See, e.g., Equitable Life Assurance Society of the U.S. v. Okey, 812 F.2d 906, 909 (4th Cir. 1987) ("[W]hen the Code and common law both provide a means of recovery, the Code should displace the common law. . . .") (citing Robert Hillman, Construction of the Uniform Commercial Code: UCC Section 1-103 and "Code" Methodology, 18 B.C. Indus. Comm. L. Rev. 655, 662-63 (1977)); Willier v. Hurt, No. 5:06-547, 2007 WL 4613033, at *6 (S.D.W.Va. Dec. 31, 2007) (holding that since a U.C.C. provision was directly on point, it displaced common-law negligence claims); Donovan v. Bank of America, 574 F.Supp.2d 192 (D.Maine 2008) (holding that the U.C.C. displaced a common-law negligence claim); Metz v. Unizam Bank, 416 F.Supp.2d 568 (N.D.Ohio 2006) (holding that the U.C.C. displaced common-law negligence claims since the U.C.C. establishes the standard of care for a bank's handling of negotiable instruments); Cagle's Inc. v. Valley Nat'l Bank, 153 F.Supp.2d 1288 (M.D.Ala. 2001) (holding that the U.C.C. displaced a common-law negligence claim); Lee Newman, M.D., Inc. v. Wells Fargo Bank, N.A., 104 Cal. Rptr. 2d 310 (Cal. Ct. App. 2001) (holding that a common-law negligence claim is displaced by the U.C.C. since the U.C.C. provides a comprehensive framework for loss allocation).

See, e.g., Equitable Life Assurance Society of the U.S. v. Okey, 812 F.2d 906, 909 (4th Cir. 1987) ("[W]hen the Code and common law both provide a means of recovery, the Code should displace the common law. . . .") (citing Robert Hillman, Construction of the Uniform Commercial Code: UCC Section 1-103 and "Code" Methodology, 18 B.C. Indus. & Comm.L.Rev. 655, 662-63 (1977)); Willier v. Hurt, No. 5:06-547, 2007 WL 4613033, at *6 (S.D.W.Va. Dec. 31, 2007) (holding that since a U.C.C. provision was directly on point, it displaced common-law negligence claims); Donovan v. Bank of America, 574 F.Supp.2d 192 (D.Maine 2008) (holding that the U.C.C. displaced a common-law negligence claim); Metz v. Unizam Bank, 416 F.Supp.2d 568 (N.D.Ohio 2006) (holding that the U.C.C. displaced common-law negligence claims since the U.C.C. establishes the standard of care for a bank's handling of negotiable instruments); Cagle's Inc. v. Valley Nat'l Bank, 153 F.Supp.2d 1288 (M.D.Ala. 2001) (holding that the U.C.C. displaced a common-law negligence claim); Lee Newman, M.D., Inc. v. Wells Fargo Bank, N.A., 104 Cal. Rptr. 2d 310 (Cal. Ct. App. 2001) (holding that a common-law negligence claim is displaced by the U.C.C. since the U.C.C. provides a comprehensive framework for loss allocation). In the present case, it is indisputable that Advance Dental has an adequate U.C.C. remedy—conversion—for which Advance Dental has already filed a claim.

Many courts within the Fourth Circuit have agreed that § 3-406 provides no affirmative cause of action. See, e.g., Halifax Corp. v. Wachovia Bank, 604 S.E.2d 403, 409 (Va. 2004); Cionci v. Wells Fargo Bank, N.A., Civ. No. 9-21-c-03175-BHH-MHC, 2022 WL 5237341, at *14 (D.S.C. July 19, 2022) (finding “persuasive the reasoning of the Fourth Circuit and Virginia's Supreme Court, and similarly conclud[ing] that S.C. Code Ann. § 36-3-406 does not expressly create a cause of action”); Willier, Inc. v. Hurt, Civ. No. 5:06-cv-00547, 2007 WL 4613033, at *6 n.9 (S.D. W.Va. Dec. 31, 2007) (“[M]ost courts have held that § 3-406, which addresses negligence contributing to a forged signature, does not support an independent cause of action.”).

Maryland courts have not expressly determined whether the discovery rule applies to other causes of action brought under UCC Article 3 (§§ 3-404 and 3-405), or to claims under UCC Article 4 (§ 4-401), although courts in other jurisdictions have.See Bandy v. Fifth Third Bank, No. 1:08 CV 1064, 2011 WL 4463415, at *7 (N.D. Ohio Sept. 27, 2011), aff'd, 519 F. App'x 900 (6th Cir. 2013)(discovery rule does not apply to UCC § 4-401 claims); United States v. Zarra, No. CIV.A. 10-811, 2011 WL 3667313, at *2 (W.D. Pa. Aug. 22, 2011)(determining that under UCC § 411, a cause of action accrues at time of negotiation and discovery rule is inapplicable); Vedos v. King, 115 Wash. App. 1030, *2 (2003)(cause of action pursuant to UCC § 4-401 accrues at time check is wrongfully paid); Willier, Inc. v. Hurt, No. CIV.A. 5:06-CV-00547, 2007 WL 4613033, at *5-*6 (S.D.W. Va. Dec. 31, 2007) (determining that the discovery rule does not apply in UCC cases, including claims under UCC § 3-405); Sebastian v. D & S Exp., Inc., 61 F. Supp. 2d 386, 389 (D.N.J. 1999)(holding that the discovery rule does not apply to claims under UCC § 3-404 and a cause of action accrues at time the check is negotiated). But see Newell v. Newell, 942 N.E.2d 776, 782 (2011)(holding discovery rule applies to breach of contract claim brought pursuant to UCC Article 4); Borchers v. Vanguard Grp. Inc., No. 2:08-CV-02138-REJ, 2011 WL 2690424 (D. Ariz. July 11, 2011)(suggesting without deciding that discovery rule would apply to UCC Article 4 claims).

(citations omitted)); Fine v. Sovereign Bank, No. 06-CV-11450, 2010 WL 3001194, at *2 (D. Mass. July 28, 2010) (noting that the Massachusetts version of U.C.C. § 3-420 "seems to expressly prohibit a drawer from ever raising a claim of conversion," but that drawer might still have cause of action against depositary bank on a fiduciary duty theory under U.C.C. § 3-307); First Realty Prop. Mgmt., Ltd. v. McDonald Co. Secs., Inc., No. 07-CV-2226, 2008 WL 80062, at *4 (N.D. Ohio Jan. 4, 2008) (collecting Ohio cases holding drawer's common law claim for conversion against depositary bank preempted by Ohio U.C.C.); Willier, Inc. v. Hurt, No. 06-CV-547, 2007 WL 4613033, at *6 (S.D. W. Va. Dec. 31, 2007) ("It is well-recognized . . . that an action for conversion may not be brought by the drawer of a check. This bar is expressly recognized in U.C.C. § 3-420(a). . . ."

Furthermore, both West Virginia and New Jersey courts have held that the discovery rule does not apply to conversion of an instrument. See Copier Word Processing Supply Inc. v. WesBanco Bank, Inc., 640 S.E.2d. 102, 110 (W. Va. 2006) (applying West Virginia law); see also Willier v. Hurt, No. 5:06-CV-547, 2007 WL 4613033, at *6 (S.D.W. Va. Dec. 31, 2007) (applying West Virginia law); New Jersey Lawyers' Fund for Client Protection v. Pace, 863 A.2d 402, 408 (N.J. Super. 2005) aff'd, 902 A.2d 661 (N.J. 2006) (applying New Jersey law). Thus, the court's analysis would be the same under both West Virginia and New Jersey law.

(See John Hancock Financial Services, Inc. v. Old Kent Bank (E.D.Mich. 2002) 185 F.Supp.2d 771, 773-774, 778 [no fraudulent indorsement where employee of "John Hancock Financial Services, Inc." endorsed checks payable to employer with "Sherman and Associates Financial Services"]; Continental Cas. Co. v. Fifth/Third Bank (N.D.Ohio 2006) 418 F.Supp.2d 964, 975 [no fraudulent indorsement where employee endorsed checks payable to employer with "missing or illegible endorsements"]; Willier, Inc. v. Hurt (S.D.W.Va., Dec. 31, 2007, No. CIV.A. 5:06-CV-00547) 2007 WL 4613033, at p. *6 [no fraudulent indorsement where employee deposited checks payable to employer into personal account with no endorsement]; McMullen Oil Co. v. Crysen Ref., Inc. (In re McMullen Oil Co. ) (Bankr.C.D.Cal. 2000) 251 B.R. 558, 565, 574-575 ( McMullen ) [no fraudulent endorsement where employee of "McMullen Oil Co." endorsed checks payable to that entity with "McMullen Oil Co. Pension Plan ," italics added]; Laurie B, supra , 2015 WL 12656285, at p. *5 [no fraudulent indorsement where employee of "Laurie B LLC" endorsed checks payable to "Desert Underground Utilities Inc., dba Laurie B"]; 6B Lawrence's Anderson on the Uniform Commercial Code (3d ed. Dec. 2020 supp.) Negotiable Instruments, § 3-405:11 (Anderson UCC); 4 Hawkland UCC Series (Dec. 2020 Update) § 3-405:1.