Kain Groue VS Capital One
Annotate this Case
Download PDF
STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2010 CA 0476 KAIN GROVE VERSUS CAPITAL ONE r Judgment Rendered SEP 10 2010 On Appeal from the TwentySecond Judicial District Court In and for the Parish of St Tammany State of Louisiana Docket No 200810450 Honorable Martin E Coady Judge Presiding Kain Groue Mandeville Louisiana Thomas J Lutkewitte Brad P Scott PlaintiffAppellant In Proper Person Counsel for Defendant Appellee Capital One New Orleans Louisiana BEFORE WHIPPLE MCDONALD AND McCLENDON JJ McCLENDON 3 This appeal is from a judgment in favor of Capital One N Capital One A that dismissed the claims of Kain Groue plaintiff who asserts that Capital One should reimburse him for debiting forged checks against his bank account For the following reasons we affirm FACTS AND PROCEDURAL HISTORY Plaintiff filed the instant suit against Capital One seeking to recover damages that plaintiff alleged were the result of improper payments of checks by Capital One According to Groue Sherrie L Simms obtained a series of checks from his home and began to forge plaintiff name on the checks on June 12 s 2007 The forged checks were subsequently deposited and debited against his checking account with Capital One Plaintiff alleged that approximately 105 checks were forged and subsequently paid by Capital One causing him to suffer a loss totaling 11 Plaintiff further alleged that Simms who was living 00 800 with him at the time intercepted the bank statements in order to prevent him from detecting the fraud Plaintiff did not learn of the missing funds in his account until he opened his August 2007 bank statement on September 5 2007 This action was tried on September 14 2009 On September 21 2009 the trial court signed a judgment dismissing plaintiff claims against Capital One s with prejudice Plaintiff has filed the instant appeal asserting that Capital One failed to exercise ordinary care in paying the checks at issue as required by LSAR S 4406 10 e Plaintiff has also requested that this court adopt the reasoning in Prestridge v Bank of Jena 05545 p 13 La 3 Cir 3 924 So App 06 8 2d 1266 1275 76 writ denied 060836 La 6 929 So 1261 and find that 06 2 2d Capitol One is liable for payment of most of the forged checks at issue 1 We note that plaintiffs twopage brief does not comply with Uniform RulesCourts of Appeal Rule 212 insofar as it fails to include a statement of jurisdiction and fails to assign and specify 4 assignments of error However the appellate courts of this state have considered briefs in improper form when filed by a pro se party See Carsice v Empire Janitorial 080741 p 3 App La 4 Cir 12 2 So 553 55455 writ denied 090097 La 3 5 So 123 08 17 3d 09 13 3d and LSAC arts 2129 and 2164 Accordingly since plaintiff is representing himself we will P C consider the merits of his appeal despite the lack of proper form of his appellate brief 2 DISCUSSION Usually a person is not liable on an instrument unless that person or his agent signed the instrument LSAR 10 S 3401 The general rule is that a bank is liable when it pays based upon a forged signature Marx v Whitney Nat l Bank 973213 p 4 La 7 713 So 1142 1145 A charge against a 98 8 2d s customer account based on a forged instrument is not an authorized charge under the contract between the bank and its customer because the order to pay was not given by the customer Id Notwithstanding this general rule requiring the bank to bear the risk of loss for a forged instrument Louisiana law provides that in certain circumstances a customer may be precluded from asserting a claim against a bank that has paid on a forged instrument Id A customer is precluded from having funds paid out on a forged instrument restored to his account if his failure to exercise reasonable care in handling the account before or after the forgery LSAR 10 406 and 10 S 3 4406 respectively substantially contributed to the loss Id Capital One asserts that it bears no liability herein because plaintiff failed to exercise reasonable care after the forgeries occurred as required under LSAR 10 S 4406 Specifically LSAR 10 S 4406 provides in pertinent part 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 z Capital One does not assert that LSAR 10 S 3406 applies herein 3 This matter falls within the ambit of Louisiana version of the Uniform Commercial Code s UCC Thus it appears that any potential claims allegedly arising in negligence grounded under general Louisiana law would be displaced by the UCC 3 1 the customer unauthorized signature or any alteration s on the item if the bank also proves that it suffered a loss by reason of the failure and 2 the customer unauthorized signature or alteration by s the same wrongdoer on any 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 exceeding thirty days in which to examine the item or statement of account and notify the bank e If Subsection d 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 loss If the customer proves that the bank did not pay the item in good faith the preclusion under Subsection d does not apply f Without regard to care or lack of care of either the customer or the bank a customer who does not within one year after the statement or items are made available to the customer Subsection a discover and report the customer unauthorized signature on s or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration If there is a preclusion under this Subsection the payor bank may not recover for breach of warranty under R 10 S 4208 with respect to the unauthorized signature or alteration to which the preclusion applies Additionally banks and customers may modify their duties by contract as described in LSAR 10 S 4103 See Peak v Tuscaloosa Commerce Bank 961258 p 8 La 1 Cir 12 707 So 59 64 App 97 29 2d Louisiana Revised Statutes 10 103 states in pertinent part 4a The effect of the provisions of this Chapter may be varied by agreement but the parties to the agreement cannot disclaim a s bank 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 responsibility is to be measured if s those standards are not manifestly unreasonable As such a bank and its customer may contract for any object which is lawful possible determined or determinable and once the contract has been established it is the law between the parties Peak 961258 at p 707 So 8 2d at 64 citing LSA C arts 1971 and 1983 13 At trial Capital One introduced its Rules Governing Deposit Accounts which was in effect at all times material hereto The agreement provided in part You the customer are obligated to examine immediately all statements and items charged against your accounts and to report any disputes or discrepancies to us promptly In addition to any defenses we may raise under any statute or regulation you agree that we shall not be liable to you for any altered item for any item paid on an unauthorized signature or for any error in any statement unless you notify us in writing of such alteration unauthorized signature or error within thirty days after the cancelled item or statement is mailed or otherwise made available to you In addition we will not be liable for any subsequent items paid in good faith which contain an unauthorized signature or alteration by the same wrongdoer unless you notify us within ten 10 calendar days after the statement and first altered andor forged items were made available to you Plaintiff acknowledged that he signed the Rules Governing Deposit Accounts when he opened his checking account The thirty limitation for reviewing day statements and notifying the bank of forgeries found in the parties agreement is in accord with the time period provided in LSAR 10d S 4406 2 Plaintiff failed to comply with the duties owed Capital One pursuant to their agreement and under LSAR 10 S 4406 Plaintiff testified that Simms began to forge plaintiff name on his checks on June 12 2007 and that the s checks appeared on plaintiffs June 2007 statement which was mailed in early July 2007 Although plaintiff conceded that Capital One sent bank statements on a regular monthly basis plaintiff admitted that he did not review or reconcile his June or July 2007 statements because they were stolen by Simms It was not until September 6 2007 that plaintiff after reviewing his August 2007 statement notified Capital One of the alleged unauthorized signatures relating to 4 We note that the tenday limitation contained in the Rules Governing Deposit Accounts is not at issue 5 Capital One asserts that the alleged forgeries began in April 2007 but whether the forgeries began in April or June is immaterial under the circumstances herein 6 Although plaintiff testified that on July 2 2007 he notified Amber Davis a Capital One employee that some of his checks were missing Mrs Davis did not recall the specific conversation Mrs Davis indicated that had she been informed would have referred plaintiff to a banker to address the issue apparently believed that the missing checks were in the trash account or request a statement to verify that the checks were not 5 that checks were missing she Regrettably because plaintiff he did not place a hold on his being utilized by a third party the checks drawn on his account Early detection of Simms forgeries could have prevented the subsequent losses and plaintiff failure to review the June s 2007 statement precludes him from asserting all subsequent forgeries by that same unauthorized signatory See Marx v Whitney Nat Bank 973213 at l pp 78 713 So at 1147 2d Moreover the terms of the parties contract provides that Capital One would not be liable for any altered item or for any item paid on an unauthorized signature unless it was notified of such alteration or unauthorized signaturewithin thirty days after the cancelled item or statement is mailed or otherwise made available to you Accordingly although LSAR S 4406 10f allows a notification period of one year the parties agreement requires plaintiff to notify Capital One of the altered items within thirty days after the statement that included the first forged instrument was made available otherwise Capital One would not be liable for payment of the items In Peak this court reviewed the following provision that appeared in a deposit agreement We the bank will not be liable for any check that is altered or any signature that is forged unless you notify us within thirty 30 calendar days after the statement and the altered or forged s items are made available Also we will not be liable for any subsequent items paid in good faith containing an unauthorized signature or alteration by the same wrongdoer unless you notify us within ten 10 calendar days after the statement and the first altered or forged items were made available Peak 961258 at p 9 707 So at 64 Emphasis omitted 2d In light of the parties agreement this court affirmed a summary judgment rendered in favor of the bank finding that a bank customer was not entitled to reimbursement from the bank for the forgeries at issue Herein because plaintiff failed to notify Capital One of the initial forgeries in the time frame set forth in the parties agreement and because the notification period expressed therein is not manifestly unreasonable the agreement On September 11 2007 plaintiff submitted a Uniform Affidavit of Forgery to Capital One 1 C precludes plaintiff from recovering from Capital One any forgeries appearing on his June statement and for any forgeries thereafter by the same wrongdoer We recognize that the Third Circuit in a 3 2 decision has declined to enforce a contractual provision in a bank signature card that reduced the s notification period8 54pe Prestridge 05 545 at p 2223 924 So at 1280 2d 81 In declining to enforce the agreement the court reasoned that t sixty he day preclusionary period set forth in Bank of Jena signature card agreement s attempts to shorten the legal prescriptive period making it more onerous therefore it is null as set forth in LSAC art 3471 C Prestridge 05 545 at p 22 23 924 So at 1280 However the oneyear bar provided in LSAR 2d S 4406 does not act as a prescriptive period but is instead a substantive 10 element of a claim for payment of a forged check See e Wetherhill v o Putnam Invest 122 F 554 557 8t Cir 1997 Accordingly while we are 3d concerned that the enforcement of the contractual provision at issue may shift potentially significant fraud losses onto the customer we are constrained to find that it is not violative of LSA C art 3471 Moreover in most instances the customer is in the best position to identify the fraudulent transactions S The agreement between the tank and customer provided You must examine your statement of account with reasonable promptness If you discover or reasonably should have discovered any unauthorized payments or alterations you must promptly notify us of the relevant facts If you fail to do either of these duties you will have to either share the loss with us or bear the loss entirely yourself depending on whether we exercised ordinary care and if not whether we substantially contributed to the loss The loss could be not only with respect to items on the statement but other items forged or altered by the same wrongdoer You agree that the time you have to examine your statement and report to us will depend on the circumstances but that such time will not in any circumstance exceed a total of 30 days from when the statement is first made available to you You further agree that if you fail to report any unauthorized signatures alterations forgeries or any other errors in your account within 60 days of when we make the statement available you cannot assert a claim against us on any items in that statement and the loss will be entirely yours This 60 day limitation is without regard to whether we exercised ordinary care Prestridge 05 545 at p 9 924 So at 1273 Emphasis omitted 2d 9 Louisiana Civil Code art 3471 provides A juridical act purporting to exclude prescription to specify a longer period than that established by law or to make the requirements of prescription more onerous is null 7 Additionally the provisions of Title 10 Commercial Laws shall be liberally construed and applied to promote its underlying purposes and policies LSA S 1a R 10 103 The purposes and policies of Title 10 are 1 to simplify clarify and modernize the law governing commercial transactions 2 to permit the continued expansion of commercial practices through custom usage and agreement of the parties and 3 to promote jurisdictions LSAR 10 103 S 11 a uniformity of the law among the various In accordance with this directive we note that our ruling as well as our prior ruling in Peak is in conformity with other jurisdictions which have enforced contracts that have reduced the applicable notification periods For instance in Bank of America N v Putnal Seed A and Grain Inc 965 So 300 301 Fla 2007 the court upheld an 2d App Ct agreement that reduced a notification time period from one year to sixty days finding that the reduction did not absolve the bank of its duty to exercise ordinary care and stating that the 60day notice requirement only creates a condition precedent which Putnal must comply with before it may seek reimbursement See also Graves v Wachovia Bank N 607 F A 2d Supp 1277 M Ala 2009 Mercantile Bank of Arkansas v Vowell 82 Ark App D 421 117 S 603 Ark App 6 Community Bank 3d W 03 11 Trust S B v Fleck 107 S 541 Tex 12 Nat Title Ins Corp Agency v 3d W 02 5 l First Union Nat Bank 263 Va 355 559 S 668 672 Va 3 l 2d E 02 1 ALLOCATION OF FAULT Although plaintiff failed to comply with the duties imposed on the customer in the parties agreement and by LSAR 10 c if the customer S 4406 proves that the bank failed to exercise ordinary care in paying the items and that the failure substantially contributed to the loss the loss is allocated between the customer and the bank See LSAR 10 see also LSAR 10 S 4 e 406 S 3406 Moreover although the parties can modify provisions of the Commercial Laws by contract a bank cannot disclaim responsibility arising from its failure to exercise ordinary care LSAR 10 103 S 4a Ordinary Care is defined in LSAR 10 a as follows S 3103 7 Ordinary care in the case of a person engaged in business means observance of reasonable commercial standards prevailing in the area in which the person is located with respect to the business in which the person is engaged In the case of a bank that takes an instrument for processing for collection or payment by automated means reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank prescribed procedures and the bank procedures do not s s vary unreasonably from general banking usage not disapproved by this Chapter or Chapter 4 The statute does not impose a duty upon a paying bank to inspect every check to verify signatures appearing thereon prior to processing the check for payment The mere fad that a bank may have paid an item over a forged signature does not establish that a bank failed to exercise ordinary care Plaintiff argues that Capital One failed to exercise ordinary care insofar as it processed checks for payments despite a hold being placed on his account on July 25 2007 However the July 25 2007 hold was not requested by plaintiff and is unrelated to the forged checks at issue in this matter Testimony at trial revealed that the hold was placed by Capital One after plaintiff left his checkbook at a local restaurant Because no one from the restaurant was able to contact plaintiff a restaurant employee called Capital One to inform the bank that plaintiff checkbook was at the restaurant s The hold was removed on July 26 2007 once plaintiff came to the bank and was informed as to the location of his check book Additionally the checkbook left at the restaurant did not contain any checks that plaintiff alleges were forged Rather the forged checks came from an entirely different sequence of checks allegedly stolen from plaintiff home As such the fact that Capital One placed a s hold on plaintiff account so that it could inform him of the misplaced checkbook s does not reflect that Capital One failed to exercise ordinary care under the circumstances Moreover plaintiff failed to introduce any evidence to show that Capital One when paying the instruments at issue failed to adhere to a i reasonable commercial standard prevailing in the area Accordingly the trial court was not clearly wrong in finding that no fault should be apportioned to Capital One in paying the items at issue For the foregoing reasons we affirm the judgment of the trial court Costs of this appeal are to be split equally between the parties AFFIRMED 10
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
