ACCEPTED
01-15-00210-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
12/14/2015 2:32:10 PM
CHRISTOPHER PRINE
CLERK
No. 01-15-00210-CV
FILED IN
IN THE 1st COURT OF APPEALS
HOUSTON, TEXAS
12/14/2015 2:32:10 PM
FIRST COURT OF APPEALS
CHRISTOPHER A. PRINE
Clerk
HOUSTON, TEXAS
FRANCISCO CALLEJA-AHEDO
Appellant
V.
COMPASS BANK
Appellee
On Appeal from the 55th District Court
Harris County, Texas
Trial Cause No. 2014-22168
APPELLANT’S REPLY BRIEF
Michael C. O’Connor
State Bar No. 15187000
Lesley C. O’Connor
State Bar No. 24086952
O’CONNOR & CRAIG
2825 Wilcrest Drive, Suite 261
Houston, TX 77042
713-266-3311
ORAL ARGUMENT REQUESTED
TABLE OF CONTENTS
TABLE OF CONTENTS .........................................................................................i
INDEX OF AUTHORITIES……………………………………..………………...ii
ARGUMENT……………………………………………………………………....1
PRAYER………………………………………………………………………….19
i
INDEX OF AUTHORITIES
Case Law
All Seasons Window & Door Man, Inc. v. Red Dot Corp.,
181 S.W.3d 490, 504 (Tex. App. ― Texarkana 2005, no pet.)....................19
American Airlines Employees Federal Credit Union v. Martin,
29 S.W.3d 86, 94 (Tex. 2000).........................................................................3
Bank of America, N.A. v. Haag,
37 S.W.3d 55, 58-59 (Tex. App. — San Antonio 2000, no pet.)................... 5
Bank of Texas v. VR Elec, Inc.,
276 S.W.3d 671, 678 (Tex. App. — Houston [1st Dist.] 2008,
pet. denied)...............................................................................................15,16
Centex Corp. v. Dalton,
840 S.W.2d 952, 956 (Tex. 1992)...................................................................7
Coleman v. Bldg State Bank,
592 P.2d 103, 111 (Kan. App. 1979).............................................................4
Compass Bank v. Nacim,
459 S.W.3d 95 (Tex. App. - El Paso, 2015, no pet.).........................10, 12, 15
Cumis Insurance Society, Inc. v. Girard Bank,
522 F. Supp. 414, 422 (E.D. Pa. 1981).........................................................17
El Apple 1, Ltd. v. Olivas,
370 S.W.3d 757, 763 (Tex. 2012).................................................................19
FDIC v. Lenk,
361 S.W.3d 602, 607-08 (Tex. 2012)........................................................4, 12
Greater Houston Transp. Co. v. Phillips,
801 S.W.2d 523, 525 (Tex. 1990) ..................................................................1
Hohenberg Bros. Co. v. George E. Gibbons & Co.,
537, S.W.2d 1, 3 (Tex. 1976)..........................................................................7
ii
Jag Orthopedics, P.C. v. AJC Advisory Corp.,
2015 NY Slip Op 31360, at 15 (U) (N.Y. Sup. Ct. 2015).............................16
Jefferson State Bank v. Lenk,
323 S.W.3d 146, 149 (Tex. 2010).............................................................4, 12
Martin v. Chase Manhattan Bank,
791 N.Y.S.2d 158, 159-60 (N.Y.S.Ct. 2004)..................................................5
McConnell v. Southside Independent School District,
858 S.W.2d 337, 341 (Tex. 1993).................................................................12
McDowell v. Dallas Teachers Credit Union,
772 S.W.2d 183, 192 (Tex. App. ― Dallas 1989, no writ)..........................15
Myrick v. National Savings & Trust Co.,
268 A.2d 526, 528 (D.C. 1970).......................................................................4
Robinson Motor Xpress, Inc. v. HSBC Bank, USA,
826 N.Y.S.2d 350 (N.Y.S.Ct. 2006)..............................................................5
Terry v. Puget Sound Nat’l Bank,
492 P.2d 534, 535 (Wash. 1972).....................................................................4
Union Planters Bank v. Rogers,
912 So.2d 116, 122 (Miss. 2005)....................................................................4
Via Net v. TIG Ins. Co.,
211 S.W.3d 310, 314 (Tex. 2006)...................................................................2
Wachovia Bank v. Fed. Reserve Bank,
338 F.3d 318, 324-25 (4th Cir. 2003).............................................................18
Westport Bank & Trust v. Lodge,
325 A.2d 222, 226 (Conn. 1973).....................................................................4
iii
Statutes
Tex. Bus. & Comm. Code §1.201.....................................................................10, 16
Tex. Bus. & Comm. Code §3.406.....................................................................15, 17
Tex. Bus. & Comm. Code §4.103.......................................................................5, 13
Tex. Bus. & Comm. Code §4.406.....................................1, 2, 3, 4, 5, 10, 12, 13, 14
Tex. Fin. Code §34.301...........................................................................................12
Tex. Fin. Code §34.302.............................................................................................6
iv
ARGUMENT
I. APPELLANT’S NEGLIGENCE IS IRRELEVANT
TO APPELLEE’S LIABILITY
Appellee Bank devotes a substantial part of its Brief to emphasizing that
Appellant Calleja was negligent in failing to inquire about missing bank statements
for almost 18 months. However, Calleja’s negligence in failing to inquire, if any, is
irrelevant to the liability issues in this case.
Negligence requires a duty of care. See, e.g., Greater Houston Transp. Co. v.
Phillips, 801 S.W.2d 523, 525 (Tex. 1990). There can be no common law duty
because the Bank concedes, and even emphasizes, that Tex. Bus. & Comm. Code
§4.406, specifically provides a complete scheme of rights and duties regulating the
relationship of a bank and its customer concerning the handling of bank statements.
See Appellee’s Brief at 22, fn 10. Any duty of Calleja to inquire about missing
bank statements must emanate from §4.406, which expressly provides that a bank
customer has no duty concerning bank statements unless and until the bank first
“sends or makes available” the statements to its customer. See also, Official
Comment 1 to §4.406, which states:
The duty stated in subsection (c) [for customer to review bank
statements] becomes operative only if the “bank sends or makes
available a statement of account or items pursuant to subsection (a).”
A bank is not under a duty to send a statement of account or the paid
1
items to the customer, but if it does not do so, the customer does not
have any duties under subsection (c).
If a bank complies with its initial duty under §4.406, Calleja concedes that the
customer bears the risk of non-receipt of the statements, such as when a wrongdoer
intercepts the statements. In this case, the Bank failed to comply with this initial
duty, which makes Calleja’s alleged negligence irrelevant.
The crux of this lawsuit is whether the Bank sent or made available the
relevant bank statements to its customer, as such duty was modified by the relevant
Account Agreement. As shown below, the Bank failed to show that it properly sent
or made available the relevant bank statements, which defeats the Bank’s summary
judgment. The Bank further ignores its own negligence and/or lack of good faith,
which allowed an unknown wrongdoer to change the proper address where account
statements were to be sent and then cashed a $37,800 check which contained a
signature of Calleja completely dissimilar to the signature card.
II. CASELAW SUPPORTS APPELLANT’S POSITION
The Bank cites numerous cases in its Brief, all of which are inapplicable to
the Bank’s initial duty to properly send or make available account statements. The
Bank first cites and quotes from the Texas Supreme Court case of Via Net v. TIG
Ins. Co. 211 S.W.3d 310, 314 (Tex. 2006), which discusses a common law duty of
due diligence in non-banking contractual relationships. This duty simply does not
2
apply to §4.406, which specifically requires that a bank first send or make
available account statements to its customer before the customer has any duty with
respect to such statements. The Bank has recognized repeatedly that the UCC
creates a “discrete fault scheme, specifically allocating responsibility among
parties to a banking relationship.” See Appellee’s Brief at 16, fn 5; CR 188-92. The
focus must be on §4.406 and not common law principles.
The Bank does discuss several §4.406 cases, all of which deal with
situations in which a bank mailed account statements to a proper address, but the
statements were then intercepted by a wrongdoer. The most important case is
American Airlines Emp. Fed. Credit Union v. Martin, 29 S.W.3d 86, 94 (Tex.
2000), in which the Texas Supreme Court stated that the customer’s duty to detect
and report unauthorized transactions “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.” The Bank emphasizes that the Supreme
Court also stated that a bank customer’s burden “includes the risk of non-receipt of
account statements.” However, this latter quote must be taken in context with
footnote 37 immediately following the statement, which clarifies that the risk of
non-receipt falls on the account holder “when account statements are mailed to the
proper address.” The bank in Martin mailed the account statements to a proper
address.
3
The Bank also cites and discusses Union Planters Bank v. Rogers, 912 So.2d
116, 122 (Miss. 2005); Myrick v. Nat’l Sav. Trust Co., 268 A.2d 526, 528 (D.C.
1970); Coleman v. Bldg State Bank, 592 P.2d 103, 111 (Kan. App. 1979); Westport
Bank & Trust Co. v. Lodge, 325 A.2d 222, 226 (Conn. 1973); and Terry v. Puget
Sound Nat’l Bank, 492 P.2d 534, 535 (Wash. 1972), for the proposition that a bank
customer loses if he fails to contact the bank concerning missing bank statements.
Appellee’s Brief at 15. However, these cases must again be considered in context,
since in each case the bank sent statements to the proper address and/or to the
person authorized to receive statements.1 Calleja admits that when a bank complies
with its initial duty under §4.406, and under its account agreement, the bank
customer bears the risk of non-receipt of statements, as provided by the Texas
Supreme Court in the Martin case.
The undisputed facts in this case are different. The evidence shows that the
Bank sent the relevant statements to an unknown wrongdoer who convinced the
Bank to change the authorized address on the Account. CR 49. The Bank
completely ignores the cases holding that a bank is responsible in this situation.
The most important cases are from our own Texas Supreme Court. In both
FDIC v. Lenk, 361 S.W.3d 602, 607-08 (Tex. 2012), and in Jefferson State Bank v.
1 The Lodge case is the only case cited by the Bank which involves the wrongdoer changing the address to which
statements were mailed. However, the wrongdoer was an employee of the account holder, the account holder knew
and intended that account statements were being sent to the wrongdoer, and the account holder received overdraft
notices at her home address.
4
Lenk, 323 S.W.3d 146, 149 (Tex. 2010), the Supreme Court clearly stated that a
bank does not fulfill its §4.406 obligation to provide account statements “to a
customer” by sending them to an imposter. Another significant case is Bank of
America, N.A. v. Haag, 37 S.W.3d 55, 58-59 (Tex. App. ― San Antonio 2000, no
pet.), in which the court held specifically that a bank customer has no duty to
notify the bank concerning missing bank statements that were improperly
addressed. See Appellant’s Original Brief at 18-19, 26 for further discussion of
these cases. See also, Martin v. Chase Manhattan Bank, N.Y.S.2d 158, 159-60
(N.Y.S.Ct. 2004), and Robinson Motor Xpress v. HSBC Bank, USA, 826 N.Y.S.2d
350 (N.Y.S.Ct. 2006), discussed in Appellant’s Original Brief at 20-21. The Bank
does not attempt to discuss or distinguish these cases in its Brief.
III. THE 2008 DEPOSIT AGREEMENT CONTROLS THE
PARTIES’ RELATIONSHIP
The Bank and Calleja both agree that §4.103(a) permits a bank and its
customer to contractually modify “the effect of the provisions” in §4.406, which
was done in this case. See Appellee’s Brief at 23. However, §4.103(a) further
provides that a bank cannot disclaim its responsibility “for its lack of good faith or
failure to exercise ordinary care.”
Although the parties agree that a contract applies to the deposit relationship,
there is a dispute over which contract applies. The Bank produced not one but three
5
potential account agreements in this case. The first agreement, dated as of August
22, 2008, was attached to Calleja’s Motion for Summary Judgment. CR 51-70. A
more legible copy is attached at Appendix 2 to Appellant’s Original Brief. The
second agreement, dated as of February 2012, was attached to the Bank’s Motion
for Summary Judgment. CR 205-228. The third agreement, dated as of September
2013, was also produced by the Bank and attached to Calleja’s Motion for
Summary Judgment. CR 136-150.
An account agreement becomes effective as to the bank customer when it is
mailed to the customer or as otherwise agreed to by the parties. See Tex. Fin. Code
§34.302. Calleja acknowledges that he received the 2008 Account Agreement,
which made it effective as to him. CR 46. The Bank does not dispute that the 2008
Account Agreement was effective between 2008 and 2012, but argues that the
2012 Account Agreement became effective and amended the 2008 Account
Agreement shortly before the relevant account statements showing wrongdoing
would have been generated by the Bank. Appellee’s Brief at 24-27. Section 17 of
the 2008 Account Agreement provides that it may be amended 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.
(CR 67 at bottom left, continuing at CR 68 at upper right).
6
Compliance with these provisions is in the nature of a condition precedent to
any effectiveness of the 2012 Account Agreement, and the Bank had the burden of
proving compliance with such conditions precedent. See, e.g., Centex Corp. v.
Dalton, 840 S.W.2d 952, 956 (Tex. 1992): Hohenberg Bros. Co. v. George E.
Gibbons & Co., 537 S.W.2d 1, 3 (Tex. 1976). There is no evidence that the Bank
did any of these things to make the 2012 Account Agreement effective as to
Calleja. See also, Amer. Airlines Empl. Fed. Credit Union v. Martin, 29 S.W.3d 86,
96 (Tex. 2000), in which the Supreme Court discusses how a Deposit Agreement
becomes “effective,” which involves notice to the customer, which is lacking in
Calleja’s case.
The Bank now argues that Calleja sought to recover attorney’s fees pursuant
to the 2012 Account Agreement, thereby validating it despite any defects in the
Bank’s proof. See Appellee’s Brief at 24-25. The Bank is wrong. Calleja never
relied on the 2012 Account Agreement to recover attorney’s fees. Instead, Calleja’s
attorney assumed that the 2013 Account Agreement was effective when this
lawsuit was filed in 2014, and that it applied to a claim for attorney’s fees made
after 2013. See Calleja’s Motion for Summary Judgment, CR 36, 44. The 2013
Account Agreement does not retroactively apply to occurrences in 2012, well
before it would have become effective. See Section 16 of the 2012 Account
Agreement, CR 219, which provides that amendments apply when they become
7
“effective.” Calleja made his position concerning the 2012 and 2013 Account
Agreements clear in his Motion for Summary Judgment. CR 36 at fn 1. Calleja has
not taken inconsistent positions which would validate the effectiveness of the 2012
Account Agreement despite the Bank’s lack of proof.
The Bank further argues that the account signature card includes Calleja’s
agreement to any amendments of the deposit contract. See Appellee’s Brief at 24.
The signature card is illegible concerning what agreements, if any, are in the
signature card pertaining to amendments. In addition, the signature card is dated 3-
11-88. The subsequent 2008 Account Agreement supersedes the signature card
based upon the specific provision in the 2008 Account Agreement as to how
amendments are to be made effective.
The Bank curiously quotes from the 2008 Account Agreement, which
provides that “By continuing to maintain your account ... after the amendment
becomes effective, you agree to the amendment of this Agreement.” (emphasis
added). The Bank then argues that Calleja agreed to the 2012 Account Agreement
because he maintained his account after February 2012. See Appellee’s Brief at 24-
25. The Bank completely ignores the highlighted language that the customer must
maintain his account “after the amendment becomes effective.” There is simply no
evidence that the 2012 Account Agreement ever became effective as to Calleja.
8
Finally, there is other evidence which shows that the 2012 Account
Agreement was not effective as to Calleja. First, the February 7, 2014 letter from
Jimmy Myers, a vice president of the Bank, quotes verbatim from the 2008
Account Agreement, which differs from the 2012 Account Agreement. CR 75.
Second, unlike the 2008 Account Agreement, the 2012 Account Agreement states
that it is for “Al Nova Branches Only.” CR 228. Third, Mueller, the Bank’s
representative, states in her second affidavit that she only “believes,” and that it
“appears,” that the 2012 Account Agreement is the one governing the deposit
relation between Calleja and the Bank. CR 396. Mueller may have proved that the
2012 Account Agreement is a business record of the Bank, but this does not prove
that the 2012 Account Agreement ever became effective as to Calleja.
Significantly, the Bank fails to address any of this evidence in its Brief, despite
being discussed by Calleja in his Original Brief at 8-10. The Bank itself conceded
that the 2012 Agreement only “is believed to be the deposit agreement in effect
during the relevant time period.” CR 168, fn 1.
IV. THE 2008 ACCOUNT AGREEMENT SUPPORTS
APPELLANT’S POSITION
A legible copy of the 2008 Account Agreement is attached at Appendix 2 to
Appellant’s Original Brief. Significantly, the 2008 Account Agreement does not
require that Calleja review account statements that were “made available.” Instead,
9
the Agreement provides that Calleja must review only account statements he
“receives” or alternatively, when the Bank “sends” the account statements. CR
295. The term “send” requires that the statement be “properly addressed.” Tex.
Bus. & Comm. Code §1.201(b)(36).
The identical language in another Compass Bank account agreement was
interpreted by the Court in Compass Bank v. Nacim, 459 S.W.3d 95 (Tex. App. ―
El Paso 2015, no pet.). The Nacim court held that the distinction between
“receives” and “sends” in the Compass Bank account agreement creates a conflict
which must be interpreted against Compass Bank, and therefore the customer is
only required to review account statements he “receives.” Furthermore, the “made
available” language in §4.406 was inapplicable because Compass bank had altered
the §4.406 duties of the bank customer to eliminate that option. The Bank is
collaterally estopped by the Nacim case from relitigating the terms of its own
Agreement.
The Bank completely ignores the Nacim case in its Brief. By eliminating
both the “send” and the “makes available” requirements, the 2008 Account
Agreement completely undercuts the trial court’s focus on whether account
statements were “made available.” CR 735. 2
10
The 2008 Account Agreement specifically provides that only “[a]ny account
owner or authorized signer of a joint account may change the mailing address for
your account.” CR 295. The evidence in this case shows that the Bank allowed an
unknown wrongdoer to change the address on the account multiple times, which
obviously constitutes a breach of contract. CR 49. In its arguments, the Bank
assumes that account statements concerning the Calleja account may not have been
properly addressed. CR 374-75.
Despite the specific wording in the 2008 Account Agreement that only an
account holder may change the mailing address for the account (CR 65), the Bank
argues on appeal for the first time that mailing account statements to a fraudulent
address not provided by an account holder was authorized. The Bank bases its
position on wording in the 2012 Agreement, which provides that statements “may
be mailed to you at the address shown in our records,” coupled with a phrase in a
later section of the Agreement that “records regarding your accounts will be
deemed correct unless you timely establish with us that we made an error.” CR
212; Appellee’s Brief at 29.
2 The Bank suggests in its Brief the many ways that Calleja could have obtained Account Statements, which
allegedly shows that the Bank “made available” the Account Statements to Calleja. However, even the 2012
Account Agreement specifies that statements are “made available” by holding or delivering the statements “in
accordance with your request or instruction.” CR 212. There is no evidence that the Bank received any request or
instruction from an account holder to hold the statements or deliver them other than to the brother’s address in the
Woodlands. See Appellant’s Original Brief at 15-16.
11
The Bank never raised its records argument in its Motion for Summary
Judgment (CR 161-200) and cannot do so here for the first time. Tex. R. Civ. P.
166a(c). As stated by the Supreme Court in McConnell v. Southside Independent
School District, 858 S.W.2d 337, 341 (Tex. 1993):
Consistent with the precise language of Rule 166a(c), we hold that a
motion for summary judgment must itself expressly present the
grounds upon which it is made. A motion must stand or fall on the
grounds expressly presented in the motion. In determining whether
grounds are expressly presented, reliance may not be placed on briefs
or summary judgment evidence.
The Bank’s argument concerning its records completely falls apart since the
2008 Account Agreement and the Nacim case provide that Calleja’s duty only
applies to account statements he “receives.” In addition, the Bank has a clear duty
under both §4.406 and the 2008 Account Agreement to deliver account statements
to its customer. The Texas Supreme Court has stated multiple times that a bank
cannot fulfill this duty by sending account statements to an unknown imposter. See
FDIC v. Lenk, supra at 607-08; Jefferson State Bank v. Lenk, supra at 149. The
Supreme Court’s conclusion was based not only on the wording of §4.406, but also
Tex. Fin. Code §34.301(b), which provides that a bank must provide account
statements “to an account holder.” The Bank cannot simply contract away its duty
by providing a “new” interpretation of the Account Agreement which authorizes
the Bank to send account statements to an imposter.
12
Although Tex. Bus. & Comm. Code §4.103 allows the parties to vary “the
effect of” §4.406, the Bank’s “new” record interpretation goes beyond the “effect”
of §4.406 to completely eliminate the Bank’s duty thereunder, which it cannot do.
Furthermore, §4.103 provides that the parties cannot disclaim a bank’s
responsibility for its lack of good faith or failure to exercise ordinary care.
Allowing an unknown imposter to change the address on the account, particularly
in the manner evidenced in this case (CR 49), raises issues both of lack of good
faith and of negligence.
Obviously, the Bank’s “new” interpretation concerning records also clashes
with the provision that only the account holder can change the address on the
account. The Bank cannot have it both ways. If only account holders can change
the address on the account, then the Bank breaches the Account Agreement by
allowing an imposter to change the name on the account. Alternatively, if the Bank
can change the address on the Account at the request of an imposter, then the Bank
breaches the provision that only an account holder can change the address on the
account.
Furthermore, the Bank’s interpretation concerning its records is flawed. The
section in the Account Agreement that records are deemed correct unless the
customer “timely” establishes that an error was made is taken out of context. The
remainder of the section reflects the types of errors referred to, all of which are
13
errors concerning credits or debits described in the account statements. In addition,
the Bank argues that “timely” means 30 days, which is derived from the wording
later in the section, requiring that a customer review statements “received” by the
customer. Appellee’s Brief at 29. Taking the terms “errors” and “timely” in context
demonstrate that these terms refer to credits or debits in any account statements
received by Calleja. 3
V. THE BANK DID NOT PROVE THAT IT SUFFERED A LOSS
Tex. Bus. & Comm. Code §4.406(d)(1) provides that if a bank customer
fails to timely report his unauthorized signature on a check after the bank sends or
makes available the statement showing the problem, the customer is precluded
from asserting the unauthorized signature against the bank, but only “if the bank
also proves that it suffered a loss by reason of the [customer’s] failure.” The Bank
offered no evidence that it suffered a loss and fails to even address this issue in its
Brief, other than quoting §4.406(d) in its Brief at 23.
The first statement showing any problem was the June 2012 statement,
which reflected a charge for new checks not ordered by Calleja. CR 246. Even
assuming that the Bank sent or made available to Calleja the June 2012 statement
during the first week in July (when statements for the prior month are customarily
3The Bank contends that the signature card contains a statement to “Hold All Correspondence” and also shows an
address in Mexico, which the Bank argues is Calleja’s “address shown in our records” and did not change.
Appellee’s Brief at 29, fn 17. To the contrary, the uncontroverted evidence shows that Calleja instructed the Bank to
mail statements to his brother’s address in the Woodlands, which the Bank did only prior to July 2012. CR 46.
14
mailed by the Bank), the forged check was paid by the Bank on July 30, 2012,
which is less than 30 days after the June 2012 statement would have been sent.
Since the Bank contends that Calleja had 30 days to report a problem, and the
forged check was already paid during this time, the Bank cannot prove that it
suffered a loss by reason of Calleja’s failure to report a problem within the 30 day
period. See, e.g., Compass Bank v. Nacim, 459 S.W.3d 95, 106-07 (Tex. App. ―
El Paso 2015, no pet.). Calleja discussed this lack of proof in his Original Brief at
16, but the Bank fails to even address it in its Brief.
VI. SECTION 3.406 DOES NOT APPLY
The Bank argues that Tex. Bus. & Comm. Code §3.406 bars Calleja’s
claims. Appellee’s Brief at 16-22; CR 195.
Section 3.406 provides as follows:
A person whose failure to exercise ordinary care substantially
contributes to an alteration of an instrument or to making 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 (emphasis added).
In order for §3.406 to apply, the Bank has the burden to prove that it paid
the $38,700.00 check and any other items in “good faith” (emphasis added). See,
e.g., Bank of Texas v. VR Elec, Inc., 276 S.W.3d 671, 678 (Tex. App. ― Houston
[1st Dist.] 2008, pet. denied); McDowell v. Dallas Teachers Credit Union, 772
15
S.W.2d 183, 192 (Tex. App. ― Dallas 1989, no writ). In its brief, the Bank refers
to VR Elec, Inc., but then states that .... “[A]s the party alleging lack of good faith,
Appellant bears the burden of proof.” The Bank is wrong and completely
misconstrues the §3.406 requirement that the Bank has the burden to prove that it
acted in “good faith” under §3.406.
In VR Elec, supra at 678, the court began its analysis of §3.406 by clearly
stating: “[A]s shown above, the Bank must prove that (1) [the customer] failed to
exercise ordinary care that substantially contributed to the alteration of the check
and (2) paid the check in “good faith” (emphasis added).
The Bank’s assertion that its good faith in paying the subject check “is
presumed” is clearly wrong. The term “good faith” means honesty in fact and “the
observance of reasonable commercial standards of fair dealing.” Tex. Bus. &
Comm. Code §1.201(b)(20). The Bank has produced absolutely no evidence of its
“honesty in fact” or of its “observance of reasonable commercial standards of fair
dealing.” The Bank cannot satisfy its proof burden by claiming that its good faith is
presumed. See also, Jag Orthopedics, P.C. v. AJC Advisory Corp., 2015 NY Slip
Op 31360, at 15 (U) (N.Y. Sup. Ct. 2015) (“With respect to UCC 3-406, a
bank cannot establish a defense under that section if it fails to show that it acted in
good faith and in accordance with reasonable commercial standards.”)
16
The Bank provides no evidence of either “honesty in fact” or “the
observance of reasonable commercial standards of fair dealing.” To the contrary,
there are facts indicating the Bank’s bad faith. The purported signature of Calleja
on the $38,700 check bears no resemblance to Calleja’s signature on the signature
card. CR 71. Furthermore, Calleja stated in his affidavit that, “the Bank sent disks
of recorded conversations between Bank employees and a person purporting to be
me. I do not recognize this person’s voice, and I did not authorize anyone to call
the Bank and request that the address for the Account be changed or for the Bank
to issue a debit/ATM card to anyone.” CR at 49. These facts raise issues of the
Bank’s good faith which prevents the Bank from relying on §3.406 as a defense. If
§3.406 is construed as the Bank has proposed, it would “have the effect of
exculpating the bank from any liability regardless of its own negligence in paying
the instruments bearing forged drawer signatures.” Cumis Insurance Society, Inc.
v. Girard Bank, 522 F. Supp. 414, 422 (E.D. Pa. 1981).
The Bank speculates that Calleja’s brother was involved in the forgery of the
$38,700.00 check, and that permitting the brother to access Calleja’s banking
information allowed other parties to learn Calleja’s banking information, which
“likely” allowed the forgery to occur. There is simply no proof of these
speculations.
17
Calleja admits that monthly account statements were received at his
brother’s address in the Woodlands, but the uncontroverted evidence is that the
Account Statements were never opened by the brother, were not available to
anyone else before being delivered unopened to Calleja, and that all Account
Statements and checks were accounted for prior to July 2012. CR 47- 48. The
Bank has produced no evidence that Calleja or his brother failed to exercise
ordinary care in handling checks and/or Account Statements and further has
produced no evidence that actions or failure to act by Calleja or his brother
contributed to “the making of a forged signature” in the $38,700.00 check. Any
alleged failure to detect or report a forgery is completely different from any alleged
action or failure to act which “contributed to the making” of the forgery. See, e.g.,
Wachovia Bank v. Fed. Reserve Bank, 338 F.3d 318, 324-25 (4th Cir. 2003).
VII. THE BANK’S PROOF OF ATTORNEY FEES IS FAULTY
The Bank relied on three affidavits from Mr. Huttenbach to justify its claim
for attorney’s fees. CR 571-72; 604-06; 716-17. Calleja stated in his Original Brief
at 33 that the fee statements proved by Mr. Huttenbach in his first affidavit only
totaled $22,722.69. The Bank correctly points out that this is an error and that the
fee statements attached to the first affidavit total $25,201.69. However, the Bank is
wrong that the total of the fee statements proved by Mr. Huttenbach total
$51,728.05. The Bank attempts to rely on fee statements included behind Mr.
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Huttenbach’s second affidavit, but Mr. Huttenbach does not mention or attempt to
prove these fee statements. CR 604-06. The fee statements proved by Mr.
Huttenbach in his first and third affidavits only total $34,793.04.
In addition, Mr. Huttenbach testifies in his third affidavit that “I currently
charge the rate of $345.00 per hour, but Compass Bank gets a discount off my
standard rate.” CR at 716. However, the fee statement attached to Mr.
Huttenbach’s third affidavit reflects an hourly rate of $345.00, without the discount
testified to by Mr. Huttenbach.
Finally Mr. Huttenbach testifies in his affidavits concerning his own
credentials but fails to address credentials of the other attorneys and paralegals
whose charges are reflected in the billing statements. This failure is fatal to the
Bank’s claim for attorney’s fees. See, e.g., El Apple 1, Ltd. v. Olivas, 370 S.W.3d
757, 763 (Tex. 2012); All Seasons Window & Door Man, Inc. v. Red Dot Corp.,
181 S.W.3d 490, 504 (Tex. App. ― Texarkana 2005, no pet.).
PRAYER
WHEREFORE, Appellant Francisco Calleja-Ahedo prays that this Court
reverse the summary judgment granted by the trial court, render judgment in favor
of Appellant on his Motion for Summary Judgment, or alternatively, remand this
case to the trial court for further proceedings.
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Respectfully submitted,
O'CONNOR & CRAIG
By: /s/ Michael C. O’Connor
Michael C. O'Connor
State Bar No. 15187000
2825 Wilcrest Drive, Suite 261
Houston, Texas 77042
(713) 266-3311
(713) 953-7513 (Fax)
Email: moconnor@oconnorcraig.com
Lesley C. O'Connor
State Bar No. 24086952
2825 Wilcrest Drive, Suite 261
Houston, Texas 77042
(713) 266-3311
(713) 953-7513 (Fax)
Email: loconnor@oconnorcraig.com
ATTORNEYS FOR APPELLANT
FRANCISCO CALLEJA-AHEDO
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CERTIFICATE OF COMPLIANCE
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), I hereby certify that
this brief contains 4,660 words (excluding the caption, table of contents, table of
authorities, signature, proof of service, certificate and certificate of compliance).
This is a computer generated document created using Microsoft Word, using 14-
point typeface. In making this certificate of compliance, I am relying on the word
count provided by the software used to prepare the document.
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document has
been served on the following counsel of record by telephonic transfer or electronic
service, on this the 14th day of December, 2015.
Michael D. Conner
Hirsch & Westheimer
1415 Louisiana, 36th Floor
Houston, Texas 77002
Facsimile: 713-223-9319
E-Mail: Mconner@hirschwest.com
/s/ Michael C. O’Connor
Michael C. O’Connor
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Francisco Calleja-Ahedo v. Compass Bank
Combined Opinion