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Valparaiso Univ. Law School

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Wednesday, June 26, 2013

NY Court of Appeals Invites Amicus Participation in UCC Article 4 Case

The New York Court of Appeals rarely requests amicus participation, but it has done so in a UCC artcle 4 case.  Here is an excerpt from the request for participation:

On June 4, 2013, the Court of Appeals granted plaintiffs Clemente Bros. Contracting Corp. and Jeffrey A. Clemente leave to appeal in Clemente Bros. Contracting Corp.. et al.. v Hafner- Milazzo. et al. Plaintiff Clemente Bros. Contracting Corp. (Contracting) was a customer of defendant bank CapitalOne, N.A.(CapitalOne). Contracting had three deposit and/or checking accounts with Capital One and also took out two loans from Capital One. The plaintiffs commenced this action against Capital One, asserting inter alia, that Capital One had failed to use ordinary care in paying on allegedly forged checks and failed to comply with its own regulations in handling Contracting's accounts. In its answer, Capital One interposed several counterclaims to recover amounts due under the loans. Insofar as pertinent to this appeal, Supreme Court granted summary judgment to defendant Capital One, dismissing plaintiffs' complaint and awarding it judgment on its counterclaims. The Appellate Division affirmed (100 AD3d 677).

Under New York's Uniform Commercial Code, a bank may be liable to its customer when it pays a check on a forged signature. The bank may avoid such liability, however, when it makes statements of the account and the allegedly forged items available to the customer, and the customer fails to report the alleged forgery to the bank within one year. Here, the parties, by agreement, shortened the one-year period to 14 days. One of the issues on appeal is whether a bank and its customer may shorten the statutory time period provided for in UCC 4-406 within which the customer must make a claim to its bank for payment o f an altered or forged item. 

More information is available here.  I am no expert on UCC article 4, but if you are considering a motion for leave to appear amicus curiae, I am happy to advise on New York Court of Appeals procedure.

Here is the Appellate Division decision from which the the appeal is taken.

[Meredith R. Miller]

 

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