Apcoa, Inc. v. Fidelity Nat. Bank

• Court: U.S. District Court — Northern District of Georgia
• Writing for the Court: ROBERT H. HALL
• Citation: Apcoa, Inc. v. Fidelity Nat. Bank, 703 F.Supp. 1553 (N.D. Ga. 1988)
• Decision Date: 19 December 1988
• Docket Number: No. 1:86-CV-1990-RHH.,1:86-CV-1990-RHH.
• Parties: APCOA, INC. and Federal Insurance Company, Plaintiff, v. FIDELITY NATIONAL BANK, Defendant and Third-Party Plaintiff, v. Dolly ISON, a/k/a Dolly Medlin, a/k/a Dolly Medley, Third-Party Defendant.

703 F. Supp. 1553

APCOA, INC. and Federal Insurance Company, Plaintiff, v. FIDELITY NATIONAL BANK, Defendant and Third-Party Plaintiff, v. Dolly ISON, a/k/a Dolly Medlin, a/k/a Dolly Medley, Third-Party Defendant.

No. 1:86-CV-1990-RHH.

United States District Court, N.D. Georgia, Atlanta Division.

December 19, 1988.

COPYRIGHT MATERIAL OMITTED

Dorothy Yates Kirkley, James Allen Orr, Paul Hastings Janofsky & Walker, Charles David Hailey, John Phillip MacNaughton, Swift Currie McGhee & Hiers, Atlanta, Ga., for plaintiff.

James Joseph Brissette, Hurt Richardson Garner Todd & Cadenhead, Atlanta, Ga., for defendant and third-party plaintiff.

ORDER

ROBERT H. HALL, District Judge.

This case comes before the court on plaintiff's motion for summary judgment. Plaintiff's claim in this case results from an embezzlement scheme whereby an employee or employees of plaintiff's company managed to embezzle several hundred thousand dollars. The embezzler opened accounts at defendant bank in plaintiff's name, deposited checks payable to plaintiff corporation (which he or she had intercepted from plaintiff's office) into those accounts, then drew on those accounts for her own personal use. Plaintiff claims that the Bank is liable for the amount embezzled as a matter of law. The court finds that their are no genuine disputes as to material facts and the plaintiff is entitled to summary judgment.

FACTS

The Plaintiff ("APCOA"), is a Delaware corporation with its principal place of business in Cleveland, Ohio. APCOA is in the business of managing parking facilities throughout the United States. At all times pertinent to this case APCOA maintained a field office in Atlanta, Georgia through which it managed those parking facilities it held in Atlanta. In order to facilitate the transfer of funds from APCOA's Atlanta field office to APCOA's home office in Cleveland, Ohio, APCOA maintained "depository accounts" with local Atlanta Banks. All parking lot revenues collected by APCOA's Atlanta office were to be deposited into APCOA's authorized depository accounts. Officers of the corporation in Ohio would then withdraw the funds to Cleveland where the main corporate accounts were held. The Atlanta office did not maintain any corporate accounts for the payment of expenses. Payroll, rent, equipment, etc ... were all drawn on APCOA's central accounts in Cleveland.

There are basically four individuals at APCOA who have played significant roles in the subject matter of this litigation. The district manager in APCOA's Atlanta office during the relevant period was Victor Toledo. He was in charge of the Atlanta operations and the office in general. He reported to the then Vice President and regional manager Walter Stuelpe, who also operated out of the Atlanta office during the relevant period but was not involved in the day-to-day operations of the Atlanta parking facilities. Stuelpe was actually a corporate person from Cleveland stationed in the Atlanta office. Among the employees Toledo supervised in Atlanta were Dolly Ison and William Jones. Ison, the central figure in the embezzlement scheme, was hired initially as a receptionist, she then was promoted to Toledo's secretary and eventually assumed the role of bookkeeper and office manager for APCOA's Atlanta operations. Jones' title was City Manager and he was responsible for supervising the Atlanta parking lot operations.

In early 1982, APCOA was conducting its banking business with Citizens and Southern National Bank (C & S) in a branch located in Peachtree Center. Stuelpe became dissatisfied with APCOA's relations with C & S, and sent Toledo and Jones to explore the possibility of shifting APCOA's banking from C & S to Fidelity National Bank. In the early summer of 1982, after reviewing what services Fidelity could offer, the decision was made to change APCOA's accounts over to Fidelity.

On or about June 23, 1982 Jones opened the first account at Fidelity under the name "APCOA, Inc. Petty Cash Account." As authority for this account Fidelity gave Jones¹ a form for unincorporated associations. He filled out this form calling the association "APCOA, Inc. Petty Cash Fund" and referring to himself as the proprietor and Victor Toledo (his boss) as a second authorized signature for the account. This account was handled by Jones and was used simply to hold the office's petty cash fund so that Jones would not have to keep large amounts of cash in his office. Toledo, Jones and Ison testified at their depositions that the home office in Cleveland must have known about this account. However, there is no evidence in the record whether or how the main office was informed, and Stuelpe emphatically insisted that the home office was never aware of this account at Fidelity. Though Jones testified that he considered the funds to belong to APCOA, the money in that fund was exclusively under Mr. Jones' control. Jones used the fund to pay for incidental office expenses, and when he incurred such expenses he would inform the main office and Cleveland would reimburse him so that the fund stayed at a constant level.

The next two accounts opened at Fidelity were the accounts to which APCOA deposited its parking revenues, the "depository accounts". These accounts were opened on or about August 2, 1982, pursuant to corporate authorizations from Cleveland. The depository accounts were governed by certain documentation forwarded to Fidelity from APCOA's Cleveland office at or about the time the accounts were opened. This documentation included two Designation and Authorization forms signed by the treasurer of APCOA, two Certificates and two signature cards.

The Designation and Authorization forms provided that Fidelity was authorized to pay checks on drafts "made or drawn against any funds at any time standing to the credit of APCOA in any account carried under the name of APCOA" when the checks and drafts were signed by two of the four designated individuals. The signature cards prepared in connection with these accounts contained the signatures of three officers of APCOA and Philip F. Milavek—without title— all based in Cleveland. No employee of APCOA in Atlanta was listed as an authorized signatory on these accounts. All statements and other documentation on these APCOA depository accounts were to be mailed directly to APCOA's home office in Cleveland.

Both the Designation and Authorization form, and the Certificate provided that they were to "continue in full force and effect until the express written notice of the revocation or modification of the same shall have been received by Fidelity." The Designation and Authorization forms, the Certificates and the signature cards were all filed and maintained at Fidelity's branch office in Peachtree Center.

The fourth account was opened at Fidelity on or about August 10, 1982 and was called "APCOA, Inc. Refund Account". There were apparently no authorizations from APCOA for this account. Ison opened the account at Toledo's direction to handle refunds for key cards or overpayments. The account was never to contain more than $50, and apparently was never used for illegitimate purposes. Again Toledo and Ison claim the home office must have known about this account but Stuelpe denies that he or the home office had any knowledge of such an account. Stuelpe asserts that accounts such as this were contrary to company policy and would not have been allowed if discovered. The signatories on the Refund account were Ison, Toledo and Toledo's wife Joanne who was his secretary at the time the account was opened.

On September 18, 1982 Dolly Ison opened an account at Fidelity entitled "APCOA— Special Account". This was the first account used for the embezzlement. The account was opened by Fidelity employee Doris Moore. There were no corporate resolutions, authorizations, or certificates executed by any officers or authorized officials of APCOA in connection with the opening of this Special Account. The signature card for this account listed Victor Toledo and Dolly Ison as authorized signatories. The mailing address was APCOA's local mailing address in Atlanta. There is no evidence that Cleveland ever became aware of this account until the defalcation was discovered. In March of 1983 the mailing address on the Special Account was changed to a post office box that was not maintained in the name of APCOA.²

On or about May 16, 1983, Dolly Ison closed the Special Account and opened a second unauthorized account at Fidelity. The second account was entitled "Dolly Ison for APCOA." Apparently, the "for APCOA" was added by Fidelity employee Doris Moore. Again there were no corporate resolutions, certificates of authority or other authorization forms or documents executed by APCOA or anyone in connection with the opening of the Ison for APCOA account. All bank statements and other documents relating to the account were mailed to a post office box which was not maintained by APCOA.

Dolly Ison walked into Fidelity's Peachtree Center branch and without forms, documents or any evidence of authority opened two accounts in APCOA's name. Mr. Sharon Denney, the Branch Manager of Fidelity's Peachtree Center branch testified that authorizations were not obtained because the bank already had authorizations on file for APCOA. There is no dispute that those documents do not authorize Dolly Ison or Victor Toledo to withdraw funds from APCOA's account.

Doris Moore who opened both the Special Account and the Ison for APCOA account was aware of the existing depository accounts and was aware that certain documentation had been executed in connection with those accounts. Doris Moore also knew that the Ison for APCOA account had nothing to do with the parking lots managed by APCOA and further understood that none of the checks which represented APCOA's parking lot revenues were to be deposited into this account.

From September of 1982 through January of 1985, Dolly Ison converted $259,611.85 in...