ROBERT J. TRIFFIN v. TWC ADMINISTRATION LLC

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.




                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-0414-16T1

ROBERT J. TRIFFIN,

        Plaintiff-Appellant,

v.

TWC ADMINISTRATION LLC, and
WILLIAM OSBOURN,

        Defendants-Respondents,

and

DYMOND OTTEY,

     Defendant.
___________________________________

              Argued November 27, 2017 – Decided December 29, 2017

              Before Judges Sabatino, Ostrer and Whipple.

              On appeal from Superior Court of New Jersey,
              Law Division, Essex County, Special Civil
              Part, Docket No. DC-5684-16.

              Robert J. Triffin, appellant, argued the cause
              pro se.

              Amelia T. Taylor argued the cause for
              respondents (Wong Fleming, attorneys; James K.
              Haney and Amelia T. Taylor, on the brief).

PER CURIAM
      Plaintiff      Robert   Triffin     appeals     from   the   trial   court's

order,      on   cross-motions   for    summary      judgment,     dismissing   his

Special Civil Part complaint against defendants TWC Administration

LLC and its officer William Osbourn.                The complaint was based on

a   check    drawn   by   Osbourn   and       a   cosigner   against   TWC's    bank

account.1        The check was payable to defendant Dymond Ottey,2

allegedly a TWC employee, in the amount of $301.17.                        Triffin

purchased the check from a check casher after the bank dishonored

it.   Triffin sought judgment for $832.04, the face value of the

check plus costs and fees.

      Reviewing the motions de novo, see Henry v. N.J. Dep't of

Human Servs., 
204 N.J. 320, 330 (2010), we reverse the grant of

summary judgment to defendants and affirm the denial of summary

judgment to plaintiff.        Regarding Triffin's motion, he has failed

to provide us with his moving papers or other competent evidence

to enable us to determine that he is a holder in due course and

entitled to judgment in his favor.                See Cmty. Hosp. Grp. v. Blume

Goldfaden, 
381 N.J. Super. 119, 127 (App. Div. 2005) (stating an

appellate court is not "obliged to attempt review of an issue when



1
  For convenience, we hereafter refer to both defendants jointly
as TWC, except where otherwise indicated.
2
  Ottey did not respond to the complaint and is not a party to the
appeal.

                                          2                                A-0414-16T1
the relevant portions of the record are not included").             As for

TWC's motion, we reject TWC's arguments that (1) 
N.J.S.A. 12A:4-

404 required Triffin to present the check within six months of its

date; and (2) Triffin obtained the check with notice of its

dishonor,    preventing   him   from       attaining   holder-in-due-course

status.

     Some basic facts are undisputed.          The $301.17 check was dated

August 20, 2015, and bore the restrictive legend "NOT VALID AFTER

180 DAYS."    On August 24, 2015, Ottey cashed the check with Rio

Check Cashers.    The check appears to bear Ottey's endorsement.

Rio then deposited the check, which the bank dishonored on August

27, 2015 and returned to Rio with the message "Refer to Maker."

On March 21, 2016, Rio assigned to Triffin all its rights to

payment.

     It was also undisputed that in addition to cashing the check

with Rio, Ottey had electronically deposited the check.           However,

other allegations related to the check are unproved by competent

evidence.    TWC alleged, without evidential support, that Ottey

electronically deposited the check before cashing it with Rio.

TWC relied on its counsel's certification.              But see Sellers v.

Schonfeld, 
270 N.J. Super. 424, 428-29 (App. Div. 1993) (stating

that an attorney's certification that does not reflect firsthand

knowledge is inadmissible evidence on a summary judgment motion

                                       3                            A-0414-16T1
under   Rule   1:6-6).    Triffin   alleged   in   his    complaint,   upon

information and belief, that if the bank did pay the check based

on an electronic deposit, it should not have done so, because it

lacked an enforceable endorsement under the terms of Ottey's

electronic depository agreement with her bank.           But see Jacobs v.

Walt Disney World Co., 
309 N.J. Super. 443, 454 (App. Div. 1998)

(stating that "factual assertions based merely upon 'information

and belief' are patently inadequate" under Rule 1:6-6) (citation

omitted).      Triffin   also   alleged,   without   the    support    of   a

certification from Rio's principal, that Rio was unaware of any

defense TWC may have had when Rio cashed the check.          By contrast,

in the assignment agreement, Rio's general manager certified only

that Rio "had no notice that the . . . check[] had been dishonored"

when Rio cashed it.

     On April 29, 2016, Triffin filed suit against TWC, Osbourn

and Ottey.     In its responsive pleading, TWC alleged that Triffin

had failed to state a claim; he lacked standing; he was not a

holder in due course; and the check was not valid after 180 days.

TWC also "reserve[d] the right to add or rely on additional

defenses."     In support of its cross-motion for summary judgment,

TWC contended that Triffin had not proved Rio was a holder in due

course; he was not a holder in due course because he purchased the



                                    4                              A-0414-16T1
check with notice of its dishonor; and, in any event, his claims

were barred by 
N.J.S.A. 12A:4-404.

    The trial court found that Rio was a holder in due course,

based on the assignment agreement's statement of no notice of

dishonor.     But, the court denied Triffin holder-in-due-course

status because he was aware of the dishonor when he purchased the

check.      The court also agreed that 
N.J.S.A. 12A:4-404 barred

Triffin's claim.

    On   appeal,    Triffin   contends      he   stands   in   Rio's    shoes.

Therefore, he, like Rio, is a holder in due course; and 
N.J.S.A.

12A:4-404 does not bar his claim against the drawer.                 We agree

with his second contention, and partially agree with the first,

subject to further proceedings.

                                     1.

    Turning first to Triffin's holder-in-due-course status, we

reject   TWC's   contention   that        Triffin's   notice    of   dishonor

precluded his status as a holder in due course.                As in another

check case involving Triffin, "[p]laintiff does not contend that

he is a holder in due course of the instrument by virtue of it

being negotiated to him for value, in good faith, without notice

of dishonor . . . "     Triffin v. Cigna Ins. Co., 
297 N.J. Super.
 199, 201 (App. Div. 1997).



                                     5                                 A-0414-16T1
       Rather, he contends he was a holder in due course by virtue

of acquiring, as transferee, all of Rio's rights as transferor.

That   may    be   so.   Pursuant   to   the   so-called   "shelter    rule,"

"[t]ransfer of an instrument, whether or not the transfer is a

negotiation, vests in the transferee any right of the transferor

to enforce the instrument, including any right as a holder in due

course" unless "the transferee engaged in fraud or illegality

affecting the instrument."      
N.J.S.A. 12A:3-203(b); see also Cigna

Ins. Co., 
297 N.J. Super. at 202; Triffin v. Maryland Child Support

Enforcement Admin., 
436 N.J. Super. 621, 633 (Law Div. 2014).              So,

if Rio were a holder in a due course, Triffin would be, too, since

there was a transfer and there are no allegations of fraud or

illegality.

       However, we are not prepared to hold on this record that Rio

was a holder in due course.              Although Rio's general manager

certified he was unaware of a dishonor before cashing the check,

he was silent on the other requisites of holder in due course

status.      See 
N.J.S.A. 12A:3-302.

       We are also unpersuaded by Triffin's contention that he was

not obliged to prove Rio's holder-in-due-course status since, he

claims, TWC failed to assert a predicate defense.             He relies on

Comment 2 to 
N.J.S.A. 12A:3-308(b), which states that a defendant

must first assert a defense or claim in recoupment, see N.J.S.A.

                                     6                                A-0414-16T1
12A:3-305, before a plaintiff, like Triffin, is required to prove

holder-in-due-course status:

           If a plaintiff producing the instrument proves
           entitlement to enforce the instrument, either
           as a holder or a person with rights of a
           holder, the plaintiff is entitled to recovery
           unless the defendant proves a defense or claim
           in recoupment. Until proof of a defense or
           claim in recoupment is made, the issue as to
           whether the plaintiff has rights of a holder
           in due course does not arise. In the absence
           of a defense or claim in recoupment, any
           person entitled to enforce the instrument is
           entitled to recover. If a defense or claim
           in recoupment is proved, the plaintiff may
           seek to cut off the defense or claim in
           recoupment by proving that the plaintiff is a
           holder in due course or that the plaintiff has
           rights of a holder in due course under section
           3-203(b) or by subrogation or succession. All
           elements of section 3-302(a) must be proved.

           [Official Comment 2 to N.J.S.A. § 12A:3-308
           (emphasis added).]

      However, a predicate defense was apparent from the pleadings.

Triffin himself alleged in his complaint, albeit upon information

and   belief,   that   Ottey   received           payment   electronically;      TWC

admitted that allegation in its answer.                 Certainly, if Ottey had

already   received     payment,   TWC       had    a   defense   in   contract    to

Triffin's claim that it pay a second time. "[T]he right to enforce

the obligation of party to pay an instrument is subject to . . .

a defense of the obligor that would be available if the person

entitled to enforce the instrument were enforcing a right to


                                        7                                  A-0414-16T1
payment under a simple contract." 
N.J.S.A. 12A:3-305(a)(2). Thus,

Triffin was obliged to prove his holder-in-due-course status.

                                 2.

     TWC also misplaced reliance on 
N.J.S.A. 12A:4-404 to support

its contention that Triffin's claims were time-barred.        Simply

put, that section limits the time within which a party may seek

payment from a bank.    Here, Triffin seeks payment from TWC, the

drawer.   
N.J.S.A. 12A:4-404 states: "A bank is under no obligation

to a customer having a checking account to pay a check, other than

a certified check, which is presented more than six months after

its date, but it may charge its customer's account for a payment

made thereafter in good faith." (emphasis added).     As one well-

respected treatise explains: "Section 4-404 is relevant only in

disputes between a drawee/payor bank and its checking account

customer." William D. Hawkland & Lary Lawrence, Uniform Commercial

Code Series, § 4-404:1 (2011); see also Amsterdam Urban Renewal

Agency v. McGrattan, 
458 N.Y.S.2d 67, 69 (App. Div. 1982).

     A bank's authority to withhold payment of a check after six

months does not affect the drawer's obligations.   While a bank may

dishonor a check that is more than six months old, pursuant to


N.J.S.A. 12A:4-404, "the drawer remains liable to the person

entitled to enforce the instrument . . . ."   Hawkland, § 4-404:1.



                                 8                           A-0414-16T1
     "The drawer's liability is terminated only upon the running

of the statute of limitations under Section 3-118."    Hawkland, §

4-404:1.   Under 
N.J.S.A. 12A:3-118(c), a three-year limitations

period generally governs a claim against a drawer:

           Except as provided in subsection d. of this
           section [pertaining to certified, teller's,
           cashiers or traveler's checks], an action to
           enforce the obligation of a party to an
           unaccepted draft to pay the draft must be
           commenced within three years after dishonor
           of the draft or 10 years after the date of the
           draft, whichever period expires first.

See also Maryland Child Support Enforcement Admin., 
436 N.J. Super.

at 634; Comment 3 to 
N.J.S.A. 12A:3-118 (stating "[s]ubsection (c)

applies primarily to personal uncertified checks").         In sum,

Triffin's claim against TWC was not barred by 
N.J.S.A. 12A:4-404.

     Finally, we shall not address the enforceability of the

restrictive legend stating that the check was "NOT VALID AFTER 180

DAYS."   TWC does not invoke the legend in its arguments before us,

choosing instead to rely on 
N.J.S.A. 12A:4-404.   In any event, we

note that Rio presented the check well before 180 days ran, and

one may question whether the legend should be fairly read to cut

off Rio's rights against the drawer – which Triffin obtained by




                                 9                          A-0414-16T1
assignment – simply because suit was commenced more than 180 days

after dishonor.3

                                    3.

     In   sum,   the   parties'   cross-motions   for   summary   judgment

should have been denied without prejudice.         Triffin's claim was

not barred by 
N.J.S.A. 12A:4-404.        On the other hand, Triffin was

entitled to the benefit of the shelter rule.        Yet, he was obliged

to prove that Rio was a holder in due course in order to prove his

own holder-in-due-course status.         On remand, he may marshal such

proofs in support of a renewed motion for summary judgment, or at

trial. TWC may likewise present any additional evidence in support

of its defenses.




3
   The enforceability of such legends against a bank is
questionable. See Hawkland, § 4-404:2 (stating that a bank should
be free to pay a check notwithstanding a customer's imprint "void
after 60 days"); see also Aliaga Med. Ctr., S.C. v. Harris Bank
N.A., 
21 N.E.3d 1203, 1208 (Ill. App. Ct. 2014) (stating bank was
entitled to pay check despite "void after 90 days" legend, because
customer "failed to properly stop payment").      As relates to a
claim against the drawer, the trial court in Maryland Child Support
Enforcement Administration viewed the same legend as inconsistent
with the statute of limitations in 
N.J.S.A. 12A:3-118(c).       
436 N.J. Super. at 634.      See also Fred H. Miller, UCC Article:
Modernizing the UCC for the New Millennium: Introduction to a
Collection on the New UCC, 25 Okla. City U. L. Rev. 189, 205 (2000)
(attaching memorandum to National Conference of Commissioners on
Uniform State Laws by the research director of the permanent
editorial board for the U.C.C., stating that the most recent
revision of Articles 3 and 4 left undone "[t]he status of checks
bearing legends such as 'void after 90 days.'").

                                    10                             A-0414-16T1
Reversed and remanded.   We do not retain jurisdiction.




                          11                          A-0414-16T1