RAYMOND BOROWSKI v. J.P. MORGAN CHASE BANK, N.A., Defendant-Respondent.

RAYMOND BOROWSKI, )
)
Plaintiff-Appellant, )
)
vs. ) No. SD34136
)
J.P. MORGAN CHASE BANK, N.A., ) Filed: December 21, 2016
)
Defendant-Respondent. )
APPEAL FROM THE CIRCUIT COURT OF STONE COUNTY
Honorable Mark A. Stephens
AFFIRMED
Raymond Borowski ("Mr. Borowski") appeals from the trial court's
judgment in favor of J.P. Morgan Chase Bank, N.A. ("Chase") in a case involving
unauthorized withdrawals from Mr. Borowski's accounts. Mr. Borowski raises
two points: (1) that the trial court erred in granting summary judgment for Chase
because to do so the trial court had to resolve numerous issues of disputed
material fact and (2) that the trial court erred in dismissing Mr. Borowski's claim
of negligence in the performance of a contract. Point One fails because the
undisputed material facts show Mr. Borowski failed to notify Chase of the
unauthorized transactions within the time period specified by the account
agreement. Moreover, under the terms of the account agreement, resolution of
Point One renders Point Two moot. Consequently, we affirm the trial court's
judgment.
Factual and Procedural Background
On appeal from an order granting summary judgment, this Court views
"the record in the light most favorable to the party against whom judgment was
entered" and accords "the non-movant the benefit of all reasonable inferences
from the record." ITT Comm. Fin. Corp. v. Mid-America Marine Supply
Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). So viewed, the following facts
appear in the parties' summary judgment documents.
On March 1, 2008, Mr. Borowski was added1 to a checking account2
belonging to Andrew Dumelle, Jr. ("Mr. Dumelle"). Sometime later, Mr. Dumelle
died, leaving Mr. Borowski as the sole owner of the account.
1
In his response to Chase's statement of material uncontroverted facts, Mr. Borowski takes issue
with the use of the phrase "added to a checking account." However, this phrase, like many of the
other facts asserted in Chase's statement of material uncontroverted facts, was deemed admitted
under Rule 74.04. Rule 74.04 requires the party seeking summary judgment to attach a
statement of uncontroverted material facts to the motion for summary judgment. Rule
74.04(c)(1). Then, the party responding to a moving party's statement of uncontroverted material
facts must "set forth each statement of fact in its original paragraph number and immediately
thereunder admit or deny each of movant's factual statements." Rule 74.04(c)(2). Furthermore,
"[a] denial may not rest upon the mere allegations or denials of the party's pleading[,]" and "the
response shall support each denial with specific references to the discovery, exhibits or affidavits
that demonstrate specific facts showing that there is a genuine issue for trial." Id. "A response
that does not comply with this Rule 74.04(c)(2) with respect to any numbered paragraph in
movant's statement is an admission of the truth of that numbered paragraph." Id. Incorporation
of legal arguments does not satisfy the requirements of the rule. See Mothershead v.
Greenbriar Country Club, Inc., 994 S.W.2d 80, 85 (Mo. App. E.D. 1999). Mr. Borowski's
responses to paragraphs 4, 15-18, 22-23, 31-32, 36,and 45 do not comply with Rule 74.04(c)(2)
because they do not include a citation to the discovery, exhibits or affidavits. Mr. Borowski's
paragraphs 4, 15-18, 22-23, 31-32, 36, and 45 are thus deemed admitted. Those facts will be
included above and treated as true for purposes of this opinion without further notation or
discussion. All rule references are to Missouri Court Rules (2016).
2 The parties' summary judgment documents also include information about a savings account.
Mr. Borowski does not appear to allege any unauthorized transactions involved that account.
2
On January 17, 2009, Jesse Padgett ("Mr. Padgett") went to a Chase
branch and presented a power of attorney purportedly signed by Mr. Borowski. A
Chase employee accepted the power of attorney and created new signature cards
for Mr. Borowski's accounts. Throughout 2008 and 2009, several transactions
were made from Mr. Borowski's accounts by and to Mr. Padgett.
On July 14, 2010, Mr. Borowski granted a power of attorney to Paul Fisher
("Mr. Fisher"). In August 2010, Mr. Fisher went to a Chase branch, notified
someone at the branch of "problems" with Mr. Borowski's accounts, and
requested records pertaining to the accounts.
On February 24, 2011, Mr. Borowski sued Mr. Padgett, Chase, and several
others based on allegations that Mr. Padgett made unauthorized transfers from
Mr. Borowski's accounts. As ultimately amended, Mr. Borowski's claims against
Chase included conversion, fraudulent transfer, negligence, breach of contract,
and negligence in the performance of a contract. Chase thereafter filed a motion
for summary judgment, arguing Mr. Borowski was barred from recovery because
he failed to report the unauthorized transfers, and a motion to dismiss, arguing
that Mr. Borowski failed to state a cause of action for conversion or fraudulent
transfer and that negligence in the performance of a contract was not a valid
cause of action as between contracting parties.
The trial court granted Chase's motions, thereby resolving all Mr.
Borowski's claims against Chase, and certified the judgment as final for purposes
of appeal.3 Mr. Borowski appeals.
3Mr. Borowski subsequently obtained a default judgment against Mr. Padgett for a total amount
of $476,171.52 in actual damages and $2 million in punitive damages.
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Discussion
Point One: Summary Judgment
In his first point, Mr. Borowski claims the trial court erred in granting
summary judgment in favor of Chase because that ruling improperly resolved
several issues of disputed fact, including whether Chase exercised ordinary care
in accepting the power of attorney from Mr. Padgett, whether account statements
were actually sent, and whether Mr. Borowski timely notified Chase of the
allegedly unauthorized transactions. Mr. Borowski also makes several legal and
factual arguments about the 2009 signature cards. Mr. Borowski's argument fails
because, under the terms of the account agreement, Mr. Borowski had no claim
against Chase unless he notified Chase of unauthorized items within 30 days or of
errors with respect to electronic funds transfers ("EFTs") within 60 days and the
undisputed material facts show Mr. Borowski did not notify Chase of the
unauthorized transactions within that time.
"When considering appeals from summary judgments, the Court will
review the record in the light most favorable to the party against whom judgment
was entered." ITT, 854 S.W.2d at 376. Moreover, the Court will "accord the
non-movant the benefit of all reasonable inferences from the record." Id.
Appellate review of the order granting summary judgment is de novo. Id.
"The criteria on appeal for testing the propriety of summary judgment are
no different from those which should be employed by the trial court to determine
the propriety of sustaining the motion initially." Id. Those criteria are in turn
determined by the classification of the moving party as either a claimant or a
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defending party. Id. at 380. Here, Chase was a defending party because Mr.
Borowski sought to recover from Chase. See id.
[A] "defending party" may establish a right to judgment by showing
(1) facts that negate any one of the claimant's elements facts, (2)
that the non-movant, after an adequate period of discovery, has not
been able to produce, and will not be able to produce, evidence
sufficient to allow the trier of fact to find the existence of any one of
the claimant's elements, or (3) that there is no genuine dispute as to
the existence of each of the facts necessary to support the movant's
properly-pleaded affirmative defense.
Id. at 381. In its motion for summary judgment, Chase sought judgment because
Mr. Borowski failed to report the unauthorized transactions. That is, Chase
sought judgment on the ground that there was no genuine dispute as to the
existence of each of the facts necessary to support its contract defense.
"Generally speaking, the relation of a bank to its depositor is . . . subject to
contract." Scott v. Union Planters Bank, N.A., 196 S.W.3d 574, 577 (Mo.
App. S.D. 2006) (quoting Washington County Mercantile Bank v.
Kennedy, 855 S.W.2d 520, 522 (Mo. App. E.D. 1993)). Here, the account
agreement contained several provisions regarding unauthorized transactions.
First, the account agreement stated:
If we honor a check or other item drawn on or posted to your
Account that is altered in any way or was not drawn or otherwise
authorized by you ("unauthorized item") or if your Account
statement contains any errors, you agree to notify us in writing of
such unauthorized item or error within 30 days of the date on
which the unauthorized item, or the Account statement that
contained a description of the unauthorized item or error, was
mailed, transmitted or otherwise made available to you.
(Emphasis added). The agreement went on to provide consequences for failure to
comply with the notice provisions:
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Failure to report an unauthorized item or error, or that you did not
receive your scheduled statement, within the 30-day time frame set
forth above, or to abide by the conditions set forth herein, shall be
deemed conclusive proof that you failed to exercise reasonable care
and promptness in examining the items and statements of the
affected Account and in notifying us of the unauthorized item or
error. You agree that such items and errors shall therefore be fully
enforceable against you and you shall have no claim against us for
same and shall be barred from bringing any action against us that is
in any way related to the unauthorized items or errors.
The account agreement also required Mr. Borowski to notify Chase of any errors
involving EFTs no later than 60 days after the first statement on which the error
appeared.
Chase paid the first unauthorized item on October 15, 2008, and the last
unauthorized item October 7, 2009. The checks and EFTs appeared on
statements that were sent to Mr. Borowski's residential address. Nevertheless,
Mr. Borowski took no action to notify Chase about any of these items until August
2010, approximately nine months after Chase paid the last unauthorized item.
That is, Mr. Borowski's attempt to notify Chase of the unauthorized items was
made well after the end of the 30 and 60 day time limits set forth in the account
agreement. Under these circumstances, Mr. Borowski failed to comply with the
notice provisions of the account agreement. The consequences of that failure are
that Mr. Borowski was precluded from bringing any type of suit against Chase
based on those transactions.
None of Mr. Borowski's arguments alter this conclusion. Mr. Borowski
first argues the trial court's grant of summary judgment was in error because the
grant of summary judgment required the trial court to make the factual inference
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that Chase exercised ordinary care. This argument is without merit because it
ignores the effect the Uniform Commercial Code ("UCC") has on this agreement.
The relevant provision of Missouri's UCC is Section 400.4-406(f)4 which
provides in pertinent part that:
Without regard to care or lack of care of either the customer or the
bank, a customer who does not within one year after the statement
or items are made available to the customer (subsection (a))
discover and report the customer's unauthorized signature on or
any alteration on the item is precluded from asserting against the
bank the unauthorized signature or alteration.
§ 400.4-406(f) (emphasis added); see also § 400.4A-505. This statute
"evidence[s] a public policy in favor of imposing on customers the duty of prompt
examination of their bank statements and the notification of banks of forgeries
and alterations and in favor of reasonable time limitations on the responsibility
of banks for payment of forged or altered items." Knight Comms., Inc. v.
Boatmen's Nat. Bank of St. Louis, 805 S.W.2d 199, 202 (Mo. App. E.D.
1991) (internal citation omitted). The provision creates an absolute limitation
which "is not merely a statute of limitations, but a rule of substantive law barring
absolutely a customer's untimely asserted right to make a claim against the
bank." Id. (internal citation omitted). Moreover, the parties may vary this
provision by agreement so long as the standards adopted in that agreement "are
not manifestly unreasonable." See § 400.4-103(a); § 400.4A-501(a). Mr.
Borowski does not claim that the contractual time limits of 30 and 60 days for
giving notice of unauthorized transactions constitute a manifestly unreasonable
modification of the one-year time limit contained in Section 400.4-406(f), and
4 All statutory references are to RSMo (2000).
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the trial court did not need to evaluate the issue of whether Chase acted with
ordinary care because the provisions of Section 400.4-406(f) made ordinary care
irrelevant to the analysis of the issue of Chase's liability in this case.
Mr. Borowski next argues that the 2009 signature cards created a new
account with Mr. Padgett so Mr. Borowski was no longer bound by the account
agreement. In support, he relies on Kennedy, 855 S.W.2d 520, for the
proposition that "a change in title is tantamount to terminating the account and
replacing it with a new one." Id. at 523. This reliance is misplaced because the
facts in that case were different. In Kennedy, the altered signature card
removed an owner's name from the account and replaced it with another name.
Id. Here, in contrast, Mr. Borowski's name was never removed from the title of
the account. Moreover, Chase continued sending statements to Mr. Borowski.
Mr. Borowski still owned the funds deposited in the bank after the completion of
the 2009 signature cards, so he was still a customer of the bank, subject to the
terms of the account agreement.
Third, Mr. Borowski argues the trial court erred in finding Chase actually
sent the statements because Chase did not provide evidence that it sent the items.
This argument is without merit. Chase supported its assertion that it sent the
statements with an affidavit from a bank employee regarding Chase's usual
practices regarding mailing account statements. Contrary to Mr. Borowski's
vigorous assertions that this evidence is a mere self-serving conclusion, an
affidavit is one of the types of evidence which may be used to support an
assertion of uncontroverted material fact in support of a motion for summary
judgment. See Rule 74.04(c)(1). Mr. Borowski offered no evidence to rebut that
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proof. While Mr. Borowski attempted to dispute those facts with legal argument,
he did not provide any contrary facts and did not support his denial with a
citation to the discovery, exhibits or affidavits. Those facts are deemed admitted.
See Rule 74.04(c)(2).
The trial court did not err in determining Chase was entitled to judgment
as a matter of law on the ground that Mr. Borowski failed to notify Chase of the
unauthorized items within the time period provided by the account agreement.
Mr. Borowski's first point is denied.
Point Two: Motion to Dismiss
In his second point, Mr. Borowski claims the trial court erred in
dismissing his claim for negligence in the performance of a contract because
negligence in the performance of a contract is a distinct cause of action from
common law negligence. However, in light of our conclusion with respect to
Point One, Point Two is moot.
"The doctrine of mootness is triggered when an event occurs that alters the
position of the parties and any judgment would be a hypothetical opinion."
Brock v. Brock, 142 S.W.3d 204, 206 (Mo. App. E.D. 2004). "When an event
occurs that makes a court's decision unnecessary or makes granting any relief by
the court impossible, then the case is rendered moot and generally should be
dismissed." Id.
Here, the analysis in Point One shows Mr. Borowski failed to notify Chase
of the unauthorized transactions as required under the terms of the account
agreement. Under the terms of the account agreement, that failure bars Mr.
Borowski from bringing any action against Chase on the basis of the
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unauthorized transactions. Any action would include an action for negligence in
the performance of a contract. Thus, the denial of Point One would render any
opinion with respect to Point Two a hypothetical opinion regarding the nature of
a claim of negligence in the performance of a contract. Point Two is moot.
Mr. Borowski's second point is denied.
Decision
The trial court's judgment is affirmed.
MARY W. SHEFFIELD, C.J. – OPINION AUTHOR
JEFFREY W. BATES, P.J. – CONCURS
DON E. BURRELL, J. – CONCURS
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