Roger Chavez v. Mercantil Commercebank, N.A.
701 F.3d 896
| 11th Cir. | 2012Background
- Chavez, a Venezuelan resident, opened an account with Mercantil Commercebank, NA in Miami, Florida, subject to the bank’s Funds Transfer Agreement (FTA).
- Chavez selected Annex 1 option one, Written Payment Orders, as the security procedure; Chavez was the sole Authorized Representative for his account.
- On February 6–7, 2008, a person allegedly impersonating Chavez delivered a written payment order for $329,500; the bank processed the transfer to the Dominican Republic.
- Bank employee Gutierrez and two branch officers (Pina and Peroza) performed identity, account, funds, and signature verifications, but security cameras were not working and no ID copy was made.
- Chavez learned of the transfer online in April 2008; he filed suit in August 2010 seeking recovery of the funds.
- The district court granted the bank summary judgment on its § 202(2) safe-harbor defense; Chavez appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the agreed security procedure satisfies §201 | Chavez contends the annex-selected procedure is limited to written orders and fails §201. | Bank contends §5(iii) adds additional verification methods beyond Annex 1. | Agreement did not satisfy §201; not a security procedure. |
| Whether §202(2) safe harbor applies given the agreed procedure | Since §201 is not satisfied, safe harbor does not apply. | Because the bank used a commercially reasonable procedure in good faith, §202(2) shifts loss to Chavez. | Safe harbor does not apply; bank cannot shift loss. |
| Effect of §5(iii) on the scope of the security procedure | No, §5(iii) does not expand Chavez's agreed procedure. | §5(iii) permits additional means to verify orders. | §5(iii) does not create an agreed additional security procedure. |
| Whether the bank’s procedures were commercially reasonable | Court should evaluate if procedures are commercially reasonable given Chavez’s needs. | Bank offered and implemented commercially reasonable procedures, including added safeguards. | Procedures were not found to satisfy the §201 security procedure, so commercial reasonableness is moot for §202. |
Key Cases Cited
- Patco Constr. Co. v. People’s United Bank, 684 F.3d 197 (1st Cir. 2012) (discusses commercial reasonableness framework under UCC Article 4A)
- Owen v. I.C. Sys., Inc., 629 F.3d 1263 (11th Cir. 2011) (standard for reviewing cross-motions for summary judgment)
- Am. Bankers Ins. Grp. v. United States, 408 F.3d 1328 (11th Cir. 2005) (framework for evaluating evidentiary and factual disputes on summary judgment)
- United States v. Nealy, 232 F.3d 825 (11th Cir. 2000) (good-faith and compliance considerations in related context)