CHIN, Circuit Judge:
In January 2009, pro se plaintiff-appellant Fischer & Mandell LLP ("F & M"), a law firm, deposited a check for $225,351 into its account at defendant-appellee Citibank, N.A. ("Citibank"). The funds were made "available" before the check cleared, and F & M wired most of the funds elsewhere. The check, however, turned out to be counterfeit and was dishonored. Citibank debited the account the amount of the check plus a $10 returned check fee.
F & M brought this action below for breach of contract and negligence, contending that it relied on Citibank's advice that the funds were "available" and that Citibank was responsible for the losses. In a thorough and carefully considered decision, the district court (Sullivan, J.) granted summary judgment to Citibank dismissing the claims. We affirm.
In January 2009, F & M
The client requested a wire transfer of a portion of the funds. On Monday, January 19, 2009, a bank holiday, F & M accessed its trust account through the Citibank website. The website showed that funds in excess of the amount of the Check were "available." As instructed by its client, F & M then requested a wire transfer of $182,780 to an account in South Korea. Citibank executed the transfer the next day.
That afternoon, the Federal Reserve Bank returned the Check as dishonored and unpaid. A Citibank representative telephoned F & M to advise that the Check was counterfeit and had been dishonored. Citibank charged back to the trust account the amount of the Check and a $10 returned check fee, resulting in an overdraft. Citibank then debited an amount necessary to satisfy the overdraft from a money market account F & M maintained at Citibank.
The same afternoon, at approximately 3:30 p.m., F & M asked Citibank to cancel and recall the two wire transfers. Citibank did not, however, seek to cancel the wire transfers until shortly after 6 a.m. the next morning. On January 27 and 28, 2009, Citibank learned that the transfers could not be cancelled because the funds had already been withdrawn.
F & M's accounts at Citibank were covered by a series of written agreements (the "Agreements"), the most relevant of which were the CitiBusiness Client Manual (the "Manual"), the Citibank Marketplace Addendum (the "Addendum"), and the CitiBusiness User Agreement (the "User Agreement," and collectively the "Agreements").
F & M commenced two lawsuits based on Citibank's actions with respect to the Check.
On February 2, 2009, F & M brought an action in the Southern District of New York asserting claims under the Electronic Fund Transfer Act and the Expedited Funds Availability Act and state law. The district court (Sullivan, J.) granted summary judgment to Citibank dismissing the federal claims and declining to exercise supplemental jurisdiction over the state law claims. See Fischer & Mandell, LLP v. Citibank, N.A., No. 09 Civ. 1160(RJS), 2009 WL 1767621 (S.D.N.Y. June 22, 2009). F & M did not appeal the judgment.
On July 14, 2009, F & M commenced this action in the Supreme Court of the State of New York on the state law claims. The complaint asserted two causes of action: breach of contract and negligence. The claims were brought under the common law of New York; the complaint did not cite the Uniform Commercial Code (the "U.C.C."). Citibank removed the case to the Southern District of New York based on diversity jurisdiction.
Citibank moved for summary judgment, and the district court (Sullivan, J.) granted the motion in May 2010. See Fischer & Mandell, LLP v. Citibank, N.A., No. 09 Civ. 6916(RJS), 2010 WL 2484205 (S.D.N.Y. May 27, 2010). The district court rejected Citibank's assertion that the
As for the negligence claim, the district court held that the claim was preempted by Article 4-A of the U.C.C. Id. at *7-8. The district court applied Article 4-A, concluded that Citibank acted in conformity with Article 4-A, and held that the negligence claim failed as a matter of law. Id. at *9.
Final judgment granting Citibank's motion for summary judgment was entered on May 28, 2010, and this appeal followed.
We review an award of summary judgment de novo, drawing all reasonable inferences in favor of the non-moving party. J. Walter Thompson, U.S.A., Inc. v. First BankAmericano, 518 F.3d 128, 136-37 (2d Cir.2008).
We discuss the two causes of action — breach of contract and negligence — in turn.
A threshold issue is whether Articles 4 and 4-A preempt F & M's breach of contract claim, brought under the common law of New York. If so, the question remains to what extent. The district court held that the breach of contract claim was not preempted in this case because both Articles permit parties in a banking relationship to vary their rights by agreement, to a certain extent, and the relevant contractual provisions here were not inconsistent with the rights created by the U.C.C. We agree.
Article 4-A "governs the procedures, rights, and liabilities arising out of commercial electronic funds transfers." Grain Traders, Inc. v. Citibank, N.A., 160 F.3d 97, 100 (2d Cir.1998); accord Ma v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 597 F.3d 84, 87-88 (2d Cir.2010). In Grain Traders, we held that common law claims arising from electronic funds transfers are precluded "when such claims would impose liability inconsistent with the rights and liabilities expressly created by Article 4-A." 160 F.3d at 103 (citations omitted). We noted, however, that Article 4-A permits some of its provisions to be varied by agreement. Id. For example, § 4-A-212 permits a receiving bank to vary its duties to the sender of wire transfers. See N.Y. U.C.C. § 4-A-212 ("A receiving bank is not the agent of the sender or beneficiary of the payment order it accepts . . . and the bank owes no duty to any party to the funds transfer except as provided in [Article 4-A] or by express agreement." (emphasis added)). Accordingly, a common law breach of contract claim is not preempted by Article 4-A to the extent the provisions are not inconsistent with Article 4-A or they fall within one of the areas where a variance is permitted. See Centre-Point Merch. Bank Ltd. v. Am. Express Bank Ltd., 913 F.Supp. 202,
Article 4 governs bank deposits and collections. Neither the New York Court of Appeals nor our Court has directly considered whether or to what extent Article 4 preempts common law actions. The New York Court of Appeals has observed, however, that the New York U.C.C. "has the objective of promoting certainty and predictability in commercial transactions." Putnam Rolling Ladder Co. v. Mfrs. Hanover Trust Co., 74 N.Y.2d 340, 349, 547 N.Y.S.2d 611, 546 N.E.2d 904 (1989) (noting as well that "the UCC not only guides commercial behavior but also increases certainty in the marketplace and efficiency in dispute resolution"). Article 4 itself recognizes that "[t]he tremendous number of checks handled by banks and the country-wide nature of the collection process require uniformity in the law of bank collections." N.Y. U.C.C. § 4-101 cmt. We therefore hold — as we did with Article 4A — that Article 4 precludes common law claims that would impose liability inconsistent with the rights and liabilities expressly created by Article 4.
Our holding gives effect to the terms of § 4-103(1), which provide that "the provisions of [Article 4] may be varied by agreement except that no agreement can disclaim a bank's responsibility for its own lack of good faith or failure to exercise ordinary care." Id. § 4-103(1). This section would be rendered meaningless if common law claims could impose liability inconsistent with the rights and liabilities expressly created by Article 4. See Sunshine v. Bankers Trust Co., 34 N.Y.2d 404, 410, 358 N.Y.S.2d 113, 314 N.E.2d 860 (1974) (finding a purported agreement to extend a bank's time to charge back a depositor's account invalid because the bank "[was] attempting to disclaim its own responsibility for ordinary care" in violation of N.Y. U.C.C. § 4-103).
Here, as discussed below, however, the Agreements did not create rights or obligations inconsistent with those created by Articles 4 and 4-A. Accordingly, we hold that the district court correctly held that the common law breach of contract claim was not preempted and that it correctly looked to the Agreements to decide the rights and liabilities of the parties.
Under New York law, a breach of contract claim requires proof of (1) an agreement, (2) adequate performance by the plaintiff, (3) breach by the defendant, and (4) damages. First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d Cir.1998); Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir.1996). Summary judgment is appropriate if the terms of the contract are unambiguous. Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir.2008).
The parties dispute only the third element, and the principal point of contention is the meaning of the term "available." The thrust of F & M's argument is that when Citibank's website "gratuitously" declared the funds to be "available" before they had been collected, it implicitly represented that the Check had cleared, thereby misleading F & M into believing that funds were "available for withdrawal as a matter of right" for both wire transfers. Citibank argues that "available" meant only that the account balance could be withdrawn from the account and not that the balance represented collected funds.
The district court correctly rejected F & M's interpretation and accepted Citibank's. The Agreements clearly show that while Citibank gave its customers the ability to make use of check proceeds provisionally, that is, before checks cleared, that right was subject to a charge back if a check was returned.
The key provision is contained in the Addendum, which provides clear guidance as to the processing of checks:
(Emphasis added). The last-quoted paragraph plainly provides that funds will be made "available" on a provisional basis, subject to a charge back if a check is returned.
The unsurprising notion that customers are responsible for returned checks is reinforced by the Manual, which unambiguously provides:
First, F & M makes much of a provision in the Manual, in a section listing exceptions to Citibank's "Standard Funds Availability Policy," that reserves to Citibank the right to "require that any check you present for deposit be sent out for collection." When this exception is invoked, Citibank will accept a check only on a "collection basis," that is, the funds are not made available until after payment is received from the bank on which the check is drawn. But this exception to Citibank's general policy of making funds provisionally available was not invoked here, and thus it is not relevant. F & M also relies on other references in the Citibank documents to "sufficient" funds and "available" funds, but these references likewise do not stand for the proposition that Citibank's advice that funds were "sufficient" or "available" meant that they had been "collected" or "finally settled."
Second, F & M's argument that the district court erroneously ignored provisions of the U.C.C. also fails, for the controlling agreements do not create rights and liabilities inconsistent with those under the U.C.C. F & M notes, for example, that § 4-213(4) provides that:
N.Y. U.C.C. § 4-213(4) (emphasis added). F & M argues that because § 4-213(4) provides that funds are "available for withdrawal as of right" only when a "settlement becomes final," Citibank erred when it advised F & M that the funds were "available" before settlement of the Check became final. The obvious flaw with this argument is that Citibank did not advise F & M that the funds were "available for withdrawal as of right." Rather, Citibank advised only that the funds were "available," without representing that the Check had cleared or that the funds had been collected or that settlement had become final. "Available" is different from "available as of right."
In fact, the U.C.C. expressly recognizes that a bank may permit a customer to use funds provisionally, subject to a charge back in the event of dishonor, as § 4-212(1) provides:
N.Y. U.C.C. § 4-212(l).
Accordingly, we affirm the district court's dismissal of F & M's breach of contract claim.
The district court correctly held that Article 4-A preempted any common law claims inconsistent with its provisions. As we held in Grain Traders, there is "no claim for negligence unless [the] conduct complained of was not in conformity with Article 4-A." 160 F.3d at 103; see N.Y. U.C.C. § 4-A-102 cmt. (Article 4-A is designed 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").
In its second claim, F & M argued that Citibank failed to exercise reasonable care because it waited some fifteen hours to try to cancel the two wire transactions after it was asked to do so. F & M contends that it asked Citibank at approximately 3:30 p.m. on January 21 to recall the two wire transactions, and that Citibank made no effort to do so until 6:11 a.m. the next day, January 22. F & M contends that, at a minimum, genuine issues of material fact existed as to whether Citibank acted reasonably by not trying sooner. The district court rejected the argument. We agree.
Under Article 4-A, a "payment order" is an instruction by a "sender" to a "receiving bank" to pay (or to cause another bank to pay) a sum of money (under certain conditions not relevant here). N.Y. U.C.C. § 4-A-103(1)(a). "[A] communication by the sender canceling or amending a payment order is effective . . . if notice of the communication is received at a time and in a manner affording the receiving bank a reasonable opportunity to act on the communication before the bank accepts the payment order." Id. § 4-A-211(2). The "receiving bank . . . accepts a payment order when it executes the order." Id. § 4-A-209(l). "A payment order is `executed' by the receiving bank when it issues a payment order intended to carry out the payment order received by the bank." Id. § 4-A-301(l).
Here, F & M was the "sender" because it was "the person giving the instruction to
F & M argues that the district court misapplied Article 4-A because Citibank was not the "receiving bank" but the "sending bank." This argument fails. While it may be that Citibank sent F & M's cancellation orders by forwarding the requests to the Korean bank and BoA, it was not the "sender" within the meaning of § 4-A-211(2). In the circumstances here, the sender is the person who "want[s] to withdraw . . . the [payment] order because [he] has had a change of mind about the transaction or because the payment order was erroneously issued or for any other reason." N.Y. U.C.C. § 4-A-211 cmt. 1. F & M was the party that "had a change of mind about the transaction," and it addressed its instruction to Citibank, making Citibank the "receiving bank." Id. § 4-A-103(d).
F & M also argues that issues of fact existed as to whether the cancellation orders would have been effective if Citibank had acted more quickly, and challenges the documents showing that the payment orders were executed before the recall request was made. F & M does so, however, in a wholly conclusory manner, and it is unable to point to any concrete evidence to contradict Citibank's documents showing that it executed the payment orders before the request to cancel was made. FDIC v. Great Am. Ins. Co., 607 F.3d 288, 292 (2d Cir.2010) (party opposing summary judgment cannot rely on "conclusory allegations or unsubstantiated speculation").
F & M cites documents showing that Citibank did not act on the recall request until 6:11 a.m. on January 22, but even assuming fifteen hours was too long, that delay was not the cause of F & M's injury. F & M also points to its monthly account statement, which showed that the second transfer was not debited to the account until January 22; the fact that the account was not debited until January 22, however, does not undermine the documentary evidence showing that the second payment order was executed the day before. Again, as the district court properly found, the critical question in terms of timing is when Citibank executed the wire transfer requests, as set forth in § 4-A-209(1).
We have considered F & M's remaining arguments and conclude that they lack merit.
The judgment of the district court is AFFIRMED, with costs.
