Villarreal v. First Presidio Bank

• Decision Date: 14 July 2017
• Docket Number: EP–15–CV–88–KC
• Citation: 283 F.Supp.3d 548
• Parties: Roberto M. VILLARREAL, Plaintiff, v. FIRST PRESIDIO BANK, and its Successor-in-Interest, Big Bend Banks National Association, d/b/a The Marfa National Bank, Defendants.
• Court: U.S. District Court — Western District of Texas

283 F.Supp.3d 548

Roberto M. VILLARREAL, Plaintiff,

v.FIRST PRESIDIO BANK, and its Successor-in-Interest, Big Bend Banks National Association, d/b/a The Marfa National Bank, Defendants.

EP–15–CV–88–KC

United States District Court, W.D. Texas, El Paso Division.

Signed July 14, 2017

William A. Elias, Robert R. Harris, Law Office of Robert R. Harris, El Paso, TX, for Plaintiff.

Mark C. Walker, Dickinson Wright, El Paso, TX, for Defendants.

ORDER

KATHLEEN CARDONE, UNITED STATES DISTRICT JUDGE

On this day, the Court considered Defendants' First Presidio Bank, and its Successor-in-Interest, Big Bends Banks National Association, D/B/A The Marfa National Bank ("Defendants" or "the Bank") Motion for Judgment Pursuant to Federal Rule of Civil Procedure 52(c) ("Motion"), ECF No. 86, made orally following the close of Plaintiff Roberto Villarreal's case in chief at trial on June 13, 2017, and filed on the Court's electronic docket shortly thereafter, in the above-referenced case. After due consideration, the Motion is hereby GRANTED in part and DENIED in part. The Motion is GRANTED as to Plaintiff's wrongful-dishonor claim and DENIED as to Plaintiff's unjust-enrichment claim.

I. BACKGROUND

Unless otherwise noted, the following facts are undisputed. Plaintiff is a Mexican national residing in Chihuahua, Mexico. Plaintiff married Amida Anna Loya Galindo in 2004 and remains married to her. Plaintiff was previously married to Irene Amparan de Villarreal, who died in April of 2000. First Presidio Bank opened for business in 1975 in Presidio, Texas. Big Bend Banks, N.A., merged with First Presidio Bank on or about January of 2008.

Plaintiff held a checking account and several certificates of deposit with Defendants. The instant case concerns a dispute over five certificates of deposit that First Presidio Bank issued to Plaintiff between April of 1983 and June of 1984. Each of these certificates of deposit were payable to Plaintiff or Irene Amparan de Villarreal, contained language restricting their transferability and assignability, and automatically renewed upon maturity at prevailing market interest rates. Either Plaintiff or Irene Amparan de Villarreal could have redeemed the certificates of deposit without the signature of the other by presenting the original, physical certificate of deposit to the Bank.

Plaintiff placed the physical certificates of deposit in a safe deposit box that he rented at First Presidio Bank when they were first issued. Plaintiff's checking account with the Bank was closed in 2008 with a negative balance. In May of 2014, Plaintiff retrieved the physical certificates of deposit from the safe deposit box. Plaintiff subsequently requested that the Bank redeem the certificates of deposit. The Bank concluded that Plaintiff had already redeemed the certificates of deposit in question and refused. The Bank has no records concerning the certificates of deposit in question other than two microfilm rolls of quarterly records from the mid–1980s.

On March 24, 2015, Plaintiff filed the instant lawsuit. See Pl.'s Compl., ECF No. 1. On March 16, 2017, Plaintiff filed his Second Amended Complaint, now the operative complaint in this matter, asserting two causes of action against the Bank: (1) wrongful dishonor under Section 4.402 of the Texas Business & Commerce Code ; and (2) unjust enrichment. See Pl.'s Second Am. Compl., ECF No. ECF No. 60. This Court conducted a bench trial of this matter on June 12, 2017 and June 13, 2017. Defendants moved for judgment pursuant to Federal Rule of Civil Procedure 52(c) on June 13, 2017. See Defs.' Mot. Plaintiff responded on June 19, 2017. See Pl.'s Resp., ECF No. 93.

II. DISCUSSION

A. Standard

In a bench trial, once "a party has been fully heard on an issue ... the court may enter judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue." Fed. R. Civ. P. 52(c). When dismissing a case pursuant to Rule 52(c), a court is not required to make any special inferences or review the facts in the light most favorable to the plaintiff." See Koenig v. Aetna Life Ins. Co. , No. 4:13-CV-0359, 2015 WL 6554347, at *4 (S.D. Tex. Oct. 29, 2015) (citing Weber v. Gainey's Concrete Prods., Inc. , No. 9731267, 1998 WL 699047, at *1 n. 1 (5th Cir. Sept. 21, 1998) ). A court entering judgment pursuant to Rule 52(c)"must find the facts specially and state its conclusions of law separately" as described in Rule 52(a). Conn. Gen. Life Ins. Co. v. Humble Surgical Hosp., LLC , No. 4:13-CV-3291, 2016 WL 3077405, at *6 (S.D. Tex. June 1, 2016) (citing Fed. R. Civ. P. 52(a)(1) ).¹

B. Analysis

Defendants assert that Plaintiff's claim for wrongful dishonor fails on five grounds and that Plaintiff's claim for unjust enrichment fails on three grounds. See Defs.' Mot. 2–14. Additionally, Defendants contend that the presumption-of-payment doctrine, the relevant statutes of limitation, and laches bar Plaintiff's claims. See id. at 14–19. The Court addresses these arguments in turn.

1. Plaintiff's claim for wrongful dishonor fails

Defendants argue that "Plaintiff has no claim for wrongful dishonor since Plaintiff is unable to demonstrate the Defendants are a ‘payor bank.’ " Defs.' Mot. 3. Plaintiff does not directly respond to this contention. See Pl.'s Resp. 2–3. Plaintiff maintains that "[t]he express language of Section 4.402 of the Texas Business & Commerce Code states that a payor bank is liable to its customer for the wrongful dishonor of an item that is properly payable." Id. at 3.

The merits of a wrongful dishonor claim are governed by Section 4.402 of the Texas Business and Commerce Code, which provides that "[a] payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but ... may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft." Tex. Bus. & Com. Code Ann. § 4.402(a) (emphasis added). Further, "[a] payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item." Id. § 4.402(b) (emphasis added). A " ‘payor bank ’ means the bank that is the drawee of a draft. " Id. § 4.105(3) (emphasis added). A " ‘draft ’ means ... an item, other than an instrument, that is an order. " Id. § 4.104(a)(7) (emphasis added).²

An order is a "written instruction to pay money signed by the person giving the instruction." Id. § 3.103(6); Hodge v. N. Trust Bank of Tex. , 54 S.W.3d 518, 525 n.5 (Tex. App. 2001). Further, "[a]n authorization to pay is not an order unless the person authorized to pay is also instructed to pay." Tex. Bus. & Com. Code Ann. § 3.103(6). In a recent case, a Texas appellate court found that "debit memos ... direct[ing] that funds be moved out of a customer's account" were orders within the meaning of Section 3.103 of the Business and Commerce Code. Compass Bank v. Nacim , 459 S.W.3d 95, 105 (Tex. App. 2015). Texas courts have only rarely had occasion to expound on the meaning of "order" under the Business and Commerce Code, but the Montana Supreme Court, interpreting the identical language from the Uniform Commercial Code ("U.C.C."),³ identified money orders and bank checks as examples of "order[s]" within the meaning of the U.C.C. Smith v. Farmers Union Mut. Ins. Co. , 361 Mont. 516, 260 P.3d 163, 171 (2011). The Supreme Court of Connecticut found that a "withdrawal slip ... [with] a written instruction to pay out $32,318.26 in cash" was also an "order" within the meaning of the U.C.C. W & D Acquisition, LLC v. First Union Nat. Bank , 262 Conn. 704, 817 A.2d 91, 96 (2003).⁴ And the comments to the U.C.C. indicate that a cashier's check is yet another type of order. See U.C.C. § 3–103 cmt. 2; see also In re Clark Contracting Servs., Inc. , 438 B.R. 913, 922 (W.D. Tex. 2010) (internal citations omitted) ("Courts in this jurisdiction recognize the Official Comments to the UCC as persuasive guidance of legislative intent.").

Debit memos directing that funds be moved out of a customer's account, money orders, checks, withdrawal slips with written instructions to pay out cash, and cashier's checks share a common characteristic: written instructions to pay money. See Compass Bank , 459 S.W.3d at 105 ; Farmers Union , 260 P.3d at 171 ; W & D Acquisition , 817 A.2d at 96 ; U.C.C. § 3–103 cmt. 2. By contrast, the certificates of deposit at issue in this case do not contain "written instructions to pay money" as required to constitute an "order" under the Business and Commerce Code. See Tex. Bus. & Com. Code Ann. § 3.103(6) ; Hodge , 54 S.W.3d at 525 n.5. The four certificates of deposit from 1983 indicate that they are "[p]ayable to the depositor upon presentation and surrender of this certificate." Pl.'s Exs. 1–4 (emphasis added). The remaining certificate of deposit from 1984 indicates that First Presidio Bank "will pay this certificate ... when you present and deliver it to us[.]" Pl.'s Ex. 5 (emphasis added).

The relevant language—"payable ... upon presentation and surrender" and "will pay ... when you present and deliver it"—contemplates the possibility of payment at some later date, conditional on the occurrence of events in the future. See Pl.'s Exs. 1–4, 5. Indeed, the holder of a certificate of deposit could choose to never seek payment by allowing the certificate of deposit to renew indefinitely. See , e.g. , Pl.'s Ex. 1 (describing how the certificate of deposit "will be automatically renewed for successive terms" unless the depositor redeems it or the bank notifies the depositor of its intention to cash in the certificate). Certificates of deposit that can be renewed in perpetuity are dissimilar to checks, for example, which contain instructions to pay in the here and now. Here, the certificates of deposit contain a promise of payment that may only be actuated by some subsequent event. See Pl.'s Exs. 1–5.

Perhaps a closer question is whether the certificates of deposit became ...