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Griffith v. BCBank, Inc.

Supreme Court of West Virginia

April 7, 2017

Lyle Brooks Griffith, Plaintiff Below, Petitioner
BCBank, Inc., Defendant Below, Respondent

         Barbour County 14-C-37


         Petitioner Lyle Brooks Griffith, by counsel Bren J. Pomponio, appeals the Circuit Court of Barbour County's April 15, 2016, order granting summary judgment to respondent. Respondent BCBank, Inc., by counsel David M. Thomas and Michael R. Proctor, filed a response in support of the circuit court's order to which petitioner submitted a reply.

         This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the circuit court's order is appropriate under Rule 21 of the Rules of Appellate Procedure.

         Petitioner Lyle Brooks Griffith brought this action as the executor of the estate of his father, Brooks J. Griffith ("Brooks"). Brooks was a resident of Philippi, West Virginia, and banked at BCBank, Inc. for many years. Beginning in 2006, he was suffering from dementia and was taking medication for that condition. Brooks's family hired Crystal Lynn Marple, now Crystal Gain, to care for Brooks as his home health worker. Following his wife's death, Brooks was the sole owner of the BCBank, Inc. account until petitioner was added as a joint account owner in August of 2010, at which time Brooks and petitioner executed amended checking account agreements setting forth the rights and obligations of the joint account owners and respondent. Both remained joint account owners until the account was closed on April 13, 2011.[1]

         According to petitioner, Mrs. Gain and her husband embezzled funds totaling $169, 000 from the BCBank, Inc. account from February of 2010 through April of 2011.[2] However, it does not appear that Brooks challenged any of the transactions during his lifetime.[3] During 2010 and through April 13, 2011, respondent made account statements available to the account owners. Each month, respondent mailed those statements, containing a detailed transaction history of all credits and debits to the account for the previous thirty days. Those statements also included copies of all checks paid from the checking account during each statement period. On April 13, 2011, the parties became aware that there were unauthorized transactions from the checking account, which is when respondent closed the checking account and moved the remaining funds to a new account that was also jointly owned by petitioner and Brooks.[4] Respondent did not pay any further transactions from the original account after that date. While petitioner alleges that Pam Golden, respondent's customer service officer, promised to reimburse petitioner for the unauthorized transactions once Mr. and Mrs. Gain were criminally adjudicated, respondent denies that this statement was made and Ms. Golden denies ever making such assurance.

         On June 12, 2014, petitioner filed suit alleging that these transactions were unauthorized, asserting claims for forgery, breach of contract, breach of fiduciary duty, negligence, and estoppel. Respondent deposed petitioner and his wife, but petitioner did not depose any present or former employees of respondent. Respondent filed its motion for summary judgment in the circuit court on or about October 23, 2015, to which petitioner submitted a response and respondent submitted a reply. The circuit court heard oral argument on January 8, 2016. In its order granting summary judgment to respondent, entered on April 15, 2016, the circuit court found that there are no genuine issues of material fact and awarded summary judgment to respondent on all counts. With regard to forgery, the circuit court found that West Virginia Code § 46-4-406 barred petitioner from asserting claims for all of the alleged unauthorized transactions from the checking account against respondent because respondent sent and made available account statements. Thus, it found that the customer was required to exercise reasonable promptness in examining the account statements to determine whether there were any unauthorized payments. Because petitioner failed to exercise reasonable promptness in examining the account statements and reporting unauthorized transactions, petitioner was precluded from seeking reimbursement. As part of its analysis, the circuit court concluded that respondent suffered a loss from petitioner's and Brooks's failure to meet their statutory duties and that respondent paid the transactions in good faith. Further, it found that all of the allegedly unauthorized payments were made prior to respondent having notice from petitioner or Brooks and that respondent did not make any further payments after it received notice. Next, the circuit court determined that petitioner and Brooks both had more than thirty days to report any unauthorized signatures but failed to do so. As part of that reasoning, the circuit court found that because Mr. and Mrs. Gain were the only two individuals alleged to have committed forgeries from the checking account, "any subsequent transaction following their original ones in February, 2010, for Brooks and August, 2010, for [petitioner], would be precluded under the 'same wrongdoer' provision of W.Va. Code § 46-4-406(d)(2)."

         The circuit court then found that all of petitioner's claims fail as a matter of law because they are barred by the applicable statutes of limitations or had been expressly or impliedly abandoned. Specifically, it found that the claims for forgery and negligence were barred by the statutes of limitations - the forgery claim had a three-year statute of limitations while the negligence claim had a two-year statute of limitations. Pointing to the possible use of the discovery rule, the circuit court found that petitioner knew on April 13, 2011, that he and/or Brooks had been injured, respondent charged the account based on the allegedly unauthorized signatures and forgeries, and respondent's transfer of funds from the checking account caused the loss to petitioner and/or Brooks. Therefore, it concluded that there was no basis to toll the limitations period under the discovery rule. The circuit court also found that there was no fraudulent concealment.

         Finally, the circuit court found that petitioner's estoppel claim had been abandoned and petitioner had failed to establish any evidence to support the breach of contract claim. According to the circuit court, petitioner had abandoned his estoppel claim because he had "not even attempted to respond to or challenge the testimonial and documentary evidence included in [respondent's] Motion for Summary Judgment that demonstrates [respondent] is entitled to judgment as a matter of law." It also concluded that petitioner had wholly failed to meet his burden in establishing the essential elements for breach of contract and had only vaguely alleged that respondent breached a provision in the checking account agreement through its conduct without identifying how the agreement was breached and what particular parts of the agreement had been breached. Petitioner appeals from that order.

         As we previously recognized, "'[a] circuit court's entry of summary judgment is reviewed de novo.' Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994)." Syl. Pt. 1, Horton v. Prof'l Bureau of Collections of Maryland, Inc., 238 W.Va. 310, 794 S.E.2d 395 (2016).

         On appeal, petitioner sets forth four assignments of error. First, he contends that the circuit court erred in granting summary judgment on his forgery claim where there were genuine issues of material fact regarding whether respondent exercised ordinary care and paid the forged checks and unauthorized transfers in good faith. He argues that the Uniform Commercial Code ("UCC") provides strict liability for a bank that pays an unauthorized item and that it is undisputed that respondent paid unauthorized transfers and forged checks presented by Mrs. Gain. However, petitioner admits that the UCC is inconsistent on who bears the burden of establishing that a bank paid unauthorized transfers in good faith. He further points to the Federal Bank Secrecy Act, which he claims requires banks to monitor suspicious activity in accounts in order to prevent the use of banks for illegal practices. Petitioner asserts that respondent knew or should have known of the unauthorized transfers for several reasons, including that there was a skip in the numbered sequence of checks presented by Mrs. Gain for cashing, Mrs. Gain was permitted to order additional checks over the phone, and multiple checks were written for amounts just under $500 in an apparent attempt to avoid scrutiny. Citing out-of-state federal authority, petitioner argues that ordinary care required the bank to maintain policies and procedures designed to avoid the unauthorized transfers.

         West Virginia Code § 46-4-406(c)-(e), part of the UCC, provides as follows:

(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 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.
(d) If the bank proves that the customer failed with respect to an item to comply with the duties imposed on the customer by subsection (c), the customer is precluded from asserting against the bank:
(1) The customer's unauthorized signature or any alteration on the item, if the bank also proves that it suffered a ...

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