ASP Enterprises, Inc. VS Kevin J. Guillory, Terry Guillory, Eunice M. Langhauser and Parish National Bank
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT NO 2008 CA 2235 ASP ENTERPRISES INC VERSUS KEVIN J GUILLORY TERRY GUILLORY EUNICE M LANGHAUSER AND PARISH NATIONAL BANK Judgment Rendered Appealed SEP 1 1 2009 from the 22nd Judicial District Court In and for the Parish of St Tammany Louisiana Case No 2003 15838 The Honorable Elaine W Dimiceli Claude F Stephen Reynaud Jr F Chiccarelli Judge Presiding Counsel for Plaintiff ASP Enterprises Appellant Inc Jeanne C Comeaux Eric B Baton Roy Landry Rouge Louisiana E Blossman Counsel for Defendant Robert S Stassi Lucas T Appellee Parish National Bank Regnier New Orleans Louisiana David J Boneno Counsel for Amicus Curiae Baton Louisiana Bankers Association Rouge Louisiana BEFORE KUHN GUIDRY AND GAIDRY JJ GAIDRY J A close a corporation that employee appeals former was the victim of summary a at following reasons we its judgment dismissing which it maintained its against the bank theft alleged forgery and claims F or the account checking by affirm FACTUAL AND PROCEDURAL BACKGROUND ASP Printers is printing in a situated doing business as Action stockholder sole was Sidney Guillot his wife Blanch Guillot the same property on Screen of silk screen At the times relevant to this matter its Covington Louisiana was on ASP corporation primarily engaged in the business president and treasurer Inc Enterprises ASP and its business s which the Guillots secretary premises were family residence was Parish National Bank the located ASP maintained Bank in for the checking Covington checking a Mr and Mrs Guillot Sometime around 1993 a that problems daily basis due to the were by or 1994 1996 Terry Guillory Mr Guillot prevented him as frequent absences s signatories from financial affairs and to to adopted orders to pay its creditors rather than issuing deposit accounts 2 experience multiple working various in his business the on managerial duties eventually assuming daily operations cash flow the business account commission salesman of Mr and Mrs Guillot point around that time apparently due checking a began Terry Guillory gradually assumed full control of the business of its the authorized account Around 1989 ASP hired health account at At some problems and overdrafts policy of checks drawn issuing on money its demand According through ASP on checks customer ASP on s payable entity named fictitious a customers for and Stop Goodbee s obtained convenience store a brother and Eunice also maintained large sums after a or co affidavit of use owned at a to a at signature year or more been forged on at the to of the Goodbee Quick from which Goodbee prior Ryan Guillot to that time paid by deposited inquiries similarly handled who had According a ASP to an supposedly check but that the in Goodbee s account and determined that other and that Mrs Guillot s many ASP checks On December 15 2003 ASP filed defendants Terry Guillory Kevin the Bank ASP alleged if not all 2003 he discovered that Mr Guillot made further had been payable cashing business operations son customer had in fact been third party checks had ASP the Bank check had been cashed at Goodbee and then Bank billing Terry Guillory left his employment with of 2003 ASP some by Kevin Guillory Terry Bank in its check Sidney Guillot in July unpaid invoice at the processed verbal altercation with the Guillots begun working Many to Langhauser the Guillorys mother Goodbee of cash for summer for including checks cashing ASP account at the checking a Terry Guillory had no account In the cashed name According Printers proceeds the s ASP checks party checks Screen Goodbee were forged fictitious payee invoices retaining ASP and third party checks Guillory the third jobs actually performed by the fictitious payees Mrs Guillot indorsing and cashing third party and to ASP the account checking Terry Guillory also created ASP to embezzle money from including forging money orders purchase to or Terry Guillory began number of methods checks drawn cash for a to ASP J a petition for Guillory Eunice that after Mr 3 damages naming M as Langhauser and Guillot became ill and Mrs Guillot to attempted expand his apparent control of the business ASP also alleged that in doing himself purchase materials to customers that as was s brother and converting s ASP answered the asserted Goodbee a an petition s knew petition denying and cross claim reconventional demand 24 causes Influenced and against ASP filed 2006 of action by seq personal ASP use should have known liability and asserting ASP and Terry Guillory liability a third and in turn party demand wages and breach of a contract to but Corrupt Organizations January 7 2008 Act Bank for s two motions for claims 4 1961 et seq for breach of partial summary against the Bank governed UCC The other addressed ASP the RICO motion S negligence under Louisiana law the Louisiana Uniform Commercial Code under RICO 18 U S C RICO against Terry Guillory the Bank filed One motion addressed ASP the UCC motion and adding allegations against all defendants under the federal Racketeer fiduciary duty and against the judgment was aware supplemental and amended petition a and for conversion under Louisiana law On or its his denying reiterating the allegations of its original petition asserting manager ownership interest in ASP July On s his assets for s against Sidney Guillot claiming unpaid convey as alleged that Kevin against the other defendants for indemnity claim cross and alleged embezzlement The Bank answered ASP a upon and invoice create ASP added alleged that both Goodbee and the Bank Terry Guillory of contract with customers Emphasis Terry Guillory Terry Guillory further Terry Guillory eventually took it so to Emphasis added operations for work performed accept payments for work performed sundry other functions Guillory Terry Guillory seized the opportunity conduct the business s La claims RS 10 1 101 et against the Bank The Trial Court The Bank trial court on its combined s partial motions for February 25 Reasons for dismissing the Bank judgment as for ASP final and 1 evidence was presented by procedures and there Guillory was forging On Motion in to effect and the trial ASP to April 28 was no or of the noted with under producing court which sic duty to to not contain as Final judgment a to partial summary In its the checks drawn furnish copies of the evidence no checks that he claimed As to the third party affidavits other n o the B ank s or operating company checks seeking clarification May 30 2008 of the decretal granting the Bank 2008 the trial court Thereafter signed the Bank filed judgment expressly seeking the dismissal I Terry Motion for Clarification and of March 11 On Bank 1915 B art him questioned endorsing the former motions motion for summary no issued against the either regard found that the Bank filed DCC motion and RICO motion judgment denying C CP the granting both the DCC RICO claims La court judgment did designating by evidence that the Bank had notice that wrongly 2008 heard were and that Mr Guillot offered ASP Designate Judgment finality was the requested copies of the supposedly delayed payable court statements in his affidavit of the date he the Bank or appealable under that the Bank checks with the bank checks However defendant judgment the trial account s as a judgment Judgment and Judgment language dismissing the DCC and decretal on summary On March 11 2008 the trial 2008 motion and the RICO motion reasons Action s a s a new of all of Parenthetically we note that it is technically improper to incorporate written reasons for judgment in the judgment itself See La C C P art 1918 Such action does not however serve to invalidate the judgment Country Club of La Prop Owners Ass n n 14 Dornier 96 0898 p 13 La App 1st Cir 2 97 691 So 2d 142 149 5 ASP judgment on July was heard 2008 11 The Bank against the Bank claims s on June 30 2008 and dismissing with s was motion for summary new granted by judgment signed all claims of ASP prejudice against the 3 Bank ASP now An amicus curiae brief has also been submitted appeals by the Louisiana Bankers Association ASSIGNMENTS OF ERROR AND ISSUES ON APPEAL ASP contends that the trial court committed error in the following described respects the Bank depository as 10 1 201 21 2 mere bank of the checks The trial transferee holder course or finding that under La under La RS RS 10 3 issue erred in court any at assuming was a holder in due or a and 2 302 1 court erred in The trial 1 the Bank granting rights against ASP as a greater than its transferor had under La R S 10 3 201 b If rights of a criminal co conspirator the trial court erred in allowing the Bank to benefit from the safe harbor protections of negotiable instrument laws such as comparative negligence 3 prescription the Bank burden found that no committed reversible error when it evidence existed that the Bank had any notice court that Terry Guillory an employee of wrongfully endorsing company checks that standards as 6 the the the Bank The was observed depositary and no court to error reasonable or when it commercial drawer bank committed reversible evidence existed failed forging maintain to or error support ASP apply its s when it claim that bank account of this motion for summary judgment was suggested by the trial court at the ofthe prior motion for clarification on May 29 2008 According to the transcript filing hearing of the hearing judgment was conversion and 3 Bank The trial concluded that 2 ASP The trial court committed reversible 5 found to the shifting and statutory presumptions The trial 4 only succeeds the trial court suggested motion for summary contentions that it had viable claims for that the filing of the new necessary to address ASP s negligence under non DCC Louisiana law ASP has not appealed that portion of the judgment ofthe June 11 2008 judgment that reaffirmed the prior granting of the RICO motion and the final dismissal of the RICO claims against the Bank Thus the RICO claims are not before us 6 oversight and maintenance reasonable commercially manner The trial 7 procedures m a committed reversible court error when it distinguish and analyze the different factual methods employed by Terry Guillory to embezzle from ASP failed to The trial court committed reversible 8 failed apply the applicable DCC provisions to R S liability and 10 3 101 in et seq different turn to when it each of the and how each method distinct methods of embezzlement under La error invoked different statutory statutory presumptions and defenses 9 The trial court committed reversible error when it concluded that because ASP failed to supervise its financial affairs by entrusting the majority of day to day management employee Terry Guillory the risk of loss caused by his fraudulent endorsements should be exclusively borne by ASP to its The trial 10 judgment 11 The trial contra non m for otion prescription as 13 m court s court erred in ummary to the DCC ASP raises the 1 the Bank granting s and of our 10 3 08 Fitness 6 6 08 992 s foregoing assignments of review Should this Court reexamine its La exception granting the Bank j udgment as to all remaining claims following legal issues for 08 1478 the erred in Performance Physical Therapy Corp 07 2206 La App 1st Cir denied apply to claims court ummary erred in In addition to the issues inherent in the error summary declining judgment s The trial otion for granting valentem The trial 12 erred in of prescription to the issue as doctrine of court ruling in Peak LLC v Hibernia 992 So 2d 527 writ So 2d 1018 that in prescriptive period of La R S 10 3 420 t conversion of funds the principle of contra non valentem should only apply if there is fraudulent concealment by the depository or drawer bank applying 2 the Did the trial of action under the causes court DCC of action which ASP err concluding that the causes supplant all additional claims and may have against the Bank The Bank frames the issues before to in us in terms of the defenses it raised the claims for the third party checks under La R S 7 1 0 3 405 b and La 10 3 420 R S As to the f forged ASP checks the Bank frames the in terms of its defenses under La R S 10 4 406 d Finally in Peak of contra application Performance matter de review novo Motorola Inc a La review v 888 So 2d 207 employ the Hibernia same 527 530 secure the just domestic civil actions appropriate admissions as to if the La La 967 A speedy CC P pleadings CC P art provides that 966 B s 212 In matters to 1st Cir App 5 La and art to de the trial 1st Cir 6 6 08 novo court s Fitness 992 So 2d 992 So 2d 1018 expressly favored in the law and inexpensive determination of non 966 A depositions mover our Physical Therapy App is undertaking applicable 2 Summary judgment is answers is entitled to to interrogatories no judgment genuine issue as a matter of Louisiana Code of Civil Procedure article upporting and opposing affidavits shall shall set forth such facts evidence and shall show the La subject appropriate was and affidavits in the record show that there is personal knowledge to 211 procedure material fact and that the law judgment It is therefore 02 0716 p 5 Corp writ denied 08 1478 La 10 3 08 designed to summary judgment Peak Performance The summary judgment is summary standards 07 2206 p Corp a writs denied 04 2314 04 2323 04 2326 04 828 determination of the issues LLC from appeal on Associated Indem 11 19 04 we us whether to as strictly limited SUMMARY JUDGMENT defendant from the action 878 So 2d 824 6 25 04 2327 v to comes effectively dismissing reaffirm the valentem non STANDARD OF REVIEW This to us which supra 4 111 f and 4 406 both the Bank and the amicus curiae urge holding relevant 2 issues affirmatively stated therein 8 as be made on would be admissible in that the affiant is competent to testify The mover judgment See burden of proof has the burden of trial at that he is entitled to summary art C CP La proof on 966 C 2 If the the subject matter 966 C 2 If the support for action or sufficient s more satisfy If the evidentiary burden his mover pleading but his not rest on the by affidavits specific facts showing that there is a produce claim s factual support See La C CP art supporting proof through affidavits has put forth response art absence of factual an trial at only C CP the adverse party must the essential more See La defense to or one that there is out nonmoving party otherwise the adverse party may of his or elements essential defense then the to claim action moving party points or one 2 966 C opponent not bear of the motion he need demonstrate the absence of factual support for elements of his will mover mere allegations otherwise or genuine issue for trial or or denials must set forth La C C P art 967 B DISCUSSION Holder in Due Course Status ASP of the Bank as opposed seq first three s s alleged to status designated assignments status as a mere and La R S 10 4 205 As amicus curiae the issues and status Our were never jurisprudence to the trial court appeal Judson So 2d 1106 v 1121 raised has a or error course under La R S 10 3 301 correctly emphasized by arguments relating submitted to the to trial longstanding general rule for decision will Davis present the question under La R S 10 3 203 transferee holder in due as a of 04 1699 not be p 23 writ denied 05 1998 the Bank and the holder in due court for determination that issues not submitted La App 1 2 0 06 1st Cir 6 29 05 924 So 2d 167 also Rule 1 3 Uniform Rules of Louisiana Courts of Appeal 9 course considered for the first time La et on 916 See In its reply brief holder in due to status course Nevertheless it urges addressed not that authorizes review of issues not interest of justice such review clearly requires of the issues and ASP s at the trial review these issues under Rule 1 3 to us were submitted related arguments to relating that the issues implicitly acknowledges ASP the trial After court s exception court considering level if the the nature conclude that such review is we inappropriate and pretermit consideration of ASP s first three assignments of 4 error The Checks at Issue The record of this third party checks account at to payable were memoranda of the admissions simply or answers to judgment evidence p 4 App not to an an affidavit 1st Cir affidavit is not ASP Goodbee at as to unsworn Sanders 7 11 03 or sworn attached on number of large a However many to various globo exhibits in by checking s affidavit deposition interrogatories utilize not party may of checks written without verification parties summary La ASP photocopies the Bank and money orders cashed of those documents A contains matter J v and unverified documents Ray 867 So 2d 771 in any way of sufficient or McDermott Inc 03 0064 A document which is 775 which is as not certified evidentiary quality to determining whether there are remaining genuine issues be or attached given weight in of material fact Id 4 ASP argues that the Bank must prove its status as a holder in due course in order to be entitled to assert the benefit of any safe harbor prescription and other defenses to ASP s claims Acknowledging that there are no Louisiana cases supporting that position ASP has cited the S 2d W 198 Tex App situation in which the given credit defenses of First State Bank Trust Co 1974 case however involved the different factual The cited plaintiff bank the checks against relating to the checks it v George 519 to enforce dishonored checks for which it had drawers In order to defeat the drawers personal necessary for the plaintiff bank seeking to enforce holder in due course The Bank in the present case was the checks to invoke the status of a is not sought case of Edinburg enforce payment as a depository bank Accordingly the cited case does not support ASP s position We agree with the Bank and amicus curiae that holder in due course status is irrelevant to the issues presented by ASP s causes of action seeking to 10 Robertson Cir Northshore v 9 25 98 So 2d 460 723 document simply attached considered by the State v Exxon court in 464 to a Likewise pp an memorandum determining 95 2501 Corp 97 2068 pp 5 6 Reg l Med Center a 7 8 La uncertified unsworn properly be not may motion for summary La 1st Cir App 1st App judgment 6 28 96 676 So 2d 783 787 After careful review of the record appears Bates undisputed stamped interrogatories checks are checks that above are through the checks contained in that although A0187 were well that the checks at issue form AOOO 1 as as some A0310 the part of identified briefs it parties a set of documents by ASP in its answers to forming the basis of its claims The third party portion ASP checks allegedly forged contained in the as of documents numbered AOOO 1 are also contained therein with the through and ASP s exception of those mentioned remaining documents numbered AO 188 through A310 The Third Party Louisiana Revised Statutes 10 3 420 a Checks provides in pertinent part An instrument is converted when iii it is taken by transfer other than a negotiation from person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person a not entitled to enforce the instrument or t Any action for conversion Terry Guillory payable to ASP s receive payment prescribes alleged actions relating and the third party checks 11 to in one year the third party checks payable to fictitious payees clearly constituted conversions under La R S allegations in of the the Bank s actions See Peak statute La Performance a of La the third a 03 1859 at pp 885 So 2d at 1182 as to 5 6 year 05 1045 Corp The Bank 449 51 prior pp in New Orleans case party checks at to 4 8 La Goodbee and deposited party asserting the benefit of the burden of proof of its requisite Whitney contra elements and Nat l Bank 618 So 2d 509 Maint 516 La case not non Inc V 924 So 2d 1 3 06 over a were to Quality Gas Products App 3rd Cir As the ASP See and Metro Elec being filed the burden of proof that those claims to 03 2754 pp deposited prior having established a prima facie the checks cashed and of prescription of all claims filing of suit December 15 2002 446 meaning 898 So 2d 482 488 89 prima facie conversion based upon Bank One s then those actions true 07 2206 at p 7 992 So 2d at 531 Bank v 1 st Cir 12 20 04 App The Bank established for as If ASP Goodbee would also constitute conversions within the to Med Data Servo Bureau L L c 9 10 accepted are 5 iii a deposits of the misappropriated checks and thereby making the accepting payment to as 10 3 420 of prescription prior year prescribed to suit shifted valentem ASP bore applicability See Black App 4th Cir v writ denied 623 So 2d 1308 La 1993 At this of 5 error as point it is appropriate that we its determination bears upon the address ASP s nature of ASP last assignment s cause of action 10 3 404 governs its claims relating to third party checks payable to Goodbee Screen Printers and other alleged ASP contends that La RS rather than ASP checks emphasizes that it never raised any checks issued or drawn on ASP s account relating to any review ofthe language of La RS 10 3 404 particularly paragraphs b fictitious payees created by fictitious payee defense Terry Guillory Based upon our and d and the related DCC Comment we The Bank conclude that the statute application to the proceeds of any third party checks rightfully entitled Rather the statute would only have Terry Guillory s provisions to which ASP have claims it no was relevance if ASP claimed that issued ASP checks to fictitious payees While ASP might have a claim general Louisiana law against Terry Guillory for diversion of sums for conversion under actually owed to ASP by the third parties issuing the checks against the Bank must fall strictly within La RS 10 3 420 12 any conversion claim applicability for conversion and the valentem to that relating of action cause or that displaced by See La R S recovery assert such any the DCC DCC s addresses against the defense of erred in court of actions causes The resolution of this issue prescription relating contra to ASP were such theories of provisions addressing 6 10 1 103 b non affects whether ASP may invoke the doctrine of defeat the Bank error of action causes ASP contends that the trial In other words supplanted of assignment contra non independent of the DCC for conversion and Bank under Louisiana law implicitly concluding of general doctrine This properly the issue of whether ASP may negligence of the non s directly valentem to reimbursement claim based upon the third party checks In Peak Performance although as one at p plaintiff Instead 992 So 2d at 531 conversion action Pargas Inc we v without 6 of Taylor observed that resort to This statute 10 1 103 b DCC and in passively of action 416 Peak Performance 07 2206 in that 2d So provisions 10 1358 its opinion characterizing 07 2206 at p parties absent expensive implicitly we cause correctly recognized emphasized DCC Id Estate and liabilities of the We of the follows the model 1982 we for conversion under La R S 10 3 420 7 expressly invoke the by the plaintiff s employee of third party checks allowed the embezzlement the not of recovery that the defendant bank rejected the plaintiffs theory to did embodied in La R S displacement concept payable we that the Louisiana nature of the 992 So 2d at 532 1364 65 La App 3rd Cir should be construed serious factual delaying litigation dispute over Citing are so that rights ascertainable each item that might displaced by the particular provisions of this Title the supplement its provisions Emphasis added During the time this matter the present language of La RS 10 1 1 03 b constituted the provides Unless other laws of Louisiana period at issue in entire text of former La RS enacted by Acts 2006 No 533 10 1 103 The present version of La RS 1 13 10 1 103 was be paid unauthorized on an commercial transactions negligence actions when Overby Check Fraud 57 Ala uncertainty the as of cost L the to not common 351 viability of such Such at 397 to conversion claims the D C C DCC actions to and are The trial displaced by the DCC dismissing such claims in its final summary pleadings and other documents properly before the holding adopting law outside the court did judgment based us claims s in the record not err in upon the However displacement concept of La In summary any claim of ASP for case conversion of third party checks falls goals of s conclude that ASP we ambit of the DCC 10 1 103 b to the facts of this reduce can a negligence grounded in general Louisiana R S Any significantly raises the DCC 10 1 103 RS foregoing considerations our Articles 3 supervise and control their employees uncertainty would be contrary choose to limit or A Brooke to U C C for conversion and we 533 at Footnotes omitted 2005 non So 2d large number of courts the Revisions simplicity clarity and uniformity See La Given the 992 generates unpredictable results litigation incentives for corporate officers Id a law claims After 391 92 thereby facilitating 11 p expressly authorized by in the Courts Rev at involving check fraud general refuse to allow any endorsement or 07 2206 Id Nationwide in cases and 4 signature strictly within the purview of La RS 10 3 420 In Peak threshold issue Performance to the 2206 at p 8 other squarely confronted of contra non We thoroughly with valentem issue of prescription under La R S 10 3 420 992 So 2d at 532 the were of whether the doctrine application background we f Id the has 07 examined the statutory prior Louisiana jurisprudence and relevant jurisprudence jurisdictions We ultimately held that 14 the of equitable doctrine of contra non valentem be cannot for the conversion of except in the prescription valentem event a a applied of fraudulent concealment limited Performance neither alleged fraudulent concealment burden of valentem we our to us In its reconsider identified any contra narrow non holding in Peak Performance our and and its brief on not appears particularity undisputed that the by ASP in its to answers as deposited or relating posted prior to those foregoing the third party checks to checks narrow deposited prior to to third as date nor has ASP or However party checks as apparent that only to ASP The December 15 2002 are prescribed issue before on us as at issue forming part of through AOOOl actually constitute third party checks payable Given the upon which identify the third not interrogatories We have reviewed those documents and it is of action changed appeal ASP does the group Bates numbered for identification were uniformity We opposing considerations warranting change issue with any at previously noted it causes establish any to holding petition party checks those tending prescription under the holding in Peak Performance have modification of the them Peak customer in The non It therefore failed to meet its part s policy considerations of certainty convincingly put forth were of evidence contra exception The based presented 0 by the defendant asserting 992 So 2d at 533 the bank proof of suspension ASP urges decline on nor of action 10 3 420 of the third category of application 11 cause RS instrument under La negotiable 07 2206 at p Id suspend prescription of a to a AOI87 portion of majority As such of any their face with regard to the December 15 2002 is whether there is genuine issue of material fact relating to any 15 fraudulent concealment by the Bank to relating those checks 2003 that ASP According by cashing and endorsement to Mr 16 000 00 in Goodbee and the check deposited Guillot within two checks to as ASP that had been At that well kept stalling his inquiries copies of ASP s in turn s ASP its checks apparently fraudulent concealment provide copies of producing Guillot s them ASP during cOnclUSOry s are reason the Guillot part relates indeterminate in that the regard period are be s burden of applicable proof competent proof of any such alleged after As failure to 2003 previously to in Mr give rise to noted allegations and evidence of the non a crucial element valentem with the Bank that ASP did fraudulent concealment 16 its bank stalling July insufficient that the limited contra We agree on B ank did not alleged fraudulent concealment material in factual its period of any fraudulent concealment by the Bank is of ASP been told only suggestion of to cancelled checks and its some or s included s conceal the scheme Mr the Bank statements any inference of fraud allegations of time on to the only the B ank previously not were not but ASP Guillot to Mr at Mr discovery Goodbee He attested that he had was Bank the had been cashed deposited by cancelled checks own its stamped at account After that account point according Considering the affidavit of may its to ASP He claimed in his affidavit that statements time into party checks payable third which days he discovered that approximately deposited into Goodbee checks drawn give it at Goodbee July 2 500 00 third party check for a began pressing the Bank for information concerning Guillot that defeat summary judgment to Terry Guillory had converted to narrow contra non Guillot claimed that he first discovered in In his affidavit Mr own ASP to invoke the exception of Peak Performance valentem payable entitling by exception not the Bank offer prior to the time that suit the was filed limited doctrine of third party checks prior This result t contra to did court non not valentem December 15 2002 applies even with are regard g App Metro Elec Maint 3rd Cir 3 1 06 As to that ASP s claims related which apply in Peak to conversion of prescribed under La to those checks cashed any endorsements 05 1045 Corp 6 7 pp of the identified third party or to such checks conclude we are as for collection precluded by if an employer entrusted with an responsibility respect employee or a person acting in instrument concert with the fraudulent of a indorsement the employee and the employee instrument the the indorsement of the person to whom the instrument is payable if it is made in the name of that If the person paying the instrument or taking it for person indorsement is effective as paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care value or for collection fails contributed Emphasis to La virtue of La R S to the makes See did the trial court provides with by checks F or the purpose of determining the rights and liabilities person who in good faith pays an instrument or takes it for value RS 924 So 2d 446 450 51 after December 15 2002 on or of a Bank One v the small remainder deposited 1 0 3 405 b Inc to refusing articulated relating Terry Guillory and deposited by Goodbee without e in err as all claims of ASP Accordingly Performance 10 3 420 The trial to exercise ordinary care in the loss added Louisiana Revised Statutes 10 3 405 a 3 provides with respect to instruments means Responsibility 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 ofpayees of instruments to v to control the be issued in the name of the employer disposition of instruments to be issued in the name of the 17 employer or vi to act otherwise with respect to instruments in a Responsibility does not include responsible capacity authority that merely allows an employee to have access to instruments being stored mail incomplete instrument forms that are transported or are part of incoming or outgoing blank or or 7 similar or or access Emphasis added Despite the Guillots authorized ASP for ASP signatory that he had the insistence that apparent or s absence and that while to authority doing and manage to handle running was so virtually the business he also had the its negotiate Guillots being were so made advised Terry Guillory to financial to to of to own Terry Guillory and the business s Even if express aspects of to sign absence that the implied authority purchase of money orders to fully control authority to sign or managerial and financial responsibility to business checks or in to him to the endorse and almost unlimited access to all of the undisputed that ASP and the Guillots delegated mere after strongly suggest that checks for ASP it is extending beyond his ASP they ratified them or or In genuine issue might exist as formal or all instruments affidavits issue ASP checks for the run an apparent control the Guillots of such actions and that financial affairs of the business extent due have had either the actual must be able name In fact the Guillots endorse checks and order aware s not in the Guillots deposition Terry Guillory testified that he occasionally had checks under Mrs Guillot was checks the uncontradicted evidence shows implied authority financial affairs while he s Terry Guillory broad plainly business mail and falling within the statutory definition of responsibility 7 This language tracks that of the Dee in other states Responsibility with respect to instruments is very broadly defined to cover most acts in a responsible capacity regarding instruments A Brooke Overby Check Fraud in the Courts After the Revisions to Uc c Articles 3 and 4 57 Ala L Rev 351 375 18 2005 In his Guillory prior like as to the a son to him discovery of his alleged misappropriation of ASP Mr Guillot operations only one although at ASP Mrs Guillot disabled from doing made so of the business and near capable of doing attempt an to errands for the business from time to time a business or and had but confirmed that no w hile he was was Terry Guillory during her husband trust in that Terry Guillory that Terry Guillory B ank for treasurer as had no reason s s after he became minor tasks and idea how to manage to on to start doubt his efforts the Bank from anything and his Although name was not and never on to run or to related to it 19 and so explained checks received from authorized him the Mrs Guillot held the any business do including the to signature cards sign at the position of secretary for the business she admitted in her affidavit that she to how to ASP running the Mrs Guillot business afloat handled all the mail of the business statements ASP employed by illnesses and further verified She claimed however that she customers name that She confirmed her it upon himself took keep her husband monthly bank her basically and that she to explained Terry Guillory fully running ASP controlled all of the financial affairs of the business anything day any of its affairs In her affidavit Mrs Guillot stated that she business He so previously performed only she had to day may have been the the business run He funds s the ran explained that Terry Guillory they thought him Terry Guillory essentially disabled him take control to trying Terry deeply trusted and stated that he confirmed that after his illnesses started Guillot described Mr affidavit filed in the record had handle any of the financial no clue matters After careful review of the record disputed or controverted the fact that the authorized business instituted that practice that the that as policy de facto to manager known to an handle the financial 8 Based upon the amended and the evidence it is was was Terry Guillory had the full keep the business operating s policy never is unclear who with ASP ASP petition money order money order to transactions necessary s undisputed that ASP has note as acting allegations of ASP further Although it of ASP it is practice while authority we and accepted by undisputed the Guillots during the time period it was in place ASP contends B ank followed its on does not conclusion that to point of s failure The does La mere not prove App reasonable 1st Cir fact that that a a 1 4 99 banking v on those s standards Gulf States 96 0844 p 9 8 Section PGA La App 4th Cir v 12 2 proof any under on a check is not signature verification procedures Inc to the n the 98 729 So 2d 1165 1168 69 accordance with reasonable commercial standards of the See nor a The points Premier Bank Nat l Ass forgery of a signature bank However circumstances upon which comply with its internal procedures See Cable Cast Magazine circumstances whether the competent proof relating not offer any with comply to 0676 pp 6 7 to to the checks and whether genuine issue of material fact exists alleged failure as banking standards factual specific record shows that ASP did Bank questionable with reasonable procedures comply ASP it is procedures in honoring own those that appeal Whitney 97 are not in banking industry Nat l Bank 689 So 2d 638 detected of New Orleans 643 Here ASP deposition filed in the record Terry Guillory testified that the money order policy was not formally instituted by anyone on behalf of ASP but evolved through necessity due to a problem with ASP s checks to vendors being dishonored This testimony was not refuted by the Guillots or any other witness for bouncing In his ASP 20 failed with offer competent to ordinary care prevailing in the proof statutory definition of business standards and even Overby Bank if those practices practices not be his agent of Jena or procedures p 3 La bank pays plus legal on a local not demonstrate 97 3213 negotiable 929 2d So 10 3 401 4 several statutory exceptions defenses to ASP s claims 1261 La 12 to the 7 8 98 statement 992 shall either account return or amount 1270 writ of the check See Marx Whitney v 1145 However forged provides a customer showing payment of items for the a account 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 The statement of account provides sufficient information if the item is described by item number amount and date of 21 Peak there checks makes available to payment Bank are rule and the Bank has raised them to the ASP or v or general rule is that So 2d 1142 So 2d at 533 general relating A bank that sends of deviation from Prestridge Thus the 713 Louisiana Revised Statutes 10 4 406 a a 924 So 2d 1266 3 8 06 forged check it is liable for the 07 2206 at p Performance interest s instrument unless that person La R S it App 3rd Cir p local banking standards and practices interest from the date of judicial demand Nat l Bank to Forged ASP Checks on a denied 06 0836 La 6 2 06 a or representative signed 05 545 The exercise of ordinary in the customer necessarily to the 7 a adherence equated with the employees offered by ASP simply do s own comport excerpts from the deposition testimony of the The A person is not liable as suggests that care can are The when See La R S 10 3 103 engaged ordinary supra at 379 either the Bank to in which the person is located with respect area business in which the person is care practices failed s observance of reasonable commercial standards the or that the Bank b If the items are not returned to the the customer retaining the items shall either retain the items or if the items are destroyed maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt of the items A customer may request an item from the bank that paid the item and that bank must provide in a reasonable time either the item or if the item has been destroyed or is not otherwise obtainable a legible copy of the person item If c account bank sends a items or pursuant makes available or Subsection to a the a statement of 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 respect to an item to by Subsection asserting against the bank the 1 imposed on the precluded from with the duties the customer is comply customer customer c unauthorized s with that the customer failed If the bank proves d signature any or alteration the item if the bank also proves that it suffered loss by reason of the failure and on 2 the customer the same wrongdoer unauthorized s on a any signature or alteration by other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time not statement in which to examine the item exceeding thirty days of account and notify or the bank applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with Subsection c and the failure of the bank to exercise ordinary care contributed to the e If Subsection loss If the d that the bank did customer proves not pay good faith the preclusion under Subsection d apply does in t Without regard customer after or the bank the statement Subsection a or a to care or lack are discover made available and 22 not of care of either the customer who does not within items the item report to the the one year customer customer s unauthorized signature precluded from asserting signature or If there is alteration or any alteration on the item is against the bank the unauthorized on under preclusion a this the payor bank may not recover for breach of warranty under R S 10 4 208 with respect to the unauthorized signature or alteration to which the preclusion applies Subsection Emphasis added In its written the the checks with the bank As noted by statement a to the of to an supra at 372 item n or deliver the received the bank ever Guillory Mrs it to sufficient allow the of the law 1 this make or customer Citation omitted paid amount and date of test Guillot testified that with was the an from 1996 practice regard to through envelope corresponding statements to the to ASP s 2003 to its month and bookkeepers maintaining the business She admitted that after Mr Guillot became ill statements but she never looked was Mr Nunmaker attested that he at them nor she did Mr also filed in the record tried to assist copies stealing of ASP from the business s bank statements 23 on Mr Guillot could in the Summer of 2003 when he discovered that had been Guillots for of review them behalf of ASP best he copies information provide by item number to meet return or paid The affidavit of Michael Nunmaker as furnish 136 statements accounting records Guillot to correct statement bank shall either the items simply place each statement into to mail a the items identify deposition monthly bank is that account payment is sufficient In her duty to customer statement reasonably Describing Overby a no observed that under send the original checks back with the Rather the known as truncation required practice statutory requirement in the This is statements court commentator A bank is not available the trial Revised Uniform Commercial Code Comment 10 4 406 one judgment he B ank is under t foregoing provision See La R S for reasons He recalled Terry asking the and reviewed them noting that the did statements According Nunmaker the to Mr available had not include me that the Bank had must we disregard the as the its cancelled checks for customer bank has honored had As he was by the quite some review is de our of Mrs Guillot not within as a bank precluded same 2 wrongdoer rule all This rule subsequent forgeries by the reasonable time detect to to the defense embodies an imposes same initial on the wrongdoer forgery if the Marx 97 3213 at p notice In Marx the supreme court found that because the not review in a on 4 10 406 d subsequent forgeries prior 713 So 2d at 1146 appearing statement Statutes same customer the risk of loss plaintiff did hearsay told knowledge ofMr Nunmaker the affiant generally after the checks He added that Mrs Guillot checks given ASP not Louisiana Revised known cancelled most recent statement despite their repeated requests for the checks the personal 6 envelope for the copies of cancelled not novo of the copIes yet been opened and upon opening it he observed that it did time include not and notify statement from the defendant bank of the initial within thirty days forgeries of receipt of that statement assertitlg against the bank all subsequent forgeries unauthorized Id signatory 97 3213 at p 7 713 So 2d at 1147 It is undisputed the first ASP likewise that ASP did not forged check appearing undisputed that the cl imed it was incumbent upon ASP that the Bank failed to exercise previously practices observed on the Bank within its bank statement in 1997 forgeries were to come all made by the ordinary d care in Accordingly 24 It is same foregoing forward with competent evidence honoring the checks the evidence in the record falls short in that reg thirty days of Once the Bank established the alleged wrongdoer Terry Guillory facts notify relating we to As the Bank s conclude that all of ASP claims s the same 1258 relating wrongdoer 9 10 pp La to rule In addition to the La 10 4 406 R S checks That provided See Peak same The items in the care on Bank of time at issue of any statements claims s a are a barred General notice occurred is Rather to not monthly to the items when suit ever answers the bank that a and Omaha 558 N W 2d 57 59 61 Neb 1997 25 By Inc is or the bank in the bookkeepers failed over were to notify the on there is its bank v no question served were at issue is Computers statement filed and ASP made sufficient notice for purposes of La See also First Place or forgery has or ASP signatures reported was interrogatories theft a bank statements identified the items in to forged Terry Guillory Even then specific notice of the particular items supra at 401 customer balancing yet ASP inexplicably general allegations of those discrepancies particularity until its 64 5 of the absence of regardless number of successive to whom the the to unauthorized to of Mrs Guillot and at the earliest in the record that ASP relating year from the date relating discrepancies relating until 2003 707 So 2d 59 the part of either the record confirms that ASP retained delivered for review and Tuscaloosa Commerce Bank 96 v that after statement deposition testimony period by application of wrongdoer rule the Bank has asserted that f precludes ASP exercise of ordinary barred 13 19 924 So 2d at 1275 79 provision provides on are 12 29 97 to the customer all claims alterations the ASP checks forged 1st Cir App 05 545 at pp Prestridge the or R S evidence with any in 2007 might have 10 4 406 required Overby Sec Nat l Bank 2007 ASP s f claims of against the Bank for the 1 0 4 406 d 2 forged ASP checks As noted as a matter bear the loss customers statement becoming UCC a RS by one authority negligence it is of policy that the law requires customers to T he most significant defense that impacts In the most extreme proper La 9 t and La R S 10 4 406 long stale under both were of cases customer the bank defense Timely review of one s bank statements is a threshold for asserting bank liability under the ability to raise claims is section 4 406 threshold that is difficult for Unless customers to meet a substantial number of customer a reviews their bank thirty days of the bank s sending it significant losses in a continuing fraud ultimately may be borne by the customer through the same Should a wrongdoer rule a customer fail to review a statement within a one year period seemingly not uncommon event given the recent cases that that failure will lead to the involve exactly such a failure Given the relatively low customer bearing the complete loss within statement cost of toward performing imposing such review the a those losses customers where the basic these on requirements defense have not been met is judicial most trend negligent of the bank statement appropriate In these cases the clearly in the best position to protect against many through the timely and adequate review of their customer losses current is statements Consider companies which delegate both the payment and review functions to one party This creates an environment long term fraud and in fact in some instances it is almost a requirement for a successful corporate theft While requiring statement review involves some costs this to businesses basic particularly small businesses requirement is a significant measure which advances the effort facilitating to a successful reduce the overall incidence of fraud Overby supra at 388 89 action fit squarely within the In summary have merit 9 Because we we The unfortunate circumstances of the present case scenario described above conclude that Summary judgment find that ASP s claims was none s of ASP s assignments of error appropriately rendered relating to the under La R S Bank Footnotes omitted forged ASP checks are clearly barred 1 0 4 406 d 2 and 10 4 406 f it is unnecessary for us to address the additional defense ofthree year prescription under La RS 10 4 111 26 DECREE The summary judgment of the trial of action and claims of the causes against of this the defendant appeal are appellee assessed to court dismissing plaintiff appellant with ASP prejudice the Enterprises Parish National Bank is affirmed the plaintiff appellant AFFIRMED 27 All Inc costs
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