18 A.3d 1033
N.J. Super. Ct. App. Div.2011Background
- Paley opened a money market account with a BOA predecessor; she signed a signature card used to verify checks.
- BOA fraudulently negotiated 188 checks from Paley’s account by Sentore, totaling $48,931.83; many checks were written to Sentore or third parties.
- Bank policy allowed automated check processing with limited signature verification, and did not always issue notices for excess checks or verify every signature.
- Paley discovered the fraud in 2005; Sentore intercepted Paley’s statements and copies of negotiated checks, concealing the fraud for years.
- Plaintiff sued BOA and Sentore; CFA claim survived initial rulings, UCC-related claims were dismissed or remitted, and a CFA verdict was later stayed by JNOV on UCC grounds.
- Trial culminated in a CFA verdict for Paley with remittitur, followed by BOA’s Rule 4:40-2 JNOV and final judgment reserving CFA issues and waiving UCC claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does CFA apply to bank check processing under UCC? | Paley contends CFA covers bank practices misrepresenting fraud controls. | BOA argues CFA does not override UCC framework for banks handling checks. | CFA does not apply to this bank check processing; UCC framework governs. |
| Is there a special relationship needed for CFA against a bank absent special duties? | Plaintiff asserts misrepresentations about fraud detection create special relationship. | Bank-customer relationship lacks the required special duty absent explicit agreement. | No special relationship; CFA claim not viable. |
| Does Lemelledo require conflict with other regulation to bar CFA? | CFA should apply alongside UCC to address consumer fraud in banking. | Lemelledo creates a presumption of CFA applicability unless a direct conflict exists with regulatory schemes. | No direct, patent conflict; CFA not applicable when UCC governs. |
| Should the CFA claim be entertained in light of UCC’s comprehensive loss-allocation framework? | CFA remedies supplement UCC for wrongdoings beyond ordinary processing. | UCC provides the comprehensive framework; common-law CFA claims would dilute UCC protections. | CFA claim asserted here is incompatible with UCC’s framework; not permissible. |
Key Cases Cited
- Daaleman v. Elizabethtown Gas Co., 77 N.J. 267 (N.J. 1978) (CFA scope and remedial purposes)
- Lemelledo v. Beneficial Mgmt. Corp. of Am., 150 N.J. 255 (N.J. 1997) (CFA applicability to credit transactions; conflict analysis with regulation)
- City Check Cashing, Inc. v. Mfrs. Hanover Trust Co., 166 N.J. 49 (N.J. 2001) (common-law duty despite UCC framework; CFA considerations)
- Travelers Indem. Co. v. Good, 325 N.J. Super. 16 (App.Div. 1999) (allocation of loss; ordinary care under UCC Article 4)
- Keller v. Bank of America, unpublished (not applicable) (not cited as official reporter; placeholder not used)