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Full Opinion
131 Nev., Advance Opinion 441
IN THE SUPREME COURT OF THE STATE OF NEVADA
C. NICHOLAS PEREOS, LTD., No, 61553
Appellant,
vs.
BANK OF AMERICA, N.A.,
FILED
Respondent. JUL 0 2 2015
TRACE K LINDEMAN
CLERK OF SUPREME COURT
S"BY
DEPUTY nf4-
Appeal from a district court summary judgment in a tort
action. Second Judicial District Court, Washoe County; Janet J. Berry,
Judge.
Reversed and remanded.
C. Nicholas Pereos, Ltd., and C. Nicholas Pereos, Reno,
for Appellant.
Poli & Ball, P.L.C., and Michael N. Poli and Jody L. Buzicky, Las Vegas,
for Respondent.
BEFORE HARDESTY, C.J., PARRAGUIRRE and CHERRY, JJ.
OPINION
By the Court, HARDESTY, C.J.:
NRS 104.4406 regulates the relationship between a bank and
its customers concerning losses sustained due to unauthorized activity in
the customer's bank account. Generally, a customer "must exercise
reasonable promptness" in examining a bank statement and within 30
days notify the bank of any unauthorized transactions. NRS 104.4406(3),
4(b).
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Because genuine issues of material fact exist in this case
regarding the manner of delivery of bank statements, the contents of
online and received-in-branch statements, and the bank's exercise of due
care in paying certain unauthorized transactions, we conclude that the
district court erred in granting summary judgment. We further conclude
that unauthorized account transactions that occur within the one-year
period before the customer gives notice to the bank are not time-barred
under NRS 104.4406(6)'s one-year period of repose because the statute
does not differentiate between a single forgery and multiple forgeries by
the same wrongdoer. Therefore, the one-year period of repose begins to
run with each successive forgery.
FACTS AND PROCEDURAL HISTORY
Mary Williams, a long-time employee of appellant, the C.
Nicholas Pereos, Ltd., law firm, was a signator on the firm's operating
account with respondent Bank of America. In September 2006, the firm's
solo practitioner, C. Nicholas Pereos, removed Williams as a signator on
the account, leaving Pereos as the sole signator. Pereos told Williams to
let the Bank of America account "run itself out" to cover any outstanding
checks, but he never took any action to affirmatively close the account.
In 2010, Pereos discovered that Williams had been embezzling
money since 2006. Despite being removed as a signator on the account,
Williams deposited checks made out to Pereos, Ltd. into the Bank of
America account and would then write and sign checks for her own
personal use. Pereos notified the bank of the unauthorized transactions
on January 28, 2010. The next month, Pereos, Ltd. filed a complaint
against Bank of America based on Williams' use of unauthorized
signatures to withdraw funds from the account from 2006 to 2010. When
it was discovered that Williams had enrolled the Pereos, Ltd. account in
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online banking and the bank statements had not been mailed, Pereos
amended the complaint to include an allegation that Bank of America had
failed to make Pereos, Ltd.'s statements available as required by NRS
104.4406(1).
Bank of America moved to dismiss the amended complaint, or
alternatively for summary judgment, on the ground that Pereos, Ltd.'s
claims for unauthorized transactions were time-barred either because they
were not reported by Pereos, Ltd. within 30 days under NRS
104.4406(4)(b) or within the one-year period of repose under NRS
104.4406(6). The bank argued that, notwithstanding Pereos, Ltd.'s
contention that the account statements were not mailed to it, Pereos'
deposition testimony revealed that Pereos had on occasion personally
picked up some of Pereos, Ltd.'s bank account statements from Bank of
America in 2006, 2007, and 2008. The bank attached copies of the
account's statements to its motion and argued that the "fulnauthorized
transactions . . . were contained in the bank statements that were made
available to [Pereos]". In opposition, Pereos, Ltd. argued that the
statements he obtained were insufficient to provide it with notice of the
unauthorized signatures as they "were only a single page or two-page
document. . . that showed check numbers and the amount of the check,
and balances. Nothing more[.]" Moreover, he contended that the
statements were insufficient because they did not contain a copy of the
canceled checks. Pereos also argued that his claims for unauthorized
checks cashed within the year preceding his notification to the bank were
not time-barred. Conversely, Bank of America argued that, because the
same wrongdoer committed all of the wrongful transactions, all claims
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were time-barred by Pereos, Ltd.'s failure to give the bank notice within
30 days after receiving the account statements.
The district court granted summary judgment in favor of Bank
of America, finding that it was irrelevant whether Pereos, Ltd. received
copies of the checks because NRS 104.4406(1) does not require the
inclusion of check images. Moreover, the district court found that there
was "no dispute that the bank statements received by [Pereosl contained
item numbers, amounts, and dates of payment," and thus, the account
statements Pereos received were sufficient to notify him of the
unauthorized activity on the firm's account. Accordingly, all claims were
time-barred under NRS 104.4406(4)(b) and NRS 104.4406(6). This appeal
followed.
DISCUSSION
Nevada's version of the Uniform Commercial Code is codified
in NRS Chapters 104 and 104A. See NRS 104.1101. Article 4, located at
NRS 104.4101-.4504, deals with bank deposits and collections, and,
specific to this action, NRS 104.4406 regulates the relationship between
banks and bank customers concerning unauthorized activity in a
customer's bank account. See also U.C.C. § 4-406 (2002). Generally, the
statute absolves a bank of liability for payment on an unauthorized
transaction when it provides the customer with information that would
allow the customer to identify any unauthorized transactions, such as an
account statement, and the customer then fails to timely act in response to
unauthorized transactions reflected therein. 1 See Prestridge v. Bank of
1 NRS 104.4406, in its entirety, reads
continued on next page...
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...continued
1. 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.
2. If the items are not returned to the
customer, the person retaining the items shall
either retain the items or, if the items are
destroyed, maintain the capacity to furnish legible
copies of the items until the expiration of 7 years
after receipt of the items. A customer may request
an item from the bank that paid the item, and
that bank must provide in a reasonable time
either the item or, if the item has been destroyed
or is not otherwise obtainable, a legible copy of the
item.
3. If a bank sends or makes available a
statement of account or items pursuant to
subsection 1, 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.
4. If the bank proves that the customer
failed, with respect to an item, to comply with the
duties imposed on the customer by subsection 3,
continued on next page...
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...continued
the customer is precluded from asserting against
the bank:
(a) His or her unauthorized signature or any
alteration on the item, if the bank also proves that
it suffered a loss by reason of the failure; and
(b) His or her 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.
5. If subsection 4 applies and the customer
proves that the bank failed to exercise ordinary
care in paying the item and that the failure
substantially contributed to loss, the loss is
allocated between the customer precluded and the
bank asserting the preclusion according to the
extent to which the failure of the customer to
comply with subsection 3 and the failure of the
bank to exercise ordinary care contributed to the
loss. If the customer proves that the bank did not
pay the item in good faith, the preclusion under
subsection 4 does not apply.
6. Without regard to care or lack of care of
either the customer or the bank a customer who
does not within 1 year after the statement or
items are made available to him or her (subsection
1) discover and report his or her unauthorized
signature or any alteration on the item, is
precluded from asserting against the bank the
unauthorized signature or the alteration. If there
is a preclusion under this subsection, the payor
bank may not recover for breach of warranty
continued on next page...
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Jena, 924 So. 2d 1266, 1270 (La. Ct. App. 2006) (discussing analogous
Louisiana statute).
Thus, once the customer is provided with the necessary
account information, the customer must "exercise reasonable promptness"
in examining the information and notifying the bank of any unauthorized
transactions. NRS 104.4406(3). Failure to do so may limit the bank's
liability for the unauthorized transactions contained in the information
and also for any others made by the "same wrongdoer" that occur before
the bank receives notice, depending on whether the bank exercised
ordinary care in making the payments. NRS 104.4406(4), (5). Regardless
of fault, however, a customer is barred from asserting any claims with
respect to an unauthorized transaction more than one year after the bank
made the information available to the customer. NRS 104.4406(6),
Here, Pereos, Ltd. argues that summary judgment was
inappropriate because genuine issues of material fact remain as to (1)
whether the account statements were sufficient to give notice of the
unauthorized activity on its account so as to trigger its duty to examine
the statements for and notify the bank of any unauthorized activity; and
(2) even if its duty was triggered, whether its claims concerning payments
made within the one-year period before it notified the bank of the
unauthorized activity were time-barred.
This court reviews a district court's order granting summary
judgment de novo. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d
...continued
under NRS 104.4208 with respect to the
unauthorized signature or alteration to which the
preclusion applies.
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1026, 1029 (2005). Summary judgment is proper if the pleadings and all
other evidence on file demonstrate that no genuine issue of material fact
exists and that the moving party is entitled to judgment as a matter of
law. Id. When deciding a summary judgment motion, all evidence must
be viewed in a light most favorable to the nonmoving party. Id. General
allegations and conclusory statements do not create genuine issues of fact.
Id. at 731, 121 P.3d at 1030-31.
Additionally, statutory interpretation is a question of law that
this court reviews de novo. Consipio Holding, BV v. Carl berg, 128 Nev.,
Adv, Op. 43, 282 P.3d 751, 756 (2012). "When a statute is clear and
unambiguous, this court gives effect to the plain and ordinary meaning of
the words and does not resort to the rules of construction." Id. When
interpreting a statute, "this court considers the statute's multiple
legislative provisions as a whole." Leven v. Frey, 123 Nev. 399, 405, 168
P.3d 712, 716 (2007). We will not interpret a statute in a way that would
"render any part of [the] statute meaningless." Id.
Summary judgment is inappropriate because a genuine issue of material
fact remains as to whether the account statements Bank of America
provided to Pereos were sufficient to trigger Pereos, Ltd.'s duty to act
To trigger a customer's duty to examine its account for
unauthorized account activity, a bank may either (1) return or make
available copies of the canceled checks to the customer, or (2) furnish an
account statement to the customer. NRS 104.4406(1). If copies of
canceled checks are not returned, the account statement must provide the
customer with sufficient information for "the customer reasonably to
identify the items paid" on the account. NRS 104.4406(1). This
requirement is met "if the item is described by item number, amount and
date of payment." Id.
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This "safe harbor" rule permitting banks to furnish account
statements to customers that contain the item number, amount, and date
of payment in lieu of providing customers with copies of canceled checks
was intended to reduce the costs associated with check collection. See
U.C.C. § 4-406 cmt. 1 (2002). The drafters reasoned that this information
is generally sufficient to notify "[a] customer who keeps a record of checks
written" of any unauthorized signatures, while also recognizing that this
information may be insufficient for a customer who does not "utilize [a]
record-keeping method." Id. The drafters explained that "accommodating
customers who do not keep adequate records is not as desirable as
accommodating customers who keep more careful records," nor does it
reduce the cost of the check collection system to all customers. Id.
Therefore, the drafters placed the burden on the bank's customers to
remain reasonably aware of the activity on their accounts. See id.
Accordingly, if the customer "should reasonably have discovered the
unauthorized payment" from the information provided, the customer must
promptly notify the bank. NRS 104.4406(3).
Here, there are genuine issues of material fact as to the
manner of delivery and the content of the "statements" that Bank of
America contends were mailed to Pereos or delivered to him during his
branch visits. Pereos, Ltd. disputes the fact that Bank of America mailed
bank statements to its office location during the time in question. While
Bank of America supplied copies of the bank statements to the district
court, it appears from the record that the bank did not actually mail those
statements to Pereos, Ltd., but rather, they were made available online at
the direction of Williams. It is not clear from the record the extent of
Williams' authority and when she converted delivery of the bank
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statements to an online format. Nonetheless, Bank of America continues
to maintain that, regardless of the method of delivery, Pereos received
some of the statements during his visits to the bank between September
2006 and January 2008, the contents of which would have put him on
notice of the unauthorized activity. And even though Pereos concedes that
the statements he received contained the item number and amount for
each item paid, he maintains that they did not contain the date of
payment. Because genuine issues of material fact remain as to the
delivery method of the bank statements and whether the statements
Pereos received during his visits to Bank of America contained the
statutory safe harbor information to discover the unauthorized
transactions, we conclude that the district court erred in granting
summary judgment under the 30-day rule in NRS 104.4406(4)(b).
The district court erred in dismissing Pereos, Ltd. 's claims for
embezzlement that occurred between January 2009 and January 2010 2
Pereos, Ltd. next argues that, even if the statements triggered
its duty to identify and promptly notify Bank of America of the
unauthorized activity, its claims for checks forged within the year
preceding giving notice to the bank are not time-barred by the one-year
deadline. Bank of America argues that all of Pereos, Ltd.'s claims are
barred pursuant to NRS 104.4406(4)(b), because payment on all of the acts
2Pereos acknowledged obtaining a statement in a Bank of America
branch in September 2006, occasional statements between late 2006 and
early 2007, and a statement in January 2008. Pereos argues that he
received no statements after January 2008, and we thus address this time
period separately. See NRS 104.4406(6) (providing that any customer who
does not report unauthorized activity to the bank within one year after the
statement giving notice of that activity is made available to it is precluded
from recovering on that activity against the bank.)
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of forgery, committed by the same wrongdoer, occurred after Pereos, Ltd.
had 30 days to examine the first account statement containing forged
transactions and before Pereos, Ltd. reported the unauthorized
transactions to Bank of America. To resolve this issue, we examine the
interplay between NRS 104.4406's subsections 4, 5, and 6, to determine
whether Pereos, Ltd.'s claims for unauthorized payments made from its
bank account during the one-year period before January 2010 are
statutorily barred.
Distinguishing between a single forgery and multiple forgeries
by the same wrongdoer, subsection 4 provides that a customer who fails to
exercise the reasonable diligence required in subsection 3 is precluded
from asserting a claim against the bank for a single forged item if the
bank "proves that it suffered a loss" from that failure, NRS 104.4406(4)(a),
or for multiple forged items "by the same wrongdoer. . . paid in good faith
by the bank[i if the payment was made before the bank received notice
from the customer of the unauthorized signature or alteration," but after
the customer had 30 days to review the account statement. NRS
104.4406(4)(b). These preclusions are subject to exception for the bank's
failure to exercise due care, however: "[i]f. . the customer proves that the
bank failed to exercise ordinary care in paying the item and that the
failure substantially contributed to loss," the loss is to be divided between
the bank and the customer. NRS 104.4406(5). And if the bank pays the
item without good faith, subsection 4's prohibitions against the customer
asserting a claim are inapplicable altogether. Id. But regardless of either
the bank's or the customer's failure to exercise ordinary care, a customer is
precluded from bringing any claim against the bank if it is not brought
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within one year of the account statement being made available. NRS
104.4406(6).
To the extent that Bank of America argues that all of Pereos'
claims are barred by MRS 104.4406(4)(b) because the same wrongdoer was
responsible for all of the embezzlements and Pereos did not report them
within 30 days of receiving the first account statement reflecting the
forgeries, we note that the one-year period of repose in NRS 104.4406(6)
does not differentiate between a single forgery and multiple forgeries by
the same wrongdoer. See MRS 104.4406(6). Because NRS 104.4406(6)
does not expressly differentiate between a single forgery and multiple
forgeries by the same wrongdoer, we conclude that a new limitations
period under its one-year statute of repose begins to run with each
successive forgery. See Sun 'it Sand, Inc. v. United Cal. Bank, 582 P.2d
920, 935 (Cal. 1978) ("This failure to explicitly differentiate between one-
time and repetitive forgeries and alterations in [the one-year statute of
repose] leads us, in light of the express distinction in [the 'same
wrongdoer' subsection], to conclude that a new one-year period begins to
run with each successive check."); Associated Home & RV Sales, Inc. v.
Bank of Belen, 294 P.3d 1276, 1283 (N.M. Ct. App. 2012) (holding that the
one-year statute of repose controls because there is "no natural connection
between [the] 'same wrongdoer' rule and the more general wording in [the
one-year statute of repose subsection]"). Thus, Pereos is permitted to
bring claims consistent with the provisions in NRS 104.4406.
Moreover, if the customer sufficiently proves that the bank
failed to exercise ordinary care in making the unauthorized payment, NRS
104.4406(4)(b)'s limitation period is negated. Here, Pereos, Ltd. has
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alleged, and Bank of America has not denied, that it paid on checks drawn
from the account signed by Williams after Williams' authority over the
account was removed. Thus, Pereos may be able to prove that Bank of
America failed to exercise ordinary care in continuing to honor Williams'
signature on checks despite the account owner's instructions otherwise.
Accordingly, genuine issues of material fact exist regarding the parties'
fault with respect to these transactions. Even if Pereos, Ltd.'s claims for
unauthorized transactions before January 2009 are barred by NRS
104.4406(4)(b), Pereos, Ltd. is entitled to go forward with its claims
against Bank of America for those unauthorized payments made during
the year before Pereos notified the bank in January 2010. See NRS
104.4406(5); Associated Home, 294 P.3d at 1283 (holding that, even though
the 30-day statutory limitation period had elapsed, because the one-year
statute of repose had yet not expired, the customer could bring a claim
against the bank if the customer could prove that the bank did not
exercise ordinary care).
Accordingly, we reverse the district court's summary judgment
and remand this matter to the district court for further proceedings
consistent with this opinion.
, C.J.
Hardesty
J.
Parraguirre
J.
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