IN THE MATTER OF THE ESTATE OF JOSEPH FELCON

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

IN THE MATTER OF THE

ESTATE OF JOSEPH FELCON

and BERNICE FELCON,

Deceased.

__________________________

Argued May 20, 2014 Decided July 30, 2014

Before Judges Reisner and Alvarez.

On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Burlington County, Docket No. 2010-21ll.

Eric A. Feldhake argued the cause for appellant Colleen Bingham (Kulzer & DiPadova, P.A., attorneys; Mr. Feldhake, of counsel and on the brief).

James A. Kassis argued the cause for respondent PNC Bank (Schenck, Price, Smith & King, LLP, attorneys; Roy J. Evans, of counsel; Mr. Kassis, on the brief).

PER CURIAM

This appeal concerns the unsuccessful effort by plaintiff Colleen Bingham, the executrix of the estates of Joseph and Bernice Felcon, to add PNC Bank as a defendant in probate litigation against her brother Thomas Felcon. Plaintiff appeals from a July 23, 2012 order denying a motion to amend the probate complaint, and from a September 7, 2012 order denying her motion for reconsideration.1 We affirm.

I

The facts are recited in the trial court's written opinions issued July 23, 2012, and September 7, 2012. We briefly summarize the facts here, and discuss them in more detail when we address the legal issues. The original dispute concerned Joseph Felcon, the elderly father of Thomas Felcon, Francis Felcon, Colleen Bingham, and four other siblings. Thomas lived with his parents, Joseph and Bernice. Francis believed that Joseph was mentally incapacitated and that Thomas might be mishandling Joseph's assets.2

In October 2010, Thomas and Joseph opened a joint account at PNC Bank. On October 25, 2010, Thomas used funds from the account to buy a cashier's check payable to Joseph. At some unspecified date in late October or early November, Colleen claimed to have "found" the check in the house where Joseph, Bernice, and Thomas were living, and she gave the check to Francis's attorneys.

Shortly thereafter, Thomas went to a branch of PNC bank and filled out a document reporting the check as lost or stolen. On various later dates, Thomas and Francis made separate visits to various PNC bank branches and made allegations against each other. Francis claimed to be the holder of Joseph's power of attorney (POA) and alleged that Thomas was misusing Joseph's assets; Thomas claimed that Francis was an interloper who was after Joseph's money. Although a guardianship action was then pending, seeking to have Joseph declared incapacitated, Francis did not seek the court's intervention to freeze the joint account. Nor did he or his attorneys present the check to the bank for payment. Eventually, at Thomas's behest, the bank stopped payment on the check, refunded the money into the joint account, and issued Thomas a cashier's check payable to him. In February 2012, more than a year after the check was issued, Francis presented the check to PNC for payment. The bank declined to pay, because it had already paid the money to Thomas.

The estate, whose primary claim was against Thomas for wrongfully taking Joseph's assets, filed a motion to amend the probate complaint to add PNC as a defendant. The trial judge denied the motion, finding that amending the complaint would be futile. The judge reasoned that under N.J.S.A. 17:16I-8, the bank had no obligation to resolve disputes between the depositors to a joint account, and that either depositor had the right to withdraw all of the money from the account. She considered that, at the time Thomas withdrew the funds, there was no hold or freeze on the account. She further reasoned that the bank's duty was to its customer, Thomas, who had the right to request that the bank stop payment on the cashier's check. She found no basis to conclude that the bank violated the Uniform Commercial Code (UCC) by stopping payment on the check and refunding the money to Thomas.

II

We review a trial court's denial of a motion to amend a complaint for abuse of discretion. Port Liberte II Condo. Ass'n v. New Liberty Res. Urban Renewal Co., LLC, 435 N.J. Super. 51, 62 (App. Div. 2014). We apply the same standard to a trial court's denial of a motion for reconsideration. Palombi v. Palombi, 414 N.J. Super. 274, 289 (App. Div. 2010). Leave to amend pleadings is to be liberally granted, but may be denied if granting the amendment would be futile because the proposed amendment is clearly without merit. Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006).

We begin by noting that the power of attorney on which Francis relied did not name him as the primary fiduciary. It named his mother, Bernice. Francis only became the fiduciary in case Bernice died or became incapacitated. Despite the bald assertions in plaintiff's brief, there is no legally competent evidence in the record that Bernice was incapacitated at the time Francis presented the POA to the bank, or that Francis presented the bank with any such evidence. The references in plaintiff's brief to "proof" of incapacity are only supported by citations to doctor's reports attesting that Joseph was incapacitated. And plaintiff's reply brief informs us that as of 2011, there was a pending guardianship proceeding concerning Bernice. Hence there is no proof that the bank had any legal duty to treat Francis as Joseph's POA, or to honor Francis's requests with respect to the joint account.

Further, although there was ongoing litigation concerning Joseph's guardianship and later over his estate, neither Francis nor Thomas applied to the probate court to resolve their respective claims concerning the joint account. Instead they separately visited different branches of the bank, each brother trying to get various bank employees to take his side in the dispute. Although Francis claimed to be Joseph's POA, and his attorneys had physical possession of the check since November 2010, Francis did not present the check to the bank for payment until February 24, 2012. Nor did he or his attorneys place the bank on written notice that they claimed to be in lawful possession of the check and intended to present it for payment at some future point. In fact, there is no evidence in this record that Francis told any bank employee that he had the check, until he attempted to cash it in February 2012.

While Francis and his attorneys were thus holding the check without putting the bank on notice of Francis's claims, Thomas filled out a bank form attesting that the check was either lost or stolen. After waiting more than the ninety days required by the UCC, N.J.S.A. 12A:3-312, the bank refunded the money to Thomas's and Joseph's joint account and issued a new cashier's check payable to Thomas. He later cashed the check. After reviewing the pertinent banking statute and the UCC, we conclude that the estate has no viable claim against PNC based on that set of facts.

The relevant banking statute governing multi-party accounts, N.J.S.A. 17:16I-8, provides that either party to a joint account may withdraw funds from the account, and the bank has no obligation to inquire into either party's contribution to the account or either party's right to the funds.

Financial institutions may enter into multiple-party accounts to the same extent that they may enter into single-party accounts. The following payments from a multiple-party account by the financial institution, including payment of the entire account balance, are deemed authorized by all parties to, and any other person with an interest in, the multiple-party account, without any duty on the part of the financial institution to consider the net contributions of the parties to the account:

a. Payments, on request, to any one or more of the parties;

. . . .

A financial institution shall not be required to inquire as to the source of funds received for deposit to a multiple-party account, or to inquire as to the proposed application of any sum withdrawn from an account, for purposes of establishing net contributions.

[N.J.S.A. 17:16I-8.]

Consequently, Thomas could have withdrawn all of the funds from the joint account, and the bank would have had no obligation to investigate his right to do so. Further, even if Francis held a valid POA for Joseph, the POA gave him no greater rights, as against the bank, than Joseph had. N.J.S.A. 46:2B-12; See also Kisselbach v. County of Camden, 271 N.J. Super. 558, 564-65 (App. Div. 1994). Under N.J.S.A. 17:16I-8, the bank had no duty to referee disputes between Joseph and Thomas, or (assuming Francis held a valid POA) between Francis and Thomas, over which of them had the right to withdraw funds from the account. Consequently, the bank had no duty to Francis to alert him when Thomas sought to stop payment on the cashier's check and have the funds returned to the joint account. Once the funds were back in the account, Thomas had the right to withdraw them by having the bank issue him a cashier's check.

Further, the proposed amended complaint did not recite that Thomas gave or tendered the original cashier's check to Joseph, or that he intended to do so, or that Joseph ever lawfully came into possession of the check, or that Joseph even knew the check existed. Hence, there is no allegation that Joseph acquired a right to the check or had a right, as against the bank, to prevent Thomas from stopping payment. Nor did the complaint state how Colleen came into possession of the check. Her certification was notable for its failure to explain specifically where she "found" the check; for all the record reveals, she could have found it while illicitly searching Thomas's bedroom. In other words, no facts were alleged to support a claim that Joseph, Colleen, or Francis was a holder or a holder in due course of the cashier's check and, thus, had a legal right to cash it or a legal right to prevent Thomas from stopping payment on the check. See Triffin v. Liccardi Ford, Inc., 417 N.J. Super. 453, 456-57 (App. Div. 2011); Santos v. First Nat'l State Bank, 186 N.J. Super. 52, 72-73 (App. Div. 1982); TPO, Inc. v. Fed. Deposit Ins. Corp., 487 F.2d 131, 136 (3d Cir. 1973).

Plaintiff relies on cases holding that a bank cannot unilaterally stop payment on a cashier's check as a self-help remedy against the remitter, and may not stop payment at the remitter's behest after the remitter has given the check to the person to whom the check was drawn. See Parks v. Commerce Bank, N.A., 377 N.J. Super. 378, 385 (App. Div. 2005) (bank cannot stop payment on a cashier's check after discovering that there were insufficient funds in the remitter's account to pay for the check); Nat'l Newark & Essex Bank v. Giordano, 111 N.J. Super. 347, 350-51 (Law Div. 1970) (bank cannot stop payment at remitter's request based on remitter's claim that he was defrauded by the merchant to whom he gave the check). However, even before the UCC specifically so provided, courts recognized that a bank may, in some situations, stop payment on a cashier's check as an accommodation to a customer who claims that the check has been lost or stolen. Santos, supra, 186 N.J. Super. at 66-67.3

The UCC, N.J.S.A. 12A:3-312(a) and (b), currently provides that, if the remitter (purchaser) of a cashier's check submits a claim attesting that it was lost or stolen, and no one presents the check for payment within ninety days after the date of the check, the bank may stop payment and issue a refund to the remitter. In that case, the bank has no obligation to the person to whom the check was drawn, or to any other holder of the check. N.J.S.A. 12A:3-312(b). Noting the banks' reasonable commercial expectations with respect to the handling of cashier's checks, comment 3 to N.J.S.A. 12A:3-312 states: "Virtually all such checks are presented for payment within 90 days."

In this case, Thomas filled out a claim on November 19, 2010, attesting that the check was lost or stolen.4 Neither Francis nor anyone else presented the check to the bank for payment within ninety days of its issue date, October 25, 2010. Accordingly, when Thomas demanded a refund of the money on April 6, 2011, considerably longer than ninety days after it was issued, the bank was within its rights in accommodating his request. Having paid Thomas, the bank had no legal duty to honor the check when Francis presented it. We find no abuse of the trial court's discretion in denying the motion to amend the complaint and in denying reconsideration. Plaintiff's arguments are without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).

1 These interlocutory orders became ripe for appellate review after the trial court entered a final order in the probate litigation, on July 15, 2013. The July 15 order adjudged that Thomas Felcon exercised undue influence over Joseph Felcon, and owed Bernice's estate $75,552. The judgment was based on a finding that, of $217,735.17 which Thomas obtained through a PNC Bank cashier's check drawn on a joint account with Joseph, $180,000 rightfully belonged to Joseph. Plaintiff recovered $104,448 from Thomas, leaving an unpaid judgment of $75,552. In essence, the proposed lawsuit against PNC Bank represents plaintiff's attempt to recover from the bank the funds she has been unable to recover from Thomas.

2 Joseph died on December 8, 2010, leaving his estate to Bernice. Bernice died on September 24, 2012. At the time the cashier's check was issued, neither Joseph nor Bernice had been declared incapacitated by a court.

3 Santos predated the adoption of N.J.S.A. 12A:3-312, discussed below, which formalizes the procedures to be followed in obtaining a refund of a cashier's check.

4 Pursuant to N.J.S.A. 12A:3-312(a)(3), a claim concerning a stolen cashier's check must include an attestation that the claimant does not know the identity of the person in possession of the stolen check. The claim form Thomas signed did not include that recitation but rather included boilerplate language that the check was lost or stolen. However, according to the bank's records, when Thomas sought the refund on April 6, 2011, he told the bank employee that the check was "lost," not that it was stolen. Hence, there would have been no reason for the bank employee to insist on a sworn statement concerning the specifics of an alleged theft of the check.