Customer visited Bank and deposited money into his account. Shortly after his visit to Bank, Customer left the country. Supposedly while Customer was en route, however, someone purporting to be Customer visited Bank, and submitted a written payment order for over $329,000. The payment order was processed by an employee of Bank who confirmed (1) the information on the payment order, (2) the identity of the person via an identification document provided by him, (3) the sufficiency of funds in the account, (4) the existence of the FTA for the account, and (5) authenticity of the signature on the payment order. The Bank employee also obtained written approval from two branch officers, who took additional measures to ensure the authenticity of the payment order. The funds were subsequently transferred to an unknown beneficiary in a foreign country.
About two months after the payment order was processed, Customer supposedly first learned of the payment order and transfer. Customer then filed an action against Bank in state court seeking to recover the funds transferred from his account. Bank removed to federal court and moved for summary judgment, arguing as an affirmative defense that, under the "safe-harbor" provision of Florida's UCC Article 4A, Customer bore the risk of loss. Customer moved for partial summary judgment, claiming that the safe-harbor defense did not apply.
The lower court granted Bank's motion for summary judgment, ruling that the safe-harbor provision shifted the risk of loss to Customer because the parties' agreed-upon security procedure satisfied the definition of "security procedure" in Florida's version of the Uniform Commercial code, the procedure was commercially reasonable, and Bank followed the procedure in good faith.
Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
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Chicago, Illinois 60602
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