS,
v.
ZAVER FINANCIAL SERVICES, INC. T/A A1 CHECK CASHING, A NEW JERSEY CORPORATION, THIRD-PARTY DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Burlington County, L-3056-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 18, 2011

Before Judges Payne and Reisner.

Plaintiff Robert Triffin appeals from the dismissal, on summary judgment, of his complaint against defendant Progressive Freedom Insurance Company (Progressive).*fn1 For the reasons that follow, we remand this matter to the trial court.

I

Triffin is in the business of buying dishonored checks from check cashing companies and trying to collect on them. See Triffin v. Somerset Valley Bank, 343 N.J. Super. 73, 78 (App. Div. 2001). Because he knows that the checks are dishonored at the time he buys them, Triffin himself is not a holder in due course. Rather, his enforcement rights derive from the status of the check cashers from whom he takes the assignments. Triffin v. Liccardi Ford, Inc., 417 N.J. Super. 453, 456-57 (App. Div. 2011). If the check cashers are holders in due course, then Triffin can enforce the checks free of the makers' defenses, other than those limited defenses that can be asserted against a holder in due course. Id. at 457. If a check casher did not act in a commercially reasonable manner, it is not a holder in due course and Triffin is subject to all of the maker's defenses. Ibid.; N.J.S.A. 12A:3-308(b).

In this case, Triffin took by assignment from a check casher, Zaver Financial Services Inc., two documents that were not checks but were drafts issued by an insurance company upon itself, payable through a bank. Although Triffin asserts that the documents were "check-like," he and Zaver's managers were both well aware that the documents were not checks. According to the deposition of Zaver's manager, the company's usual practice was to call the "pay through" bank before accepting an insurance draft. However, in the case of the two drafts at issue, Zaver decided to take the risk of paying without inquiring first. It turned out that Progressive had stopped payment on both drafts, and hence Zaver could not collect on them. Significantly, before the trial court, Triffin repeatedly conceded that the two insurance drafts were not "negotiable instruments."

On this appeal, Progressive asserts the following reasons for stopping payment on the drafts. With respect to each draft, the insured had reported to Progressive that the draft never arrived. Concerned that the draft may have been lost in the mail, Progressive stopped payment on the original draft and issued a new one. However, the insured apparently obtained the original draft and cashed it at Zaver's establishment.

Although Progressive articulates this defense, in the trial court Progressive did not prove its defense with legally competent evidence. Instead, it submitted only a certification from its attorney, attesting that attached to his certification were some adjusters' notes. There was no certification from the adjusters or any other Progressive employee, and the notes, which were somewhat cryptic in any event, were not authenticated as business records. Progressive's statement of material facts in support of its summary judgment motion did not refer to any facts or evidence concerning its underlying defense to enforcement of the drafts.

In granting summary judgment, the trial judge considered that the drafts were not negotiable instruments. Second, she considered that even if they were negotiable instruments, Zaver was not a holder in due course because it failed to call the bank to confirm that the drafts were in fact payable. She did not address Progressive's challenge to the validity of the assignment from Zaver to Triffin, or Progressive's asserted reasons for stopping payment on the drafts.

II

We review the trial court's summary judgment decision de novo, employing the Brill standard. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Based on our review of the record, and the applicable law, we first conclude that Triffin, having specifically conceded before the trial court that the documents in question were not negotiable instruments, and having also stipulated that the trial court should apply the UCC in deciding the case, is estopped from asserting a different position on this appeal. See N.J. Div. of Youth & Family Servs. v. M.C. III, 201 N.J. 328, 340-41 (2010)(explaining the doctrine of invited error). Under the UCC, the holder in due course rule only applies to a negotiable instrument. N.J.S.A. 12A:3-302.

It could certainly be argued that the dishonored drafts, which Progressive issued and which Triffin took by assignment from Zaver, were not checks but were negotiable instruments, within the ...


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