Opinion
No. CV-07-5002703
April 2, 2008
MEMORANDUM OF DECISION
Procedural History
Plaintiff Liberty Bank brought this action against defendant Haley De-Marty by complaint dated January 3, 2007 and made returnable on February 6, 2007. A trial was held before the Court on March 26, 2008.
Facts
Some time in July 2006, an anonymous woman telephoned the defendant and informed her that she had won a sweepstakes prize. The woman then told defendant that as an advance on her winnings, she would receive a series of checks which she was to deposit in her bank account. Defendant was then to withdraw a portion of the funds and wire them to an address in Spain in order to receive the rest of her prize. On or about July 27, 2006, defendant received a check drawn on Huntington National Bank of Columbus Ohio in the amount of $4,890.24, which she deposited in her account with plaintiff Liberty Bank. The next day, defendant received a check in the amount of $4,700.00 drawn on Wachovia Bank and did the same thing. For the next several days, defendant received repeated calls from the anonymous woman inquiring about the availability of the funds and the status of the wires. Once informed by the plaintiff Liberty Bank that the funds from the two checks had cleared, defendant wired the money as instructed. At trial, defendant provided proof that she had wired at least $3,000.00 to an address in Spain around the time that she negotiated the checks at issue. The checks were eventually dishonored by the issuing banks, the Huntington check as counterfeit and the Wachovia check as being drawn on an account that contained insufficient funds.
The evidence that defendant was the victim of a check overpayment scheme is indisputable. Plaintiff notified defendant that the checks had been dishonored in a timely manner and recouped $568.01 from defendant's bank account. In this action, plaintiff seeks recovery from defendant in the amount of $9,022.23, representing the deficiency between the amount recovered from plaintiff's account and the value of the dishonored checks, plus $5,000.00 in attorneys fees.
"Check overpayment/ money wiring scams are becoming more and more popular, and more and more clever. The set-up for the scam can be different every time: sometimes the scam artist contacts you to buy something you advertised for sale in the paper or on the internet, sometimes he sends a check to pay you for work you did at home, sometimes he offers you an "advance" on a fake sweepstakes or lottery you have supposedly won. But, all of these scams end the same way — with you losing your money. Here is how the scam operates: the people you are doing business with send you a check for more than the amount they owe you, and then instruct you to wire the difference back to them. Or, they send you a check, with instructions to deposit it, keep part of the amount for your own compensation, and then wire the rest back to them for one made-up reason or another. The checks in these scams look real-in fact, they often look authentic enough to fool bankers-but in reality, they are fraudulent. The results are always the same: the check eventually bounces, but not until you've wired them the money. They've disappeared, and you're stuck, out the full amount, including what you wired to the scammer." Office of the State of Connecticut Attorney General Website.
Law
Defendant is truly a victim in this matter, the real villains of the piece being the people who perpetrated the check overpayment scheme, who are unfortunately not before the Court. The fact remains, however, that defendant received and expended funds to which she was not ultimately legally entitled. "[S]ympathy is an insufficient basis for approving a recovery based on a theory inconsistent with law." Clark v. Commissioner, 209 Conn. 390, 406 (1988), citing Schweicker v. Gray Panthers, 453 U.S. 35, 43 101 S.Ct. 2633 (1981). The Court is compelled to follow the clear language of the statute "[n]o matter how sympathetic or deserving the plaintiff may appear to be . . ." Vincent v. New Haven, 285 Conn. 778, 792 (2008).
Plaintiff seeks recovery pursuant to Section 42a-4-208 of the Connecticut General Statutes. The statute at issue is part of the Uniform Commercial Code, which was originally adopted by the Legislature in 1959. Yale Diagnostic Radiology v. Estate of Harun Fountain, 267 Conn. 351, 357 (2004). "When an act is a uniform law, decisions from other states are valuable for the interpretation of its provisions." Friezo v. Friezo, 281 Conn. 166, 188 (2007), citing Hill v. Blake, 186 Conn. 404, 408 (1982). The relevance of extra-jurisdictional opinions applies to statutes that are part of the Uniform Commercial Code. Jacobs v. Healey Ford-Subaru, Inc., 231 Conn. 707, 719-21 (1995).
A threshold question in this matter is why the plaintiff allowed defendant to make withdrawals from her account before the checks had cleared. "The reason for [allowing depositors to withdraw funds on checks that haven't cleared] is to prevent the hindrance to commercial transactions which would result if depository banks refused to permit withdrawal prior to clearance of checks. By giving the bank a security interest in the amount credited prior to notice of a stop payment order or other notice of dishonor, Secs. 42a-4-208 and 42a-4-209 allow continuation of that common practice while protecting the bank as a holder in due course." Laurel Bank and Trust Co. v. The City National Bank of Connecticut, 33 Conn.Sup. 641, 647 (App. Sess. 1976).
A. Plaintiff Was Entitled to Recoup Funds From Defendant's Bank Account.
Upon dishonor of the checks at issue, plaintiff recouped $568.01 from defendant's bank account. Upon notice of dishonor, plaintiff received a security interest in the funds defendant held on deposit. Laurel Bank and Trust Co. v. The City National Bank of Connecticut, supra. In Schwab v. Walden Bank, 109 Misc.2d 929, 930-31, 441 N.Y.S.2d 195 (1981), the court held that the bank held a security interest against a depositor who drew on a check that was subsequently dishonored. "When a bank permits withdrawal against an uncollected item and the item is subsequently dishonored, the bank has a security interest in any proceeds of the dishonored item." 6A R. Anderson, Uniform Commercial Code, Sec. 4-208.11, p. 102 (3d Ed. 1990). As a result plaintiff was entitled to recoup the $568.01 from defendant's bank account.
B. Plaintiff is Entitled to Recover the Remaining Amount from Defendant.
Plaintiff seeks a judgment in the amount of $9022.23 against defendant, representing the difference between the amount it recouped from defendant's bank account and the value of the dishonored checks.
In Laurel Bank Trust Co. v. Sahadi, 32 Conn.Sup. 172, 179 (Ct.Comm.Pl. 1975), the Court permitted the bank to recover in its action against the depositor where the defendant withdrew funds from his account prior to dishonor of the deposited check, expressing little ambivalence with the result: "The defendant did nothing, although it is clear from the statutes that it was never intended that the bank should suffer loss in such a case. To hold otherwise cannot be supported." It is impossible not to feel great sympathy for the defendant in this matter, but the law is clear: when a bank pays funds to a depositor on a check that is eventually dishonored, the person who received the funds must reimburse the bank. General Statutes Section 42a-4-208(d). As a result, the Court enters judgment on behalf of the amount of $9,022.23, representing the difference between the amount of the dishonored checks and the amount plaintiff recouped from defendant's account.
C. Plaintiff May Not Recover Attorneys Fees from Defendant.
Plaintiff seeks to recover attorneys fees from defendant in the amount of $5,000.00. "Connecticut generally follows the American rule with regard to attorneys fees. Except as provided by statute or in certain defined exceptional circumstances, the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys fee from the loser." Mangiante v. Niemiec, 98 Conn.App. 567, 570 (2006), citing Maris v. McGrath, 269 Conn. 834, 844 (2004). (Internal quotation marks omitted.)
The critical question in this instance is whether the language in General Statutes Section 42a-4-208(d) entitling prevailing parties to recover "expenses" is broad enough to encompass attorneys fees. In a case interpreting the identical statutory language, an Oklahoma court found that attorneys fees were not recoverable because the words "attorneys fees" were not contained in the statute: "[T]he statutory language does not expressly provide for attorney fees as do other provisions of the Uniform Commercial Code." Christensen Aviation, Inc. v. State Bank, 20 P.3d 170, 172 (Okla. 2001). In Bank of New York v. Fleet Bank, 176 Misc.2d 21, 671 N.Y.S.2d 945 (1988), the Court held that attorneys fees were not recoverable under a similarly worded version of the UCC: "Had the drafters of the UCC or our Legislature intended to include the recovery of counsel fees as a specific statutory form of damages, this could easily have been accomplished. In fact, in the UCC there are numerous specific references to an award of attorneys fees." Id. at 24.
Based on Connecticut's traditional adherence to the "American rule" regarding the recovery of attorneys fees and the lack of specific language in 42a-4-208 allowing the recovery of attorneys fees, the Court finds that they do not constitute recoverable expenses in this matter and the plaintiff's claim for attorneys fees is denied.