978-1285770178 Case Printout Case CPC-15-05 Part 1

Court of Appeal of Louisiana,

Second Circuit.

Debbie Jo BROOKS, Plaintiff–Respondent

Background: Owner of checking account provided by clearing broker to allow customers to write checks against

money held in their brokerage account sued clearing broker to recover funds wrongly withdrawn from the account

by her former partner. Clearing broker moved for summary judgment. The District Court for the Parish of Caddo,

No. 498653,Roy L. Brun, J., denied motion. Broker requested supervisory review.

[1] Judgment 228 185(2)

228 Judgment

228V On Motion or Summary Proceeding

228 Judgment

228V On Motion or Summary Proceeding

228k182 Motion or Other Application

228k185.2 Use of Affidavits

228k185.2(9) k. Effect of failure to file affidavit. Most Cited Cases

228V On Motion or Summary Proceeding

228k181 Grounds for Summary Judgment

228k181(2) k. Absence of issue of fact. Most Cited Cases

Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is

material for summary judgment purposes can be seen only in light of the substantive law applicable to the case.

[3] Banks and Banking 52 119

52 Banks and Banking

52III Functions and Dealings

52III(C) Deposits

52k119 k. Relation between bank and depositor in general. Most Cited Cases

A bank and its depositor have a debtor-creditor relationship that is contractual in nature.

Banks and Banking 52 148(4)

52 Banks and Banking

52III Functions and Dealings

65 Brokers

65IV Duties and Liability to Principal

65k30 k. Unauthorized acts. Most Cited Cases

Clearing broker, which administered owner’s checking account in connection with her brokerage account, so as

[5] Statutes 361 226

361 Statutes

361VI Construction and Operation

[6] Banks and Banking 52 148(4)

52 Banks and Banking

52III Functions and Dealings

65 Brokers

65IV Duties and Liability to Principal

65k30 k. Unauthorized acts. Most Cited Cases

Signed checking application established brokerage account owner’s contractual relationship with clearing broker

Blanchard, Walker, O’Quin & Roberts, Shreveport, LA by W. Michael Adams, Scott R. Wolf, for Defendant–

Applicant, Pershing LLC, Delaware.

Harper Law Firm, Shreveport, LA by Jerald R. Harper, for Plaintiff Respondent, Debbie Jo Brooks.

STEWART, J.

We granted writs in this matter to review the trial court’s denial of a motion for summary judgment by the de-

fendant, Pershing, LLC Delaware (“Pershing”). At issue is whether Pershing is a “bank” under Chapter 4 of the Uni–

form Commercial Code (“U.C.C.”), La. R.S. 10:4–101 et seq., such that the failure of the plaintiff, Debbie Jo

Brooks (“Brooks”), to provide notice of unauthorized signatures on certain checks precludes her claim against Per–

Brooks and Tingstrom began living together in 1994. In 1999, Brooks allowed Tingstrom to take over handling

her finances. For five years Brooks did not look at any statements concerning her various accounts. But on Decem-

ber 19, 2004, Brooks got the mail while Tingstrom was away and opened a statement from Hibernia Bank. The

Brooks filed suit against Transamerica and Boston Safe Deposit and Trust Co. (“Boston Safe”), on November

21, 2005. The petition stated that the Resource Checking account was with Transamerica and that Boston Safe was

the bank with the authority to honor checks drawn on the account. Brooks alleged that the defendants paid the unau–

thorized checks without obtaining proper identification and approval from her, the account holder.

3. No. 5098, dated June 22, 2003, for $3,500.

4. No. 5103, dated November 13, 2003, for $26,000.

5. No. 5106, dated January 31, 2004, for $3,000.

6. No. 5107, dated March 10, 2004, for $26,000.

Asserting that Brooks had failed to notify it of her loss as required by the U.C.C. and as a result her claims were

withdrawals had been made from that account.

FN1. In addition to filing suit against Tingstrom, Brooks also sued A.G. Edwards & Sons, Inc., and PNC

Bank, alleging their improper payment of unauthorized checks totaling $51,675.58.

According to Buonocore’s affidavit, Pershing is a clearing agent for Transamerica and “provides account custo–

ship with her. She also asserted that the time periods set forth in La. R.S. 10:4–106 should be strictly construed and

should not be applied on summary judgment to entities who have not been shown to have had a banking relationship

lowed Brooks additional time to amend her petition to state a cause of action. Pershing‘s exception argued

that Brooks’ assertion that it is not a bank meant that her petition failed to state a cause of action against it

for improper payment of the unauthorized checks.

DISCUSSION

As expressed by La. C.C.P. Art. 966(A)(2), the summary judgment procedure is “favored” and is “designed to

La. C.C.P. Art. 966(B).

[1] The party moving for summary judgment bears the burden of proof. La. C.C.P. Art. 966(C). Pershing, who

bears the burden of proving that it is a bank as defined by the U.C.C. and that Brooks’ claim against it is precluded,

must produce evidence to establish that there is no genuine issue as to material fact and that it is entitled to summary

judgment as a matter of law. When there is a properly supported motion for summary judgment, the nonmoving par-

is “material” for summary judgment purposes can be seen only in light of the substantive law applicable to the case.

Roccaforte v. Wing Zone, Inc., 2007–2451 (La.App. 1st Cir.8/21/08), 994 So.2d 126, writ denied, 2008–2266

(La.11/21/08), 996 So.2d 1112.

Pershing’s motion for summary judgment is based on La. R.S. 10:4–406, which is found in Chapter 4, Uniform

Commercial Code—Bank Deposits and Collections. Under La. R.S. 10:4–406(a), a bank that provides its customer

was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered