The law office-defendant, an LLC, opened an IOLA account with the bank-plaintiff and deposited a purported client's cashier's check into the account. Shortly thereafter, the client, through the law office, directed that the majority of the funds be wired to two international parties. Although the bank's business deposit accounts brochure says that a transfer of more than $5,000 out of a new account will be made only after nine business days, the money was wired out of the account before the ninth business day, after the bank's employees had verified by telephone with the clearinghouse bank that the check had cleared. A few days later, it was discovered that the check was fraudulent.
Practice point: The breach of contract claim was dismissed as against the lawyer because he is not the named customer on the bank account, and there is no basis for holding him liable in the documents that comprise the application to open the account. The negligence cause of action also was dismissed as against him. Limited Liability Company Law § 1205(a) makes an LLC's member liable for negligence in the furnishing of services, that is, malpractice. Here, however, neither the lawyer nor the LLC were providing personal services to the bank; they were acting as its customer. Additionally, there are no allegations otherwise supporting a personal claim against the lawyer based on piercing the corporate veil.
Case: Metropolitan Commercial Bank v. Levy, NY Slip Op 05505 (1st Dep't July 6, 2017)
Here is the decision.
Tomorrow's issue: A hearing on an application for the award of attorney's fees.