Levy Baldante Finney & Rubenstein v. Wells Fargo

J-A22035-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

LEVY BALDANTE FINNEY & RUBENSTEIN, IN THE SUPERIOR COURT
P.C., OF
PENNSYLVANIA
Appellant

v.

WELLS FARGO BANK, N.A. AND TD
BANK, N.A.,

Appellees No. 3241 EDA 2016

Appeal from the Order Entered September 14, 2016
in the Court of Common Pleas of Philadelphia County
Civil Division at No.: 001575 June Term 2015

BEFORE: BOWES, J., LAZARUS, J., and PLATT, J.*

MEMORANDUM BY PLATT, J.: FILED FEBRUARY 14, 2018

Appellant, Levy Baldante Finney & Rubenstein, P.C., appeals from the

order of September 14, 2016, which granted the motion of Appellees, Wells

Fargo Bank, N.A. and TD Bank, N.A., for summary judgment in this action.

For the reasons discussed below, we affirm.

We take the underlying facts and procedural history in this matter from

the trial court’s October 28, 2016 opinion and our independent review of the

certified record.

[Appellant] is a law firm with offices in Philadelphia,
Pennsylvania and Haddonfield, New Jersey. [Appellees], TD Bank
(“TD”) and Wells Fargo Bank (“WFB”), are national banks that do
business in Pennsylvania and New Jersey.
____________________________________________

* Retired Senior Judge assigned to the Superior Court.
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In its amended complaint, [Appellant] alleged one claim
against TD under Uniform Commercial Code (“UCC”) § 4-401, 13
Pa.C.S.A. § 4401, Pennsylvania Commercial Code § 4401, and
N.J.S.A. 12[A]:4-401[a] when it debited [Appellant’s] bank account
for checks that were fraudulently indorsed.[b]

[a]The Pennsylvania and New Jersey statutes listed in
[Appellant’s] complaint are almost wholesale
adoptions of the UCC. Therefore, for purposes of ease
and clarity, [the trial] court will refer to the UCC in
this opinion unless the applicable and Pennsylvania or
New Jersey statute varies from the UCC.

[b][Appellant’s a]mended [c]omplaint, filed November
2, 2015, lists WFB as a defendant in the caption, but
does not allege a cause of action against WFB.
Instead, the only count in the complaint is alleged
against TD. Therefore, WFB’s motion for summary
judgment is granted, and the balance of this opinion
will address why TD is also entitled to summary
judgment.

* * *

From June 2012 to January 2015, Jack Cohen, then a named
partner at [Appellant], stole over $300,000 from [Appellant’s] TD
checking accounts[c] by fraudulently indorsing[d] twenty-nine
checks[e] that had been made payable to referral attorneys, expert
witnesses, clients, and other third parties.

[c][Appellant] had three bank accounts at TD relevant
to this litigation—a Pennsylvania IOLTA [(Interest on
Lawyer Trust Account)] account, a New Jersey IOLTA
account, and a business premier checking account.

[d] The word “indorsement” used in different tenses
throughout [the trial court] opinion, has the same
meaning as the word “endorsement.” Although the
latter spelling is more commonly used, UCC § 3-405
uses “indorsement” to describe signing the back of a
check. As such, for purposes of clarity and
consistency, “indorsement” will be the version used
throughout [the trial court] opinion.

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[e]Twenty[-]three of the checks were credited from
[Appellant’s] PA IOLTA account, five were credited
from its NJ IOLTA account, and the last fraudulently
indorsed check was credited from [Appellant’s]
business premier checking account.

Susan Huffington, [Appellant’s] bookkeeper, first discovered
one of Mr. Cohen’s fraudulently indorsed checks in [the fall of][1]
2014. At that time, Ms. Huffington was notified by a referral
attorney that he had not received his referral check from the firm.
When Ms. Huffington looked into the matter she noticed the check
had been cashed, but “the [i]ndorsement looked like [Jack
Cohen’s] signature.”

Following this discovery, . . . Ms. Huffington took no action,
other than confronting Mr. Cohen. Even after two of Mr. Cohen’s
“reimbursement” checks to the firm bounced, Ms. Huffington took
no action. It was not until the middle of January 2015 and the
discovery of more fraudulently indorsed checks that Ms.
Huffington mentioned the issue to [a partner of Appellant].

Additional fraudulently [i]ndorsed checks were discovered
when Ms. Huffington reviewed the monthly account statements
TD provided. Ms. Huffington would review the statements and
look, “for signatures that appear[ed] to be [Mr. Cohen’s].” For
the New Jersey IOLTA account, Ms. Huffington was able to review
the hard-copy account statement, as it contained images of the
front and back of each check. However, the Pennsylvania IOLTA
account required review of [Appellant’s] online account because
the hard copy statements did not contain images of the back of
checks that were cashed.

After compiling a list of fraudulently indorsed checks,
Appellant filed an affidavit of forgery with TD on March 18, 2015,
____________________________________________

1 The trial court states Ms. Huffington first discovered the check in early
November 2014. (See Trial Court Opinion, 10/28/16, at 2). In its brief,
Appellant states Ms. Huffington first discovered the checks “in or around
October 2014.” (Appellant’s Brief, at 3). In his deposition, Attorney Mark
Rubenstein discusses the problem with the check occurring in September
2014. (See Appellees’ Motion for Summary Judgment, 7/18/16, Exhibit B,
Deposition of Mark Rubenstein, Esq., 6/07/16, at 57).

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affirming that it learned of the unauthorized withdrawals on
January 22, 2015.

When TD refused [Appellant’s] demand for a refund to its
accounts, [Appellant] filed a complaint on [September 1], 2015.
[Appellant] amended its complaint on November 2, 2015, and TD
replied with a proper new matter, pursuant to [Pennsylvania Rule
of Civil Procedure] 1030, asserting that the suit was barred, in
part, by waiver and estoppel. TD filed [its] motion for summary
judgment on July 18, 2016. In its motion, TD argues that
[Appellant] waived its right to sue when it failed to notify TD of
Mr. Cohen’s fraud within thirty days of being provided a monthly
account statement, as is required by the [d]eposit [a]greement[f]
that governs [Appellant’s] business relationship with TD.[g]

[f]The [d]eposit [a]greement provides [in relevant
part],

[]On accounts with check-writing privileges, you must
review your statement and imaged copies of paid
checks, if any, we send you and report forgeries,
alternations, missing signatures, amounts differing
from your records, or other information that might
lead you to conclude the check was forged or that,
when we paid the check, the proper amount was not
paid to the proper person. . . [.] In addition, you
agree not to assert a claim against us concerning any
error, forgery or other problem relating to a matter
shown on an [a]ccount statement unless you notified
us of the error, forgery or other problem within thirty
(30) [c]alendar [d]ays after we mailed you the
statement.[]

[Appellees’ Motion for Summary
Judgment, Exhibit H], Deposit
Agreement, at 12-13. (Emphasis Added).
[Appellant’s] account with TD had check
writing privileges. Thus, it was required
to review its account statement and
report any problems to TD within thirty
days.

[g]When [Appellant] opened its checking accounts
with TD, it signed a “New Business Agreement” form.

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In the second line under the heading “IMPORTANT
INFORMATION,” the agreement states,

[]The undersigned acknowledge(s)
receipt of the Deposit Account Agreement
and Fee Schedule will govern my/our
account with the Bank. My/Our use of this
account shall evidence my/our acceptance
of the terms and conditions as set forth in
the Deposit Account Agreement . . .”

[Appellees’ Motion for Summary Judgment, Exhibits
C, D, and E, New Business Accounts Forms, at 1].

(Trial Court Opinion 10/28/16, at 1-4) (some record citations and footnote

omitted).

On September 14, 2016, the trial court granted Appellees’ motion for

summary judgment. The instant, timely appeal followed. The trial court did

not order Appellant to file a concise statement of errors complained of on

appeal. See Pa.R.A.P. 1925(b). On October 28, 2016, the trial court issued

an opinion. See Pa.R.A.P. 1925(a).

On appeal, Appellant raises the following questions for our review:

1. Where the Uniform Commercial Code, as adopted by
Pennsylvania and New Jersey, provides that there are “no duties
on the drawer to look for unauthorized [i]ndorsements”, and all
evidence confirms that it is impracticable to require a drawer to
review checks and identify unauthorized [i]ndorsements, did the
[t]rial [c]ourt err by nonetheless imposing on Appellant, as a
drawer, a duty to review the issued checks for unauthorized
[i]ndorsements?

2. Given that Sections 4-401 and 3-419 of the Uniform
Commercial Code impose strict liability on a drawee bank to
reimburse its customer when it wrongfully pays a check by virtue
of the check’s containing an unauthorized [i]endorsement, was it

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error for the [t]rial [c]ourt to absolve the drawee bank of its
obligation to make the reimbursement to its drawer?

3. Is a Deposit Agreement between a bank and its customer that
effectively eliminates the bank’s duties of good faith and ordinary
care as required by the Uniform Commercial Code enforceable?

4. Does the fact that a checking account is a law firm IOLTA
account alter the relative rights and responsibilities that otherwise
exist under the Uniform Commercial Code between a bank and its
customer?

5. Where the Uniform Commercial Code allows a drawer three
years t[o] file a claim from the time it receives a bank statement
indicating that a check or checks were not properly payable
because of an unauthorized [i]ndorsement, and where the
Uniform Commercial Code does not require a depositor/drawer to
look for unauthorized [i]ndorsements, is it reasonable for the bank
to reduce the time to thirty days from the time it received a bank
statement, within which the drawer must notify the bank?

(Appellant’s Brief, at 2).2

Appellant appeals from the trial court’s grant of summary judgment. We

briefly note our standard of review.

Our scope of review of an order granting summary judgment
is plenary. We apply the same standard as the trial court,
reviewing all the evidence of record to determine whether there
exists a genuine issue of material fact. We view the record in the
light most favorable to the non-moving party, and all doubts as to
the existence of a genuine issue of material fact must be resolved
against the moving party. Only where there is no genuine issue
as to any material fact and it is clear that the moving party is
____________________________________________

2 Despite raising five questions with no subparts in its statement of the
questions involved, Appellant divides its argument into three sections with
subparts, contrary to our rules of appellate procedure. (See Appellant’s Brief,
at 8–23); see also Pa.R.A.P. 2119(a) (“The argument shall be divided into as
many parts as there are questions to be argued[.]”). Nonetheless, we will
address its issues because this discrepancy does not hamper our review. See
Donahue v. Fed. Express Corp., 753 A.2d 238, 241 n.3 (Pa. Super. 2000).

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entitled to a judgment as a matter of law will summary judgment
be entered.

Motions for summary judgment necessarily and directly
implicate the plaintiff’s proof of the elements of his cause of
action. Thus, a record that supports summary judgment will
either (1) show the material facts are undisputed or (2) contain
insufficient evidence of facts to make out a prima facie cause of
action or defense and, therefore, there is no issue to be submitted
to the fact-finder. Upon appellate review, we are not bound by
the trial court’s conclusions of law, but may reach our own
conclusions. The appellate court may disturb the trial court’s
order only upon an error of law or an abuse of discretion.

Dibish v. Ameriprise Fin., Inc., 134 A.3d 1079, 1084-85 (Pa. Super. 2016),

appeal denied, 141 A.3d 481 (Pa. 2016) (citation omitted).

As noted, supra at n.2, Appellant’s argument section does not match

its statement of the questions involved. Our review of the argument section

shows that Appellant’s three issues with multiple subparts are, in actuality,

minor variations on four main themes. These are: (1) the trial court wrongly

imposed a duty upon Appellant to review checks for unauthorized

indorsements (see Appellant’s Brief, at 9-11, 20-21); (2) the thirty-day period

contained in the deposit agreement is unreasonable (see id. at 15-17, 21-

22); (3) the trial court erred in finding that Appellant could have reasonably

detected the fraud with a more diligent review of its monthly statements (see

id. at 11-12, 20-23); and (4) by granting summary judgment to TD, the trial

court has allowed the negligence of WFB to go unpunished (see id. at 13-19).

We will address these four issues, seriatim.

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In its first issue, Appellant claims that the “trial court erred in imposing

upon Appellant, as a drawer of the check, a duty to review checks for

unauthorized [i]ndorsements.” (Id. at 9; see id. at 9-11, 20-21).

Specifically, Appellant argues that the UCC does not impose an obligation on

customers to look for unauthorized indorsements. (See id. at 9). Further,

it claims that the trial court erred in imposing a heightened duty upon it

because it is a law firm. (See id. at 20-21). We disagree.

Section 4-406(c) of the UCC provides as follows.3

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
of an alteration of an item or because a purported signature by or
on behalf of the customer was not authorized. If, based on the
statement or items provided, the customer should reasonably
have discovered the unauthorized payment, the customer must
promptly notify the bank of the relevant facts.

UCC § 4-406(c). Comment 5 to Section 4-406 states, in relevant part,

“Section 4-406 imposes no duties on the drawer to look for unauthorized

indorsements. Section 4-111 sets out a statute of limitations allowing a

customer a three-year period to seek a credit to an account improperly

charged by payment of an item bearing an unauthorized indorsement.” UCC

____________________________________________

3 We will follow the trial court’s example and will refer to the UCC in this
decision unless the applicable Pennsylvania or New Jersey statute varies from
it.

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J-A22035-17

§ 4-406, Com. 5. However, Section 4-103 of the UCC provides, in pertinent

part:

The effect of the provisions of this Article 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. However, the parties may determine by agreement the
standards by which the bank’s responsibility is to be measured if
those standards are not manifestly unreasonable.

UCC § 4-103(a).

In the instant matter, the trial court acknowledged that the UCC did not

impose a duty on a customer to search for fraudulent indorsements. (See

Trial Ct. Op., at 5). However, it found the parties had modified their duties

by agreement, in that the deposit agreement required Appellant to notify the

bank within thirty days of any problem with a check it issued; these problems

included not paying the proper amount to the correct person, which would

necessarily include unauthorized indorsements. (See id.; see also Appellees’

Motion for Summary Judgment, Exhibit H, at 12-13). Appellant does not

dispute that it signed forms acknowledging receipt and acceptance of the

terms and conditions of the deposit agreement. (See Appellant’s Brief, at 9-

23; see also Appellees’ Motion for Summary Judgment, Exhibits D and E).

Appellant also does not point to any relevant caselaw that has found that such

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modifications are unenforceable.4 (See Appellant’s Brief, at 9-11). Thus, the

trial court neither abused its discretion nor committed an error of law in finding

that Appellant agreed to the modifications contained in the deposit agreement,

and that these modifications imposed a duty on it to look for unauthorized

indorsements.

Appellant further claims that the trial court wrongly imposed a

heightened duty upon it because it was a law firm and the majority of

fraudulently indorsed checks were from IOLTA accounts. (See id. at 20-21).

Again, we note that Appellant mischaracterizes the trial court’s opinion. In its

opinion, the trial court correctly notes that both the Pennsylvania Rules of

Professional Conduct and the New Jersey State Legislature have imposed

heightened requirements designed to ensure that a law firm manages the

IOLTA accounts properly. (See Trial Ct. Op., at 6-7). The trial court does not

attempt to graft these requirements onto the UCC but rather points to them

____________________________________________

4 We find Appellant’s reliance on Crescent Women’s Med. Grp., Inc. v.
KeyCorp, 127 Ohio Misc.2d 93 (C.P. 2003), misplaced. Firstly, Crescent is
not binding authority on this Court. See Huber v. Etkin, 58 A.3d 772, 780
n.8 (Pa. Super. 2013), appeal denied, 68 A.3d 909 (Pa. 2012). Secondly,
Crescent is factually distinct, in that it did not involve fraudulent
indorsements, but rather the wrongful depositing of unindorsed checks
marked “for deposit only” in employees’ personal accounts. Crescent, supra
at 94. Lastly, the trial court in Crescent provided no explanation or legal
support for its bald conclusions that the requirement to look for “missing
signatures” on checks contained in the deposit agreement does not include
missing indorsements and that “[t]here is no reason to believe” that the
deposit agreement exceeds the requirements of the UCC. Id. at 96; see id.
at 95-96. Thus, we do not find Crescent to be binding or persuasive
authority.

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to explain that, because of these requirements, Appellant received more

information from TD than it ordinarily would and that a more comprehensive

review of that paperwork by Appellant’s bookkeeper would have enabled

Appellant to discover the fraudulent activity within the agreed-upon thirty-day

period. (See id.). Thus, there is no basis for the Appellant’s contention that

the trial court imposed a “law firm exception” to the UCC. (Appellant’s Brief,

at 21). Accordingly, we conclude that the trial court neither abused its

discretion nor committed an error of law in its discussion regarding IOLTA

acounts. See Dibish, supra at 1085. Appellant’s first issue does not merit

relief.

Appellant next claims that the thirty-day period contained in the deposit

agreement is unreasonable. (See Appellant’s Brief, at 15-17, 21-22). Again,

we disagree.

As noted above, the UCC allows for modification of its terms by

agreement. See UCC § 4-103(a). Moreover, the deposit agreement modified

the UCC’s three-year statute of limitations and required Appellant to notify it

of any problems within thirty days of receiving its monthly statement. (See

Appellees’ Motion for Summary Judgment, Exhibit H, at 12-13). Further, risk-

shifting agreements such as the deposit agreement in the instant matter are

common and enforceable in the absence of evidence that the bank has failed

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J-A22035-17

to exercise ordinary care.5 See United States v. Payment Processing Ctr.,

LLC, 461 F.Supp.2d 319, 330-31 (E.D. Pa. 2006).6

The Pennsylvania courts do not appear to have ruled upon the

reasonableness of such notification periods. However, the New Jersey courts

have addressed the issue. In Estate of Yahatz v. Bank of America, N.A.,

2015 WL 8456799, (N.J. Super. Ct. App. Div. filed Nov. 10, 2015), the New

Jersey Superior Court, Appellate Division, in an unpublished opinion, enforced

a sixty-day notification period contained in a deposit agreement. See Yahatz,

supra at **2-3 (“time limitations for bringing suit may be imposed by statute

. . . or by agreement between the banks and its customer. . . . A customer

who fails to notify a bank of an unauthorized transaction with the time

limitations set forth in a deposit agreement is precluded from challenging a

transaction the customer alleges was unauthorized.”) (citations omitted). In

Oguguo v. Wells Fargo Bank, 2016 WL 3041853 (D.N.J. filed May 27, 2016)

(unpublished decision), the District Court found that a thirty-day time limit is

“not manifestly unreasonable, reflecting an interest in expeditiously stopping

____________________________________________

5 We note that while Appellant does argue that a bank failed to exercise
ordinary care, that bank is WFB, not TD, and for the reasons discussed, infra,
WFB is not a proper party to this action. (See Appellant’s Brief, at 13-19).

6“While we recognize that federal court decisions are not binding on this court,
we are able to adopt their analysis as it appeals to our reason.” Kleban v.
Nat. Union Fire Ins. Co. of Pittsburgh, 771 A.2d 39, 43 (Pa. Super. 2001)
(citations omitted).

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fraudulent acts and minimizing losses from bank fraud.” Oguguo, supra at

*5. In their brief, Appellees cite to an additional seventeen cases wherein

both state and federal courts have found contractual notification periods as

short as fourteen days to be reasonable. (See Appellees’ Brief, at 23 n.6).

Appellant does not point to any cases that have held that such

notification periods unreasonable in the absence of the bank’s failure to

exercise ordinary care.7 (See Appellant’s Brief, at 15-17; 21-22). Instead,

____________________________________________

7 We find Appellant’s reliance on Phillips Home Furnishings, Inc. v.
Continental Bank, 331 A.2d 840 (Pa. Super. 1974) and Hy-Grade Oil Co.
v. New Jersey Bank, 350 A.2d 279 (N.J. Super. Ct. Appellant. Div. 1975),
cert. denied, 361 A.2d 532 (N.J. 1976), misplaced. The decision of this Court
in Phillips is not good law, as the Pennsylvania Supreme Court overturned it.
See Phillips Home Furnishings, Inc. v. Continental Bank, 354 A.2d 542,
544 (Pa. 1976). Moreover, Hy-Grade does not involve a deposit agreement
that places time limits on the right to recover for fraudulent transactions or
indorsements. Instead, it involves an exculpatory clause that absolved the
banks in question of all responsibility for problems with their night depository,
which the court ultimately found to be against the public interest. See Hy-
Grade, supra at 280-83. We find little similarity between an exclusionary
clause that releases a bank from all legal liability for a night depository box
under its sole possession and control, and a risk-shifting clause that imposes
a time limitation on the right to recover from a bank. Thus, we find that Hy-
Grade is not persuasive authority.

While the final decision cited by Appellant, In re Clear Advantage
Title, Inc., 438 B.R. 58 (Bankr. D.N.J. 2010), is much closer factually because
it concerns fraudulent withdrawals, it is of limited legal assistance. See Clear
Advantage, supra at 61-63. It does not appear that the defendant bank in
Clear Advantage moved for summary judgment on the basis of the time
limitation contained in their deposit agreement, rather the trial court discusses
it within the context of certain common law claims that are predicated on the
plaintiff’s proving of a special relationship between itself and the bank. See
id. at 65-66. In dicta, the trial court notes that the bank will likely be able to
reduce any award against it by showing the plaintiff’s negligence in failing to

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Appellant argues that the cited cases are not applicable because they do not

involve fraudulent indorsements, which they claim are all but impossible to

discern from a review of the statement. (See id.). However, as discussed

below, we disagree with Appellant’s contention.

Initially, we note that we agree with the court in Oguguo that such time

limits are not unreasonable, and there is a clear interest in stopping fraudulent

acts, minimizing losses, and encouraging customers to meticulously monitor

their bank accounts. See Oguguo, supra at *5. Moreover, we find

persuasive the reasoning of the New York State Supreme Court in Galasso,

Langione, & Botter, LLP, v. Galasso. 2016 WL 5108641 (N.Y. Sup. Ct. filed

Sept. 19, 2016) (unpublished opinion).

The Galasso case concerned a multi-year, very complicated fraud

perpetrated by an employee of the plaintiff law firm, which involved, in part,

fraudulent indorsements of checks from an IOLA (New York State’s version of

IOLTA) account. See Galasso, supra at **1-10, *21. When seeking

summary judgment, one of the bank defendants argued that the plaintiff did

____________________________________________

report the fraud within the specified time frame. See id. at 66. Later, in a
footnote, the court briefly discusses that it will apply the statutory time limit
contained in New Jersey law rather than the time period contained in the
deposit agreement. See id. at 65 n.4. However, this Court does not find the
trial court’s bald statement that the time period is unreasonable to be at all
persuasive, particularly in light of the underlying facts in Clear Advantage,
see id. 61-63, which demonstrate that with even a cursory review of its bank
statements, the plaintiffs should have easily spotted the fraud within the
relevant time frame.

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not report the forgeries to the bank until “well outside of the [shortened]

[fourteen-] day [notification] period required under the parties’ agreement.”

Id. at *22 (footnote and internal quotation marks omitted). The court held

that, so long as the bank could prove it made the monthly account statements

available to plaintiff and exercised ordinary care, the shortened notification

period was triggered. See id. at *23. Because the bank was able to show

that it mailed the statements to the plaintiff, who did not carefully review

them, the court found that the plaintiff could not recover for any checks forged

outside the shortened notification period. See id. at **24-25.

In the instant matter, Appellant has provided no legal support for its

contention that the thirty-day period is somehow presumptively unreasonable

in cases of fraudulent indorsement. It has also provided no evidence that TD

failed to exercise ordinary care. Further, as discussed above, we do not find

such a shortened period to be unreasonable. Moreover, as discussed below,

the trial court’s finding that Appellant did not exercise due diligence in

reviewing the statements is supported by the evidence. Therefore, we

conclude that trial court neither abused its discretion nor committed an error

of law in finding that the shortened notification period was reasonable. See

Dibish, supra at 1085; Galasso, supra at **23-25; Yahatz, supra at **2-

3; Oguguo, supra at *5. Appellant’s second claim does not merit relief.

In its third contention, Appellant argues that the trial court erred in

finding that Appellant could have reasonably detected the fraud with a more

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diligent review of its monthly statements. (See Appellant’s Brief, at 11-12,

20-23). Specifically, Appellant maintains that, even if it had more fully

reviewed its account statements, including looking at the check backs, it could

not have recognized that the signature on the back was Mr. Cohen’s, not the

payees’, unless it already knew there was a problem with the check. (See id.

at 11-12). It further contends that by placing the burden on it, as the

customer, to monitor its statement for fraudulent activity, the trial court

relieved the bank from any “duties when its customer is a law firm.” (Id. at

20). In sum, it claims that it is impossible for any customer to discern a

fraudulent indorsement unless and until it is contacted by the correct payee

to alert it to a problem. (See id. at 20-23).

However, Appellant provides no legal support for these statements. It

is long-settled that failure to cite any authority supporting the argument

constitutes a waiver of the issue on appeal. See Jones v. Jones, 878 A.2d

86, 90 (Pa. Super. 2005). This Court will not act as counsel and will not

develop arguments on behalf of an appellant. See Bombar v. West Am.

Ins. Co., 932 A.2d 78, 94 (Pa. Super. 2007). When deficiencies in a brief

hinder our ability to conduct meaningful appellate review, we can dismiss the

appeal entirely or find certain issues to be waived. See Pa.R.A.P. 2101.

Because Appellant has failed to develop this issue, it waived it. See id.; see

also Bombar, supra at 94; Jones, supra at 90.

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In any event, in its decision, the trial court acknowledged that it is easier

to discover problems with the front of a check then fraudulent indorsements

on the back. (See Trial Ct. Op., at 7). However, it noted that because the

vast majority of the fraudulently indorsed checks were drawn on IOLTA

accounts, Appellant had the ability either via the paper statements or online

to view the images of the checks, including the backs. (See id. at 7). The

trial court points to the deposition testimony of Appellant’s bookkeeper, Susan

Huffington, who admitted that she did not ordinarily scrutinize check images

at all, unless she could not balance the account. (See id.; see alao Appellees’

Motion for Summary Judgment, Exhibit K, at 23). Further, our review of the

record confirms the trial court’s finding that with “some diligence,” in its review

of the monthly statements, Appellant could have discovered the fraudulent

indorsements within the thirty-day period. (Trial Ct. Op., at 7; see also

Appellees’ Motion for Summary Judgment, Exhibit K, at 33, 44-45).

Moreover, Appellant’s actions, or more correctly lack of action, when the

fraud was finally discovered exemplifies its lack of due diligence in this matter.

The check that first alerted Ms. Huffington to the fraud was drawn in the fall

of 2014. As discussed above, when made aware of the problem, Ms.

Huffington did not alert her supervisors about it and did not alert TD. Mr.

Cohen subsequently indorsed four more checks before Ms. Huffington alerted

her supervisors to the problem in January 2015. Appellant did not alert TD

about the fraudulent activity until March 2015. Had Ms. Huffington acted more

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diligently and notified her superiors promptly when she first discovered the

issue with the September check, and had Appellant notified TD in January

2015, Appellant could have recovered between $7,500.00 and approximately

$43,000.00.8 (See Appellees’ Brief, at 10) (listing checks). Thus, it is evident

that, even when Appellant became aware of the fraudulent indorsements, it

did not act with due diligence in notifying TD.

In the New Jersey case of Globe Motor Car Co. v. First Fidelity Bank,

N.A., 641 A.2d 1136 (N.J. Super. Ct. Law. Div. 1993), affirmed, 677 A.2d 794

(N.J. Super. Ct. App. Div. 1996), cert. denied, 686 A.2d 764 (N.J. 1996), an

office manager embezzled over one and one-half million dollars from an

automobile dealership. See Globe, supra at 1138. The trial court in its

decision granting summary judgment to defendant First Fidelity Bank,

described the plaintiff’s monitoring of its finances thusly:

Throughout the period of [the employee’s] deception,
routine inspections by plaintiff’s accountants, defendant Petrics,
Meskin & Nassaur, failed to reveal any discrepancy. The
accountants apparently reviewed only [the employee’s] falsified
bank reconciliation and the top sheet of the bank statement
showing the month-end account balance. The accountants never
audited [the employee’s] bank reconciliation and, until he was
finally caught, no one reviewed any of his forged cancelled checks,
nor did anyone verify any of his forged deposit tickets. On site
vehicle inspections by First Fidelity and [other defendants] failed
to reveal any reason for alarm. When vehicle counts did not
coincide with bank or dealer records, [the employee] gave the
inspectors assorted explanations for the discrepancies. When
____________________________________________

8 Also, had Ms. Huffington notified her supervisors when she discovered the
issue with the September check, they might have prevented Mr. Cohen from
fraudulently indorsing the remaining checks.

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questioned about a vehicle’s absence, [the employee] often
responded that the vehicle was out on lease, already paid to the
bank, or sold or traded subject to payment. [The employee’s]
embezzlement was finally brought to light in May 1990, when
defendant First Fidelity informed [plaintiff] that it was out of trust.

Id. at 1138. In upholding the trial court’s grant summary judgment in the

instant matter, we find persuasive the statements of the trial court in Globe

as to why the employer is in a better position than the bank to detect

employee fraud.

In considering the relationship of the parties and the nature
of risks involved, there is no question that depositors such as
[plaintiff] are better suited than their lending bank to manage
their own affairs, hire and supervise their own employees, keep
their own records, hire their own auditors and detect and deal with
corporate theft. The bank’s monthly reports to its creditor permits
the depositor to determine if any deposits are missing or if checks
are drawn without authority. A prompt examination of those
records should have disclosed to the [plaintiff] that its office
manager was a thief. In fact, even if the bank was aware of [the
employee’s] defalcation, the bank had no duty to disclose matters
of which the other party has actual or constructive knowledge or
as to which the information or means of acquiring information of
the two parties is equal. Banks cannot be expected to be their
borrowers’ financial guarantors. Here, [plaintiff’s] attempt to
assign liability to First Fidelity for its failure to police [plaintiff’s]
faithless employee is like the farmer, who upon appointing the fox
to guard the henhouse, finds fault with the rooster for the
subsequent slaughter. In both instances, blame is misplaced.

* * *

Ultimately, fault must lie with the employer, the person or
persons who presumably carried out the necessary background
checks and maintained the most significant day-to-day contact
with the dishonest employee. The employer that hires a thief
must suffer the consequences of his or her misjudgment. . . .

Id. at 1139, 1142 (citation and quotation marks omitted).

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Here, similarly, the record supports the trial court’s conclusion that

Appellant was in a far better position than Appellees to detect Mr. Cohen’s

fraudulent activities. (See Trial Ct. Op., at 7-9). Appellees provided Appellant

with the information necessary to detect the fraud and Appellant failed to

make diligent use of those tools. Thus, Appellant’s third clam, that the trial

court erred in finding that it did not act with due diligence is meritless. See

Globe, supra at 1139, 1142.

In its final contention, Appellant argues that by granting summary

judgment to TD, the trial court has allowed the negligence of WFB to go

unpunished. (See Appellant’s Brief, at 13-19). We decline to address this

contention. As the trial court correctly notes, while Appellant named WFB as

a defendant, it did not include any allegations against it in its amended

complaint. (See Trial Ct. Op., at 1 n.2; Appellant’s Amended Complaint,

11/02/15, at 1-3). Moreover, Appellant admits that it cannot file a direct

action against WFB under the UCC because it is not in privity with it. (See

Appellant’s Brief, at 13); see also ADS Assocs. Grp., Inc., v. Oritani Sav.

Bank, 99 A.3d 345, 361 (N.J. 2014) (bank does not owe party duty in absence

of contractual relationship; therefore, non-contracting party does not have

direct cause of action against bank). Thus, the issue of WFB’s alleged

negligence is not properly before us and the issue of whether granting

summary judgment in favor of TD “absolves” WFB is irrelevant. (Appellant’s

Brief, at 16). We conclude that the trial court neither committed an error of

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law nor abused its discretion in granting summary judgment. See Dibish,

supra at 1085.

Order affirmed.

Judge Lazarus joins the Memorandum.

Judge Bowes files a Concurring Memorandum.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/14/18

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