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Valente v. TD Bank, N.A.

Appeals Court of Massachusetts, Worcester

August 30, 2017

GERALD VALENTE, [1] executor, [2] and trjustee,
v.
TD BANK, N.A. [3]

          Heard: March 3, 2017.

         Civil action commenced in the Superior Court Department on October 25, 2011.

         The case was heard by Daniel M. Wrenn, J., on a motion for summary judgment.

          Barry A. Bachrach for the plaintiff.

          Catherine R. Connors for the defendant.

          Agnes, Kinder, & Shin, JJ.

          AGNES, J.

         Before a bank customer may sue his bank for honoring a check drawn on his account that bears an "unauthorized signature or alteration, " Massachusetts law requires that the customer notify the bank of the matter within one year after a statement of the account showing the item that was paid is made available to him. G. L. c. 106, § 4-406, as appearing in St. 1998, c. 24, § 8.[4] In the present case, the plaintiff, Gerald Valente, in his capacity as the executor of the estate of Mauro Valente (decedent or Mauro) and as trustee of the Valente Family Trust, brought suit against the decedent's widow, Donna Valente, [5] and her daughter, Lillianna Saari, alleging that they wrongfully misappropriated substantial sums of money from the decedent's estate and a family trust that were on deposit in TD Bank, N.A. (bank). In the same action, in the only count in the complaint against the bank, the plaintiff alleged that the bank was negligent and thereby liable for damages because it was aware of the wrongful conduct by the decedent's widow. For substantially the same reasons given by the Superior Court judge below, who allowed the bank's motion for summary judgment in a thoughtful and comprehensive memorandum of decision, we hold that the one-year notice requirement set forth in G. L. c. 106, § 4-406, bars a customer's lawsuit against his bank for honoring a check with a forgery of the customer's signature despite an allegation that the bank had actual knowledge of the forgery.[6]

         Background.

         The essential facts material to the outcome in this case are not in dispute. The following account is drawn from the materials submitted by the plaintiff and the bank in connection with the bank's motion for summary judgment. Mauro and Donna were married in 2000. They remained married until Mauro's death in March, 2011. Mauro maintained five accounts with the bank: two accounts in his name alone, two accounts in the name of the Valente Family Trust, and one account in the name of his business, Valente Construction, Inc. In addition, in November, 2007, Mauro and Donna went to the bank and opened a joint account with both of their names on the account. Mauro was the only authorized signatory on all accounts except for the joint account, on which Donna was also a signatory. When Mauro opened those accounts, he acknowledged receipt of the rules and regulations issued by the bank that specifically require customers to review their account statements and to notify the bank as soon as possible "if [they] believe there is an error, forgery or other problem with the information shown on [their] Account statement." The bank sent monthly statements for all of Mauro's accounts and for the joint account to his home address in Worcester. There is no dispute that Mauro did not notify the bank within one year after the monthly account statements were mailed to him regarding specific items that contained unauthorized or forged signatures. At the earliest, the plaintiff gave notice to the bank of the allegedly unauthorized transactions in October, 2011, when the complaint in this case was filed.

         There is evidence in the record that Mauro suffered progressive memory loss from late 2006 through early 2008. In December, 2007, due to his failing health, Mauro executed a durable power of attorney (POA) that appointed Donna as his attorney-in-fact [7] The POA granted Donna "full power to act for [Mauro] in all matters affecting [his] business, property, rights and interests." It also allowed Donna to "draw checks or drafts upon, or otherwise withdraw funds from, any checking, savings or other bank accounts belonging to [Mauro]." Donna contends that she provided a copy of the POA to the bank in or about June, 2009, after Mauro had suffered a stroke.

         The core of the plaintiff's allegations of negligence on the part of the bank relates to events that occurred between November, 2007, when Mauro and Donna opened a joint account at the bank, and March, 2011, by which time Donna had transferred nearly $2 million from Mauro's individual accounts into their joint account, and then further transferred that money (and more) from the joint account into her individual account. It was not until after Mauro's death in March, 2011, that the plaintiff discovered evidence of those transactions.

         On October 25, 2011, the plaintiff filed the complaint. In the sole count against the bank, the plaintiff alleges that the bank knew or should have known of Donna's misappropriation of Mauro's funds, and that by failing to act or otherwise prevent Donna from withdrawing the funds, the bank breached the duty of care it owed to Mauro. The record contains canceled checks drawn on Mauro's accounts for substantial amounts during the relevant period, which were made out to "Cash" and deposited in Donna's personal account.[8] The record also contains canceled checks from Mauro's and Donna's joint account that Donna signed and then deposited into her personal account at the bank. Two of the checks from the joint account, numbered 204 and 205, which are attached to the plaintiff's complaint, are dated less than one year before the filing of the complaint. No checks that are alleged to be unauthorized and that are from the other accounts are attached to the complaint.

         The plaintiff also presented evidence regarding the bank's fraud detection policies. During the period in dispute, the bank's fraud detection software generated thirty-seven individual alerts of possible fraud in connection with the joint account and Donna's personal account. Pursuant to the bank's policies, each time an alert is generated, it is required to be investigated by a bank analyst. After investigating one such alert in October, 2010, a bank manager contacted Worcester elder services to report potential elder abuse of Mauro, but no further action was taken by the bank. In addition, in an affidavit, a financial consultant engaged by the plaintiff opined that had the bank followed bank policies and industry standards, the matter would have been referred to the bank's corporate security ...


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