FLEET BANK NATIONAL ASSOCIATION v. HUNTINGTON NATIONAL BANK

Thursday, February 28, 2002

Supreme Court

Westchester County

Justice Rudolph

FLEET BANK NATIONAL ASSOCIATION v. HUNTINGTON NATIONAL BANK ” Plaintiff, Fleet Bank (“ Fleet”) brings this action against HSBC Bank (“HSBC”) to recover damages for a late return of a dishonored check. On June 29, 2001 Fleet was granted summary judgment against HSBC for failure to comply with the strict liability provision of Uniform Commercial Code (“UCC”) ?§4-302.

On November 14, 2001, an evidentiary hearing was conducted on damages and mitigation. Memoranda of Law were submitted by all parties. The Court has considered all submissions and reviewed the testimony presented. Upon due deliberation, the following constitutes the decision of the Court:

On January 6, 1999, Fleet’s customer deposited a check (“the check”) payable to the depositor in the sum of $500,000. The check was drawn against an account maintained at HSBC. Fleet presented the check for payment to HSBC through normal banking channels on January 6, 1999. The check was received by HSBC on January 7, 1999. HSBC determined that there were insufficient funds in the account on which the check was drawn on January 8, 1999.

HSBC notified Fleet of its nonpayment of the check as required by 12 C.F.R. ?§229.33 via electronic notice pursuant to the Electronic Advance Return Notification System (“EARNS”). Fleet received the EARNS notice at approximately 2 P.M. on January 8, 1999. At approximately 9 P.M. on the same date, HSBC delivered the return item to its courier, Air Net Systems, Inc. (“Air Net”) for overnight return delivery to Fleet. The shipment was delayed, and the dishonored check was not received by Fleet until sometime after January 16, 1999. On January 14, 1999, before return receipt of the dishonored check, Fleet’s Loss Control Department ascertained from HSBC’s Loss Control Department that the check had been returned unpaid on January 8, 1999.

In the interim between January 6, 1999 and January 14, 1999, Fleet paid substantial funds against the initial $500,000. deposit made by its customer.

After recovery efforts from its depositor, Fleet has sustained $118,192.67 in damages representing paid checks against the funds represented by the check.