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Academy Chair Renting Co. v. Citibank, N.A

Index No. 3168/11 (Queens County Sup. Ct. April 9, 2013) (unpublished)

ZEK successfully moved for summary judgment dismissing the complaint arising from multiple check forgeries by plaintiff’s dishonest bookkeeper over a period of more than four years on an account with ZEK’s bank client. The Queens Supreme Court ruled in the bank’s favor on both defenses raised by ZEK – that the notice of the forgeries by plaintiff was untimely pursuant to both the UCC’s repeat forger rule (§ 4-406) as well as the bank’s customer agreement. The decision is noteworthy in that it confirmed explicitly that ZEK’s drawee bank client had no burden of establishing its ordinary care where the plaintiff did not review the statements and items that the bank made available to it on a timely basis and raised no factual issue concerning lack of ordinary care. The court noted that even though the bank had no burden on this issue, it had established the reasonableness of its security and fraud detection systems through affidavits of bank officers and employees without relying on outside retained experts.