Wells Fargo Bank, N.A. v. FSI, Financial Solutions, Inc.
196 Cal. App. 4th 1559
| Cal. Ct. App. | 2011Background
- FSI deposited a $90,000 check drawn on an account later closed; the check dishonored and funds were charged back by Wells Fargo.
- FSI used most of the $90,000 to pay preexisting debts; Wells Fargo charged back the remaining $90,000 and sought recovery.
- FSI and Wells Fargo filed cross-claims; the trial court awarded FSI $28,926.37 plus $748 in overdraft fees and ordered release of the chargeback, citing promissory estoppel based on bank statements.
- Witnesses testified about processing delays, holds, and misstatements of the check’s status; Wells Fargo granted a two-day hold and later representations indicated the funds were available.
- FSI appealed asserting misrepresentations and negligence entitled damages exceeding overdraft fees; Wells Fargo contended it could charge back and recover the amount regardless of promises or negligence.
- The appellate court reversed, holding Wells Fargo had chargeback rights under the California UCC and that there was no substantial evidence of cognizable damages to FSI beyond the overdraft fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Wells Fargo’s delay and misrepresentations create damages that offset its chargeback rights under the UCC? | FSI argues misrepresentations void or offset Wells Fargo’s chargeback. | Wells Fargo asserts valid chargeback rights despite delays or misstatements. | Wells Fargo’s chargeback rights stood; damages to FSI not proven beyond overdraft fees. |
| Are there cognizable damages from Wells Fargo’s negligence/misrepresentation beyond overdraft fees? | FSI seeks damages from misstatements and processing delays. | Damages limited to overdraft fees; no other proven harm. | No substantial evidence of cognizable damages aside from $748; judgment reversed. |
| .Can promissory/negligent misrepresentation or promissory estoppel basis support damages? | FSI relies on promissory/negligent estoppel to recover value lost. | Equitable estoppel or promissory estoppel not proven to sustain damages. | Damages not supported under these theories; promissory estoppel not applicable. |
| Was the trial court allowed to award attorney fees and lost others on remand? | Attorney fees justified by prevailing claims. | Fees and costs require separate determination on remand. | Remand to determine allowable attorney fees; order reversed to Wells Fargo. |
Key Cases Cited
- Holcomb v. Wells Fargo Bank, N.A., 155 Cal.App.4th 490 (Cal. Ct. App. 2007) (deals with proper handling of checks and misrepresentations by bank personnel; supports negligent misrepresentation claim.)
- Symonds v. Mercury Savings & Loan Assn., 225 Cal.App.3d 1458 (Cal. Ct. App. 1990) (bank liable for delay in check processing; chargeback rights and damages framework.)
- Chino Commercial Bank, N.A. v. Peters, 190 Cal.App.4th 1163 (Cal. Ct. App. 2010) (discusses bank liability for delay and ordinary care in processing items.)
- Aceves v. U.S. Bank N.A., 192 Cal.App.4th 218 (Cal. Ct. App. 2011) (promissory/negotiation-based estoppel analysis in banking context.)
- First Georgia Bank v. Webster, 168 Ga.App. 307 (Ga. Ct. App. 1983) (examples of reliance on bank representations and resulting damages.)
- First National Bank v. Ulibarri, 38 Colo.App. 429 (Colo. Ct. App. 1976) (cases illustrating reliance and damages in banking representations.)