United States Second Circuit

In action against third-party plaintiff bank for negligence and violations of the UCC, and third-party action against collecting and presenting banks for breaches of presentment warranties, related to a stolen check that was altered and cashed by a person other than the intended payee, summary judgment for third-party plaintiff bank against third-party defendant banks is affirmed where: 1) the drawer's alleged failures do not constitute negligence under U.C.C. section 3-406; 2) the drawer's alleged post-alteration failures will not preclude recovery for the loss associated with an altered check under the "substantial contribution" test of U.C.C. section 3-406; 3) the payor bank acted in good faith and, accordingly, the lack-of-good-faith exception to the presentment warranty did not apply; and 4) the district court did not err in granting summary judgment to the payor bank even though the bank had not yet reimbursed the drawer of the check for the fraud.

Appellate Information

• Decided 03/04/2008
• Published 03/04/2008

Judges

• JOSÉ A. CABRANES, Circuit Judge:, Before:  McLAUGHLIN, CABRANES, and SACK, Circuit Judges.

Court

• United States Second Circuit

Counsel

• For Appellees:
  
• Ina B. Scher, Davis & Gilbert LLP, New York, NY, for Plaintiff-Appellee J. Walter Thompson, U.S.A., Inc., Ronald M. Neumann (David B. Chenkin, on the brief), Zeichner Ellman & Krause LLP, New York, NY, for Defendant and Third-Party Plaintiff-Appellee, Bank of America Corporation., William D. Wallach, McCarter & English LLP, Newark, NJ, for Third-Party Defendants-Appellants First BankAmericano, Federal Reserve Bank of Atlanta.