Kathleen Keener v. Wells Fargo Bank N.A.
CPU4-17-000071
| Del. Ct. Com. Pl. | Dec 5, 2017Background
- Keeler sued Wells Fargo alleging checks fraudulently cashed from her account between Oct. 15 and Dec. 5, 2013 and sought reimbursement under UCC Article 4 and breach of contract; she alleges she reported the fraud to Wells Fargo on Dec. 5 and Dec. 16, 2013 but was not given claim forms until April 2014.
- Wells Fargo formally denied Keeler's fraud claim on Aug. 8, 2014; Keeler filed suit on Jan. 5, 2017 for $22,200 plus fees and interest.
- Wells Fargo moved for judgment on the pleadings, arguing the three-year statute of limitations in 6 Del. C. § 4-111 bars the claim because each check’s negotiation (debit) occurred in 2013.
- Keeler argued the limitations period should start when Wells Fargo denied her claim (Aug. 8, 2014) or when she received claim forms (Apr. 29, 2014), and that Comment 5 to § 4-406 supports her view.
- The court found Delaware law silent on accrual for these UCC provisions, surveyed three approaches from other jurisdictions (discovery rule, one-year repose-notice approach, and accrual at negotiation), and chose the third.
- Holding: the court ruled each claim accrued when each check was negotiated (debited) in 2013; Keeler’s Jan. 5, 2017 complaint was time-barred and dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does the UCC three-year limitations period for improper payment claims accrue? | Accrual should begin when the bank notifies the customer it will not reimburse (denial) or when claim forms were provided; verbal notice to bank should not start the clock. | Accrual begins when the negotiable instrument was negotiated/debited (when customer’s account was charged). | Accrual begins when each check was negotiated/debited; claims filed more than three years after are time-barred. |
| Does Comment 5 to § 4-406 set accrual timing? | Comment 5 implies timing tied to § 4-111 and supports tolling until bank acts. | Comment 5 does not define accrual; it merely references the three-year remedy. | Comment 5 does not define accrual and cannot override accrual principles. |
| Does the discovery rule toll the UCC limitations period? | Discovery rule should apply because plaintiff did not know of fraud until later and was not given forms until April 2014. | The discovery rule does not apply to knowable UCC claims; accrual is when instrument is negotiated. | Discovery rule does not apply to these UCC claims; accrual is at negotiation. |
| Should a shorter notice/repose period control (e.g., one-year notice requirement)? | N/A (plaintiff did not rely on substituting a repose period). | Wells Fargo favors finality and predictability under UCC principles. | Court rejects treating a separate one-year procedural notice as displacing the three-year statute; repose analysis not appropriate here. |
Key Cases Cited
- New Jersey Lawyers' Fund for Client Protection v. Pace, 892 A.2d 661 (N.J. 2006) (statute of limitations for negotiable instruments runs from date instrument negotiated)
- Estate of Hollywood v. First Nat'l Bank of Palmerton, 859 A.2d 472 (Pa. Super. Ct. 2004) (limitation period for unauthorized payment claims runs when instrument is negotiated)
- Husker News Co. v. Mahaska State Bank, 460 N.W.2d 476 (Iowa 1990) (UCC objectives favor uniformity and finality; supports running limitations from negotiation)
- Pero's Steak & Spaghetti House v. Lee, 90 S.W.3d 614 (Tenn. 2002) (acknowledges harshness but supports accrual at negotiation to preserve UCC uniformity)