### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT September 19, 2003 THOMAS K. KAHN CLERK [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH

CIRCUIT

________________________ No. 02-15981

________________________ D. C. Docket No. 00-01646 CV-WBH-1 REGIONS BANK, d.b.a. Regions F

unding, Plaintiff-Appel lant,

versus THE PROVIDENT BANK, INC., d.b.a. Providen

t Consumer Fina

ncial Services, Inc., Defendant-Cross -ClaimantAppellee, MORNINGSTAR MORTGAGE BANKERS, INC., ANGELA DAIDONE, Defendants-Cros s-Defendants.

________________________ Appeal from the United States District Court for the Northern D

istrict of Georgia

_________________________ (September

19, 2003)* Honorable Arthur L. Alarc ` n, United States Circuit Judge for the Ninth Circuit, sitting

by designation. 2 Before BARKETT, MARCUS and ALARCÓN * , Circuit Judges. ALARCÓN, Circuit Judge: Regions Bank (“

Regions”) appeals f

rom the final or

der and judgme

nt of the district court dis missing thi s action af ter granti ng The Prov ident Bank , Inc.’s (“Provident”) motion for summa ry judgment pursuant to Rule 56(b) of the Federal Rules of Civil Procedure. Regions seeks reversal on the ground that the district court erred in ruli

ng that Regions’s sta

te law claim

s were preem

pted by Article

4A of the Uniform Commercial Code ( “U.C.C.”) and that genuine issues of material fact exist regard

ing whether Provide

nt knew or should have k nown that funds it received from

Morningstar Mortgag

e Bankers, Inc.(“Morningstar ”), by me ans of a wire transfer

, had been fraudule

ntly obtained. We affirm because we conclude that Regions failed to demonstrate that Provident knew or should have known that funds transferred from Fleet Bank were fraudulently obtaine d by Morningstar. I Regions and Provident

are comm

ercial banks that a

ct as “ware

house1 Provident’s trans actions regar

ding its warehou

se lines are hand

led by the “w

arehouse funding unit.” 3 lenders” for the r

esidential real es

tate market.Provident 1 and Regions advance money to inde

pendent mortgage

lenders, known as o

riginators, who fu

nd loans to home buyers. Under the typical warehouse loan agreem ent, the warehouse lender wires the funds re

quested by the ori

ginator to a closing ag

ent or attorney

who is instructed to disburse

the funds to the hom

e buyer. The

original note signed by the home buyer serves as collateral for the loan, and the warehouse lender maintains a sec

urity interest i

n the property pur

chased with the loan . In order to pay off its debt with the warehouse lender, the originator sells the loan to a third party investor at a premium. On August 25, 1998, P

rovident entered int

o a warehouse loan a

greement with Morningstar [h

ereinafter Prov

ident Warehouse L

ine]. Morningsta

r agreed to use the money lent to it by Provid ent to make mortgage loans to home buyers. Morningstar prom

ised to use the procee

ds from sales of

the individual mor

tgage loans to third party investors to pay off its debt to Provident. If Morningstar failed to locate an investor to purchase its loans, and Provident’s funds remained outstanding for m

ore than the tim

e period specified b

y Schedule A of

the particular loan agr

eement, Morn

ingstar agreed to r

epay Provident o

r purchase the2 A DDA is a personal account that is held at a bank and used by an individual or business.

4 loans itself. Provident twice sus

pended Morningstar’ s warehouse line of credit, in January 1999, a

nd March 2000, in re sponse to its failure to make prom pt payments on the loans or to sell them to third party investors. On April 4, 2000, John Haag Jiras, a closing at

torney, infor

med Provident th

at his signature had be

en forged on closing documents

pertaining to the Clos

ing Agent Agreem

ent and Errors and Omissions insurance policy that had been submitted to Provident by Morningstar, and that the FBI wa

s investigating his alle

gations. Shortly

thereafter, a

n FBI agent contacted Provident ’s in-house counsel regarding the invest

igation instigated by Mr. Jiras. On April 5, 2000, P

rovident sent a lette

r to Angela Daidone , president and CEO of Morningstar, demanding repayment of all outstanding loans within ten days. Ms. Da

idone informed P

rovident that she owne

d ten acres of land i

n Long Island, New Yo

rk that she would liqui

date, and that she w

ould wire the funds in

to the demand deposi

t account (“D

DA”) that Morningstar maintaine d at Provident Bank. 2 Morningstar had previously reimbursed Provident from monies deposited in this account.5

On April 6, 2000, P

rovident discovered t

hat First Union Mort

gage Corporati on (“First Uni on”) poss essed the o riginal n ote for one of Provide nt’s outstanding home lo ans. On March 29, 2000, First Union ha

d forwarded the f

unds to pay for the loa

n to Chase Manhattan Bank (“Chase” ), for deposit into Morningstar’s Pa

ine Webber account. Meanwhile, on April 4, 2000, Morningstar entered into a warehouse loan agreement w

ith Regions [hereina

fter Regions Wa

rehouse Line].Pursuant to this agreement,

Morningstar request

ed that Regions trans

mit funds by w

ire to the escrow account of closing attorneys Weider & Mastroianni (“W&M” ) at Fleet Bank. On April 10 , 2000, Morningstar requested $171,720 f

rom Regions to f

und a loan for Ever T. Aguado. Regi ons wired the request ed funds to Fleet Ban k. Regions instructed W&M that the funds were to be used to pay for the loan to Mr. Aguado. On April 11, 2000, Morningstar requested $465,000 in order to fund a loan for Marjorie Crawford. Regions wired this amount to the W&M escrow account at Fleet Bank on Apri

l 11, 2000, with instr

uctions that the funds w

ere for a loan for Ms. Crawford.On the same da te, Peter Mastr

oianni of W&M cont

acted Ms. Daidone at Morningst

ar for further in

structions regardin

g how the funds in the escrow account shou

ld be put towards the l

oans for Mr. Agua

do and3 The record is unclear regarding whether the FB I contacted Regions on April 11 or April 12. 6 Ms. Crawford. Ms. Daidone told Mr. Mastroianni that Regions had transferred funds to W&M’s escrow account in error. She asserted that she was the intended recipient of the fu

nds. Ms. Daidone r

equested that W&M

instruct Fleet Ban

k to wire $171,720 of the funds in W&M’s escrow account to Morningstar’s DDA at Provident . On April 11 , 2000, Flee t Bank wired the $171,7 20 to Morn ingstar’s DDA at Provident. The payment order from Provident to Fleet Bank listed Morningstar’s accoun t number at Provident Ban k and stated that “Orig to BNF info: Re: Aguado–Morningstar Mortgage Bankers, Inc.” After Fleet Ba

nk transferred $171, 720 to Morningstar’ s DDA at Provide nt, Ms. Daidone informed Provi dent that funds were av ailable in Morning star’s DDA to settle an outstandin

g loan on the Provident Warehouse Line . On April 12, 2000, Provident debit

ed Morningstar’s a

ccount by the $171, 720 and credited the Provident Ware

house Line. On A

pril 12, 2000, at Mor

ningstar’s reque st, Regions wired $162,000 to the

W&M escrow ac

count, with instruc

tions to fund a loan for Mario Graziosi. On April 11 or 12, 2 000, 3 FBI agents inform ed the internal sec

urity department at

Regions that it had bee

n monitoring the w

ire transfers fr

om Regions7

to W&M. Thomas J. Holland, Senior Vice-Pre sident of Regions Mortgage, testified at his deposition that the FBI agents stated that the FBI “had monitored Ms. Daidone and that they felt there was a major problem with her, and they were going to try to arr

est her almost i

mmediate ly.” The FB I also informe d Regions that it should attem

pt to retrieve m

onies that Regions had w ired for the closing of particular loans immediately. On April 13, 2000, Ms. Daidone instructed Fleet Bank to wire $627,000 that Regions had wired to

the W&M escrow

account on April 11 a

nd 12, 2000 to Morningstar’s DDA at Provident. The payment order to Provident from Fleet Bank listed Morningstar’s account number and stated that “Orig to BNF info: Re Graziosi $162,000 Crawford $465,000.” The same day, Ms. Daidone advised Provident that it coul

d apply the funds w

ire-transferre

d by Fleet Bank,

against Morningstar’s outs tanding debt. At 5:42 p.m. o

n April 13, 2000, Ja

ime Robison of F leet Bank placed a call to a suburban Cincinnati branch of Provident Bank. Ms. Robison spoke with an unidentified Provide

nt employee . The Provident e mployee inf

ormed Ms. Robi son that the DDA belonged to Morningstar and that the funds were still in that account. Ms. Robison informed the Provident employee that “ it was possible that the funds had been sent to the wrong institution.”8

Immediat ely after speaking with the Provid ent employe

e, Ms. Robison called an empl

oyee in the funds t

ransfer departm

ent of Fleet Bank to

initiate the process of recall

ing the wire transf

er. Ms. Robison w

as informed tha

t she would need to draft a suppor

ting memo r

equesting the recal

l and specifying t

he beneficiary information and dollar amounts of the transfers. Ms. Robison drafted the memo on April 13, 2000 and sent it to Fleet Bank ’s funds transfer depart ment. Fleet Bank did not co ntact Provident on April 13, 2000. On April 13, Regions’s attorney, John G. Aldridge, contacted Peter Mastroianni at W&M and asked him to attempt to reverse the wire transfers that had been sent to Mornin

gstar’s DDA a

t Provident. Mr. Aldridge testifie d at his deposition that it was

his understanding on Ap ril 14, 2000, that Mr

. Mastroianni “had discussed th

e situation with his ba

nk and this bank was ta

king the appropriate steps to reverse the wire transfer.” There is no indication in the record that Mr. Mastroianni contacted Provident directly in an effort to reverse the wire transfers. Regions al so asked the FBI to att empt to locate and seize th e funds. Regions did not contact

Provident regardin

g the funds in Morningsta r’s DDA until April 17, 2000. On April 14, 2000,

around 10:00 a.m ., Provident appli ed the $627,000 in Mornin gstar’s DDA, that Fleet Ba nk had w ired to the acco unt th e previ ous day,4 The in remcomplaint alleged that Morningstar obtained loans from Provident and

Regions by either pledging no collateral at all, or by pledging collateral that had already bee n pledged to secure funds from another bank. The complaint also alleges that Morningstar forged closing documen

ts and used the fun

ds it obtained from P

rovident and Reg

ions to cover its operating expen

ses rather than t

o originate loan

s.

5 Under Georgia law: (a) It is unlawful for any person, throug h a pattern of racketeering activity or 9 agains t four o utstan ding l oans in the Pro vident Warehou se Line. Later th at day, around 4:30 p.m. , Provident rece ived a copy of an in rem

foreclosure com

plaint from the FBI

detailing Morningstar ’s fraud against Provident and Regions

. 4 That same afternoon, Provident also r eceived a two-pag

e fax from Fl

eet Bank regarding the wire transfers for $171,720 and $627,000 to Morningstar’s DDA which stated “pls note possible frau d pls rtn as sent in error no indemnity. . . Possible fr aud.” On April 17, 2000, Mr. Aldridge telephoned Provident to request the return of the funds that we

re wired into Morni

ngstar’s DDA by Fleet Bank.On April 21, 2000, Mr. Aldridge

also sent a form

al written dem

and for repaym

ent of the funds to Provident’s in-

house counsel. On Ma

y 15, 2000, counse

l for Provident responded by letter to R egions’s demand and refus ed to return the fund s. Regions filed a com

plaint in the Distric

t Court for the Nor

thern District of Georgia on June 30, 2000, asserting stat e law claims

against Provident fo

r conversion, unjust enrichment, receipt of stolen pr operty, wrong

ful set-off and violations of Georgia 5 and federal 6 racketeering sta tutes. Regions also a

sserted aproceeds derived therefrom, to acquire or maintain, directly or indirectly, any interest in or control of any enterprise, real property , or personal property of any nat ure, inc lud ing m one y. (b) It is unlaw

ful for any

person employ

ed by or ass

ociated with any

enterprise to conduct or participate in, directly or indirectly , such enterprise through a pattern of r acke tee rin g act ivi ty. Ga. Code Ann. § 16-14-4 (2002).

6 Under federal

law: (c) It shall be unlawful for any per son employed by or associated with any enterprise engaged in, or the activi ties of whi ch affect, in terstate or foreign commerce, to conduct or participate, directly or indirectly , in the conduct of such enterprise's affairs through a pattern of racketeer ing activity or collection of unlawful debt. 18 U.S.C. § 1962(c) (2003).

7 Regions’s claims of receipt of stolen property, conversion, unjust enrichment, and wrongful set-off will hereinafter collectively be r eferred to as the “state law claims.” Regions asserted these state law claims against Provident under Ohio law. Provident does not dispute the application of Oh

io law to this case.

We will therefore

determine the issu

es in accordanc

e with Ohio law. 10 number of claims against Morningstar and Ms. Daidone. Pursuant to Rule 55(a) of the Federal Rul

es of Civil Procedu

re, the clerk ent

ered a default j udgment against Morningstar and Ms. Daidone on February 2, 2001, for failure to file an answer or other pleading in response to the complaint or the first amended complaint. O

n May 12, 2001, R

egions filed a second

amended com

plaint, dropping the federal

and state racketeering claims a gainst Provident and a

dding a claim of wron

gful set-off again

st Provident. 7 Provident filed a motio n for summary judgment on January 7, 2002. On September 25, 2002, the district court granted Provident’s motion for summ ary11

judgment, hold

ing that each of Regi

ons’s state law c

laims was pre

empted by Article 4A of the

U.C.C. (“

Article 4A”).The court also foun d that “[b]e

cause [W&M’s] po ssible fraud notifications arrived aft er Provident acce

pted the payment orders, they were ineff ective to cancel them.” The district court had jurisdiction over the state law claims pursuant to 28 U.S.C. § 1332. Regions has filed a timely

appeal. We ha

ve jurisdiction purs

uant to 28 U.S.C.§ 1291. II Regions asserts that

the district court e

rred in holding that Re

gions’s state law claims w

ere preempte

d by Article 4A . Regions argues tha t “nothing in Art

icle 4A suggest that the dr

afters intended it t

o insulate a wrongdoe

r from liabili

ty in connection with funds

transfers that w

ere effectuate

d as intended.” Reg

ions asserts that its cla

ims were not pr

eempted becau

se Provident accep

ted the funds when it knew or shoul d have known that th e funds were fraudulent ly obtained. Regions further con

tends that “genui

ne issues of mat

erial fact exist w

ith respect to the elements of

Regions’s claim

s.” This court re

views a district co

urt’s grant of summary judgment de novo. Scala v. City of Winter Park , 116 F.3d 1396, 1398 (11th Cir. 1997). Summary judgment is pro

per if there is no ge

nuine issue of ma

terial fact and the moving party is entitl ed to judgment as a matter of law. See Pritchard v. S.Co.12

Servs. , 92 F.3d 1130, 1132 ( 11th Cir. 1996). T he district court co

ncluded that it was unnecessary to determine whether a genuine issue of materia l fact existed regarding Regions’s state law claims because it held that those claims were preempted by Article 4A. “ We may, however, af

firm the grant of summary judgment on any ground fairly supported by the record.” Alliance Metals, Inc., of Atlanta v. Hinely Indus., Inc. , 222 F.3d 895, 900 (11th Cir. 2000). “[P]arti es whose conflict a

rises out of a funds tr

ansfer should look fir

st and foremost to Article 4-A for guidance in bringing and resolving their claims . . . .” Sheerbonnet, Ltd. v. Am. E xpress Bank, Ltd. , 951 F. Supp. 403, 407 ( S.D.N.Y. 1995). Regions’s c

laims are base

d on Morningstar’s d

irection to Fleet B ank to transfer funds, illegally obtained from Regions, to Morningstar’s DDA at Provident. Because the wire transfers at issue here occurred via the Federal Reserve Wire Transfer Netw ork, or “Fedw

ire,” which is ow

ned and operated by the Federal Rese

rve Banks, Subpar

t B of Federal Re serve Regulation J (“Regulation J”), 12 C.F.R. §§ 2 10.25-210.32, appl ies. See id . § 210.25(a) (“ This subpart provides rules to govern fun ds transfers throug h Fedwire . . . .”). Moreover, Regulation J “incorporates the provisions of Article 4A” of the U.C.C. as set forth in the Reg ulation, id . § 210.25(b)(1), and “governs the

rights and obligations of,” inter alia , “parties to a funds transfer any part of which is carried8 “ Payment order mea ns a n in str uct ion of a s end er t o a re cei vin g ban k, t rans mit ted oral ly, electronically

, or in writing, to p

ay, or to ca

use another bank

to pay, a fixe

d or determinable amount of money to a beneficiary . . . .” U.C.C. § 4A-103(a)(1).

9 “ Beneficiary

means the person to be paid by the beneficiary’s bank.” U.C.C. § 4A103(a)(2).

10 “ Beneficiary’s bank

means the bank identified in a payment order in which an account of the beneficiary is to be credited pursuant to the order or whic h otherwise is to make payment to the beneficiary if the order does not provide for payment to an account.” U.C.C. § 4A103(a)(3).

11 “ Receiving bank

means the bank to which the sender’s instruction is addressed.” U.C.C. § 4A-103(a)(4).

12 “ Sendermeans the person giving the instruction to the receiving bank.” U.C.C. § 4A103(a)(5). 13 out t hrou gh Fed wire. . . . “ Id . § 210.25(b)(2)(v). See also Grossman v. Nationsbank, N.A. , 225 F .3d 12 28, 12 32 (11 th Cir . 2000 ) (per curia m) (“Regulation J applies U.C.C.Article 4A to wi re transfers cond

ucted using Fedwire.”).Accordingly, the provisions of Art

icle 4A, as incor

porated to funds transfers using Fed

wire via Regulati

on J, apply to the circumstance s before us. Section 4A-103 of A

rticle 4A defines

various terms t

hat are used within the Article such as payment order 8 , beneficiary 9 , beneficiary ’s bank 10 , receiving bank 11 , and sender 12 . Under Articl e 4A, Provident w

as the beneficiar

y’s bank and the receiving bank w

hen it received the payment or der from Fleet Bank, the sender , on beh alf of Mo rnings tar, the benefi ciary. The rules that em

erged during the dra

fting of the U.C. C. “are inte nded to be14

the exclusive means of determining the rights, duties and liabilities of the affected parties in any situation co vered by partic

ular provisions of the

Article .” U.C.C. § 4A-102 cmt. (emphasis adde d). However,

Article 4A is not t

he “exclusive means b y which a plai ntiff can se ek to r edres s an al leged harm ar isin g from a funds transfer.” Sheerbonnet , 951 F. Supp. at 409. See also J.J. White & R.S. Summers, Uniform Com

mercial Code , §§ 1-2, at 132 (1993 pocket part) (“ With the adoption of Artic

le 4A, electroni

c funds transactions

are governed not only

by Article 4A, but a

lso common l

aw . . . .”) . “The Art

icle itself is repl

ete with references to common law rem edies.” Sheerbonnet , 951 F. Supp. at 4 08. “[T] he Drafting Com

mittee intende

d that Article 4A would be suppleme nted, enhanced, and in some places, superceded by other bodies of law . . . the Article is intended to synergize with other l egal doctrines.” T.C. Baxte r & R. Bhala, The Interrelationship of Article 4A with Other Law , 45 Business Lawy er 1485, 1485 (1990). “The

legislative intent r

eflected here is t

hat carefully

drafted provisions . . . are not to be

side-stepped when c

onvenient by ref

erence to other sour

ces of law. But where

the provisions do not vent ure, the claim

ant need not turn back; he or she may seek other guides, statutory or judicial.” Sheerbonnet , 951 F. Supp. at 408. Therefore, the only restraint on a plaintiff is that “resort to principles of law or equity outside o f Article 4A is no t appropriate to cr

eate rights, duties

and13 Section 4A-209 g overns accepta

nce of a pay

ment order and re

ads in pertinent pa

rt: (a) Subject to subsection (d), a receiving bank other than the beneficiary 's bank accepts a payment order when it executes the order. (b) Subject to subsections (c) and (d), a beneficiary's bank accepts a payment order at the ear

liest of the followi

ng times: (1) when the bank (i) pays the beneficiary as stated in Section 4A-405(a) or 4A-405(b), or (ii) notifies the beneficiary of rece ipt of the order or that the account of the beneficiary has been cre dited with respect to the order unless the notice indicates

that the bank is re

jecting the orde

r or that funds with

respect to the order may not be withdrawn or used until receipt of pay ment from the sender of the order; (2) when the bank receives payment of the entire a mount of the sender's order pursuant to Section 4A-403(a)(1) or 4A-403(a)(2).

14 Section 4A-502 g

overns set off by

a beneficiary

’s bank and read

s in pertinent par

t: (c) If a beneficiary

's bank has received a payment order f or payment to the ben efi cia ry's a ccou nt i n th e ban k, t he fo llo win g rul es ap ply: (1) The bank may credit the beneficiary 's account. The amount credited may be set off against an o

bligation owed by

the beneficiar

y to the bank

or may be ap

plied to satisfy cre

ditor process ser

ved on the bank with

respect to the ac

count. 15 liabilities inconsistent

with those stated in t

his Article.” U .C.C. § 4A-102 c mt. (emphasis added). The parties do not dis

pute that Provident complied with the relevant provisions of the U.C.C. in accepting the transfer 13 and setting off the f unds 14 to credit the debt owe

d to Provident by M

orningstar. Region

s argues that the “[p]rovision

s of Article 4A de

al with allocation o f risk and responsibil ity” with regards to claim

s based on mistake

and error and that “ [n]othing in Artic le 4A suggests that the draf

ters intended it to insu

late a wrongdoer f

rom liability

in connection with funds

transfers that w

ere effectuate

d as intended.” Pr

ovident asserts that the text of Article 4A and the official commentary do not suggest that16

Article 4A is limited to clai ms based on mistake and errors. Article 4A is sile

nt with regard to cl

aims based on the

theory that the beneficiary b ank accepted funds w hen it knew or should ha

ve known that the funds were fraudulently obtained. Therefore, a provision of state law that requires a receiving or bene ficiary bank to disgorge funds th at it knew or should ha

ve known were obtaine

d illegally whe

n it accepted a wir

e transfer is not inc

onsistent with the goals or pro visions of Article 4 A. The U.C.C. supports this co nclusion. Article 4A defin

es good faith as “

honesty in fact a

nd the observance of reasonable

commerc ial standards of fa

ir dealing.” U. C.C. § 4A-105(6) . The U.C.C . also provides that “[e]very contr act or duty with

in [the U.C.C. ] imposes an obligation of good faith in its performance or enforcement.” Id . § 1-203. Furthermore, we are mindful that the Supreme Court has repeatedly held that “ [i]f possible, [a court] should avoid construing [a] statute in a way that produces [] absurd results.” Dewsn up v. T imm , 502 U.S. 410, 427 (1992 ). See also United States v. Granderson , 511 U.S. 39, 4 7 n.5 (1994) (refus ing to apply a “

plain meaning” interpretation of a sentencing proviso when such an interpretation “leads to an absurd result”). Inte rpreting Article 4A in a manner that would allow a beneficiary bank to accept funds when it knows or should know that they were fraudulently obt

ained, would allow

banks to use Article

4A as a shield for17

fraudulent activity. It could hardly have been the intent of the drafters to enable a party to succee

d in engaging in fraudul

ent activity, so long as it compli ed with the provisions of Arti cle 4A. Regions argues that i

t presented suffic

ient facts to dem

onstrate that there

is a genuine issue of fa

ct in dispute regardi

ng whether Provide

nt knew or should have known that the funds it received by Morn ingstar were obtained by fraud. Regions bases its state law claims on the fundamental principle of property law that “no one can obtain title to stolen property[,] . . . however innocent [a buy er] may have be

en in the purchase; pu

blic policy forbids the acquisition of t itle through the thief.” Pate v. Elliott , 400 N.E.2d 910, 912 (Ohio Ct. App. 1978) (per curiam) (quot

ing Ogden v. Ogden , 4 Ohio St. 182, 195 (1854)). This rule applies to the theft of goods or chattels but does not apply to the transfer of money. In Ohio, “[t]he general rule, as evidenced by the great weight of authority , is that only bad faith on th

e part of a third per

son receiving stolen m

oney, or his fa

ilure to pay valuable con

sideration therefo

r, will defeat h

is title thereto as a

gainst the true owner.” Hinkle v. Cornwe ll Quality Tool

Co. , 532 N.E.2d 772,

777 (Ohio App. 1987). See also Newpowe r v. Boyd , 233 F.3d 922, 930 (6 th Cir. 2000) (explaining that if a

n embezzler p

urchases an item

from a good fai

th seller with stolen funds, the seller “obtains good title to the money the thief provides”);15 Provident urges this court to require only actual knowledge of f raudulent activity, but cites to no authority supporting this definition of good faith. 18 Ogden , 4 Ohio St. at 195 (stating that one can not take title from a thief, “m oney and bank notes po ssibly excepted”). Had Provident known or had reason to know that the funds it received from Mor ningstar were obta

ined by fraud, it could not have obtained title to the funds upon acceptance of the wire transfer from Fleet Bank because it wou

ld have acted in bad f

aith. 15 Regions claims,

inter alia, that P

rovident is civilly

liable for recei

ving property stolen f

rom Regions. U

nder Ohio law, “ [a]nyone inj ured in person or property by a criminal ac t has, and may

recover full dam

ages in, a civil ac

tion unless specifically

excepted by law.” Ohio Rev. Cod e Ann. § 2307.60 (W

est 2003). It is a criminal act to “receive, retain, or dispose of property of another knowing or having reasonable cause to believe that the property has been obtained through comm

ission of a theft off

ense .” Id. § 2913.51 (empha sis added). Exer

tion of control of the property or services of another “ [b]eyond the scope of the express or implied co nsent of t he owner or p erson auth orized to g ive consen t,” or “[b]y deception” is a thef

t offense under Ohio l aw. Id. § 2913.02. A beneficiary bank accepts a payment order w hen the “bank receives payment of

the entire am

ount of the sender’ s order.” U.C. C. § 4A-209(b)(2)19

(2003). Provident a

ccepted paym

ent orders from

Fleet Bank and deposited the funds into the DDA held by Morningstar at Provi dent, on April 11 and 13, 2000. Title to funds in a wire transfer passes to the beneficiary b ank upon acceptance of a payment order. See United States v. BCCI Hold ings (Luxembourg), S.A. , 980 F. Supp. 21, 27 (D.D.C. 1997) (“Because an accepted transfer cannot be revoked without the consent of the beneficiary, and the beneficiary bank incurs an obligation to the benef

iciary upon acceptance of the funds , the ownership inte rest in those funds must

pass from the or

iginator upon comp

letion of the funds transfer.”) (quotatio n marks and citations omitt ed). See also United States v. BCCI Holdings (L

uxembourg), S .A., et al. ( In re Petition of P acific Bank) , 956 F. Supp. 5, 11 (D.D .C.1997) (sam e); Official Co

mment of U .C.C. § 4A-102 (explaining that in the drafting of Article 4A, substantial consideration was given to policy goals of assigning responsibilit y, allocating r

isks, and predicting risk with certainty

in electronic fund w

ire transactions) . If Provident re ceived the payment or

der without “kno

wing or having reaso

nable cause to belie

ve that the property [had] been obtained through commission of a theft offense,” Ohio Rev. Code Ann. § 2913.51,

title to the funds law

fully passed to P

rovident on April 11 and 13, 2000, upon its a

cceptance of the pa

yment orde

rs on behalf of Morningstar’s DDA.16 The April 13, 2000 payment order was received by Provident on behalf of Morningstar’s DDA the same date as the 5:42 p.m. phone call. However, Regions has not adduced any evidence that the phone call was made be fore Provident accepted the payment order. 20 Regions conceded dur

ing oral argume

nt that the phone call f

rom Ms. Robison of Fleet Ban

k on April 13, 2000 at 5 :42 p.m. to an e mployee at

a suburban Cincinnati branch of Provident Bank, “was indeed the first direct statement from someone to Provident Bank that the particular wires at issue wer e potentially fra

udulent or the product o f criminal ac tivity.” How

ever, this phone call occurred after

both payment

orders were re

ceived by Provid

ent on behalf of Morningstar’s DDA. 16 To state a valid cl aim requiring d

isgorgement of t

he funds wired to Provident,

Regions was requir

ed to demonstrat

e that Provident knew

or had reasonable cau

se to believe that it w

as receiving frau

dulently obtained funds before it received the wire tran sfers and acquired ti tle to the funds. Regions contends that t

here were a num

ber of “red f

lags” raised by Morningstar’s con

duct before 5:42 p.m

. on April 13, 2000,

which gave notice to Provident that the f

unds coming into Mor

ningstar’s accoun

t were the product

of fraudulent or criminal activity. Regions notes that Provident knew that Morningstar failed

to make prom

pt payments on the loans from the Provident Wareho use Li ne or t o sell the ou tstan ding loans to in vesto rs wit hin t he time periods required by

the loan agreem

ents. The fact t

hat Morningstar fre

quently21

missed the deadl

ines imposed by

Provident shows that

Morningstar engaged

in poor business or accounting practices, but not fraud. Provident’s awareness that the FBI was invest

igating whether Mor

ningstar had forged M

r. Jiras’s signa

ture on loan closing documents submitted to Provident does not demonstrate that the money subsequently paid by Morningstar to Provident to repay the loans was obtained by fraud. The re cord s hows t hat Pr ovid ent kn ew tha t Morn ings tar us ed the same collateral to obtai

n funding from bot

h Provident and First

Union. This knowle

dge was not sufficient to put Provident on notice that the money it received was obtained by frau

d. These so-call

ed “red flags”

were sufficient

to demonstrate

to Provident that Morningstar was an inept business entity with questionable ethical standards which prom

pted Provident to dem

and payment

of all outstanding loan

s made to Morningstar. None of these facts is evidence that the wire transfers transmitted by

Fleet Bank were

obtained by fra

ud. The record shows t

hat Morningstar infor

med Provident th

at it planned to liquidate certain of

its assets in order t

o pay off its debt. Regions has not demonstrated th

at Provident knew or

should have known that M orningstar did not possess sufficien t assets to cover its business losses

. Both payment orders sent by Fleet Bank to Morningstar’s DDA identified22

Morningstar’s account number at Provident and “Morningstar Real Estate & Mortgage Financing Corp.” as the beneficiary of the funds. The paym ent order from April 12, 2000, also contained a line stating “Orig to BNF info: Re: Aguado–Morningstar M

ortgage Bankers,

Inc.” The pay

ment order fr

om April 13, 2000, contained a line

stating that “O

rig to BNF info: Re

Graziosi $162,000 Crawford $465,000 .” Regions contends that because Aguado , Crawford and Graziosi were n

ot individuals who had r

eceived loans from

the Provident Warehouse line, the fact that their names were m entioned on the payment orders from Fleet B ank to Provident was sufficient to put Pr

ovident on notice that t

he funds it was accept

ing had originated wi

th the intent of funding

loans separate from the Provident Warehouse Line. However, “ [w]hen a transfer order identifies the beneficiary

by an account num

ber, the receivi

ng bank may r

ely on the accoun

t number in credi

ting the account even though the transfer o rder identifies a person different from the holder of the account,” Eisenberg , 301 F.3d at 223, “ if the Federal Reserve Bank do es not know of such an inconsistency in ide ntification,” 12 C.F.R. § 210.27. See also Eisenberg , 301 F.3d at 223 (hol ding that a defendant was not liable for v

iolating the U.C. C. when the defe ndant relied on the ac

count numbe r stat ed on the pa yment o rder t o cred it th e acco unt, i nstea d of th e name designated by the

wire instructions) . “A Feder al Reserve Bank ha

s no duty to23

detect any such inconsistency in identification [of an account holder].” 12 C.F.R. § 210.27. Here, the pay

ment order accurately ident ified Morningstar a

s the holder of the account. The payment orders contained only a cry ptic reference to the names Aguado, Crawfo

rd and Graziosi. The paym ent orders did not stat

e that Regions had provided the funds to W&M to loan to these individuals. Regions has failed to cite any authority for the proposition that a beneficiary’s bank must conduct an investigation into nam

es that appear on a p ayment ord er where the holde

r of the account is correct

ly identified. The fact that the names Aguado,

Crawford and Graziosi appeare

d on the paym

ent orders from

Fleet Bank to Provi

dent is insufficient evidence to conclude that Provident knew or should have known that the funds were obtain ed illegally. Martin J. Weis s, Warehouse O perations Manager for Provi

dent’s Wareho

use Funding Division te stified at his depositi on that “when someone from the warehouse division were [sic] loo king at a DDA

account . . . one

reviewing the account . . . would only see debits and credi

ts, deposits and withdraw

als” and one would not be able to “dete rmine the m

ethod by which the money showed up in t he DDA account.” Because the “

red flags” identif

ied by Regions ar

e insufficient as a

matter of law to prove that Pr

ovident “[knew

] or [had] re

asonable cause to be

lieve that the17 “[C]onversion is the wrongful exercise of dominion over property to the exclusion of

the rights of the

owner, or withhold

ing it from his posse

ssion under a clai

m inconsistent with h

is rights.” Joyce v. Gen. Motors Corp. , 551 N.E.2d 172, 175 (Ohio 1990).

18 Under Ohio law, a defendant may be liable for unjust enrichment whe n (1) the plaintiff has conferred a benefit on the defendant, and (2) the plaintiff has such superior equity under the circumstances that it would be unconscionable for the defendant to retain the benefit. Cincinnati v. Fox , 49 N.E.2d 69, 73 (Ohio Ct. App. 1943).

19 The law of set-off in Ohio is that "[a] Bank, even though it has no knowledge, either express or implied, t

hat another than t

he depositor has a

n interest in the fu

nds deposited in his own name, cannot apply such funds to the individual indebtedness to it of the depositor, where such lack of knowledge has not resulted in any chang e in the Bank's position and no superior equities have been raised in its favor.” Federal Ins. Co. v. Fifth Third Bank , 867 F.2d 330, 335 (6th Cir. 1 989) (quot ing Kull v. North High Sav. & Loan Co. , 21 Ohio Law A bs. 172, 176 (Ohio Ct. App. 1935) (citation omitted)).

24 [funds had] been ob

tained through com

mission of a thef

t offense,” Ohio

Rev. Code Ann. § 2913.51,

Provident would not be

liable for recei

ving stolen property under Ohio law. Regions also asserte

d claims of conve

rsion, 17 unjust enrichm

ent, 18 and unlawful set-off 19 against Provident. Since one acting in g ood faith may

obtain title to money from a thief, Hinkle , 532 N.E.2d at 777, Provident obtained legal title to the funds whe

n it accepted the w

ire transfers fr

om Fleet Bank o

n April 11 and 13, 2000. Following Provident’s acceptance of the funds transferred by Fleet Bank, Regions no lo nger had title to th ose funds. See Shawmut Wo rcester County Bank v. First Am

. Bank & Trust, 731 F. Supp. 57, 60 (D. Mass. 1990)

(holding that the comple

tion of a wire tra

nsfer extinguishes the

originator’s own

ership25

interest in the funds). When Provident debited Morningstar’s account and credited the warehouse line

on April 12 and 14, 2000 , Provident’s pos sessory intere st in the funds was superior to Regions’s. Because Regions has not demonstrated that Provident acted in ba

d faith, Regions has

failed to prove an e ssential eleme nt of each of its state law clai ms. CONCLUSION We agree with Regions’s assert ion that Article 4A

does not preempt

a state law claim if

money is tr

ansferred by w

ire to a party t

hat knows or should have known that the funds w

ere obtained illega

lly. Nonethel

ess, we are per

suaded from our independent review of the record that Regions has failed to present evidence demonstrating th

at there is a genuine

issue of fact rega

rding whether Prov

ident knew or should have known that the funds it received from Morningstar had been fraudulently obt

ained. Such proof w

as necessary t

o support a judgm

ent on each of Regions’s state law clai ms. See Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986) (stating that there can be “no genuine issue as to any material fact,” when the non-moving party has failed to prove an essential element of its case) (quotation mark

s omitted); Johnson v. Bd. of Regents of Univ. of Ga. , 263 F.3d 1234, 1243 (11th Cir. 2001) (stating that sum mary jud gment is proper “against a party who fails to make a showing sufficient to establish the existence of an26

element essential to that party's case, and on which that party will bear the burden of proof at trial”) (qu otation mark s and citat ion omitted ). The distr ict court’s decision to grant Provident’s motion for su mmary judgment is AFFIRMED.