Title: Schlegel v. Bank of America
Citation: N/A
Docket Number: 051651
State: Virginia
Issuer: Virginia Supreme Court
Date: April 21, 2006

Present:  Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and 
Lemons, JJ., and Compton,∗ S.J. 
 
KURT G. SCHLEGEL 
 
v.  Record No. 051651  OPINION BY JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
 
    April 21, 2006 
BANK OF AMERICA, N.A., ET AL. 
 
FROM THE CIRCUIT COURT OF THE CITY OF CHARLOTTESVILLE 
Edward L. Hogshire, Judge 
 
This appeal involves a funds transfer made pursuant to 
alleged unauthorized payment orders and the receiving 
bank’s subsequent freezing of the transferred funds without 
refunding them to the customer’s account.  The primary 
issue concerns whether Code § 8.4A-204(a) preempted certain 
common law claims asserted as a result of the unauthorized 
payment orders and the freezing of the funds.  Because the 
unauthorized payment orders are covered by Code § 8.4A-
204(a), the common law claims pertaining to that 
transaction are preempted.  Proceeding on the common law 
claims relating to the subsequent freezing of the funds, 
however, would not create rights, duties, and liabilities 
inconsistent with the provisions of Title 8.4A.  Thus, 
those claims are not preempted.  We will therefore affirm 
                     
∗ Senior Justice Compton participated in the hearing 
and decision of this case before his death on April 9, 
2006. 
 
2
in part and reverse in part the judgment of the circuit 
court. 
I. RELEVANT FACTS AND PROCEEDINGS 
 
The funds at issue in this appeal were transferred 
from a corporate bank account in the name of Piedmont 
Building & Development Corporation (Piedmont).  The 
appellant, Kurt G. Schlegel, and his uncle, Christopher C. 
Grieb, were the corporation’s only shareholders, with each 
owning 50 percent of the company’s stock.  In 1999, 
Schlegel, in his capacity as president and acting secretary 
of Piedmont, opened a corporate checking account with a 
bank that is apparently a predecessor in interest to the 
appellee, Bank of America, N.A., (the Bank).  The corporate 
signature card listed only Schlegel as having authority to 
access the Piedmont account.  The corporate resolution 
authorizing the opening of the account, however, listed 
both the president and chief executive officer as the 
corporate officials having the power to act on behalf of 
Piedmont with respect to the bank account. 
Less than a year earlier, in a corporate resolution 
authorizing the opening of a different account for Piedmont 
at the Bank, Grieb was listed as chairman of Piedmont and 
was one of the persons authorized to access that particular 
bank account.  Schlegel admitted that he never notified the 
 
3
Bank that the authority granted to Greib pursuant to the 
earlier corporate resolution had been revoked. 
 
At some point, Schlegel and Grieb disagreed about the 
control and ownership of Piedmont.  Schlegel sold property 
owned by Piedmont and deposited the sale proceeds into the 
Piedmont bank account at issue in this appeal.  In November 
2001, after Grieb learned of the transaction, he contacted 
the Bank, in his capacity as chairman and chief executive 
officer of Piedmont, and initiated two payment orders 
against Piedmont’s bank account.  Grieb instructed the Bank 
to transfer all funds in excess of $5,000 from Piedmont’s 
account to his personal account at the Bank.  Pursuant to 
those payment orders, the Bank transferred $65,655.48 from 
Piedmont’s bank account to Grieb’s personal bank account. 
 
After the transfer of Piedmont’s funds, Schlegel 
notified the Bank orally and in writing that the payment 
orders were unauthorized because Grieb was no longer 
affiliated with Piedmont and had no authority to send the 
payment orders.  On November 19, 2001, in response to 
Schlegel’s complaint, the Bank placed a “hard hold” on the 
funds it had transferred to Grieb’s account, with neither 
Schlegel nor Grieb allowed access to the funds.  The funds, 
however, remained in Grieb’s bank account. 
 
4
 
In February 2002, Grieb filed a suit against Schlegel 
to dissolve Piedmont.  Schlegel and Grieb eventually 
settled the suit by agreeing, among other things, that each 
would receive 50 percent of the funds frozen by the Bank.  
The Bank then offered to distribute the frozen funds 
according to the settlement between Schlegel and Grieb, 
provided the Bank could recover a portion of its attorney’s 
fees and be dismissed from further liability.  An agreement 
was not reached on the Bank’s request. 
 
Instead, Schlegel pursued the suit he had filed 
against the Bank in December 2002, seeking damages for 
conversion, breach of contract, and violation of Code 
§ 8.4A-204 for the unauthorized payment orders.1  Schlegel 
alleged that the Bank not only transferred funds from 
Piedmont’s corporate bank account without authority to do 
so, but also wrongfully froze the funds, thereby depriving 
Piedmont of the use of its property.  In response, the Bank 
filed an answer, a cross-bill for interpleader of the 
frozen funds, and a third-party cross-bill against Grieb 
                     
1 Schlegel alleged that Piedmont had assigned its cause 
of action against the Bank to him and he was therefore 
bringing the suit in his own name. 
Schlegel filed a motion for leave to file an amended 
bill of complaint.  Although the Bank had no objection to 
Schlegel’s motion, the circuit court never entered an order 
granting the motion. 
 
 
5
for indemnification and/or contribution.  Grieb denied any 
liability to the Bank. 
 
The Bank subsequently filed a motion for summary 
judgment with regard to Schlegel’s suit and its cross-bill 
for interpleader.  The Bank argued that Code § 8.4A-204 
preempted Schlegel’s common law claims and provided the 
exclusive remedy for the alleged unauthorized payment 
orders.  The Bank asked the circuit court to order that the 
frozen funds be distributed between Schlegel and Grieb and 
to permit it to recover its attorney’s fees from the funds 
before distribution.  Schlegel filed a cross-motion for 
summary judgment with regard to the Bank’s cross-bill for 
interpleader, asking that the Bank be required to return 
the funds transferred from Piedmont’s bank account and pay 
attorney’s fees and costs.  Schlegel also requested that a 
trial date be set for his claims against the Bank for 
conversion and breach of contract.2 
In a letter opinion, the circuit court identified two 
issues based on the cross-motions for summary judgment:  
(1) whether Code § 8.4A-204 preempted Schlegel’s common law 
claims for conversion and breach of contract; and (2) 
                     
2 Grieb also filed a motion for summary judgment, 
stating that the Bank’s claim against him should be 
dismissed if summary judgment were granted in favor of the 
Bank. 
 
6
whether the Bank was entitled to an award of attorney’s 
fees under its cross-bill for interpleader.  As to the 
first issue, the circuit court concluded that Schlegel’s 
allegations fell “squarely within the confines” of Code 
§ 8.4A-204 and that his common law claims were, therefore, 
preempted by that statute.  On the second issue, the 
circuit court, exercising its discretion to award 
attorney’s fees and costs in an interpleader action when 
the plaintiff has acted in good faith, see Pettus v. 
Hendricks, 113 Va. 326, 332, 74 S.E. 191, 194 (1912), 
decided that the Bank should be awarded reasonable 
attorney’s fees and costs.  Thus, the court granted the 
Bank’s motion for summary judgment and denied both 
Schlegel’s and Grieb’s motions for summary judgment. 
After receiving evidence on the issue of attorney’s 
fees, the circuit court, in a separate letter opinion, 
directed that the interpleaded funds be divided equally 
between Schlegel and Grieb.  The court, however, awarded 20 
percent of the interpleaded funds to the Bank as its 
attorney’s fees.  The court found that the Bank had filed 
its cross-bill for interpleader a month after Schlegel and 
Grieb settled the suit between them but that resolution of 
the interpleader was delayed because Schlegel pursued his 
claims for breach of contract and conversion.  In the 
 
7
court’s view, the Bank had been required to expend an 
“extraordinary amount of time and money in defending and 
prosecuting the interpleader.”  Thus, the court directed 
that the Bank collect 95 percent of its award for 
attorney’s fees from Schlegel’s share and 5 percent from 
Grieb’s share.  Schlegel now appeals the circuit court’s 
judgment. 
II. ANALYSIS 
On appeal, Schlegel challenges the circuit court’s 
conclusion that Code § 8.4A-204 preempted his common law 
claims and the award of attorney’s fees.  The circuit court 
decided the preemption issue on cross-motions for summary 
judgment.  When no material facts are genuinely in dispute, 
summary judgment is appropriate.  Former Rule 3:18 (now 
Rule 3:20); Thurmond v. Prince William Prof’l Baseball 
Club, Inc., 265 Va. 59, 64, 574 S.E.2d 246, 250 (2003).  
Since the circuit court’s ruling on that issue was 
predicated entirely on a question of law, this Court will 
review the decision de novo.  See Sheets v. Castle, 263 Va. 
407, 410, 559 S.E.2d 616, 618 (2002). 
On the other hand, the award of attorney’s fees to the 
Bank rested within the sound discretion of the circuit 
court.  See Coady v. Strategic Resources, Inc., 258 Va. 12, 
18, 515 S.E.2d 273, 276 (1999).  On appeal, we will set 
 
8
aside the circuit court’s determination on that issue only 
if the court abused its discretion.  See Holmes v. LG 
Marion Corp., 258 Va. 473, 479, 521 S.E.2d 528, 533 (1999). 
A. Code § 8.4A-204 and Preemption 
The question whether the provisions of Code § 8.4A-204 
preempted Schlegel’s common law claims for conversion and 
breach of contract is one of first impression in Virginia.  
Title 8.4A, which is essentially identical to Article 4A of 
the Uniform Commercial Code, governs a particular method of 
payment generally referred to as a funds transfer.  Code 
§ 8.4A-102 cmt.; see also Fitts v. AmSouth Bank, 917 So.2d 
818, 822 (Ala. 2005).  The term 
 
“[f]unds transfer” means the series of transactions, 
beginning with the originator’s payment order, made 
for the purpose of making payment to the beneficiary 
of the order.  The term includes any payment order 
issued by the originator’s bank or an intermediary 
bank intended to carry out the originator’s payment 
order.  A funds transfer is completed by acceptance by 
the beneficiary’s bank of a payment order for the 
benefit of the beneficiary of the originator’s payment 
order. 
 
Code § 8.4A-104(a).  In pertinent part, the term “[p]ayment 
order” is defined as “an instruction of a sender to a 
receiving bank, transmitted orally, electronically, or in 
writing, to pay, or to cause another bank to pay, a fixed 
or determinable amount of money to a beneficiary.”  Code 
§ 8.4A-103(a)(1). 
 
9
 
In the funds transfer at issue in this appeal, Grieb’s 
instruction to the Bank to transfer money out of Piedmont’s 
account to his personal account was a “payment order.”  See 
Code § 8.4A-104 cmt. 1.  Grieb was the “sender” of the 
payment order, and the Bank was the “receiving bank.”  See 
id.; Code §§ 8.4A-103(a)(4) and (5) (defining the terms 
“receiving bank” and “sender”).  Grieb, in his individual 
capacity, was the “beneficiary” of the payment order, and 
the Bank was the “beneficiary’s bank.”  See Code § 8.4A-104 
cmt. 1; Code §§ 8.4A-103(a)(2) and (3) (defining the terms 
“beneficiary” and “beneficiary’s bank”).  In this funds 
transfer, there was no “[i]ntermediary bank.”  See Code 
§ 8.4A-104(b). 
 
The statute forming the basis of the circuit court’s 
decision, Code § 8.4A-204(a), provides: 
 
If a receiving bank accepts a payment order 
issued in the name of its customer as sender 
which is (i) not authorized and not effective as 
the order of the customer under § 8.4A-202, or 
(ii) not enforceable, in whole or in part, 
against the customer under § 8.4A-203, the bank 
shall refund any payment of the payment order 
received from the customer to the extent the bank 
is not entitled to enforce payment and shall pay 
interest on the refundable amount calculated from 
the date the bank received payment to the date of 
the refund.  However, the customer is not 
entitled to interest from the bank on the amount 
to be refunded if the customer fails to exercise 
ordinary care to determine that the order was not 
authorized by the customer and to notify the bank 
of the relevant facts within a reasonable time 
 
10
not exceeding 90 days after the date the customer 
received notification from the bank that the 
order was accepted or that the customer’s account 
was debited with respect to the order.  The bank 
is not entitled to any recovery from the customer 
on account of a failure by the customer to give 
notification as stated in this section. 
 
 
This statutory provision provides a customer, such as 
Piedmont (and now Schlegel, through assignment of 
Piedmont’s claim), with a remedy for acceptance of an 
unauthorized payment order.  The remedy is a refund of the 
amount wrongfully transferred plus interest if the customer 
exercised ordinary care to determine that the payment order 
was unauthorized and so notified the receiving bank within 
a reasonable time.  Id.  The question, however, is whether 
that is the only remedy for acceptance of an unauthorized 
payment order.  The Bank argues that it is the sole remedy 
because Code § 8.4A-204(a) expressly addresses a customer’s 
rights in the event of an unauthorized payment order and 
thereby preempts any common law remedy. 
 
Even though the circuit court concluded that the 
provisions of Code § 8.4A-204(a) preempted Schlegel’s 
common law claims for conversion and breach of contract, 
the court nevertheless recognized that some courts have 
allowed common law claims to proceed when the claims fell 
outside the particular situation covered by Code § 8.4A-
204(a).  We agree that certain common law claims may not be 
 
11
preempted by Title 8.4A, but we disagree with a portion of 
the circuit court’s decision in this case. 
 
In Centre-Point Merchant Bank Ltd. v. American Express 
Bank Ltd., 913 F.Supp. 202, 204 (S.D.N.Y. 1996), the court 
addressed two separate claims, one being that American 
Express had failed to debit Centre-Point’s account and 
reinvest the funds as instructed by a “telex” communication 
and the other claim being that American Express had 
transferred funds from Centre-Point’s account pursuant to a 
fraudulent payment order.  With regard to the first claim, 
the court held that the “rollover” instructions were not 
“payment orders” within the meaning of Article 4A of New 
York’s Uniform Commercial Code.  Id. at 207.  As to the 
second claim, the court found that the fraudulent payment 
order did fall within the scope of Article 4A.  Id. 
 
The next question for the court was whether Article 4A 
provided the exclusive remedy for the injury caused by the 
fraudulent payment order.  Id. at 208.  The court concluded 
that the claim involved an alleged breach of a duty to 
provide commercially reasonable security procedures to 
verify payment orders.  Id.  Therefore, the claim concerned 
a transaction covered by Article 4A and would determine the 
rights, duties, and obligations of the parties to the 
transaction.  Id.  Thus, the court decided that the claim 
 
12
for the fraudulent payment order was precluded by Article 
4A.  Id.; see also Fitts, 917 So.2d at 825 (common law 
claims for breach of contract, negligence, suppression, 
wantonness, and conspiracy were all based on an improper 
funds transfer and were thus preempted by Article 4A). 
 
Explaining its decision, the court quoted extensively 
from the holding in Sheerbonnet, Ltd. v. American Express 
Bank, Ltd., 951 F.Supp. 403 (S.D.N.Y. 1995): 
 
While Article 4-A should be the first place parties 
look for guidance when they seek to resolve claims 
arising out of a funds transfer, “the article has not 
completely eclipsed the applicability of common law in 
the area.  The exclusivity of Article 4-A is 
deliberately restricted to ‘any situation covered by 
particular provisions of the Article.’  Conversely, 
situations not covered are not the exclusive province 
of the Article.”  In fact, the Official Comment 
tacitly states that resorting to principles of law or 
equity outside of Article 4-A is acceptable, so long 
as it does not create rights, duties and liabilities 
“inconsistent with those stated in this Article.” 
 
Centre-Point, 913 F.Supp. at 206 (quoting Sheerbonnet, 905 
F.Supp. at 407-08). 
 
In contrast, the court in Hedged Investment Partners, 
L.P. v. Norwest Bank Minnesota, N.A., 578 N.W.2d 765, 771 
(Minn. Ct. App. 1998), held that certain claims arising 
from unauthorized funds transfers were not preempted by 
Article 4A of Minnesota’s Uniform Commercial Code.  At 
issue were 26 funds transfers that allegedly were not 
authorized under an Agency Agreement between a limited 
 
13
partnership and a bank.  Id. at 769.  The court concluded 
that the contractual responsibilities at issue were not 
excluded by Article 4A because the Agency Agreement 
addressed fiduciary responsibilities that went beyond the 
scope of funds transfers.  The court stated that  
the exclusivity of Article 4A is restricted to 
situations that are covered by particular 
provisions of the Article and that principles of 
law and equity may be applied to disputes 
relating to funds transfers so long as those 
principles do not create rights, duties, or 
liabilities inconsistent with those stated in the 
Article. 
 
Id. at 771. 
 
 
In the case before us, Schlegel’s common law claims 
against the Bank involved two separate transactions.  The 
first one was the alleged unauthorized payment orders Greib 
sent to the Bank.  The provisions of Code § 8.4A-204(a) 
address a receiving bank’s liability if it accepts a 
payment order that is not authorized and not effective as 
the order of the customer.  The alleged unauthorized 
payment orders are a “situation covered by the particular 
provisions” of Code § 8.4A-204(a) and the remedy Schlegel 
seeks in his common law claims would conflict with the 
statutory remedy.  Code § 8.4A-102 cmt.; see Sheerbonnet, 
951 F.Supp. at 408, 410.  In other words, to allow Schlegel 
to proceed on his common law claims with regard to the 
 
14
unauthorized payment orders would “create rights, duties 
and liabilities inconsistent with those stated in” Code 
§ 8.4A-204(a).  Code § 8.4A-102 cmt.; see also Centre-
Point, 913 F.Supp. at 206; Fitts, 917 So.2d at 824.  
Therefore, his common law claims as they relate to the 
alleged unauthorized payment orders are preempted by the 
provisions of Code § 8.4A-204(a). 
 
We do not, however, reach the same conclusion with 
regard to Schlegel’s common law claims arising from the 
second transaction, i.e. the freezing of the funds without 
refunding them to Piedmont’s bank account.  Schlegel 
asserted that the Bank wrongfully exercised dominion and 
control over Piedmont’s funds when the Bank froze the funds 
instead of returning them after learning that the payment 
orders were not authorized.  According to Schlegel, that 
dominion and control over the funds continued when the Bank 
refused to disburse the frozen funds after Schlegel and 
Grieb resolved their differences about ownership of 
Piedmont and the transferred funds. 
The Bank nevertheless contends that, pursuant to its 
deposit agreement with Piedmont, it had the authority to 
freeze the funds at issue because of the dispute between 
Schlegel and Grieb.  Regardless of whether the Bank is 
correct, no provision of Title 8.4A covers the second, 
 
15
independent transaction by the Bank and Schlegel’s common 
law claims for conversion and breach of contract arising 
from that transaction.  We agree with the observations of 
the court in Sheerbonnet: 
 
The rules of [Article 4A] are transactional, aimed 
essentially at resolving conflicts created by 
erroneous instruction or execution of payment orders, 
whether by the originator, by an intermediary or 
receiving bank, or by the beneficiary’s bank.  A major 
objective is to reduce and control risks that arise in 
payment systems by defining when and how rights and 
obligations are incurred and discharged.  As organized 
by the article, funds transfer errors fall into three 
main categories.  Errors may occur during the issuance 
and acceptance of the payment order [as when the Bank 
in the instant case accepted Grieb’s alleged 
unauthorized payment orders], or [when the payment 
order] identifies the wrong beneficiary or . . . is 
untimely cancelled.  Errors may also occur during the 
execution of the payment order by the receiving bank – 
– as when the originator’s instructions are not 
followed, or the order is executed late, or is issued 
in an improper amount, or is not executed at all.  
Errors may also stem from payment issues – as in the 
obligation of the originator to pay the receiving 
bank, of the beneficiary’s bank to pay the 
beneficiary, and notification of payment and discharge 
of duties requirements. 
 
951 F.Supp. at 412. 
Schlegel’s common law claims as to the second 
transaction by the Bank do not fall within these categories 
of error.  In other words, the freezing of the funds in 
Grieb’s account instead of returning the funds to 
Piedmont’s account is not a situation covered by any of the 
particular provisions of Title 8.4A.  See Code § 8.4A-102 
 
16
cmt.  Thus, contrary to the circuit court’s finding, we 
conclude that Schlegel’s common law claims in this regard 
do not “fall squarely within the confines” of Code § 8.4A-
204 or any other provision of Title 8.4A.  These specific 
common law claims are not preempted, and the circuit court 
erred in finding otherwise. 
B. Attorney’s Fees 
With regard to the circuit court’s ruling on 
attorney’s fees, Schlegel argues not only that the Bank was 
not entitled to “any” attorney’s fees, but also that the 
award of 20 percent of the funds at issue was “speculative, 
excessive, and unreasonable.”  Schlegel also asserts that 
the circuit court erred in ruling that he was responsible 
for paying 95 percent of the attorney’s fee award. 
As the circuit court noted, we held in Pettus that 
when the plaintiff in the interplea has acted in 
good faith, and has grounds upon which to base 
his call for the interposition of a court of 
equity, requiring the adverse claimants to 
interplead, he is entitled to his costs out of 
the fund in his hands or which he may pay into 
the court.  And these costs may include an 
attorney’s fee. 
 
113 Va. at 332, 74 S.E. at 194 (quoting Woodmen of the 
World v. Wood, 75 S.W. 377, 378 (Mo. Ct. App. 1903)).  
Contrary to Schlegel’s argument, the principle announced in 
Pettus remains valid.  Applying that principle, we cannot 
 
17
say that the circuit court abused its discretion in 
deciding that the Bank was entitled to an award of 
attorney’s fees.  Considering the controversy between 
Schlegel and Grieb about the ownership of Piedmont and its 
assets, the Bank had grounds for filing its cross-bill for 
interpleader. 
We do not, however, reach the same conclusion with 
regard to the amount of the award.  Upon reviewing the 
Bank’s invoices itemizing its expenses for attorney’s fees, 
we find entries that relate solely to attorney’s fees 
incurred by the Bank for litigating the issues raised in 
Schlegel’s bill of complaint as opposed to the Bank’s 
cross-bill for interpleader.  For example, an entry for 
January 27, 2003 pertained to a conference concerning how 
to respond to Schlegel’s motion for leave to amend his bill 
of complaint.  As another example of many such entries, the 
Bank claimed attorney’s fees on April 27, 2004 for studying 
law review articles about Article 4A’s exclusivity. 
A party requesting an award of attorney’s fees must 
establish a prima facie case that the fees requested are 
reasonable.  Chawla v. BurgerBusters, Inc., 255 Va. 616, 
623, 499 S.E.2d 829, 833 (1998).  In deciding whether a 
party has shown the reasonableness of the fees, 
 
18
the fact finder may consider, inter alia, the 
time and effort expended by the attorney, the 
nature of the services rendered, the complexity 
of the services, the value of the services to the 
client, the results obtained, whether the fees 
incurred were consistent with those generally 
charged for similar services, and whether the 
services were necessary and appropriate. 
 
Id.  In the present case, the Bank did not carry its burden 
to establish “to a reasonable degree of specificity those 
attorneys’ fees associated with its [interpleader].”  Ulloa 
v. QSP, Inc., 271 Va. 72, 83, 624 S.E.2d 43, 50 (2006).  
Although the circuit court did not award the full amount of 
attorney’s fees requested because the Bank incurred many of 
the fees in defending against Schlegel’s claims, the court 
nevertheless did not determine whether the amount awarded 
represented compensation for services that were “necessary 
and appropriate” to the cross-bill for interpleader.  
Chawla, 255 Va. at 623, 499 S.E.2d at 833.  Thus, we 
conclude that the circuit court abused its discretion in 
awarding attorney’s fees to the Bank in the amount of 20 
percent of the funds at issue.3 
We likewise conclude that the circuit court abused its 
discretion in directing that 95 percent of the attorney’s 
                     
3 The Bank argues that it was also entitled to an award 
of attorney’s fees pursuant to the deposit agreement with 
Piedmont.  The terms of the deposit agreement do not change 
our conclusion that the circuit court abused its discretion 
in determining the amount of the award. 
 
19
fees awarded be deducted from Schlegel’s portion of the 
funds.  The circuit court believed that Schlegel was 
responsible for the Bank’s incurring the majority of the 
attorney’s fees because he protracted the litigation by 
filing numerous “ungrounded motions.”  The court, however, 
did not relate how those motions protracted resolution of 
the narrow issues involved in the cross-bill for 
interpleader in light of the fact that Schlegel and Grieb 
had reached a settlement that divided the funds at issue 
equally between them.  The order memorializing that 
settlement required the custodian for Piedmont to pay all 
outstanding expenses of Piedmont and then distribute the 
funds at issue to Schlegel and Grieb.  While the Bank’s 
expenditures for attorney’s fees might not have been an 
outstanding expense of Piedmont at the time the settlement 
order was entered, we find no reason why the award of 
attorney’s fees should not be paid in the same manner, i.e. 
by paying whatever amount is awarded to the Bank and then 
distributing the remaining funds equally between Schlegel 
and Grieb. 
III. CONCLUSION 
In summary, the circuit court did not err in 
concluding that Code § 8.4A-204(a) preempted Schlegel’s 
common law claims arising from the alleged unauthorized 
 
20
payment orders.  The circuit court, however, did err in 
finding that Code § 8.4A-204(a) preempted Schlegel’s common 
law claims for conversion and breach of contract arising 
from the Bank’s failure to return the funds to Piedmont’s 
bank account after it learned of the alleged unauthorized 
payment orders and the Bank’s alleged continuing dominion 
and control over the transferred funds. 
With regard to the award of attorney’s fees, we 
conclude that the circuit court did not abuse its 
discretion in finding that the Bank is entitled to an award 
for attorney’s fees incurred with respect to its cross-bill 
for interpleader.  However, the circuit court did abuse its 
discretion by awarding 20 percent of the frozen funds as 
attorney’s fees and by directing that Schlegel pay 95 
percent of the award from his portion of the funds at 
issue. 
For these reasons, we will affirm in part and reverse 
in part the judgment of the circuit court and remand for 
further proceedings consistent with this opinion. 
Affirmed in part, 
reversed in part, 
   and remanded.