ReAmerica, S.A. v. Wells Fargo Bank International

2008 U.S. Dist. LEXIS 30614 (Mar. 18, 2008)

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ReAmerica, S.A. v. Wells Fargo Bank International

United States District Court for the Southern District of New York
2008 U.S. Dist. LEXIS 30614 (Mar. 18, 2008)

Facts

In 1989, ReAmerica, S.A. (ReAmerica) (plaintiff) opened a bank account with Wells Fargo Bank International’s (Wells Fargo) (defendant) predecessor in interest. Two years later, Wells Fargo agreed to provide wire-transfers services to ReAmerica. The agreement required Wells Fargo to follow a security procedure involving authorization codes, which were the sole method for verifying ReAmerica’s payment orders. Typically, ReAmerica’s principal and chief executive officer, Carlos Romanelli, would determine the code and provide it to an employee, Lucilla Gallino, who would prepare the payment order for Romanelli’s signature. Wells Fargo would verify the code and, if correct, accept the payment order. The agreement specified that Uniform Commercial Code (UCC) Article 4A governed. Between January 1, 2000, and December 5, 2001, ReAmerica transmitted 139 payment orders to Wells Fargo. During this span, a ReAmerica consultant made unauthorized transfers to his personal account by obtaining the codes and forging Romanelli’s signature. In an email and a letter respectively sent on January 28, 2002, and January 29, 2002, ReAmerica requested that Wells Fargo suspend its account because it suspected fraudulent activity. By letter dated April 17, 2002, ReAmerica requested detailed information from Wells Fargo for the years 2000 and 2001 to review. The letter merely referenced a criminal proceeding against the consultant. Wells Fargo immediately provided the information. By the end of April 2002, ReAmerica knew that it intended to dispute 24 unauthorized transfers totaling over $1,000,000. Yet, ReAmerica did not specify the disputed transfers to Wells Fargo until March 18, 2004. ReAmerica subsequently sued Wells Fargo to recover the disputed transfers. Wells Fargo moved for summary judgment on the grounds that ReAmerica failed to provide notice of the unauthorized transfers within one year as required by UCC § 4A-505. ReAmerica argued that UCC § 4A-505 did not apply to forgeries. Alternatively, ReAmerica argued that Wells Fargo never provided actual notice because it inconsistently sent bank statements, that ReAmerica timely provided notice via the email and letters, and that Wells Fargo negligently addressed some authorization codes to Gallino.

Rule of Law

Issue

Holding and Reasoning (Batts, J.)

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