Francisco Calleja-Ahedo v. Compass Bank

ACCEPTED

01-15-00210-CV

FIRST COURT OF APPEALS

HOUSTON, TEXAS

10/23/2015 3:29:52 PM

CHRISTOPHER PRINE

CLERK

Case No. 01-15-00210-CV

FILED IN

1st COURT OF APPEALS

IN THE FIRST COURT OF APPEALS HOUSTON, TEXAS

HOUSTON, TEXAS 10/23/2015 3:29:52 PM

CHRISTOPHER A. PRINE

Clerk

Francisco Calleja-Ahedo, Appellant

v.

Compass Bank, Appellee

From Cause No. 2014-22168

55th Judicial District Court, Harris County, Texas

Appellee’s Brief

HIRSCH & WESTHEIMER, P.C.

By: /s/ Michael D. Conner

Michael D. Conner

State Bar No. 04688650

mconner@hirschwest.com

William P. Huttenbach

State Bar No. 24002330

phuttenbach@hirschwest.com

1415 Louisiana, 36th Floor

Houston, Texas 77002

Telephone: (713) 220-9162

Facsimile: (713) 223-9319

Attorneys for Appellee, Compass Bank

Appellant requested oral argument. Appellee also request to be heard.

930505.20140273/2253328.1

TABLE OF CONTENTS

TABLE OF AUTHORITIES ................................................................................... iii

Statement of the Case.................................................................................................1

Appellant’s Issues [Restated].....................................................................................2

Statement of Facts ......................................................................................................2

Standard of Review ....................................................................................................7

Summary Judgment ................................................................................................7

A. Generally .......................................................................................................7

B. Traditional Summary Judgment ....................................................................7

C. Evidentiary Rulings .......................................................................................8

D. Contract Interpretation ..................................................................................8

E. Harmless Error ............................................................................................10

Summary of Argument ............................................................................................10

Argument and Authorities........................................................................................13

I. Appellant’s Failure to Inquire for 18 Months Is Negligent

as a Matter of Law ...............................................................................13

II. The Deposit Contract and Section 4.406.............................................22

The February 2012 Deposit Agreement Governs the Account. ..........24

Compass Bank made statements available in accordance with the

contract. ...............................................................................................27

III. As Prevailing Party Compass Bank is Entitled to Recover

Attorneys’ Fees....................................................................................32

IV. Appellant Failed to Conclusively Establish Entitlement to

Summary Judgment .............................................................................36

i

Conclusion ...............................................................................................................38

Prayer .......................................................................................................................40

Certificate of Compliance ........................................................................................41

Certificate of Service ...............................................................................................41

Appendix ..................................................................................................................42

ii

TABLE OF AUTHORITIES

Cases

Aetna Life & Casualty Co. v. Hampton State Bank

497 S.W.2d 80 (Tex. Civ. App.—Dallas 1973, no pet.) ......................................20

Am. Airlines Employees Fed. Credit Union v. Martin,

29 S.W.3d 86 (Tex. 2000).............................................................................. 31, 33

Am. Tobacco Co., Inc. v. Grinnell,

951 S.W.2d 420 (Tex. 1997) ..................................................................................8

Bank of Tex. v. VR Elec., Inc.,

276 S.W.3d (Tex. App.—Houston [1st Dist.] 2008, pet. denied) ..... 16, 19, 20, 22

Barfield v. Howard M. Smith Co. of Amarillo,

426 S.W.2d 834 (Tex. 1968) ......................................................................... 10, 14

Berry v. Encore Bank

2015 WL 3485970

(Tex. App.—Houston [1st Dist.] June 2, 2015, no. pet. h.)..............................7, 38

Canfield v. Bank One, Tex., N.A.,

51 S.W.3d 828 (Tex. App.—Texarkana 2001, pet. denied) .................................21

Carpenter v. Cimarron Hydrocarbons Corp.,

98 S.W.3d 682 (Tex. 2002).....................................................................................8

Cathey v. Booth,

900 S.W.2d 339 (Tex. 1995) ..................................................................................8

City of Laredo v. Montano,

414 S.W.3d 731 (Tex. 2013) ................................................................................35

Coker v. Coker,

650 S.W.2d 391 (Tex. 1983) ..................................................................................8

iii

Coleman v. Bhd. State Bank,

3 Kan. App. 2d 162, 592 P.2d 103 (1979) ............................................................15

Compton, Ault & Co. v. Marshall,

88 Tex. 50, 29 S.W. 1059 (Tex. 1895) .................................................................21

Contractors Source, Inc. v. Amegy Bank Nat’l Ass’n,

462 S.W.3d 128 (Tex. App.—Houston [1st Dist.] 2015, no pet.) ................. 21, 22

Derr Constr. Co. v. City of Houston,

846 S.W.2d 854 (Tex. App.—Houston [14th Dist.] 1992, no writ) .......................9

Downer v. Aquamarine Operators, Inc.,

701 S.W.2d 238 (Tex. 1985) ..................................................................................8

E.I. Du Pont De Nemours & Co. v. Shell Oil Co.,

259 S.W.3d 800 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) .................35

El Apple I, Ltd. v. Olivas,

370 S.W.3d 757 (Tex. 2012) ........................................................................ 35, 36

El Paso Field Services, L.P. v. MasTec N. Am., Inc.,

389 S.W.3d 802 (Tex. 2012) ............................................................................9, 31

Fullick v. City of Baytown,

820 S.W.2d 943 (Tex. App.—Houston [1st Dist.] 1991, no writ) .......................27

Gramen Farm, LLC v. Huyen Nguyen,

01-13-00569-CV, 2014 WL 4374120

(Tex. App.—Houston [1st Dist.] Sept. 4, 2014, no pet.) ......................................31

HECI Exploration Co. v. Neel,

982 S.W.2d 881 (Tex. 1998) ................................................................................14

Highland Capital Mgmt., L.P. v. Ryder Scott Co.,

402 S.W.3d 719 (Tex. App.—Houston [1st Dist.] 2012, no pet.) ..........................8

iv

Howard v. Faberge, Inc.,

679 S.W.2d 644 (Tex. App.—Houston [1st Dist.] 1984, writ refused n.r.e.) ......10

Italian Cowboy Partners v. Prudential Ins. Co.,

341 S.W.3d 323 (Tex. 2011) ..................................................................... 9, 10, 31

J.M. Davidson, Inc. v. Webster,

128 S.W.3d 223 (Tex. 2003) ................................................................................31

Kennamer v. Estate of Noblitt,

332 S.W.3d 559 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) ...............7, 8

Khalilnia v. Fed. Home Loan Mortg. Corp.,

01-12-00573-CV, 2013 WL 1183311

(Tex. App.—Houston [1st Dist.] Mar. 21, 2013, pet. denied)..............................27

K-Mart Corp. v. Honeycutt,

24 S.W.3d 357 (Tex. 2000).....................................................................................8

Leax v. Leax,

305 S.W.3d 22 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) .....................8

Long v. Griffin

442 S.W.3d 253 (Tex. 2014) ......................................................................... 35, 36

Lyle v. Jane Guinn Revocable Trust,

365 S.W.3d 341 (Tex. App.—Houston [1st Dist.] 2010, pet. denied) .................10

McCraw v. Maris,

828 S.W.2d 756 (Tex. 1992) ................................................................................10

Mid-Century Ins. Co. v. Ademaj,

243 S.W.3d 618 (Tex. 2007) ..................................................................................7

Miller v. Raytheon Aircraft Co.,

229 S.W.3d 358, 365-66 (Tex. App.—Houston [1st Dist.] 2007, no pet.) ..........26

v

Myrick v. Nat'l Sav. & Trust Co.,

268 A.2d 526 (D.C. 1970) ....................................................................................15

RGS, Cardox Recovery, Inc. v. Dorchester Enhanced Recovery Co.,

700 S.W.2d 635, 638 (Tex. App.—Corpus Christi 1985, writ ref’d n.r.e.) ...........9

Rogers v. Rogers,

01-90-00852-CV, 1991 WL 179620

(Tex. App.—Houston [1st Dist.] Sept. 12, 1991, writ denied)...............................9

Schlumberger Tech. Corp. v. Swanson,

959 S.W.2d 171 (Tex. 1997) ................................................................................14

Seagull Energy E & P, Inc. v. Eland Energy, Inc.,

207 S.W.3d 342 (Tex. 2006) ................................................................................31

Sonerra Resources Corp. v. Helmerich & Payne Int’l Drilling Co.,

01-11-00459-CV, 2012 WL 3776428

(Tex. App.—Houston [1st Dist.] Aug. 30, 2012, no pet. h.) ...........................9, 10

Stauffer v. Henderson,

801 S.W.2d 858 (Tex. 1990) ................................................................................31

Stucki v. Noble,

963 S.W.2d 776 (Tex. App.—San Antonio 1998, pet. denied)............................26

Terry v. Puget Sound Nat. Bank,

80 Wash. 2d 157, 492 P.2d 534 (1972) ................................................................15

Tex. Workers’ Comp. Comm’n v. Patient Advocates,

136 S.W.3d 643 (Tex. 2004) ............................................................................7, 38

Union Planters Bank, Nat. Ass'n v. Rogers,

912 So. 2d 116 (Miss. 2005) .................................................................................15

Valence Operating Co. v. Dorsett,

164 S.W.3d 656 (Tex. 2005) ..................................................................................8

vi

Vega v. Compass Bank,

04-13-00383-CV, 2014 WL 953466

(Tex. App.—San Antonio Mar. 12, 2014, no pet.) ...............................................35

Via Net v. TIG Ins. Co.,

211 S.W.3d 310 (Tex. 2006) ................................................................................14

Wagner & Brown, Ltd. v. Horwood,

58 S.W.3d 732 (Tex. 2001)...................................................................................14

Waite v. BancTexas-Houston, N.A.,

792 S.W.2d 538 (Tex. App.—Houston [1st Dist.] 1990, no writ) .......................26

Westport Bank & Trust Co. v. Lodge,

164 Conn. 604, 325 A.2d 222 (1973) ...................................................................15

Whitney Nat. Bank v. Baker,

122 S.W.3d 204 (Tex. App.—Houston [1st Dist.] 2003, no pet.) ........................31

Statutes

Tex. Bus. & Com. Code § 1.201(b)(20) ..................................................................21

Tex. Bus. & Com. Code § 3.406 (a) ................................................................ passim

Tex. Bus. & Com. Code 4.103(a) ..................................................................... 23, 28

Tex. Bus. & Com. Code 4.406 ......................................................................... passim

Tex. Bus. & Com. Code §§ 3.101–605 ....................................................................22

Tex. Civ. Prac. & Code § 37.009 .............................................................................36

Tex. Civ. Prac. & Code § 38.001 .............................................................................36

vii

Tex. Fin. Code Ann. § 34.302 (a) ..................................................................... 24, 25

Tex. Fin. Code § 34.301 (a) ........................................................................ 14, 29, 31

Rules

Tex. R. App. P. 44.1.................................................................................................10

Tex. R. App. P. 9.4(e) ..............................................................................................41

Tex. R. App. P. 9.4(i) ...............................................................................................41

Tex. R. Civ. P. 166a (c) .............................................................................................7

Tex. R. Evid. 902(10)........................................................................................ 26, 27

Other Authority

Black’s Law Dictionary 284 (7th ed. 2001) ............................................................35

viii

Statement of the Case

Nature of the Case Appellant Calleja-Ahedo sued Compass Bank because

it did not refund payment of an allegedly forged check

that Appellant did not report to Compass Bank for

more than 18 months

Trial Court 55th Judicial District Court, Harris County, Texas, the

honorable Jeff Shadwick presiding

Course of Proceedings The case was decided in favor of Compass Bank on

cross motions for summary judgment

Trial Court’s Disposition In its Final Summary Judgment On All Claims By and

Between Plaintiff and Compass Bank signed

December 8, 2014 (CR735-37) the trial court entered

a take nothing judgment on all of Appellant’s claims

and awarded judgment in favor of Compass Bank for

attorneys’ fees, contingent attorneys’ fees, costs and

expenses.

1

Appellant’s Issues [Restated]

In eight issues Appellant argues that, despite the undisputed fact that

Appellant did not examine statements or inquire into his bank account for more

than eighteen months, Compass Bank was not entitled to summary judgment, was

not entitled to the attorneys’ fees awarded, and that Appellant rather than Compass

Bank should have been granted summary judgment on Appellant’s claim against

Compass for declining to reimburse him.

Statement of Facts

This dispute involves an allegedly forged check and subsequent transactions.

Appellant claims these transactions were not authorized and resulted in charges

against a deposit account (#------3759) with Compass Bank. (The “Account”).

Appellant did not report any unauthorized activity to Compass Bank for more than

18 months.

In 1988, Appellant opened an Account with Compass. CR50, 230.

Appellant, his wife, Elizabeth Haller de Calleja, and his father, Francisco Calleja

Cajigas, all were signatories on the Account from its opening to its closing in 2014.

CR46, 50. Sra. de Calleja and Sr. Cajigas are not parties to this suit and neither

gave testimony or other evidence. See, e.g., CR420, et seq. The Account signature

card, signed by all three owners, includes Appellant’s Mexico City address. CR50,

230.

2

At all times from 1988 to 2014, Account statements were available upon

request at any Compass Bank branch and, since long before 2012, Account

statements were accessible on-line. CR397. For four out of the more than 24 years

of the relationship, Compass Bank also mailed monthly statements of the Account.

According to Appellant, for convenience and security because he lives in a “suburb

of Mexico City” (CR 46), “prior to July 2012, [he] directed the bank statements for

the Account be mailed by the Bank to the address of [his] brother” in The

Woodlands, Texas. CR46.

The statement for May 2012 activity is the last statement mailed to

Appellant’s brother’s address. At the request of someone who provided sufficient

identifying information regarding Appellant’s account to identify himself as

Appellant, Compass Bank mailed the statement for the period May 31 through

June 28, 2012 to an address in Cupertino, California. CR246. The next several

statements were mailed to Sacramento (CR249-57) and, thereafter, to an address in

Georgia. CR 258, et seq. Although Appellant claims he did not tell Compass Bank

to change the mailing address (see, e.g., CR46), Appellant presented no affidavit

testimony or other evidence from the other two owners of the Account.1 And, there

1

Co-signatories on the Account, Ana Elizabeth Haller de Calleja and Francisco Calleja

Cajigas, each also had the right to change the mailing address. See CR202, CR212; see also

CR412, et seq. (Compass’s motion to strike); CR685 (Order at ¶ 6, overruling Compass’s

objection).

3

is no evidence that anyone—not Appellant, either of the other Account owners, or

Appellant’s brother—ever contacted Compass Bank to notify it that Account

statements were no longer being received at the Texas address.

On June 26, 2012, the account was debited $33.23 for checks – this charge

appeared on the June statement. CR246. Appellant alleges that this charge was

unauthorized. On July 30, 2012, a check in the amount of $38,700.00 was paid

from the Account. CR249. The transaction appears on the July statement. Id. From

July 30, 2012 until January 2014, Compass received no notice that Appellant had

any complaint with his Account.

Eighteen months later, in January 2014, Appellant alleges he “discovered a

problem” when “an acquaintance” to whom he had written a check told him that

check was returned marked “account closed.” CR47. When Appellant finally

contacted Compass Bank in the last week of January 2014, he was shown a copy of

the $38,700.00 check (id.) posted to the Account and listed on the Account

statement a year and one-half earlier. CR71. For the first time, he claimed the

check was forged. CR47. When asked by Compass what he did to monitor the

Account after January 2012 (6 months before the alleged forgery), Appellant

answered under oath, “There was no need to ‘keep track’ of banking information

because no authorized checks (except perhaps two checks described in response to

Interrogatory No. 10) would be shown in statements after May 2012.” CR321-22.

4

Plaintiff failed to provide any evidence or other testimony that he regularly

reviewed his account statements as required by the deposit agreement.

The deposit agreement applicable to the Account (CR202, 205, et seq.)2

provides, “If we have a deliverable address on file for you, we will mail or deliver

to you periodic statements for your account at approximately monthly intervals

….” CR212. These materials “may be mailed to … the address shown in our

records.” Id. “Our records regarding [the Account] will be deemed correct unless

you timely establish with us that we made an error.” Id. The agreement also

instructs Appellant to “Notify us promptly if you do not receive your statement by

the date you normally would expect to receive it.” Id. The agreement further

provides:

… 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 for you or delivering all or any of these items to

you in accordance with your request or instructions. If we hold

statements or notices to you at your request or because you fail to

provide us with a current address, they will be deemed delivered to

you when they are prepared (for held statements), mailed (for returned

mail) or otherwise made available to you.

2

Appellant disputes that the February 2012 edition of the deposit agreement applies. The

2008 deposit agreement (the one Appellant advocates) permits amendment and provides

Compass will notify Appellant of amendment of the agreement by either mailing notice to “the

last address shown on our records” … “or by posting the amendment in our offices.” CR68. The

2008 agreement also provides: “By continuing to maintain your account or obtaining services or

products relating to this Agreement or your account after the amendment becomes effective, you

agree to the amendment of this Agreement.” Id. The 2012 deposit agreement includes

substantially similar language. CR219. There is no dispute that Appellant maintained the

Account after February 2012. See CR228.

5

Id. Appellant did not report any unauthorized transactions, nor did he inform

Compass Bank he was not receiving mailed monthly statements, at any time before

January 2014.

The deposit agreement includes Appellant’s (and the other account owners’)

promise to “carefully examine each account statement ….” CR212. It includes the

owners’ “agree[ment] to act in a prompt and reasonable manner in reviewing your

statement or notice and reporting any exceptions to us.” Id. “This means that, if

you do not report exceptions to us within thirty (30) days after we send or make the

statement or notice available to you, we will not reimburse you for any such

disputed amounts or any loss you suffer, including, but not limited to, any amounts

lost as a result of paying any unauthorized, forged, or altered item ….” Id.

Compass Bank paid a check on July 30, 2012. Appellant waited 18 months

to tell Compass Bank he believed the check was forged. Likewise, Appellant did

not tell Compass Bank for 18 months that statements sent to his brother’s address

every month for four years stopped showing up after June of 2012. Appellant made

no effort to obtain copies of statements from any Compass Bank branch, via the

internet or otherwise, at any time between July 2012 and January 2014. See

CR397.

6

Standard of Review

Summary Judgment

A. Generally

The standard of review for summary judgments is “de novo.” Mid-Century

Ins. Co. v. Ademaj, 243 S.W.3d 618, 621 (Tex. 2007).

When both parties move for summary judgment and the trial court grants

one motion and denies the other, this Court determines all questions presented and

renders the judgment that the trial court should have rendered. See Berry v. Encore

Bank, 01-14-00246-CV, 2015 WL 3485970, at *4 (Tex. App.—Houston [1st Dist.]

June 2, 2015, no. pet. h.) (citing Tex. Workers’ Comp. Comm’n v. Patient

Advocates, 136 S.W.3d 643, 648 (Tex. 2004)).

B. Traditional Summary Judgment

The moving party bears the burden of showing both no genuine issue of

material fact and entitlement to judgment as a matter of law. Tex. R. Civ. P. 166a

(c); Am. Tobacco Co., Inc. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997);

Kennamer v. Estate of Noblitt, 332 S.W.3d 559, 563 (Tex. App.—Houston [1st

Dist.] 2009, pet. denied). In deciding whether there is a genuine issue of material

fact, the Court takes evidence favorable to the non-movant as true and, all

reasonable inferences benefit and all doubts are resolved in favor of the non-

movant. Am. Tobacco Co., Inc. v. Grinnell, supra; Kennamer v. Estate of Noblitt,

7

332 S.W.3d at 563 (citing Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661

(Tex. 2005)).

Summary judgment for a defendant is proper if the defendant disproves at

least one element of each of the plaintiff’s claims or affirmatively establishes each

element of an affirmative defense to each claim. Kennamer v. Estate of Noblitt,

supra (citing Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995)).

C. Evidentiary Rulings

The admission or exclusion of summary judgment evidence is reviewed for

abuse of discretion. Highland Capital Mgmt., L.P. v. Ryder Scott Co., 402 S.W.3d

719, 747 (Tex. App.—Houston [1st Dist.] 2012, no pet.) (citing K-Mart Corp. v.

Honeycutt, 24 S.W.3d 357, 360 (Tex. 2000)). A trial court abuses its discretion

when it acts without reference to guiding rules or principles. Id. (citing Carpenter

v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 687 (Tex. 2002). If the trial

court acts in an arbitrary or unreasonable manner, it abuses its discretion. See Leax

v. Leax, 305 S.W.3d 22, 32 (Tex. App.—Houston [1st Dist.] 2009, pet. denied)

(citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 242 (Tex. 1985).

D. Contract Interpretation

The interpretation of an unambiguous contract is properly the subject of a

motion for summary judgment. See, e.g., Coker v. Coker, 650 S.W.2d 391, 393-94

(Tex. 1983); Derr Constr. Co. v. City of Houston, 846 S.W.2d 854, 862 (Tex.

8

App.—Houston [14th Dist.] 1992, no writ) (citing RGS, Cardox Recovery, Inc. v.

Dorchester Enhanced Recovery Co., 700 S.W.2d 635, 638 (Tex. App.—Corpus

Christi 1985, writ ref’d n.r.e.)); Rogers v. Rogers, 01-90-00852-CV, 1991 WL

179620 (Tex. App.—Houston [1st Dist.] Sept. 12, 1991, writ denied) (not

designated for publication).

When interpreting unambiguous contracts courts are bound to “ascertain the

true intentions of the parties as expressed in the writing itself.” Italian Cowboy

Partners v. Prudential Ins. Co., 341 S.W.3d 323, 333 (Tex. 2011); see also

Sonerra Resources Corp. v. Helmerich & Payne Int’l Drilling Co., No. 01-11-

00459-CV, 2012 WL 3776428,*4 (Tex. App.—Houston [1st Dist.] Aug. 30, 2012,

no pet. h.) (mem. op.). The Court construes the contract as a whole in order to

“harmonize and give effect to all the provisions of the contract so that none will be

rendered meaningless.” El Paso Field Services, L.P. v. MasTec N. Am., Inc., 389

S.W.3d 802, 805 (Tex. 2012) (citing Italian Cowboy Partners, Ltd. v. Prudential

Ins. Co. of Am., supra).When a contract is unambiguous, courts may not consider

the parties’ interpretations or extraneous evidence to determine the meaning of the

instrument. Italian Cowboy Partners v. Prudential Ins. Co., supra; Sonerra

Resources Corp. v. Helmerich & Payne Int’l Drilling Co., supra.

9

In reviewing a summary judgment ruling that interprets a contract, the

Court’s review is de novo. See Lyle v. Jane Guinn Revocable Trust, 365 S.W.3d

341, 350 (Tex. App.—Houston [1st Dist.] 2010, pet. denied).

E. Harmless Error

In the event this Court determines the trial court committed an error of law,

this Court should reverse the judgment only if “the error complained of: (1)

probably caused the rendition of an improper judgment; or (2) probably prevented

the appellant from properly presenting the case to the court of appeals.” Tex. R.

App. P. 44.1. The test is not a “but for” test, nor is it one of mere possibility;

rather, this Court’s inquiry is whether the error probably caused rendition of an

improper judgment. See McCraw v. Maris, 828 S.W.2d 756, 758 (Tex. 1992)

(citing Howard v. Faberge, Inc., 679 S.W.2d 644, 648 (Tex. App.—Houston [1st

Dist.] 1984), writ refused n.r.e.)).

Summary of Argument

The material facts in this case are undisputed. First, Compass Bank paid a

check on July 30, 2012. Despite agreeing to report any unauthorized activity within

thirty days, Appellant waited 18 months to inform Compass Bank he believed the

check was forged. Likewise, Appellant failed to notify Compass Bank for 18

months that he and/or his brother were no longer receiving bank statements.

Appellant made no effort to obtain copies of statements from any Compass Bank

10

branch, via the internet or otherwise, at any time between July 2012 and January

2014. See CR397.

This Court should affirm the trial court’s judgment that Appellant recover

nothing against Compass because the undisputed facts demonstrate as a matter of

law that (1) Appellant failed to exercise the required diligence by waiting more 18

months to examine or inquire into the status of his account, and (2) at all times,

Appellant’s account statements were “made available” to him had he requested

them from Compass.

First, based on the lapse of time from July 30, 2012, when a supposedly

forged check was cashed, until January of 2014, when Appellant first reported the

alleged fraud, the trial court concluded that, “as a matter of law Plaintiff has failed

to exercise diligence in protecting himself from fraud regardless of any

shortcomings in sending bank statements.” CR735. The conclusion is based on

undisputed facts and supported by Compass Bank’s Business and Commerce Code

article 3 arguments. See CR193-98.

Additionally, based on uncontroverted evidence, much of it from Appellant

himself, that Appellant ignored his Account for 6 months before and 18 months

after the alleged forgery, the trial court also determined that “Plaintiff’s focus on

the word ‘sends’ as used in section 4-406 of the Texas Business and Commerce

11

Code is too exclusive and ignores the equally important and relevant ‘or makes

available’ language of that section.” Id.

These determinations, the operative contract between Appellant and

Compass Bank, and the terms of sections 3.406 and 4.406 of the Business and

Commerce Code preclude Appellant’s claim.

Properly applying rules of contract construction and giving effect to all parts

of the written agreement in evidence, the trial court correctly concluded that the

periodic statements of the Account were “made available.” The trial court correctly

applied the law, e.g., Business and Commerce Code section 4.406 and the written

contract, to conclude that Appellant failed to timely report any problem revealed

on available Account statements. Accordingly, Appellant’s claim was precluded.

The contract includes a signature card in which Appellant agreed to be

bound by the agreement and all amendments. By terms of the agreement as

amended, and consistent with statute, Compass Bank complied with its obligation

to make statements of the Account available to Appellant.

Appellant failed to comply with his corresponding obligation to timely alert

Compass Bank that he was no longer receiving monthly account statements. He

failed to comply with his statutory and contractual duties to timely notify Compass

Bank of any exception to activity reflected on statements of the Account.

12

Accordingly, the trial court’s judgment in favor of Compass Bank should be

affirmed.

Similarly, the trial court’s denial of Appellant motion for summary judgment

should be affirmed. Appellant did not conclusively prove payment of the check or

any other transaction was unauthorized. Neither of two co-owners of the Account

gave evidence. And, Appellant failed to conclusively prove his satisfaction of

conditions precedent to any right to recover.

Finally, the trial court’s award of attorneys’ fees to Compass Bank pursuant

to the contract between the Parties should be affirmed.

Argument and Authorities

I. Appellant’s Failure to Inquire for 18 Months Is Negligent as a

Matter of Law.

It is undisputed that Appellant failed to examine his bank statements or

otherwise inquire into the status of his bank account for more than 18 months.

Because this fact was not disputed, the trial court concluded that, “as a matter of

law Plaintiff has failed to exercise diligence in protecting himself from alleged

fraud ….” CR735. No reasonable person could disagree: failure to reconcile bank

statements for months on end is unreasonable; failure to look at an account

statement month after month is unreasonable; failure to even alert the bank that

statements have stopped showing up when and where expected is unreasonable.

13

The 2012 deposit agreement provides that Appellant (and the other Account

owners) “agree(s) to act in a prompt and reasonable manner in reviewing your

statement or notice and reporting any exceptions to us.” CR212. Further, the

deposit agreement directs Appellant to “[n]otify us promptly if you do not receive

your statement by the date you normally would expect to receive it.” Id. It is

undisputed that Appellant neither reviewed the status of his account nor notified

Compass that he had not received statements for at least 18 months. CR47.

The deposit contract between Compass Bank and Appellant is “a contract in

writing for all purposes.” Tex. Fin. Code § 34.301 (a). As the Texas Supreme

Court has written:

Contracting parties are generally not fiduciaries. See Schlumberger Tech.

Corp. v. Swanson, 959 S.W.2d 171, 177 (Tex. 1997). Thus, due diligence

requires that each protect its own interests. See Barfield v. Howard M.

Smith Co. of Amarillo, 426 S.W.2d 834, 840 (Tex. 1968) (“As a party to

arm’s length business transactions, respondent had a duty to use

ordinary care for the protection of its own interests”). Due diligence

may include asking a contract partner for information needed to

verify contractual performance. See [Wagner & Brown, Ltd. v.

Horwood, 58 S.W.3d 732 (Tex. 2001)] at 736; [HECI Exploration Co. v.

Neel, 982 S.W.2d 881 (Tex. 1998)] at 886. If a contracting party

responds to such a request with false information, accrual may be delayed

for fraudulent concealment. Wagner & Brown, 58 S.W.3d at 737; HECI,

982 S.W.2d at 886. But failing to even ask for such information is not

due diligence. See Wagner & Brown, 58 S.W.3d at 736; HECI, 982

S.W.2d at 886.

Via Net v. TIG Ins. Co., 211 S.W.3d 310, 314 (Tex. 2006) [emphasis added].

14

In this case, it is undisputed that Appellant failed to even inquire about his

account for more than 18 months. Id.; see also, e.g., Union Planters Bank, Nat.

Ass’n v. Rogers, 912 So. 2d 116, 122 (Miss. 2005) (A 4.406 case in which the

court said, “A reasonable person who has not received a monthly statement from

the bank would promptly ask the bank for a copy of the statement.”).3 Thus, apart

from Appellant’s obligations pursuant to 4.406 (see infra), Appellant’s admitted

and unjustified failure to have discovered irregularities in the Account because

“[t]here was no need to ‘keep track’” (CR321) precludes his claims. 4 Assuming

without conceding that an imposter was involved, Appellant’s failure to “keep

track” permitted the alleged imposter to access and make use of Appellant’s

account information. Had Appellant routinely reviewed the account activity, he

3

See also, e.g., Myrick v. Nat'l Sav. & Trust Co., 268 A.2d 526, 528 (D.C. 1970)

(unjustified failure to inquire as to lack of receipt of monthly statements and cancelled checks

held negligent as a matter of law); Coleman v. Bhd. State Bank, 3 Kan. App. 2d 162, 169, 592

P.2d 103, 111 (1979) (citing Myrick); Westport Bank & Trust Co. v. Lodge, 164 Conn. 604, 611-

12, 325 A.2d 222, 226 (1973) (reasonably prompt and careful examination of the altered

statements would have disclosed the forgeries many months before they ultimately were

discovered and that the lack of effort on the part of the defendants to make such examination

constituted negligence.); Terry v. Puget Sound Nat. Bank, 80 Wash. 2d 157, 159-60, 492 P.2d

534, 535 (1972) (Monthly statements were intercepted by wrongdoer and not received by

plaintiffs; plaintiffs did not inquire of the bank nor discuss between themselves this unusual

absence of statements; and, only after they received notice that the account was overdrawn did

they go to the bank and discover forgeries, such “facts constitute substantial evidence of

negligence on the part of the plaintiffs.”).

4 It appears that Appellant is arguing, without citation to authority, that an exception

should apply to his obligation to monitor the Account if he does not use the Account for some

period. There should be no such exception. Even if a depositor does no banking for an extended

period, when he fails to monitor the account, he opens the door for a fraudster to engage in

unauthorized activity without detection.

15

would have discovered the allegedly unauthorized charge of $33.23 for new checks

(CR246), thereby alerting him to the potential for the alleged unauthorized activity

that appeared on subsequent statements. But, his failure to monitor the Account

for more than 18 months permitted the alleged imposter to purchase blank checks

with Account funds and to then use those checks undetected. Assuming the truth of

Appellant’s allegations, the alleged imposter’s forgery (using check stock

Appellant claims he did not purchase) was made possible by Appellant’s negligent

failure to examine Account statements—or even to inquire about them—for 6

months before and 18 months after the alleged forgery. 5 See Tex. Bus. & Com.

Code § 3.406 (a).

In addition to the 4.406 arguments discussed below, Compass Bank moved

for summary judgment pursuant to section 3.406. 6 Tex. Bus. & Com. Code §

3.406; CR193-98. Section 3.406(a) provides:

5

Rewarding Appellant’s admitted lack of diligence would undermine the UCC’s “discrete

fault scheme, specifically allocating responsibility among parties to a banking relationship” and

create untold uncertainty. See Bank of Tex. v. VR Elec., Inc., 276 S.W.3d 671, 683 (Tex. App.—

Houston [1st Dist.] 2008, pet. denied). A customer could willfully ignore his accounts, have a

third person conspire to change the address and drain the account then months or years later sue

to hold the bank liable.

6

Compass also argued section 3.405 but does not advance any 3.405 arguments here,

except by analogy. For example, Appellant entrusted his brother with responsibility to receive

and hold statements in Texas. The brother failed for 18 months to inform Appellant that

statements were no longer arriving as they had. Appellant is responsible for his brother’s failure

to discharge the responsibility he was given, just as if the brother had been Appellant’s

employee.

16

(a) A person whose failure to exercise ordinary care substantially

contributes to an alteration of an instrument or to the making of 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.

Tex. Bus. & Com. Code § 3.406 (a).

The trial court correctly concluded that, as a matter of law, Appellant failed

to exercise ordinary care. See CR735. That failure substantially contributed to the

making of the claimed forged instrument. See Tex. Bus. & Com. Code § 3.406.

Appellant testified about his routine for examining bank statements. For at least

four years before the alleged forgery and 18 months after, rather than receiving or

requesting statements for review personally, Appellant expected account

statements to be sent to his brother’s apartment in Texas, even though his brother is

not an Account owner. See CR46; CR 50; CR230-31; CR320. Appellant testified

he visited his brother “from time-to-time and retrieve[d] bank statements ….”

CR46. Although Appellant made it a point to say he kept statements in a “locked

drawer” in Mexico City, he offered no evidence that his brother in Texas kept the

statements in a locked drawer or that his brother’s multi-unit apartment complex

and mailbox were safe and secure. CR47. Appellant’s testimony conclusively

establishes his “from time-to-time” visits to Texas did not include any visit during

the period from July 2012 until January 29, 2014. Id. He did not disclose when,

prior to July 2012, he had last come to Texas to retrieve bank statements. In fact, in

17

answer to an interrogatory asking what he did to monitor the Account after January

2012 (6 months before the alleged forgery), Appellant answered under oath,

“There was no need to ‘keep track’ of banking information because no authorized

checks (except perhaps two checks described in response to Interrogatory No. 10)

would be shown in statements after May 2012.” CR321-22.

It is undisputed that Appellant was not requesting or reviewing account

statements in 2012 or 2013. Appellant’s admitted, willful ignorance of the activity

in his Account allowed the alleged theft to go undetected and unreported for more

than 18 months. Thus, even if Compass Bank had continued to send statements to

the brother’s apartment, Appellant still would not have discovered and reported the

alleged forgery prior to 2014. Appellant’s own testimony negates any connection

between the non-receipt of statements and his admitted inattention to Account

activity, i.e., his negligence contributing to an alleged interloper’s forgery. Tex.

Bus. & Com. Code §3.406(a). Appellant willfully left his banking information

outside his control for extended periods of as much as two years. And, his no need

to keep track rationale ignores the very basis for a customer’s duty to examine

account statements: to ensure that activity reflected on each statement is authorized

activity.

Appellant also offered no explanation why his brother, whom he trusted to

receive copies of his bank documents, never told him statements of the Account

18

were no longer arriving as they had for four years. See CR46-47. Based on

undisputed evidence—mostly Appellant’s sworn statements—the trial court

concluded:

In particular, but not the sole reason for [the October 28, 2014 order

granting Compass Bank’s motion for summary judgment; CR539-40],

the Court noted that where the check at issue was cashed on July 30,

2012, and the Plaintiff did not notify the bank until January 29, 2014, 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. … Further, duties found in the deposit agreement

attached to Compass Bank’s Motion for Summary Judgment which

include a requirement that the depositor “act in a prompt and reasonable

manner” relating to his account statements are also important and weigh

against Plaintiff’s position.

CR735-36. Appellant’s decision to forgo any diligence regarding his Account —

ignoring the Account altogether for months before and after July 2012 (see CR321-

22)—at a minimum, substantially contributed7 to the alleged forgery as a matter of

law. Tex. Bus. & Com. Code § 3.406 (a). Accordingly, the trial court’s judgment

should be affirmed.

Appellant does not directly attack the trial court’s conclusion that, as a

matter of law, he failed to exercise diligence in protecting himself. Taking a wholly

different tack, Appellant misreads this Court’s opinion in Bank of Texas v. VR

Elec, Inc., 276 S.W.3d 671 (Tex. App.—Houston [1st Dist.] 2008, pet. denied). See

7

“The ‘substantially contributes’ test is meant to be less stringent than a ‘direct and

proximate cause’ test. Under the less stringent test the preclusion should be easier to establish.”

Tex. Bus. & Com. Code § 3.406, Cmt 2.

19

Appellant’s Brief (“Br.”), p. 27. That case acknowledges that for 3.406 to preclude

the customer, a bank “must prove that (1) [the customer] failed to exercise ordinary

care that substantially contributed to the alteration of the check [or the forgery] and

(2) it paid the check in good faith.” VR Elec, Inc., 276 S.W.3d at 678.

Appellant fails to appreciate how “good faith” was established in VR Elec.

After discussing Aetna Life & Casualty Co. v. Hampton State Bank, 8 a Dallas

Court of Appeals case in which “the record ‘failed to show any lack of honesty’”

and “‘contains no evidence tending to show that [the] employee … connived with

the forger or had reason to believe that he check was not genuine,’” the Court

observed in VR Elec that “[n]o evidence was developed at trial suggesting the Bank

knew of the forgery or had reason to believe it was not genuine.” See VR Elec, Inc.,

276 S.W.3d at 679-80. Similarly, Appellant does not direct the Court to any

evidence presented to the trial court suggesting a lack of good faith by Compass

Bank – there is no evidence in the record “tending to show that [Compass] …

connived with the [alleged] forger or had reason to believe that the check was not

genuine.” 9 See id.

8

497 S.W.2d 80, 87 (Tex. Civ. App.—Dallas 1973, no pet.).

9

Like the parties in VR Elec, Appellant “conflate[s] the concepts of good faith and

ordinary care.” Bank of Texas v. VR Elec., Inc., 276 S.W.3d at 679; see also Br., pp. 31-32.

Again citing the Aetna case out of Dallas, the Court explained that “neither ‘failure to exercise

ordinary care [n]or even gross negligence is equivalent to lack of good faith.’” Id. (quoting Aetna

Life & Casualty Co. v. Hampton State Bank, 497 S.W.2d at 87). It is well to note that the deposit

agreement permits payment of checks “mechanically based on the information encoded on the

Footnote continued.

20

As the Court has recently written, UCC “good faith” means “‘honesty in fact

and the observance of reasonable commercial standards of fair dealing.’”

Contractors Source, Inc. v. Amegy Bank Nat’l Ass’n, 462 S.W.3d 128, 135 (Tex.

App.—Houston [1st Dist.] 2015, no pet.) (citing Tex. Bus. & Com. Code §

1.201(b)(20)). As the party alleging lack of good faith, Appellant bears the burden

of proof :

It is well-settled in Texas that “[t]he law presumes, in the absence of

proof to the contrary, that the business transactions of every man are

done in good faith, and for an honest purpose; and any one who alleges

that such acts are done in bad faith, or for a dishonest and fraudulent

purpose, takes upon himself the business of showing the same.”

Compton, Ault & Co. v. Marshall, 88 Tex. 50, 29 S.W. 1059, 1059 (Tex.

1895); see also Canfield v. Bank One, Tex., N.A., 51 S.W.3d 828, 837

(Tex. App.—Texarkana 2001, pet. denied).

Id. Compass Bank’s good faith in paying the subject check is presumed and there

is no evidence rebutting the presumption. See id. Appellant does not direct the

Court to any record reference that shows or raises an issue of fact regarding a lack

of good faith. Compass Bank’s good faith and the trial court’s unchallenged

conclusion that Appellant failed, as a matter of law, to exercise diligence, together

establish the preclusion set forth in section 3.406 (a) of the Business and

Commerce Code. Tex. Bus & Com. Code § 3.406 (a). Appellant’s claims are

Previous footnote continued.

item” and the parties’ agreement that “reasonable commercial standards do not require” visual

review of checks. CR213.

21

precluded and this Court should affirm the trial court’s judgment on that basis

alone.

II. The Deposit Contract and Section 4.406.

Compass Bank also moved for summary judgment pursuant to Business and

Commerce Code section 4.406 and corresponding contract provisions. Tex. Bus. &

Com. Code § 4.406 10; see CR166, et seq. Section 4.406 provides, in part:

(a) A bank that sends or makes available to a customer a

statement of account showing payment of items for the account shall

either return or 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 payment. …

***

(b) 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

10

The Uniform Commercial Code regulates a bank’s relationship with its customers. See

generally Tex. Bus. & Com. Code §§ 3.101–605 (negotiable instruments); id. §§ 4.101–.504

(bank deposits and collections); Contractors Source, Inc. v. Amegy Bank Nat’l Ass’n, 462

S.W.3d 128, 133 (Tex. App.—Houston [1st Dist.] 2015, no pet.) (citing Bank of Tex. v. VR Elec.,

Inc., 276 S.W.3d 671, 683 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (the UCC creates

“a discrete fault scheme, specifically allocating responsibility among parties to a banking

relationship”)). As the Court also recognizes, the bank/customer relationship may also be

governed in part by the agreement between them. Id. (citing Bank of Tex., 276 S.W.3d at 677).

22

an item, to comply with the duties imposed on the customer by

Subsection (c), the customer is precluded from asserting against the

bank:

(1) the customer's unauthorized signature or any alteration on

the item, if the bank also proves that it suffered a loss by reason of the

failure; and

(2) the customer's unauthorized signature or alteration by 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 30 days, in which to examine the item or statement of

account and notify the bank.

***

(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’s unauthorized signature on 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 Section 4.208 with respect to the unauthorized signature or

alteration to which the preclusion applies.

Tex. Bus. & Com. Code § 4.406.

As Appellant correctly states, section 4.103(a) of the Business and

Commerce Code permits a bank and its customer to contractually modify the rights

and duties embodied in section 4.406. Tex. Bus. & Com. Code § 4.103(a).

Appellant concedes the parties did so in this case. See Br., p. 4. Therefore, the

transactions in issue are governed by section 4.406 and the operative deposit

agreement.

23

The February 2012 Deposit Agreement Governs the Account.

In his motion for summary judgment, Appellant sought to recover attorney’s

fees pursuant to the 2012 deposit agreement. CR44 (Appellant’s motion for

summary judgment). Reversing course, Appellant now argues that the 2012

agreement does not apply to this case, but that an earlier, 2008 agreement, applies

instead.

“A bank and its account holder may amend the deposit contract by

agreement or as permitted by Subsection (b) or other law.” Tex. Fin. Code Ann. §

34.302 (a). The signature card includes Appellant’s agreement to any amendments

of the deposit contract. CR50; CR230. The 2008 deposit agreement (the one

Appellant advocates) also contemplates amendment and expressly provides that

notice of the amendment may be mailed or may be posted in Compass Bank’s

offices. CR298-99. 11 The 2008 deposit agreement, “effective August 22, 2008”

(CR51), provides further, “By continuing to maintain your account … after the

amendment becomes effective, you agree to the amendment of this Agreement.”

CR68. The 2012 deposit agreement includes substantially similar terms, i.e., notice

by posting and acceptance of the amendment by continuing to keep the Account.

11

The “Amendments to this Agreement” provision appears at pages 20-21 of the 2008

deposit agreement. As appended to Appellant’s motion for summary judgment, the provision

begins at the lower left of CR69 and is continued beginning at the upper right of CR68. A more

legible copy of the 2008 “Consumer Disclosure” (deposit agreement) is appended at Tab 1 for

the Court’s reference. A more legible copy of the 2012 deposit agreement is appended as Tab 2.

.

24

CR219. Thus, as permitted by statute, as expressly provided in the signature card

and the both deposit agreements in evidence, and because Appellant indisputably

maintained the Account after February 2012—the events about which Appellant

complains all occurred in or after June of 2012—Appellant agreed to the February

2012 amendment. CR228; see also Tex. Fin. Code § 34.302. 12 In fact, Appellant

himself invoked the 2012 deposit agreement in an attempt to recover attorney’s

fees. CR44 (Appellant’s motion for summary judgment). The 2012 deposit

agreement is the operative deposit agreement.

As Compass Bank’s custodian testified, Appellant agreed to be bound by a

deposit agreement; the 2012 deposit agreement governing the relationship is

attached to her summary judgment affidavit; that deposit agreement contains rights

and obligations of the parties; and the attached 2012 deposit agreement “evidences

the agreement in effect between [Appellant] and Compass Bank.” CR202-03. The

trial court’s reference to “the deposit agreement attached to Compass Bank’s

Motion for Summary Judgment” correctly gives effect to the operative contract,

the 2012 deposit agreement.

Attempting to avoid the very agreement he tried to use as a basis for fees,

Appellant argues that Compass Bank’s custodian’s affidavit was conclusory. See

12

“A bank and its account holder may amend the deposit contract by agreement or as

permitted by Subsection (b) or other law.” Tex. Fin. Code Ann. § 34.302 (a).

25

Br., pp. 7-9. Ms. Mueller identified herself as a Compass Bank employee and

custodian of its records and testified that “in this capacity, I have personal

knowledge of accounts held at Compass Bank.” CR202-03. This “shows how [s]he

gained personal knowledge.” See, e.g., Waite v. BancTexas-Houston, N.A., 792

S.W.2d 538, 540 (Tex. App.—Houston [1st Dist.] 1990, no writ); see also Miller v.

Raytheon Aircraft Co., 229 S.W.3d 358, 365-66 (Tex. App.—Houston [1st Dist.]

2007, no pet.) (“The personal knowledge requirement is satisfied if the affidavit

sufficiently describes the relationship between the affiant and the case so that it

may be reasonably assumed that the affiant has personal knowledge of the facts

stated in the affidavit.”) (quoting Stucki v. Noble, 963 S.W.2d 776, 780 (Tex.

App.—San Antonio 1998, pet. denied)). Ms. Mueller identified Appellant’s

account as a “regular bank account” and governed by the attached 2012 account

agreement governing such accounts. Id. Specifically she said, “Attached as Tab 1

is a copy of the written contract governing the deposit relationship between

[Appellant] and Compass Bank.” CR202. Ms. Mueller properly identified the 2012

deposit agreement as a Compass Bank business record of which she had personal

knowledge and as the agreement “in effect between” the parties. CR203.

Evidence rule 902(10) sets out a form of affidavit to be used with business

records under rule 803(6). Tex. R. Evid. 902(10). The rule also provides that the

form set out is not exclusive. Id. As the Court has written, “An affidavit that

26

substantially complies with the form of affidavit set out in the rule will suffice.”

Khalilnia v. Fed. Home Loan Mortg. Corp., 01-12-00573-CV, 2013 WL 1183311,

at *2 (Tex. App.—Houston [1st Dist.] Mar. 21, 2013, pet. denied) (citing Fullick v.

City of Baytown, 820 S.W.2d 943, 944 (Tex. App.—Houston [1st Dist.] 1991, no

writ)). Ms. Mueller’s affidavit complies with rule 902(10). See CR202-03. 13 That

the 2012 deposit agreement is the operative agreement is conclusively established.

Compass Bank made statements available in accordance with the contract.

The complaint begins with a $38,700.00 check paid from Appellant’s

Account in July 2012.14 See CR420 (First Amended Petition). The questioned

transaction appears on the Account statement for the period June 29-July 30, 2012,

addressed to an allegedly unauthorized address in California. CR249. It is

undisputed that Appellant did not notify Compass Bank of the alleged forgery or

any other exception until more than 18 months later on January 24, 2014. See

CR240; see also CR47 (Appellant’s affidavit). Therefore, if Compass Bank sent or

made Account statements available to Appellant more than 30 days before January

13

Appellant’s argument regarding Ms. Mueller’s second affidavit is unfounded. See Br., p.

8. In her second affidavit Ms. Mueller adds factual basis for her earlier statement that the 2012

document is the agreement that “evidences the agreement in effect between [Appellant] and

Compass Bank.” CR202-03. She explains the revision date in relation to Appellant’s claim that

an imposter appeared after that date and she links the 2012 amendment to the signature card

permitting such amendments. CR396. The testimony provides additional foundation facts.

14

The allegedly unauthorized debit of $33.23 for checks ordered appears on the previous

statement. CR246. Appellant, likewise, did not notify Compass of this debit for more than 18

months.

27

24, 2014, Appellant’s claims in this case are precluded, as a matter of law, under

section 4.406 (in addition to the 3.406 preclusion) just as the trial court determined.

Tex. Bus. & Com. Code § 4.406 (d), (f).

As noted above, a bank and its customer may modify the rights and duties

embodied in section 4.406. Tex. Bus. & Com. Code § 4.103(a). There is no dispute

that the parties did so. See Br., p. 4. Among other things, the parties agreed to the

meaning of “make available.” For example, the 2012 deposit agreement provides

that Compass Bank “may make statements, cancelled checks (if applicable …),

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.” CR212. The 2012 deposit agreement also provides,

“[i]f we hold statements or notices to you at your request …, they will be deemed

delivered to you when they are prepared ….” CR212. Compass Bank’s Ms.

Mueller testified that copies of statements were available at any branch and were

available on-line for viewing or for ordering copies. CR397.15 Her uncontroverted

testimony was that Compass Bank’s records contain no indication that Appellant

ever called about a missing statement and no indication that Compass Bank ever

15

Appellant suggests that because he was in Mexico he could not simply go to his local

bank. Appellant’s location does not affect and should not alter his obligation to timely notify

Compass Bank. Plus, because, as Ms. Mueller testified, Appellant’s post June 2012 statements

were available on-line, he could easily have accessed them from wherever he was.

28

refused a request to provide copies of any statements. Id. Ms. Mueller also testified

that statements Appellant did receive include several alternative methods for

contacting the bank to alert it to any perceived problem. 16 Id. Thus, as the trial

court correctly concluded on the established facts of this case, Account statements

were “otherwise made available” within the meaning of section 4.406 of the

Business and Commerce Code.

The deposit agreement also provides that statements “may be mailed to you

at the address shown in our records ….” CR212.17 The contract provides and

Appellant agreed that Compass Bank’s “records regarding your accounts will be

deemed correct unless you timely establish with us that we made an error.” CR212.

“Timely” means within 30 days. Id. Appellant said nothing about any error from

July of 2012 until the end of January 2014. Because Appellant admittedly failed to

“keep track” of the Account from as early as January 2012 through January of

2014, the successive addresses “shown in our records” are “deemed correct” as

16

Appellant’s brother got the statements through May of 2012, each of which had, among

other things, a 1-800 number for contacting Compass Bank. When the expected next statement

allegedly did not appear, Appellant (and/or his brother) had more than adequate information to

have timely contacted Compass Bank.

17

The signature card, evidence both parties presented to the trial court, part of the contract

in writing for all purposes (Tex. Fin. Code § 34.301 (a)), and expressly incorporated into the

deposit agreement (CR207; CR735) is Appellant’s “address shown in our records” and did not

change:

CR50; CR230.

29

provided by the clear terms of the deposit agreement. Because Appellant did not

“timely establish with us that we made an error” (CR212), Account statements

were “otherwise made available” within the meaning of section 4.406 of the

Business and Commerce Code.

Appellant failed to make any timely report about the allegedly unauthorized

activity. He did not timely report that his brother was no longer receiving Account

statements, even though the deposit agreement says, “[n]otify us promptly if you

do not receive your statement by the date you normally would expect to receive it.”

CR212. Appellant cavalierly ignored the Account for at least two years. See

CR321-22 (“There was no need to ‘keep track’ of banking information because no

authorized checks … would be shown in statements after May 2012.”). Neither the

Business and Commerce Code nor the deposit agreement places the risk of loss on

Compass Bank for Appellant’s unilateral decision to ignore his financial affairs.

Rather, Appellant had contractual obligations regarding the oversight of his

Account, including the obligation to timely review account activity and report

exceptions. CR212. The summary judgment record conclusively establishes

Appellant’s failure to satisfy these obligations. Accordingly, Compass Bank’s

records are deemed correct, including the records of successive addresses to which

statements were sent. See id.

30

Upon this record, having construed the written contract governing the

Account as a whole, giving effect to all its provisions so that none is rendered

meaningless,18 the trial court correctly and sustainably concluded that Compass

Bank made statements of the Account available and Appellant waited far too long

to report any unauthorized transaction. See El Paso Field Services, L.P. v. MasTec

N. Am., Inc., 389 S.W.3d 802, 805 (Tex. 2012) (citing Italian Cowboy Partners,

Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d at 333); see also Am. Airlines

Employees Fed. Credit Union v. Martin, 29 S.W.3d 86, 94 (Tex. 2000).19 Account

statements were “sent or otherwise made available” within the meaning of the

deposit agreement and section 4.406 of the Business and Commerce Code.

Appellant’s claims in this case are precluded and, the judgment of the trial court

should be affirmed.

18

Both parties submitted the Account signature card as evidence. This Account record

includes the phrase, “Hold All Correspondence” in the address field. Neither party focused on

the import of the term in the trial court. But, in order to construe the deposit agreement, the trial

court (and this Court) must “ascertain the true intentions of the parties as expressed in the writing

itself.” Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex.

2011) (citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003)). This means

examining and considering “the entire writing in an effort to harmonize and give effect to all the

provisions of the contract so that none will be rendered meaningless.” Id.; Seagull Energy E & P,

Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006); Gramen Farm, LLC v. Huyen

Nguyen, 01-13-00569-CV, 2014 WL 4374120, at *3 (Tex. App.—Houston [1st Dist.] Sept. 4,

2014, no pet.); see also Whitney Nat. Bank v. Baker, 122 S.W.3d 204, 208 (Tex. App.—Houston

[1st Dist.] 2003, no pet.) (“[t]he signature card for a bank account is a type of contract.”);

Stauffer v. Henderson, 801 S.W.2d 858, 869 (Tex. 1990); Tex. Fin. Code § 34.301 (a).

19

“[T]he purpose of section 4.406 is to place the burden on those best able to detect

unauthorized transactions so that further unauthorized transactions can be prevented, and this

burden includes the risk of nonreceipt of account statements.”

31

III. As Prevailing Party Compass Bank is Entitled to Recover Attorneys’

Fees.

The 2012 deposit agreement includes the parties’ agreement regarding the

recovery of attorneys’ fees:

Attorneys’ Fees. In any action between you and us in court, the

prevailing party shall be entitled to recover its reasonable attorneys’ fees

expended in the prosecution or defense of the court action from the other

party.

CR209. Because Compass Bank prevailed, it is entitled to recover its reasonable

fees expended.

Appellant concedes the parties’ agreement that the trial court could

determine the reasonableness and necessity of Compass Bank’s fees. See Br., p.

31; CR714. The correspondence referenced at CR714 is memorialized in

[Appellant’s] Supplemental Response to Defendant’s Claim for Attorney’s Fees,

CR698, et seq. “Both parties agreed that an evidentiary hearing would be

unnecessary and that the Court could rule on whether attorney’s fees were

reasonable and necessary based on affidavits and argument.” CR698. Consistent

with the agreement, the trial court’s determination of the recoverability and amount

of fees awarded in favor of Compass Bank was accomplished separately from the

summary judgment hearing on liability. See CR539-40; CR541; CR735. Thus, by

agreement the parties effectively requested and participated in a bench trial on

attorneys’ fees and did so on counsel’s respective affidavits.

32

Despite previously arguing that the 2012 deposit agreement entitled him to

an award of attorneys’ fees, Appellant now argues that the 2012 deposit agreement

was not the deposit agreement in effect. As above, the signature card includes

Appellant’s agreement to any amendments of the deposit contract. CR50; CR230.

The 2008 deposit agreement—Appellant’s preferred agreement—similarly

contemplates amendments to the parties’ agreement. See CR68. Among the

pertinent provisions is that the bank may notify the account owner of an

amendment by mailing notice or by posting notice at the bank. Id.; see also CR219

(2012 deposit agreement); CR50 (signature card). Appellant implicitly argues he

did not “receive” the 2012 deposit agreement. But receipt is not material. By terms

of both the 2008 and 2012 deposit agreements, the successive amendments also

were effective because Appellant continued to maintain the Account after August

2008 and after February 2012. CR68; CR219.20 The 2012 deposit agreement

applies including the agreement that a “prevailing party” in litigation “shall be”

entitled to recover its reasonable fees. CR209.

Appellant next complains that attorney Huttenbach’s first affidavit is

insufficient because the affidavit “states that the Bank is entitled to recover

$28,840.19 of fees and costs, but the attached fee statements only total

20

The agreement enforced by the Texas Supreme Court in Am. Airlines Employees Fed.

Credit Union v. Martin was an amended agreement which customer Martin did not obtain at the

time but, nevertheless, “continued to maintain his account.” See Martin, 29 S.W.3d at 96.

33

$22,722.69.” Br., p. 33. First, the math is incorrect; the invoices attached to the

first affidavit total $25,201.69—Appellant omitted to include the $2,479.00

appearing at CR335.21 Those invoices reflect time spent only through August 28,

2014. See CR361. Second, Mr. Huttenbach’s fee opinion on September 19, 2014

was for “at least” $28,840.19 and he allowed for another 12 hours in the event

there was a reply to prepare or a hearing to attend. CR331. There is no unexplained

discrepancy in connection with the first affidavit.

Appellant argues that all the fee bills attached to the three affidavits “still do

not add up to the $49,186.65 awarded.” Br., p. 34. This is true: the attached fee

bills add to $51,728.05. See CR575; CR579; CR588; CR597; CR602; CR612;

CR619; CR724. Again, Mr. Huttenbach’s testimony was that reasonable and

necessary fees were “at least” $49,186.65, the amount awarded. CR716. Any error

in awarding the amount that counsel opined instead of the sum of all invoices is

harmless—actually beneficial— as to Appellant.

21

Likewise, Appellant’s assertion that “all of his affidavits” state Mr. Huttenbach’s hourly

rate as $345.00 is not consistent with the record. See Br., p. 33. The September 19, 2014 affidavit

recites a $330.00 rate. CR331. The November 21, 2014 and December 5, 2014 affidavits both

recite a rate of $345.00. CR604; CR716. In any event, the parties agreed and expressly requested

the trial court to determine the reasonableness and necessity of Compass’s claim for fees based

on affidavits and argument. See Br., p. 31; CR698, et seq.; CR714.

34

Appellant also suggests the Mr. Huttenbach’s affidavits were “conclusory.”

Br., p. 34. 22 As the Court has written: “The term ‘conclusory’ is defined as

‘[e]xpressing a factual inference without stating the underlying facts on which the

inference is based.’” E.I. Du Pont De Nemours & Co. v. Shell Oil Co., 259 S.W.3d

800, 809 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (citing Black’s Law

Dictionary 284 (7th ed. 2001)). The argument is patently unavailing. Attorney

Huttenbach, an expert witness, gave his opinion. The opinion is based on personal

knowledge, the experience and factors set forth in three successive affidavits, and

is supported by authenticated, attached detailed billings to the client. See CR331, et

seq.; CR604, et seq.; CR716, et seq.

Appellant further argues that Compass Bank’s evidence does not comply

with Long v. Griffin. 23 See 442 S.W.3d 253 (Tex. 2014). The Long case is

distinguishable but Compass Bank’s evidence, nevertheless, surpasses the stated

minimum standard. Not all claims asserted in Long would support an award of

fees; only those on which the Griffins prevailed within the scope of chapters 37 or

22

The Vega case cited does not say any affidavit was conclusory, rather only that the

nonmovant created a fact issue. See Vega v. Compass Bank, 04-13-00383-CV, 2014 WL 953466,

at *3 (Tex. App.—San Antonio Mar. 12, 2014, no pet.).

23

Appellant also cites City of Laredo v. Montano, 414 S.W.3d 731 (Tex. 2013). Montano,

like Long, references the same “basic proof” standard articulated in the El Apple I case (see p.

36, infra). 414 S.W.3d at 736. Compass’s expert provided more than “time estimates based on

generalities.” See id. He offered his qualifications, described certain tasks performed, and

assuming these were mere generalities, attorney Huttenbach referenced the attached pages with

time entries disclosing the dates, the timekeeper and his or her rate, the tasks performed, and

time billed in increments of 1/10th of an hour. See, e.g., CR334-62; CR608-19; CR718-24.

35

38 of the Civil Practice and Remedies Code. Id. at 255; Tex. Civ. Prac. & Code §§

37.009, 38.001. Recoverability of fees in this case is based on the prevailing party

clause in a contract. And unlike Long, Mr. Huttenbach attached redacted invoices

to his affidavits; no such records were presented in Long. See Long, 442 S.W.3d at

255. Quoting its previous decision in El Apple I, Ltd. v. Olivas, the Long court

again described the minimum of sufficient evidence as “evidence ‘of the services

performed, who performed them and at what hourly rate, when they were

performed, and how much time the work required.’” Id. (quoting El Apple I, Ltd. v.

Olivas, 370 S.W.3d 757, 764 (Tex. 2012)). Compass Bank’s invoices include each

of these categories of information. See, e.g., CR334-62; CR608-19; CR718-24.

The trial court’s judgment should be affirmed.

IV. Appellant Failed to Conclusively Establish Entitlement to Summary

Judgment

For the reasons above, the trial court’s judgment should be affirmed.

Nevertheless, Compass Bank addresses Appellant’s argument that he should have

prevailed.

Appellant failed to conclusively prove that he was entitled to summary

judgment on his breach of contract claim. See CR34 et seq. As set forth above,

Appellant did not conclusively establish the terms of “the” contract he alleges was

breached. He omitted to give effect to terms included in the signature card; he

failed to conclusively establish any factual basis for avoiding terms permitting

36

amendments; he argued that the 2008 agreement applies, then tried in the same

motion to take advantage of the 2012 attorneys’ fees provision. On the other hand,

assuming without conceding and for purposes of argument only, that Compass

Bank did not conclusively prove that the 2012 deposit agreement applies, it at least

raised an issue of fact. For example, Ms. Mueller testified as custodian and on

personal knowledge that the 2012 deposit agreement is the correct agreement, in

effect between the parties. CR202.

Even if not conclusively established (Compass Bank maintains it was),

Compass Bank did far more than merely raise a fact issue regarding the preclusion

in 4.406 of the Business and Commerce Code. See CR372, et seq. Compass Bank

made available the Account statements by (1) sending them to addresses of record

“deemed correct” by terms of the deposit agreement, (2) holding the statements

and never refusing any request from Appellant to provide copies, and (3) informing

Appellant of several different methods of contacting the bank to report any

problem, including that statements were no longer arriving as expected. Statements

of the Account were made available and Appellant’s corresponding section 4.406

duties were triggered. CR212; CR230.

It is undisputed that Appellant did not report any exceptions. He did not

satisfy the condition precedent to maintaining a suit. Without conclusive proof of a

deposit contract that permits Appellant to completely ignore his Account for

37

months on end, Appellant did not and cannot show himself entitled to summary

judgment. Without conclusive proof of a deposit contract that precludes Compass

Bank from relying on its unchallenged and deemed correct records to make

account statements available, Appellant did not and cannot show himself entitled

to summary judgment.

Because the record conclusively proves that Appellant utterly ignored the

Account beginning at least 6 months before the first supposed unauthorized

transaction until 18 months after that transaction, his affirmative claims are also

precluded by section 3.406(a) of the Business and Commerce Code. Appellant was

negligent as a matter of law. That negligence substantially contributed to the

claimed forgery and Compass Bank was and remains entitled to the judgment

granted by the trial court. The judgment should be affirmed.

Conclusion

This case was disposed on cross motions for summary judgment. Therefore,

the Court determines all questions presented and renders the judgment that the trial

court should have rendered. See Berry v. Encore Bank, 01-14-00246-CV, 2015 WL

3485970, at *4 (Tex. App.—Houston [1st Dist.] June 2, 2015, no. pet. h.) (citing

Tex. Workers’ Comp. Comm’n v. Patient Advocates, 136 S.W.3d 643, 648 (Tex.

2004)). The trial court reached the correct result.

38

No reasonable person could possibly find that completely ignoring the

Account from January 2012 through January 2014 was anything other than

negligence, the antithesis of ordinary care. Appellant’s conclusively established

failure to exercise ordinary care for at least 24 months substantially contributed to

the making of the claimed forged signature.

The contract between the parties required Appellant to review his account

information and to timely report all exceptions. Timely is contractually defined as

30 days. The deposit agreement provides that Appellant “[n]otify us promptly if

you do not receive your statement by the date you normally would expect to

receive it.” With the obligation to report exceptions within 30 days, Appellant

waited over 18 months to notify Compass Bank of anything. The agreement and

common sense required Appellant to speak up if he did not receive account

statements when he expected them. The agreement and common sense require that

Appellant keep track of his own financial affairs.

Based on Appellant’s lack of diligence as a matter of law and its correct

interpretation of “make available” under the operative contract and the Business

and Commerce Code, the trial court properly and sustainably determined that

Compass Bank was entitled to summary judgment in its favor.

39

Prayer

For at least the reasons set forth above, Appellee Compass Bank respectfully

asks this Court to affirm the judgment of the trial court.

Respectfully submitted,

HIRSCH & WESTHEIMER, P.C.

By: /s/ Michael D. Conner

Michael D. Conner

State Bar No. 04688650

mconner@hirschwest.com

William P. Huttenbach

State Bar No. 24002330

phuttenbach@hirschwest.com

1415 Louisiana, 36th Floor

Houston, Texas 77002

Telephone: (713) 220-9162

Facsimile: (713) 223-9319

Attorneys for Appellee, Compass Bank

40

Certificate of Compliance

I do hereby certify that the relevant contents of this document consist of

9,797 words, in compliance with Tex. R. App. P. 9.4(i) and this document

complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has

been prepared in a proportionally spaced typeface using Microsoft Word 2013 in

14 point Times New Roman font, except for footnotes which are in 12-point

typeface.

/s/ Michael D. Conner

Michael D. Conner

Certificate of Service

I hereby certify that on this 22nd day of October, 2015, a true and correct

copy of the foregoing document was served as follows:

Michael O’Connor

O’CONNOR, CRAIG, GOULD & EVANS

2500 Tanglewilde, Suite 200

Houston, Texas 77063

Via Eservice

/s/ Michael D. Conner

Michael D. Conner

41

Case No. 01-15-00210-CV

IN THE FIRST COURT OF APPEALS

HOUSTON, TEXAS

Francisco Calleja-Ahedo, Appellant

v.

Compass Bank, Appellee

From Cause No. 2014-22168

55th Judicial District Court, Harris County, Texas

APPENDIX

Consumer Disclosure (2008 deposit agreement) Tab 1

Consumer Deposit Account Agreement (2012 deposit agreement) Tab 2

42

Ta

GousuMER Dlscr.osuRE

Effeetive August 21 2006

Compass Banlç a member of the BBVA Group

Consumer Disclosure

Highllghts

1. Changes to Consumer Deposit Account Agreement 2

2 Changesto Checking and SavingsAccounb 4

Other Fees and Servlce Charges I

Consumer Deposit Account Agreement 11

1, Definitions 11

2, Account Operations 12

3, Account Statements and Not'ces 13

4, Account Transactions 14

5. Deposits, Colleetions and Payment of ltems 15

6, Wìürdrawals 17

7. Sub"accounts 17

L Arbitration 18

9, \Âhiver of Jury Trial 19

10. Dormant and Abandoned/Unclaimed Accounts 19

11. SetOff t9

12. Waivers 19

13. Other SeMees 1g

'14. lnteres-t¡ lnterest Repoding 20

15. Changes to Account Status 20

16, Applicable Law 20

17. Additíonal Provísions 20

Fund¡ Arailabillty Disdosure 21

Elecironic F¡nd llansfer Dlsclosure St¡tement 22

Tarpaye r ldentlf lcati o n N u m b ers (Bad<up Withh old lng) 24

Compass Gonsume¡ Priyact Disdosure 26

lmportant lnformaüon About Your Cheddng Áccount (Cñ6d( 21) 29

Vlsao Ghedr Card Agreement and Dl¡closurê Statement 31

HIGHLIGI{TS

Ghanges to Consumer Deposit Account Agreement

This Disclosure Booklet contains the terms and conditions that will govern your consurner deposit

accounts at Compass Bank beginning August 22,2OO8" A consumer deposit account includes any

type of checkíng, savings money market or NOW account to which funds may be deposited and that

is used prímarily for personal, family or household purposes. Please carefully review tte Gonsumer

EÞposÍi Aøunt &rcement on pages 1'l -21 of this Consumer Disclosure Booklet and keep it

for fuh.¡re reference. Many terms of your Compass account will be different from those at Ta<as State

Elank, including, but not limited to, the followíng:

r Postlng Order and Order of PaymenL At Compass Bank checks and other debits to your

account may be poded and/or paid in a different order than at Texas State Bank lf two or more

iterns are presented for payment from your account on the same day, we may pay or clrarge the

items to your account in any order. To avoid olerdrawing your accoun[ make sure¡rou have a

sufficient available balance in your account before you write a ct¡eclç use your Check Card or

authorize an electronic payment

r 'Available Balanca' Bank, we distinguish between the

"available balance'and The ierm 'available balance" refers

funds

to the balance of mediate withdrawal. Unlike the

posrted balancq the available balance reflects any holds placed on your account The term 'Posted

balance" refers to the balance of funds in youraccount based solely on items that ha,re been

posled as credits or debits to your account Your available balance may be rnore or less Ú¡an the

âmount of your posted balance, but does not include any credit available under any Compass Bank

Overdraft Protection Line of Credit you may have,

r Holds lof Ched( Card ûans¡ctions. lf we issue a Msa@ Check Card foryour account and you

use ytlrJr Ca¡d for cerbin transactions (including every POS and many Visa transactions), the

merchant accepäng your Card may request advance authorizatjon of that transaction. lf we

authorize atransactionr we may place a temporary'hold' on your accourt forüte amount

requested by tfie merctant Ilús hdd ls not payrnent for an zuthodzed ha¡rsacüorÌ and may be

plæed on your account bebre fìe acùral ùansactlon ls presented to ts fø payrnent Fot more

lnformdion abor.rt these holdg when they are releâse4 thelr effect on your actount and the

authori¿ations requested by mercfrants, please rcferto the Chêck Card Agreement and Dlsclosure

Stalement induded with ¡lour new Ct¡eck Catd.

r Una¡¡lñorlzgl lts¿ns¡rüon¡ rrrßlo¡ Fo¡gprlee R [s esssntíal that any account efiorc,

unar¡ttrorized bansac{ions, alteratlons, unåuthorized signatrrres, fotgerþC encoding enors, posting

errþrg or any other improper bansac{ions on your âccq¡r¡t (colleclÍvely refuned b æ 'excepf¡ons')

be reported b us as soon as reasonabþ poss¡bþ- You must carefulþ examine each acæunt

statement or rrcüce you receive and report any excepùbns to us promptly afuryou receive the

statement or noüca H you do not report an orcepüon to us within $ltty (30) days afbr we sêfld

ûre sbtsment or notke to yû{rt we may not be fiable ûo you for any bss ¡rou suffer related to lhat

arception. Different rules may +ply to items lhat are eþctonic fund baneftrs.

l Rerotylng O¡seutes Releted to Your A¡cu¡nt tf a dlspute of ary ldnd adses under your

acco

account agreerneût or relales to ¡rour aacnrrtl, either

yÐu or we can droose to have that dlspute either ¡ou nor vue

ssek b compel arbitraüon of any dlspute we ha¡s related lo thls Agreement, ¡our æcannl or any

üansectons lnvolvirg ¡our aæount or (Ì0 some or dl of the arblHion prwision is r¡nerdorceable

ard we are ln a dispute ln a court of bw, üren eadr sf us âgr€s¡¡ to waive any lþht we may have to

a jury hial b the eortent permitÞd Ð hrv. lÎrc rtltfilon ¡nd lüry ùlal rairer p¡ovlslonc fn

youl ¡oeount agreGment limityour abilltyto litigate dalm¡ ln court and your llghtto a

iurytrial. You should rwlew these proulslons carefully.

I

For informdion on MÍscellaneous Fees at Compass Bank, please see pege I of this Booklet.

2

Other differences found in the Consumer Dlsc/osure Boo,t/ef lncfude:

l. Concumer Deposit Ascount Agreement sectionsl

v¡ ACCOUNTOPERATIONS

- Fowers of Attorney

- Service Chargeq Other Charges

a ACCOUNT STATEMENTS AND NOTICES

- Errors, Unauthorized Transactions and Forgeries

- Record Retention

A ACCOUNTTRANSACTIONS

- SÍgnatures; Facsimile Signatures

- Wre Transfers

- lnst¡fficient Balance and Overdrafts

- Stop Payment Orders

- lnter-Account Tiansfers

- lltegatlansactions

g DEPOSITS, COLLECTIONS, AtlD PAYMENT 0F ITEMS

- Deposits by Minors, Agents or Trustees

- Collection as Agent

- Check Endorsement Standards

- Foreign Currencies

- ATM Depositories, Night Depositories, Direct Deposlt and Deposits by Mail

- Chargebacks

- Stale and Postdated Checks; Miscellaneous

¡ WITHDRAWALS

¡r RESTRICTIONS ON WT|HDRAWALS

;a SET OFF

s ÍNTERESI'¡ INTERESI- REPORTING

u CHANGES TO ACCOúNT STAIUS - Conversion to Business Accounts

q ADDITIONAL PROVISIONS - Closing Your Account

x APPUCABLELAW

a AMENDMENT TO THIS AGREEMENT

2. Funds AYailabillty Disdosup

3. Electronlc Fund Tiansfü Dlscloeure Statement

4 Consumsr Prþacy Disdosu¡e

5. lmportånt Informatlon About Your Ched<ing Acæunt (Ghed< 2f )

Changes to Checking and Savings Accounts

'

Here are highlights to the changes in ûre terms and features of yolr accounts after they transfer to

Compass Banlc

Texas State Bank i Compass Bank ; Please Note Changes to Thess Account

: Terms and Features

, RegularCheddng,ïexStar . Regular I $10.00 monthly Seruice Charge. $750

, Ched<ing, and Club t Checking i minimum daily collected balance end $2,500

i average daily collected balance required to

I Ghed<ing ¡

i waive monthly Service Charge Standard fees

wilf apply for cashíe/s checks and travele/s

i checks, Customers enrolled ln Add-On Values

r will be converted to CompassPlus and will be

i assessed a $5 monthly fee.

, ftet Checking, Freedom , Build-To-Order No monthly Service Charge or mlnlmum

i n¿vantagerGroup . Free Checking i balance requirement Unlimited transactions.

I

' Cheddng, PennyWise, i Choose two premium features at no charge

i Student Ghed<lng ORil), I (additiona,l features are $2/slatement cycle):

Rlveruay Premier , Free foreign ATMs, rebates of ATM fees otter

r Ghec*ing, Economy banks charge, up to $25 cash on your account

, Chedring, and Fresh Start ;' anniversary, interest on your checking accounl

I balance, cash back on Visa Check Card

' purchaseg double Visa Extras Rewards polnb,

I one overdraft fee waiver peryear. Customers

enrolled in Add-On Values will be conveded b

i CompassPlus and will be assessed a $5

monthly fee,

, Colmes Baslc Bonus, ' Build-To-Order , No monthly Service Charge or minímum

I ComEs Famlly Bonuq Free Checking ] baJance requiæment Unlimiùed transactions,

I Colmes Bonus Plus, î Choose two premium festures at no charge

' FlSl Madlson Bas'q (additional features are $2/statement cycle):

¡ : San Augustine FlSl í Free foreign ATMs, rebates of ATM fees other

, : lndlvldual, San Augustine " banks charge, up to 925 cash on your account

': '' FlSl lolnt, San Augustine

FlSl Famlly, FlSl Madison

j anniversary, înterest on yourchecking account

I bahnce, cash back on Visa Check Cárd

Famllç and Vista Club r purdrases, double Visa E¡rùas Rewards points,

, one overdraftlee waiyer per year. Accidental

; Death lnsurance, Savers Club Book, Soþurns

' magazine, Payment Card Protec'tion, Key Ring

i' Protection and Half Price Hotel no longer

available. Customers enrolled in Add-On Values

' will be corverted to CompassPlus and will be

assessed a $5 monthly fue.

' F¡fW Pl¡¡s Free Che<*ing, ; Basic 50 i No monthly Service Charge or minÌmum balance

Gold Chêcldng, Senior ' Checking , requiremenl Unlimited t¡ansactions, Free

,I Advantage Chedring, i travele/s checks. Free supply of custom checks.

Senior Partner Chedring, Bonus rates available on CDs, Foreign ATM

, Seniot Chedtlng, Senior r transaction fees apply. Standard fees willapply

Chedrlng (TRN), Senior ' for cashier's checks, Customers enrolled in Add-

Gold, and Senior Gold Plus ' On Values will be converted to CompassPlus

and will be assessed a $5 monürly fee,

i'4:

Ghanges to Ghedcing and Savlngs Accounts continued

Here ars highlights to the changes in the torms and feetures of your accounts afler they transfer to

.":ioi:: _'i*

i rexas State Compa$ Bank i Plesso llote Changes to These Account

I Terms and Feaü¡res

r.B".lk

EIA (Electronic Tlansfar I Basic Checking : All current terms, conditions, and Service Charges

AccountL Value Ched<lng, ¡ will remain in etfect Transacl¡on fees forValue

and Value Cheddng (fRN) ; Checking and Value Checking frRU) w¡tl ¡e

i waived. Customers enrolled in Add-On Values

will be converted to CompassPlus and will be

assessed a $5 monthly fee.

Fnedo¡n Select Ched<lng, CompassLink No monthly Service Charge with a combined

Reedom Select Checking average daily collected balance of $?000 in

Cheddng (TRN), CompassLink Checking and Preferred Money

Star Chedting, Market Accounts, or when linked to an

Cholce Ched<ing, outstanding installment loan or line of credit

Senior Cholce Chedring, balance of $?500 or mors. Oiherwise, $15

lnterest Chedclng, and monthly Seruice Chæge. No fee for using another

lltt€rest Ched<ing Cf Rll) bank's ATM and eligible for surcìarge rebates,

Free custom wallet checks, cashie/s checks, and

travele/s chert<s Bonus rates available on CDs.

The following Rate Ters apply: $0-$1,999;

$2000+. Customers enrolled in Add-On Values

will be converted to CompassPlus and will be

assessed a $5 monthþ fee.

-r-

Freedom Platlnum CompassUnk No monthly Service Charge with a combined

t

Chedrlng and P¡emler I Checking averege daily coltected balance of $2,000 in

lnvestment I CompassLink Checking and Preferred Money

¡ i

I Market Accounts, or when linked to an

t

I

oubtranding insiallment loan or line of credit

1 balance of $7,500 or more. Otherwise $15

monlhly Service Charge, No fee for using

I

I

¡

I I another bank's ATM and eligible for surcharge

I

I I rebates. Free custom wallet checks, cashieds

i

I

checks, and travele/s checks. Bonus rates

I

I

( I

available on CDs. Customers enrolled in Add-

I

I

I

On Values will be converted to CompassPlus

and will be assessed a $5 monüly fee.

I

!

Texas Freedom Glub, I Directions No monthly Servíce Charge wÌth a minimum

i I

I Texes F߀dom Oub (TRN), Checklng daily collected balance of $1,000. Otherwise,

Relaüonshlp Chedcing, $6 monihly Service Charga No fee for using

I

I

and Senlor Medallion another bank's ATM and eligible for surcharge

I Ghedtlng rebates. Free custom wallet checks, cashie/s

I

l checks, and travele/s checks. Bonus rates

I

available on CDs. Free new 3x5 Safe Deposit

Box in the fini year, 2590 discount thereafter.

Two Tree Stop Payments per month. The

following Rate Tiers apply: $0-$1,999;

$2,000+. Customers enrolled in Add-On

Values will be converted to CompassPlus and

will be assessed a $5 monthly fee.

à

Changes to Ghed<ing and SavingsAmunts continued

Here are highlights to the chargee in the terms and feaù.rres of your accounls after they hansfer to

Compass Bank

lexas StatE GompassBank Please Noûe Changes to These Account

Bank ïerms and Feaü¡res

Group lntercst Ched<ing Build-To-Order No monthly SeMce Charge or minimum

and Group Banklng Free Checking balance requirement Unlimited hansactions.

wih lnterest Choose one premium feat¡re at no ctarge

(additional batures are $Zsdement rycle):

Free foreÌgn ATMs, rebates of ATM fees other

banks charge, up to $25 cash on your account

anniversary, cash back on Visa Chec* Cæd

purchases, double Visa Extras Rewards points,

one overdraft fue waiver peryear. lr¡terest on

yourchecking account balance is a Preseleeted

premium feature, The following Rate lers appþ

$O-$1,999; $2,00G$9,999; $ 1000G

$24999; $25,000-$74,999¡ $7500Gr.

Customers enrolled in Add-On Val¡es will be

converbd to CompassPlus and will be

assessed a $5 monthly fee.

RegularSauings and Basic Savings $15 quarterþ Senitce Charge. $500 minimum

BorderSavlngs daily collected balance required to waive

quarterly Se¡vice Charge. Accounb with

more than four (4) withdrawals per quarier will

receive a $3 Service Charge for eadr additÍonal

wihdrawal. The following Raie'lìer applies: $O¡.

I

I

I

Group Savings Baslc Savings No rnonthly Service Chaçe or rninimum

I

balance requirement Acc¡unb with more tran

four (4) withdawals per quarter will receive a $.3

Service Charge for each addítional wihdrawal.

Thefollowing Rate Ïer applies: $0+,

StulentSavlngs Young Savers No quarterly Service Charge or minirnum

balance requirement Accounts wíth more than

four (4) withdrawals per quarter will recefue a $3

Service Charge for each addilional witrdraryal.

The following Rate Ter appliesr $0+.

Monery MartetSavings, Consumer No monthly Service Charge or minimum

Freedom lnvesùnent, Prefened balance reguíremenl U nlimited in-person

Monq Henagement Money Market transactions A $10 excessi,/e bans'fer fe.e is

Saylngg and he¡nÍer assessed per statement rycle for pre

Money llarket authorized or telephone transfers over six (6)

per sbtement q¡cle. A $10 excsssíve

'fhetullowlng Rale Tbls

eply: $G$9899;

$ 10,00$$ t9p9q $20,00G$49,999;

$6O,000-$9999e¡ 3 tO0,00C$249,99q

S250,æG$9ggpg9¡ $1,000O0G$2,49Ogsg;

$2,500,000-$4Ê99,999; $5,0oQ000+.

B ui I d-to' Ord er Freo Che*in g Acco unt Dîsclosu rc

PTEAT¡E REfAIII A COPT OFTIIIS DISCTOSURE FOR FUÏURE REFEREIICÊ

Standard Benefltc/Requlrements

r Requires $25 rninimum depositto open

u Checks posted to the account are not retumed in üre monfily staùement but photocopíes are

available. Charges for photocopies are $3.0O per posted item,

s An image sbtement is available for a service charge of $3,00 per month An image statement

includes reduced pictures of cancelled úecks in numerical order. The paper copies of cancelled

checks will not be retumed in the statement {or this account

E Free safekeeping of checks,

DeflnlUons

tt Account Anniversary The Account Anniversary is lhe month and day you opened your

Build-to'Order Checking account or converted to a Build-to-Order Checking account

ö Feature Year:This ls a period of tureh/e strrnent qrcles between Account Anniversaries,

beginning with the stabment q¡de in whidl üre Account Anniversary falls. Certain Custom

Features may be tþd to üre ftablr€ Yeer. Ptease see lhe description of Custom Features below

¡ Custom Features: These are the additional features you can select to customize your Build-to-

Order Checking accoun{ and they are listed below

Clrstom Feaü¡res:Selecttwo Gusfom Fealuresat no'charge. Go onllnq visîtyourbrandt or

ælI l -SOI'GOI|PÁSS to select your lwo leatures (See cña¡ges lor addÍtlonal featurcs below)

q Nofeeforuslng anotherbanKsATM

s Rebate of Afil lees that other banks dtarga

ln order to receive rebate, ATM receipts showing ATM iees or account statements showing ISF

fees rnust be mailed within 90 calendar days of the ATM transaction to Compass Banl< Rebate will

be dtrectly deposited into the checking account within 10 business days of receipl Compass does

not rebate lnternational Seruice Fees for Point of Sale transactions (for example, purcfiases from a

foreign merchant using your Check Cæd),

2 lnteresil on your drcd<lng balances

daily

lf you select this feature, the following terms apply: The ate

the interest on your account. This method applies a dally peri

balance in the account eactr day. lnterest on deposits begins ess

day on whici we receÍve credit for the'depodt Accnted lnbrest is crediH to the balance ln the

account on the last day of the stat'ement q¡cle. Accrued lnterest that is credlted þ the balance ln

the'account begins to eam interest no hbr üran üre next br¡sfnesg day and compounds wïth each

stalement rycla Statement cycles are generally ronthly unlqss ohEnrise disdosed tf you close

your account or corwert your account to a noninþrest-eaming accour¡t before accrued interest if

any, is credited, you will not receive the accrued interest A taxpryer identification number will be

required to eam lntercst on these accounts,

n Cash Bonus on your acoount annivesary (up to $25)

e This bonus must be selected for twelve consecutive shtement rycles, and the account must

th

be active each of es to recei¿e the full $_25 bgnus A

bmu

porlion of this each s&mentq/de in wh¡ó the

baù¡re ls selectsd ard your account ls acüve. An 'acüve' silatemont q¡de for purpoces of thb

bonus ig a ctabment clcle in whidr tlreæ ls at þast I cugùomerinit€bd depodt or withdrawal

during the slatement cyde. ff lhere ls no deposit or witMrar,val duting he fftst staternent cyde,

wtridt can be less üan 30 days, th,e bonus wlll not be accrued for that flrst statement cyde.

s Build-to-Order Checking account must be open on the Account Anniversary for this feafuæ to

be paid. lf the Build.to-Order Chacking account is closed before the Account Annirrersary, the

cash bonus accrued to that poini will not be paid.

s Bonus will be pairJ on ttre Aæount Anniversary, (lf üre Anniversary Daùe falls on a holiday,

weekend or norì-processing day, the bonus wiltbe paid the next processlng day) Bonus is paid

only from time of the most recent selection of üre bonus featurg meaning the prorated feature

will be paid only for the period in which the feature is selected consecutively up to the Account

7

Anniversary. lf the cash bonus feature is selected at account opening and subsequently de-

selected prior io the Account Anniversary the cash bonus accrued prior to the deselection of

the feature will not be paid, Cash bonus wllt be direcüy deposited into the Build-to-Order

Checking account

s Limit two bonus features per customer.

:: Double Vlsa Extras polnts

Visa Extras program enrollment required. Standard Visa Extras poinls will be earned 0n the month

following your Vsa Extras account update, Compass wifl match those points earned in the previous

month, ihereby giving double the rewards. Points are paid only on Oualifying Purchases. A

"Oualifying Purchasen is any signature-based purchase, lntemet purchase, phone or mail-order

purchase, bill payrnenl contactless purchase (purchases made by holding your Visa card or other

device up to a secure reader instead of swiping your card), or small dollar purchase fur which you

are not required to sign, made with an enrolled Visa card, that is processed or submitted through

the Visa U.S,A" lnc, payment system. A Oualifying Purchase does not include a purdrase made

using a Personal ldentification Number (PlN) or purchase you initiate through ideniification

technology that substitutes for a PlN. Additional restrictions apply. For more Ìnformation on

qualifying purchases, sêe program terms and condìtions,

.* Cash Bad< on Vlsa Ghed< Card kansac;üon¡

x Available for the primary Check Card for the account only, Earn cash back on Oualifying Check

Ga¡d Purchases' routed tirrough Vsa ('See'Double Visa Extras Points'for Oualifying R.rrchase

definltion,)

's $0.05 will be eamed for every signaù.rre-based purchase (excluding teller cash disbursements

and merchant authorizations that are not completed).

'u ln addlüon, $0.06 will be eârned for every two PIN-based purchases (excluding cash

transactions, ATM kansadions, quasFcash transactions, payments made for prepaid or re

loadable cards sudr as certa¡n gift cardq Visa Buxx and similar cardq transadÍons conducted at

Global Access Cash Terminals and pre-authorizations for transactions).

n Retums or debits of a Visa Check Card ciarge will be deducted from ttre cash calculation,

n Cash back rewards will be credited at üre end of the statement cyde for lhe Build-to-Order

Checking accq¡nt linked to lhe primary Check Card. The posting date br a quelifying

transaction will determlne the date of the transaction for puryoses of this feafure. Credits

for the net purchase activity will be made at the end of the clcle pedod. lf üre Bulld-to-Order

Ch.ec.kilg account is dosed, lhe ca$r back rerrards accrued in lhe cunent statement qrcle

willnot be paid.

:¡ One Oyordrãft Frs (NSF Chargc) Forglvenese p€r yêer

Applies to one NSF Charge-Paid ltem or one NSF Charge-Retumed ltem (se€'Miscellaneous

Fees'). The Overdraft^Fee_(Nsf Chuge) Forgiveness Feature must be redeemed durlng your

anniversary year in which this feature ls selected or lt wlll be forfeited; ürts feelure does not accn¡e

or carry lo¡ward into subsequent years Once yotr redeem this feah¡re lt wíll remain a s€lscûed

feah¡re untll the Accq¡nt furníversary. You rnay carrcel thls feature after tte Acæunt Annversary

befoæ you ædeern it in tre ner<t Anniversary Year. lf you select olher features dudng ttre year, añ¿

have redeemed the Fee Forgiveness fuafurq they will be in addition to this feaù.¡re Th¡s feah¡re

rnay not be used for forglveness of Extended Oerdraft Service Cha¡ges

:r kiclng:

n Two features provided free of charge.

' l:i,fi*:

be cfiarged an

r The "Add-On Beneflt Charge'wÍll reflect tha highest number of leaürres sêlected duñng úre

g_ive¡ staþqent cyclq regardlass of the nu rber of days lhe feaùrres were n effoc¡'thõ.Add-

on Elenefit charge'will be incuned on the daythe sta-tement b ganerated

!f

awarded¡ ratherlhe acc¡unt will ha,/e lnte

a Note: Features are calculated based on statement cycle, not month,

I

Other Fees and Service Ghalges for Consumer Accounts

ATM/Check Card Replacement Fee*,. .",,,"$5,00

(+plies to non-personalized Compass ATlvî/Check Cards)

Bank Bags

Z+per

Locked-*-- **$20.00

Bond Coupon Collection Fee,**-,, *--$5.00 ;

Check Charges

Fersonalized check orders are debited from your account when your order is received, Personalized

check order ctrarges vary by style, check design chosen by cr:stomer, and number of checks ordered.

Collection ltem

lncoming:

Non-Customer toE n¡1

Outgoing:

lntemational* -.-*$20,00 +costs

Compass Fee for Using Another Bank's ATM*,*".^*

-S2.00/transaction

Fee,-.-,-*

Deposit Correction .¡*.*,,x*,* $2.õO/item

Direct Depos'rb '*"N/C

Extended Overdraft Service Charge

Should your account become oætdra,vn a¡rd conf¡nue wilh a negative belanco for slx (6) consær¡ttve

caþndu da¡æ, an utended oærdraft fee of $38 ($42 effec{ive January I, 2009) wfll be ôaryed.

b

Theßefrer, if your accowrt cs¡linues of $7 per calendar day wfll

be assessed beghn¡ng on the sevÊnü until day thhfy (30) of

orßrdrdt status or untfl lhe account is broqght b a positive balance wtridrerer occurs firs[ This

extended overd¡aftfee is in addition to any NSF fees you may inq.¡r as a result of items being

presented against insufficient funds.

Gamishments, Levieg Court Orders 75O0 +attorneyfees

lnter-Accouni Transfer Fee.,,,.*-.-..".* -*.,."-..."*^$10,00/þansfer

Transfers funds from cuslomer-designated account tro corær potential overdrafb in úecking accounL

lSFFee

lntemalionalTransactions are those transastions usÍng your debit card made outside of the United States.

An lntemational Service Fee flSÐ amounting to 1% for ATI¡'ltransac{ions and 3% of üe bansaction

amountfor ùansactions made some place other üran an ATlvl will be posted to your account for any

lntemationallansaction, even hose in US dollars A full desuilion of the cunency conversion process

is contained in this agreement on page 16.

Itern Presented for Payment Against lnsutficient Funds (NSÐ

NSF Chuge - ftid ltem-- *,,,,-,.,*,,$38.00

NSF Charge - Retumed Jtem

-._.-$Í18,00

These chaçes are applied for processing iìems presented for payment against insuflicient funds (NSÐ with

a ma.¡<imum of six (6) charges per day. These charges are imposed on items created by dreck, in-pelson

withdrawal, ATM wthdrawal, or other electronic means.

New Account Closed Withln 180 Days-,,.,,,- $25,00

Non Staff-Assisted Call 1.O0/call over 15/monlh ;

Check Card 10.00 ì

¡

.Ìr I

|

L_-_-

9l

---__

Reconcíle Statemenl*,* $26OOlhour

Research* J25,00/houn $S00/copy orfax

Retr:rn of Cancelled Checks-",* *-,,,--.$500/month

Returned Deposited lteru-"-,-.".* Þ*¡.¡,,¡r,¡,Ehs,¡Þ* .",",,,"",,$7.00/item

Rerun Deposibd ltem*.-** ---.*-.$7.00/item

Rolled Coin,- *,--*-$0.10/roll

Special Statemenf

Stop Payment Rquest*-",, *-$30.00/request

Staff-Ass'rsted Cell 1O0/callorrer 5/month

Strapped Currency

Telephone Transfer Fee,*.,_ -*--*$3.00/fans'fer

Temporary Checks (minimum fuo ú.fu) - -.,. t.OO

Wire Transfers

-

lncoming(Customer)* -*æ,ù $12.00

Ma¡rualOutgoing (Customer)-

--S20.00

Manuaf Outgoing (Repetitive).- *."**.,,-$18'00

witr Confirmation:

Fex./E+nail.- -----*J2300

ManualOuþcing

lntemalional:

lncoming e 1õ,00

Outgoing

Confirmaiion of incoming or or.rtgoing;

Phone ,.... ,-,- - -._95,00

'A special statement may include, but not be exclusive to, the following: daily statements, duplicate

1 slabments, hold slatemenls and shtement prinlouts.

i

Addítional services and/or fee schedules available upon requesl

Note: The above noted fees and service charges are not set banlcwide. These prices are driven by the

competition in your local market

10

I

Welcome to Compass Ban( Member FDIC, Following is your Deposit Accouni Agreement and cartain

additional disclosure information, including our Consumer Privacy Disdosure. Please read this information

carefully and keep it with your other financial records,

Consumer Deposit Accou nt Agreement

This Agæement curers any type of deposit amunt (as dsfined bebw) you may hæe wiür us novtr, or in

he fr¡fure that ¡s used prlmarlty hr persmal, femlf or hoæehold purposec Q opening your accoun[ by

conducüng any bansactbn inrrolving your acount¡ or by malntaining your account afbr receipt of this

Agreernent you agrce tb üre brms ln lhis Agreement lhis Agreement tndr¡des not only ftis doa¡ment but

also our q¡nent interes{ and sarvice ctrarge sdredulg dlscbsure for inbrest'eaming consumø accounb, and

dlsdosure for nonínteresþeaming corrsumer acoorffìts. Thls Agreement also hctudes any n6fl or amended

proiis'ors and disctosur€s v€ may provide concernlng pur account Allof üese documenb bgather a¡e a

contract betvleen you and us.

t. DEFmmOilS

The following terms and definltions applywtæn usd in lhis Agrcenrent Sorne terms used in üris

Agreement but not detined b€loìfl ha/e tlre rneaning assbned to them ln the Uniform Commerciat Code

ín efiecl fn üe stde wherg r¡æ mainbin you¡ account

AccountorDopocltAÊcount furylpe of dredrlng sarring+ morìey muk4 or NüÂl accour¡tto

which funds msy be deposlted. Tìrne depsib ue a(duded Írryn tris definilion and are not conred by ütis

Agreement

Accou¡rt O*mer or Owne¡: Each person named in our records as an account ownerwith respect to an

account induding any trustee, custodiu¡ guardian, conservator or other representative acting in that capacity,

ATMg Automated teller machines.

of aüornry.Vl/e res€rrre th€ lþht in our sole

d represenüng sn aæount owner does not

b in an account atthe ouner's dedr as a tesult of lhe

agents capacity as an attome¡in-fact

Autfiodzad Slgner, Each person who has signed a signafure card with respectto an account in any

attome¡in-fad or other representative

capacity, irrcluding any tnrstee, crstodian, guardian, conservator,

acting in lhat capaclty.

AvallaHc B¡hnca The bdance of fwrds in yor accu,rnt ürat is aralable for bnmedlate wthdnwal.

Unllke tre posbd balance üre a¡dlable balsnce reflec{s any holds placed on your accont irrcludlng $e

restrictions described in üre R¡rds Ava$âbllity Dsdosum induded wih ü¡is Agreement Your a¿ailable

balance may be more or less than the amount of your posted balancq but does not indude any credlt

arailable under any Compass Bank Orerdraft Protection Line of Credit pu may have.

Bulnæ Deya Alürough rnany of q¡r branch offices are open m Safurdays, fur purposes of his

Agreement our businesc dEæ are Mondayürrough Ftiday excluding holidE/s.

dormant'rt, for one ysar or more ln üre case of

n tlre case of sardngs and money ma¡ket eccounb:

unt no conespondence reguding the account has

been receiræd by ur an¿ no accou¡rt o¡rner has otrerrrise indicaÞd an lnÞrest ïn he accounl

lndMdual Aco unL

a single-perty acæunt At e

owneds estrte unless tre

the account

men! order

or tre payment

of transactions,

of Joint

Accounb:

1 ,

A Joint Account wilh righi of zurvivonhip so hal at lhe deaü of an ouner, ownership of he account

passes lo the surviving owne(sl and notto the decéased ovme/s estds¡

2, A Joint Account with right of suruivorship and RO,D. by desþnating one or more beneficiaries of tlte

account, so that at the death of ùe last zurvtving owner, ownên¡hip passes to PO.D, beneficiaries and is

not part of the lest surviving orne/s estab; or

3. A Joint Aæq¡ít wiftout ffiof suruivonhip, so ürat attre death of any or,rmer, $e deceased owne/s

ownership interest passes as partof adeceased owre/s estate,

Jolnt Accounts wlll bc pgumed to be witlr rlght of suwivorship (type (l) abov6) unlsss

appllcable law rcqulms that you malß an atfirmatiye deslgnation in order for dght of

sunivorshlp staùs to appþ.

i1 |

P.O.O. Account A deposit eccount payable on request b one or mora o'rnrtere durhg üdr llfelime

end on tho dss$ ol ür bstsuniv,lg owner, to ona orurte benefciatl€s and mtb rny ornc/s es*.

Fúd Bs¡sn€. The balancc of funds in your accotmt bas€d soldy on itvns hd lnyt been posted as

I

e

rnayhaæ.

Santce Chrqr¡. A'ny ósrgq feq or simtu am

your account

ary schedt¡h

b r¡s, but not

agreÊnrênb yur måyhs¡ÊwiÜr us

- Skrglc P!Éy Account An account owned by on o deaÛ of

üra æmer of a drde psrty accot¡nt ovr¡tershlp posses ovrnsr lras

úo6€n ¡ POD. acoot¡nt Uy *lslgnshng trla or mor¿

in

thb b a lagd

icarfrbþfor

auto

ilt##t oris ormor€ orrrer¡astr¡sbc foronsor

more hìÊ{cb¡þsu,hcro the rddin$ip b æteblish€d

ssû€ûs oil üÊ h$t oüGr üran lhe sums on @dt in the

PO.D.eccomù

lllc, Our, U+ ComÞ¡¡+ ol ComP¡¡s

Aencstra¡eq lrrc. For purposæ erd

r or, if the accor¡nt b a mdtipb porV ¡ccounl, arry Bnd d

aocount owners, and aü auüoriæd rlgnen.

¿ ACCOlrlffoPERAnors

jolntaccornt byúy accomt o\rúncr flauttþrtôd ä*

tho anomt wilhdrawn, tegardl€ss of he sq¡rce or owneralüp of ths funds in tha occourrt &ry eccornt

orner of e þltt aær¡nt tnay add e naw orrrËr or at¡troùed s¡gner b the accor¡nl \tb mey, but are not

rc$Iüed b honaaGqrestÐyolb prerailawÌhdr*nl orbansferIarydpr ac"or¡rtowËror

aífprüæd slgnerøto r€rrxlrrg anoüì6r aor¡ttownerorarütoriæd sþnerfruntheæonLAeervice

ôarye mey epp! if uo hocorlhe request end you agree lo indemnlfy us and hold us lrarmlece fiom any loss

or darnage to pu ø ar¡orc else üat resulls frun o 'honuing üre raques[ You mry be asksd to sþn

sdrl¡lirnâl doo¡menb or agrãnenb h connoction siür üå reqJesù

r ofaty accaml, wlËher Ð grtt or

Unless we agreeoüerwfss in wrttlng

oive notic¿ ol the üans{êr. Accourtç

are ùensfusbþ only on our recordE \i/e reserue the Qht not b acknowl€dgé or æ@ any stl€mpted

ùa¡¡sÍer of an accq¡nt

A¡lltodzatþn to Fry a¡rd DoHt llre AmrmL You a¡ürodze us b pey ø wiürdraw funds from the

account, wlttout any nolice b you, on he oder of aly account ownar or a¡üurized slgnr ø on lhe order of

any peæoul repesenûBliìe of any acæunt owner (eæn if appoirbd h a st¡Þ or cor¡nùy oürcr ttrgn ths oriê

in wlúdrnl rminb¡nyoûr

from ary of these Fnrsons

be execr¡bd m e lmn acoçilabla to te' thst

âl

atbrneflrthct eccour¡t hm¡ac'tions condncted by üre

2

attorne¡in-fact and the instruciions and orders of the atbmey-in-fact are binding on all eccount owners. lf we

accept a power of attomey, we may continue to recognÌze and honor fre authority of üre attomryin-fact until

we receive written notice of re'¡ocalon or termination of autrority and have had a reasonable time to act on it

Service Chalges; Other Ghalges You acknowledge $ai you have been proriided our cunent

schedule of service .h"tgus and, if applicablq interest raþs for yor.¡r account You agree that all service

drarges and any interest ntes applicable trc ü¡e aaount may be dranged by us frøn time to time as set forth

in Seclion 14. You agrce úrat we rnay debit ftom your account wen lf yolr accotrnt is dormant abândolled,

or unclalmed, wittrout ary further notice or dernan4 all senice drages applicable b yorr acounl as well as

charges lor the prtrdraeã of óecks, drefts, end oûrer produc'ts or services ordered by yor from or ürmugh us

We s¡alt not be llable for lailing to pay any itam presented againstyorr account if he amfable balance is

insuflìcjent lo pay the ite& even if üre insutflclent available balance resulb sdely lronr debiting these service

and other drargoe lrom yout account

Oder of Payment lf trc or more ibms ere pre

wê may oerc¡se any righb of set off we nay have

was ¡nitiatø at a polnt-of-sale termina[ yur agree trat uæ may charge tre emñnt of he itam to¡tour ectount

or place a hotd ori ¡rour account in üe únount resr d by tha meichant imnredately upon auürorization of

trd point of-sale bansætion, wen lhor4h we have not lhen ectualty received tìe item for paymmt

3. ACCOUIÍT STAfEMEItftS AND llOTlCEs

Perlodic Statement$ lf we have a deliverable address on {lle for you, we will mail or deliver lo you

porlodlc sùateme{ìts lor your deposit acount at approximately monthiy íntenab unlæs we speci$b you

lhereatbc The account sùaþment will desc¡lbe eadt

date of debit or credil For certain types of accounts,

or a lacsffile ol those itenrs llsH on tle

naæilabh lor any reason fior example when an item is

againsl pur accountl lf we comply witr the foregoing

provisions ol üris Sectioq you agree that the sHement and iterns all have begn mede available to pu in a

reasonable menner,

Mailing and Availablllty, Feriod-lc statements, canceled checks (if applicable io your account) and

wdtten notíces of dishonor or refum of unpald deposited items, or any other notice or communication, may be

malled to you at lhe addless shown in our records or a forwarding address foryou if one is on lile wih the

U.S Fost,¿l Seryica llowarer, we rvill not mail any account ínformation to an address that'the U.S. Poslal

Service has informed us is fundelÌverable' or othenvise ìnvalid. We use reasonable efforb to rnaintain the

fllst staþmen(s) rebmed as undeliverabte fur sixty (60) dayr or sudr longer period of lime as may be

requlred by applicable hw, after whidr time we may dispose of the stalernent and original ltams. Ho,ate'¡er, we

Enor¡ Un¡uthorlz¡d llan¡acüo¡rs end Fo

actmq altenatÍons, unauthorí¡ed stgnafureg foßedæ,

redlts

tre

exceptions. You agree thatyou willcarefrd[ examlne and

that we will not be liable to you for any loss lrou suffer related b ürat exception. This means ürat if you do

not report exceptions to us within h¡rty (30) days after we send lhe statement or notice to you, we will not

reimburse you for any loss you sufferì irnluding, but not limited to, any amounb lost as a resutt of paying any

unauûrorized, forged, or allered ibm, or paying any other item altered orforged þ üe same wrongdoer if

i13r

ri

you. Bcept as provided

afy er(cePtiofis ceused ry

üuta¡a dectonh fund bansbrs ln anycase,you

agæe prunpüy b qay to

us any amorrt credted debityow

aæa¡nt lo oHain pøymentof eny enureos credit

Reord Retenüott.Vfswll æÞln anylbm paid bus¡ness

da¡rs fiom the trê üì€ item psb b pur account llb (7) years

4 ACCOUT{T lRAllSAC,frO}lS

Slgmturee; F¡cslmlle Slgnaüna lile may reJy on eadr sþdure on a signahrre card for the

eccountorsr plor aulhothed il

signdure or other meclranlcal o

accounl you assume he enürc

m

bears or prporb lo bø a tacslrdle slgnatuæ

resembling a signatura on flle with us, regadless of uilrom or by what means the eclual or p,urported

signature was affixed b ths item

- P¡s-authorlza'd tt€íts.lf you girre infonnalion

that in the ordinary aourss ol ils businesl it will

your accounts, then arry item initiated by thd person

to n you lumi*red may be used impropaly or by

an r person for ltems drawn ln his frshion by any

un aJüori$ b do so, and v,,e may honor all of

[tese type items prøenÞd to rrs

lfllre ûansúala li/hen we accept a wire hansbr payrnn{ order lnsùr.¡c1ing paymmt to you or to your

account wa will notify you of olr recelpt ol payment by indicating the a¡rnunt in your accornt statem€fiL

lf the payment oder does mt specit an accounl we rny deposit tho payment into any account hat you

maintain wilh us (nduaing mulüple perty accornbl Your account shtemefit wlll be the onþ nothe of æceipt

execded by us. $/e rêsen'€ be rþht b æfusa to acept any payment order. lf trere is erver any inconsisbrtcy

or onflict between he accomt number arÉ üre narne of a recifú€rÉ m an insbudbn or payment ordø we

msy rely erdusively on lhe account number and bank ldentification nurnber contsr-ned h a payment oder

rather than ths name Amendments to a payrrent order must be provid to r.ts at leastlhree business daye

prior b orn €xeortion of ûre payment order, !iê nay record ury blephone conrærsatirns or data ùammlsSons

that initiate or arnend paynænt ordes The úango rale on a retum payment order shall be the rste in effect

at the f¡tæ the rcfum is receiræd"

your arailable bahrrce ls insufficient to pay the

f

of lhe items unpaid

may, at our opllon, reù¡m any

cause an orerdratt of your accu¡nt Wb nuy rehrm

ent b pay lhat ltern, even lf vye previursly hate

pemitted orrerdrsfts. You are nol entithd to reþ on any ilnor act by us wiûr respect b your acco.¡nt Our

el€cüon to pry orcrdrafb does not eshblish a counse of deallng between you end us or modify $e brms

of thls Agree menL You agree tha[ Íl pur arelhble balancs is insufffdent b pây any ttem præãntø agairst

yottr accounl yotr prornpfy wiü pay boh our se¡vl¡e dtårge for handling and processlng ürat iþm snd tle

amount of ury orcrdraft wilhout furürer notice or demand, I

lure io pay'ttrese arrþunb prompüy may

owner wlllbeJoinüy and sarenalþ liabþ for

ible for beir occr¡rence ln üre alørtyou faff lo

ôarges æd we refur yoú ovardrar,rrn eccount to

expenseg indudng wihor¡t limiffior\ aüomÊ/s

account behg orerd¡aum.

trro or more consumer accounb lhat we allory to be

14

pr¡mary accountto pay a coverd item, We will have no obligation to pay any ccvered item if {he combined

available bdances in the secondary acrount and primary account at fie lime the covered item is presented

to us for paymeni are insufficient to pay fte covered it'em or if the secondary account ls in dormant inactivq

or frozen sbtus, ln this situation, if no funds are bansfene{ you will not he assessed any sewice charye

ac

for üe ùansfer, but your primary sufficient avaílabls

balances and overdralts disossed accounts will not affect

whelher any elecbonic transaction on requires authorization

at the time of the ùansaetion (e.9" point-of-sale, ATlvl and Check Card hansaclions) the autrodzation will be

based on the a¿ailable balance in the primary account and not on the available balance in the secondary

account regardless of any dæígnation of a secondary accounL

Stop Payment Orders. You rnay request us to stop payment on any chedç draft or similar written

order or instruction drawn on your account by giving us tha inlormation we may request including ihe

account number, ihe item numbe6 the date of the itern, the payee of tre item, and the exact amount of the

will seadr for your lÞm by æmputer, so it fs

bo efbcltve wc must¡eeeiveuysbp payment

ifl conllrm yd¡r orsl stop papnnt ordr in

will be cotrdrdveþ Fæurned b be conect

twayear paiod and pay urr stop payment

seruice ôuge vs¡ifi€d toüe pal/æütãthe avallablo

balance ln your

oËremiseAny

b deæe a sbp payment order unlees requested lo

who requested it You agree b lrdernnlff us and hol

o$€nsss (nclrdlng attomay's fee) rre may lrrcrr by

have stopped paymenl for stop payment orders on peauthorized electronic funds transfers, please refer

to üre Becbonic Fund Transfer Disclosure Statement in üis booklet

lllegal ïlansacdo¡s. You agree that you will not use your account for any transaction hat ls lllegal

in the jurisdiction where ¡lou live, in tre jurisdiction where ttre tansaction is consummabd, or in any other

jurisdictft:n affected by the hansactim. You agree that it is your responsibiliiy b determine the legality of

eacl of your transaclions in all applicable jurisdictions before entering into the transactjon. You acknowledge

and agree that we ha,re no oblígation to monibr, to review or to evaluate üre legalify of tansactions on your

account You also agree üat you will not use your account in connec'tion with añy lñtemet or online gambling

þri.sdlction\{b reserve üe rightto retum

lnbrnet or online gambling ùarsact¡on or a

l¡tr,yorl agree to prylorany item thatyou auhorized,

ed b be flegat

Colledon ¡s olleclion are recolved by us as your agent for

yo

collection and at only (such as a reùrhed dêpqelted itern or

a

an item drawn on senice draqe for attsmpüng colledion of the item.

ln sltuationswhere ion only, re wül not girn you cash or an offfcial óeck for

the iterns until tre items have been paid. We are oblígated only to e,rercis'e ordlnary care in handling and

collecäng items delivered to us tor deposit or collection. We shall not be liable forüe misconduct neglect

orlorlo€€ ordæùucton of arry item in üendlortrr

ürctl, fre or üêreËnt berond our reæanat¡þ

cotecüng agenb shdl bs llable forfa¡hrelo collccl

agent No colleding agent shdl bc llaHe

lolrtDenoeût¡ lf an emutb aþ

or rlghb and H$es lø pryment ol any sums m

whidt vra mainbin youreccornt

Dopocltr ¡f ll¡naq Ager*¡ orllu¡bc¡ A dêpori,t eæepbd lorn orm battalf of a mhor, at our

€ntshel beve¡d oænthargh mtooo.ted byün

of an UTlriA accofit b irrwocable, wrll b conskleçed

sbE ilduþs gonrnlng uniform tatfers

Ch€ds arl¡oen¡ont Stmdrd¡. lf acær¡t yotl ûo rcspotstbÞ ftr

the conditin of üre ba* of the dreck whar it tB the ü¿ck b uaed dutitg üte óeck

colþction procass to reod ttìe ldentiffcaüon ol banks præso¡ng lhc ched<. blost of the back ol ths check

is res€rved lø bank use You qrec thet üe endorsarrrenl of he óack must ba cmtained in thc pcyao

atüe o<cùangre

sponsibb I

hfurmdim prov,ldedby ur Erdìdrge

a shortpaitd of ürflèYou r#dbd€pos¡lgol@ncunmcy

AtI DeRo¡ltode¡¡ llþn DcpoCbde+ DM D.pdl rnd DqxtU $ tdl. Our ATlils,

tÊ

described on the deposit slíp, Errors in posting, addition, subtraction and calculation, whether by you or us,

are subjectto correc'tion by us at any time; provided that we may not be obligated to correct ceÈain errors

if you fail to notiff us of the exceptions in a timely manner as described in Section 3. You agree to repay us

promp{y any amount credited to your account in eno¡ and you authorize us to charge your account or any

other account of which you are an account owner, to obtain payment of any erroneoLls payment or credil

Stale and Postdated Ched<s; Miscellaneous. We may, in our discretion and wiihout notice to you,

either pay or return any dreck that is presented to us for paymánt more than six (6) months after the dáte of

that check, We also may, in our discretion and without notice lo you, either pay or retum any check we recelve

before lhe date on that check unless you have complied with any applicable statute regarding posldated

checks and you have provided us with notice of the posldating in time for us to have a reasonable

opportunity to act on it before the check is presented to us for paymenL Your notice about any postdated

check must be given in the same manner as a stop payment order and must provide the same information

required for stop payment orders. Each postdated item covered by a notice of postdating will be subject to a

ature

t

uPayee's

information on the check, including terms such as endorsement requiredi "Nol good for more than

$ (amount)l''Void if not paid Ìn (number) daysi and similar language. W'e shall have the righ! but not the

obligation, to process any item that is materially incornplete or has been altered,

6. Wm{DRAWAT.S

You may withdraw part or all of your accounts available balance. Any account owner or authorized signer

of a multiple party account may withdraw all or part of the available balance in lhe account regardless of who

deposited the funds into the account We accept no responsibility or obligation, except as required by law, to

supervise or review the use of your accounl

Restrictions on Withdrawals. Your account may be subject to certain transaction limitationq ufrich

are shown ìn the disclosure provided to you at the time you opened your account, Vüe may at any time and

without prior notice to you (except where príor notice is required by law) establish or change transaction

limitations for any account lf these limitations are exceeded, you will be subjectto any charges in efiect

at fie time. ln addition, we may stop paying inierest on an interest-bearing accounl or we may close the

account without prior notice to you (except wh.-re prior notice is required by law),We also may require you

to provide noiíce before you may withdraw money from certain types of accounts.

hold on your account to cover a chim against your

recelve ary noticg claim, or court order which we

erüs, a$aúÍFnb'levieq înjunctionq or other orders

tha form ot rnanner in whid¡ we receive the notice,

named party to he noücs claim, or coud order, We will

not be responsible for refusing ù: letyou withdraw funds from the account or refusing to pay items presented

against your accor¡nt whíle ihe hold is in etfect or after we have paid funds to the source of the claim.

ln the event of any contoversywittr respectto your account such as a claim againstfunds in your

account or a dispute over who has the right to make withdrawals from the account or who is the or,vner of

the funds on deposit in the accounl we may refuse to pay any funds to anyone until we are satisfied that the

controversy ís resolved or we may continue to honor the authority of account owners and authorized signers

as reflected on our records, We will not be responsible for any damages you may suffer as a result of our

refusal to allow you or anyone else to withdraw funds due to the controversy or our allowing any existing

owner or authorized signer to continue to conduct transactions on the account during the coniroversy, We

also may pay or offer to pay the account balance to a court of appropriate jurisdiction, naming all of the

ctaimants to the account as defendants in an interpleader action, You agree to reimburse us for all expenses

we incur in an interpleader action, includÌng attorney's fees and cosþ and we may obtain reimbursement of

those expenses from your account without notice to you.

7. SUB.ACCOUNTS

We may estabfish two 'sub-accountsn on our books for certajn deposit accounts. lf we elect to establish

the sub-accounb, it will not affect the oüer terms and conditions of your account or this Agreement the

Federal Deposit lnsurance protection afforded on your accoun! the interest (if any) paid on your account the

service charges imposed in connectÍon wlth your accounT or the lrutr in Savlngs disclosure given to you,

Both of fte sub-accounts will remah your accor¡nb, but wfll be used by us intemall¡, to manage your funds.

The first sub-account will quaüfy as snd bo teatsd as a'sâvings deposit account" for the purposes of Federal

Reserve Eoard regulations. You auhorize us to lransfer funds between the two sub-accounts consístent with

Federal Reserve Board regulaiions. As such, we must advise you that ihe regulations require that we reserve

the right to require at least seven days' written notice prior to üe withdrawal or transfer of funds from the

17

I

'--l

savings sub?ccoufit do not cunently otercise hat rþht wifr respect lo thesa sadngs sub'accounb. ln

\túe

the evefit we defrennine to orercise that dght vre wil dose he savings silb?ccaùnt end ùansfur all furds

back to yotrr onent accot¡nt and cease lhe sub-account agreement Yolr de¡osit urd rrÍlhdrâwal capabfiües

ue not dþcted by or dec{on to esiabllsh the sub'account

8. ARBITRAÎIOII

By opening ø mainhining the account yul agree hat if a dispute ol ury kind adses under thís

Agreement or relates to pur acrount or any barmc{ions imolving your accourt düter yo{l ü we can choose

b have that dispute æsohred by binding arbihatft:n Tltl¡ rôib¡tion pudCon llmtts you abilily lo

litlgate claims in court and your dght to a iury trlal You should rwiew thls soctlon carefully.

You will not have tlre right to participaie as a dass representative or member of any class of claimants for any

claim subject to arbitration. fubitration is usually an informal proceedlng in whidr dlsputes are decided by one

or more neutral arbitmtors who receive the evidence at a hearing and then issue a binding ruling in the form

of an award. You and we understand that discovery and olher procedures in aôiùation may be more limited

han discovery in court proceedings and that fre ability to modify, vacate, or appeal an award by an

arbitrato(s) is limited.

You and we agree, upon written demand made bypu ldisputes,

confoversies, and claims, whetrer based on contracl fraud conslifution'

This text is long and has been trimmed here. Open the source document for the complete record.