Choice Escrow and Land Title v. BancorpSouth Bank, No. 13-1879 (8th Cir. 2014)
Annotate this CaseChoice filed suit against BancorpSouth for lost funds and BancorpSouth counterclaimed for attorney's fees. The court concluded that the loss of funds from Choice's account falls on Choice because there was no genuine dispute of fact as to whether BanCorpSouth's security procedures - which included password protection, daily transfer limits, device authentication, and dual control - were commercially reasonable; BancorpSouth met its burden of establishing that it accepted the payment order at issue in good faith; and BanCorpSouth complied with procedures or Choice's instructions. The court also concluded that the portion of the indemnification provision relating to attorney's fees was not inconsistent with Article 4A of the UCC and that BancorpSouth may seek attorney's fees from Choice under this provision. Accordingly, the court affirmed the district court's grant of summary judgment to BancorpSouth, reversed the district court's dismissal of BancorpSouth's counterclaim on the pleadings, and remanded for further proceedings.
Court Description: Civil case - Uniform Commercial Code. Under Article 4A of the UCC, where a bank and customer agree to implement a security procedure designed to protect themselves against fraud, the customer bears the risk of loss where the security procedure is commercially reasonable and the bank proves it accepted the payment order in good faith and in compliance with the procedures or customer instructions; here, all prongs of this test were met and the district court did not err in finding Choice bore the risk of loss; the provision in the parties' agreement regarding indemnification for attorneys' fees did not conflict with Article 4A and defendant may seek attorneys' fees from Choice under this provision.
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