Date: August 6, 2018
MEMORANDUM OF DECISION AND ORDER ON DEFENDANT FIRST
REPUBLIC BANKâS MOTION FOR SUMMARY JUDGMENT
Mitchell H. Kaplan, Justice of the Superior Court
plaintiff, the law firm Sarrouf Law, LLP (Sarrouf), was the
victim of a classic internet scam. Defendant, H. Glenn
Alberich, of counsel to Sarrouf, responded to an email from a
self-identified international businessman seeking legal
assistance in the sale of heavy equipment to a Massachusetts
customer. Alberich had no prior relationship with this
individual, nor was he referred by anyone that Alberich knew.
Through communications with his potential client, Alberich
learned that as part of the engagement, Alberich would be
called upon to receive a check allegedly representing a
substantial down payment on the sale price of the
equipment-$337, 044-deposit it, and then distribute nearly
all of it to foreign recipients. Alberich accepted the
engagement and caused, what turned out to be, a counterfeit
check to be deposited in Sarroufâs IOLTA account with
defendant, First Republic Bank (FRB). Alberich then caused
those funds to be wire transferred to recipients in Asia and
Southeast Asia, before the check was returned to FRB as
uncollectable. FRB charged back to the Sarrouf IOLTA the
amount of the wires. In this action, Sarrouf seeks to recover
its loss from Alberich and FRB. Count I of Sarroufâs
Complaint asserts a claim of negligence against FRB, and
Count II a claim for breach of the California Uniform
Commercial Code (CUCC), Sections 1304 and 4103.
case is presently before the court on FRBâs motion for
summary judgment seeking dismissal of the claims against it.
For the following reasons, FRBâs motion for summary judgment
facts revealed by the summary judgment record, viewed in the
light most favorable to Sarrouf, are as follows.
is a law firm based in Boston, Massachusetts. The firmâs
principals are Camille Sarrouf, Sr. and Camille Sarrouf, Jr.;
the bookkeeper is Mary Bono; and the legal secretary is Karen
Beaudoin. In 2006 or 2007, H. Glenn Alberich became "of
counsel" to Sarrouf, although he did not work on cases
with either of the principals in the firm.
a California state-chartered bank with branch offices in
Accounts at FRB
2011, Sarrouf opened a client funds account with FRB. As part
of the process of establishing this account, FRB provided
Sarrouf with a number of documents that Sarrouf was required
to execute, including: a Business Account & Disclosure
Agreement dated May 2010; a Master Signature Card & Agreement
to Open Accounts signed June 7, 2011; a Funds Transfer
Agreement & Client Authorization signed June 7, 2011; a
Multi-Client Management Master Account Application signed
June 7, 2011; and a Partnership Authorization to Open
Accounts signed June 7, 2011. The Funds Transfer Agreement &
Client Authorization provided, in relevant part:
We may, in our sole discretion, execute a Funds Transfer
which causes an overdraft to your account, in which case you
are liable for the overdraft and any related fees, as stated
in the Disclosure.
We are authorized to execute Funds Transfers issued by you or
any Authorized Person, without inquiry into the circumstances
of the transaction, even if a Funds Transfer benefits the
We may, at our sole discretion, accept your cancellation or
amendment to a Funds Transfer. We have no liability if a
cancellation or amendment is not affected [sic].
All Funds Transfers are subject to verification by us
pursuant to the following security procedure, which you agree
is a commercially reasonable security procedure.
CALL BACK: If you or an Authorized Person gives Funds
Transfer instructions by any method other than in person, we
may telephone you or the Authorized Person at one of the
telephone numbers listed in our records, or another telephone
number as we and you agree upon.
You agree that we are liable to you only for our negligent
performance or nonperformance of the services provided under
All Funds Transfers are governed by federal law and the laws
of the state of California, including the Bank Secrecy Act,
the Office of Foreign Assets Control (OFAC), the USA PATRIOT
Act, and the Uniform Commercial Code as enacted in California
sent Sarrouf an updated Business Account Disclosure &
Agreement in June 2014.
Our policy is to make funds from your check deposits
available to you on the first business day after the day we
receive your deposit ... Please keep in mind, however, that
after we make funds available to you, and you have withdrawn
the funds, you are still responsible for checks you deposit
that are returned to us unpaid and for any other problems
involving your deposit.
January 2012, Sarrouf opened an Interest on Lawyers Trust
Account (IOLTA) with FRB. The authorized signers on the IOLTA
were Camille Sarrouf, Sr., Camille Sarrouf, Jr., Bono, and
Beaudoin. Since joining Sarrouf as "of counsel" in
2007, Alberich, with Sarroufâs permission, listed Sarroufâs
IOLTA information on his annual Board of Bar Overseers
renewal form. Prior to October 2015, Alberich had never
deposited or withdrawn funds, or requested to do so, from
van den Biggelaar"
September 23, 2015, an individual who identified himself as
"Henry van den Biggelaar" contacted Alberich
through a webpage that Alberich maintained advertising his
services. Biggelaarâs message read: "I request the help
of an attorney to draft a sale agreement. Respond if you are
able to help and schedule a time to discuss details. Thank
you for your prompt response." Biggelaarâs email address
was listed as, "email@example.com." Over the
next few days, Alberich and Biggelaar corresponded by email.
Alberich did no research regarding either Biggelaar or
September 25, 2015, Biggelaar wrote that:
I am negotiating a transaction about selling a crawler crane
to a purchaser living in Massachusetts. I need your firm to
help me draft a sale contract for the transaction. Attached
are some required details of the crane for your review. Find
underneath the name of the proposed buyer for your conflict
check. The manufacture and total expenditure is one million
six hundred eighty-five thousand tow [sic] hundred twenty
dollars (1, 685, 220.00).
549 South Street
P.O. Box 692396
Quincy, MA 02269
Advice on your rate for drafting a PS agreement and forward
your engagement letter for our review and signature.
attached a six-page Term Sheet to the email relating to the
September 29, 2015, Alberich spoke with Biggelaar for fifteen
to twenty minutes on the phone about Biggelaarâs company and
crawler cranes, among other things. Biggelaar told Alberich
that Cashman Dredging would be represented by a broker in the
transaction. Thereafter, Alberich sent Biggelaar a retainer
agreement. The agreement was on letterhead that identified
Alberich as "of counsel" to Sarrouf, required a $3,
000 retainer, and stated that Biggelaar would be billed
$400.00 an hour for legal services.
October 1, 2015, Biggelaar emailed Alberich the signed
retainer letter and explained that: "The scope of your
engagement would be to draft and execute a standard Purchase&
[sic] Sale agreement that would protect all parties involved
... The buyer will be represented by their broker. Existing
terms are that buyer will make initial deposit that would
cover attorney retainer as soon as the retainer is executed.
The initial deposit will be 20% of total amount. It must be
received within 5 business days of signing the retainer
agreement to show commitment. Full Balance is expected before
equipment is shipped ... Kindly advice [sic] on how you want
the initial deposit and retainer check written out."
Alberich did not know and did not ask Biggelaar why signing
the retainer agreement triggered the buyerâs obligation to
pay the deposit.
in the morning on October 1, 2015, Alberich responded that
the checks should be made out as follows: the Deposit Check
payable to "H. Glenn Alberich, as attorney for Big
Machine" and the Retainer Check payable to "H.
October 5, 2015, Alberich received at his home office, a
"letter of intent" and two checks, which were
purportedly sent by the buyerâs insurance broker, Zurich
North America. The letter of intent authorized Alberich:
"to release $192, 900.00 to seller for final inspection
cost and insurance coverage to commence inspection and $118,
650.00 for service parts for 6 months. Balance funds should
be held in trust until final closing." The deposit check
was drawn in the amount of $337, 044.00, payable to
"Sarrouf Law LLP." The retainer check was in the
amount of $3, 000 and payable to "H. GlennAlberich, Esq.
[sic]." In the upper left hand corner of both checks is:
"To JP Morgan Chase Bank, N.A. Syracuse, NY 13206"
and "RBC Bank." Nothing on the checks struck
Alberich as concerning.
October 5, 2015, Alberich presented the $3, 000 retainer
check to a teller at Santander Bank where he maintained an
account, and the teller accepted the check for deposit. That
same day, Alberich sent the $337, 044 check to Sarrouf via
overnight mail. In his handwritten cover letter to Camille
Sarrouf, Jr., Alberich wrote: "Camille-Please deposit
the enclosed check in the firmâs IOLTA account. I am
preparing a contract for the purchase of heavy equipment, and
the enclosed check is a good faith down payment. The closing
may not occur for 90 days."
October 6, 2015 at 8:34 a.m., Alberich sent an email to Bono,
with a copy to Camille Sarrouf, Jr., informing Bono that he
mailed a check to Camille Sarrouf, Jr. and asking that she
deposit the $337, 044 check into Sarroufâs IOLTA. Alberich
also requested that Bono scan and email him a copy of the
deposit slip as soon as possible. One minute later, Camille
Sarrouf, Jr. responded to Alberichâs email asking him if he
was "around later for a call" concerning the check.
Alberich responded that he would reach out to Camille
Sarrouf, Jr. over the next two days, but he never did.
Deposits the $337, 044 Check at FRB
in the day on October 6, 2015, Bono brought the $337, 044
check to FRBâs Post Office Square branch for deposit. Nothing
about the check struck Bono as suspicious. She brought the
check to the first representative that she saw, Gabriela
Perry. Bono and Perry knew each other from previous banking
transactions. Bono handed Perry the check and deposit slip.
She did not say anything to Perry about the check, the
circumstances under which Alberich received the check, or the
circumstances under which Bono was depositing it. Bono saw
Perry look at the check, turn it over, look at the
endorsement, put the deposit slip back on top of the check,
and enter information into her computer. Perry recalled that
she looked at the check for the amount, the date, whether it
was signed, the identity of the payee, whether the name of
the payee matched the account, the endorsement, and the
nine-digit routing number.
accepted the check for deposit into Sarroufâs IOLTA and gave
Bono a deposit receipt. Bono looked on the deposit receipt to
see when the deposited funds would be available, but did not
see this information on the receipt. Bono asked Perry when
the funds would be available, and Perry told Bono that the
funds would be available immediately because FRB does not
hold funds in the IOLTA. Bono thought it was strange that
there would be no hold, but she did not question Perry any
further because she thought that the check was a cashierâs
check. Bonoâs interaction with Perry on October 6, 2015
lasted approximately one minute.
12:47 p.m. on October 6, 2015, Alberich forwarded a copy of
the $337, 044 deposit receipt to Biggelaar. The deposit
receipt noted that: "Checks and other items are received
for deposit subject to the provisions of the Uniform
Commercial Code or any applicable collection agreement.
Deposited funds may not be available for immediate withdrawal
in accordance with the check hold policy stated in our
Account Disclosure. All items are credited subject to final
payment. Any item may be charged back at any time before
final payment." At 3:37 p.m. on October 6, FRB scanned
the $337, 044 check to its Image Center, and the check was
processed at 4:02 p.m.
Requests Wire Transfers
a.m. on October 8, 2015, Biggelaar sent Alberich an email,
which stated, in part:
Attached please find the signed Letter of Intent and
instructions on our funds held in your trust account, Effect
a swift wire to KIM SREYLOT and ODIKA HOLDING INTERNATIONAL
RESOURCES COMPANY LIMITED for the final inspection of the
equipment and service parts as agreed by both parties.
Due to the time difference between us we want you to have
this transfer executed today before 11:00 a.m. your time and
make the value date of the transfer 08 October 2015 in other
[sic] for ODIKA HOLDING INTERNATIONAL RESOURCES COMPANY
LIMITED and KIM SREYLOT to be able to update their accounts
accordingly and proceed as directed.
Report back to me, copying buyerâs representative with
receipt of wire transfer and swift reference numbers so we
can forward same to them as soon as possible.
I await your acknowledgment of instructions and wire transfer
email also instructed Alberich to wire $192, 900 to Sreylotâs
account at Union Commercial Bank PLC in Cambodia and $118,
650 to Odika Holding International Resources Company
Limitedâs account at HSBC in Hong Kong. Alberich did not ask
Biggelaar about Sreylotâs or Odika Holdingsâ role in the
transaction. After sending the wire instructions, Biggelaar
emailed Alberich six times in twenty-four hours to confirm
that Alberich received the wire instructions and to request
confirmation that the wires had been sent; Alberich testified
at deposition that he did not think this was unusual.
000 Retainer Check is Returned & the Wire Transfers
11:27 a.m. on October 8, 2015, Alberich sent Biggelaar the
I just completed two meetings in preparation for a court
hearing which just ended. I have forwarded your instructions
to my Boston office and advised that the transfers be
executed as quickly as possible. Please be advised that the
$3, 000 check in payment of my retainer fee has been returned
by my bank and that amount has been subtracted from my
account. I am surprised and puzzled by this turn of ...