                               UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                               No. 04-2569



CHEVY CHASE BANK, F.S.B.,

                                                  Plaintiff - Appellee,

           versus


WACHOVIA BANK, N.A.,

                                                 Defendant - Appellant,

           and


YOUNG & RUBICAM, INCORPORATED,

                                                              Defendant.


Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (CA-04-275)


Argued:   September 20, 2006                 Decided:   December 6, 2006


Before WILKINSON, NIEMEYER, and SHEDD, Circuit Judges.


Affirmed by unpublished opinion. Judge Shedd wrote the majority
opinion, in which Judge Wilkinson concurred. Judge Niemeyer wrote
a dissenting opinion.


ARGUED: Daniel S. Fiore, Arlington, Virginia, for Appellant. Ralph
Arthur Taylor, Jr., ARENT FOX, P.L.L.C., Washington, D.C., for
Appellee.    ON BRIEF: Eric S. Baxter, ARENT FOX, P.L.L.C.,
Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.




                                2
SHEDD, Circuit Judge:

     Wachovia Bank, N.A. (“Wachovia”) brings this appeal, asserting

that the district court erred when it denied its motion for summary

judgment and granted summary judgment in favor of Chevy Chase,

F.S.B. (“Chevy Chase”).   Finding no error, we affirm.



                                 I

     This case involves a dispute over a check in the amount of

$341,187.45 issued on July 19, 2002.      The check, drawn on the

account of Young & Rubicam (“Y&R”) at Wachovia, was deposited into

an account maintained at Chevy Chase.    Subsequently, Chevy Chase

presented the check to Wachovia, which paid the check and debited

Y&R’s account for the amount of the check.   When issued, the check

was made payable to Hearst Magazines Division.     Upon deposit at

Chevy Chase, however, the name of the payee was Kon Pesicka/CJ

International.

     Y&R and Wachovia operate under a “positive pay” agreement,

whereby Y&R drafts a check on its account and identifies key

features of the check to Wachovia.      Specifically, Y&R informs

Wachovia of the date, check number, and dollar amount on each

check.   When the check is later presented to Wachovia for payment,

Wachovia verifies each of these identifiers and pays the check

unless one of them differs from the information supplied by Y&R.




                                 3
     The      check    presented      to   Wachovia       matched     the   information

provided by Y&R.          Wachovia accordingly paid the check without

verifying the name of the payee.                 Y&R subsequently discovered that

there    were    problems      with    the       check,    notified    Wachovia,    and

requested that Wachovia produce the original check.                            However,

Wachovia was unable to locate and produce the original check

because,      pursuant    to   its    policy,       Wachovia    had    destroyed    the

original check after storing a digital copy.                         Wachovia, citing

“business” reasons, then credited Y&R’s account for the value of

the check.

     Thereafter, Wachovia sought repayment of the check from Chevy

Chase based on an assertion of breach of presentment warranty.

Upon receiving this request, Chevy Chase launched an investigation

to determine whether the check had been forged or altered.                        Chevy

Chase, however, was unable to determine with certainty what type of

fraud was committed.           More specifically, Chevy Chase could not

determine whether the check it received was the check which Y&R had

issued but with the name of the payee altered or whether it was a

different check which was a forgery or a counterfeit.

     Chevy Chase then filed this action, seeking a declaratory

judgment regarding its obligations to Wachovia. Wachovia, in turn,

sought   to     hold   Chevy    Chase      liable    for    breach     of   presentment

warranty under the Virginia Commercial Code. After discovery, both

parties moved for summary judgment.                  The district court, holding


                                             4
that Wachovia had failed to produce sufficient evidence showing

that the check had been altered, granted summary judgment in favor

of Chevy Chase.      Further, the district court alternatively held

that Wachovia was precluded from recovery because, under its

positive pay agreement, it was not obligated to credit Y&R’s

account    upon   discovery   of   check   fraud.      Thus,   any   loss   was

voluntarily borne by Wachovia, meaning that Wachovia suffered no

damages.    This appeal followed.



                                     II

     We review de novo the district court’s decision to grant

summary judgment, applying the same standards which the district

court employed.     Nat’l City Bank of Indiana v. Turnbaugh, 463 F.3d

325, 329 (4th Cir. 2006).     Summary judgment is proper only if there

are no genuine issues of material fact and if the moving party is

entitled to judgment as a matter of law.            Fed. R. Civ. P. 56.     In

reviewing a grant of summary judgment, we must view all facts in a

light most favorable to the non-moving party.           Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 255 (1986).              However, the non-moving

party must “go beyond the pleadings and by [his] own affidavits, or

by the depositions, answers to interrogatories, and admissions on

file, designate specific facts showing that there is a genuine

issue for trial.”      Celotex Corp. v. Catrett, 477 U.S. 317, 324

(1986) (internal quotations omitted).


                                      5
                                          III

      Both parties agree that the check received by Chevy Chase and

the check issued by Y&R had different payees.             This being the case,

the check received by Chevy Chase -- and paid by Wachovia -- could

have been the original check issued by Y&R (and subsequently

altered by an unknown party) or the check could have been a

counterfeit check (or a check with a forged drawer signature). The

primary factual dispute centers on this distinction.                      Wachovia

contends that the check was altered, while Chevy Chase maintains

that the check was forged.            The outcome of this factual dispute

determines who must bear the loss incurred when the check was paid.

      The Virginia Commercial Code provides that a party presenting

a check for payment makes a warranty of presentment to the party

paying   the   check.        Va.   Code   Ann.   §   8.4-207.2.     One    of   the

guarantees included in the warranty of presentment is that the

check presented has not been “altered.” Id. § 8.4-207.2(a)(2). An

alteration is defined as:

      (I) an unauthorized change in an instrument that
      purports to modify in any respect the obligation of a
      party, or (ii) an unauthorized addition of words or
      numbers or other change to an incomplete instrument
      relating to the obligation of a party.

Id. § 8.3A-407(a).           However, the presentment warranty does not

include a guarantee that the drawer’s signature on the check is

authorized.      Instead, it provides only that a presenting party has

no   knowledge    that   a    check   bears     an   unauthorized   (or    forged)


                                           6
drawer’s     signature.         Id.    §§       8.4-207.2(a)(3),      8.1A-201(41).

Similarly,    a   party   seeking       payment      warrants    that    he    has   no

knowledge that a check is counterfeit.                   Nat’l Title Ins. Corp.

Agency v. First Union Nat’l Bank, 559 S.E.2d 668, 669 (Va. 2002).

     Wachovia has alleged that Chevy Chase breached its presentment

warranty by presenting an altered check for payment. Specifically,

Wachovia asserts that the check it received from Chevy Chase was

the original check which Y&R issued to Hearst Magazine Services.

Because this check contained an amount, check number, and date

identical to the one Y&R issued, Wachovia concludes that the change

in the name of the payee can only be an alteration.                     Accordingly,

Wachovia maintains that it is entitled to recover the amount it

paid Chevy Chase upon presentment of the check.                 See Va. Code Ann.

§ 8.4-207.2(b).

     Wachovia may not recover on its claim for breach of warranty

unless it proves that the check it received from Chevy Chase was

altered.     The district court found that Wachovia failed to carry

its burden on this issue.         We agree.

     In    support   of   its    position        that   the   check   was     altered,

Wachovia presented nothing more than an assertion that the check it

paid differed from the check which Y&R issued.                        This fact, of

course, is obvious. Beyond this, Wachovia must show that the check

it received from Chevy Chase was the original check issued by Y&R

but with an altered payee.            Wachovia has failed to do this.


                                            7
      Wachovia has presented no witnesses who can testify regarding

Wachovia’s receipt of the check, meaning that no one can offer

evidence regarding the condition of the check when it was presented

for   payment.     More   importantly,   Wachovia   cannot   present   the

original check, having destroyed it after making a digital copy.

If Wachovia had produced the actual check itself, an examination of

the check may have shed light on whether the check was altered.

For example, the check may have contained smudges, erasures,

chemical bleach marks, broken fibers, or other signs of alteration.

Without the original, even Wachovia’s own forensic expert testified

that he could not say, with a reasonable degree of scientific

certainty, that the check had been altered rather than forged or

copied (and therefore counterfeit).

      In these circumstances, Wachovia has failed to offer any

evidence from which a reasonable factfinder could conclude that the

check was altered as opposed to counterfeited.               Accordingly,

Wachovia cannot carry its burden of proving that Chevy Chase

breached its warranty of presentment, and its claim against Chevy

Chase fails.     Having reached this conclusion, we need not address

Chevy Chase’s alternative argument that Wachovia’s claim must fail

for lack of damages.




                                    8
                               IV

    Based on the foregoing, we affirm the judgment of the district

court.

                                                         AFFIRMED




                               9
NIEMEYER, Circuit Judge, dissenting:

     The facts of this case demonstrate, more likely than not, that

the check issued by Young & Rubicam, drawn on Wachovia Bank, and

presented to Chevy Chase Bank was an altered check, not a forged or

counterfeit check.    Under the Uniform Commercial Code, therefore,

risk of loss by payment on the instrument must be borne by Chevy

Chase Bank, and Wachovia Bank is entitled to relief against Chevy

Chase Bank for breach of its presentment warranty.              See Va. Code

Ann. § 8.4-207.2.     I believe the majority misapplies the summary

judgment standard, which requires only that Wachovia create a

“genuine issue as to any material fact.”         Fed. R. Civ. P. 56(c).

     The image of the check presented to Chevy Chase Bank contained

numerous indications that it was the image of the actual check

issued by Young & Rubicam but with the payee altered:                  (1) the

number on the image agreed with the number on the check issued by

Young & Rubicam; (2) the date on the image agreed with the date on

the check issued by Young & Rubicam; (3) the amount of the check on

the image agreed with the amount of the check issued by Young &

Rubicam; (4) the machine-embossed signature of Young & Rubicam

agreed   with   its    signature     on    the   actual       checks    issued

contemporaneously;    (5)   the    image   had   the   same    front-to-back

alignment as other checks in the same batch as the check issued by

Young & Rubicam; and (6) the image perfectly overlapped with the

typographical features of other checks in the batch issued by Young


                                    10
& Rubicam.   Additional circumstantial evidence also supports the

claim that the image in question was that of the actual check

issued by Young & Rubicam:   (7) The actual check issued by Young &

Rubicam was never returned, except in its altered form, as shown in

the image.   If the check presented to Chevy Chase Bank was a

counterfeit check, then the original check issued by Young &

Rubicam would likely have been returned in the ordinary course of

banking procedures.   (8) The font used in the payee’s name on the

image check was different from the font otherwise used on the check

and was consistent with alteration by typewriter.   This indicates

that the payee’s name was added by alteration.   One counterfeiting

a Young & Rubicam check would logically have used the same font

type throughout, as Young & Rubicam did when it issued the check.

Finally, (9) fraud by alteration of the payee was known to be the

common form of fraud used to circumvent the “positive-pay” type of

arrangement in place between Young & Rubicam and Wachovia Bank.

Such fraud is much harder to detect during the routine, high-volume

banking process than a check issued with a forged signature on

counterfeit check stock.

     Because I conclude that the facts presented by Wachovia make

it more likely than not that the image was an image of the original

check issued Young & Rubicam but altered, I would conclude, a

fortiori, that Wachovia’s evidence was sufficient to create a




                                 11
question of fact, requiring us to deny Chevy Chase Bank’s motion

for summary judgment.

     The majority opinion seems to absolve Chevy Chase Bank of any

need to rebut Wachovia’s evidence, permitting it rely simply on the

bare assertion that the check might have been counterfeit, rather

than altered.     In addition, the majority enters into needless

conflict   with   our   sister   circuit   in   the   law   of   negotiated

instruments under the Uniform Commercial Code.         See Wachovia Bank,

N.A. v. Foster Bancshares, Inc., 457 F.3d 619 (7th Cir. 2006).

This is unfortunate in an area of law where the need for national

uniformity is greatest.

     Accordingly, I respectfully dissent.




                                   12
