The opinion
ACCEPTED
01-15-00210-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
8/10/2015 5:34:09 PM
CHRISTOPHER PRINE
CLERK
No. 01-15-00210-CV
FILED IN
IN THE 1st COURT OF APPEALS
HOUSTON, TEXAS
8/10/2015 5:34:09 PM
FIRST COURT OF APPEALS
CHRISTOPHER A. PRINE
Clerk
HOUSTON, TEXAS
FRANCISCO CALLEJA-AHEDO
Appellant
V.
COMPASS BANK
Appellee
On Appeal from the 55th District Court
Harris County, Texas
Trial Cause No. 2014-22168
APPELLANT’S BRIEF
Michael C. O’Connor
State Bar No. 15187000
Lesley C. O’Connor
State Bar No. 24086952
O’CONNOR, CRAIG, GOULD & EVANS
2500 Tanglewilde, Suite 222
Houston, TX 77063
713-266-3311
713-953-7513 (fax)
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
1. Francisco Calleja-Ahedo Plaintiff, Appellant
12000 Sawmill Rd. Apt. 2216
The Woodlands, Texas 77380
2. Compass Bank Defendant, Appellee
Plaintiff’s-Appellant’s Trial and Appellate Counsel:
Michael C. O’Connor Lesley C. O’Connor
O'Connor, Craig, Gould & Evans O’Connor, Craig, Gould & Evans
State Bar No. 15187000 State Bar No. 24086952
2500 Tanglewilde, Suite 222 2500 Tanglewilde, Suite 222
Houston, TX 77063 Houston, Texas 77063
713-266-3311 713-266-3311
713-953-7513 (Fax) 713-953-7513 (Fax)
Defendant-Appellee’s Trial Counsel:
William P. Huttenbach
State Bar No. 24002330
Jessica B. Levy
State Bar No. 24064412
Hirsch & Westheimer, P.C.
1415 Louisiana, 36th Floor
Houston, Texas 77002
713-220-9184
Fax: 713-223-9319
Defendant-Appellee’s Appellate Counsel:
Michael D. Conner William P. Huttenbach
State Bar No. 04688650 State Bar No. 24002330
Hirsch & Westheimer, P.C. Hirsch & Westheimer, P.C.
1415 Louisiana, 36th Floor 1415 Louisiana, 36th Floor
Houston, Texas 77002 Houston, Texas 77002
713-220-9184 713-220-9162
Fax: 713-223-9319 Fax: 713-223-9319
i
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL .........................................................i
TABLE OF CONTENTS .......................................................................................ii
INDEX OF AUTHORITIES……………………………………..……………….iii
STATEMENT OF THIS CASE…………………………………………………..iv
ISSUES PRESENTED…………………………………………………………….v
STATEMENT REGARDING ORAL ARGUMENT .............................................vi
TERMS AND ABBREVIATIONS USED WITHIN APPELLANT’S BRIEF…...1
STATEMENT OF FACTS………………………………………………………...2
SUMMARY OF ARGUMENT…………………………………………………....4
ARGUMENT……………………………………………………………………....6
PRAYER………………………………………………………………………….37
ii
INDEX OF AUTHORITIES
Case Law
Statutes
Rules
iii
STATEMENT OF THE CASE
Appellant Francisco Calleja-Ahedo filed suit in the 55th District Court of
Harris County, Texas, against Compass Bank to recover for amounts improperly
paid from his account at the Bank, including a forged check in the amount of
$38,700. The Bank filed an Answer raising the affirmative defense under Tex. Bus.
& Comm. Code §4.406, and counterclaimed for attorney’s fees. Both sides filed
Motions for Summary Judgment. The trial court granted the Bank’s Motion and
denied Calleja’s Motion. Calleja is appealing both the trial court’s granting the
Bank’s Motion and failing to grant Calleja’s Motion.
iv
ISSUES PRESENTED
1. The trial court erred in granting the Bank’s Motion for Summary Judgment
because the Bank failed to properly prove the deposit account agreement relied on
by the Bank.
2. The trial court erred in granting the Bank’s Motion for Summary Judgment
because the Bank failed to comply with its own deposit account agreement.
3. The trial court erred in granting the Bank’s Motion for Summary Judgment
because the Bank failed to produce competent summary judgment evidence that it
sent and/or made available relevant account statements to its customer.
4. The trial court erred in granting the Bank’s Motion for Summary Judgment
because there is evidence that the Bank failed to act in good faith in connection
with the subject transactions.
5. The trial court erred in awarding attorney’s fees to the Bank.
6. The trial court erred in granting the Bank’s Motion for Summary Judgment
because there is no evidence that Calleja violated Tex. Bus. & Comm. Code
§§3.405 and/or 3.406.
7. The trial court erred in granting the Bank’s Motion for Summary Judgment
because the Bank’s “no evidence” Motion was improper and premature.
8. The trial court erred in failing to grant Calleja’s Motion for Summary
Judgment because Calleja proved that unauthorized payments were made from his
account, and the Bank failed to prove its affirmative defenses.
v
STATEMENT REGARDING ORAL ARGUMENT
Appellant Calleja believes oral argument would be helpful to the Court
because of the number and complexity of the legal issues involved, and the few
Texas cases dealing directly with the term “makes available” as used in Tex. Bus.
& Comm. Code §4.406, and as omitted and/or defined in deposit account
agreements.
vi
TERMS AND ABBREVIATIONS USED WITHIN APPELLANT’S BRIEF
“Account” means the money market account no. 0200803759 at the Bank.
“Account Statements” or “Statements” means the monthly account statements for
money market account no. 0200803759 at the Bank.
“Bank” means Defendant/Appellee Compass Bank.
“Calleja” means Plaintiff/Appellant Francisco Calleja-Ahedo.
“2008 Agreement” means the Deposit Account Agreement dated in 2008, which
Calleja proved and claims that it governs the relationship between Calleja and the
Bank concerning the Account during the relevant time periods.
“2012 Agreement” means the Deposit Account Agreement dated in 2012, which
the Bank contends governs the relationship between Calleja and the Bank
concerning the Account.
1
STATEMENT OF FACTS
Calleja had a money market account for many years with the Bank upon
which he wrote a few checks. He directed the Bank to mail his Account statements
to his brother’s address in the Woodlands because Calleja lived in Mexico City,
and it was more convenient and secure to obtain the Account Statements when he
visited his brother. The brother lived alone and no one else had access to the
Statements until Calleja retrieved the Statements, unopened, at the Woodlands
address. Calleja retained the Statements and his checks in a locked drawer in
Mexico City, and none of them are missing. Calleja never requested internet access
to the Account and never had a debit card for the Account. CR 46-48; 317-23; 438-
39.
Calleja and the Bank both agree that their deposit relationship is governed
by a deposit account agreement (CR 183-93; 436), but they differ on which
agreement controls the transactions in this case. Calleja admits that he received the
2008 Agreement attached to his summary judgment affidavit. CR 46; 438. The
Bank relies upon a 2012 Agreement attached to its motion for summary judgment
(CR205-28), but there is no evidence that the 2012 Agreement ever became
effective as between Calleja and the Bank.
Beginning in July 2012, the Bank began mailing the Account Statements to a
series of addresses unknown to Calleja, who did not notice that Account
Statements were not being received at the Woodlands address. CR 47; 439. On
July 30, 2012, the Bank cashed check #1021, in the amount of $38,700, which was
a forgery. CR 47; 71; 81. The check itself was fraudulent since Calleja’s checks
ended before check #1021, and the address imprinted on the check was unknown
to Calleja, as was the payee of the check. Calleja received no benefit from the
check. CR 47; 439.
Calleja discovered a problem with the Account on January 24, 2014, when
an acquaintance reported to Calleja that a check written on the Account had been
returned as “account closed.” CR 439. On January 29, 2014, Calleja came to the
Woodlands office of the Bank and completed a forgery affidavit for the Bank
concerning check no. 1021. CR 439-40, 465. In late February, 2014, Calleja
received a letter from Bank officer Jimmy Myers, stating that the Bank was not
responsible for any loss. CR 440, 467. In the letter, Mr. Myers quotes from the
language in the 2008 Agreement, describing it as “our Deposit Account
Agreement,” and which states that the customer agrees to report exceptions in
2
account statements “promptly after you receive the statement.” The 2008
Agreement also contains the contradictory statement that it will not be liable for
any loss concerning an exception unless it is reported to the Bank “within thirty
(30) days after we send the statement to you.” CR 457, 467. There is no
requirement in the 2008 Agreement that Calleja had a duty to report unauthorized
charges in Account Statements which the Bank merely “made available,” nor is
there any provision which permits the Bank to recover attorney’s fees in this case.
CR 443-62.
In June 2014, Calleja received for the first time copies of Account
Statements after June 2012, which showed additional unauthorized charges of
$1,621.23 and improper Bank fees of $123.82. These charges were reported to the
Bank within 30 days after Calleja received the Account Statements showing these
charges. CR 440-41, 470-525.
3
SUMMARY OF THE ARGUMENT
This case concerns the Bank’s negligence and its failure to follow its own
Deposit Account Agreement. The Bank allowed a wrongdoer to change the address
where the Bank was mailing Account Statements. The Bank then paid a fraudulent
check from Calleja’s account, with the wrongdoer purporting to sign Calleja’s
name using a signature that is completely different from Calleja’s true signature on
the Bank’s signature card. The Bank’s affirmative defense is that Calleja did not
timely report the forgery to the Bank.
The Bank admits that a wrongdoer may have forged the check and may also
have caused the Bank to mail the Account Statements showing the forgery to
addresses unknown to Calleja. The Bank seeks to avoid its own negligence by
asserting that “common sense” imposes a duty on Calleja to contact the Bank when
he does not receive the Account Statements, even if the Bank sent the Statements
to unauthorized and unknown addresses. The Bank further asserts that it “made
available” the relevant Account Statements to Calleja by holding copies of them at
the Bank. If the Bank can satisfy its “make available” duty by holding the Account
Statements at the Bank (absent instructions to do so), then no bank would ever fail
to comply with §4.406 since all banks retain bank statements. The term “makes
available” in Tex. Bus. & Comm. Code §4.406 must mean more than merely
holding bank statements.
Section §4.406 requires a bank customer to timely report unauthorized
charges appearing in bank statements, but this duty arises only if the bank first
“sends or makes available” the account statements to the customer. Texas Bus &
Comm. Code §4.103(a) permits a bank and its customer to modify by agreement
the duties imposed by §4.406, which the parties did in this case. Calleja and the
Bank dispute which Deposit Account Agreement governs the transactions in this
case, but the Bank loses under both Agreements.
As shown below, Calleja did not receive, and the Bank neither “sent” nor
“made available,” relevant Account Statements, as provided by the Deposit
Account Agreements themselves and by cases construing §4.406. The 2012
Agreement relied on by the Bank specifically provides that account statements are
made available “by holding all or any of these items for you or delivering all or
any of these items to you, in accordance with your request or instruction.”
(emphasis added). There is no evidence that any account holder requested or
instructed the Bank to hold Account Statements or to deliver them to unauthorized
4
addresses. Significantly, the Bank never discussed in the trial court these terms
from its 2012 Agreement as they pertain to the requirements for “send” and “make
available.”
Furthermore, the Bank itself argues that §4.406 displaces all common law
negligence claims, which would include the argument that Calleja was negligent in
failing to report his failure to receive Account Statements. Section 4.406 does not
place any duty on the customer to report unauthorized transactions until the bank
sends or makes available account statements to the Customer, which the Bank
failed to do in this case.
The Bank also made arguments in the trial court that Calleja was barred by
Tex. Bus. & Comm. Code §§3.405 and/or 3.406. However, the Bank had the
burden of proving all elements of these sections which the Bank failed to do.
The Bank and Calleja agreed to allow the trial court to determine whether
claimed attorney’s fees were reasonable and necessary. Calleja reserved the right
to challenge such fees on appeal, including whether such fees are recoverable. The
Bank is not entitled to recover fees under the 2008 Agreement, and the Bank failed
to follow Supreme Court rules on proving attorney fees and otherwise had fatal
flaws in its affidavits purporting to prove attorney’s fees.
Calleja is entitled to summary judgment by proving that unauthorized
charges were paid from his Account, which constitutes a breach by the Bank under
both the 2008 and 2012 Agreements, and establishes the Bank’s liability since the
Bank failed to provide adequate proof for each element of its affirmative defenses.
5
BANK DID NOT COMPLY WITH ITS OWN AGREEMENT
Texas Bus. & Comm. Code §4.406 sets forth duties for both a bank and its
customer in relation to account statements. The bank must first “send or make
available” the statements to the customer, which then triggers the customer’s duty
to detect and report unauthorized transactions. See, e.g. American Airlines
Employees Federal Credit Union v. Martin, 29 S.W.3d 86, 92, 94 (Tex. 2000). The
Bank’s reliance on §4.406 is an affirmative defense, as to which the Bank “bears
the burden of proving each essential element of that defense.” FDIC v. Lenk, 361
S.W.3d 602, 609 (Tex. 2012).
Section 4.103(a) permits parties to vary the effect of Article 4’s provisions
by agreement, so long as that agreement does not disclaim a bank’s responsibility
for its own lack of good faith or failure to exercise ordinary care or limit the
measure of damages. See, e.g., American Airlines Employees Federal Credit Union
v. Martin, 29 S.W.3d 86, 95 (Tex. 2000). Both parties agree that a deposit account
agreement governs the deposit relationship between Calleja and the Bank. CR 183-
93; 436. See Tex. Fin. Code §34.301. However, the parties dispute which Account
Agreement applies to the 2012 transactions at issue.
Calleja proved the 2008 Agreement attached to his Affidavit by admitting
that he received the 2008 Agreement. CR 46, 51-70. The Bank also originally
produced the 2008 Agreement in discovery. See bate stamp marks CB000281
6
through CB000300 at bottom of each page of the 2008 Agreement. Furthermore,
the letter to Calleja dated February 7, 2014, from Jimmy Myers, a vice president of
the Bank, (CR 48; 75), quotes verbation from the 2008 Agreement, as being
applicable to the deposit relationship between Calleja and the Bank. The quoted
wording differs from the 2012 Agreement attached to the Bank’s Motion for
Summary Judgment.1
The Bank does not dispute that the 2008 Agreement was effective between
2008 and 2012, but apparently contends that the 2012 Agreement amended and
took the place of the 2008 Agreement. A deposit account agreement must be
amended by mailing the amendment to the account holder, or as otherwise agreed
to by the parties. See Tex. Fin. Code §34.302, copy of which is attached hereto at
Appendix 1.
Section 17 of the 2008 Account Agreement provides that it may be amended
by the Bank “upon giving prior notice to you,” which may be accomplished by:
Mailing you notice of the amendment to the last address shown on our
records, by making the notice available with the periodic statement of your
account (as applicable) or by posting notice of the amendment in our offices.
(CR 299 at bottom left, continuing at CR 298 at upper right).
There is no evidence that the Bank did any of these things, or if it did, when
the Bank did them. Instead, the Bank attempts to prove the 2012 Agreement by
1 The Bank also produced a 2013 Agreement (CR 136), but neither party relies upon it in their respective Motions
for Summary Judgment.
7
attaching the Affidavit of Kathy Mueller at Exhibit A to its Motion. CR 202-03.
Mueller testifies at paragraph 3 of her Affidavit that “[t]he account was governed
by the account agreement governing such account. See Tab 1,” and at paragraph 5,
that “[a]ttached as Tab 1 is a copy of the written contract governing the deposit
relationship between Plaintiff and Compass Bank,” and at paragraph 8 that “the
account agreement evidences the agreement in effect between the Plaintiff and
Compass Bank.” These statements are without foundation, are conclusory, and
must be disregarded.2
The conclusory statements made by Mueller are further demonstrated by her
second affidavit, in which she states repeatedly that she merely “believes” or that it
“appears” that the 2012 Agreement attached to her first affidavit is the one
governing the deposit relationship between Calleja and the Bank. CR 396.
Obviously, Mueller’s mere belief in the 2012 Agreement is speculation and
insufficient to show that it became effective as a contract between Calleja and the
Bank.
The 2012 Agreement is further shown to be inapplicable to Calleja by the
Agreement itself, which states that it is “Revision February 2012 - Al Nova
Branches Only” (emphasis added). CR 228. The Bank fails to provide any
2 Calleja attempted to have these conclusory statements stricken by the trial court without success. CR531-34.
However, this Court may disregard conclusory statements even without a ruling from the trial court. See, e.g.,
Seaprints, Inc. v. Cadleway Props, 446 S.W.3d 434, 441 (Tex. App. ― Houston [1st Dist.] 2014, no pet.).
8
evidence explaining this limitation or that Calleja was ever connected to any “Al
Nova Branches.” Finally, the uncertainty expressed by Mueller in her second
affidavit is in itself sufficient to create a fact issue concerning whether the 2012
Agreement applies to Calleja. Even the Bank itself admits that the 2012 Agreement
is only “believed to be the deposit agreement in effect during the relevant time
period.” CR 168, at fn 1.
Mueller also attempts to prove the 2012 Agreement by asserting that it is a
business record. CR 203. However, proving that the 2012 Agreement is a business
record does not automatically make it effective against Calleja. The Bank must
take the further step of proving that the 2012 Agreement became effective as to
Calleja, which requires showing that the Bank provided notice of the 2012
Agreement to Calleja or to one of the other account holders as required by Tex.
Fin. Code §34.302 and/or by the 2008 Agreement, and if so, when this was done.
See, e.g., Tex. Rule Evid. 803(6), which provides that business records are
admissible “unless the source of information or the method or circumstances of
preparation indicate lack of trustworthiness.” See also, Martin, supra, 295 S.W.3d
at 89 (Tex. 2000), wherein the Supreme Court stated that “[a]lthough the Credit
Union did not mail out copies of the Deposit Agreement to all of its members, it
notified them that copies could be picked up at any of its branches, and that they
could call the Credit Union to request a copy.” There is no evidence that the Bank
9
sent the 2012 Agreement to Calleja or that the Bank notified Calleja in any manner
that the 2012 Agreement was available for pick up. Such proof is completely
lacking from the Bank’s Motion, which means that the 2012 Agreement must be
disregarded, and only the 2008 Agreement determines the deposit relationship
between Calleja and the Bank.
Despite the parties’ dispute over which Deposit Account Agreement applies,
the Bank loses under both Agreements. The copy of the 2008 Agreement
duplicated in the Clerk’s Record is barely legible, which makes it difficult to read.
A better copy is attached hereto at Appendix 2.3 The relevant section from the
2008 Agreement (CR 51) provides that Calleja has a duty to report exceptions
“promptly after you receive the statement.” (emphasis added). Later in the same
section, the 2008 Agreement provides that Calleja should report exceptions “within
thirty (30) days after we send the statement or notice to you.” (emphasis added).
CR 295.
These conflicting statements create an ambiguity which is discussed below.
The term “send” is not defined in the 2008 Agreement, but Tex. Bus. & Comm.
Code §1.201(b)(36) requires that a document be “properly addressed” in order to
be “sent.” The Account Statements in this case were, beginning with July 2012
3 Another problem with the 2008 Agreement in the Clerk’s Record relates to pagination. Two pages of the 2008
Agreement are contained on each page of the Clerk’s Record, but the pages of the 2008 Agreement are not
sequential. The copy attached at Appendix 2 has sequential pages.
10
Statement, not properly addressed because there is no evidence presented by the
Bank that the addresses (other than the Woodlands address to which prior
Statements were sent) were ever authorized by any signatory of the Account. In
fact, the evidence shows that the Bank allowed the addresses to be changed by an
unknown and unauthorized person. CR 48. The 2008 Agreement specifically
provides that only “[a]ny account owner or authorized signer of a joint account
may change the mailing address for your account.” CR 295. The Bank frankly
acknowledges that the Account Statements may not have been properly addressed
(CR 374), and the trial court admits in its summary judgment order that it was not
basing its ruling on whether the Account Statements were “sent,” but instead was
focusing on whether the statements were “made available.” CR 735.
Despite the trial court’s focus on whether the Bank “made available” the
Account Statements, the 2008 Agreement only requires Calleja to review and
report discrepancies in Account Statements which have been received by Calleja,
or alternatively, sent by the Bank. The 2008 Agreement simply does not require
Calleja to review Account Statements which have been “made available.” The
exact wording from the 2008 Agreement could not be plainer:
You agree that you will carefully examine each account statement or notice
you receive and report any exceptions to us promptly after you receive the
statement and report any exceptions to us. If you do not report an exception
to us within thirty (30) days after we send the statement or notice to you,
11
you agree that we will not be liable to you for any loss you suffer related to
that exception. This means that, if you do not report exceptions to us within
thirty (30) days after we send the statement or notice to you, we will not
reimburse you for any loss you suffer, including, but not limited to, any
amounts lost as a result of: paying any authorized, forged, or altered item, or
paying any other altered item altered or forged by the same wrongdoer if we
paid the other item before we received of any of these exceptions from you.
(emphasis added). CR 295.
As shown on the preceding page, the term "send" requires that the document
be "properly addressed," and the 2008 Agreement provides only that "[a]ny
account owner or authorized signer of a joint account may change the mailing
address for your account" CR 295. The Bank produced no evidence that the
Account Statements mailed after June 2012 were properly addressed, and in fact,
the evidence shows that the Account Statements were mailed to unauthorized
addresses. CR 481.
Although §4.406 provides a defense if the Bank "sends or makes available"
the Account Statements, the Bank is bound by its own modifications of §4.406, as
provided in the 2008 Agreement. The 2008 Agreement requires Calleja to review
and report exceptions only when Account Statements are "received" by Calleja, or
alternatively, "sent" by the Bank. This case is virtually identical to the recent case
of Compass Bank v. Nacim, 459 S.W.3d 95 (Tex. App. - El Paso, 2015, no pet.),
which dealt with identical language in another Compass Bank account agreement.
A copy of this case is attached at Appendix 3. The El Paso court held that the
12
account agreement was ambiguous as to whether it required that the statements be
"received" or "sent" before the bank customer had a duty to report discrepancies in
the statements. Nacim, supra at 107-08. Any ambiguity must be construed against
the Bank and in favor of Calleja. See, e.g., JMB Partners, Ltd. v. Osloub, 4 S.W.3d
368,371 (Tex. App. − Houston [1stDist.] 1999, no pet.
In any event, the ambiguity is irrelevant in this case since the evidence
shows that the Account Statements were neither received by Calleja nor properly
sent by the Bank, and the Bank provided no evidence to the contrary. CR 46-47.
Significantly, the El Paso court also held that the additional "made available"
language in §4.406 was inapplicable because Compass Bank had altered
the §4.406 duties in its account agreement to delete that option. Nacim, supra at
108. The Bank is bound by the same wording in the 2008 Agreement, which
eliminates the Bank’s option of making the Account Statements available to
Calleja. See Tex. Fin. Code §§34.301; 341.302; La Sara Grain Co. v. First Nat'l
Bank, 673 S.W.2d 558, 563-64 (Tex. 1984).
Assuming arguendo that the 2012 Agreement applies, the Bank also loses
under that Agreement, even though it was never shown to be effective between the
Bank and Calleja. Similar to the 2008 Agreement, the 2012 Agreement provides
that "you will carefully review each account statement or notice you receive and
report any exceptions to us promptly after you receive the statement or notice."
13
(emphasis added). Unlike the 2008 Agreement, the 2012 Agreement then follows
with language requiring that the account holder report exceptions within thirty days
after we send or “make the statement or notice available to you." CR 212. As
shown by the Nacim case, these different provisions create an ambiguity as to
whether the obligation to review statements and report exceptions arises only when
the statements are received or when they are sent or when they are made available.
This ambiguity creates uncertainty as to when the thirty day time period begins to
run. Nacim, supra at 107-09.
The uncertainty is compounded by the Bank’s argument that it made
Account Statements “available” by holding them at the Bank. Does this mean that
the thirty day period begins when the Statements are first created, or when they are
sent, or when they are received? See Nacim, supra at 108. Adopting the Bank’s
argument that it made Statements “available” by holding them at the Bank (absent
a request to do so by the account holder) 4 would render meaningless the duty of
banks under §4.406 since every bank retains bank statements. See, e.g., First
Citizens Bank v. All Lift of Georgia, Inc. 251 Ga. App. 484, 555 S.E.2d 1 (2001),
and other cases discussed infra. The Texas Supreme Court cited the All Lift case
4The Bank possibly could have avoided this lawsuit by defining “make available” in its Deposit Account
Agreement to include holding Statements at the Bank and/or posting them online, but the Bank chose not to do so.
Instead the Bank’s 2012 Agreement provides that retaining statements at the Bank makes them “available” only
when requested or instructed by the account holder. CR 212.
14
when it was making a distinction between deceased and living depositors.
Jefferson State Bank v. Lenk, 323 S.W.3d 146, 150 at fn 7.
Even if the thirty day period runs from when account statements are "made
available" to the customer, this does not help the Bank because the 2012
Agreement defines availability in the Section entitled "Mailing and Availability."
This Section (CR 212) provides as follows:
We may make statements, cancelled checks (if applicable to your
account), notices or other communications available to you by holding
all or any of these items for you, or delivering all or any of these items
to you, in accordance with your request or instructions.” (emphasis
added).
The Bank never produced any evidence that it received a request or
instructions from any account holder to hold the Account Statements or to deliver
the Statements in any manner other than mailing the Statements to the Woodlands
address. To the contrary, the evidence shows that no such request or instructions
had been given to the Bank. CR 48.
Calleja highlighted this provision in his Motion and again in his Response to
the Bank’s Motion (CR36; 428), but the Bank failed to even address the quoted
wording, which specifies what constitutes “make available.” Instead, the Bank
simply recited various ways that the Bank could have made the Account
15
Statements available to Calleja, none of which are included within the term “makes
available” as defined in the 2012 Agreement. CR 374-76.
The Bank emphasizes that Calleja failed to report the forged check for
almost a year and a half after the Bank paid the forged check. The Bank intimates
that Calleja is barred by the one year deadline set forth in §4.406(f), but this
section provides that the one year period does not commence until “after the
statement or items are made available to the customer.” See, e.g., Jefferson State
Bank v. Lenk, 323 S.W.3d 146, 150 (Tex. 2010). As shown above, the Bank failed
to make the Account Statements “available” to Calleja until 2014.
THE BANK DID NOT PROVE THAT IT SUFFERED A LOSS
Tex. Bus. & Comm. Code §4.406(d)(1) provides that if the customer failed
to timely report his unauthorized signature on a check after the bank sends or
makes available account statements which provide sufficient information of the
problem the customer is precluded from asserting the unauthorized signature
against the Bank, but only “if the bank also proves that it suffered a loss by reason
of the [customer’s] failure.” There is absolutely no evidence that the Bank suffered
a loss, especially since the forged check was already paid by the Bank before the
Bank asserts that Calleja should have reported that he had not received his missing
Account Statement. CR 47; 71; 81. See, e.g., Nacim, supra at 106-07.
16
COURT CASES ARE FAVORABLE TO CALLEJA
The Bank relies heavily on the Texas Supreme Court case of American
Airlines Employees Federal Credit Union v. Martin, 29 S.W. 3d 86, 94 (Tex.
2000), in which the Supreme Court stated that the customer’s duty to detect and
report unauthorized transactions “is triggered when the bank meets its burden to
provide the customer with enough information that the customer can detect that the
unauthorized transaction has occurred.” The Court further stated, and the Bank
emphasizes, that the customer’s burden “includes the risk of non-receipt of account
statements.” However, this quote must be read in context with footnote 37
immediately following the quote, which states that “when account statements are
mailed to the proper address, the risk of non-receipt falls on the account holder.”
(emphasis added). The Court further cited to the case of Stowell v. Cloquet Co-Op
Credit Union, 557 N.W.2d 567, 571-72 (Minn. 1997), which also emphasized that
account statements must be properly addressed. Even the Bank quotes from the
Stowell case that “once account statements are mailed to the accountholder’s
address, the risk of non-receipt falls on the account holder.” (emphasis added). CR
175. See also, Tex. Bus. & Comm. Code §1.201 which defines the term “send” to
require that the item be “properly addressed.”
Significantly, in both the Martin and Stowell cases there is no question that
the bank statements were mailed to the proper address of the account holder. The
17
risk of non-receipt was proper in those cases. In this case, the evidence shows that
the relevant Account Statements were not sent to an authorized address. CR 48.
The Supreme Court next spoke on this issue in Jefferson State Bank v. Lenk,
323 S.W.3d 146, 149 (Tex. 2010), which specifically involved a bank sending
account statements to an imposter. The Court stated:
We reject the Bank’s argument that it satisfied its burden by sending
statements to Spillman [the imposter]. Even assuming, without
holding, that the Bank could have relied on the fraudulent letters, that
reliance would not have made Spillman the Bank’s customer. Thus
sending Spillman the statements could not fulfill the Bank’s
obligation to provide account statements “to a customer.”
The Court went on to hold that in the special circumstance when a bank is
aware of a customer’s death, the bank can comply with §4.406 only by retaining
statements at the bank for inspection by a properly appointed estate representative,
and the time limit for discovering problems does not commence until the estate
representative is appointed.
The Bank seeks to distinguish this case based on its special rule for deceased
account holders, but if the Court wanted to hold generally that a bank’s retention of
statements for access by the customer satisfies the “make available” standard, it
could easily have done so. Instead, the Supreme Court differentiated between
deceased and living customers in its footnote 7, which cited First Citizens Bank v.
All-Lift of Georgia, Inc., 251 Ga. App. 484, 555 S.E.2d 1 (2001). In First Citizens,
18
the Georgia court held that banks cannot satisfy the section 4.406 burden by
merely retaining the statements at the bank (absent the customer’s request to do
so). The Texas Supreme Court stated that its holding in Jefferson “does not conflict
with” First Citizens because the Georgia court was not dealing with how a bank
could comply with §4.406 for a deceased customer.
The First Citizens case makes perfect sense since allowing a bank to “make
available” bank statements by merely retaining them at the bank would completely
emasculate the duties imposed on banks under §4.406. Since all banks retain
copies of bank statements in some form, there would never be a bank which could
fail in its duties under §4.406. This result is unreasonable and cannot be intended
by the statute. The term “makes available” must mean more than mere retention of
bank statements.
Finally, in FDIC v. Lenk, 361 S.W.3d 602, 607-08 (Tex. 2012), the Supreme
Court reasserted its holding in Jefferson, that a bank does not fulfill its §4.406
obligation to provide account statements “to a customer” by sending them to an
imposter. The Supreme Court further cited and relied upon Tex. Fin. Code
§34.302(b), which specifically provides that a bank must provide statements “to
the account holder.”
19
Furthermore, neither the Lenk nor the First Citizens cases dealt with an
account agreement which specifies what constitutes “make available.” In this case,
the Bank suggests that it “made available” the relevant Account Statements by
holding copies at the Bank and/or by allowing optional internet access to accounts,
which Calleja did not request. CR 374-76. Significantly, the 2012 Agreement
relied on by the Bank, defines “make available” in a manner which excludes each
of the ways which the Bank suggests that it made Account Statements available.
CR 212.
Cases from other jurisdictions which have construed §4.406 agree that the
term “makes available” requires more than a bank simply retaining the statements
at the bank. In Matin v. Chase Manhattan Bank, 791 N.Y.S.2d 158, 159-60
(N.Y.S.Ct. 2004), a plaintiff argued that his statements were not mailed to his
home or to a person directed by him after the bank sent his statements to an
address based on a forged change of address card. The New York Supreme Court
reversed an order granting the bank’s motion for summary judgment after finding
that the plaintiff’s allegations were sufficient to raise a question of fact as to
whether the bank statements were “made available” to the plaintiff. The Matin
court stated:
“When a customer requests that a bank mail the statements either to
himself or to another person, and the bank complies, the statements
are considered “made available to the customer” for the purpose of the
20
UCC (Mesnick v. Hempstead Bank, 106 Misc. 2d 624, 626, 434
N.Y.S.2d 579; Jensen v. Essexbank, 396 Mass. 65, 483 N.E.2d 247;
Terry v. Puget Sound Natl. Bank, 80 Wash. 2d 157, 492, P.2d 534;
Brown v. Cash Mgt. Trust of Am., 963 F.Supp. 504 [D.Md. 1997].
However, the plaintiff alleged that the statements were not mailed to
him or to a person to whom he directed because the bank sent the
statements to the address on a forged change of address card. The
bank did not contest that the statements were sent to the address on
the forged change of address card rather than his actual address. These
allegations were sufficient to raise a question of fact as to whether the
statements were made available to the plaintiff under UCCC 4-406(1)
(see Woods v. MONY Legacy Life Ins. Co., supra at 286, 617
N.Y.S.2d 452, 641 N.E.2d 1070).”
Another applicable case is Robinson Motor Xpress, Inc. v. HSBC Bank,
USA, 826 N.Y.S.2d 350 (N.Y.S.Ct. 2006), in which the New York Supreme Court
held that the bank statements were not “made available” to the plaintiff within the
meaning of §4.406 when they were mailed to an address other than that which the
plaintiff had designated. The Robinson court explained that when:
“the customer has expressly directed that the statements be mailed to a
specific address or officer...and the bank fails to comply with that
instruction, such delivery is equivalent to the statements having been
improperly directed to an address unrelated to the plaintiff, and the
statements cannot be said to have been “made available” to the
plaintiff by such mailing.”
See also, First Citizens Bank v. All-Lift of Georgia, Inc. 251 Ga. App. 484,
555 S.E.2d 1 (2001), cited by the Texas Supreme Court as noted above, which held
that a bank cannot satisfy its initial burden under §4.406 by retaining statements at
the bank, absent the customer’s authorization to do so, and Merna v. Simuro, 904
21
N.Y.S.2d 197 (N.Y.S.Ct. 2010), which denied a bank’s summary judgment when
the evidence did not show that the account holder had authorized the mailing of
account statements to the address on record with the bank.
Each case relied upon by the Bank involves statements sent to a proper
address or to a person authorized to receive statements. One case upon which the
Bank relies is Stowell v. Cloquett Co-Op Credit Union, 557 N.W.2d 567 (Minn.
1997), cited by the Texas Supreme Court as noted above. The Stowell case
involved a credit union which was mailing account statements to the correct
address, but the account holder was not receiving the statements because the
statements were being removed from the account holder’s mailbox by a neighbor
who was forging checks on the account. The court stated “the modern UCC case
law of other jurisdictions is virtually unanimous in holding that, once account
statements are mailed to the account holder’s address, the risk of non-receipt falls
on the account holder...” (emphasis added). 557 N.W.2d at 571. This case directly
supports Calleja’s position that the Bank has the initial burden to mail account
statements to the authorized proper address for the Account and not to the
unauthorized address of an imposter. Only when the Bank fulfills its initial duty,
does Calleja have a duty to inspect and report discrepancies.
The Bank also relies on In re Estate of Berry, 280 S.W.3d 478 (Tex. App. —
Corpus Christi 1993, no writ); Borowski v. Firstar Bank Milwaukee, 579 N.W.2d
22
247 (Wis. App. 1998); Tumlinson v. First Victoria National Bank, 865 S.W.2d 176
(Tex. App. ― Corpus Christi 1994, no writ); Hatcher Cleaning Co. v. Comerica
Bank ― Texas, 995 S.W.2d 933 (Tex. App. ― Ft. Worth 1999, no pet.); Watseka
First National Bank v. Horney, 686 N.E.2d 1175, 35 UCC Rep. Serv. 2d 582 (Ill.
App. Ct. 1997); Sabatino v. Atlantic Sav. Bank, 444 S.E.2d 537 (S.C. App. 1994);
Mesnick v. Hempstead Bank, 434 N.YS.2d 579 (N.Y. 1980); Woods v. MONY
Legacy Life Ins. Co., 617 N.Y.S.2d 452 (N.Y. 1994); Siecinski v. First State Bank
of East Detroit, 26 UCC Rep. Serv. 2d 666, 669-70 (Mich. App. Ct. 1995); Gerber
v. City Nat’l Bank of Florida, 619 So.2d 328, 329 (Fla. Dist. Ct. App. 1993) and
Minskoff v. American Express, 98 F.3d 703 (2nd Cir. 1996), but each of these cases
involved statements being mailed to an authorized address. The case of Myrick v.
National Savings & Trust Co., 268 A.2d 526 (D.C. 1970), involved forged checks
which were cashed after the bank had notified the account holder that there was no
money in the Account. The bank also submitted evidence that it mailed monthly
statements to its customers, and there is no indication by the Court that the
statements were mailed other than to an authorized address.
The case of Wetherill v. Putnam Investments, 122 F.3d 554 (8th Cir. 1997),
involved a corporate secretary who was authorized to make deposits into a
corporate account but not withdrawals. The secretary changed the address for the
account to a post office box and proceeded to forge checks on the account. The
23
court held that §4.406 barred the Plaintiff’s claim because the secretary was an
officer of the company, the president of the company was aware of the post office
box, some corporate mail was received there, and the monthly statements were also
being sent to the authorized address of the company’s broker.
The Bank cites only two cases for the proposition that holding account
statements at the Bank constitutes making them available to the customer. In the
early case of Westport Bank & Trust v. Lodge, 325 A.2d 222 (Conn. 1973), the
account holder knew that account statements were being mailed to her personal
secretary and knew that there were overdrafts and other irregularities concerning
the account. The reference to account statements being available at the bank is
merely a comment on one facet of the evidence and not the main basis for the
court’s decision. Karmin Door Co. v. Bank Boston, No. 99-0146 (Mass. Superior
Ct. 2000) is an unreported case which simply does not hold that a bank may
comply with its §4.406 duties by holding the statements at the bank. Instead,
evidence showed that bank statements were sent to the customer’s address and that
an employee of the customer forged checks. The customer failed to timely notify
the bank of the forgeries even though statements were being received at customer’s
address. Neither the Lodge nor the Karmin case supports the Bank’s contention
that merely holding bank statements (absent request by or notice to the customer)
24
satisfies the Bank’s duties under §4.406. 5 All of the cases relied upon by the Bank
simply do not support its compliance with §4.406 when the Bank sends Account
Statements to an imposter at an unauthorized address, completely unknown and
unrelated to the account holder.
NO DUTY TO REQUEST BANK STATEMENTS
The Bank made a “common sense” argument in the trial court (without
citing any authority), that if Calleja did not receive his Account Statements, he
should have requested them from the Bank within a month after he failed to
receive them. CR 373. The trial court apparently agreed, stating in its summary
judgment order that “as a matter of law, Plaintiff has failed to exercise diligence in
protecting himself from alleged fraud regardless of any shortcomings in sending
bank statements.” CR 735.
This type of argument is completely misplaced. There is no requirement in
§4.406 that a customer request missing bank statements which the bank sent to an
unauthorized address. Section 4.406 only requires that a customer inspect and
report discrepancies in bank statements which the bank has sent or otherwise made
available to the customer. If the bank has not properly sent or made available a
5 The Bank further argued in the trial court that the Account Statements notified Calleja that he could request
statements from the Bank, thereby making them available. The wording referenced states: “If you have questions
about your statement, call Customer Service at 1-800-266-7277.” This wording clearly refers to questions about the
statement in which the wording appears and which would have been received by the customer. It is not notice that
the customer can contact the Bank to obtain missing statements.
25
bank statement, the customer has no duty under §4.406 to report any discrepancy
in such bank statement, or to request missing bank statements.
This case is very similar to Bank of American, N.A. v. Haag, 37 S.W.3d 55,
58-59 (Tex. App. — San Antonio 2000, no pet.), in which the court held that a
withdrawal by a person not on the signature card was “unauthorized.” In response
to the bank’s argument that the account holder was estopped because he never
notified the bank that the account statements were erroneously addressed, the court
further held that the account holder had no duty to speak under these
circumstances, either under common law principles or pursuant to §4.406.
Even the Bank agrees in this case that common law claims and defenses
concerning an account holder’s duty to report discrepancies in account statements
have been completely displaced by §4.406. CR 171. Section 4.406 places no duty
on the account holder to notify the bank concerning problems with his statements
unless the bank first sends or makes available such statements to the account
holder. See §4.406, Comment 1. As shown above, the Bank never sent or made
available the relevant account statements to Calleja, but instead sent the statements
to an unauthorized address. CR 48.
Finally, at the time the Bank contends that Calleja should have requested the
missing Account Statements, the Bank had already paid the forged check. CR 71;
26
81. The Bank does not present any evidence or argument that the Bank suffered
any loss because of Calleja’s alleged negligence in failing to report missing
Account Statements, which completely defeats the Bank’s defenses under §4.406
and under any common law negligence claim. 6
TEX. BUS. & COMM CODE §3.406 IS INAPPLICABLE
The Bank argues that Tex. Bus. & Comm. Code §3.406 bars Calleja’s claims. CR
195. Section 3.406 provides as follows:
A person whose failure to exercise ordinary care substantially
contributes to an alteration of an instrument or to making a forged
signature on an instrument is precluded from asserting the alteration
or the forgery against a person who, in good faith, pays the instrument
or takes it for value or for collection (emphasis added).
In order for §3.406 to apply, the Bank has the burden to prove that it paid the
$38,700.00 check in “good faith.” See, e.g., Bank of Texas v. VR Elec, Inc., 276
S.W.3d 671, 678 (Tex. App. — Houston [1st Dist.] 2008, pet. denied). The term
“good faith” means honesty in fact and “the observance of reasonable commercial
standards of fair dealing.” Tex. Bus. & Comm. Code §1.201(b)(20). The Bank has
produced absolutely no evidence of its “honesty in fact” or of its “observance of
reasonable commercial standards of fair dealing.” The Bank simply is not entitled
to the protections of §3.406.
6Tex. Bus. & Comm. Code §4.406(e) also provides a comparative negligence test if both the Bank and Calleja are
negligent and the Bank proves that it suffered a loss.
27
In addition, the Bank speculates that Calleja’s brother was involved in the
forgery of the $38,700.00 check. CR 195. However, the Bank has provided
absolutely no evidence in support of this allegation. The Bank further contends that
permitting the brother to access Calleja’s banking information allowed other
parties to learn Calleja’s banking information, which “likely” allowed Calleja’s
purported loss to occur. Calleja admits that monthly account statements were
received at his brother’s address in the Woodlands, but the uncontroverted
evidence is that the Account Statements were never opened by the brother, were
not available to anyone else before being delivered unopened to Calleja, and that
all Account Statements and checks were accounted for prior to July 2012. CR 47-
48. The Bank has produced no evidence that Calleja or his brother failed to
exercise ordinary care in handling checks and/or Account Statements and further
has produced no evidence that actions or failure to act by Calleja or his brother
contributed to “the making of a forged signature” in the $38,700.00 check.
TEX. BUS. & COMM. CODE §3.405 DOES NOT APPLY
The Bank further alleges that Calleja violated Tex. Bus. & Comm. Code
§3.405. This statute provides that an employer is responsible for the fraudulent
endorsement of a check by an employee or a person acting in concert with the
employee if the employer entrusted the employee with the check, and the check
was cashed in “good faith” by the bank. The Bank alleges that since Calleja
28
allowed Account Statements to be mailed to his brother’s address in the
Woodlands, this action somehow makes Calleja an “employer” and his brother an
“employee”, with Calleja being responsible for the fraudulent endorsement on the
$37,800.00 forged check paid by the Bank on July 30, 2012.
Section 3.405 cannot possibly apply in this case for several reasons. First,
the evidence is uncontradicted that Calleja’s brother only received and delivered to
Calleja unopened account statements. The brother had absolutely no responsibility
with regard to checks for the Account. CR 47. The term “responsibility” is defined
narrowly to include authority with respect to instruments [checks]:
(a)(B)(3) “Responsibility” with respect to instruments means authority
(i) to sign or endorse 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 of
payees of instruments to be issued in the name of the employer, (v) to
control the disposition of instruments to be issued in the name of the
employer, or (vi) to act otherwise with respect to instruments in a
responsible capacity. “Responsibility” does not include authority that
merely allows an employee to have access to instruments or blank or
incomplete instrument forms that are being stored or transported or
are part of incoming or outgoing mail, or similar access.
Second, §3.406(b) further provides that the Bank must pay the check in
“good faith.” The term “good faith is defined at §1.201(b)(20) as not only honesty
in fact but also “the observance of reasonable commercial standards of fair
29
dealing.” The burden of proving “good faith” is on the Bank. See, e.g. Bank of
Texas v. VR Elec., Inc., 276 S.W.3d 671, 678 (Tex. App. — Houston [1st Dist.]
2008, pet. denied), construing §3.406, which has the same good faith standard as
§3.405. The Bank has submitted no evidence that it paid the $37,800.00 check in
good faith. On the other hand, there is evidence that Calleja’s purported signature
on the check is in no way similar to his signature on the Account signature card
and is other checks. CR 71.
THE BANK’S LACK OF GOOD FAITH
Tex. Bus. & Comm. Code §§1.201(20) and 1.304 require that the Bank
exercise good faith performing all of its duties imposed by the UCC, including
payment of checks and otherwise handling Calleja’s account at the Bank. Section
1.304 applies to all duties required under the Texas Uniform Commercial Code,
including Bank’s duties under §4.406. See also, La Sara Grain Company v. First
Nat’l Bank, 673 S.W.2d 558, 562 (Tex. 1984), in which the Supreme Court stated:
“[if checks were not paid in good faith] the bank cannot claim the protection of
section 4.406. The time limits of that section apply only to items paid in good
faith.” In 1984, the definition of “good faith” required only “honesty in fact.” See
La Sara supra at 563. In 2003, the definition of “good faith” was expanded in
§1.201(20) to include not only honesty in fact but also observance of “reasonable
commercial standards of fair dealing.”
30
There is evidence in this case that the Bank was not honest in fact and/or did
not following reasonable commercial standards of fair dealing. The signature on
the forged check does not even resemble Mr. Calleja’s signature on the signature
card for the Account or on other documents admittedly signed by Calleja. CR 71,
73, 230, 317-23. This shows that the Bank did not even attempt to compare the
signature on the check with the signature card for the account. In McDowell v.
Dallas Teachers Credit Union, 772 S.W.2d 183, 188-91 (Tex. App. — Dallas
1989, no writ), the court held that a bank’s practice of not comparing the signature
on checks with the signature card does not comply with reasonable commercial
standards and was unfair.
Furthermore, there is evidence that the Bank allowed an imposter to change
the address to which Account Statements were to be mailed, and there is no
evidence that the Bank made any attempt to send a notice to the Woodlands
address that there had been a change of address. CR 46-49, 317-23. Both of these
indicate the Bank’s failure to comply with reasonable commercial standards of fair
dealing.
The Bank has the burden of proving its good faith under Tex. Bus. & Comm.
Code §§3.405 and 3.406, which were raised as defenses in the Bank’s Motion for
Summary Judgment. See, e.g. Bank of Texas v. VR Electric Inc., 276 S.W.3d 671,
678-80 (Tex. App. — Houston [1st Dist.] 2008, pet. denied). The Bank produced
31
no evidence of its procedures or its good faith. Even if Calleja had the burden to
prove the Bank’s failure to exercise good faith under §4.406, Calleja plead that the
Bank failed to act in good faith (CR 420-22), and submitted evidence that the Bank
failed to exercise good faith. CR 46-49; 317-23.
BANK IS NOT ENTITLED TO RECOVER ATTORNEY’S FEES
The parties in this case agreed that the trial court could determine, as a finder
of fact, whether the Bank’s claimed attorney’s fees were reasonable and necessary.
However, Calleja retained the right to challenge whether the Bank’s attorney’s fees
were recoverable, and/or whether the Bank had properly proven its requested fees.
CR 714.
As shown above, the 2008 Agreement is the only one applicable in this case.
The 2008 Agreement does not allow the Bank to recover attorney’s fees against
Calleja under the circumstances of this case. The only section for recovery of
attorney’s fees in the 2008 Agreement (Section 19 on page 35) provides that “[i]f
you fail to pay any amounts due under this Agreement and your debt is referred to
an attorney(s), not one of salaried employees...you agree to pay all reasonable
expenses permitted by applicable law, including but not limited to, court costs and
attorney’s fees set by the court.” CR 54. The Bank cannot recover attorney’s fees
under this section because the Bank did not seek, and did not recover, any debt
32
owed by Calleja under the 2008 Agreement. The Bank also did not seek a
declaratory judgment (CR 6-12), and cannot recover attorney’s fees pursuant to
Tex. Civ. Prac. & Rem. Code §38.001(8) because the Bank did not seek or recover
damages from Calleja. See, e.g., Green Int’l v. Solis, 951 S.W.2d 384, 390 (Tex.
1997).
The Bank also did not properly prove its attorney’s fees awarded by the trial
court. The affidavits submitted by Mr. Huttenbach are insufficient to support the
attorney’s fees awarded by the trial court. Mr. Huttenbach filed three affidavits
seeking to justify the $49,186.65 of attorney’s fees through summary judgment
awarded by the trial court. CR 571-72; 604-06; 716-17. Mr. Huttenbach’s first
affidavit (CR 571-72) states that the Bank is entitled to recover $28,840.19 of fees
and costs, but the attached fee statements only total $22,722.69. CR 574-602. Mr.
Huttenbach never explains this discrepancy. Mr. Huttenbach’s second affidavit
(CR 604) does not claim additional attorney’s fees but only purports to expand on
why the attorney’s fees are proper. Mr. Huttenbach still did not explain the
discrepancy in the first affidavit concerning the amount of attorney’s fees.
Mr. Huttenbach states in all of his affidavits that his usual hourly rate is
$345.00 but that the Bank receives a discount. The fee statements attached to Mr.
Huttenbach’s first affidavit reflect a discounted charge of $315.00 per hour (CR
334-61), but the fee statements attached to Mr. Huttenbach’s third affidavit (CR
33
718) calculates his hourly rate at $345.00, which is in excess of the discount that he
claims the Bank is charged. Mr. Huttenbach did not explain this discrepancy.
Furthermore, the Bank bills attached to all of Mr. Huttenbach’s affidavit still do
not add up to the $49,186.65 awarded by the trial court. CR 571-602; 608-19; 718-
23. Mr. Huttenbach’s affidavits are conclusory and do not support the requested
fees. See, e.g., Vega v. Compass Bank, No. 04-13-00383-CV, at 5-6 (Tex. App. ―
San Antonio, March 12, 2014, no pet.) (Memo. Opin.), which dealt with Mr.
Huttenbach’s affidavit in another Compass Bank case.
Finally, Mr. Huttenbach does not comply with the requirements set forth by
the Texas Supreme Court in Long v. Griffin, No. 11-1021, ___ S.W.3d ___, 2015
WL 1643271, at *3 (Tex., April 25, 2014); City of Laredo v. Montano, 414 S.W.3d
731, 736 (Tex. 2013). First, a substantial number of the entries in the fee
statements attached to Mr. Huttenbach’s affidavits are completely or substantially
blocked out (CR 334-61; 571-602; 608-1; 718-23), presumably because Mr.
Huttenbach considered that they contained attorney-client privilege. However,
without disclosing even a description of the work being performed, Calleja’s
attorney is unable to respond whether those portions of the fee statements show
reasonable and/or necessary fees for the undescribed work. Second, Mr.
Huttenbach does not provide information concerning the identity and experience of
the other attorneys and paralegals working on the case and whose time is billed in
34
the fee statements. Again, Calleja’s attorney is unable to properly evaluate whether
such work and fees charged by these other persons were reasonable and/or
necessary.
Therefore, there is no evidence and/or insufficient evidence to sustain the
$49,186.65 awarded by the trial court through summary judgment, especially since
no depositions were taken, and the amount awarded to the Bank was substantially
more than the amount of the forged check.
BANK’S NO EVIDENCE MOTION IS IMPROPER
In paragraphs 7 and 8 of the Bank’s Motion (CR 165), the Bank merely
mentions the availability of a no evidence motion for summary judgment.
However, nowhere does the Bank actually state that it is asserting a no evidence
motion for summary judgment, which is unavailable in any event. First, the Bank
has not specified any essential elements of a claim or defense for which there is no
evidence and for which Calleja would have the burden to prove. Second, the Bank
has the burden to prove the elements of its §§3.405, 3.406 and 4.406 defenses,
which it failed to do. More significantly, Tex. Bus. & Comm. Code §§1.201(b)(20)
and 1.304 require that the Bank pay the $38,700.00 forged check in “good faith,”
before the Bank can rely on the defenses in §4.406. See, e.g., La Sara Grain Co. v.
First Nat’l Bank, 673 S.W.2d 558, 563 (Tex. 1984). The term “good faith” requires
35
an objective observance of reasonable commercial standards of fair dealing. The
Bank has produced no evidence of its procedures, and Calleja has produced
evidence that the signature on the forged check did not even resemble his signature
on the Bank’s signature card. CR 71, 73, 230, 317-23. See also McDowell v.
Dallas Teachers Credit Union, 772 S.W.2d 183, 188-91 (Tex. App. — Dallas
1989, no writ), which held that a bank’s failure to compare signatures on checks
with the signature card does not comply with reasonable commercial standards and
is unfair.
CALLEJA IS ENTITLED TO SUMMARY JUDGMENT
Calleja proved in its Motion for Summary Judgment that the Bank allowed
unauthorized deductions from the Account, which caused a breach in the Account
Agreement. CR 34-49. This is all that is required for Calleja to recover from the
Bank. See, e.g., FDIC v. Lenk, 361 S.W.3d 602, 606-07 (Tex. 2012). The Bank’s
Response to Calleja’s Motion assumed that unauthorized deductions were made
from the Account (CR 161), but then devotes its entire Response attempting to
show that it complied with its duties under Tex. Bus. & Comm. Code §4.406 by
sending or making available to Calleja the relevant Account Statements, and that
Calleja failed in a supposed duty under §4.406 to report the Bank’s failure to
properly send Account Statements. CR 166-71. The Bank’s reliance on §4.406 is
an affirmative defense, as to which the Bank has the burden of proof. See, e.g,
36
FDIC v. Lenk, 361 S.W.3d 602, 609 (Tex. 2012). As shown above, the Bank is not
entitled to the benefits of §4.406 because the Bank failed to send or make available
the relevant Account Statements as specified in both the 2008 and 2012 Account
Agreements and as further provided by applicable case law.
PRAYER
WHEREFORE, Appellant Francisco Calleja-Ahedo prays that this Court
reverse the summary judgment granted by the trial court, render judgment in favor
of Appellant on his Motion for Summary Judgment, or alternatively, remand this
case to the trial court for determination of Appellant’s attorney fees.
Respectfully submitted,
O'CONNOR, CRAIG, GOULD & EVANS
By: /s/ Michael C. O’Connor
Michael C. O'Connor
State Bar No. 15187000
2500 Tanglewilde, Suite 222
Houston, Texas 77063
(713) 266-3311
(713) 953-7513 (Fax)
Email: moconnor@oconnorcraig.com
ATTORNEYS FOR APPELLANT
FRANCISCO CALLEJA-AHEDO
37
CERTIFICATE OF COMPLIANCE
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), I hereby certify that
this brief contains 9,577 words (excluding the caption, table of contents, table of
authorities, signature, proof of service, certificate and certificate of compliance).
This is a computer generated document created using Microsoft Word, using 14-
point typeface. In making this certificate of compliance, I am relying on the word
count provided by the software used to prepare the document.
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document has
been served on the following counsel of record by telephonic transfer or electronic
service, on this the 10th day of August, 2015.
Michael D. Conner
Hirsch & Westheimer
1415 Louisiana, 36th Floor
Houston, Texas 77002
Facsimile: 713-223-9319
E-Mail: Mconner@hirschwest.com
/s/ Michael C. O’Connor
Michael C. O’Connor
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No. 01-15-00210-CV
IN THE
FIRST COURT OF APPEALS
HOUSTON, TEXAS
FRANCISCO CALLEJA-AHEDO
Appellant
V.
COMPASS BANK
Appellee
On Appeal from the 55th District Court
Harris County, Texas
Trial Cause No. 2014-22168
APPENDIX
Appendix 1: Copy of Tex. Fin. Code §34.302
Appendix 2: Consumer Disclosure: 2008 Agreement
Appendix 3: Compass Bank v. Nacim, 459 S.W.3d 95 (Tex. App. - El Paso, 2015,
no pet.)
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