New Jersey Trial Court Finds No Affirmative Cause of Action Against Banks under New Jersey Uniform Fiduciaries Law

A New Jersey trial court recently granted summary judgment in favor of a national bank, finding that the New Jersey Uniform Fiduciaries Law (“UFL”) does not permit an affirmative cause of action against a bank and that the bank had no legal obligation to investigate alleged improper transfers made pursuant to a Power of Attorney. See Estate of Ralph Sandor v. Wells Fargo Clearing Services, et al., Docket No. BER-C-54-21.  In 2013, Ralph Sandor (the “Decedent”) opened a custodial brokerage account with Wells Fargo and authorized the transfer of his accounts from another bank. Prior to opening the account, a Wells Fargo employee spoke with the Decedent over the phone to confirm the transfer and the validity of a 2013 Power of Attorney (the “POA”) that authorized the Decedent’s nephew to transact business on the Decedent’s behalf. In November 2015, a note was allegedly placed on the Decedent’s account that the Decedent was no longer able to competently make decisions for himself. However, in July 2016, the Decedent executed a form to change his brokerage account to a transfer-on-death account with the Decedent’s nephew as the sole primary beneficiary. To ensure that such change was the Decedent’s intent, a Wells Fargo employee conferred with the Decedent’s attorney, who confirmed. One month later, after the brokerage account was changed to a transfer-on-death account, the Decedent opened a new brokerage account with Wells Fargo and asked that the POA information be cross-referenced with his new account. According to Wells Fargo, it processed the POA as a “full POA” according to Wells Fargo’s internal policies and associated the Decedent’s nephew with the new account. Through the POA, the Decedent’s nephew allegedly transferred hundreds of thousands of dollars to himself and others. After the Decedent passed away, the Administrator of the Decedent’s Estate brought a claim against Wells Fargo for negligence and violation of the Uniform Fiduciaries Law, asserting that Wells Fargo was liable for the improper transfers and, among other things, seeking to recover the sums transferred out of the accounts. Wells Fargo subsequently moved for summary judgment.

The Court granted Wells Fargo’s motion. First, it found that the Administrator’s claim for violation of the UFL must be dismissed because the UFL does not create an affirmative cause of action against Wells Fargo. Rather, “the UFL provides a defense when a bank is sued for failing to take notice of and action on a fiduciary’s obligation.” The Court then found that the Administrator’s claim for negligence against Wells Fargo also failed for a number of reasons. First, the Court noted that in New Jersey, a tort remedy does not arise from a contractual relationship unless the breaching party has an independent duty imposed by law. Here, the relationship between the Decedent and Wells Fargo was based on a contract and there was no independent duty of Wells Fargo to the Decedent. Next, the Court found that even if the Administrator were permitted to pursue a negligence claim against Wells Fargo, the Administrator was unable to show the applicable standard of care and a breach thereof. The Administrator relied solely upon Wells Fargo’s internal policies, which “‘standing alone . . . cannot demonstrate the applicable standard of care.’” The Court also found that even to the extent that the Administrator was able to show the standard of care and a breach thereof, the Administrator nevertheless failed to overcome the liability shield created by the UFL. The Court noted that the UFL provides a bank with limited immunity against claims “‘…unless the bank acts in bad faith or had actual knowledge of a fiduciary breach.’” Here, there was no evidence of bad faith or actual knowledge that the transfers were ultra vires. Specifically, Wells Fargo was provided with a copy of the POA, upon which the transfers from the Decedent’s Wells Fargo account were based. The POA also expressly waived any liability against Wells Fargo stating, in pertinent part, that the “[p]arties may rely upon the representations of my agent [the nephew] as to all matters related to any power granted to my agent, and no person who may act in reliance upon the representations of my agent or the authority granted to my agent shall incur liability to me or my estate as a result of permitting my agent to exercise any power.’” Further, the checks and transfers that were intended to be delivered to the Decedent or his nephew were deposited into accounts bearing their respective or joint names. Finally, the Court noted that because Wells Fargo did not have actual knowledge that the Decedent’s nephew was purportedly breaching his fiduciary duties to the Decedent, and because none of the transfers made to third parties were initially intended for the Decedent or his nephew, “Wells Fargo was under no legal obligation to investigate transfers that otherwise conformed with those immunized by the UFL.” Accordingly, the Court granted summary judgment in favor of Wells Fargo and dismissed the claims with prejudice.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Desiree McDonald at