Valente v. TD Bank, N.A.
AC 16-P-1119
| Mass. App. Ct. | Aug 30, 2017Background
- Mauro Valente held multiple TD Bank accounts (individual, trust, business) and a joint account with his wife Donna; monthly statements were mailed to Mauro's home.
- Mauro suffered cognitive decline and gave Donna a durable power of attorney in December 2007; Donna was a signatory only on the joint account.
- Between 2007 and 2011, large transfers moved funds from Mauro’s individual accounts into the joint account and then into Donna’s personal account; many disputed checks were payable to "Cash" and deposited to Donna’s account.
- Bank fraud-detection software generated multiple alerts; one investigation in Oct. 2010 prompted a report to elder services but no further bank action; plaintiff’s consultant opined bank failed to follow policies.
- Plaintiff (executor/trustee) sued Donna, her daughter, and TD Bank in Oct. 2011; the sole claim against TD alleged negligence for honoring checks with unauthorized signatures or alterations.
- The bank moved for summary judgment invoking G. L. c. 106, § 4-406(f) (one-year notice preclusion); the trial judge granted summary judgment for the bank and the Appeals Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does G. L. c. 106, § 4-406(f) preclude a customer’s negligence suit when notice of unauthorized signatures/alterations was not given within one year of statement delivery? | Valente argued bank had actual knowledge of misappropriation so § 4-406(f) should not bar his negligence claim. | TD Bank argued § 4-406(f) is an absolute statutory prerequisite to suit by a customer and bars claims not timely reported, regardless of bank knowledge. | Court held § 4-406(f) bars the suit: one-year notice requirement is a statutory prerequisite and precludes the negligence claim. |
| Can a plaintiff rely on the bank’s "actual knowledge" (e.g., internal alerts/reports) to avoid § 4-406(f)? | Valente pointed to fraud alerts, an elder‑services report, and other evidence to create a triable issue of actual knowledge. | Bank maintained that even if it had some awareness, the UCC notice rule governs loss allocation between customer and bank; Go-Best (third‑party) is inapplicable. | Court rejected the exception: for customer claims governed by the UCC, § 4-406(f) applies and one-year notice cannot be avoided by alleging bank actual knowledge. |
| Were the checks attached to the complaint sufficient to give "clear notice" under § 4-406(f)? | Valente attached two recent checks from the joint account and argued notice was timely. | Bank argued attached checks were from the joint account (Donna an authorized signer) and thus not unauthorized; checks from individual accounts were more than one year old. | Court held the attached checks were not unauthorized (joint account signatures valid); plaintiff failed to show timely, specific notice for the other alleged forgeries. |
Key Cases Cited
- Jensen v. Essexbank, 396 Mass. 65 (1985) (one-year UCC notice is a statutory prerequisite to suit by a customer for forged signatures)
- Arkwright Mut. Ins. Co. v. State St. Bank & Trust Co., 428 Mass. 600 (1998) (§ 4-406 preclusion applies to common-law negligence claims by customers; absolute one-year limit promotes finality)
- Go-Best Assets Ltd. v. Citizens Bank of Mass., 463 Mass. 50 (2012) (bank’s duty to investigate third parties arises only where bank has actual knowledge of misappropriation; dealt with non-customer plaintiff)
- Stone & Webster Engr. Corp. v. First Natl. Bank & Trust Co. of Greenfield, 345 Mass. 1 (1962) (early Massachusetts treatment of UCC notice rules)