Schering-Plough Healthcare Products, Inc. v. NBD Bank, N.A.
| Decision Date | 25 October 1996 |
| Docket Number | No. 95-1781,SCHERING-PLOUGH,95-1781 |
| Citation | 98 F.3d 904 |
| Parties | 30 UCC Rep.Serv.2d 1009 HEALTHCARE PRODUCTS, INC., Plaintiff-Appellant, v. NBD BANK, N.A., n/k/a NBD Bank, and NBD Bank Dearborn, N.A., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Brian D. Figot, Troy, MI (argued and briefed), for Plaintiff-Appellant.
Henry J. Shymanski, NBD Bank, Detroit, MI (argued and briefed), for Defendants-Appellees.
Before: KENNEDY and NORRIS; Circuit Judges; MATIA *, District Judge.
KENNEDY, J., delivered the opinion of the court, in which NORRIS, J., joined. MATIA, J. (pp. 913-19), delivered a separate dissenting opinion.
Plaintiff Schering-Plough Healthcare Products, Inc., ("Schering-Plough") appeals from an order of summary judgment for defendants, NBD Bank ("NBD") and NBD Bank Dearborn ("NBD-Dearborn"), in this breach of contract action. Plaintiff argues that the District Court erred when it: (1) interpreted Michigan's Statute of Frauds to bar its enforcement of defendants' alleged promises to certify certain checks, issue cashier's checks, and deposit certain funds into its account; (2) found that defendants did not accept certain checks for payment; (3) concluded that defendants had not contracted to certify certain checks, issue cashier's checks, and make certain funds available; and, (4) determined that defendants had not breached their duties of good faith performance and fair dealing. For the following reasons, we AFFIRM.
On December 1, 1994, Schering-Plough, a supplier of healthcare products, received two checks from F & M Distributors, Inc. ("F & M"). The first check, which was payable to Schering-Plough, was in the amount of $111,903.20. The second check was in the amount of $335,734.33 and was payable to an affiliate of Schering-Plough. Both checks were drawn on F & M's controlled disbursement account at NBD-Dearborn, an affiliate of NBD that handles only these types of accounts. This account was a "zero balance" arrangement under which NBD-Dearborn notified F & M, through a computer system report, of the checks presented for payment. Each day the account would begin with a zero balance and, upon F & M's direction, would be funded by a funding account, which in turn was funded by deposits by F & M and borrowings from F & M's credit facilities, to pay those checks presented for payment. Because F & M had the discretion to fund the account to pay checks after they were presented for payment, NBD-Dearborn would not know if there were adequate funds in F & M's account until the end of the day on which the checks were posted on the computer system report.
On Thursday, December 1, 1994, Robert Harmon, an employee of Schering-Plough, took the F & M checks to the Warren, Michigan, branch of NBD (NBD-Warren). At NBD-Warren, Harmon was told that F & M's account had sufficient funds to pay the checks and that the checks could be converted to cashier's checks. David Parlangeli, an assistant manager at NBD-Warren, verified that no stop payment orders had been placed on the checks, and then wrote "no stops" and "TV," the initials of the person from whom he received that information, on the checks. According to plaintiff, Parlangeli spoke with a senior loan officer for F & M's account and then informed Harmon that he would not issue cashier's checks for the F & M checks. Harmon left the bank with the checks, and without cashier's checks.
The following day, Friday, December 2, Schering-Plough employee James Hamilton telephoned the Fairlane branch of NBD (NBD-Fairlane) and spoke with Assistant Vice President Sandra Martin. Plaintiff claims that Martin confirmed that funds were Because NBD would not certify the checks or issue cashier's checks in lieu of their certification, Hamilton decided to open an account with NBD-Fairlane and deposit the checks in an effort to expedite the availability of those funds. He contacted his office and instructed employees there to assemble and fax the documents needed to do that. The account, which was governed by a contract affording NBD the right to wait a reasonable time after an item has been deposited into the account before funds may be withdrawn to insure that the item has been collected, was opened on a temporary basis until the documents authorizing the account were legally reviewed.
available to pay the checks and that the checks could be properly presented at her bank branch for certification. That afternoon, Hamilton arrived at NBD-Fairlane and presented Martin with the checks for certification. After consulting the folder containing information necessary to certify checks on zero balance controlled disbursement accounts, Martin learned and informed Hamilton that the F & M checks could not be certified. 1
Martin told Hamilton that she would know by mid-day on Monday, December 5, whether funds would be available for payment of the checks. Because she would not be in the office on Monday, Martin instructed Hamilton to call another employee, Cheryl Mosby, to verify that the funds had been deposited.
As instructed, Hamilton called Mosby on Monday and inquired whether the funds had been deposited in Schering-Plough's newly opened account. According to Hamilton, Mosby told him that because F & M's account was an "interdepartment" bank branch account and Schering-Plough's account was a regular NBD checking account, she would not know if the funds were collected until Wednesday, December 7.
NBD-Dearborn received the checks on Monday, December 5. That same day, F & M filed a petition for relief under Chapter 11 of the Bankruptcy Code. 2 The following day, NBD issued a notice to Schering-Plough stating that the checks were being returned unpaid with the notation "refer to maker."
Schering-Plough filed this suit against NBD and NBD-Dearborn alleging that NBD and NBD-Dearborn accepted the checks under MICH. COMP. LAWS § 440.3408 and thus agreed to pay the amount indicated on the face of the checks. In addition, Schering-Plough claimed that: (1) NBD breached its alleged agreement of December 1, 1994, to issue cashier's checks in exchange for the F & M checks; (2) NBD and NBD-Dearborn breached their alleged agreement of December 2, 1994, to certify the checks upon presentment; and (3) NBD and NBD-Dearborn breached their alleged agreement to make the funds represented by the checks available to Schering-Plough in its newly-opened account by mid-day December 5. Finally, Schering-Plough claimed that defendants breached their duties of good faith and fair dealing when they refused to honor the checks as promised in those agreements.
The District Court granted defendants' motion for summary judgment, holding that the "no stops" and "TV" markings did not constitute acceptance of the checks, that NBD's alleged promises to certify the checks, to issue cashier's checks, or to make funds available were merely "preliminary discussions, invitations to deal, and estimates of the availability of funds rather than the firm and objective commitment that is required for contractual liability," 890 F.Supp. 651, 656 (E.D.Mich.1995), and that there was neither consideration for those agreements nor a consideration substitute such as promissory estoppel. The District Court further held
that because all three alleged agreements were oral promises to engage in financial accommodations, the Michigan Statute of Frauds, MICH. COMP. LAWS § 566.132(2), bars their enforcement. Finally, the District Court dismissed plaintiff's cause of action for breach of duties of good faith and fair dealing on the basis that that cause of action cannot be sustained in the absence of an underlying, enforceable agreement. Plaintiff appeals from the District Court's grant of summary judgment.
We review a grant of summary judgment de novo. Kraus v. Sobel Corrugated Containers, Inc., 915 F.2d 227, 229 (6th Cir.1990). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). In determining whether summary judgment is proper, we view the facts and any reasonable inferences drawn from those facts in a light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). The mere existence of a colorable actual dispute does not preclude an award of summary judgment; there must be a genuine dispute between the parties on an issue of material fact in order to preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986).
Schering-Plough argues that the District Court erred when it granted summary judgment for the defendants, claiming that there is a genuine issue of material fact regarding whether the "no stops" and "TV" notations on the checks evidence NBD's intent to accept the checks. NBD's operating procedures provide that before a cashier's check is issued for a check drawn against an NBD-Dearborn zero balance controlled disbursement account, the issuing employee must verify with the bookkeeper that no stop payments exist on the check and place the initials of the bookkeeper who provides that information on the check. 3 Plaintiff suggests that once Parlangeli wrote "no stops" and "TV" on the checks, as required by the operating procedures, the checks were accepted, and that the "TV" and "no stops" markings evidence their acceptance. We disagree.
Under Michigan law,
"[a]cceptance" means the drawee's signed agreement to pay a draft as presented. It must be written on the draft and may consist of the drawee's signature alone. Acceptance may be made at any time and becomes effective when...
To continue reading
Request your trial
-
U.S. v. Miami University, No. C-2-98-0097.
...superfluous are to be avoided."), cert. denied, 525 U.S. 828, 119 S.Ct. 77, 142 L.Ed.2d 61 (1998); Schering-Plough Healthcare Prods., Inc., v. NBD Bank, 98 F.3d 904, 909 (6th Cir.1996) Second, several federal courts, in the context of § 1983 actions, have held that FERPA creates federal rig......
-
Wells Fargo Bank v. Citizens Bank of Texas
...an interest-bearing account are transferred to the zero balance account to pay the check.6 See e.g. Schering-Plough Healthcare Prods., Inc. v. NBD Bank, N.A., 98 F.3d 904, 910 (6th Cir.1996); RPM Pizza, Inc. v. Bank One Cambridge, 869 F.Supp. 517, 518-19 Banks offering controlled disburseme......
-
Wells Fargo Bank v. Citizens Bank of Texas, No. 10-04-00268-CV (TX 9/7/2005)
...interest-bearing account are transferred to the zero balance account to pay the check.6 See e.g. Schering-Plough Healthcare Prods., Inc. v. NBD Bank, N.A., 98 F.3d 904, 910 (6th Cir. 1996); RPM Pizza, Inc. v. Bank One Cambridge, 869 F. Supp. 517, 518-19 (E.D. Mich. Banks offering controlled......
-
Messing v. Bank of America
...of the check by placing the words "upon acceptance [by the drawee bank]" on it.); see also Schering-Plough Healthcare Products, Inc., v. NBD Bank, N.A., 98 F.3d 904, 908 (6th Cir.1996)(holding that the words "No Stops" [indicating no stop payments] and "TV" [initial of drawee bank employee ......