                                                    SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized).

                    ADS Associates Group, Inc. v. Oritani Savings Bank (A-114-11) (069987)

Argued September 10, 2013; Reargued April 9, 2014 -- Decided September 30, 2014

PATTERSON, J., writing for a majority of the Court.

         In this appeal, the Court considers whether plaintiff is a bank “customer” who can bring a claim under
Article 4A of the Uniform Commercial Code (UCC), N.J.S.A. 12A:4A-101 to -507, and, if not, whether plaintiff, as
a non-bank customer, can assert a common law negligence claim against the bank.

          Plaintiff Brendan Allen and defendant Asnel Diaz Sanchez engaged in a joint business venture to perform
work on the Bergen-Hudson Light Rail project. Allen and Sanchez decided to operate the joint venture through
Sanchez’s company, ADS Associates, Inc. (ADS). On October 2, 2003, Allen and Sanchez went to Oritani Savings
Bank (Oritani) and, with the assistance of Oritani employee Marlene Fabregas, opened a dual-signature account in
the name of ADS. The account was separate from preexisting accounts that ADS had with Oritani and required both
Allen’s and Sanchez’s signatures to transact business from the account. Using an Oritani form, Sanchez also issued
a corporate resolution appointing Allen as Treasurer of ADS. The Bank’s “Business Checking Account” Agreement
(Account Agreement), which was signed by Allen and Sanchez, acting on behalf of ADS, and Fabregas, acting on
behalf of Oritani, required ADS to “examine the [monthly statement issued by Oritani] and report any problem or
error with an account statement within 60 days after the statement is sent to [ADS].” Failure to do so meant that
Oritani would “not [be] liable for such problem or error.” The Account Agreement further provided that ADS
would be “liable for any losses or expenses caused by [ADS’s] employees, owners, principals or agents who forge
or alter any instrument or endorsement or make any unauthorized charge to [ADS’s] account.” Fabregas explained
to Allen and Sanchez that only ADS, as the account holder, would receive bank statements, and that Oritani would
not separately mail bank statements to Allen. Soon after ADS commenced work on the project, Sanchez, using
Oritani’s internet banking services, linked the dual-signature ADS account to other ADS accounts within his control.
Thereafter, without Allen’s knowledge, through a series of internet transactions, Sanchez transferred a substantial
sum of money from the dual-signature ADS account that he had opened with Allen to his other ADS accounts.

         After learning of Sanchez’s transfers, Allen filed a lawsuit alleging, among other things, common law
negligence and UCC violations against Oritani. The trial court dismissed Allen’s individual claims against Oritani,
but permitted Allen to file claims against Oritani on behalf of ADS. Following the close of all evidence but before
the case was submitted to the jury, the court considered motions to dismiss filed pursuant to Rules 4:37-2(b) and
4:40-1, and dismissed all the claims that Allen brought on ADS’s behalf except for a UCC Article 4A claim. In
dismissing the negligence claim, the trial court reasoned that “because the internet transfers are covered by Article
4A any negligence or gross negligence claim based upon them is preempted by Article 4A.” The jury subsequently
returned a verdict in ADS’s favor on the sole remaining Article 4A claim. The trial court, however, entered a
judgment notwithstanding the verdict in favor of Oritani premised on the indemnification provision in the Account
Agreement. On appeal, the Appellate Division determined that Allen could not pursue claims on behalf of ADS
based on a resolution issued by Sanchez denying Allen that authority. The panel held, however, that Allen could
pursue common law claims on his own behalf against Oritani based on his “special relationship” with Oritani
pursuant to City Check Cashing, Inc. v. Manufacturers Hanover Trust Co., 166 N.J. 49, 60-65 (2001). The panel
therefore reversed the trial court’s order dismissing Allen’s individual common law negligence claim and remanded
for a new trial. The Court granted limited certification. 210 N.J. 260 (2012).




                                                          1
HELD: Allen may not assert a UCC Article 4A claim against Oritani because he is not a bank “customer” under the
statute. Allen also may not assert a common law negligence claim against Oritani because such a claim would
contravene the objectives of Article 4A. Even if Article 4A did not bar Allen’s negligence claim, no “special
relationship” existed to create a duty of care between Oritani and Allen under City Check Cashing, 166 N.J. 49.

1. Article 4A of the UCC was enacted in 1994 to address electronic funds transfers. Article 4A provides the
statutory framework that governs the transactions at issue in this case because Sanchez’s internet transfers from the
dual-signature ADS account to his other ADS accounts were “funds transfers” within the meaning of Article 4A.
See N.J.S.A. 12A:4A-104(1). Article 4A defines in detail the rights and obligations of banks and their customers
concerning non-authorized funds transfers. Throughout the statutory provisions and their official comments, the
word “customer” is used to describe the person or entity entitled to pursue a remedy against a bank if the statutory
requirements for a cause of action are met. The term “customer” is defined as “a person, including a bank, having
an account with a bank or from whom a bank has agreed to receive payment orders.” N.J.S.A. 12A:4A-105(1)(c).
The record here demonstrates that ADS, and not Allen, was Oritani’s “customer.” ADS, not Allen, executed the
Account Agreement, was the account holder, and was entitled to receive bank statements and to report account
errors. The record contains no evidence that Oritani ever agreed to receive a payment order from Allen or acted in a
manner that could have induced Allen to believe that he was its “customer.” Therefore, because Allen was not
Oritani’s “customer,” he cannot pursue a claim against the bank under UCC Article 4A. (pp. 18-26)

2. Notwithstanding its expansive language, “the UCC does not purport to preempt the entire body of law affecting
the rights and obligations of parties to a commercial transaction.” N.J. Bank, N.A. v. Bradford Sec. Operations, Inc.,
690 F.2d 339, 345 (3d Cir. 1982). In City Check Cashing, this Court considered whether a check-cashing service
that was not the customer of the defendant bank could assert a common law cause of action against the bank. 166
N.J. at 52-55. The Court held that “in the check collection arena, unless the facts establish a special relationship
between the parties created by agreement, undertaking or contact, that gives rise to a duty, the sole remedies
available are those provided in the [UCC].” Id. at 62. In Brunson v. Affinity Federal Credit Union, the Court
underscored its holding in City Check Cashing, noting that “in the unique context of whether a bank owes a duty to
a non-customer, it is clear that ‘[a]bsent a special relationship, courts will typically bar claims of non-customers
against banks.’” 199 N.J. 381, 400 (2009) (alteration in original) (quoting City Check Cashing, 166 N.J. at 60). (pp.
26-30)

 3. In that analytical framework, the Court considers whether a claim by Allen against Oritani premised upon
common law negligence would contravene the provisions of UCC Article 4A. The official comments to UCC
Article 4A make clear that it was enacted to comprehensively define the rights and remedies of parties affected by
the funds transfers governed by the statute’s terms. See N.J.S.A. 12A:4A-102 cmt. 1. The dispute in this case arises
from a setting directly addressed by Article 4A -- a bank’s acceptance of an order transferring funds from one
account held by its customer to another of that customer’s accounts. Consequently, this matter is among the
disputes for which the Legislature intended Article 4A to constitute “the exclusive means of determining the rights,
duties and liabilities of the affected parties.” Ibid. If Allen were permitted to assert a negligence claim against
Oritani, the “careful and delicate balancing” of competing interests that generated Article 4A would be undermined.
Ibid. Therefore, a decision authorizing Allen to assert a negligence claim in this case, in which he clearly lacks the
status of a customer, would contravene the purpose and the terms of Article 4A. (pp. 30-36)

4. Even if Article 4A’s language and intent did not bar a negligence claim, no duty of care premised upon a “special
relationship,” as contemplated in City Check Cashing, could be found in the circumstances of this case. The duty of
care recognized in City Check Cashing must be premised on a special relationship derived from the parties’
“agreement, undertaking or contact.” 166 N.J. at 62. None of those sources of a special relationship can be found in
this case. Oritani had no direct agreement with, or undertaking for the benefit of, Allen as an individual. The
Account Agreement and the statements of Oritani’s representative made clear that its duties were to ADS and that
Allen was not individually Oritani’s customer. There was also no contact between Allen and Oritani that would
support a special relationship. In City Check Cashing, the Court characterized “contact,” comparing it to
agreements and undertakings, as “the loosest of the three terms, defined as the ‘establishment of communication
with someone.’” Id. at 62 (quoting Webster’s Ninth New Collegiate Dictionary 282 (9th ed. 1984)). Allen’s


                                                          2
“contact” with Oritani was limited to two visits: The October 2, 2003, meeting to open the dual-signature ADS
account with Sanchez, and a visit to the bank after Allen learned of Sanchez’s transfers. The record reveals no
contact at all between Allen and Oritani during the period in which Sanchez conducted the disputed transfers, much
less a communication that would have alerted Oritani to monitor ADS’s account activity. (pp. 36-40)

      The judgment of the Appellate Division is REVERSED, and the judgment of the trial court is
REINSTATED.

         JUSTICE ALBIN, DISSENTING, expresses the view that Allen was a bank customer for UCC purposes
and his common-law negligence claim pursuant to City Check Cashing was not inconsistent with the UCC;
therefore, he should have been permitted to proceed on both claims.

       CHIEF JUSTICE RABNER, JUSTICES LaVECCHIA and FERNANDEZ-VINA, and JUDGES
RODRÍGUEZ and CUFF (temporarily assigned) join in JUSTICE PATTERSON’s opinion. JUSTICE
ALBIN filed a separate, dissenting opinion.




                                                        3
                                      SUPREME COURT OF NEW JERSEY
                                       A-114 September Term 2011
                                                 069987


ADS ASSOCIATES GROUP, INC.,
and BRENDAN ALLEN,

    Plaintiffs-Respondents,

         v.

ORITANI SAVINGS BANK,

    Defendant-Appellant,

         and

ASNEL DIAZ SANCHEZ,

    Defendant.


         Argued September 10, 2013
         Reargued April 9, 2014 – Decided September 30, 2014

         On certification to the Superior Court,
         Appellate Division.

         Gregg S. Sodini argued the cause for
         appellant.

         Gary S. Newman argued the cause for
         respondents (Newman & Denburg, attorneys).

    JUSTICE PATTERSON delivered the opinion of the Court.

In this appeal, the Court considers whether an individual who is

not the customer of a bank can assert a common law negligence

claim, premised upon the bank’s allegedly improper handling of a

corporation’s funds transfers.



                                 1
    This case arose from a business venture that was

established by plaintiff Brendan Allen (Allen) and defendant

Asnel Diaz Sanchez (Sanchez).     The venture was operated through

plaintiff ADS Associates, Inc. (ADS), a corporation fully owned

by Sanchez.     Allen and Sanchez opened a business checking

account in the name of ADS at a branch of Oritani Savings Bank

(Oritani), where ADS had preexisting accounts.     By agreement

between ADS and Oritani, the new ADS account required the

signatures of both Allen, who served as ADS’s Treasurer, and

Sanchez to appear on each check drawn on the account.      Despite

that limitation, Sanchez linked the new ADS account to other ADS

accounts within his control and, through a series of internet

transactions, transferred a substantial sum of money from the

ADS account he had established with Allen to his other ADS

accounts.

    After learning of these transfers, Allen sued Oritani and

Sanchez.     Although it dismissed Allen’s claims, the trial court

permitted Allen to assert claims on ADS’s behalf against

Oritani, notwithstanding Sanchez’s issuance of a resolution

denying Allen the authority to maintain an action on ADS’s

behalf.     A jury returned a verdict in favor of ADS.   The trial

court, however, entered a judgment notwithstanding the verdict

in favor of Oritani premised on an indemnification provision in

the agreement governing ADS’s account with Oritani.

                                   2
    An Appellate Division panel reversed the trial court’s

determination.   It found that the ADS resolution signed by

Sanchez deprived Allen of authority to assert a claim on behalf

of ADS.   The panel held, however, that Allen could assert a

common law negligence claim against Oritani despite the fact

that he was not Oritani’s banking customer.   It concluded that,

by virtue of their prior communications, Allen had a “special

relationship” with Oritani, pursuant to this Court’s holding in

City Check Cashing, Inc. v. Manufacturers Hanover Trust Co., 166

N.J. 49, 60-65 (2001), and that Oritani had a duty to advise

Allen of its internet banking policies when he and Sanchez

opened the ADS account.

    We concur with the trial court that Article 4A of the

Uniform Commercial Code (UCC), N.J.S.A. 12A:4A-101 to -507,

governs the wire transfers at the center of this case, and that

Allen may not assert a claim under Article 4A against Oritani

because he does not meet the statutory definition of a bank

“customer.”   N.J.S.A. 12A:4A-105(1)(c).   We further hold that

Allen may not assert a negligence claim based upon an alleged

special relationship with Oritani under City Check Cashing,

supra, 166 N.J. at 59-62.   The Legislature enacted Article 4A to

comprehensively address the issues raised by funds transfers and

to determine the rights, duties, and liabilities of the parties

affected by such transactions.   Allowing Allen’s common law

                                 3
negligence claim to proceed would undermine the statute’s

objectives.

       Accordingly, we reverse the determination of the Appellate

Division, and reinstate the judgment of the trial court.

                                 I.

       We derive our account of the facts from the trial testimony

and documents admitted into evidence before the trial court.

       In August 2003, Allen approached Sanchez regarding a

potential business venture involving the removal of a dirt

stockpile from a construction site for the Bergen-Hudson Light

Rail project.    When Allen learned of the Bergen-Hudson Light

Rail project, he was interested in bidding on it, but concluded

that to proceed with the venture he would need to operate

through a corporate entity with a union contract and minority-

owned business status.    Consequently, Allen approached Sanchez,

who was already the sole shareholder, officer, and director of

ADS, a New Jersey corporation established in September 2001.1

       Allen and Sanchez agreed to jointly bid on the project and

perform the work should their bid be successful.    According to

Allen, Sanchez undertook the tasks of billing, preparing

invoices, processing all paperwork, managing the checkbook, and

reviewing bank statements.    Further, Sanchez testified that he




1   “ADS” stands for Asnel Diaz Sanchez.
                                  4
and Allen agreed that ADS would assume liability related to the

work.   Allen and Sanchez agreed that after all expenses related

to the venture were paid, Allen would receive seventy percent of

the profits and Sanchez would receive thirty percent.2

     ADS was the successful bidder on the project and was

awarded the Bergen-Hudson Light Rail contract.    With the work

about to commence, Allen and Sanchez agreed to open a bank

account at Oritani, at which ADS already held accounts.

According to Allen, the account was to be opened in ADS’s name

because of ADS’s status as an established minority-owned

business.

     On October 2, 2003, Allen and Sanchez visited Oritani to

open the account.    They met with Marlene Fabregas, a

representative of the bank.    Allen testified that he and Sanchez

explained to Fabregas that they wanted to open an account

separate from ADS’s preexisting accounts in order to

cooperatively control funds relating to what they termed their

“joint venture.”    According to Allen, he and Sanchez advised

Fabregas that they wanted a dual-signature account, on which




2 At a pretrial hearing, Sanchez maintained that once all
expenses were paid, ADS was to receive thirty percent of the
profits “off the top . . . for being at risk and taking all the
liability and responsibility for the job,” and that the
remaining profits were then to “be split 70/30.”
                                  5
neither individual could unilaterally write a check without the

other’s signature.

     The new Oritani account was opened under the name “ADS

Associates Group Inc.,” with ADS’s tax identification number.

The blank checks provided by Oritani included the notation “two

signature lines required,” with spaces for both Allen and

Sanchez to sign each check.   Allen and Sanchez were listed as

the authorized signatories on the account’s signature cards.

     Allen testified that during the initial meeting with

Fabregas, at the suggestion of Sanchez, he was given the title

of Treasurer of ADS.   On an Oritani form, Sanchez, acting as

ADS’s Secretary, formalized Allen’s appointment as ADS Treasurer

in a corporate resolution dated October 2, 2003.    The resolution

provided that Allen’s appointment would remain effective until

it was rescinded or modified by ADS.   Allen testified that it

was his understanding that his role as Treasurer involved

approving payments from the account.

     Allen and Sanchez, acting on behalf of ADS, and Fabregas,

acting on behalf of Oritani, signed the Bank’s “Business

Checking Account” Agreement (Account Agreement).3   The Account

Agreement provided in part:




3 During his testimony, Allen expressed confusion as to when the
parties signed the Account Agreement, but the document bears the
date October 4, 2003.
                                 6
         You   will   receive   a   monthly   statement
         reflecting all account activity, all charges
         assessed therewith and the balance of your
         account, together with canceled checks for the
         period. In order to preserve your rights, you
         must examine the statement and report any
         problem or error with an account statement
         within 60 days after the statement is sent to
         you or [Oritani] is not liable for such
         problem or error.    This includes a forged,
         unauthorized    or   missing    signature   or
         endorsement, a material alteration, a missing
         or diverted deposit, or any other error or
         discrepancy.

The Account Agreement further provided that ADS would be “liable

for any losses or expenses caused by [ADS’s] employees, owners,

principals or agents who forge or alter any instrument or

endorsement or make any unauthorized charge to [ADS’s] account.”

    According to Allen, during the October 2, 2003, meeting,

Fabregas explained that only ADS, as the account holder, would

receive bank statements, and that Oritani would not separately

mail bank statements to Allen.   Therefore, Allen and Sanchez

determined that it would be Sanchez’s responsibility to review

the bank statements and to report any errors to Oritani.

    In October 2003, when Allen and Sanchez opened the ADS

account, Oritani offered its customers internet banking

services, accessible to any authorized signatory on an account

through a separate electronic banking application.   At trial,

Marjorie Lois Chup, a manager in Oritani’s electronic banking

services, testified about Oritani’s internet banking policy.


                                 7
She stated that any individual who was an authorized signatory

on an account could complete an application to gain access to

the internet banking services using a selected code, and could

then link the account holder’s existing accounts online.4    The

Account Agreement signed by Allen, Sanchez and Fabregas did not

set forth any provision, or state any bank policy, regarding the

linking of accounts via the internet.     The internal Oritani

Branch Procedures Manual in effect in 2003 did not expressly

address internet transactions, but generally discussed funds

transfers between Oritani accounts.     It provided that “[a]ll

signatures that are required for withdrawal of funds from the

‘from’ account [must be] present” before a transfer between two

Oritani accounts would be authorized.

     Using his own funds, Allen made the initial deposit of $750

into the new ADS account, and later wired $28,000 into the

account to cover payments to vendors.     As Allen conceded in his

testimony, all remaining deposits into the new ADS account were

made by Sanchez.   At a September 10, 2008 pretrial hearing,




4 Branch Manager Rocco Pinto testified that by 2008, when the
trial took place, Oritani required each signatory on a dual-
signature account to fill out a separate internet banking
application, and that in the absence of such an application
executed by both parties with signing authority, internet
transactions on the account would be considered unauthorized.
Pinto, however, was unfamiliar with the internet banking policy
that existed in 2003, and did not provide testimony regarding
Oritani’s internet banking policy during the relevant time.
                                 8
Sanchez maintained that he deposited between $200,000 and

$400,000 of his own money into the account during the course of

the project.

    According to Allen, between October 2003 and June 2004, he

and Sanchez met frequently to sign checks, which were used to

pay ADS’s vendors and to reimburse Allen and Sanchez for

expenses paid using their personal funds.    At times, when Allen

was difficult to reach, Sanchez would arrange for Allen to pre-

sign checks so that Sanchez could use them to pay ADS expenses.

Allen testified that Sanchez did not maintain a running balance

in ADS’s checkbook and conceded that he did not challenge that

practice.    He testified that on occasion he requested to see

bank statements for the account, but maintained that Sanchez, in

response to his requests, offered only excuses as to why he

could not provide the statements to Allen.    With Sanchez

handling the bank account and reviewing statements on ADS’s

behalf, Allen had no direct contact with the bank between the

initial meeting on October 2, 2003, and June 15, 2004, when he

discovered the internet transactions at issue in this case.

    Soon after ADS commenced work on the project, Sanchez,

using the Oritani website, linked the new ADS account with two

other preexisting ADS accounts that were approved for internet

banking.    According to Sanchez, he linked the three accounts

because Allen’s unavailability made it difficult to pay expenses

                                  9
incurred in the Bergen-Hudson Light Rail project.   Between

October 15, 2003, and June 14, 2004, Sanchez made eighty-five

transfers, totaling $613,972.26, from the dual-signature account

to the two other ADS accounts that he had previously established

on ADS’s behalf.   He made six transfers, totaling $61,400, from

ADS’s two other accounts to the dual-signature account.     At

trial, Allen denied ever authorizing internet banking on the ADS

account or having contemporaneous knowledge of these transfers.

    According to Allen, on June 15, 2004, he discovered that

Sanchez had made internet transfers of money from the dual-

signature ADS account.   That day, a check from the dual-

signature account in the amount of $70,000, written to a company

that Allen owned with his wife, failed to clear due to

insufficient funds.   Allen testified that, later that morning, a

distraught Sanchez visited him and told him that “[t]here’s no

more money” in the account and that he had “used it for

expenses.”

    Allen immediately went to the Union City Oritani branch,

seeking information about the account.   After an Oritani

employee refused to provide him with bank statements for the

account, Allen spoke directly with branch manager Rocco Pinto.

Pinto testified that Allen’s request to see statements for the

dual-signature account was declined because Sanchez was not

present to co-authorize the request.   Allen testified, however,

                                10
that Pinto gave him records of transactions on the ADS account

conducted during the previous five months.    Later, Allen’s wife

obtained statements from Oritani covering the first three months

of the account’s existence.

    Notwithstanding these developments, Allen continued to work

with Sanchez on the Bergen-Hudson Light Rail project for nearly

a year.   Sanchez made no further internet transfers of funds

from or to ADS’s dual-signature account, and discontinued his

participation in his business venture with Allen in April 2005.

After Sanchez ceased working on the project, Allen continued to

transact business for the project under the ADS name.     Allen

testified that he did not file criminal charges against Sanchez.

    At trial, Sanchez refuted the suggestion that he stole

money from ADS’s account.     He testified that the Bergen-Hudson

Light Rail contract was unprofitable and that, by the conclusion

of the project, ADS was subject to numerous liabilities for

which he was the personal guarantor.    Sanchez stated that as a

result of these remaining liabilities, he was forced to file for

bankruptcy.   According to Sanchez, ADS suffered no damages due

to Oritani’s conduct.

                                  II.

    On May 17, 2006, Allen filed this action in the Law

Division, naming Oritani and Sanchez as defendants.     After an

initial period of discovery, Oritani moved for summary judgment

                                  11
to dismiss Allen’s complaint against it.    Allen cross-moved for

summary judgment and to amend the complaint to include ADS “as a

[p]laintiff by and through its treasurer Brendan Allen.”    The

trial court granted Oritani’s motion and dismissed Allen’s

individual claims.    However, it entered orders designating ADS

as a plaintiff in this matter and stated that “nothing herein

prevents [ADS] from asserting a corporate claim against

Oritani.”

       Oritani then filed a second motion for summary judgment

seeking to dismiss the claims asserted by Allen on behalf of

ADS.    Allen’s counsel filed a cross-motion for partial summary

judgment on behalf of a plaintiff designated as “ADS Associates

Group, Inc. formerly Brendan Allen” seeking a declaration that

$613,972 represented “an amount not authorized and not effective

as the order of the customer or not enforceable against the

customer with such declaration subject to [d]efendant’s

defenses.”    The trial court denied Oritani’s summary judgment

motion, denied ADS’s cross-motion for partial summary judgment,

directed ADS to file an amended complaint naming itself as the

plaintiff, and ordered further discovery.

       Allen then filed an amended complaint in his own name as

well in the name of ADS.    ADS and Allen asserted claims against

Oritani for breach of contract, conversion, violation of various

UCC provisions, general liability, negligence, gross negligence,

                                 12
breach of fiduciary duty and good faith, violations of the

Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, and common law

fraud.5   In its answer to the amended complaint, Oritani asserted

counterclaims against Allen and ADS alleging, among other

claims, that Allen fraudulently asserted a cause of action on

ADS’s behalf without authorization in violation of New Jersey’s

Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1.     Oritani also

asserted cross-claims against Sanchez.6

     Prior to trial, at the request of Oritani’s counsel,

Sanchez signed a resolution on behalf of ADS.     The resolution

stated that Allen lacked authorization to file suit or

“otherwise take action on behalf of ADS,” that Allen’s counsel

was not authorized to represent ADS, and that ADS had no cause

of action against Oritani or Sanchez.     Notwithstanding the terms

of the resolution, the trial court denied Oritani’s third motion

for summary judgment and entered an order authorizing Allen to

prosecute claims against Oritani on ADS’s behalf.




5 In addition to their claims against Oritani, ADS and Allen
asserted claims for breach of contract, conversion,
misrepresentation and fraud, and breach of fiduciary duty
against Sanchez in the amended complaint. The amended complaint
notes that all claims against Sanchez had been stayed pending
bankruptcy proceedings.

6 Oritani’s answer to the amended complaint notes that the bank’s
cross-claims against Sanchez had been stayed as a result of his
bankruptcy.
                                13
     With trial imminent, the trial court conducted a hearing

pursuant to N.J.R.E. 104(a).   During the course of that hearing,

the trial court determined that Allen had standing to bring suit

on behalf of ADS by virtue of the fact that he had a fiduciary

duty to ADS as one of its officers.   However, the court

determined that Allen could not assert claims against Oritani on

his own behalf.

     The case was tried before a jury.    Following the close of

all evidence but before the case was submitted to the jury, the

court considered the parties’ motions to dismiss brought

pursuant to Rules 4:37-2(b) and 4:40-1.    At a subsequent

hearing, the trial court dismissed all the claims brought by

Allen on behalf of ADS except for the claim premised on

Oritani’s alleged violations of UCC Article 4A.7   In dismissing

the negligence claim, the trial court reasoned that “because the

internet transfers are covered by Article 4A any negligence or

gross negligence claim based upon them is preempted by Article




7 At the end of ADS’s and Allen’s proofs, Oritani moved to
dismiss plaintiffs’ claims, including the negligence and gross
negligence claims, pursuant to Rule 4:37-2(b). At the close of
all evidence, the parties disputed whether Oritani could also
move for judgment pursuant to Rule 4:40-1. The trial court
found that nothing in Rule 4:40-1 barred Oritani from making
such a motion. The trial court evidently applied the standards
of both Rule 4:37-2(b) and Rule 4:40-1 in denying Oritani’s
motion to dismiss the UCC claims served by ADS and Allen, and
dismissed ADS’s and Allen’s negligence claims pursuant to Rule
4:37-2(b).
                                14
4A.”    The court also dismissed all counterclaims asserted by

Oritani against plaintiffs except for the counterclaim alleging

that plaintiffs violated the Frivolous Litigation Statute,

N.J.S.A. 2A:15-59.1.    Plaintiffs’ sole remaining claim -- for

Oritani’s alleged violation of UCC Article 4A -- was submitted

to the jury.

       The jury returned a verdict in favor of ADS.    It found that

none of the internet transfers initiated by Sanchez between

October 15, 2003, and June 14, 2004 had been authorized by ADS,

and that ADS had objected to these transfers within one year of

the date upon which it received notice of them.       The jury

awarded damages to ADS in the amount of $295,500.       When the

trial court inquired how the jury arrived at this figure, the

jury responded that it represented the total amount of internet

transfers from ADS’s new Oritani account between April 2, 2004,

and June 14, 2004.     The jury explained that this was

“representative [of] 60 days from the date of notification.”8




8 On October 21, 2008, ADS filed a motion for additur, by which
it sought to increase the jury’s verdict by $318,472.26. ADS
also sought an award of interest, attorneys’ fees and expenses,
and an entry of final judgment. ADS subsequently withdrew its
motion for additur, but did not withdraw its motions for
interest, attorneys’ fees and expenses, and an entry of final
judgment. On November 14, 2008, ADS moved for a judgment
notwithstanding the verdict, seeking to increase the amount of
the judgment to $613,972.26 and incorporating its prior motions
for interest and attorneys’ fees. The trial court ultimately
denied the motions.
                                  15
     On October 28, 2008, Oritani moved pursuant to Rule 4:40-2

for a judgment notwithstanding the verdict.   The trial court

granted Oritani’s motion and dismissed ADS’s UCC claim with

prejudice.   It reasoned that the Account Agreement required ADS

to indemnify Oritani for losses and expenses caused by Sanchez,

who was a corporate officer when he transferred the disputed

funds.

     ADS and Allen appealed the trial court’s judgment.9   The

Appellate Division reversed the trial court’s determination.      It

ruled that in the wake of ADS’s resolution divesting Allen of

the authority to litigate on its behalf, Allen no longer had the

right to pursue ADS’s corporate claims against Oritani.

     The panel, however, reasoned that although Allen was not

Oritani’s customer, he could pursue common law claims on his own

behalf against Oritani.   The panel recognized a special

relationship between Allen and Oritani within the meaning of

this Court’s decision in City Check Cashing, supra, 166 N.J. at

59-62.   In support of its finding of a “special relationship,”

the panel cited Allen’s insistence on a dual-signature checking

account in his October 2, 2003, meeting with Oritani’s

representative and Sanchez, Oritani’s knowledge of ADS’s two




9 Oritani filed a cross-appeal from the denial of its motion for
attorneys’ fees and costs. The issues raised in the cross-
appeal are not before this Court.
                                16
preexisting accounts, trial testimony about Oritani’s internet

policies, and the jury’s finding that Sanchez’s internet

transfers were unauthorized by ADS.    The panel reasoned that

Oritani had a duty to disclose to Allen that the bank’s internet

banking policy would allow Sanchez to move funds between ADS

accounts under his control.   It reversed the trial court’s order

dismissing Allen’s individual common law negligence claims and

remanded for a new trial.

    We granted certification, limited to the issue of whether

Allen may maintain a common law non-customer negligence claim

against Oritani.    210 N.J. 260 (2012).

                                III.

    Oritani argues that the Appellate Division misapplied this

Court’s decision in City Check Cashing, and that the panel

granted broader rights to Allen, a non-customer, than the rights

accorded to customers.   It contests the panel’s conclusion that

Allen and Oritani had a “special relationship,” arguing that

Allen established contact with Oritani only through ADS.

Oritani contends that Allen’s claims are governed by Article 4A

of the UCC, which precludes Allen from asserting a common law

negligence claim.   In the alternative, Oritani argues that New

Jersey case law provides that banks have no duty to monitor or

supervise the account activity of their depositors.    Finally,

Oritani argues that the record is devoid of evidence that would

                                 17
support a negligence claim because the parties never discussed

internet transfers when Allen and Sanchez met with Oritani

representatives to set up the account for ADS, and all parties

were aware of ADS’s existing accounts at Oritani.

    ADS and Allen maintain that the Appellate Division

appropriately reinstated Allen’s common law negligence claims

because Allen established a special relationship with Oritani,

as recognized by this Court in City Check Cashing.    They contend

that this special relationship derived from Oritani’s

representations to Allen, particularly its assurance that the

account would require two signatures on each check in order for

a withdrawal to be effected.   They urge the Court to affirm the

Appellate Division’s determination.

                                IV.

    We review the trial court’s grant of Oritani’s motions for

involuntary dismissal of Allen’s negligence claim, filed

pursuant to Rule 4:37-2(b).    A motion for involuntary dismissal

is premised “on the ground that upon the facts and upon the law

the plaintiff has shown no right to relief.”    R. 4:37-2(b).   The

“motion shall be denied if the evidence, together with the

legitimate inferences therefrom, could sustain a judgment in

plaintiff’s favor.”   R. 4:37-2(b).   If the court, “‘accepting as

true all the evidence which supports the position of the party

defending against the motion and according him the benefit of

                                 18
all inferences which can reasonably and legitimately be deduced

therefrom,’” finds that “‘reasonable minds could differ,’” then

“‘the motion must be denied.’”   Verdicchio v. Ricca, 179 N.J. 1,

30 (2004) (quoting Estate of Roach v. TRW, Inc., 164 N.J. 598,

612 (2000)).   An appellate court applies the same standard when

it reviews a trial court’s grant or denial of a Rule 4:37-2(b)

motion for involuntary dismissal.     Fox v. Millman, 210 N.J. 401,

428 (2012).

     We review the trial court’s interpretation of Article 4A

and all other legal determinations by the trial court de novo.

Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366,

378 (1995) (“A trial court’s interpretation of the law and the

legal consequences that flow from established facts are not

entitled to any special deference.”).

                                 A.

     At the outset, we address the impact of UCC Article 4A on

Allen’s individual claim.10   We interpret Article 4A in

accordance with the Legislature’s direction that the UCC

          shall be liberally construed and applied to
          promote its underlying purposes and policies,
          which are:


10Contrary to the suggestion of the dissent, post at ___ (slip
op. at 6), we do not exceed the scope of our grant of
certification, but analyze the principles of Article 4A,
N.J.S.A. 12A:4A-101 to -507, as applied to this case in order to
determine whether Allen can maintain a common law non-customer
claim against Oritani.
                                 19
                 (1) to simplify, clarify, and modernize
                 the     law    governing     commercial
                 transactions;

                 (2) to permit the continued expansion of
                 commercial practices through custom,
                 usage and agreement of the parties; and

                 (3) to make uniform the law among the
                 various jurisdictions.

         [N.J.S.A. 12A:1-103(a).]

    UCC Article 4A was enacted by the Legislature in 1994 to

address the subject of electronic funds transfers.    N.J.S.A.

12A:4A-104(1) broadly defines “[f]unds transfer” to mean “the

series of transactions, beginning with the originator’s payment

order, made for the purpose of making payment to the beneficiary

of the order.”    A bank customer’s transfer of money between two

of its own accounts may constitute a “funds transfer” governed

by Article 4A of the UCC.    See N.J.S.A. 12A:4A-104 cmt. 1

(noting that in some funds transfers within UCC definition, “the

originator and the beneficiary may be the same person . . . for

example, when a corporation orders a bank to transfer funds from

an account of the corporation in that bank to another account of

the corporation in that bank”).    Sanchez’s internet transfers

from the dual-signature ADS account that he established with

Allen at Oritani to his other ADS accounts at Oritani clearly

constitute “funds transfers” within the meaning of Article 4A.




                                  20
Accordingly, UCC Article 4A provides the statutory framework

that governs the transactions at issue in this case.

    Article 4A addresses in detail the circumstances under

which a bank may conclude that a payment order for a transfer of

funds is properly authorized.   It provides that “[a] payment

order received by the receiving bank is the authorized order of

the person identified as sender if that person authorized the

order or is otherwise bound by it under the law of agency.”

N.J.S.A. 12A:4A-202(1).   Article 4A defines the customer’s

rights, and limits the liability of the bank, when it accepts a

payment order that turns out to be unauthorized.   N.J.S.A.

12A:4A-202(2) provides:

         If a bank and its customer have agreed that
         the authenticity of payment orders issued to
         the bank in the name of the customer as sender
         will be verified pursuant to a security
         procedure, a payment order received by the
         receiving bank is effective as the order of
         the customer, whether or not authorized, if
         (i) the security procedure is a commercially
         reasonable method of providing security
         against unauthorized payment orders, and (ii)
         the bank proves that it accepted the payment
         order in good faith and in compliance with the
         security procedure and any written agreement
         or instruction of the customer restricting
         acceptance of payment orders issued in the
         name of the customer.

         [N.J.S.A. 12A:4A-202(2).]

“The effect of [N.J.S.A. 12A:4A-202(2)] is to place the risk of

loss on the customer if an unauthorized payment order is


                                21
accepted by the receiving bank after verification by the bank in

compliance with a commercially reasonable security procedure.”

N.J.S.A. 12A:4A-203 cmt. 5.

    A second provision, N.J.S.A. 12A:4A-203, protects the

customer from the loss of funds under specified conditions:

         The receiving bank is not entitled to enforce
         or retain payment of the payment order if the
         customer proves that the order was not caused,
         directly or indirectly, by a person (i)
         entrusted at any time with duties to act for
         the customer with respect to payment orders or
         the security procedure, or (ii) who obtained
         access to transmitting facilities of the
         customer or who obtained, from a source
         controlled by the customer and without
         authority of the receiving bank, information
         facilitating breach of the security procedure,
         regardless of how the information was obtained
         or whether the customer was at fault.
         Information includes any access device,
         computer software, or the like.

         [N.J.S.A. 12A:4A-203(1)(b).]

That provision allows the customer to “avoid the loss resulting

from . . . a payment order if the customer can prove that the

fraud was not committed by a person described in that

subsection.”   N.J.S.A. 12A:4A-203 cmt. 5.

    A third provision of Article 4A, N.J.S.A. 12A:4A-204,

defines the circumstances under which a customer may be awarded

a refund of funds found to have been transferred without

authorization.   That provision

         applies only to cases in which (i) no
         commercially reasonable security procedure is

                                  22
         in effect, (ii) the bank did not comply with
         a commercially reasonable security procedure
         that was in effect, (iii) the sender can
         prove, pursuant to [N.J.S.A.] 4A-203(a)(2),
         that the culprit did not obtain confidential
         security   information  controlled   by   the
         customer, or (iv) the bank, pursuant to
         [N.J.S.A.] 4A-203(a)(1) agreed to take all or
         part   of   the   loss  resulting   from   an
         unauthorized payment order.

         [N.J.S.A. 12A:4A-204 cmt. 1.]11

     Article 4A thus defines in detail the rights and

obligations of banks and their customers in the event that funds

are transferred in accordance with a payment order that the

customer has not authorized.   Throughout the statutory

provisions and their official comments, the word “customer” is

used to describe the person or entity entitled to pursue a

remedy against a bank if the statutory requirements for a cause

of action are met.   See, e.g., N.J.S.A. 12A:4A-203(1)(b)

(stating that a “receiving bank is not entitled to enforce or

retain payment of [a] payment order if the customer proves”

specified circumstances); N.J.S.A. 12A:4A:203 cmt. 5 (stating

that “[t]he customer may avoid the loss resulting from” certain




11A refund awarded to a customer may include interest on the
amount refunded “calculated from the date the bank received
payment to the date of the refund.” N.J.S.A. 12A:4A-204(1).
The amount of interest awarded may, however, be affected by a
customer’s failure to exercise ordinary care to discover and
report the unauthorized payment order. N.J.S.A. 12A:4A-204(1).
Moreover, a customer’s ability to seek a refund from a receiving
bank may be limited by N.J.S.A. 12A:4A-505.
                                23
payment orders “if the customer can prove” particular

circumstances exist).    The term “customer” is specifically

defined in the statute as “a person, including a bank, having an

account with a bank or from whom a bank has agreed to receive

payment orders.”   N.J.S.A. 12A:4A-105(1)(c).

    Here, the definition of a customer does not apply to Allen.

The record demonstrates that ADS was the customer, as defined by

N.J.S.A. 12A:4A-105(1)(c).    ADS, not Allen, executed the Account

Agreement dated October 4, 2003.       ADS, not Allen, was the

account holder for the Oritani account at issue under that

Agreement.   ADS, not Allen, was the party entitled to receive

the bank statements.     Although N.J.S.A. 12A:4A-501(1) provides

that “the rights and obligations of a party to a funds transfer

may be varied by agreement of the affected party,” the Account

Agreement between ADS and Oritani does not in any respect confer

upon Allen the status of a customer for purposes of UCC Article

4A, or otherwise support Allen’s right to bring an individual

claim against Oritani.    Instead, the Account Agreement

underscores the status of ADS as Oritani’s sole customer for the

purposes of the disputed account.

    The dissent relies on two cases, Schoenfelder v. Arizona

Bank, 796 P.2d 881, 883-84, 889 (Ariz. 1990), and First Nat’l

Bank v. Hobbs, 450 S.W.2d 298, 299 (Ark. 1970), for the

proposition that Allen should be considered a “customer” of

                                  24
Oritani within the meaning of N.J.S.A. 12A:4A-105(1)(c).      Post

at ___ (slip op. at 7-10).    Both Schoenfelder and

Hobbs constituted applications of Article 4, not Article 4A, and

were decided before Article 4A was adopted by their states’

respective legislatures.     See Ariz. Rev. Stat. Ann. §§ 47-4A101

to 47-4A507 (1991); Ark. Acts 1991, No. 540 § 1 (Enacted March

14, 1991).

    Article 4 and Article 4A do not define the term “customer”

in precisely the same way.    For purposes of Article 4, N.J.S.A.

12A:4-104 defines “customer” to denote “a person having an

account with a bank or for whom a bank has agreed to collect

items, including a bank that maintains an account at another

bank.”   N.J.S.A. 12A:4-104(a)(5).     In contrast, for purposes of

Article 4A, N.J.S.A. 2A:4A-105 connects the scope of the term

“customer” directly to the payment orders that are the subject

of Article 4A, defining the term to mean “a person, including a

bank, having an account with a bank or from whom a bank has

agreed to receive payment orders.”      N.J.S.A. 12A:4A-105(1)(c).

Here, Allen clearly did not meet the narrow definition of

“customer.”   As confirmed by the Account Agreement, the “account

holder” was ADS, not Allen, and the record contains no evidence

that Oritani ever agreed to receive a payment order from Allen.

    Moreover, in neither of the cases cited by the dissent was

the plaintiff advised -- as was Allen in this case -- that he

                                  25
was not the account holder, and that he was not entitled to

receive bank statements.   See Schoenfelder, supra, 796 P.2d at

888; Hobbs, supra, 450 S.W.2d at 302.    In contrast to the

conduct of the defendant banks in Schoenfelder and Hobbs,

Oritani never acted in a manner that could have induced Allen to

believe that he was its “customer”; indeed, he was expressly

told otherwise.   The dissent cannot, and does not, cite a case

in which an individual in Allen’s position has been deemed to be

a “customer” for purposes of Article 4A.

     In short, if N.J.S.A. 12A:4A-203 or -204 afforded a remedy

under the circumstances of this case, such a remedy would be

available only to the “customer.”    In this case, the sole

customer of Oritani is ADS.12

                                B.

     In that setting, in which the Legislature has unequivocally

limited claims against banks under N.J.S.A. 12A:4A-203 and -204,

we consider whether Allen may assert a common law negligence

claim against Oritani.

     Prior to this case, no New Jersey appellate court has

determined whether a non-customer, who claims damages arising

from a funds transfer, may sue a bank under a common law


12We do not reach the issue of whether ADS could assert a claim
against Oritani under Article 4A of the UCC in the circumstances
of this case. Only Allen’s individual claims are before the
Court.
                                26
negligence theory independent of Article 4A of the UCC.    In

other settings, however, our courts have addressed the

availability of common law remedies in commercial disputes.

    Notwithstanding its expansive language, “the UCC does not

purport to preempt the entire body of law affecting the rights

and obligations of parties to a commercial transaction.”     N.J.

Bank, N.A. v. Bradford Sec. Operations, Inc., 690 F.2d 339, 345

(3d Cir. 1982).   N.J.S.A. 12A:1-103(b) provides:

         Unless displaced by the particular provisions
         of the [UCC], the principles of law and
         equity, including the law merchant and the law
         relative to capacity to contract, principal
         and       agent,       estoppel,        fraud,
         misrepresentation, duress, coercion, mistake,
         bankruptcy,    and   other    validating    or
         invalidating cause supplement its provisions.

         [N.J.S.A. 12A:1-103(b); see also N.J.S.A.
         12A:1-103 cmt. 4 (stating that “[t]he list of
         sources of supplemental law . . . is intended
         to be merely illustrative . . . and is not
         exclusive”).]

Addressing the UCC provisions that are now codified in New

Jersey under N.J.S.A. 12A:1-103, the Third Circuit has stated

that “[a]s a general rule, courts have read [the] principles of

construction to mean that the [UCC] does not displace the common

law of tort as it affects parties in their commercial dealings

except insofar as reliance on the common law would thwart the

purposes of the UCC.”   N.J. Bank, supra, 690 F.2d at 345-46; see

Psak, Graziano, Piasecki & Whitelaw v. Fleet Nat’l Bank, 390


                                27
N.J. Super. 199, 204 (App. Div. 2007); Sebastian v. D & S

Express, Inc., 61 F. Supp. 2d 386, 391 (D.N.J. 1999).

    In City Check Cashing, supra, this Court considered whether

a check-cashing service that was not the customer of the

defendant bank could assert a common law cause of action against

the bank, which allegedly failed to respond to the service’s

urgent request to authenticate a certified check.     166 N.J. at

52-55.    Addressing the framework for check collection and

payment set forth in Articles 3 and 4 of the UCC, the Court

stated:

           It is against that backdrop, and mindful of
           the balance of interests reflected in the
           Legislatures’  enactment   of   the  [UCC]’s
           provisions, that most courts have been
           reluctant to sanction common law negligence
           claims. “Only in very rare instances should
           a court upset the legislative scheme of loss
           allocation and permit a common law cause of
           action.”

           [Id. at 58 (quoting Bank Polska Kasa Opieki,
           S.A. v. Pamrapo Sav. Bank, S.L.A., 909 F.
           Supp. 948, 956 (D.N.J. 1995)); see also Girard
           Bank v. Mount Holly State Bank, 474 F. Supp.
           1225, 1239 (D.N.J 1979) (noting that “[c]ourts
           should be hesitant to improvise new remedies
           outside the already intricate scheme of
           Articles 3 and 4”).]

    Nevertheless, the Court observed “that implicit in those

expressions of the need for restraint is a recognition that a

common law duty, in fact, may arise and that its breach may be

actionable in spite of the existence of the [UCC].”     City Check


                                 28
Cashing, supra, 166 N.J. at 58-59 (citing Girard Bank, supra,

474 F. Supp. at 1239).    The Court held that “in the check

collection arena, unless the facts establish a special

relationship between the parties created by agreement,

undertaking or contact, that gives rise to a duty, the sole

remedies available are those provided in the [UCC].”      Id. at 62.

    In City Check Cashing, the Court found no special

relationship that would support a common law cause of action

arising from the defendant bank’s failure to respond to the

plaintiff check-cashing service’s request to verify the

authenticity of an altered certified check, prior to a midnight

deadline imposed by a UCC provision.     Id. at 62-63.   The Court

noted that the check-cashing service was not the bank’s

customer, that it had no agreement with the bank, and that it

had not promised an immediate response to its urgent request.

Id. at 63.

    In Brunson v. Affinity Federal Credit Union, the Court

underscored its holding in City Check Cashing, noting that “in

the unique context of whether a bank owes a duty to a non-

customer, it is clear that ‘[a]bsent a special relationship,

courts will typically bar claims of non-customers against

banks.’”     199 N.J. 381, 400 (2009) (alteration in original)

(quoting City Check Cashing, supra, 166 N.J. at 60); see also

Psak, Graziano, Piasecki & Whitelaw, supra, 390 N.J. Super. at

                                  29
204 (holding that “the UCC displaces the common law where

reliance on the common law would thwart the purposes of the

UCC”).

     In that analytical framework, we consider whether a claim

by Allen against Oritani premised upon common law negligence

would contravene the provisions of UCC Article 4A.   In that

inquiry, we find substantial guidance in the official comments

to Article 4A, which are promulgated on behalf of the National

Conference of Commissioners on Uniform State Law and the

American Law Institute.13

     The Official Comment to N.J.S.A. 12A:4A-102 states that

Article 4A was intended to prescribe detailed requirements for

funds transfers so that parties affected by such transfers may

comply with those requirements and anticipate the risks assumed:

          In the drafting of Article 4A, a deliberate
          decision was made to write on a clean slate
          and to treat a funds transfer as a unique
          method of payment to be governed by unique
          rules that address the particular issues
          raised by this method of payment.          A
          deliberate decision was also made to use
          precise   and   detailed  rules   to  assign
          responsibility,   define  behavioral  norms,
          allocate risks and establish limits on
          liability, rather than to rely on broadly
          stated, flexible principles. In the drafting

13The UCC Article 4A Prefatory Note of National Conference of
Commissioners on Uniform State Laws and the American Law
Institute states that the “[c]omments that follow each of the
sections of [Article 4A] are intended as official comments.
They explain in detail the purpose and meaning of the various
sections and the policy considerations on which they are based.”
                               30
         of these rules, a critical consideration was
         that the various parties to funds transfers
         need to be able to predict risk with
         certainty, to insure against risk, to adjust
         operational and security procedures, and to
         price funds transfer services appropriately.

         [N.J.S.A. 12A:4A-102 cmt. 1.]

    That Official Comment further provides that Article 4A

comprehensively governs the rights and remedies of parties

affected by funds transfers:

         Funds transfers involve competing interests -
         - those of the banks that provide funds
         transfer services and the commercial and
         financial organizations that use the services,
         as well as the public interest.          These
         competing interests were represented in the
         drafting process and they were thoroughly
         considered. The rules that emerged represent
         a careful and delicate balancing of those
         interests and are intended to be the exclusive
         means of determining the rights, duties and
         liabilities of the affected parties in any
         situation covered by particular provisions of
         the   Article.     Consequently,   resort   to
         principles of law or equity outside of Article
         4A is not appropriate to create rights, duties
         and liabilities inconsistent with those stated
         in this Article.

         [N.J.S.A. 12A:4A-102 cmt. 1.]

    Accordingly, with respect to the categories of transactions

within its reach, UCC Article 4A was intended to define the

rights and obligations of the affected parties, and set forth

the remedy for the breach of a duty.

    In light of this expression of legislative intent, we

consider the impact of Article 4A on Allen’s common law

                               31
negligence claim, premised on his contention that Oritani was

negligent when it permitted Sanchez to transfer funds among

ADS’s three accounts at Oritani.       The dispute in this case

arises from a setting directly addressed by Article 4A -- a

bank’s acceptance of an order transferring funds from one

account held by its customer to another of that customer’s

accounts.   Therefore, this matter is among the disputes for

which the Legislature intended Article 4A to constitute “the

exclusive means of determining the rights, duties and

liabilities of the affected parties.”       Ibid.   Moreover, our

recognition of the common law negligence action asserted by

Allen in his individual capacity would contravene the essential

objective of Article 4A:     to provide definitive principles that

allocate the risks and define the duties of banks effecting

electronic transfers on behalf of their customers.       Ibid.

    As shown by the definition of customer in N.J.S.A. 12A:4A-

105(1)(c), and the plain language of N.J.S.A. 12A:4A-202, -203

and -204, the Legislature clearly intended to impose upon banks

specified duties to customers.     Article 4A recognizes a cause of

action against a bank for unauthorized transfers that may only

be asserted by a customer.     That statutory claim is not afforded

to individual officers, directors, or employees of that

customer.   If Allen were permitted to assert a common law

negligence claim against Oritani, the “careful and delicate

                                  32
balancing” of competing interests that generated Article 4A

would be undermined.   N.J.S.A. 12A:4A-102 cmt. 1.14   Indeed, were

we to permit a corporate officer to assert such a common law

claim, the result might be to grant broader rights to non-

customers than those afforded to customers in some settings, for

instance where a customer has a viable Article 4A claim that is

limited by the terms of the customer’s agreement with the bank.

The recognition of a common law negligence claim -- in this case

premised upon a special relationship such as that contemplated

in City Check Cashing in the different setting of Articles 3 and

4 -- would be precisely the type of “resort to principles of law

or equity outside of Article 4A” that the Legislature expressly

sought to avoid.   N.J.S.A. 12A:4A-102 cmt. 1.

     Our dissenting colleague contends that Allen should be

permitted to maintain a “non-customer” claim under City Check

Cashing for negligent misrepresentation, independent of Article

4A, based upon Oritani’s assurance that two signatures would be


14Two reported cases from other jurisdictions that addressed
this issue in settings governed by Article 4A have barred the
common law claims asserted. See Corfan Banco Asuncion Paraguay
v. Ocean Bank, 715 So. 2d 967, 968, 970-71 (Fla. Dist. Ct. App.)
(barring plaintiff’s negligence claim premised on allegation
that bank incorrectly accepted transfer despite incorrect
account number because UCC Article 4A provided exclusive
remedy), rev. dismissed, 728 So. 2d 203 (Fla. 1998); Aleo Int’l,
Ltd. v. Citibank, N.A., 612 N.Y.S.2d 540, 541 (N.Y. Sup. Ct.
1994) (dismissing negligence claim for failure to cancel
transfer, in light of UCC Article 4A provisions that governed
cancellation and Comment to UCC 4-A-102).
                                33
required for a check to be honored without disclosing the fact

that transfers among ADS’s accounts could be effected by means

of internet banking.   Post at ___ (slip op. at 13-14).

In his amended complaint, Allen did not plead a negligent

misrepresentation claim as a non-customer of Oritani -- indeed,

he asserted no negligent misrepresentation claim of any kind.

As his counsel stated to the trial court, Allen’s “City Check

Cashing claim,” in which he asserted that “there is a special

relationship” with Oritani, was pled in Count Four of his

amended complaint.15   In Count Four, designated “General

Liability, Negligence and Gross Negligence – Oritani,” Allen

generally asserted a claim for negligence and gross negligence

against Oritani, premised upon Oritani’s alleged failure to




15Arguing that Count Four should be construed as a claim for
negligent misrepresentation, our dissenting colleague does not
rely on the negligence claim in Count Four itself, but on
allegations of fraud and misrepresentation. Post at ___ (slip
op. at 4-6). In Count Six, ADS and Allen asserted a claim for
common-law fraud, premised upon ADS’s status as Oritani’s
customer, and alleged the elements of that claim, including
affirmative misrepresentations and reliance. In addition, ADS
and Allen asserted a misrepresentation claim against Sanchez in
Count Nine. Allen identified only the negligence claim of Count
Four -- not the fraud claim set forth in Count Six or the
misrepresentation claim alleged in Count Nine -- as his
individual claim against Oritani premised upon City Check
Cashing. In that claim -– the sole non-customer claim asserted
in this case -- Allen alleges the elements of negligence, but
made no attempt to plead a cause of action for negligent
misrepresentation. Accordingly, the dissent postulates a City
Check Cashing non-customer claim for negligent misrepresentation
that was never asserted in this case.
                                 34
enforce its dual signature policy, permitting the disputed

transfers to occur.   That claim includes the elements of

negligence, but does not state the elements of a cause of action

for negligent misrepresentation, which must be pled with

particularity in accordance with Rule 4:5-8.   Accordingly, the

negligent misrepresentation claim that our dissenting colleague

contends should be permitted under City Check Cashing, supra, is

not part of this case.16

     Moreover, even if the claim described by the dissent had

been pled, such a claim would directly contravene the

Legislature’s stated objectives in enacting Article 4A.     As

described by the dissent, the negligent misrepresentation claim

would be premised upon the contention that because Oritani

assured its customer, ADS, that two signatures would be required


16The cases which our dissenting colleague cites in support of
his argument that Article 4A was not intended “to repeal the law
of misrepresentation, or allow banks a free hand to deceive the
public” involve allegations of fraud and misconduct that are not
reflected by the facts of the instant case. See Regions Bank v.
Provident Bank, Inc., 345 F.3d 1267, 1275 (11th Cir. 2003)
(involving claims “based on the theory that [the defendant] bank
accepted funds when it knew or should have known that the funds
were fraudulently obtained”); Regions Bank v. Wieder &
Mastroianni, P.C., 423 F. Supp. 2d 265 (S.D.N.Y. 2006) (arising
from same factual circumstances involving claims of actual
fraudulent transfer); Dubai Islamic Bank v. Citibank, N.A., 126
F. Supp. 2d 659, 661-62 (S.D.N.Y. 2000) (involving claims that
defendant Citibank maintained “a secretive department . . . as a
tool for wealthy patrons to accomplish secret, untraceable
financial transaction without regard to the legality or
legitimacy of such transactions,” and facilitated efforts of “a
reputed international financial terrorist”).
                                35
in order for a check from its account to be honored, it should

not have authorized the electronic funds transfers in dispute.

Post at ___ (slip op. at 13-14).     In Article 4A, the Legislature

has treated electronic funds transfers as a distinct category of

transactions governed by special rules, and has carefully

limited the liability of banks to refund money transferred in

accordance with a payment order that the customer has not

authorized.   See N.J.S.A. 12A:4A-204.    The negligent

misrepresentation claim postulated by the dissent –- devoid of

any allegation that the bank failed to utilize an agreed-upon,

commercially reasonable security procedure for the electronic

transfer -- would seek a remedy outside of the statutory

parameters.   Ibid.

    In short, a decision authorizing Allen to assert a

negligence claim in the setting of this case, in which he

clearly lacks the status of a customer, would contravene the

purpose and the terms of Article 4A.     Accordingly, the trial

court properly dismissed ADS and Allen’s common law negligence

claim.

                                C.

    Even if Article 4A’s language and intent did not itself bar

a negligence claim, no duty of care premised upon a “special

relationship,” as contemplated in City Check Cashing, could be

found in the circumstances of this case.    As this Court has

                                36
noted, the determination of a duty “‘involves identifying,

weighing, and balancing several factors -- the relationship of

the parties, the nature of the attendant risk, the opportunity

and ability to exercise care, and the public interest in the

proposed solution.’”    Brunson, supra, 199 N.J. at 403 (quoting

Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 439 (1993)).       The

duty of care recognized in City Check Cashing, supra, must be

premised on a special relationship derived from the parties’

“agreement, undertaking or contact.”    166 N.J. at 62.

    None of those sources of a special relationship can be

found in this case.    As defined in City Check Cashing, “[a]n

agreement is essentially a meeting of the minds between two or

more parties on a given proposition.”    Ibid. (citing Black’s Law

Dictionary 44 (6th ed. 1991)).   “An undertaking is the willing

assumption of an obligation by one party with respect to another

or a pledge to take or refrain from taking particular action.”

Ibid. (citing Black’s Law Dictionary 1060 (6th ed. 1991)).

    Here, Oritani had no direct contract with, or undertaking

for the benefit of, Allen as an individual.    The Account

Agreement provided that ADS was the account holder and thus the

bank’s customer, that ADS held the title to the “Business

Checking Account” maintained by Oritani, and that Oritani had an

obligation to send statements only to ADS.    Nothing in the

Account Agreement remotely suggests a duty on the part of

                                 37
Oritani to detect potentially fraudulent conduct by Sanchez and

to report it to Allen.     See Globe Motor Car v. First Fidelity,

273 N.J. Super. 388, 395 (Law Div. 1993) (noting that “[a]bsent

a contractual duty, a bank has no obligation to manage,

supervise, control or monitor the financial activity of its

debtor-depositor and is not liable to its depositor in

negligence for failing to uncover a major theft”).

    To the contrary, the Account Agreement required ADS to

“examine the [monthly statement issued by Oritani] and report

any problem or error with an account statement within 60 days

after the statement is sent to [ADS].”    Failure to do so meant

that Oritani would “not [be] liable for such problem or error.”

There was no “undertaking” on the part of Oritani to constrain

Sanchez’s ability to transfer funds among the multiple accounts

held by ADS at the bank.    Further, if Oritani had any obligation

to disclose its internet banking policy, that obligation was to

share that policy with ADS, not with Allen in his individual

capacity.

    Moreover, the record does not indicate that Oritani misled

Allen to believe that he held the status of a customer.

Instead, it establishes that Oritani clearly informed Allen that

his status as a signatory did not make him a customer; its

representative told Allen that bank statements would be sent to

ADS in care of Sanchez, and that no duplicate statements would

                                  38
be sent to him.   Accordingly, no special relationship can be

premised upon an agreement or an undertaking in this case.        See

City Check Cashing, supra, 166 N.J. at 62.

     In City Check Cashing, the Court characterized “contact,”

comparing it to agreements and undertakings, as “the loosest of

the three terms, defined as the ‘establishment of communication

with someone.’”   Id. at 62 (quoting Webster’s Ninth New

Collegiate Dictionary 282 (9th ed. 1984)).   Allen’s “contact”

with Oritani was limited to two visits:   Allen’s October 2,

2003, meeting with Fabregas and Sanchez to open the dual-

signature ADS account, and Allen’s June 15, 2004, visit to the

bank after he learned of Sanchez’s transfers of funds.     The

record reveals no contact at all between Allen and Oritani

during the period in which Sanchez conducted the disputed

transfers, much less a communication that would have alerted

Oritani to monitor ADS’s account activity.   Indeed, despite

ADS’s contractual obligation to alert Oritani to any problem or

error reflected in a bank statement within sixty days of the

issuance of that statement, Oritani received no communication

from ADS, Allen or Sanchez regarding any such concern.     Thus,

there was no contact between Allen and Oritani that would

support a finding of a special relationship in this case.        Even

if Allen’s claim were not barred by Article 4A of the UCC, no



                                39
such special relationship could be recognized based on the

record in this case.17

     In sum, UCC Article 4A was enacted to comprehensively

define the rights and remedies of parties affected by the funds

transfers governed by the statute’s terms.   The plain language

of N.J.S.A. 12A:4A-105(1)(c) makes clear that Allen is not a

customer entitled to assert a claim against Oritani.   Allen’s

assertion of a common law negligence claim in this case,

premised on a special relationship such as that contemplated by

this Court in City Check Cashing, contravenes the language and

purpose of Article 4A.   Accordingly, the trial court properly

dismissed Allen’s negligence claim.18

                                V.




17In contending that we “consign[] into irrelevance” City Check
Cashing, our dissenting colleague misreads our opinion. City
Check Cashing was decided in the very different context of an
Article 4 claim. In the Article 4 setting, the common law
claims contemplated by City Check Cashing are not subject to the
limitations that apply in fund transfer cases governed by
Article 4A. The viability of City Check Cashing is unaffected
by this opinion, which addresses claims arising from funds
transfers regulated by N.J.S.A. 12A:4A-101 to -507.

18The trial court’s entry of judgment notwithstanding the
verdict in favor of Oritani, following the dismissal of Allen’s
individual claims, was premised upon ADS’s obligation to
indemnify Oritani for any losses and expenses caused by Sanchez.
Because the Appellate Division’s determination that Allen had no
authority to assert claims on ADS’s behalf is not under review,
ADS has no judgment against Oritani, and the issue of
indemnification is moot.
                                40
    The determination of the Appellate Division panel is

reversed, and the judgment of the trial court is reinstated.

     CHIEF   JUSTICE RABNER; JUSICES LaVECCHIA and FERNANDEZ-VINA;
and JUDGES   RODRÍGUEZ and CUFF (both temporarily assigned) join
in JUSTICE   PATTERSON’s opinion. JUSTICE ALBIN filed a separate,
dissenting   opinion.




                                 2
                                        SUPREME COURT OF NEW JERSEY
                                        A-114 September Term 2011
                                                  069987


ADS ASSOCIATES GROUP, INC.,
and BRENDAN ALLEN,
      Plaintiffs-Respondents,
         v.
ORITANI SAVINGS BANK,
    Defendant-Appellant,
         and
ASNEL DIAZ SANCHEZ,
    Defendant.


    JUSTICE ALBIN, dissenting.


    Today, the majority announces that a bank can make material

misrepresentations to a party, facilitate the fleecing of the

party by his partner, and yet have no accountability and face no

liability.    The majority comes to that fundamentally unjust

result by a crabbed reading of the Uniform Commercial Code

(UCC), by ignoring UCC jurisprudence, and by consigning to

irrelevance one of our recent precedents, City Check Cashing

Inc. v. Mfrs. Hanover Trust Co., 166 N.J. 49, 62 (2001), which

allows for common-law causes of action against banks for

negligent misrepresentation.    I do not believe that the UCC or


                                  1
the common law immunizes a bank from liability when it violates

established norms of commercial conduct.     I therefore

respectfully dissent.

                                  I.

                                  A.

    Plaintiff Brendan Allen brought suit against defendant

Oritani Savings Bank for common-law negligence and fraud and for

violations of the UCC, N.J.S.A. 12A:4A-204, and the Consumer

Fraud Act, N.J.S.A. 56:8-1 to -2.13.     I need not repeat the

complex and convoluted procedural history, which the majority

has ably described.     I will focus only on the issue before the

Court.

    The trial court granted summary judgment in favor of

Oritani on Allen’s negligence claim, and the Appellate Division

reversed.   We granted certification “limited to the issue

whether [Allen] can maintain a common law non-customer

negligence claim against the bank.”    210 N.J. 260 (2012).

    Whether Oritani is entitled to summary judgment on Allen’s

negligence claim requires that we view the summary-judgment

record in the light most favorable to Allen, the non-moving

party.   With that standard in mind, here are the relevant facts.

                                  B.


                                  2
    Allen and Asnel Diaz Sanchez agreed to pursue a joint

business venture through an existing corporation, ADS Associates

Group, Inc., of which Sanchez was the sole stockholder.    In

October 2003, Allen and Sanchez visited Oritani Savings Bank

with the purpose of opening a joint business account.    Allen

explained to Oritani’s branch manager, Marlene Fabrigas, that he

wanted a joint account so that no funds could be removed from

the account without his written consent.     He also explained that

this safeguard was to protect his business investment.    Fabrigas

told Allen that only one person or entity could be listed as the

account holder.   She assured Allen, however, that the account

would be established in a way so that no monies could be removed

without his consent.

    Using a bank form, Fabrigas prepared a corporate resolution

-- for Sanchez’s signature -- that designated Allen as treasurer

of ADS Associates.     Fabrigas also completed a “Business Account

Signature Card” that required the signatures of both Allen and

Sanchez “in the payment of funds or in the transaction of any

business for this account.”     In other words, by agreement,

Oritani was not authorized to permit any transaction from the

new account without Allen’s written consent, including a

transfer of funds from the account.     In accordance with that

arrangement, Fabrigas had checks printed with two signature

lines, one for Allen and one for Sanchez.    Based on Fabrigas’s
                                   3
representations, Allen placed $28,750 of his personal funds into

the bank account.

    Less than two weeks later, unbeknownst to Allen, the bank

allowed Sanchez, on his own, to begin making Internet transfers

out of the ADS account until it was bled dry.     Fabrigas never

hinted to Allen that the bank made an exception to the two-

signature rule with Internet transfers.    Allen only became aware

of the transfers when a check issued on the account bounced.

                                II.

    The majority contends that Allen’s general claim of

negligence is not supported by allegations that Oritani made

misrepresentations in violating its duty of due care.     A fair

reading of the complaint says otherwise.

    In Count Four of the complaint, titled “General Liability,

Negligence, and Gross Negligence,” Allen asserted that “Oritani

had a duty to Allen based upon the promises made directly by the

branch manager and representations [she] made.”    Accordingly,

Oritani had “a duty to reasonably and diligently enforce the

dual signature security provisions contracted for with regard to

the ADS account.”   In support of that claim, Allen specifically

alleged the misrepresentations -- the promises -- made by the

bank manager:



                                 4
[Paragraph] 11. The manager assured ALLEN
several times during the filling out of the
paperwork that there was no way [SANCHEZ]
could remove any money from the account
without Allen’s consent.


[Pararaph] 12. The manager did this with
full knowledge that Defendant ORITANI could
not live up to this promise.


[Paragraph] 18. Oritani assured ALLEN each
and every time requested to send statements
that it did not matter because there was no
way that money could be removed from the
account without ALLEN’s signature on a
check.


[Paragraph] 19. Oritani knew that
representation to be false at the time it
was made.


[Paragraph] 45. This method of security
requiring both signatures was purposely
undertaken to prevent either holder from
obtaining funds from the ADS account without
the express and written consent of BOTH
ALLEN and SANCHEZ which consent was to be
evidenced by both parties’ signatures being
submitted to ORITANI before any funds could
be accessed or disbursed on behalf of ADS.


[Paragraph] 50. In fact, ORITANI made
affirmative misrepresentations to both ADS
and ALLEN in connection with the opening up
and creation of the ADS account by
representing to all parties that the dual
signature requirement would be strictly and



                      5
          reasonably enforced diligently, with regard
          to each and every transaction.1


     The majority’s strained parsing of the complaint does not

obscure what is self-evident -- that Allen’s negligence claim is

premised, in part, on the repeated misrepresentations made by

the bank manager.   Those misrepresentations are particularized

in accordance with Rule 4:5-8.   Oritani was on notice of a

negligent-misrepresentation cause of action, consistent with the

pleading practices in this state.    See Printing Mart-Morristown

v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (holding that

under our liberal notice-pleading standards, “a reviewing court

searches the complaint in depth and with liberality to ascertain

whether the fundament of a cause of action may be gleaned even

from an obscure statement of claim, opportunity being given to

amend if necessary” (citation and internal quotation marks

omitted)).   That Allen’s negligence claim is based partly on

Oritani’s misrepresentations is not undermined by Allen’s claims

alleging fraud and misrepresentation and consumer fraud in other

counts.

     Allen’s cross-petition for certification, moreover, made

clear that the non-customer negligence claim rested on Oritani’s


1 These paragraphs were all incorporated into Count Four of the
complaint.


                                 6
misrepresentations.     In the cross-petition, which we granted,

Allen stated that “there was clearly a special relationship

between Oritani and Allen. . . .       Oritani made representations

to [Allen] which [Allen] relied upon to [his] detriment, i.e.[,]

that Oritani would treat this as a two signature account for

[Allen’s] protection, which misrepresentations were breached.”

On this basis, Allen claimed he could “maintain a negligence

cause of action.”   Significantly, Oritani did not challenge

Allen’s characterization that his negligence claim was premised

on the bank’s misrepresentations.       The majority raises this

objection on its own.

    In short, Allen fairly pled a cause of action for

negligence based on misrepresentations made by the bank.       The

record does not allow that fact to be willed away.       I now turn

to the substantive issues before the Court.

                                 III.

    Although the Court granted certification solely to resolve

“whether [Allen] can maintain a common law non-customer

negligence claim against Oritani,” 210 N.J. 260, the majority

also resolves an issue on which the Court denied certification -

- whether Allen was a bank customer able to pursue a UCC claim

under N.J.S.A. 12A:4A-204.     That issue -- technically not before

us -- the majority wrongly decides.      I now believe that we erred

                                   7
in not granting certification on Allen’s UCC claim.     Indeed,

Allen was correct:    the Appellate Division erroneously affirmed

the dismissal of his UCC claim based on the mistaken notion that

he was not a customer of Oritani.

    The majority concludes that Allen has no UCC claim because

ADS Associates -- not Allen -- was Oritani’s customer, and that

because he was not a customer, he has no common-law negligence

claim either.   The majority is wrong on both counts.   First,

substantial authority supports the view that Allen was a bank

customer for UCC purposes.   Second, contrary to the position

taken by the majority, courts have overwhelmingly held that UCC

Article 4A does not bar common-law claims and that it is not the

exclusive remedy for harms related to funds transfers.     In

particular, Article 4A is not the exclusive remedy when a bank

induces a person to open and place money in an account based on

misrepresentations.   Last, Allen’s common-law negligence claim

finds support not only in City Check Cashing but also in the

Restatement (Second) of Torts (1977), and in cases from this

Court and other courts across the country.

                                IV.

                                 A.

    A person “having an account with a bank” is a “customer”

for the purposes of Article 4 (bank deposits) and Article 4A

                                 8
(funds transfers).   N.J.S.A. 12A:4-104(a)(5); N.J.S.A. 12A:4A-

105(1)(c).   Although, under Article 4 and Article 4A, a customer

is not limited to a person “having an account with a bank,” that

definition of a customer is common to both Articles.2   No case

suggests that a person “having an account with a bank” could be

a customer for Article 4 purposes but not for Article 4A

purposes.

     The majority contends that Allen was not a bank customer

under Article 4A.    According to the majority, a person is not a

customer unless his name is on the title of the bank account.       I

would not follow the majority’s formalistic definition of

“customer,” a definition that has been rejected by a number of

courts.

     Indeed, the Arizona Supreme Court in Schoenfelder v.

Arizona Bank, 796 P.2d 881, 889 (Ariz. 1990), held that a person

who is a mandatory signatory on an account held by a corporation

can stand as a customer in his own right.    That case is




2 Compare N.J.S.A. 12A:4-104(a)(5) (“‘Customer’ means a person
having an account with a bank or for whom a bank has agreed to
collect items, including a bank that maintains an account at
another bank.”), with N.J.S.A. 12A:4A-105(1)(c) (“‘Customer’
means a person, including a bank, having an account with a bank
or from whom a bank has agreed to receive payment orders.”).
Thus, the relevant definitions in both Articles are the same.
                                 9
strikingly similar to the one before us and refutes the

majority’s position.

    In Schoenfelder, the plaintiff arranged to sell a parcel of

land to a corporate developer who intended to finance a

construction project with a bank loan.        Id. at 884.   The

plaintiff and the corporate developer opened an account in the

developer’s name in a bank where the developer had other

accounts.   Ibid.   The plaintiff wanted to ensure that the loan

proceeds would be used only on the project.        Ibid.    To that end,

the new account was structured so that the plaintiff’s signature

would be required for the withdrawal of any funds.          Ibid.   The

corporate account’s signature card indicated that the

plaintiff’s signature and either of two other signatures were

necessary for a funds withdrawal.     Ibid.    The bank paid on

checks that bore the plaintiff’s forged signature.          Ibid.   On

that basis, the plaintiff sued the bank, seeking relief under

Article 4 of the UCC.   Id. at 885.

    The Arizona Supreme Court concluded that the plaintiff was

the bank’s “customer” under the UCC.     Id. at 889.       In reaching

that conclusion the Arizona high court took “into account all

the material circumstances surrounding the opening of the

account, the acknowledged intent of the parties to the

transaction, the bank’s knowledge of that intent, and the nature


                                 10
of the bank’s transactions with the parties.”      Id. at 886.    The

Schoenfelder court reasoned that a “fact-intensive analysis” is

required and that the focus should not be on “the mere

technicalities of the named owner of the account, and the formal

organization of that entity.”    Id. at 887.    It also observed

that in those cases in which courts held that signatories were

not bank customers, the banks did not have “knowledge of a

unique arrangement between the plaintiff and the named account

owner regarding ownership of the funds.”       Id. at 886.

Accordingly, the plaintiff was entitled to sue the bank for the

forged checks.    Id. at 889.   The plaintiff in Schoenfelder

unquestionably would have had a cause of action if the bank had

paid on checks where a necessary signature was missing from the

signature line.

    In another similar case, the Arkansas Supreme Court allowed

a cause of action under Article 4 for a bank’s failure to

enforce a dual-signature requirement, finding Lloyd Hobbs a

customer even though the account was not in his name.        First

Nat’l Bank v. Hobbs, 450 S.W.2d 298, 301-02 (Ark. 1970).         In

that case, Hobbs owned a motel franchise and contracted with a

businessman to lease and operate the motel.      Id. at 299.     They

agreed that all revenues would be deposited into a corporate

account at a local bank.    Id. at 299-300.     They explained their

business arrangement to the bank manager, who agreed to open an
                                  11
account that would require two signatures on all checks.        Id. at

300.    Later, the bank allowed money to be withdrawn from the

account by check without two authorized signatures.     Ibid.    The

Arkansas high court found that, for Article 4 purposes, Hobbs

was a customer because he had “opened the account, and directed

the manner in which it was to be handled.”     Id. at 301.

       A number of cases are in accord with Schoenfelder and Hobbs

and have rejected the majority’s narrow definition of customer.

See, e.g., Murdaugh Volkswagen, Inc. v. First Nat’l Bank, 801

F.2d 719, 725 (4th Cir. 1986) (holding that, despite

corporation’s name on account, sole stockholder was herself

customer and able to bring UCC suit against bank because she

personally guaranteed corporation’s obligations); Parrett v.

Platte Valley State Bank & Trust Co., 459 N.W.2d 371, 379 (Neb.

1990) (holding same for principal shareholder); Kendall Yacht

Corp. v. United Cal. Bank, 50 Cal. App. 3d 949, 956 (Ct. App.

1975) (holding same for husband-and-wife-owned corporation).

       Schoenfelder and Hobbs, Murdaugh Volkswagen, Parrett and

Kendall Yacht Corp. are persuasive in defining when a person is

a customer under the UCC.     I would adopt the Schoenfelder

totality-of-the-circumstances test for determining when a person

is a UCC bank customer.     That test considers “the relationship

of the parties to the bank, the purpose of the account, and the


                                  12
bank’s knowledge of those facts.”      Schoenfelder, supra, 796 P.2d

at 887.   Here, Oritani orchestrated the opening of the account -

- requiring Allen’s signature for a withdrawal of funds.      The

purpose of the dual-signature requirement was to prevent Sanchez

from emptying the account without Allen’s knowledge.     Oritani

not only misrepresented to Allen that his interest in the

account would be protected by the dual-signature requirement,

but it also facilitated the fraud by allowing Sanchez to act

unilaterally.

     Those facts were sufficient to justify bringing this matter

before a jury for its ultimate determination.

                                  B.

     As indicated earlier, had this Court not denied

certification on Allen’s UCC claims, I would have held that

Allen was a customer.    I would also have held that he survives

summary judgment on his UCC claim under N.J.S.A. 12A:4A-204(1),

which provides that:     “If a receiving bank accepts a payment

order issued in the name of its customer as sender which is . .

. not authorized . . . the bank shall refund any payment . . .

.”   (emphasis added).   The transfers by Sanchez were not

“authorized” because they were expressly forbidden by the

agreement (expressed in the Signature Card) that two signatures




                                  13
are required for any transaction.      Thus, Allen’s UCC claim

should have been allowed to proceed to trial.

       I would rectify our mistake in denying certification on the

UCC claim even at this late date.      I would grant certification

now.   Justice delayed is better than a complete denial of

justice.

                                  V.

                                  A.

       Concerning the issue on which we granted certification, I

would hold that Allen is entitled to proceed to trial on his

common-law negligence claims pursuant to City Check Cashing,

supra, 166 N.J. at 62.     There, we held that a bank may owe a

common-law duty -- not inconsistent with the UCC -- when “the

facts establish a special relationship between the parties

created by agreement, undertaking or contact.”       Here, there was

an agreement -- “a meeting of the minds between two or more

parties on a given proposition.”       See ibid.   The bank, Allen,

and Sanchez all agreed that financial transactions on the

account required two signatures.       The bank also engaged in an

undertaking.    It willingly made “a pledge to take . . .

particular action” -- not to release funds without two

signatures.    See ibid.   Last, “whether a contact creates a duty

is determined by its nature and surrounding circumstances.”

                                  14
Ibid.   The communications made by the bank to Allen surely gave

rise to a duty.   See ibid.

    This case falls into all three City Check Cashing

categories:   Oritani entered into an agreement with Allen,

undertook to refrain from releasing funds without his signature,

and clearly had contact with him.      After having told Allen that

his signature was required for any funds to be taken from the

account, “[Oritani] had a duty to disclose its Internet policy

to Allen when [the account] was opened,” specifically “the

availability and effect of Internet banking, and how it could

result in an electronic transfer of funds from the account

without two-signature authorization.”      That is, Oritani had a

duty to be truthful with Allen.     Certainly, Oritani should not

have told Allen that funds could not be released from the

account without his written signature when it knew that

statement was false concerning Internet funds transfers.

    Oritani’s misrepresentations are a basis for liability

under our tort law.   A defendant is liable for negligent

misrepresentation when he “supplies false information for the

guidance of others in their business transactions, . . . if he

fails to exercise reasonable care or competence in obtaining or

communicating the information.”     Petrillo v. Bachenberg, 139

N.J. 472, 484 (1995) (alteration in original) (quoting


                                  15
Restatement (Second) of Torts, supra, § 552(1)) (holding

attorney liable to non-client for negligently omitting negative

information from report on which non-client relied in purchasing

real property).

       The Restatement standard, which we adopted in Petrillo,

applies to any statements made to others and is not limited to a

defendant’s customers or clients.     Ibid.   Whether or not Allen

was a customer, the bank was “liabl[e] for pecuniary loss caused

to [Allen] by [his] justifiable reliance upon the [false]

information.”   Restatement (Second) of Torts, supra, § 552(1).

       That duty does not imply (as the majority claims) that

Oritani had a duty “to detect potentially fraudulent conduct by

Sanchez and to report it to Allen,” ante at ___ (slip op. at

33).   The breach of the bank’s duty was complete when the false

statements were made at the account opening.

       I now turn to address why a cause of action for negligent

misrepresentation is not inconsistent with the UCC.

                                 B.

       At its core, the majority’s rationale is that because Allen

“clearly lacks the status of a customer,” a negligence cause of

action, in addition to those provided in Article 4A, would

inherently “contravene” the UCC.      Ante at ___ (slip op. at 31).


                                 16
However, “[n]ot all common law claims are per se inconsistent

with [Article 4A’s] regime.”   Ma v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 597 F.3d 84, 89 (2d Cir. 2010).     It is

well-established that “Article 4-A . . . is not the exclusive

means by which a plaintiff can seek to redress an alleged harm

arising from a funds transfer.”    Sheerbonnet, Ltd. v. Am.

Express Bank, Ltd., 951 F. Supp. 403, 409 (S.D.N.Y. 1995).

    The UCC’s drafters and our Legislature intended that

common-law claims would survive -- and indeed supplement -- the

UCC unless a UCC provision bars a particular claim.     See

N.J.S.A. 12A:1-103(b) (providing that “unless displaced by the

particular provisions of the [UCC], the principles of law and

equity, including . . . fraud [and] misrepresentation . . .

supplement its provisions”).   The Drafting Committee’s comment

cited by the majority, U.C.C. 4A-102 official cmt. (1989),

cannot undermine the text of the statute.

    The majority, moreover, overreads the comment, which states

that “resort to principles of law or equity outside of Article

4A is not appropriate to create rights, duties and liabilities

inconsistent with those stated in [that] Article.”    U.C.C. 4A-

102 official cmt.   By its own language, the comment provides

that a plaintiff may resort to principles of law or equity that

are not inconsistent with Article 4A.    As Thomas Baxter, the


                                  17
Chair of the Subcommittee on Proposed UCC Article 4A, explained,

“the Drafting Committee intended that Article 4A would be

supplemented, enhanced, and in some places, superceded by other

bodies of law.”   Thomas C. Baxter, Jr. & Raj Bhala, The

Interrelationship of Article 4A with Other Law, 45 Bus. Law.

1485, 1485 (1990).   Therefore, “electronic funds transactions

are governed not only by Article 4A, but also by common law.”     3

James J. White & Robert S. Summers, Uniform Commercial Code §

22-3, at 8 (5th ed. 2008).

    Consistent with this point, courts “have held that

plaintiffs may turn to common law remedies to seek redress for

an alleged harm arising from a funds transfer where Article 4A

does not protect against the underlying injury or misconduct

alleged.”   Patco Constr. Co. v. People’s United Bank, 684 F.3d

197, 215-16 (1st Cir. 2012) (permitting claims for breach of

contract and of fiduciary duty).     Those common-law claims

include causes of action for negligence, breach of contract, and

fraud.   See, e.g., Fischer & Mandell LLP v. Citibank, N.A., 632

F.3d 793, 797 (2d Cir. 2011) (permitting claim for breach of

contract); Regions Bank v. Provident Bank, Inc., 345 F.3d 1267,

1276 (11th Cir. 2003) (permitting claims for conversion and

unjust enrichment); Regions Bank v. Wieder & Mastroianni, P.C.,

423 F. Supp. 2d 265, 269 (S.D.N.Y. 2006) (permitting claims for

conversion and breach of fiduciary duty), remanded for
                                18
reconsideration on other issue, 253 Fed. Appx. 52 (2d Cir.),

aff’d on remand, 526 F. Supp. 2d 411 (S.D.N.Y. 2007); Miller v.

Union Planters Bank, N.A., 61 U.C.C. Rep. Serv. 2d (Callaghan)

328, at 10-11 (S.D. Miss. 2006) (“[Plaintiff’s] common law

claims [for negligence, conversion, breach of contract and of

fiduciary duty] are not inconsistent . . . because Article 4A

does not expressly prohibit the remedies [he] is seeking.”);

Dubai Islamic Bank v. Citibank, N.A., 126 F. Supp. 2d 659, 666

(S.D.N.Y. 2000) (permitting claims for negligence and unjust

enrichment); Sheerbonnet, supra, 951 F. Supp. at 412, 414

(permitting claims for conversion, tortious interference with

contract, and unjust enrichment); cf. Hanover Ins. Co. v. M&T

Bank, 783 F. Supp. 2d 809, 815 (E.D. Va. 2011) (“[UCC § 4-

406(f)] does not bar [plaintiff’s] breach of contract claim

because [plaintiff] is not a ‘customer’ . . . .”).

    Indeed, claims alleging negligence in the opening of an

account that are not inconsistent with Article 4A may go

forward.   See Eisenberg v. Wachovia Bank, N.A., 301 F.3d 220,

224 (4th Cir. 2002) (holding “[plaintiff’s] negligence claims,

insofar as they challenge the opening and management of [the]

account” are not inconsistent with Article 4A); Gilson v. TD

Bank, N.A., 73 U.C.C. Rep. Serv. (Callaghan) 2d 430, at 27 (S.D.

Fla. 2011) (holding that negligence claim alleging “lack of care

during the account openings, not the wire transfers” is not
                                19
inconsistent with Article 4A, “which governs only wire

transfers”).

    Instead of eliminating common-law causes of action across

the board, as the majority does, other courts have recognized

that “[t]he exclusivity of Article 4-A is deliberately

restricted to ‘any situation covered by particular provisions of

the Article.’”   Sheerbonnet, supra, 951 F. Supp. at 408 (quoting

N.Y. U.C.C. 4A-102 official cmt.).   Article 4A does not cover

misrepresentations that induce a customer to have a relationship

with a bank.   The provisions of Article 4A “are transactional,

aimed essentially at resolving conflicts created by erroneous

instruction or execution of payment orders.”   Id. at 412.    In

these circumstances, the tort of negligent misrepresentation is

not inconsistent with the purpose of Article 4A.

    The drafters of Article 4A did not intend to repeal the law

of misrepresentation, or allow banks a free hand to deceive the

public, so long as a funds transfer is incidentally involved and

the bank otherwise complies with Article 4A.   See Regions Bank,

supra, 345 F.3d at 1276 (“It could hardly have been the intent

of the drafters to enable a party to succeed in engaging in

fraudulent activity, so long as it complied with . . . Article

4A.”); Regions Bank, supra, 423 F. Supp. 2d at 269 (holding that

“a rule established to govern wire transfers would not restrict


                                20
a party’s fiduciary duties,” nor sanction conversion); Dubai

Islamic Bank, supra, 126 F. Supp. 2d at 666 (accepting

plaintiff’s argument that “a bank is not immune from common law

liability arising from its tortious conduct simply because wire

transfers may be involved”).

    In the related context of Article 4, moreover, courts have

repeatedly held that negligent-misrepresentation claims are not

displaced by the UCC.   See, e.g., Avanta Fed. Credit Union v.

Shupak, 223 P.3d 863, 871 (Mont. 2009) (“[T]he customer who

detrimentally relies on the negligent misrepresentations of the

bank’s agents, and thereby suffers damage, is not without

recourse.”); Holcomb v. Wells Fargo Bank, N.A., 155 Cal. App.

4th 490, 498 (Ct. App. 2007) (“There is nothing in the [UCC]

prohibiting a claim based on a depositor’s detrimental reliance

on a bank employee’s incorrect statements.”), appeal denied, No.

S157668, 2007 Cal. LEXIS 14459 (Dec. 19, 2007); First Ga. Bank

v. Webster, 308 S.E.2d 579, 581 (Ga. Ct. App. 1983) (holding

that negligent-misrepresentation action against bank not barred

by UCC).

    Finally, contrary to the suggestion by the majority, a non-

customer cause of action is not precluded just because, in

certain instances, the non-customer is accorded broader rights

than a customer.   See Hanover Ins. Co. v. M&T Bank, 783 F. Supp.


                                21
2d 809, 815 (E.D. Va. 2011) (holding that Article 4 statute of

repose, UCC § 4-406(f), “does not bar [plaintiff’s] breach of

contract claim because [plaintiff] is not a ‘customer’”).

                                 VI.

       City Check Cashing envisioned this case.   A negligence

action premised on a bank’s misrepresentations is not in

conflict with the UCC and is a basis for liability.    Bank

deception is not a practice condoned by the UCC or by our common

law.   The majority has denied Allen his rightful day in court.

I therefore respectfully dissent.




                                 22
                SUPREME COURT OF NEW JERSEY


NO.    A-114                                    SEPTEMBER TERM 2011

ON CERTIFICATION TO             Appellate Division, Superior Court



ADS ASSOCIATES GROUP, INC.,
and BRENDAN ALLEN,
      Plaintiffs-Respondents,
               v.

ORITANI SAVINGS BANK,

      Defendant-Appellant,

               and

ASNEL DIAZ SANCHEZ,

      Defendant.

DECIDED                  September 30, 2014
                Chief Justice Rabner                        PRESIDING
OPINION BY              Justice Patterson
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY                       Justice Albin

                                       REVERSE/
  CHECKLIST                                                  AFFIRM
                                       REINSTATE

  CHIEF JUSTICE RABNER                      X

  JUSTICE LaVECCHIA                         X

  JUSTICE ALBIN                                                 X

  JUSTICE PATTERSON                         X

  JUSTICE FERNANDEZ-VINA                    X

  JUDGE RODRÍGUEZ (t/a)                     X

  JUDGE CUFF (t/a)                          X

  TOTALS                                    6                    1




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