New York Supreme Court Dismisses Claim Against Bank for Withdrawing Deposits from Allegedly Forged Checks

The Supreme Court of New York, New York County, recently granted defendant bank’s motion to dismiss a claim that it wrongfully withdrew plaintiff’s funds from his account after another defendant falsely claimed his checks were forged.  See Galitsa v. Berkley, 2016 N.Y Slip Opp. 32468(U) (N.Y. Sup. Ct. 2016).  In the complaint, plaintiff alleged that he received eight checks from the individual defendant and deposited the checks into his bank account at defendant bank.  After he deposited the checks, the individual defendant contacted the defendant bank and claimed that plaintiff forged his name on the checks.  In response, the bank withdrew the sum of $24,451.65 from plaintiff’s bank account and returned the money to the individual defendant.  The individual defendant then filed a formal complaint against plaintiff, resulting in plaintiff being indicted for various counts of Grand Larceny and incarcerated for approximately five months.  During the course of the criminal proceeding, plaintiff arranged for his handwriting samples to be analyzed by experts employed by the New York City Police Department.  The results concluded that plaintiff likely did not forge the checks, and the charges against plaintiff were dismissed.  Plaintiff then brought this action against the bank and the individual defendant.  Plaintiff alleged that the bank “wrongfully withdrew the sum of $24,451.65 from plaintiff’s [] accounts based on nothing but accusations made by defendant[.]” 

The bank then filed a motion to dismiss, arguing that the Deposit Account Agreements, which plaintiff agreed to be bound by when he signed the Signature Card that referred to them, permit the bank to reverse payments to a customer’s account when a forgery is suspected.  The Agreements further discharge the bank from any liability for such actions, which plaintiff argued violated public policy.  The Court disagreed with plaintiff’s contention, holding that contractual provisions that exculpate parties from ordinary negligence are enforceable.  The Court further rejected plaintiff’s argument that the Signature Card violates the provisions of CPLR §4544, which provides that “[t]he portion of any printed contract or agreement involving a consumer transaction […] where the print is not clear and legible or less than eight points in depth […] may not be received in evidence[,]” because the agreements opening plaintiff’s accounts do not involve “consumer transactions” within the meaning of CPLR §4544; and further, in any event, the pertinent language the bank relies upon for its defense is contained in the Deposit Account Agreements, not the Signature Card.  The Court found that all of plaintiff’s remaining arguments lacked merit.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.comMichael Crowley at mcrowley@riker.com or Clarissa Gomez at cgomez@riker.com.