It could, but the only way to find out is to sue them.

From the circumstances does it appear that; Reg CC 229.33 Notice of nonpayment. UCC 4202 Responsiblity for collection or return; When action timely and UCC 4-214(a)Right of charge-back or refund; Liability of collecting bank; Return of item. Do these laws all pertain to my friends suituation? Any other relevant regulations or codes? Your help is greatly appreciated.

It really sounds as if you've reached the point where the level of detail needed is beyond the expertise of most bankers. It's time to call in that attorney.

It's not beyond the expertise of many of the bankers that have responded - we have pointed the poster to all the pertinent laws and regulations. Whether or not the bank is liable is only for a judge or jury to determine after the examination of all the facts.