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In Zengen, Inc. v. Comerica Bank, another California case, Zengen sued its bank to recover $4.6 million in unauthorized fund transfers. The company's former CFO embezzled the money.  Zengen conceded that it received monthly bank statements, but alleged that its CFO disappeared with all of the company's financial records. In its suit against the bank, Zengen alleged common law claims for breach of contract, negligence, return of deposit and money had and received, and a UCC claim for refund of payment pursuant to UCC § 11204.

The trial court entered judgment in Comerica's favor. It held that the UCC preempted all of the common law claims and that Zengen's failure to timely notify the bank of its objection to the debits defeated the UCC § 11204 claim.

On appeal, the court affirmed the trial court's grant of summary judgment. The court held:

• that the UCC establishes a detailed scheme for analyzing the rights, duties and liabilities of banks and their customers in connection with the authorization and verification of payment orders;

• that the UCC expressly states that it is the sole governing body of law for the rights, duties and liabilities associated with funds transfers, and expressly preempts all other principles of law or equity regarding funds transfers;

• that Zengen's common law claims for breach of contract, negligence, return of deposit and money had and received thus are displaced by the UCC;

• that notice to the bank was required to preserve the right to maintain an action for a refund under UCC § 11204;

• that the purpose of this requirement is to put the receiving bank on notice that the customer considers the bank liable for the unauthorized funds transfer; and

• that a notice that only advises the bank that the payment orders were "unauthorized" and "fraudulent," standing alone, does not satisfy this requirement and Zengen's notice thus was insufficient to preserve its UCC § 11204 claim.