Hillside Check Cashing Corp. v Mymar Export, Ltd.
Annotate this CaseDecided on June 8, 2005
Supreme Court, Queens County
Hillside Check Cashing Corp.
against
Mymar Export, Ltd., et al.
4578/99
Duane A. Hart, J.
Plaintiff Hillside Check Cashing Corp., third-party defendant Jay Salpeter, and third-party defendant Fran Hill Check Cashing Corp. have moved for an order, inter alia, permitting the pro hoc vice admission of Robert E. Rochford. Defendant Banco Popular North America ("BPNA") s/h/a Banco Popular De Puerto Rico has cross-moved for summary judgment dismissing the complaint and all other claims asserted against it.
Plaintiff Hillside Check Cashing Corp. cashed approximately 125,000 checks for defendant Mymar Export Ltd., defendant Mytex International, Ltd., and defendant Intercoastal, Ltd. from in or around 1993 until July, 1997. During the final month, these defendants issued 245 checks totaling approximately $300,000 which defendant BPNA dishonored because three accounts maintained by the defendant check makers contained insufficient funds. The plaintiff alleges that defendant Myron Waschitz and defendant Jocephus Randolph, agents of the defendant check makers, induced it to cash the checks by making false representations that there were sufficient funds to pay the checks. On the other hand, according to the defendant check makers, the plaintiff participated in a usurious scheme to make two and three-day loans to the corporations at a rate of interest amounting to about 400% per annum. The defendants allege that the plaintiff cashed thousands of checks for them over a period of five years, earning a profit of about $1,000,000. The plaintiff denies any usury and alleges that it charged only a 1.1% fee for each check as permitted by § 400.12 of the Regulations of the Superintendent of Banks.
Defendant Jocephus Randolph, the president of the defendant check makers, signed payroll checks for fictitious employees and brought the checks to the plaintiff for cashing. After the plaintiff cashed the checks, defendant Randolph deposited the proceeds into several accounts maintained by the defendant check makers at defendant BPNA. The plaintiff had no banking relationship with defendant BPNA, although the defendant bank did write a letter dated February 26, 1996 [sic: 1997] "to whom it may concern" regarding Mymar Export, Ltd. Account No.731-063805. The letter reads in relevant part: "Please accept our apology for any inconvenience you may have experienced due to checks you received from MYMAR EXPORT, LTD. The problem resulted from a bank error and should in no way reflect upon our customer. We have since corrected the problem and fully expect that it will not happen again." Defendant BPNA apparently wrote this letter, which was received by the plaintiff, because the bank dishonored 25 checks in [*2]early 1997. According to the defendant check makers, the checks actually bounced because the plaintiff deposited them too early. Defendant Randolph testified at his deposition that Jay Salpeter, an agent of the plaintiff, "knew the checks were not supposed to be deposited, he was supposed to hold them twenty-four or forty-eight hours, a two-day period. If they were deposited on the same [day] they were brought to him, there would be a problem, there was no money in the accounts." Defendant BPNA had no knowledge of the alleged arrangement between the plaintiff and the defendant check makers.
Turning first to defendant BPNA's cross motion, the opponent of a motion for summary judgment has the burden of submitting proof in evidentiary form sufficient to show that there is an issue of fact which must be tried. (See, Alvarez v. Prospect Hospital, 68 NY2d 320.) Plaintiff Hillside Check Cashing Corp. failed to carry this burden. First, the plaintiff failed to raise a genuine issue of fact concerning whether defendant BPNA engaged in a conspiracy to defraud the plaintiff. "To prove a conspiracy, a plaintiff must show a corrupt agreement, an overt act in furtherance of that agreement, and membership in the conspiracy by each defendant." (Cofacredit S.A. v. Windsor Plumbing Supply Co., Inc., 187 F3d 229; see, Kashi v. Gratsos, 790 F2d 1050; Hoag v. Chancellor, Inc., 246 AD2d 224.) There is no evidence in this case that the defendant bank entered into a corrupt agreement with the defendant check makers. Second, the parties agree that the plaintiff, not a customer of defendant BPNA, has no statutory remedy against the bank pursuant to the Uniform Commercial Code. Third, it is true that some courts have found that common law tort liability toward a non-customer of a financial institution exists where a special relationship was established between them. (See, City Check Cashing, Inc. v. Manufacturers Hanover Trust Co., 166 NJ 49, 764 A2d 411.) This special relationship may be fiduciary, confidential, or contractual in nature, for example. (See, Cumis Ins. Soc., Inc. v. Windsor Bank and Trust Co., 736 F Supp 1236.) However, without a showing of a special relationship, one bank does not owe a duty to another to discover a check kiting scheme (see, Mid-Cal National Bank v. Federal Reserve Bank of San Francisco, 590 F2d 561), and a bank owes no duty of care to non-customers with whom it has no special relationship in regard to a check kiting scheme. (See, Pereira v. United Jersey Bank, 201 BR 644.) The plaintiff contends that the letter written by defendant BPNA in February, 1997 regarding the bounced checks established a special relationship between it and the defendant bank. In the check collection process, a special relationship may be established between parties by agreement, undertaking, or contact. (See, City [*3]Check Cashing, Inc. v. Manufacturers Hanover Trust Co., supra.) In the case at bar, it may be argued that the letter written by defendant BPNA regarding the checks bounced in early 1997 established a special relationship with the plaintiff in two ways: first, by amounting to an agreement by the defendant bank to honor all future checks written by the defendant check makers and second, by amounting to an undertaking by the defendant bank to investigate the cause of the bounced checks. In regard to the first branch of the argument, the defendant bank wrote the letter in reference only to 25 particular checks it dishonored, and the letter does not amount to a guarantee of all future checks written by the defendant check makers. In regard to the second branch of the argument, the plaintiff failed to submit evidence sufficient to raise a genuine issue of fact concerning whether the defendant bank through its negligence erroneously identified the cause of the 25 bounced checks. Defendant BPNA attributed the cause to its error, and defendant Randolph was not shown to have definite knowledge to the contrary regarding this particular incident. The plaintiff is not entitled to a further opportunity for discovery from the bank. In order to successfully oppose a motion for summary judgment on the ground that further discovery is needed, "a party claiming ignorance of critical facts must first demonstrate that his or her ignorance is unavoidable, and that reasonable attempts were made to discover facts which would give rise to a triable issue ***." (Lumbsy v. Gershwin Theater, 282 AD2d 578; see, Gillinder v. Hemmes, 298 AD2d 493; Cruz v. Otis Elevator Co., 238 AD2d 540; Rothbort v. S.L.S. Mgt. Corp., 185 AD2d 806.) The plaintiff did not adequately make this showing in this action which has been pending since March 2, 1999.
Since the claims against defendant BPNA are dismissable, the plaintiff and third-party defendants cannot establish a real need for the pro hac vice admission of Robert E. Rochford.
Accordingly, the motion by the plaintiff and third-party defendants is denied. The cross motion by defendant BPNA is granted.
Short form order signed herewith.
J.S.C.
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