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Posts tagged "check fraud"

U.S. District Court Dismisses Claims Arising From Check Fraud Scheme

In Armenian Missionary Association of America, Inc. v. TD Bank, N.A., et al, 87 UCC Rep. Serv. 2d 766 (D.N.J. 2015), the United States District Court for the District of New Jersey dismissed check fraud claims brought against TD Bank N.A. ("TD"). Plaintiff Armenian Missionary Association of America, Inc. ("AMAA" or "Plaintiff"), a non-profit organization that relies on donations to provide aid and assistance to Armenians throughout the world, sued TD after it discovered a series of alleged thefts by its former employee, Tigran Melkonyan, of over $800,000.00.

Pennsylvania Federal Court Rejects Plaintiff's Attempt to Invoke Discovery Rule To Toll Statute of Limitations in UCC Check Fraud Case

Section 4-401 of the Uniform Commercial Code provides that a bank may charge the account of a customer if it is presented with a "properly payable" check or other item "authorized by the customer," and "in accordance with any agreement between the customer and the bank." Section 4-401 also provides the basis for forged check liability in the case in which a plaintiff alleges that a bank is liable for charging her for a check that was not properly payable to a third party. UCC Section 4-111 provides that "an obligation, duty, or right" stemming from Article 4 must be commenced within three years from the time the cause of action accrues.

Sixth Circuit Joins Majority in Rejecting Discovery Rule for UCC Check Conversion Claims

The United States Court of Appeals for the Sixth Circuit has joined with the majority of courts in rejecting application of the discovery rule for check conversion claims under the Uniform Commercial Code ("UCC").  In Pate v. Huntington Nat'l Bank, et al., 560 Fed.Appx. 506 (2014), the Sixth Circuit addressed the application of Ohio's general statutory discovery rule for the wrongful taking of personal property in the context of check conversion subject to UCC § 3-118(g).  Ohio Rev. Code § 2305.09 provides that a cause for wrongful taking of personal property "shall not accrue until the wrongdoer is discovered."  UCC § 3-118(g), on the other hand, provides that an action for conversion "must be commenced within three years after the cause of action accrues."

Mississippi Joins Jurisdictions Approving Contractual Reduction of Check Fraud Reporting Deadline

Mississippi has joined the growing list of jurisdictions that have approved contractual reductions of the one-year reporting deadline for certain check fraud claims found in Uniform Commercial Code ("UCC") section 4-406(f).  In Century Construction Co., LLC v. BancorpSouth Bank, 117 So.3d 345, 80 UCC Rep.2d 1073 (Miss. Ct. App. 2013), the Mississippi Court of Appeals found that a term in the customer's deposit account agreement requiring the customer to report check fraud claims within 60 days of the issuance of the account statement listing the subject check was valid and enforceable.

The "Same Wrongdoer" Defense In Check Fraud Litigation

In "check fraud" litigation, bank customers often sue their banks after learning that someone has made a forged or otherwise unauthorized signature on the front of one or more of the customer's checks.  It often turns out that the fraudster has perpetrated the scheme over a long period of time and has made unauthorized signatures on many different checks.   This article offers a brief overview of the "same wrongdoer" rule, an important defense that is available to banks in such cases under the Uniform Commercial Code ("UCC") as adopted in Massachusetts.

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