Supreme Court of California

In a dispute over whether a bank that honored fraudulent payment orders or the company that employed an embezzling chief financial officer should bear the loss, a judgment in favor of the bank is reversed and remanded where: 1) a cause of action under the California Uniform Commercial Code displaces other common law causes of action such that the company must recover from the bank under the California Code or not at all; 2) a test is set forth for evaluating the requisite objection a customer must convey to the bank, under section 11505 of the Code, in order to recover from the bank; and 3) a remand was necessary for application of the test set forth, to the facts of the case.

Appellate Information

• Decided 06/04/2007
• Published 06/04/2007

Judges

• CHIN, J.

Court

• Supreme Court of California

Counsel

• For Appellant:
  
• Burton V. McCullough, for Plaintiff and Appellant.


• For Appellees:
  
• Buchalter, Nemer, Fields & Younger, Buchalter Nemer, Michael L. Wachtell, Jeffrey S. Wruble, Robert S. Addison, Jr., Los Angeles;  Greines, Martin, Stein & Richland and Marc J. Poster, Los Angeles, for Defendant and Respondent., Leland Chan, San Francisco, for California Bankers Association as Amicus Curiae on behalf of Defendant and Respondent., Sullivan & Cromwell, Bruce E. Clark, Christopher R. Edgar, Palo Alto, H. Rodin Cohen and Michael M. Wiseman for The Clearing House Association L.L.C., as Amicus Curiae on behalf of Defendant and Respondent.