Shapiro v. United California Bank

CourtCalifornia Court of Appeals
Writing for the CourtL. THAXTON HANSON; DALSIMER, Acting P. J., and COOPERMAN
Citation133 Cal.App.3d 256,184 Cal.Rptr. 34
PartiesJerry SHAPIRO, Sylvia Shapiro, individually and on behalf of all persons similarly situated, Plaintiffs & Appellants, v. UNITED CALIFORNIA BANK, et al., Defendants & Respondents. Civ. 61736.
Decision Date30 June 1982

Page 34

184 Cal.Rptr. 34
133 Cal.App.3d 256
Jerry SHAPIRO, Sylvia Shapiro, individually and on behalf of all persons similarly situated, Plaintiffs & Appellants,
v.
UNITED CALIFORNIA BANK, et al., Defendants & Respondents.
Civ. 61736.
Court of Appeal, Second District, Division 1, California.
June 30, 1982.
Hearing Denied Sept. 8, 1982.

[133 Cal.App.3d 258]

Page 35

Miller & Daar, David Daar, Beverly Hills, for plaintiffs & appellants.

Severson, Werson, Berke & Melchior, Clarie D. Johnson, Los Angeles, for defendants & respondents.

L. THAXTON HANSON, Associate Justice.

Plaintiffs Jerry and Sylvia Shapiro, individually and on behalf of all others similarly situated, appeal from an order of dismissal entered following a nonsuit granted in favor of defendant United California Bank (hereinafter referred to as UCB) in this class action for damages based on alleged unlawful penalties charged by UCB for processing checks drawn on checking accounts without sufficient funds.

FACTS

On October 9, 1974, plaintiffs instituted this class action suit against UCB for damages arising from an alleged unlawful penalty

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imposed by UCB on its customers for the processing of checks drawn on checking accounts without sufficient funds (NSF checks). 1 Plaintiffs' complaint, which contained nine causes of action, sought, inter alia, a declaration that UCB's practice of assessing NSF charges is illegal, and a permanent injunction restraining UCB from enforcing NSF charges. 2

UCB filed a demurrer to plaintiffs' complaint in November 1974. The demurrer was sustained without leave to amend as to four of the nine causes of action. Another cause of action, that for fraud, was dismissed by class certification order on September 5, 1979.

[133 Cal.App.3d 259] The remaining four causes of action were all predicated on the theory that UCB's practice of assessing NSF charges constituted an unlawful penalty within the meaning of former section 1670 of the Civil Code.

In April 1978, UCB filed a motion for summary adjudication of issues without substantial controversy, which sought a determination that the NSF charges assessed by UCB on its customers did not constitute penalties as defined by Civil Code section 1670. This motion was denied by the trial court.

In September 1979, the trial court issued an amended order certifying the class of plaintiffs and specifying the common issues of law and fact to be tried. 3 The trial court then ordered UCB to publish class notices in various newspapers throughout California.

The case proceeded to trial before a jury on November 1, 1979. At that time UCB filed a motion for a separate trial on the issue whether the signature cards plaintiffs executed upon opening an account with UCB contained an implied covenant that the plaintiffs would not write NSF checks. 4 UCB's motion was made on the basis that under former Civil Code sections 1670 and 1671, the issue of liquidated damages arises only if there has been a breach of agreement. In its motion UCB [133 Cal.App.3d 260] argued that "if plaintiffs cannot prove that there was an implied obligation to not write N.S.F. checks, then they have no theory upon which to base a recovery against defendant, and all of the other issues certified for trial become moot."

The trial court granted UCB's motion to bifurcate the trial. Plaintiffs then presented

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evidence on the issue whether the signature card agreement contains an implied promise not to write NSF checks.

Plaintiffs attempted to prove that an implied promise not to write NSF checks was incorporated in the signature card agreement because the agreement provided that the depositor's accounts would be governed by the "practices of the Bank in force from time to time...." They introduced evidence of the Bank's practices. Plaintiffs' expert on the banking industry, Dr. Michael R. Darby, testified in pertinent part that it was the general practice of banks to discourage NSF checks because "(p)roper financial management dictates that sufficient funds be on deposit each time checks are written by a depositor," and that it "is the obligation of the customer not to write such a check."

When plaintiffs rested their case, UCB made a motion for nonsuit pursuant to Code of Civil Procedure section 581c, or in the alternative, for directed verdict in favor of UCB. This motion was denied without prejudice to renewal.

UCB then presented its case, introducing the testimony of bank personnel to show that the bank did not regard UCB customers as being under a contractual obligation to refrain from writing NSF checks. When UCB rested its case, plaintiffs presented evidence in which they attempted to show that UCB in its own Bank Manual treated NSF charges as a penalty. UCB then renewed its motion for nonsuit or directed verdict. This motion was granted, the trial court finding that "there is no evidence of sufficient substance to support a verdict for plaintiff...." Accordingly, the trial court issued an order of dismissal pursuant to Code of Civil Procedure section 581c in favor of UCB, and denied plaintiffs leave to amend their complaint.

ISSUE

Plaintiffs contend on appeal that the trial court erred in granting UCB's motion for nonsuit because plaintiffs, as a matter of law, produced[133 Cal.App.3d 261] evidence sufficient to support a verdict that the signature agreement between plaintiffs and UCB contained an implied covenant not to write NSF...

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4 practice notes
  • Perdue v. Crocker National Bank, S.F. 24591
    • United States
    • United States State Supreme Court (California)
    • July 18, 1985
    ...in his account. (Cal.U.Com.Code, § 4401.)" (Pp. 968-969, 176 Cal.Rptr. 14; accord, Shapiro v. United California Bank (1982) 133 Cal.App.3d 256, 262, 184 Cal.Rptr. We cannot entirely agree with Hoffman and Shapiro that the contract between the bank and the depositor treats an overdraft ......
  • Perdue v. Crocker Nat. Bank
    • United States
    • California Court of Appeals
    • March 25, 1983
    ...former Civil Code section 1670." (Id., p. 969, 176 Cal.Rptr. 14; emphasis added.) (Accord Shapiro v. United California Bank (1982) 133 Cal.App.3d 256, 184 Cal.Rptr. 34.) Nor do we find merit in appellant's further argument that the signature card is an illusory contract because it perm......
  • Best v. U.S. Nat. Bank of Oregon
    • United States
    • Court of Appeals of Oregon
    • April 17, 1986
    ...Civil Code section 1670." 121 Cal.App.3d at 968-69, 176 Cal.Rptr. 14. (Citations omitted.) In Shapiro v. United California Bank, 133 Cal.App.3d 256, 184 Cal.Rptr. 34 (1982), the court also upheld a directed verdict in favor of the bank. At trial, the plaintiffs had introduced the testi......
  • City of Glendale v. Superior Court, No. B072610
    • United States
    • California Court of Appeals
    • September 29, 1993
    ...the parties' right to freely set such contractual terms as they choose. [Citation.]" (Shapiro v. United California Bank (1982) 133 Cal.App.3d 256, 261-262, 184 Cal.Rptr. 34.) A court's authority to imply a term in a contract is circumscribed by certain criteria: "... (1) the impli......
4 cases
  • Perdue v. Crocker National Bank, S.F. 24591
    • United States
    • United States State Supreme Court (California)
    • July 18, 1985
    ...in his account. (Cal.U.Com.Code, § 4401.)" (Pp. 968-969, 176 Cal.Rptr. 14; accord, Shapiro v. United California Bank (1982) 133 Cal.App.3d 256, 262, 184 Cal.Rptr. We cannot entirely agree with Hoffman and Shapiro that the contract between the bank and the depositor treats an overdraft ......
  • Perdue v. Crocker Nat. Bank
    • United States
    • California Court of Appeals
    • March 25, 1983
    ...former Civil Code section 1670." (Id., p. 969, 176 Cal.Rptr. 14; emphasis added.) (Accord Shapiro v. United California Bank (1982) 133 Cal.App.3d 256, 184 Cal.Rptr. 34.) Nor do we find merit in appellant's further argument that the signature card is an illusory contract because it perm......
  • Best v. U.S. Nat. Bank of Oregon
    • United States
    • Court of Appeals of Oregon
    • April 17, 1986
    ...Civil Code section 1670." 121 Cal.App.3d at 968-69, 176 Cal.Rptr. 14. (Citations omitted.) In Shapiro v. United California Bank, 133 Cal.App.3d 256, 184 Cal.Rptr. 34 (1982), the court also upheld a directed verdict in favor of the bank. At trial, the plaintiffs had introduced the testi......
  • City of Glendale v. Superior Court, No. B072610
    • United States
    • California Court of Appeals
    • September 29, 1993
    ...the parties' right to freely set such contractual terms as they choose. [Citation.]" (Shapiro v. United California Bank (1982) 133 Cal.App.3d 256, 261-262, 184 Cal.Rptr. 34.) A court's authority to imply a term in a contract is circumscribed by certain criteria: "... (1) the impli......

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