Pinigis v. Regions Bank

• Decision Date: 06 July 2007
• Docket Number: No. 1060474.,1060474.
• Citation: 977 So.2d 446
• Parties: Elisa Simmons PINIGIS, as executrix of the estate of Doris Porter Coyle, deceased v. REGIONS BANK.
• Court: Alabama Supreme Court

977 So.2d 446

Elisa Simmons PINIGIS, as executrix of the estate of Doris Porter Coyle, deceased v. REGIONS BANK.

No. 1060474.

Supreme Court of Alabama.

July 6, 2007.

John W. Haley, Bruce J. McKee, and S. Hughston Nichols of Hare, Wynn, Newell & Newton, L.L.P., Birmingham, for appellant.

Laurence J. McDuff of Adams & Reese, LLP, Birmingham, for appellee.

WOODALL, Justice.

Elisa Simmons Pinigis, as executrix of the estate of Doris Porter Coyle, deceased, appeals from a summary judgment for Regions Bank ("the Bank") in her action against the Bank for its payment of allegedly unauthorized checks drawn on Coyle's account. We affirm.

This is Pinigis's second appeal from a summary judgment in favor of the Bank. See Pinigis v. Regions Bank, 942 So.2d 841 (Ala.2006) ("Pinigis I"). The facts underlying this dispute are fully developed in that case and will not be repeated here. In Pinigis I, we reversed a partial summary judgment for the Bank, which had been granted on the ground that "the Bank `was not given any specific notification of the unauthorized signatures on checks until the instant lawsuit was filed ... almost nine months after the last unauthorized check was written.'" 942 So.2d at 844. Applying Ala.Code 1975, § 7-4-406(f), the trial court had held that "Pinigis could not `hold the [B]ank liable for checks paid by the [B]ank more than 180 days prior to discovery and reporting.'" 942 So.2d at 844. Section 7-4-406 provides:

"(a) 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.

"(b) 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 seven 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.

"(c) If a bank sends or makes available a statement of account or items pursuant to subsection (a), 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.

"(d) If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection (c), the customer is precluded from asserting against the bank:

"(1) The customer's unauthorized signature or any alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and

"(2) The customer's 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.

"(e) If subsection (d) 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 (c) 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 (d) does not apply.

"(f) Without regard to care or lack of care of either the customer or the bank, a customer who does not within 180 days after the statement and the items or a legible copy or image of the items are sent to the customer, or within one year after the statement or items are otherwise made available to the customer (subsection (a)) discover and report the customer's unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration. Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year after the statement or items are sent or made available to the customer, discover and report any alteration on the back of the item or any unauthorized endorsement is precluded from asserting against the bank any such alteration or unauthorized endorsement. If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under Section 7-4-208 with respect to the unauthorized signature or alteration to which the preclusion applies."

(Emphasis added.)

In her first appeal, Pinigis relied in part on the fact that the Bank, in its answer, had asserted that "`[t]he plaintiffs claims are barred by the applicable statutes of limitations.'" 942 So.2d at 844. She objected to the Bank's reliance on § 7-4-406(f) as a basis for a summary judgment, arguing that the notice provision in § 7-4-406(f) "is not a statute of limitations, but is, in fact, a statute of repose." 942 So.2d at 846. She contended that "`[a] statute of repose, such as § 7-4-406(f), is an [affirmative defense],' which the Bank was required to include in its answer, or it was waived." 942 So.2d at 844. Thus, because the Bank had described its defense as a statute of limitations, rather than as a statute of repose, Pinigis argued, the Bank's answer was insufficient to preserve a defense based on § 7-4-406(f). We agreed with Pinigis that in pleading a statute of limitations, the Bank had not pleaded a statute of repose, and we reversed the summary judgment on the sole ground that the Bank had waived reliance on Ala. Code 1975, § 7-4-406(f), by failing to plead it in its answer.

Following the release of our opinion in Pinigis I, the Bank was allowed to amend its answer and specifically to plead § 7-4-406(f) as an affirmative defense. It then renewed its summary-judgment motion, asserting, once again, that "the customer's failure to notify the Bank in a timely fashion precludes recovery under Ala.Code § 7-4-406(f)." Again, the trial court granted the Bank's motion, and Pinigis appeals.

In this appeal, Pinigis urges us to adopt a bad-faith exception to the notice requirement of § 7-4-406(f). She contends that a bank customer's failure to satisfy the 180-day notice requirement in § 7-4-406(f) bars an action against the bank to recover funds paid over an "unauthorized signature or alteration" only if the bank paid the checks in good faith. In the words of Pinigis: "Pinigis claims that Regions Bank improperly paid about $250,000 in forged checks and that the loss should fall on the Bank. The Bank asserts the absolute rule of repose defense contained in Ala.Code § 7-4-406(f)." Pinigis's reply brief, at 1 (emphasis added).¹

"Ordinarily, this Court reviews a summary judgment de novo." Verneuille v. Buchanan Lumber of Mobile, Inc., 914 So.2d 822, 824 (Ala.2005). In this case, our review is de novo for the additional reason that the dispositive issue is a pure question of law regarding statutory construction. Holsbrooks v. Stacy, 830 So.2d 708, 710 (Ala.2002). The question is one of first impression in Alabama, and, for that matter, in nearly every other state, which, like Alabama, has adopted some version of the Uniform Commercial Code, § 4-406, as revised in 1990. See generally A. Brooke Overby, Check Fraud in the Courts After the Revisions to U.C.C. Articles 3 and 4, 57 Ala. L.Rev. 351, 351 (2005) ("Forty-eight state legislatures have enacted the 1990 versions of Articles 3 and 4" (footnote omitted)). We begin where we left off in Pinigis I.

In Pinigis I, we explained that § 7-4-406(f) is variously regarded as a "statutory `non-claim provision,'" 942 So.2d at 847 (quoting Barkley Clark, The Law of Bank Deposits, Collections and Credit Cards ¶ 6.2[3][d], at S6-22 n. 62.2 (Supp.1987)), or a "`statute[] of repose.'" Id. (quoting Brian Patrick Perryman, Note, Checking Checks: American Airlines Employees Federal Credit Union v. Martin and the Amenability of Common Law Waiver to Deposit Agreement Cutdown Provisions, 10 Geo. Mason L.Rev. 551, 594 n. 84 (2002)). "While equitable principles may extend the time for commencing an action under statutes of limitation, nonclaim statutes impose a condition precedent to the enforcement of a right of action and are not subject to equitable exceptions." Estate of Decker v. Farm Credit Servs. of Mid-America, ACA 684 N.E.2d 1137, 1139 (Ind.1997). Similarly, "statutes of repose, unlike statutes of limitations, are not subject to equitable tolling, even under `compelling circumstances,'" Perryman, supra, at 594 n. 86 (quoting Siecinski v. First State Bank of E. Detroit, 209 Mich.App. 459, 464, 531 N.W.2d 768, 770 (1995)).

These authorities accurately describe the concept of a rule of repose in Alabama. The general 20-year rule of repose, for example, "is based solely upon the passage of time," and is "`not affected by the circumstances of the situation, by personal disabilities, or by whether prejudice has resulted or evidence obscured,'" nor is it "based upon concepts of accrual, notice, or discovery." Ex parte Liberty Nat'l Life Ins. Co., 825 So.2d 758, 764 (Ala.2002) (quoting Boshell...