Madison Title Agency, LLC v. Bank of Am., N.A.

672 F.Supp.3d 1313

MADISON TITLE AGENCY, LLC, Plaintiff, v. BANK OF AMERICA, N.A., Defendants.

Civil Action No. 1:20-cv-03674-VMC

United States District Court, N.D. Georgia, Atlanta Division

Signed April 20, 2023

George A. Koenig, Koenig Law Group, P.C., Atlanta, GA, for Plaintiff.

Christine Kapur, Equifax Inc., Atlanta, GA, Jennifer R. Burbine, McGuire Woods LLP, Atlanta, GA, Richard H. Conner, III, Pro Hac Vice, McGuire Woods, Charlotte, NC, for Defendants.

ORDER

Victoria Marie Calvert, United States District Judge

Before the Court is the Motion of Defendant Bank of America, N.A. (the "Bank") for Summary Judgment ("Motion," Doc. 55).¹ On January 31, 2023, the Court entered an Order denying the Motion without prejudice pending the Bank's filing of a corrected Statement of Material Facts. The Bank filed its corrected statement on February 17, 2023 (Doc. 75, "SMF"). Plaintiff Madison Title Agency, LLC ("Madison") filed its Response to the SMF on March 10, 2023 ("RSMF," Doc. 83).² Because Madison substantially complied with the Court's Order, the Court will permit Madison to renew the previously denied Motion.

Background

This case relates to a wire transfer sent by Madison through its bank, Bank United, on September 18, 2019 in the amount of $368,948.75 that was credited to an account at the Defendant Bank (the "Wire Transfer"). (SMF ¶ 1; RSMF ¶ 1). Plaintiff was tricked into sending the Wire Transfer by a fraudulent mortgage payoff statement that Plaintiff received from someone purporting to be the seller. (SMF ¶ 2; RSMF ¶ 2). The Wire Transfer directed the Bank to credit an account number ending in 7038 (the "Beneficiary Account") and identified the beneficiary as "ROUNDPOINT KASTTRANS LLC." (SMF ¶ 2; RSMF ¶ 2). The Wire transfer was received and processed through the Bank's proprietary wire transfer processing system. (Affidavit of Jenny Karkas ¶ 10, Doc. 78-3). The precise mechanisms of the system are discussed at length by the parties, but the Court need not recount them here at this time.³

The Bank received a request to return the funds sent in the Wire Transfer from Bank United on or about October 17, 2019, and responded to Bank United that there were no funds left in the Beneficiary Account that could be returned. (SMF ¶ 11).⁴

Legal Standard

Federal Rule of Civil Procedure 56(a) provides "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."

A factual dispute is genuine if the evidence would allow a reasonable jury to find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it is "a legal element of the claim under the applicable substantive law which might affect the outcome of the case." Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).

The moving party bears the initial burden of showing the court, by reference to materials in the record, that there is no genuine dispute as to any material fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The moving party's burden is discharged merely by " 'showing'—that is, pointing out to the district court—that there is an absence of evidence to support [an essential element of] the nonmoving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. 2548. In determining whether the moving party has met this burden, the district court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion. Johnson v. Clifton, 74 F.3d 1087, 1090 (11th Cir. 1996). Once the moving party has adequately supported its motion, the non-movant then has the burden of showing that summary judgment is improper by coming forward with specific facts showing a genuine dispute. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). All reasonable doubts should be resolved in the favor of the non-movant. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). In addition, the court must "avoid weighing conflicting evidence or making credibility determinations." Stewart v. Booker T. Washington Ins., 232 F.3d 844, 848 (11th Cir. 2000). When the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine dispute for trial. Fitzpatrick, 2 F.3d at 1115 (citations omitted).

Discussion

This dispute centers on UCC Article 4A-207. The first half of Georgia's version of that code section provides as follows:⁵

(a) Subject to subsection (b), if, in a payment order received by the beneficiary's bank, the name, bank account number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance of the order cannot occur.

(b) If a payment order received by the beneficiary's bank identifies the beneficiary both by name and by an identifying or bank account number and the name and number identify different persons, the following rules apply:

(1) Except as otherwise provided in subsection (c), if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. The beneficiary's bank need not determine whether the name and number refer to the same person.

(2) If the beneficiary's bank pays the person identified by name or knows that the name and number identify different persons, no person has rights as beneficiary except the person paid by the beneficiary's bank if that person was entitled to receive payment from the originator of the funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur.

O.C.G.A. § 11-4A-207. These subsections taken together essentially provide that, in the event that a payment order (i.e. a wire request) identifies both an accountholder and an account number, and if the beneficiary's bank does not know that they identify different persons, the beneficiary's bank may rely on the account number alone, and need not determine whether the name and number refer to the same person. In order to take advantage of this option, the Bank must not have actual knowledge that the accountholder name and account number identify different people. " 'Knows' or 'knowledge' means actual knowledge." O.C.G.A. § 11-1-202(b).

Madison argues that such knowledge existed under the circumstances. Specifically, Madison attacks the Bank's wire transfer processing system as "badly outdated" and contends that "Bank employees also knew that technology readily available and easily implemented would have identified the obvious name mismatch between Madison's wiring instructions and its own customer in this case." (Resp. at 13-14). But this contention, regardless of whether or not it is true, does not create a material dispute of fact about the Bank's knowledge. Instead, this argument sounds like "notice," which includes a fact where, "[f]rom all the facts and circumstances known to the person at the time in question, [the person] has reason to know that it exists." O.C.G.A. § 11-1-202(a). But Article 4A does not require that the Bank decline a wire transfer if it has "notice" of a mismatch, but specifically requires "knowledge." Nothing in Madison's argument about the merits of the Bank's system raises a reasonable inference that the Bank had actual knowledge of the mismatch in this case.⁶

Moreover, the Bank points to an unpublished Eleventh Circuit opinion holding that a bank did not have actual knowledge even where the bank's wire transfer system identified a mismatch but permitted the wire to go through without human intervention. Peter E. Shapiro, P.A. v. Wells Fargo Bank N.A., 795 F. App'x 741, 744 (11th Cir. 2019) ("Because in fact the name of the intended beneficiary . . . did not match the name of the owner of the Wells Fargo account identified . . . , the automated MTS audit trail reflected that there was a "possible name mismatch in [credit] party," although no individual person was aware of that. Notwithstanding this possible name mismatch, Wells Fargo's MTS processed the wire—as it was programmed to do—because the account number . . . matched a valid Wells Fargo account number."). If a bank that actually implements an automated mismatch system is not liable for failing to act on an automatically identified mismatch, then by extension the Bank cannot be held liable for failing to implement an automated mismatch system...