Under Ohio Law, An Unjust Enrichment Claim Arising From A Uniform Commercial Code Transaction That Has A Specific Limitations Period Must Be Brought Within 3 Years Of Its Accrual

In the case of U.S. Bank, N.A. v. Graham, 185 Ohio App.3d 226, 2009-Ohio-6199 (Mallory, J.), the First District Court of Appeals held that an unjust enrichment claim arising from a Uniform Commercial Code (UCC) transaction that has a specific limitations period must be brought within three (3) years of its accrual.

In Graham, the bank brought an action alleging claims of endorser liability and unjust enrichment against the bank’s customer, who had overdrawn on his checking account. In October, 2003, the customer had made a series of deposits and withdrawals of checks that resulted in the bank paying out $23,000 more than what the customer had in his overdrawn account. But the bank, inexplicably, waited until May 2007, more than three (3) years later, to file suit against its customer for recovery of the overdrawn funds. The bank sued the customer for both statutory and common law claims.

Specifically, the bank sued its customer for endorser liability for the overdrawn accounts under R.C. 1303.16(C) (UCC Section 3-118[C]), which is an action to enforce the obligation of a party to pay an unaccepted draft. While this would have been the most likely claim for the bank to recover on the overdrawn account, the problem with this claim for the bank was that the statute of limitations for R.C. 1303.16(C) runs out within three (3) years after the dishonor of the unaccepted draft. In this case, the dishonor had taken place more than three (3) years before the filing in Hamilton County Court of Common Pleas. The bank also asserted a claim against its customer for unjust enrichment, which has a six (6) year statute of limitations under R.C. 2305.07.

The customer moved for summary judgment in its favor against both claims asserting that the three (3) year statute of limitations applied to both the endorser liability and unjust enrichment claims, when the subject matter of the claims arise from the UCC. The trial court granted the summary judgment. The bank appealed only on the issue of the applicable statute of limitations on the unjust enrichment claim. The appellate court affirmed that the bank was out of time.

Posted by: Eliot G. Bastian

Categories: Bankruptcy & Banking Law