Bank Absolved In Defrauded Law Firm Claims

The Massachusetts Supreme Judicial Court affirmed the dismissal of a defrauded law firm’s action against the bank that had wire transferred funds on a counterfeit instrument

The plaintiff, Sarrouf Law LLP (Sarrouf), was the victim of a fraud perpetrated by a person posing as a client trying to sell a piece of heavy construction equipment to a buyer in Quincy. A check, ostensibly from the buyer’s agent, was delivered to H. Glenn Alberich, a lawyer who was “of counsel” to Sarrouf and in communication with the purported client. After the check was deposited in Sarrouf’s account at First Republic Bank (First Republic or bank), the “client” sent Alberich instructions requiring that most of the check’s proceeds be sent by wire transfer to two recipients, one in Cambodia and the other in Hong Kong. After the transfers had been made irretrievably, the check was revealed to be counterfeit; that amount was charged back to Sarrouf’s account, resulting in a large deficit. As a result, Sarrouf sued First Republic and Alberich. A Superior Court judge allowed First Republic’s motion for summary judgment and ordered entry of separate and final judgment, dismissing Sarrouf’s claims against the bank. See Mass. R. Civ. P. 54 (b), 365 Mass. 820 (1974). We affirm.

As to negligence claims

we must view Sarrouf’s claims through the lens of the U.C.C. See Chino, supra at 1170-1176. See also Dixon, 2013 IL App. (3d) 120832, ¶13 (“Provisions such as section 4 202[12] of the UCC displace common law negligence principles; UCC compliance is nonnegligent as a matter of law”).

And other claims

In summary, timely performance of the four duties set forth in C.U.C.C. § 4202(a) meets the ordinary care requirements of a collecting bank. Sarrouf does not, however, complain of any lack of ordinary care with respect to First Republic’s enumerated duties. Instead, Sarrouf attempts to impose on First Republic an obligation to detect the counterfeit nature of a check drawn on another bank,  deposited by Sarrouf. This obligation does not appear in the code or the parties’ agreements.

(MIke Frisch)