American Dream Team, Inc. v. Citizens State Bank
481 S.W.3d 725
| Tex. App. | 2015Background
- American Dream Team, Inc. (ADT), a Texas real-estate broker, received a purported foreign check for $35,000 (written amount $30,000) drawn on a Canadian bank; ADT received a provisional credit and later wired $30,000 abroad.
- Bank posted provisional credit (per ADT’s election) pending final collection; ADT employees were told by bank staff that funds were available and could be disbursed.
- The check later proved counterfeit; the Bank charged back $30,000 against ADT’s escrow account and attempted to recover the wired funds (unsuccessfully).
- ADT sued the Bank alleging negligent misrepresentation, conversion, DTPA violations, common-law fraud, breach of contract/equitable estoppel, money had and received, and promissory estoppel; Bank counterclaimed for breach of UCC transfer warranties and sought attorney’s fees under the deposit agreement.
- The trial court granted the Bank traditional and no-evidence summary judgment, rendered a take-nothing judgment, and awarded the Bank attorney’s fees; ADT appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Trial court struck deposition testimony as "voluminous record" | Struck testimony was not voluminous and electronic search makes citation easy | ADT failed to specifically cite deposition pages in response; court not required to sift record | Court upheld striking; no abuse of discretion |
| Whether common-law and contract claims are preempted by UCC (chargeback) | Fraud and related common-law claims based on teller statements are not displacement by UCC | UCC Article 4 (§4.214) governs chargebacks and displaces conflicting common-law contract claims | Court held breach/contract/common-law claims governed/supplanted by UCC; summary judgment proper on those claims |
| Whether Chapter 4 preempts fraud claim based on teller communications | ADT: teller statements about funds cleared support fraud — outside UCC’s detailed regime for processing | Bank: UCC governs bank–customer relations and displaces common-law claims relating to deposits/collections | Court concluded Chapter 4 does not fully preempt common-law fraud for teller communications; reversed trial court on preemption defense (issue sustained) |
| No-evidence summary judgment on fraud elements (misrepresentation, scienter, justifiable reliance) | ADT: testimony raises fact issues that tellers said funds were ‘‘good’’ and ADT relied | Bank: teller statements reflected provisional credit on computer and were truthful; numerous red flags made reliance unjustified | Court held no evidence of actionable false statement or justifiable reliance; affirmed summary judgment on fraud (no-evidence) |
| Statute of limitations on negligent misrepresentation, conversion, DTPA | ADT: claims timely (argued) | Bank: causes accrued in March 2010; suit filed Sept. 2012 — beyond 2-year limitations | Court held those claims time-barred; summary judgment proper |
| Bank’s counterclaim for breach of UCC transfer warranties | ADT: warranties apply only to deposited items or negotiable instruments | Bank: warranties under §§3.416,4.207 apply to transferred instruments, including counterfeit items | Court held ADT breached UCC transfer warranties; summary judgment for Bank on counterclaim |
| Attorney’s fees under deposit agreement | ADT: fees not warranted because Bank obtained no damages and only defended | Bank: contract entitles it to fees when found not liable on claims by depositor | Court held Bank was prevailing party under agreement and awarded fees; affirmed |
Key Cases Cited
- Barraza v. Eureka Co., 25 S.W.3d 225 (Tex. App.—El Paso 2000) (standard for admission/exclusion of summary judgment evidence)
- Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (Tex. 1985) (abuse of discretion review explained)
- Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494 (Tex. 2010) (defendant may conclusively negate elements to obtain summary judgment)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (court must review entire record and consider context when evaluating legal-sufficiency/no-evidence challenges)
- Merriman v. XTO Energy, Inc., 407 S.W.3d 244 (Tex. 2013) (no-evidence summary judgment standards)
- Grant Thornton LLP v. Prospect High Income Fund, 314 S.W.3d 913 (Tex. 2010) (reliance barred where red flags make reliance unjustified)
- Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194 (Tex. 2011) (elements of common-law fraud)
- Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754 (Tex. 2007) (definition of genuine issue of material fact)
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (summary judgment burden shifting)
- Guthrie v. Suiter, 934 S.W.2d 820 (Tex. App.—Houston [1st Dist.] 1996) (trial court not required to sift record for nonmovant)