Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

Exercise 12

FACTS Ama Afiriyie opened checking and savings accounts with Bank of America, N.A. (BOA), as well as a secured credit-card account for which she paid a security deposit of $300. One year later, BOA upgraded Afiriyie's credit-card account to unsecured status and issued her a refund check for $300.
On attempting to cash the check at a BOA branch office in New Jersey, Afiriyie was accused of criminal conduct by Diane Lowe, the branch manager. Lowe told the police that the check was fraudulent, and Afiriyie was briefly arrested. Afiriyie filed a suit in a New Jersey state court against BOA, alleging wrongful dishonor. A jury awarded Afiriyie $710,000 in damages. The court ordered a new trial on the ground that the award represented "recovery far beyond what a reasonable fact finder could determine." Meanwhile, BOA appealed the denial of its motion for summary judgment.
ISSUE Was there support in these circumstances for Afiriyie's claim for wrongful dishonor?
DECISION Yes. A state intermediate appellate court affirmed the lower court's ruling. The reviewing court stated that, "In sum, the trial court did not err in declining to grant summary judgment dismissing plaintiff's statutory claim of wrongful dishonor." The appellate court also agreed with the lower court that there should be a new trial.
REASON BOA exercised control over the deposit that Afiriyie paid to secure her credit-card account and determined that she was entitled to its return. The refund check made payable to Afiriyie was drawn on an account in BOA's name, but the letter delivered with the check referred to the account as Afiriyie's. In light of this fact, the check was "the functional equivalent of funds coming from plaintiff's own account." Thus, BOA's refusal to cash the check supported Afiriyie's claim for wrongful dishonor.
BOA argued that there was no wrongful dishonor because under UCC 3-501(b)(4), the bank had until the day after Afiriyie presented the check to process the payment. The court noted, however, "That argument does not work here" because BOA's actions are inconsistent with the normal processing of a check. Based on the bank manager's statements to the police, Afiriyie was arrested and charged with forgery and attempted theft by deception. "BOA cannot, on the one hand, cause plaintiff to be arrested for attempting to pass a fraudulent check, and, on the other hand, claim that they never dishonored that check."
FOR CRITICAL ANALYSIS-Social Consideration What options might the branch manager have used to avoid the dispute in this case?