Opinion ID: 1091092
Heading Depth: 1
Heading Rank: 5

Heading: Displacement by Article 4A of the Common-Law Claims

Text: AmSouth argued before the trial court that Article 4A displaced the Fittses' common-law claims. The trial court concluded that it did not need to address that argument because the statute of repose in § 7-4A-505, Ala.Code 1975, barred any claim not brought within one year of learning of an improper transfer. The Fittses argue that the trial court improperly imported the statute of repose from § 7-4A-505, Ala.Code 1975, and applied it to common-law claims that, the Fittses say, carry their own statute of limitations. We agree with the result reached by the trial court but not with its reasoning. If the one-year statute of repose is to be applied to bar the Fittses' common-law claims, then Article 4A must displace those common-law claims. In other words, the one-year statute of repose found in Article 4A cannot properly be applied to bar the common-law claims unless Article 4A displaces those common-law claims. We conclude that Article 4A has displaced those common-law claims. Article 4A of the UCC addresses Funds Transfers. As the Official Comment to § 7-4A-102, Ala.Code 1975, recognizes: The funds transfer governed by Article 4A is in large part a product of recent and developing technological changes. Before this Article was drafted there was no comprehensive body of law  statutory or judicial  that defined the juridical nature of a funds transfer of the rights and obligations flowing from payment orders. Judicial authority with respect to funds transfers is sparse, undeveloped and not uniform. Judges have had to resolve disputes by referring to general principles of common law or equity, or they have sought guidance in statutes such as Article 4 which are applicable to other payment methods. But attempts to define rights and obligations in funds transfers by general principles or by analogy to rights and obligations in negotiable instrument law or the law of check collection have not been satisfactory. In the drafting of Article 4A, a deliberate decision was made to write on a clean slate and to treat a funds transfer as a unique method of payment to be governed by unique rules that address the particular issues raised by this method of payment. A deliberate decision was also made to use precise and detailed rules to assign responsibility, define behavioral norms, allocate risks and establish limits on liability, rather than to rely on broadly stated, flexible principles. In the drafting of these rules, a critical consideration was that the various parties to funds transfers need to be able to predict risk with certainty, to insure against risk, to adjust operational and security procedures, and to price funds transfer services appropriately. This consideration is particularly important given the very large amounts of money that are involved in funds transfers. Funds transfers involve competing interests  those of the banks that provide funds transfer services and the commercial and financial organizations that use the services, as well as the public interest. These competing interests were represented in the drafting process and they were thoroughly considered. The rules that emerged represent a careful and delicate balancing of those interests and are intended to be the exclusive means of determining the rights, duties and liabilities of the affected parties in any situation covered by particular provisions of the article. Consequently, resort to principles of law or equity outside of Article 4A is not appropriate to create rights, duties and liabilities inconsistent with those stated in this article. This language suggests that if the situation made the basis of a dispute is addressed in Article 4A, then the provisions of Article 4A provide the exclusive rights and remedies of the parties involved. See also Corfan Banco Asuncion Paraguay v. Ocean Bank, 715 So.2d 967, 971 (Fla.Dist.Ct.App. 1998) (the Official Comment to § 102 of Article 4A of the UCC suggests the exclusivity of Article 4A as a remedy. Although the commentary to the UCC is not controlling authority, we are persuaded by the expressed intent of the drafters (citation omitted)). Because the situation made the basis of the Fittses' common-law claims  that AmSouth made an improper funds transfer  is unequivocally addressed in the particular provisions of Article 4A, we conclude that those common-law claims are displaced by Article 4A [7] and that the Fittses' exclusive remedy for that claim must be found in Article 4A. We also conclude that the trial court properly applied § 7-4A-505, Ala. Code 1975, to the facts of this case. It is undisputed that the Fittses learned of the transfer of $85,000, at the latest, in mid-May 2001. They did not contest the funds transfer until some two years later. Therefore, under the express language of § 7-4A-505, Ala.Code 1975, they are precluded from proceeding against AmSouth to recover for the alleged improper funds transfer. [8] We conclude that the trial court properly applied § 7-4A-505, Ala.Code 1975, in this case although we conclude that § 7-4A-505 was applicable for a different reason than stated by the trial court. We conclude that Article 4A displaced the Fittses' common-law claims; we also conclude that the trial court properly applied § 7-4A-505, Ala.Code 1975, to preclude the Fittses from proceeding against AmSouth. Because the Fittses have no viable claims against AmSouth, the trial court properly entered a summary judgment for George on AmSouth's third-party complaint. We affirm the summary judgment in favor of AmSouth and in favor of George, although we do so on different grounds than the trial court gave for entering those summary judgments. AFFIRMED. NABERS, C.J., and HARWOOD, WOODALL, and BOLIN, JJ., concur.