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Saturday, August 30, 2008

Lee v. First Union National Bank, Wachovia

8-27-08 Margaret Lee v. First Union National Bank, Wachovia
Bank, N.A., First Union Brokerage Services, Inc., and
Gregory Mack

Plaintiff alleged she paid an employee of First Union
National and First Union Brokerage Services $2,000 in cash for
purchase of shares of a mutual fund and that he did not deposit
the money into her brokerage account, which caused an overdraft
which First Union covered by taking money from her checking
account and selling some of the mutual fund units. Plaintiff's
complaint alleged violation of the Consumer Fraud Act (CFA) and
common law conversion.

The trial judge granted summary judgment to defendants,
holding that the CFA was not applicable to a sale of securities
and the count for misappropriation was barred by the two-year
statute of limitations under the Blue Act, N.J.S.A. 49:3-71(g).

We reversed on the following grounds: (1) The transaction
is not exempt from the CFA prohibition on deceptive sales
practices because the claim relates to misrepresentation as to
performance of services and not the nature or existence of the
security; (2) N.J.S.A. 49:3-71(g) is not applicable because the
gravaman of this count of the complaint concerns the unlawful
"taking, detaining, or converting of personal property," which
is subject to the six-year statute of limitations.