X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
New Jersey’s Appellate Division has delivered a new blow to the state’s most frequent filer — pro se litigant Robert Triffin — ruling that payroll-services companies are not liable for bad checks because they are acting only as agents. The court held that one who becomes a holder in due course by buying dishonored checks could collect only against the company that issued the checks, not the payroll processor. The court, in Triffin v. Ameripay, LLC, A-2461-02T2, interpreted a 1995 revision to the N.J. Uniform Commercial Code. Because the revision has been adopted by all the states, the ruling could travel well nationwide for the multibillion-dollar payroll-services industry. “This is the clearest ruling as to the role of the payroll servicing company made anywhere,” says Terry Thornton of O’Brien & Thornton in Paramus, who argued the case before the appellate court. “This shifts the liability to the employer, which is crucial when dealing with high-speed electronic fund transfers,” says Arthur Piacentini, the managing director for defendant Ameripay of Rochelle Park. He adds that 610 payroll-servicing companies are in New Jersey, and that there are 14,000 members of the American Payroll Association nationwide. John Cannel, executive director of the New Jersey Law Revision Commission, agrees the ruling should have a national impact, explaining that the revision made in Trenton in 1995 is based on the recommendation of the American Law Institute and the National Conference of Commissions on Uniform State Laws. “All the states adopted this,” says Cannel. Judge Francine Axelrad, writing for the appeals court, said the 1995 revision to Article 3 of New Jersey’s version of the UCC, pertaining to negotiable instruments, made it plain that the party responsible for a dishonored check is the principal, which is always the company that draws the check. Triffin, who lives in Drexel, Pa., has a law degree but has been refused bar admission in New Jersey and Pennsylvania due to findings of poor character. Triffin, who for three decades has been buying dishonored checks through assignment agreements to try to collect on them, argued that the payroll-servicing company, Ameripay, was liable because its executive’s signature was on the checks as well as the bank account. Triffin has also sued the world’s largest payroll-processing company, Automatic Data Processing of Roseland, which had $7.15 billion in sales last year. But ADP fought back. On April 22, an Essex County jury awarded ADP a $132,600 judgment against Triffin as well as $50,000 in punitive damages. The jury concluded that Triffin’s assignment agreements were fraudulent. Specifically, ADP lawyers got Triffin to acknowledge that he routinely took the signatures of those who sold him the checks, scanned them into his computer, and then cut and pasted them onto many pages of a detailed assignment agreement he later drew up. However, that case, ADP v. Triffin, 29171-02, did not address the issue of ADP’s liability in processing the checks. Citing precedents from other states, the court in the Ameripay case concluded that to hold the payroll-servicing entity responsible for a bad payroll check would be the same as holding an employee responsible for payment for signing a corporate check that bounced. It also would be tantamount to holding an attorney accountable for a check written and signed by him from a client’s trust account because the client stopped payment. The judges cited case law that concluded only the client is liable in such a scenario. “We find that Ameripay is immune from liability under the specific provisions of N.J.S.A. 12A:3-402c pertaining to checks,” Axelrad wrote. She added that subsection c of the 1995 UCC revision “changed the statutory provisions regarding who shall be liable on a dishonored check payable from an account of a represented person and expanded a representative’s defenses. The agent is no longer liable on the check simply because he or she signed for the principal.” Put another way, common sense dictates that the owner of the money in the payroll bank account is the employer company, and everybody, from Triffin to the check-cashing firm that sold the checks to Triffin to the workers who cashed the checks, knew Ameripay was “a mere conduit or agent for transferring money from his clients to the payees,” wrote Axelrad, who was joined by Judges Howard Kestin and Frank Lario Jr. During the ADP trial last month in Newark, ADP’s lawyer, Dennis Kearney, told the jurors in his closing statement that his client views Triffin as a shakedown artist who uses the courts and the cost of litigation as his hammer. Kearney, a partner with Florham Park’s Pitney Hardin, said Triffin was going after the deep pockets. Triffin has filed thousands of cases in New Jersey and Pennsylvania over the years, and has been filing suits in the Special Civil Part at the rate of more than 500 a year during the past two years. This case represents at least his 12th appearance as a pro se litigant before an appeals court, where he has a record of eight losses and four wins and where his cases continue to shape case law involving the UCC holder in due course. In fact, the appeals judges cited two other Appellate Division cases involving Triffin as they fleshed out the progression of the law in the state. Kearney said after the jury verdict last month that Triffin was eyeing payroll-servicing companies as a “new product line.” Indeed, in the Ameripay case, Triffin did not sue the employer, Nu Tribe Radio Networks Inc. of New York City, or the check-cashing firm that sold him the bad checks at discount. LAW OF AGENCY 101 Ameripay is a privately held, $1 million company in Rochelle Park that processes payrolls of small companies. Ameripay picked up NTRN, a radio station in Newark, as a client in July 2002. Unfortunately for Ameripay, after it set up its bank account to process the payroll, NTRN never transferred the money into the account as required by contract, and quickly folded under charges of fraud. Four employees cashed two payroll checks each at A-1 Check Cashing Emporium Inc. in New Jersey, though court papers do not list an address. The checks were “returned to maker.” Triffin bought the eight checks from A-1 a month later, and shortly thereafter filed his complaint in Somerset County. Triffin relied heavily on the pre-1995 UCC statutes, citing the signature on the checks by an Ameripay executive. Moreover, he relied on the fact that Ameripay’s two principals signed the certification of authorization for the bank account, and that Ameripay was on the name of the account. Superior Court Judge Edward Coleman agreed with Triffin and awarded him $4,610, which included prejudgment interest. But the appeals court noted that the bank’s certificate of authority identified the account holder as “Ameripay LLC Client Payroll NRN,” which was consistent with the signature card. The judges further pointed out that NTRN’s name, address and telephone number were on the face of the checks, and that Ameripay was not identified on the checks. Coleman accepted Triffin’s argument that when two innocent parties are involved, Ameripay and Triffin in this case, the person who should be “blamed for � [NTRN's fraud] or the one who takes the loss, is the party who initiated the action.” Coleman found that the initiator was the Ameripay executive who issued and signed the checks. But again, the appellate court found that executive’s signature to clearly be “an authorized signature of a representative person,” which does not bind Ameripay to the checks. Thornton, who represented Ameripay with her partner, Merrill O’Brien, says she believes the decision will close the door on Triffin’s pursuit of payroll-servicing companies. “I would think that if he went after any other payroll-servicing companies that there would be a claim for frivolous litigation because this decision is so clear.” Triffin did not return a telephone call to his home, which doubles as his office.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.