Gilson v. TD Bank, N.A.

Carolyn Gilson (plaintiff) retained Edward Stein to help her with various financial transactions. G & C Investment Joint Venture (G&C) and LAZ Development Corporation (LAZ) (plaintiffs) were investment entities that Gilson’s late father established. In November 2008, Stein opened two accounts in G&C’s name and one account in LAZ’s name at TD Bank, N.A. (TD) (defendant). Gilson did not authorize Stein to be a signatory on these accounts, but TD nevertheless opened the accounts with Stein as a signatory. TD’s standard commercial account-opening procedure included a filing receipt and the entity’s governing documents (i.e., a partnership agreement). However, TD’s files did not include a filing receipt or partnership agreement for the G&C account. In addition, TD failed to notice certain inconsistencies in G&C’s account-opening documents. Over the next several months, Stein used wire transfers to steal approximately $3.5 million of Gilson’s money via the G&C and LAZ accounts. Gilson, G&C, and LAZ sued TD pursuant to Uniform Commercial Code (UCC) Article 4A and Federal Regulation J (which applied Article 4A to wire transfers conducted via the Federal Reserve’s funds transfer system), alleging that TD’s negligence allowed Stein to open the G&C and LAZ accounts and to use the accounts to steal Gilson’s money. TD moved for summary judgment, contending that Article 4A and Regulation J preempted Gilson, G&C, and LAZ’s common-law negligence claims.