NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3621-15T2
WELLS FARGO BANK, N.A.,
Plaintiff-Appellant,
v.
NORTHERN EXECUTIVE MOTOR CLUB
LLC,
Defendant,
and
NAVY FEDERAL CREDIT UNION,
Defendant-Respondent.
__________________________________
Argued September 20, 2017 – Decided October 2, 2017
Before Judges Fuentes, Koblitz and Suter.
On appeal from Superior Court of New Jersey,
Law Division, Essex County, Docket No. L-3722-
15.
Christine F. Marks argued the cause for
appellant (Greenbaum, Rowe, Smith and Davis,
LLP, attorneys; John D. North, of counsel and
on the brief; Ms. Marks, on the brief).
Peter G. Siachos argued the cause for
respondent (Gordon & Rees, Scully Mansukhani,
LLP, attorneys; Mr. Siachos and Matthew P.
Gallo, on the brief).
PER CURIAM
Wells Fargo Bank, N.A. appeals from an August 7, 2015 order
dismissing count five of its complaint, the only count against
Navy Federal Credit Union (NFCU), for failure to state a claim
upon which relief can be granted under Rule 4:6-2(e). Wells Fargo
also appeals from the October 9, 2015 order denying
reconsideration. Despite Rule 1:6-2, both motions were decided
without granting oral argument, although it was requested and
therefore required. We now reverse after de novo review because
the motion court's reasoning was in error. The court did not
consider a pertinent statute, N.J.S.A. 12A:4-205(a), and made a
premature factual determination of a lack of "ordinary care."
Our review of a motion to dismiss on these grounds is de
novo. Smerling v. Harrah's Entm't, Inc., 389 N.J. Super. 181, 189
(App. Div. 2006). We review the legal sufficiency of the facts
alleged in the complaint with liberality, giving all reasonable
inferences to the plaintiff. Major v. Maguire, 224 N.J. 1, 26
(2016) (citing Printing Mart-Morristown v. Sharp Elecs. Corp., 116
N.J. 739, 746 (1989)).
Wells Fargo deposited a check for $64,000 drawn on NFCU made
payable to Jennifer Aldridge and Northern Executive Motor Club,
LLC (Northern Executive) into Northern Executives' account at
Wells Fargo on July 24, 2014. The check had an indorsement from
2 A-3621-15T2
Aldridge1 but not Northern Executive. The check was otherwise
facially proper in all respects.
Wells Fargo subsequently honored checks drawn and allowed
other withdrawals against the credit that was created by depositing
the $64,000 check. Six days after the check was deposited NFCU
returned the check to Wells Fargo unpaid, based on the missing
signature of Northern Executive, Wells Fargo's customer. NFCU's
failure to honor the check created an overdraft of $63,725.63,
which was not paid by Northern Executive.
Wells Fargo's complaint alleged it was a holder in due course.
The motion court reasoned:
Wells Fargo is not a holder in due course.
Wells Fargo failed to exercise ordinary care
and that failure substantially contributed to
the improper negotiation of the check. Here
the check lacked one of two required
signatures.
The Uniform Commercial Code, however, as codified in the New
Jersey statutes, accords holder in due course status to a bank
that deposits a check into a customer's account even if not
indorsed by the customer. N.J.S.A. 12A:4-205 states:
If a customer delivers an item to a depositary
bank for collection:
a. the depositary bank becomes a holder of
the item at the time it receives the item for
collection if the customer at the time of
1
This indorsement was later determined to be fraudulent. Aldridge
was deceased.
3 A-3621-15T2
delivery was a holder of the item, whether or
not the customer indorses the item, and, if
the bank satisfies the other requirements of
[N.J.S.A.]12A:3-302, it is a holder in due
course ; and
b. the depositary bank warrants to collecting
banks, the payor bank or other payor, and the
drawer that the amount of the item was paid
to the customer or deposited to the customer's
account.
The other requirements of N.J.S.A. 12A:3-302 are not at issue
here. Thus, pursuant to a New Jersey statute, the failure of
Wells Fargo's customer, Northern Executive, to indorse the check
does not prevent Wells Fargo from being a holder in due course.
The motion court's determination that Wells Fargo "failed to
exercise ordinary care" is a factual determination that must abide
a trial. It cannot be determined by the court based on the
complaint alone. Oral argument might well have assisted the court
in narrowing the issues and focusing on the appropriate statute.
We reverse and remand for trial.
Reversed and remanded for further proceedings.
4 A-3621-15T2