18 Jul No Comments Remik Expert Matters

Facts:  In 2014, the defendant company discovered that its chief financial officer was issuing checks payable to himself and forging the signature of the authorized signer on the account (the “forged checks”).  He deposited the checks into his personal account at another bank.  The company notified its bank and asked the bank for assistance in recovering the funds.  The bank decided to return a number of the paid forged checks with entry to the Federal Reserve after the expiration of its midnight deadline (the “late returns”).  The Federal Reserve gave the plaintiff bank a provisional credit for the late returns and sent the checks back to the depository bank.  The bank then credited the company’s account for the amount of the provisional credit received from the Federal Reserve in exchange for an indemnification from the company.  Some months later, the depository bank made a “late return” claim on the plaintiff bank demanding that the plaintiff bank return the funds represented by the forged checks because they had been returned to the depository bank after the plaintiff bank’s midnight deadline.  The plaintiff bank refused and the depository bank then filed suit against the company’s bank.  The lawsuit was settled and then the bank filed a separate lawsuit against the company based on the indemnification agreement seeking reimbursement for its attorney’s fees and costs of suit in defending the lawsuit brought by the depository bank.

Client:  The defendant company.

Issues for the Expert:  Whether the bank acted expeditiously and consistently with the reasonable commercial standards of the banking business in attempting to recover the funds embezzled from the company after the company notified the bank of the forged checks; (2) whether the staff of the bank involved had the requisite knowledge and expertise to properly respond to the company’s request for assistance in recovering the embezzled funds, (3) whether the bank properly informed the company of its intended course of action and of the risks and potential liabilities of the actions the bank was taking to attempt to recover the funds for the company; (4) whether the bank could have recovered any funds for the company had the bank acted expeditiously and consistently with the reasonable commercial standards of the banking business; and (5) whether the bank’s demand for an indemnification agreement from the company was appropriate under the circumstances.

Outcome:  The case settled at the conclusion of discovery.