Francisco Calleja-Ahedo v. Compass Bank

Opinion issued May 3, 2016
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-15-00210-CV
———————————
FRANCISCO CALLEJA-AHEDO, Appellant
V.
COMPASS BANK, Appellee
On Appeal from the 55th District Court
Harris County, Texas
Trial Court Case No. 2014-22168
OPINION
Francisco Calleja-Ahedo (“Calleja”) sued Compass Bank (“the Bank”) after
it did not refund payment of an allegedly forged check and additional allegedly
unauthorized transactions drawn on Calleja’s account. Both parties moved for
summary judgment. The trial court granted the Bank’s summary judgment motion,
denied Calleja’s motion, and awarded the Bank $49,186.65 in trial-level attorney’s
fees and $60,000 in conditional appellate attorney’s fees. In eight issues, Calleja
contends (1) the trial court erroneously granted the Bank’s summary judgment
motion because the Bank failed to prove that the deposit agreement it relied upon
was effective as to Calleja; (2) the Bank failed to comply with the deposit
agreement; (3) the Bank failed to produce competent summary judgment evidence
that it sent or made available account statements to Calleja; (4) the Bank failed to
act in good faith in connection with the transaction at issue; (5) the Bank presented
no evidence that Calleja violated Business and Commerce Code sections 3.405 and
3.406; (6) the Bank’s no evidence summary judgment motion was improper and
premature; (7) the trial court erroneously denied Calleja’s summary judgment
motion because Calleja proved that an unauthorized payment was made from his
account and the Bank failed to prove its affirmative defenses; and (8) the trial court
erred in awarding attorney’s fees to the Bank.
We reverse and render judgment.
Background
Calleja opened a money market account with the Bank in 1988. Calleja, his
wife, and his father were all listed as signatories on the account. Calleja lives in
Mexico City, but he directed the Bank to send his monthly account statements to
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his brother, who lives in The Woodlands. Calleja would visit his brother in The
Woodlands from “time to time” and pick up the unopened account statements that
his brother retained for him. Calleja never accessed his account statements on the
Internet, and he never set up online banking. He acknowledged that he used this
account infrequently.
The account statement for May 2012, which was mailed by the Bank in early
June, is the last statement that Calleja received at his brother’s address. In June
2012, an unknown person contacted the Bank, asked that the address on file for the
account be changed to an address in California, obtained a debit card, and ordered
a set of blank checks. Over the next several months, the Bank mailed account
statements to addresses in California and then in Georgia. Calleja contends that
none of the signatories on the account authorized these address changes. He did
not contact the Bank and notify it that he was no longer receiving account
statements at his brother’s address.
On July 30, 2012, the Bank cashed a check in the amount of $38,700. In the
ensuing months, as a result of several debit card purchases and service charge fees,
the account balance dwindled and then became negative.
In January 2014, eighteen months after the Bank paid the $38,700 check, an
acquaintance of Calleja’s informed him that a check that Calleja had written drawn
on the account had been returned with the notation “account closed.” Calleja
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traveled to The Woodlands to meet with Bank officials. He alleges that this
meeting was the first time he learned that the account address had been changed
and that the Bank had paid the $38,700 check. Calleja informed Bank officials that
the check was a forgery and that all subsequent transactions were similarly
unauthorized, and he completed a forgery affidavit, averring that the address listed
as his on the forged check and the payee of that check were unknown to him.
Calleja requested that the Bank credit his account in the amount of the
unauthorized checks and withdrawals.
Shortly after Calleja reported the unauthorized withdrawals, a Bank official
sent him a letter informing him that, pursuant to the deposit agreement, because
Calleja did not report the alleged unauthorized withdrawals for eighteen months,
the Bank was not liable to him and would not refund the amounts. In response,
Calleja filed the underlying suit against the Bank, seeking a refund of the $38,700
paid on the check and the additional unauthorized charges, pre-judgment interest,
costs, and attorney’s fees. The Bank answered and asserted numerous affirmative
defenses, including the application of Business and Commerce Code section 4.406,
which precludes claims against banks when the plaintiff fails to discover and report
allegedly unauthorized signatures in a timely manner. The Bank also filed a
counterclaim seeking attorney’s fees.
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Calleja moved for summary judgment on his own claim. Calleja argued that
because the Bank did not send account statements to the requested address after
June 2012, the Bank did not “send or make available” account statements to him,
the proper account holder, and, therefore, any duty that he had to discover and
report unauthorized transactions never arose. As the relevant deposit agreement
governing his relationship with the Bank, Calleja relied upon a version that became
effective in 2008 (“the 2008 Agreement”).
As summary judgment evidence, Calleja attached the 2008 Agreement, his
affidavit detailing how he conducted his banking and how he learned of the
unauthorized transactions, the signature card with the signatures of all three
signatories and his Mexico City address, a copy of the $38,700 check, the forgery
affidavit that he completed, an e-mail concerning this dispute that he sent to a Bank
official, the letter that he received from the Bank denying liability, account
statements for June 2012 through September 2013, all of which were addressed to
addresses other than his brother’s apartment in The Woodlands, and his counsel’s
attorney’s fees affidavit.
The 2008 Agreement provided that the Bank would mail or deliver periodic
account statements to Calleja on a monthly basis. Calleja agreed to give the Bank
written notice if his address changed, and the 2008 Agreement provided that any
account owner could change the address. The 2008 Agreement stated, “We may
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make statements . . . available to you by holding all or any of these items for you,
or delivering all or any of these items to you, in accordance with your request or
instructions.” The 2008 Agreement also contained the following provision
concerning account errors:
Our records regarding your accounts will be deemed correct unless
you timely establish with us that we made an error. It is essential that
any account errors . . . unauthorized transactions, alterations,
unauthorized signatures, forgeries . . . or any other improper
transactions on your account (collectively referred to as “exceptions”)
be reported to us as soon as reasonably possible. Otherwise, we may
not be liable for the exceptions. You agree that you will carefully
examine each account statement or notice you receive and report any
exceptions to us promptly after you receive the statement or notice.
You agree to act in a prompt and reasonable manner in reviewing your
statement or notice and reporting any exceptions to us. If you do not
report an exception to us within thirty (30) days after we send the
statement or notice to you, you agree that we will not be liable to you
for any loss you suffer related to that exception. This means that, if
you do not report exceptions to us within thirty (30) days after we
send the statement or notice to you, we will not reimburse you for any
loss you suffer, including, but not limited to, any amounts lost as a
result of: paying any unauthorized, forged, or altered
item . . . . Except as provided by applicable law, you also agree that
we will not be required to reimburse you for any exceptions caused by
your own negligence.
The 2008 Agreement also provided that the Bank could amend the
agreement upon prior notice to Calleja. Specifically, the Bank agreed to provide
prior notice of any amendments at least thirty days before the amendments became
effective by “mailing you notice of the amendment to the last address shown on
our records, by making the notice available with the periodic statement of your
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account (as applicable), or by posting notice of the amendment in our offices.”
The 2008 Agreement further provided, “By continuing to maintain your account or
obtaining services or products relating to this Agreement or your account after the
amendment becomes effective, you agree to the amendment of this Agreement.”
The 2008 Agreement provided for the limited recovery of attorney’s fees under
circumstances not applicable to this case.
The Bank also moved for summary judgment. The Bank argued that Calleja
should bear the loss in this case, as he had a duty to inspect his account statements
for unauthorized charges, and, if he was not receiving account statements, he
should have notified the Bank. The Bank attached one of Calleja’s interrogatory
answers, in which he stated that he “had no reason to review bank statements
during this time period because the [a]ccount was virtually inactive.” The Bank
argued that, pursuant to Business and Commerce Code section 4.406(f), Calleja
was precluded from asserting the allegedly unauthorized transactions against the
Bank because he did not report the transactions to the Bank within one year,
instead waiting eighteen months after the unauthorized transactions to report them
to the Bank. The Bank also argued that Business and Commerce Code section
3.406 precluded Calleja’s claim, as Calleja permitted his brother “to access [his]
banking information [which] allowed other parties to learn [his] banking
information,” which likely led to the unauthorized transactions. The Bank argued
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that it was entitled to attorney’s fees under the deposit agreement, and it presented
the affidavit of its counsel in support of its request.
As summary judgment evidence, the Bank presented a different version of
the deposit agreement with Calleja, one that had allegedly been amended in
February 2012 (“the 2012 Agreement”). The Bank accompanied this agreement
with the affidavit of Kathy Mueller, a Bank employee, who averred that the
attached 2012 Agreement was “a copy of the written contract governing the
deposit relationship between [Calleja] and Compass Bank” and that “the account
agreement evidences the agreement in effect between [Calleja] and Compass
Bank.” The 2012 Agreement was substantially similar to the 2008 Agreement, but
it did contain several changes relevant to this dispute. The 2012 Agreement
explicitly stated, “Notify us promptly if you do not receive your statement by the
date you normally would expect to receive it.” The 2012 Agreement also
contained slightly different language concerning the reporting of errors in account
statements:
You agree that you will carefully examine each account statement or
notice you receive and report any exceptions to us promptly after you
receive the statement or notice. You agree to act in a prompt and
reasonable manner in reviewing your statement or notice and
reporting any exceptions to us. If you do not report an exception to us
within thirty (30) days after we send or make the statement or notice
available to you, you agree that we will not be liable to you for any
loss you suffer related to that exception and that you cannot later
dispute the transaction amounts and the information contained in the
statement.
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(Emphasis added.) The 2012 Agreement also provided for attorney’s fees, stating,
“In any action between you and us, the prevailing party shall be entitled to recover
its reasonable attorney’s fees expended in the prosecution or defense of the court
action from the other party.” The final page of the 2012 Agreement contained the
following notation: “Revision Feb 2012 Al Nova Branches Only.” The Bank
presented no summary judgment evidence explaining the meaning of the “Al Nova
Branches Only” notation and whether that applied to Calleja, nor did it present any
evidence concerning how it gave notice of the amended agreement to Calleja.
In response to Calleja’s summary judgment motion, the Bank attached a
second affidavit by Mueller to address arguments that Calleja raised, including
which version of the deposit agreement was applicable and actions Calleja could
have taken if he had not received his account statements. Mueller averred:
In my first Affidavit, I attached what I believed to be the proper
deposit agreement governing the parties’ relationship. The deposit
agreement attached had a revision date of February 2012. Plaintiff
claims that an imposter allegedly impersonated Plaintiff and changed
the address on the account during the summer of 2012 so it appears
that the February 2012 version was the version in effect at that time.
Consequently, I believe that the deposit agreement that I attached to
my Affidavit was the proper deposit agreement governing the
relationship. Because Plaintiff had signed the signature card agreeing
to be bound by the deposit agreement, and agreeing that it could be
amended from time to time, I believe that deposit agreement governed
the parties’ relationship. Plus, Plaintiff could have closed his account
if he did not want to be bound by the deposit agreement. For all of
these reasons and many more reasons, I believe that the deposit
9
agreement I attached to my first affidavit governed the parties’
relationship.
Mueller also averred that if Calleja had not received his monthly account
statements, as he expected to, he could have notified the Bank, obtained copies at
any branch, or reviewed the statements online.
The trial court issued separate orders granting the Bank’s summary
judgment motion and denying Calleja’s motion. In the order granting the Bank’s
motion, the trial court stated:
In particular, but not as the sole reason for this ruling, the Court noted
that where the check at issue was cashed on July 30, 2012, and the
Plaintiff did not notify the bank until January 29, 2014, as a matter of
law Plaintiff has failed to exercise diligence in protecting himself
from alleged fraud regardless of any shortcomings in sending bank
statements. Plaintiff’s focus on the word “sends” as used in section 4-
406 of the Texas Business and Commerce Code is too exclusive and
ignores the equally important and relevant “or makes available”
language of that section. Further, duties found in the deposit
agreement attached to Compass Bank’s Motion for Summary
Judgment which include a requirement that the depositor “act in a
prompt and reasonable manner” relating to his account statements are
also important and weigh against Plaintiff’s position. There are no
material issues of fact which preclude granting this motion.
The trial court also awarded the Bank $49,186.65 in trial-level attorney’s fees and
a total of $60,000 in conditional appellate attorney’s fees. This appeal followed.
Summary Judgment
In six of his eight issues, Calleja contends that the trial court erred in
granting the Bank’s summary judgment motion. Specifically, Calleja contends that
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the Bank failed to prove that the 2012 Agreement applied to his account; the Bank
failed to comply with the 2008 Agreement; the Bank failed to produce competent
evidence that it sent or made available the account statements to Calleja; the Bank
failed to act in good faith in connection with the transaction; there is no evidence
that Calleja violated Business and Commerce Code sections 3.405 and 3.46; and
the Bank’s no evidence summary judgment motion was improper and premature.
In his eighth issue, Calleja contends that the trial court erred in denying his own
summary judgment motion because he proved that an unauthorized payment had
been made from his account and the Bank failed to prove its affirmative defenses.
A. Standard of Review
When both parties move for summary judgment and the trial court grants
one motion and denies the other, we review both parties’ summary judgment
evidence and determine all questions presented. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005); FM Props. Operating Co. v. City of Austin, 22
S.W.3d 868, 872 (Tex. 2000). Each party bears the burden of establishing that he
is entitled to judgment as a matter of law. City of Santa Fe v. Boudreaux, 256
S.W.3d 819, 822 (Tex. App.—Houston [14th Dist.] 2008, no pet.); see also TEX. R.
CIV. P. 166a(c) (“The judgment sought shall be rendered forthwith if . . . there is no
genuine issue as to any material fact and the moving party is entitled to judgment
as a matter of law on the issues expressly set out in the motion or in an answer or
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any other response.”). If we determine that the trial court erred, we render the
judgment that the trial court should have rendered. Dorsett, 164 S.W.3d at 661;
FM Props., 22 S.W.3d at 872. If the trial court’s order does not specify the
grounds for its summary judgment ruling, we affirm the summary judgment if any
of the theories presented to the trial court and preserved for appellate review are
meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216
(Tex. 2003).
B. The Governing Account Agreement Under Finance Code Sections
34.301 and 34.302
As a threshold issue, we must determine which version of the deposit
agreement governed the parties’ relationship. Both parties agree that the 2008
Agreement was, at least at one point, effective as to Calleja. Calleja contends that
this agreement was in effect at the time the forgeries occurred in June and July
2012, but the Bank contends that the deposit agreement had been amended in
February 2012, as permitted by the 2008 Agreement, and that the 2012 Agreement
governed the parties’ relationship.
The Texas Finance Code provides that a deposit contract between a bank
and an account holder “is considered a contract in writing for all purposes and may
be evidenced by one or more agreements, deposit tickets, signature cards, or
notices as provided by [Finance Code] Section 34.302, or by other documentation
as provided by law.” TEX. FIN. CODE ANN. § 34.301(a) (Vernon 2013). Section
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34.302(a) provides that a bank and an account holder may amend the deposit
contract “by agreement or as permitted by Subsection (b) or other law.” Id.
§ 34.302(a) (Vernon 2013). Section 34.302(b) allows a bank to amend a deposit
contract by mailing a written notice of the amendment, including the text of the
amendment and the effective date, to the account holder. Id. § 34.302(b).
Section 17 of the 2008 Agreement addresses amendments to the deposit
agreement. It provides, in relevant part:
We may amend this Agreement from time to time upon giving prior
notice to you. Amendments of this Agreement may include
modifying and deleting existing provisions and adding new
provisions. We agree to provide you notice of any amendment
(except an amendment benefitting you) at least thirty (30) days, or a
longer period if required by law, before that amendment becomes
effective by mailing you notice of the amendment to the last address
shown on our records, by making the notice available with the
periodic statement of your account (as applicable), or by posting
notice of the amendment in our offices. We may, but are not required
to, give you notice if the amendment will be to your benefit. If there
is more than one account owner, we will send the notice of
amendment to only one of you. By continuing to maintain your
account or obtaining services or products relating to this Agreement or
your account after the amendment becomes effective, you agree to the
amendment of this Agreement.
The Bank argues that it amended the deposit agreement in February 2012
and that, because Calleja indisputably maintained the account after this date, he
agreed to the February 2012 amendments, and thus the 2012 Agreement controls.
As summary judgment evidence, the Bank attached an affidavit completed by
Kathy Mueller, an employee of the Bank, and the 2012 Agreement, which was
13
incorporated into the affidavit by reference. Mueller averred that the 2012
Agreement governed Calleja’s account, stating, “[Calleja] agreed to be bound by a
deposit agreement governing his account at Compass Bank. Attached as Tab 1 is a
copy of the written contract [the 2012 Agreement] governing the deposit
relationship between [Calleja] and Compass Bank]” and “the [attached] account
agreement evidences the agreement in effect between [Calleja] and Compass
Bank.” The last page of the 2012 Agreement states, “Revision Feb 2012 Al Nova
Branches Only.” The Bank presented no evidence, either from Mueller or another
Bank employee, concerning what “Al Nova Branches Only” meant, whether this
applied to Calleja, or whether notice of the 2012 Agreement was mailed to Calleja,
provided with his account statement, or posted in the Bank’s offices.
Based on this record, we conclude that the Bank has not established that the
2012 Agreement was ever effective as to Calleja. Although both the Finance Code
and the 2008 Agreement allow the Bank to amend the deposit agreement, the Bank
has not established that it did so in a manner allowed by either the Finance Code or
the 2008 Agreement. The Bank presented no summary judgment evidence that it
mailed notice of the proposed amendments to Calleja, that it included the proposed
amendments with his account statement, or that it posted notice of the amendments
in its offices. See TEX. FIN. CODE ANN. § 34.302(b) (stating ways in which bank
may notify account holder of amendments to deposit agreement). Instead, the
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Bank merely attached the 2012 Agreement as summary judgment evidence and
provided conclusory affidavit testimony from one of its employees that the 2012
Agreement governed Calleja’s account. See Contractors Source, Inc. v. Amegy
Bank Nat’l Ass’n, 462 S.W.3d 128, 133 (Tex. App.—Houston [1st Dist.] 2015, no
pet.) (“An affiant’s belief about the facts is legally insufficient evidence. Likewise,
conclusory affidavits do not raise fact issues because ‘[t]hey are not credible, nor
susceptible to being readily controverted.’ ‘A conclusory statement is one that
does not provide the underlying facts to support the conclusion.’”) (quoting Ryland
Grp., Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996), and Rizkallah v. Conner,
952 S.W.2d 580, 587 (Tex. App.—Houston [1st Dist.] 1997, no writ)).
We conclude that the evidence is not sufficient to establish that the 2012
Agreement governed the Bank’s relationship with Calleja, and the trial court
therefore erred in considering the 2012 Agreement to be the controlling deposit
agreement.
C. Whether the Trial Court Properly Granted the Bank’s Motion
Article 4 of the Uniform Commercial Code (“UCC”), found in Texas
Business and Commerce Code Chapter 4, establishes the rights and duties between
banks and their customers regarding deposits and collections. Am. Airlines Emps.
Fed. Credit Union v. Martin, 29 S.W.3d 86, 91 (Tex. 2000); see TEX. BUS. & COM.
CODE ANN. §§ 4.101–.504 (Vernon 2002 & Supp. 2015). Under this statutory
15
scheme, a bank is liable to its customer if it charges the customer’s account for an
item that is not properly payable from that account, such as items with an
unauthorized signature. Martin, 29 S.W.3d at 91; see TEX. BUS. & COM. CODE
ANN. § 4.401(a) (Vernon 2002) (“A bank may charge against the account of a
customer an item that is properly payable from that account even though the charge
creates an overdraft. An item is properly payable if it is authorized by the
customer and is in accordance with any agreement between the customer and the
bank.”).
1. Duty to Discover and Report Unauthorized Signatures Under
UCC Section 4.406
Section 4.406 addresses a customer’s duty to discover and report
unauthorized signatures. See Schiro v. Tex. Cmty. Bank, N.A., 68 S.W.3d 55, 57
(Tex. App.—Dallas 2001, no pet.) (“Bank customers have a duty to discover and
report unauthorized signatures on their accounts.”). Section 4.406(a) requires a
bank that sends or makes available account statements to the customer to “either
return or make available to the customer the items paid or provide information in
the statement of account sufficient to allow the customer reasonably to identify the
items paid.” TEX. BUS. & COM. CODE ANN. § 4.406(a) (Vernon 2002). The
Uniform Commercial Code defines “sends” as “to deposit in the mail or deliver for
transmission by any other usual means of communication with postage or cost of
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transmission provided for and properly addressed.” Id. § 1.201(b)(36)(A) (Vernon
Supp. 2015).
The Code does not define “makes available.” If a bank sends or makes
available account statements, “the customer must exercise reasonable promptness
in examining the statement or the items to determine whether any payment was not
authorized . . . because a purported signature by or on behalf of the customer was
not authorized.” Id. § 4.406(c). If, based on the account statement provided, the
customer reasonably should have discovered the unauthorized payment, “the
customer must promptly notify the bank of the relevant facts.” Id.
Section 4.406 also provides a defense to banks in certain circumstances:
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 . . . 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.
Id. § 4.406(f); Martin, 29 S.W.3d at 91 (stating that customer is “absolutely
precluded” from asserting his unauthorized signature if customer fails to discover
and report unauthorized signature within one year after bank makes available
account statement showing allegedly unauthorized transaction). Parties are
allowed to vary the effect of Article 4’s provisions by agreement, including
shortening the time period that a customer has to discover and report an
unauthorized transaction. See Martin, 29 S.W.3d at 95–96; see also TEX. BUS. &
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COM. CODE ANN. § 4.103(a) (Vernon 2002) (“The effect of the provisions of this
chapter may be varied by agreement, but the parties to the agreement cannot
disclaim a bank’s responsibility for its lack of good faith or failure to exercise
ordinary care or limit the measure of damages for the lack or failure.”); Canfield v.
Bank One, Tex., N.A., 51 S.W.3d 828, 836 (Tex. App.—Texarkana 2001, pet.
denied) (“Deposit agreements, which may shorten the statutory time limits on the
notice required to be given by a customer, are enforceable as a contract between
the parties.”).
In Martin, the Texas Supreme Court noted that one of the purposes of the
UCC is to “facilitate[] financial transactions, benefitting both consumers and
financial institutions, by allocating responsibility among the parties according to
whoever is best able to prevent a loss.” 29 S.W.3d at 92. The court reasoned:
Because the customer is more familiar with his own signature, and
should know whether or not he authorized a particular withdrawal or
check, he can prevent further unauthorized activity better than a
financial institution, which may process thousands of transactions in a
single day. Section 4.406 acknowledges that the customer is best
situated to detect unauthorized transactions on his own account by
placing the burden on the customer to exercise reasonable care to
discover and report such transactions. The customer’s duty to
exercise this care is triggered when the bank satisfies its burden to
provide sufficient information to the customer. As a result, if the bank
provides sufficient information, the customer bears the loss when he
fails to detect and notify the bank about unauthorized transactions.
Id. The court further stated that the burden on the customer includes “the risk of
nonreceipt of account statements” and that the customer’s duty to detect and report
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unauthorized actions “is triggered when the bank meets its burden to provide the
customer with enough information that the customer can detect that the
unauthorized transaction has occurred.” Id. at 94; see also Jefferson State Bank v.
Lenk, 323 S.W.3d 146, 149 (Tex. 2010) (stating that bank has initial burden to
“send or make available the [account] statement to its customer”). The bank does
not satisfy this burden by sending account statements to an imposter. See Lenk,
323 S.W.3d at 149 (rejecting argument that defendant bank complied with section
4.406 by sending account statements to imposter estate administrator, noting that
imposter was not bank’s customer, and thus “sending [the imposter] the statements
could not fulfill the Bank’s obligation to provide account statements ‘to a
customer’”).
2. Whether Section 4.406 Precludes Calleja from Asserting
Unauthorized Signature
a. Whether statements were “sent or made available” to
Calleja
The Bank contends that section 4.406(f) precludes Calleja from asserting the
imposter’s unauthorized signature and seeking a refund of the amounts removed
from his account because it “sent or made available” account statements to Calleja,
but he did not notify the Bank of the forgery within one year, as the statute
requires. Specifically, the Bank argues that it mailed account statements to the
address that it had in its files and that it made the account statements available
because the statements could be accessed at a branch office or online. Calleja
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contends that the Bank did not send or make available the account statements
within the meaning of the statute because section 4.406 requires the sending of
account statements to the account holder, not to an imposter, and the 2008
Agreement contractually limits how the Bank may make statements available. We
agree with Calleja.
The summary judgment evidence reflects that, through May 2012, Calleja
received account statements at his brother’s address in The Woodlands in
accordance with his instructions to the Bank. In June 2012, an unknown person
falsely represented to Bank employees that he was Calleja, and, as a result of this
deception, the unknown person was able to change the address on the account for
the mailing of statements, to obtain a debit card, and to order blank checks. Bank
statements reflect that the statement for June 2012, which was mailed in early July
2012 and which reflected the payment for a new set of blank checks, was mailed to
an address in Cupertino, California, instead of to Calleja’s brother’s address in The
Woodlands. The Bank cashed a check for $38,700 drawn on Calleja’s account on
July 30, 2012, and this withdrawal was reflected on the account statement for July
2012, which was mailed to an address in Sacramento, California in early August
2012. Subsequent account statements, which reflected additional withdrawals and
service charges, were mailed to the Sacramento address and then to a series of
addresses in Georgia. Calleja averred that neither he nor the other two authorized
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signatories on the account ever initiated these address changes and that none of
them authorized the payments made from the account beginning in June 2012.
In Martin, the Texas Supreme Court recognized that the bank customer “is
best situated to detect unauthorized transactions on his own account by placing the
burden on the customer to exercise reasonable care to discover and report such
transactions.” 29 S.W.3d at 92. However, the court then stated,
The customer’s duty to exercise this care is triggered when the bank
satisfies its burden to provide sufficient information to the customer.
As a result, if the bank provides sufficient information, the customer
bears the loss when he fails to detect and notify the bank about
unauthorized transactions.
Id.; Compass Bank v. Nacim, 459 S.W.3d 95, 107 (Tex. App.—El Paso 2015, no
pet.) (“Under Section 4.406(a), the bank triggers the customer’s duty to inspect and
report questionable items when it ‘makes available’ a sufficient account
statement.”). “This duty to detect and report is triggered when the bank meets its
burden to provide the customer with enough information that the customer can
detect that the unauthorized transaction has occurred.” Martin, 29 S.W.3d at 94.
The Texas Supreme Court later clarified that a bank does not satisfy this burden
when it provides account statements to an imposter. Lenk, 323 S.W.3d at 149
(holding that bank did not provide account statements to customer when it
provided statements to imposter who had represented to bank that he was estate
representative of deceased customer). An imposter does not become the bank’s
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customer, and section 4.406 requires a bank that chooses to send or make available
account statements to a customer to send the statements to its customer. See id.;
see also TEX. BUS. & COM. CODE ANN. § 4.406(a) (“A bank that sends or makes
available to a customer a statement of account showing payment of items for the
account shall either return or make available to the customer the items paid or
provide information in the statement of account sufficient to allow the customer
reasonably to identify the items paid.”) (emphasis added).
Here, by allowing an unknown and unauthorized third party to change the
address on the account in June 2012 and then by mailing subsequent account
statements to the unknown party, instead of to Calleja at his brother’s address in
The Woodlands, the Bank did not “send” account statements to its customer. See
TEX. BUS. & COM. CODE ANN. § 4.406(a); Lenk, 323 S.W.3d at 149; Martin, 29
S.W.3d at 92, 94. We therefore must consider whether the Bank “made available”
the account statements to Calleja. See TEX. BUS. & COM. CODE ANN. § 4.406(c)
(“If a bank sends or makes available a statement of account or items pursuant to
Subsection (a), the customer must exercise reasonable promptness in examining
the statement or the items to determine whether any payment was not
authorized . . . because a purported signature by or on behalf of the customer was
not authorized.”) (emphasis added).
22
The Bank argues that it did make account statements available to Calleja
because, at all relevant times, Calleja could have visited any branch of the Bank to
request copies of his statements, he could have set up online banking and accessed
his statements via the Internet, or he could have called the Bank and reported that
he had not received his statements and gain access in that manner. Calleja,
however, points out that, although the UCC does not define “make available,” the
2008 Agreement does. Specifically, the 2008 Agreement provides, “We may make
statements, canceled checks (if applicable to your account), notices or other
communications available to you by holding all or any of these items for you, or
delivering all or any of these items to you, in accordance with your request or
instructions.”1 Calleja averred that he requested that the Bank provide account
statements to him at his brother’s address and that he never requested that the Bank
change the authorized address or retain account statements for him at the Bank.
In the 2008 Agreement, the parties thus agreed to a specific definition of
“make available,” namely, that the Bank might make account statements available
to Calleja “by holding all or any of these items for you, or delivering all or any of
these items to you, in accordance with your request or instructions.” Calleja
1
The 2012 Agreement contains an identical provision. That agreement then states,
“If we hold statements or notices to you at your request or because you fail to
provide us with a current address, they will be deemed delivered to you when they
are prepared (for held statements), mailed (for returned mail) or otherwise made
available to you.” (Emphasis added.)
23
presented summary judgment evidence that he instructed the Bank to provide
account statements to him by delivering the statements to his brother’s address in
The Woodlands and that he never instructed the Bank to hold statements for him at
a branch office. The Bank presented no contradictory evidence. Thus, the parties
contractually limited the ways in which the Bank could make account statements
available to Calleja, and both parties are bound by this limitation. See Nacim, 459
S.W.3d at 108 (“If we are to engage in the fiction that customers actually read and
agree to the modified terms and conditions of their account agreements, and
enforce those provisions which favor the bank, then we must also apply those
which work to the bank’s detriment.”). Because the summary judgment evidence
reflects that the Bank, at the behest of an unknown third party, changed the address
on the account and mailed account statements, beginning with the June 2012
statement that first reflected an unauthorized transaction, to a series of addresses
unauthorized by Calleja and did not mail account statements to the authorized
address in The Woodlands, we hold that the Bank did not “make available” the
account statements in accordance with the governing 2008 Agreement.
b. Whether Calleja’s “duty to report” was triggered
We likewise hold that Calleja’s duty to report unauthorized transactions
never arose under the 2008 Agreement. The 2008 Agreement provides:
You agree that you will carefully examine each account statement or
notice you receive and report any exceptions to us promptly after you
24
receive the statement or notice. You agree to act in a prompt and
reasonable manner in reviewing your statement or notice and
reporting any exceptions to us. If you do not report an exception to us
within thirty (30) days after we send the statement or notice to you,
you agree that we will not be liable to you for any loss you suffer
related to that exception. This means that, if you do not report
exceptions to us within thirty (30) days after we send the statement or
notice to you, we will not reimburse you for any loss you suffer,
including, but not limited to, any amounts lost as a result of: paying
any unauthorized, forged, or altered item . . . .
(Emphasis added.) As we have noted, the summary judgment evidence reflects
that the Bank did not send the account statements that reflected the unauthorized
transactions to Calleja. Thus, Calleja’s contractual duty under the deposit
agreement to report unauthorized transactions also never arose.2 We hold that the
trial court erred in determining that Calleja did not satisfy either his statutory duties
or his contractual duties to report unauthorized transactions.
We sustain Calleja’s first, second, and third issues.
3. The Bank’s Affirmative Defenses Under UCC Sections 3.405 and
3.406
As an additional basis for summary judgment, the Bank also argued that
Calleja was precluded from recovery pursuant to the affirmative defenses found in
2
As the Bank points out, the 2012 Agreement states, “Notify us promptly if you do
not receive your statement by the date you normally would expect to receive it.”
This provision is not included in the 2008 Agreement. Furthermore, the parties
have identified no statutory duty on the part of the customer to notify the bank if
he is not receiving account statements.
25
Business and Commerce Code sections 3.405 and 3.406 because Calleja entrusted
his banking information to his brother, which likely led to his damages.
a. Whether Calleja was responsible for fraudulent
indorsements by an “employee”
The Bank argued that Business and Commerce Code section 3.405, entitled
“Employer’s Responsibility for Fraudulent Indorsement by Employee,” applied to
preclude Calleja’s recovery. Specifically, the Bank argued that Calleja’s brother,
whom Calleja appointed to receive his account statements, was Calleja’s
“employee” and had responsibility over the account. Section 3.405 provides,
For the purpose of determining the rights and liabilities of a person
who, in good faith, pays an instrument or takes it for value or for
collection, if an employer entrusted an employee with responsibility
with respect to the instrument and the employee or a person acting in
concert with the employee makes a fraudulent indorsement of the
instrument, the indorsement is effective as the indorsement of the
person to whom the instrument is payable if it is made in the name of
that person.
TEX. BUS. & COM. CODE ANN. § 3.405(b) (Vernon 2002). Section 3.405(a)(3)
specifically defines “responsibility with respect to instruments” as
authority (i) to sign or indorse instruments on behalf of the employer,
(ii) to process instruments received by the employer for bookkeeping
purposes, for deposit to an account, or for other disposition, (iii) to
prepare or process instruments for issue in the name of the employer,
(iv) to supply information determining the names or addresses of
payees of instruments to be issued in the name of the employer, (v) to
control the disposition of instruments to be issued in the name of the
employer, or (vi) to act otherwise with respect to instruments in a
responsible capacity.
26
Id. § 3.405(a)(3); see also Duong v. Bank One, N.A., 169 S.W.3d 246, 250 (Tex.
App.—Fort Worth 2005, no pet.) (“Section 3.405 adopts a system of comparative
negligence between an employer who grants an employee responsibility with
respect to an instrument and a bank. The initial risk of loss in this situation is on
the employer ‘based on the belief that the employer is in a far better position to
avoid the loss by care in choosing employees, in supervising them, and in adopting
other measures to prevent forged indorsements on instruments payable to the
employer or fraud in the issuance of instruments in the name of the employer.”).
In addition to providing no evidence that Calleja’s brother was Calleja’s
“employee,” the Bank also provided no evidence that Calleja’s brother had any
“responsibility with respect to instruments.” Instead, the only summary judgment
evidence concerning Calleja’s brother relates to account statements being sent to
his address in The Woodlands, which he would hold unopened until Calleja
traveled to the Houston area to collect the statements. There is no evidence in the
record that Calleja’s brother ever had any contact with, let alone any responsibility
over, any instruments relating to Calleja’s account. Furthermore, although the
Bank suggests that Calleja’s brother was involved with the unauthorized
transactions at issue in this case, this argument is entirely speculative. The Bank
has presented no competent summary judgment evidence demonstrating that
Calleja’s brother was the individual who pretended to be Calleja, changed the
27
address on the account, obtained a debit card, ordered blank checks, and wrote
unauthorized checks and made unauthorized debit withdrawals from Calleja’s
account. We conclude that the Bank failed to establish that section 3.405 applies
in this case, and, thus, it cannot be the basis for the trial court’s summary judgment
ruling.
b. Whether Calleja failed to exercise “ordinary care”
Finally, Business and Commerce Code section 3.406 provides:
A person whose failure to exercise ordinary care substantially
contributes to an alteration of an instrument or to the making of a
forged signature on an instrument is precluded from asserting the
alteration or the forgery against a person who, in good faith, pays the
instrument or takes it for value or for collection.
TEX. BUS. & COM. CODE ANN. § 3.406(a) (Vernon 2002). “Section 3.406
precludes the depositor from asserting wrongful payment against the bank if the
depositor’s negligence substantially contributed to the alteration or forgery of the
check as long as the bank paid the instrument in good faith and in accordance with
the reasonable commercial standards of the payor’s business.” McDowell v. Dallas
Teachers Credit Union, 772 S.W.2d 183, 192 (Tex. App.—Dallas 1989, no writ)
(emphasis added); see also Bank of Tex. v. VR Elec., Inc., 276 S.W.3d 671, 680
(Tex. App.—Houston [1st Dist.] 2008, pet. denied) (stating that court had to
determine “whether the Bank proved that VR failed to exercise ordinary care that
substantially contributed to the alteration of the check”).
28
The key inquiry under section 3.406 is whether an account holder’s
negligence “substantially contributes to an alteration of an instrument or to the
making of a forged signature.” See TEX. BUS. & COM. CODE ANN. § 3.406(a). In
this case, the Bank points to no operative statutory or contractual provision that
required Calleja to notice that he was not receiving statements at his brother’s
address and to report those missing statements to the Bank within thirty days.
Rather, we have held that the evidence is legally insufficient to establish that the
Bank sent Calleja’s bank statements to him or made them available to him, as
required by section 4.406 and the 2008 Agreement to trigger Calleja’s duty to
report unauthorized transactions to the Bank. Accordingly, Calleja could not be
negligent for failing to report the unauthorized transactions.
Moreover, there is scant summary judgment evidence concerning the
circumstances under which the unknown third party obtained Calleja’s banking
information and used that information to change the account address, obtain a debit
card, order blank checks, and forge Calleja’s signature on several checks. Calleja
averred that he has not been able to determine who this third party was or how this
person gained access to his banking information. In response to discovery
requests, the Bank provided Calleja with audio recordings of conversations
between Bank employees and a person purporting to be Calleja, but Calleja did not
recognize that person’s voice. Although the Bank speculates that Calleja’s brother
29
was involved with the unauthorized transactions, the Bank can point to no evidence
in the record supporting this contention. This case thus is not similar to either VR
Electric, in which the evidence demonstrated that a VR Electric employee
improperly indorsed the check at issue to himself, or McDowell, in which
McDowell’s bookkeeper forged her signature on over fifty share drafts. See VR
Elec., 276 S.W.3d at 675; McDowell, 772 S.W.2d at 186. Instead, the record
contains no evidence concerning the identity of the imposter who forged Calleja’s
signature or how this individual gained access to Calleja’s account.
The Bank argues that “[t]he trial court correctly concluded that, as a matter
of law, [Calleja] failed to exercise ordinary care” and cites to the trial court’s final
judgment for support. This statement by the trial court, however, must be read in
context of the final judgment itself. The trial court stated: “In particular, but not as
the sole reason for this ruling, the Court noted [in a previous summary judgment
order] that where the check at issue was cashed on July 30, 2012, and [Calleja] did
not notify the bank until January 29, 2014, as a matter of law [Calleja] has failed to
exercise diligence in protecting himself from alleged fraud regardless of any
shortcomings in sending bank statements.” This statement thus refers to Calleja’s
lack of diligence post-forgery in not discovering and reporting the unauthorized
transactions; it cannot be read as a blanket statement that Calleja did not exercise
30
ordinary care and that this failure substantially contributed to the making of the
forgery.
We conclude that the summary judgment record contains no evidence that
Calleja failed to exercise ordinary care that substantially contributed to the making
of the forged checks at issue. See TEX. BUS. & COM. CODE ANN. 3.406(a).
Because the Bank did not conclusively establish this affirmative defense, we hold
that, to the extent the trial court based its summary judgment ruling on this
defense, the trial court erred. See Lujan v. Navistar Fin. Corp., 433 S.W.3d 699,
704 (Tex. App.—Houston [1st Dist.] 2014, no pet.) (stating that when defendant
moves for traditional summary judgment, it must either disprove at least one
essential element of plaintiff’s claim or plead and conclusively establish each
essential element of affirmative defense). Because we hold that the Bank is not
entitled to summary judgment on the basis of Business and Commerce Code
sections 3.405, 3.406, or 4.406, we hold that the trial court erred in granting
summary judgment in favor of the Bank.
We sustain Calleja’s sixth issue.3
3
Because we hold that the trial court erred in rendering summary judgment in favor
of the Bank, we vacate the attorney’s fees award in favor of the Bank.
Furthermore, because we hold that the trial court could not grant summary
judgment on the basis of sections 3.405, 3.406, or 4.406, we need not address
Calleja’s fourth and seventh issues, that the trial court erred in granting summary
judgment because he presented evidence that the Bank did not act in good faith
31
D. Whether the Trial Court Properly Denied Calleja’s Motion
In his eighth issue, Calleja contends that the trial court erred in denying his
summary judgment motion on his claim because he established that the
unauthorized payments were made from his account and the Bank failed to prove
its affirmative defenses.
A bank may charge against its customer’s account an item that is properly
payable from that account, and an item is properly payable “if it is authorized by
the customer and is in accordance with any agreement between the customer and
the bank.” TEX. BUS. & COM. CODE ANN. § 4.401(a). Calleja presented summary
judgment evidence that neither he nor any other signatory on the account
authorized the forged checks and subsequent withdrawals from the account
beginning in June 2012. The Bank has not presented any contradictory evidence
indicating that the challenged payments and withdrawals were actually authorized
by an account holder. Furthermore, as we have already held, the Bank cannot take
advantage of the affirmative defenses of sections 3.405, 3.406, or 4.406. We
therefore conclude that Calleja established that he was entitled to summary
judgment in his favor, and we hold that the trial court erred in denying his
summary judgment motion.
and that the Bank’s “no evidence” summary judgment motion was improper and
premature, respectively. See TEX. R. APP. 47.1.
32
We sustain Calleja’s eighth issue.4
Conclusion
We reverse the trial court’s summary judgment granting the Bank’s motion
and denying Calleja’s motion, and we render judgment that Calleja is entitled to a
refund from the Bank in the amount of the unauthorized withdrawals from his
account. We vacate the attorney’s fees award in favor of the Bank.
Evelyn V. Keyes
Justice
Panel consists of Chief Justice Radack and Justices Keyes and Higley.
4
The 2008 Agreement, which we have held governed Calleja’s and the Bank’s
relationship at the time of the unauthorized charges against Calleja’s account,
allows for the recovery of attorney’s fees under limited circumstances not
applicable here. This agreement, therefore, does not authorize Calleja’s recovery
of attorney’s fees from the Bank.
33