Manhattan Med. Diagnostic & Rehabilitation, P.C. v Wachovia Natl. Bank, N.A.
Annotate this CaseDecided on September 27, 2006
Supreme Court, New York County
Manhattan Medical Diagnostic and Rehabilitation, P.C., Plaintiff,
against
Wachovia National Bank, N.A., Defendant.
116287/04
Marylin G. Diamond, J.
In this action, plaintiff Manhattan Medical Diagnostic and Rehabilitation, P.C. claims that an account in its name was opened at defendant Wachovia National Bank without proper authorization and that the checks which were deposited in the account and then withdrawn by an unidentified individual did not bear a valid authorized endorsement. The complaint asserts claims against Wachovia for conversion and negligence and seeks the recovery of the amount of the checks withdrawn from the account. In turn, Wachovia has brought a third-party action for indemnification against Roy Brown and Dr. Bruce Paswall, the two individuals whom Wachovia claims are responsible for opening the account.
According to the complaint, Madhu B. Boppana is plaintiff's owner and sole shareholder and the only individual authorized to conduct business on its behalf. Boppana has submitted an affidavit in which he states that Paswall was merely engaged by plaintiff to collect its medical receivables and was not authorized to open a banking account on its behalf. The disputed account was opened on or around May 21, 2003 upon the submission to Wachovia of a Certified Corporate Resolution for Depository Authorization bearing Brown's signature and a Deposit Account Application bearing Paswall's signature. Although it appears that Brown was the plaintiff's original founder and formerly its sole shareholder, he has admitted that he retired in 1999 and that Boppana was plaintiff's sole shareholder at the time the account was opened. Notwithstanding this concession, Paswell asserts that he was, in fact, authorized by Brown to open the account in 2003. Brown, who acknowledges signing some of the documents which Paswall later submitted to Wachovia in order to open the account, contends that he did so without having read the documents and without realizing their significance. [*2]
Brown has now moved for summary judgment dismissing the third-party complaint as against him. Wachovia has cross-moved for summary judgment dismissing the complaint in its entirety and plaintiff has cross-moved for summary judgment granting it the relief sought herein.
Discussion
Plaintiff cannot prevail on its claims against the bank for conversion or negligence unless it can demonstrate that Wachovia did not act reasonably in accepting the allegedly falsified or erroneous documents showing Paswall to be plaintiff's secretary. See 29th Street Corp. v. New York Community Bank, 2 AD3d 838, 839 (2nd Dept. 2003); Sybedon Corporation v. Bank Leumi Trust Company of New York, 224 AD2d 320 (1st Dept. 1996); Geotel, Inc. v. Wallace, 162 AD2d 166, 168 (1st Dept. 1990). See also Jones v. Community Bank of Sullivan County, 306 AD2d 679, 680-81 (3rd Dept. 2003). On its motion for summary judgment, Wachovia asserts that, in fact, it acted in a commercially reasonable manner because the documents it received were sufficient to establish that Brown and Paswall had the authority to open an account on plaintiff's behalf. The court agrees. In addition to the Certified Corporate Resolution for Depository Authorization bearing Brown's signature and the Deposit Account Application bearing Paswall's signature, Wachovia also received IRS notices addressed to plaintiff and Brown, a copy of plaintiff's Certificate of Incorporation and a copy of a certificate from the State Education Department certifying that Brown was plaintiff's original shareholder, director and officer. Wachovia also received a copy of Paswall's drivers license which had been photocopied onto plaintiff's letterhead. Wachovia has established its prima facie entitlement to judgment as a matter of law since these documents show that it reasonably believed that Brown was still plaintiff's president, that Paswall had been appointed plaintiff's secretary and that Paswall had the authority to open the account on plaintiff's behalf. In opposition, the plaintiff has failed to provide any evidence which raises a triable issue of fact as to whether Wachovia was negligent. It has not cited any statutes or regulations which even suggest that Wachovia acted unreasonably. Nor has it submitted an affidavit from anyone with expert knowledge of proper banking procedures. Under the circumstances, Wachovia's cross-motion for summary judgment dismissing the complaint must be granted.
Accordingly, Wachovia's cross-motion for summary judgment is granted and the complaint is hereby dismissed. Plaintiff's cross-motion for summary judgment is denied. Since the court has dismissed plaintiff's complaint, Brown's motion for summary judgment dismissing the third-party claim as against him is denied as moot.
The Clerk Shall Enter Judgment Herein
Dated: 9/27/06MARYLIN G. DIAMOND, J.S.C.
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