The opinion of the court was delivered by: MICHAEL B. MUKASEY
MICHAEL B. MUKASEY, U.S.D.J.
Plaintiff resides in Santiago, Chile, where he is engaged in the currency exchange business. (Complt P 1) On July 11, 1990, plaintiff received a check for $ 22,500 from Ilan Slachewski, who wished to convert the dollars into Chilean pesos. (Pl. Aff. P 9) The check was drawn on an account at Bank Hapoalim, B.M. ("Hapoalim") and was to be paid to the order of "IDB of N. York." (Def. Ex. A) Plaintiff endorsed the check by stamping it with the following words: "PAY TO THE ORDER OF IDB OF NEW YORK FOR DEPOSIT ONLY ACCT. NO. 90-1758-9." (Def. Ex. A) He then deposited the check into his account at Israel Discount Bank ("IDB").
IDB forwarded the check to Bankers Trust Company for collection on July 16, 1990. (Def. 3(g) Stmt P 10) On July 17, Bankers Trust forwarded the check to the New York Fed. (Def. 3(g) Stmt P 12) It is undisputed that the New York Fed, in turn, sent the check to Hapoalim for collection. (Def. Mem. at 6; Pl. 3(g) Stmt P 13(c)) On August 7 or 8, 1990, the New York Fed discovered that the check had been lost and informed Bankers Trust of the loss by issuing an Advice of Charge. (Pl. 3(g) Stmt P 13; Def. 3(g) Stmt P 13) On August 9, 1990, plaintiff allegedly paid Slachewski $ 22,500 in pesos, after having waited approximately one month for Slachewski's check to clear. (Pl. 3(g) Stmt P 14)
On or before September 10, 1990, Bankers Trust submitted a photocopy of the check directly to Hapoalim for collection. (Pl. 3(g) Stmt P 15; Def. 3(g) Stmt P 16) It was not until September 18 that Bankers Trust informed IDB that the check had been lost. (Pl. 3(g) Stmt P 16; Def. 3(g) Stmt P 17) On or about October 10, 1990, Hapoalim dishonored the check because Slachewski's account had insufficient funds. (Pl. 3(g) Stmt P 20; Def. 3(g) Stmt 18) On October 23, 1990, IDB charged back Eskenazi's account the sum of $ 22,500. (Def. 3(g) Stmt P 20) Plaintiff has been unable to recover from Slachewski, and has settled his claims against IDB, Bankers Trust and Hapoalim.
Defendant contends that it is entitled to summary judgment because 1) it acted properly; 2) plaintiff is not a holder of the check; and 3) plaintiff suffered no damages because the check was drawn upon insufficient funds. (Def. Mem. at 3) Summary judgment is appropriate if the evidence demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Because granting the motion denies the nonmoving party a trial on the merits, the court must resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. Gibson v. American Broadcasting Cos., 892 F.2d 1128, 1134 (2d Cir. 1989). Here, no genuine issue of fact exists with regard to the claim of negligence, so summary judgment is appropriate. Because defendant acted reasonably, defendant's motion for summary judgment is granted. Accordingly, this opinion does not address whether plaintiff was a holder, or whether plaintiff suffered damages as result of the New York Fed's conduct.
Banks are obligated to exercise ordinary care in the handling of checks during the collection process. See N.Y.U.C.C. § 4-202(1) (McKinney 1991). Section 4-202(1)(e) of the U.C.C. specifically states that "a collecting bank must use ordinary care in . . . notifying its transferor of any loss or delay in transit within a reasonable time after discovery." In defining "ordinary care," Article 4 of the U.C.C. provides:
N.Y.U.C.C. § 4-103(3) (McKinney 1991). Thus, if the New York Fed can show that it acted in conformity with Federal Reserve regulations or general banking practices, then it will have provided sufficient proof that it exercised ordinary care. The burden then shifts to plaintiff to rebut this showing. See Celotex Corp. v. Catrett, 477 U.S. 317, 331, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).
Defendant offers an affidavit from Fred Denesevich, an officer of the New York Fed holding the position of "Regional Check Manager." He states that 30 days is a reasonable amount of time to conduct a lost check inquiry, and that, in the banking community, the research involved generally takes 30 days or more. (Denesevich Aff.) Because defendant acted within 30 days of the earliest possible date of notification, July 17, it contends ...