Lesser v. TD Bank, N.A.
- Paul Engelmayer
- 1:18-cv-09922
- U.S. District Court · Southern District of New York
- 2
In Lesser v. TD Bank, Judge Gorenstein ordered more briefing on a New York check-conversion claim and possible complaint amendments without deciding the dismissal motions.
Joseph S. Lesser, Loeb Partners Realty LLC, TD Bank, N.A., Capital One, N.A., and the other named defendants were affected because the court required supplemental briefing and possible discussions about amending the complaint and withdrawing the pending dismissal motions.
What happened
Lesser v. TD Bank, N.A. concerns plaintiffs Joseph S. Lesser and Loeb Partners Realty LLC’s claim under New York law involving checks allegedly payable to them but intercepted before delivery.
The court identified two issues the parties had not adequately addressed: whether the defendants failed to follow reasonable commercial standards and whether the plaintiffs were the checks’ true owners. The court also noted possible additional allegations concerning Lesser’s TD accounts and Capital One’s role as drawee bank.
Magistrate Judge Gabriel W. Gorenstein ordered the defendants to file supplemental briefing, allowed responses and a reply, and directed the parties to discuss possible complaint amendments if either defendant objected. The order did not decide the pending motions to dismiss.
The detailed version
- Lesser v. TD Bank, N.A. · No. 1:18-cv-09922
- Paul Engelmayer
- Feb. 10, 2020
Background
The complaint asserts a claim under Section 3-419 of the New York Uniform Commercial Code involving checks. The complaint alleges that checks payable to the plaintiffs were intercepted before actual or constructive delivery to the payees. The defendants had moved to dismiss.
Issues Identified by the Court
The court explained that Section 3-419(3) can protect a depositary or collecting bank from liability to the true owner when the bank acted both in good faith and in accordance with reasonable commercial standards. The court found that, apart from brief references in TD Bank’s motion memorandum, the parties had not addressed whether the complaint adequately alleged a failure to follow reasonable commercial standards. The court declined to treat the complaint’s conclusory statement on that issue as a factual allegation.
The court also stated that the parties had not addressed whether the plaintiffs were the “true owner[s]” of the checks. It pointed to case law indicating that actual or constructive delivery to the payee may be a necessary prerequisite to a conversion claim under Section 3-419(1)(c), but the order did not resolve that issue.
Order
The court directed the defendants to address both issues in supplemental memoranda or letters by February 21, 2020. The plaintiffs could respond by February 28, and the defendants could reply by March 4.
The court also directed each defendant to state whether it opposed treating the complaint as amended, solely for deciding the motions to dismiss, to include allegations that Lesser held two accounts at TD during the relevant period and that Capital One was the drawee bank for three intercepted checks. If either defendant objected, the defendants were directed to discuss with the plaintiffs whether the plaintiffs could file an amended complaint and withdraw the pending motions to dismiss without prejudice, and the parties were directed to report the result to the court.
The order directed further briefing and discussions; it did not state that the motions to dismiss were granted or denied.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.