Teitel v. First Los Angeles Bank

• Decision Date: 02 July 1991
• Docket Number: No. B041732,B041732
• Citation: 282 Cal.Rptr. 916,231 Cal.App.3d 1593
• Court: California Court of Appeals Court of Appeals
• Parties: Patricia S. TEITEL, Plaintiff and Appellant, v. FIRST LOS ANGELES BANK, etc., Defendant and Appellant.

Page 916

282 Cal.Rptr. 916

231 Cal.App.3d 1593

Patricia S. TEITEL Plaintiff and Appellant, v FIRST LOS ANGELES BANK, etc., Defendant and Appellant.

No. B041732.

Court of Appeal, Second District, Division 4, California.

July 2, 1991.

Certified for Partial Publication ^*

As Modified on Denial of Rehearing

July 24, 1991.

Negele, Knopfler, Pierson & Robertson and James R. Negele and Arthur E. Schwimmer, Los Angeles, for plaintiff, appellant and respondent.

Manatt, Phelps, Rothenberg & Phillips, Alan I. Rothenberg, Robert E. Hinerfeld, Christopher G. Foster and Kevin F. Ruf and Latham & Watkins, and Alan I. Rothenberg, Los Angeles, for defendant, respondent and appellant.

EPSTEIN, Associate Justice.

This appeal arises from a jury verdict in favor of Patricia Teitel against First Los Angeles Bank (Bank). Following a jury trial in which Teitel received a verdict of some $9,000 in general damages and $500,000 in punitive damages against Bank, the trial court denied a remittitur motion to alternatively reduce the amount of punitive damages or grant a new trial, but granted Bank's motion for judgment notwithstanding the verdict and, in so doing purported to reduce the award of punitive damages from $500,000 to $50,000. Teitel contends that the trial court was without authority to reduce punitive damages by an order granting judgment notwithstanding the verdict, and that the order violated her constitutionally guaranteed right to jury trial. Bank urges us to affirm the trial court judgment on the ground that the original award was excessive as a matter of law. Alternatively, the Bank asks that we order a new trial conditioned on Teitel's refusal of a remittitur, the motion which was denied by the trial court.

We conclude that the trial court erred in selecting Bank's motion for judgment notwithstanding the verdict as the vehicle to reduce what it perceived as an excessive amount of punitive damages. Since the trial court expressly declined to grant the proper remedy of new trial subject to the condition that new trial would be denied if appellant consented to a remittitur, we cannot say how it would have ruled on that motion in light of the unavailability of judgment notwithstanding the verdict as a vehicle to reduce a damages verdict. We therefore reverse the judgment, reinstate the original judgment awarding Teitel $500,000 in punitive damages, and remand with directions to reconsider the Bank's motion for new trial on punitive damages conditioned on Teitel's acceptance of a remittitur. In light of this disposition, we do not address Teitel's constitutional argument, or the Bank's argument on cross-appeal that the award of punitive damages was excessive as a matter of law.

While Bank does not challenge the sufficiency of the evidence of liability, it contends in its cross-appeal that a new trial is required on both liability and damages because of evidentiary errors. We shall conclude that, to the degree that evidentiary error occurred, it was harmless.

FACTUAL AND PROCEDURAL HISTORY

Teitel, an attorney admitted to practice law in New York, moved to California in 1981 and was hired by Roger Hartman as his legal secretary. Teitel opened a personal checking account at the Century Park branch of Bank near Hartman's office. Teitel's duties included maintaining Hartman's books of account, writing his checks, and recording his checks in a ledger. Following her initial three months of employment, Teitel began performing paralegal duties for Hartman in connection with real estate syndications. She received extra compensation for these services.

On February 13, 1984, Hartman went to Bank and executed three affidavits of forgery, claiming that Teitel had signed his name without authority on three checks payable to herself. ¹ The first was a check dated October 25, 1983 in the amount of $750; the second was a November 17, 1983 check in the amount of $600; and the third check was dated December 9, 1983 and was in the amount of $1,354.84. Hartman discharged Teitel on February 14, 1984 because of his belief that these checks were forged. Teitel was arrested the same day and charged with forgery after Bank reported the affidavits of forgery to the police. Teitel was never prosecuted.

Teitel did not deny that she had written the checks and that she had deposited them in her account. She contended that she did so with Hartman's authorization. Teitel explained that the check for $750 was a partial bonus for work she performed on a hotel deal, and that Hartman had authorized her to deposit this amount in her own account. She testified that Hartman had given her authorization by telephone to put his initials on each of the three checks. Teitel also testified that she drew the $600 check in her own handwriting, signed it with Hartman's name, and deposited it to her own account because it was money owed to her by Hartman on hotel deals.

Teitel testified that the check for $1,354.84 was her "average salary" check, which she prepared, signed with Hartman's name, and deposited to her own account. She stated that Hartman had signed a check in the amount of $1,000 as an advance to her the same day. Teitel explained that she had prepared both checks and left them on Hartman's desk for signature, but that when she retrieved them she found that Hartman had signed only the check for $1,000.

Hartman's check ledger did not contain entries for either the October 25, 1983 check or the November 17, 1983 check. Hartman testified that he had refused several requests by Teitel that she be made an authorized signatory on his checking account. He denied having given her authority to sign a check on his account. Hartman testified that when he initially confronted Teitel, she denied signing the three checks. She then admitted she had signed the checks and challenged Hartman to say what he planned to do about it. Hartman testified that he told Teitel he was unsure about what action he would take.

Hartman executed the affidavits of forgery and presented them to Bank. The same day, personnel of Bank deducted the amount of the challenged checks from Teitel's personal account and credited Hartman's account with the same amount. ² Bank also immediately reversed 40 checks drawn by Teitel on her personal account. Each of these checks already had cleared Teitel's account and had been paid. After the affidavits of forgery were received, these checks were variously stamped "insufficient funds," "uncollected funds" or "paid in error." The returned checks totalled more than $5,800, some $3,100 over the amount of the claimed forgeries. Bank stipulated that: "63. PATRICIA S. TEITEL was given no written notice of the reversal of any of the checks [returned on February 13] prior to their return through normal banking channels; 64. FIRST LOS ANGELES BANK does not have a written policy instructing ... [an] employee to debit the checking account of [Teitel] upon receipt of an affidavit of forgery from Roger C. Hartman; 65. FIRST LOS ANGELES BANK has no written policy regarding the reversing of allegedly forged checks; 67. FIRST LOS ANGELES BANK is unaware of the person who gave the final approval to reverse the checks [drawn on Teitel's account]." On February 14, 1984, Barbara Poston, the Bank's Assistant Branch Manager, wrote to Teitel, notifying her that Hartman had executed the allegations of forgery and requesting Teitel to contact the Bank. Poston's efforts to contact Teitel by telephone were unsuccessful.

Bank presented the testimony of four employees and officers. Although none of these witnesses accepted responsibility for Bank's conduct and none could recall details of how Bank responded to the affidavits of forgery, each testified that he or she understood the actions taken by Bank to be consistent with standard banking industry practice.

Burton McCullough, an expert in banking law, testified on behalf of Teitel that Bank did not act within standard banking practice in withdrawing money from Teitel's account, replacing that amount in Hartman's account, and reversing checks drawn by Teitel on her personal account which Bank already had charged to that account. Bank presented the manager of a branch of Bank of America who testified that the contested actions were within standard banking procedures.

Teitel testified that she had incurred costs as a result of adverse actions taken by the payees on the checks reversed by Bank, including service charges imposed by merchants for the processing of the returned checks; a judgment obtained by Sears Roebuck in small claims court; the fee for restoration of her electrical service, which had been terminated; and transportation expenses following repossession of her automobile. Teitel claimed loss of employment for four months following her termination by Hartman during which she was occupied with attempting to restore her credit. Teitel also claimed lost wages she would have earned as a member of the California Bar and presented an expert witness who testified that Bank's cross-complaint against her in this action, alleging forgery, would have precluded her admission to the California Bar. Bank presented evidence that Teitel had not sought admission to the California Bar at any earlier point during her residency in California, and that the cross-complaint brought by Bank would not have barred her admission. Teitel filed bankruptcy shortly after she filed her action against Bank. ³

Bank restored the disputed funds to Teitel's account in mid-April 1984, after Teitel executed an indemnity agreement demanded by Bank.

Teitel filed suit in February 1985, alleging causes of action for breach of contract, breach of the covenant of good faith and fair dealing, intentional infliction of emotional distress, conversion, wrongful dishonor of checks, violations of Financial Code sections 857 and 952, and negligence. Bank cross-complained, alleging that Teitel forged the disputed checks and that her lawsuit was barred...