Beshara v. Southern Nat. Bank

• Decision Date: 16 July 1996
• Docket Number: No. 83950,83950
• Citation: 1996 OK 90,928 P.2d 280
• Parties: 30 UCC Rep.Serv.2d 595, 1996 OK 90 Robert J. BESHARA, Gordon Coleman and Nedra Cheney, Appellants, v. SOUTHERN NATIONAL BANK, John L. O'Brien, William Eric Culver, Blevins & Sordahl, Inc., Paul Blevins, Gable & Gotwals, Inc., and Ronald N. Ricketts, Appellees.
• Court: Oklahoma Supreme Court

Page 280

928 P.2d 280

30 UCC Rep.Serv.2d 595, 1996 OK 90

Robert J. BESHARA, Gordon Coleman and Nedra Cheney, Appellants, v. SOUTHERN NATIONAL BANK, John L. O'Brien, William Eric Culver, Blevins & Sordahl, Inc., Paul Blevins Gable & Gotwals, Inc., and Ronald N Ricketts, Appellees.

No. 83950.

Supreme Court of Oklahoma.

July 16, 1996.

Rehearing Denied Dec. 20, 1996.

John D. Boydston, Eufaula, C. Jack Maner, Mallie M. Norton, Tulsa, for Appellants.

Ronald N. Ricketts, Kari S. McKee, G. Lawrence Fox, Tulsa, for Appellees.

KAUGER, Vice Chief Justice:

The questions presented for certiorari are: 1) whether the trial court erred when it granted the Bank's demurrer to the appellant's evidence of wrongful dishonor; 2) whether the trial court erred when it dismissed the appellant's other alleged alternative theories of recovery; and 3) whether the trial court erred when it dismissed the appellant's counterclaim without allowing the appellant an opportunity to respond to the appellees' motion to dismiss. We find that: 1) under the facts presented, the trial court erred by failing to submit the wrongful dishonor claim to the jury; 2) the appellant has stated a viable claim for the alternative theories of breach of good faith and conversion, but the breach of fiduciary duty claim was properly dismissed; and 3) under the facts presented, the appellant should have been given an opportunity to respond to the appellees' motion to dismiss his counterclaim.

FACTS

In the early 1980's, the appellant, Robert J. Beshara (appellant/Beshara) met Betty J. Mitchell (Mitchell), an assistant cashier with the appellee, Southern National Bank (Southern National/the Bank) in Tulsa, Oklahoma. Shortly thereafter, Beshara and Mitchell began a social relationship. In August of 1986, Beshara opened a checking account and began banking with Southern National. As a matter of convenience, Beshara had Mitchell conduct virtually all of his banking business by having her make deposits to and withdrawals from his checking account at the Bank.

However, a few days after he opened his checking account at Southern National, Mitchell, without Beshara's authorization or knowledge, changed the address on his account to her home address in Sand Springs and added her name as an authorized signer on the account. Subsequently, she began embezzling money from the account. When Beshara's monthly statements were mailed to Mitchell's residence, she altered them so that they would conform with his actual transactions in the account and she sent him the false statements.

Mitchell periodically embezzled money from Beshara's checking account until late December of 1988, when another employee of Southern National, while conducting a routine internal audit, discovered a large transfer of money from Beshara's account into another account. On January 9, 1989, with Beshara's checking account showing a balance of $32,425.37, Southern National placed a hold on the account to conduct an internal audit to determine the correct account balance. The Bank insists that Beshara came into the bank near the end January looking for Mitchell, and that it informed him of her tampering with his account and requested copies of all documents which he possessed pertaining to the account. ¹ Sometime later, Beshara ended his relationship with Mitchell.

On March 24, 1989, Beshara's attorney wrote the Bank, demanding that Beshara's checking account be released from the hold and that the proper account balance be restored. The Bank insisted that it had not completed its audit. In April of 1989, Beshara informed the Bank that he needed some of his money to pay his income taxes which were due. The Bank offered to loan Beshara the money to pay his taxes, but Beshara refused the offer. ²

Five months after Southern National first placed its hold on Beshara's checking account, Beshara wrote two checks against the account. ³ According to Beshara, his attorney advised him to write the checks to determine if the Bank continued to hold his checking account and, if so, to provide him with written evidence that the Bank was doing so. Southern National refused to honor the checks, marked them "refer to maker," and returned them to their respective payees.

On August 10, 1989, Southern National mailed a proof of loss claim to its insurance company requesting reimbursement under a fidelity bond for the losses it suffered as a result of Mitchell's embezzlement. The claim included a specific and detailed report which explained how Mitchell's embezzlement occurred and how much money should have been in Beshara's account. Hartford issued Southern National three checks for reimbursement of its losses as a result of Mitchell's embezzlement; one for $50,000.00 on February 16, 1990, a second on June 29, 1990, for $145,897.64 and another check for $5,000.00 on October 15, 1990, nearly two years before it finally restored the funds in Beshara's account. ⁴

Beshara sued the Bank on August 17, 1989. ⁵ Seeking actual and punitive damages, Beshara asserted that the Bank acted in bad faith, wrongfully refused to honor the checks he wrote on his account, and converted his money.

Upon Southern National's motions, the trial court found in separate rulings that: 1) "a 'conversion' action will not lie in this case as the relationship between a depositor and a bank is that of debtor and creditor;" 2) Beshara could not rely on his other theories of recovery; and 3) "issues of [f]act still exist on recovery based on wrongful dishonor."

On April 2, 1992, Southern National filed a counterclaim against Beshara and a third party petition against the payees of the checks he wrote, alleging a civil claim under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.A. §§ 1961 et seq., and alleging claims for fraud and conspiracy. The Bank asserted that Beshara and the payees embarked upon a scheme to induce the Bank to act to its detriment by dishonoring the checks. Beshara and the payees responded with a counterclaim and cross-petition against the Bank, alleging abuse of process and intentional infliction of emotional distress. Finally, in September of 1992,--over three and one half years after placing its original hold on Beshara's checking account--the Bank, still insisting that it had not completed its auditing of the account, sent Beshara a check for his account balance with interest. The trial court ordered the wrongful discharge claims and the counterclaims tried separately. On May 4, 1994, the trial court granted Southern National's motion in limine, which excluded from the trial any evidence, argument or other reference to the Hartford fidelity bond, or any other theory of liability other than wrongful dishonor.

From June 14, 1994, to June 17, 1994, Beshara's wrongful dishonor claim against Southern National was tried to a jury. At the close of Beshara's evidence, the Bank demurred to the evidence and moved to dismiss the wrongful dishonor claim. The trial court, stating from the bench that Beshara suffered no damages from the Bank's refusals to honor the checks, granted the Bank's motion to dismiss the wrongful dishonor claim and entered judgment in favor of Southern National and against Beshara. The trial court announced that it would entertain oral motions concerning summary judgment concerning the counterclaims.

Southern National dismissed its counterclaim and third party petition against the appellants with prejudice, and it moved to dismiss the appellants' counterclaim and cross-petition for abuse of process on the grounds that the pleadings failed to state a claim upon which relief could be granted. The trial court treated the motion to dismiss as a motion for summary judgment and granted summary judgment in favor of the Bank and against the appellants. Beshara, Coleman and Cheney appealed and on September 5, 1995, the Court of Appeals Division 3, in an unpublished opinion, affirmed the trial court. We granted certiorari on February 27, 1996.

I.

THE APPELLANT'S ATTEMPT TO RECOVER DAMAGES AGAINST THE BANK CENTER AROUND TWO IMPORTANT FACT SCENARIOS: 1) THE FACTS SURROUNDING THE ALLEGED WRONGFUL DISHONOR; AND 2) THE FACTS SURROUNDING THE BANK'S CONDUCT APART FROM ITS REFUSAL TO PAY THE CHECKS.

From the outset we note that Beshara does not appear to dispute that the Bank was at least initially justified, as a result of Mitchell's embezzlement, in placing a temporary hold on, or freezing the funds in his checking account, to investigate Mitchell's actions in his and other accounts and to determine the proper balance of his account. Rather, the gravamen of his allegation is: 1) that the Bank placed a hold on his account in January of 1989, and after he made repeated demands to have his account restored, it dishonored the checks he wrote in early May of 1989; and 2) even if the Bank was justified in refusing to honor the checks, at some point in time, it determined from its investigation that his account should have had a balance of approximately $104,00.00, yet the Bank would not restore his account. ⁶

a.

The trial court erred by failing to submit the wrongful dishonor claim to the jury.

Beshara argues that the Bank's failure to pay the checks he wrote in May of 1989, was wrongful dishonor and that the trial court erred when it granted the Bank's demurrer to his evidence and dismissed his wrongful dishonor claim. The Bank counters that the trial court did not err because: 1) the evidence established that the Bank was justified in placing a hold on Beshara's checking account; and 2) Beshara failed to prove any evidence of damages.

The test of a demurrer to the plaintiff's evidence requires both the trial court and the reviewing tribunal to accept as true all of the plaintiff's evidence and its reasonable inferences, and to disregard conflicting evidence favorable to the defendant. ⁷ A demurrer to the plaintiff's evidence should be sustained only when there is an entire absence of proof to...