Espresso Roma Corp. v. Bank of America, 100 Cal. App. 4th 525 (2002)

Espresso Roma Corporation suffered losses of more than $330,000 when its former bookkeeper stole blank company checks, forged signatures and used the checks to pay for personal purchases. The bookkeeper concealed his actions by removing the forged checks from the bank statements when he sorted the mail. The company did not discover or report the forgeries to the bank until May 1999 – some 18 months after the first forgery. The company sued the bank, and the trial court granted the bank’s motion for summary judgment based upon California Commercial Code Section 4406, which precludes a customer’s claim against a bank for unauthorized payment unless the customer notifies the bank no more than 30 days after the first forged item was included in a monthly statement. The first such statement that the company had received was in November of 1997. The bank provided further evidence that it had exercised ordinary care within the meaning of the statute. The Court of Appeal affirmed summary judgment in favor of the bank.