Plaintiff corporate customer sued defendant bank for breach of contract, negligence, refund of payment, return of deposit, and money had and received. The trial court sustained the bank’s demurrer to the negligence cause of action without leave to amend and granted summary judgment for the bank on all of the remaining causes of action. The California Court of Appeal, Second District, Division Five, affirmed. The customer petitioned for review.
California Business Lawyer & Corporate Lawyer, Inc. explains CACI Malicious Prosecution
Overview
The customer’s chief financial officer apparently embezzled $ 4.6 million by directing fraudulent funds transfers from the customer’s account to an account he controlled. The court held that, pursuant to Cal. U. Com. Code, § 11505, as a prerequisite to recovering from a bank, a customer had to notify the bank of an objection to a payment within one year after the customer received payment notification. The customer had to inform the bank in some way that it objected to what the bank had done in accepting the payment order. But the statute did not require any particular formulaic words. Rather, it was sufficient if, based on all of the circumstances, a reasonable bank would have understood that the customer was objecting to what the bank had done in accepting the payment order or otherwise considered the bank liable for the loss. The customer arguably did more than just inform the bank the payment orders were unauthorized. Its chief executive officer (CEO) told a bank official that he had not authorized the payment orders. Additionally, the CEO testified that, at some uncertain time, he and the bank official had engaged in a general discussion about the bank being sued.
Outcome
The judgment of the intermediate appellate court was reversed, and the case was remanded to that court for further proceedings.
