Pertierra v. Bank of America

Pertierra v. Bank of America

Filed 8/28/08 Pertierra v. Bank of America CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

MARIA CRISTINA PERTIERRA Plaintiff and Appellant, v. BANK OF AMERICA, Defendant and Respondent.

B197964 (Los Angeles County Super. Ct. No. LC073589)

APPEAL from a judgment of the Superior Court of Los Angeles County. Michael B. Harwin, Judge. Affirmed.

Law Offices of Edelberg & Espina, Sherwin C. Edelberg and Claire N. Espina for Plaintiff and Appellant.

Barton, Klugman & Oetting and Robert Louis Fisher for Defendant and Respondent.

Maria Cristina Pertierra (appellant) appeals from an order granting Bank of Americas (respondent) motion for summary adjudication. Appellant sued respondent after respondent permitted appellants husband, Arturo Pertierra, who was a co-owner of appellants bank account, to withdraw $175,000 from the account after writing two checks without complying with a two-signature requirement. Appellant alleged causes of action against respondent for breach of written contract, breach of oral contract, promissory estoppel, negligence, and violation of the California Uniform Commercial Code (Commercial Code).^[1]

Upon the trial courts grant of respondents motion for summary adjudication on the grounds that Code of Civil Procedure section 340, subdivision (c)^[2](section 340(c)) barred any claims based on the two checks, appellant filed a notice of appeal and moved for a stay of trial. The motion was deemed to be a petition for writ of supersedeas. This court held that appellant had demonstrated that the order granting respondents motion for summary adjudication disposed of the entire action, and therefore, the order was appealable.^[3] Accordingly, the writ of supersedeas was granted.

Although we disagree with the trial courts conclusion that section 340(c) applies to bar appellants claims, we affirm summary judgment in favor of respondent on the ground that appellant has failed to demonstrate that triable issues of material fact exist as to any of her causes of action, therefore respondent is entitled to judgment as a matter of law.

CONTENTIONS

Appellant contends that the trial court erred in granting summary judgment because the one-year statute of limitations set forth in section 340(c) is inapplicable. Further, appellant argues, even if section 340(c) is implicated here, it does not preclude her causes of action for negligence or breach of contract. Finally, appellant argues that her claims against the bank are not preempted by the Commercial Code, and thus her causes of action for breach of written contract, breach of oral contract, and negligence should be permitted to proceed.

FACTUAL BACKGROUND

The significant background facts are undisputed. In 1981, appellant opened accounts with respondent in respondents private banking office in San Francisco, California. In 1986, appellant added her husband as a co-owner of two accounts: (1) a Cash Maximizer account which was also a checking account, with account No. xxxxx-14454 (cash maximizer account), and (2) a time deposit account with account No. xxxxx-03336 (CD account). Because appellant and her husband did not reside in the United States, management of their account was coordinated telephonically, by mail, or through the Bank of America private banking office in Manila, Philippines. At some point in time, appellants daughter, Marina Rosa O. Pertierra, was added as a co-owner of the accounts.

In 1992, the private banking officer who was assigned to appellants accounts became aware of a dispute between appellant and her husband. As a result of this dispute, on June 16, 1992, the private banking officer sent a letter to appellant and her husband imposing a requirement that all withdrawal instructions on the CD account must be signed by both individuals. On September 10, 1992, respondent imposed a similar restriction on withdrawals from the joint checking account.

On August 12, 21, and September 7, 2000, appellant, Arturo Pertierra, and Marina Rosa Pertierra, respectively, signed the master agreement for personal accounts with respondent. That contract provided: By signing this agreement, you begin a deposit account relationship with us. The written information which we give you is part of this agreement that tells you the current terms of each account. We may change these terms at any time.

Between 1992 and 2003, respondent enforced the two-signature requirement on the accounts. In December 2003, respondent transferred all accounts with less than $1 million from the private bank in San Francisco to the Sand Hill retail bank in Menlo Park. Appellants accounts, which held less than $1 million, were transferred to the Sand Hill branch at that time.

On March 5, 2004, the banking center manager of the Sand Hill branch sent a letter to appellant explaining the changes that had occurred. The letter explained that the cash maximizer account and CD account had been transferred to the Sand Hill banking center. At Arturo Pertierras request, the manager had made some changes to the accounts in order to get a higher return on the assets. These changes included transferring the two accounts to four accounts: Prima checking, account No. xxxxx-06710; Interest Maximizer, account No. xxxxx-08072; CD account, No. xxxxx-01213; and another CD account, No. xxxxx-01225. The letter also noted that the account title remained unchanged and listed Arturo Pertierra, appellant, and Marina Rosa Pertierra as owners. The letter specified: Please also note that going forward, the 2 signature requirement on the withdrawal is not guaranteed and the bank will not be liable for any withdrawal made by any unauthorized signers, who are legal owners to the account. The letter enclosed a new deposit agreement, effective December 1, 2003, which by its terms became part of the contract between the parties. The 2003 deposit agreement contained the following provisions:

Changes to Agreement. [] We may change this Agreement at any time. For example: we may add new terms and conditions and we may delete or amend existing terms and conditions. We generally send you advance notice of the change. If a proposed change is favorable to you, however, we may make the change at any time without advance notice. If you do not agree with the proposed change, you may close your account. However, you indicate your agreement to the change if you continue to use your account or keep it open.

In addition, the new deposit agreement stated:

Multiple Signatures. We do not offer accounts on which two or more signatures are required for a withdrawal. If you indicate on your signature card or other account documents that more than one signature is required for withdrawal, this indication is for your own internal procedures. It is not binding on us. We may pay out funds from your account if the check, item, or other withdrawal instruction is signed or approved by any one of the persons authorized to sign on the account. We are not liable to you if we do this.

In April 2004, appellant wrote a letter to the manager of the Sand Hill branch indicating that she was not informed and did not consent to the changes or conversions from two accounts to four accounts. Appellant stated in her declaration in opposition to summary judgment that she never received a response to this letter. In June 2007, she wrote a second letter, contesting the actions of the bank and attaching her first letter. She claims that she never received a response to the second letter either. Through discovery it was revealed that the manager to whom the letters were addressed was no longer connected with respondent as of the end of April 2004 and never received the letters. Appellant does not dispute that account statements were mailed to her attorney in the Philippines regularly and that she made no efforts to close the accounts or have them frozen.

In July 2004, Arturo Pertierra spoke with the teller coordinator of the Sand Hill branch and explained his need for funds. At Arturos request, the teller coordinator authorized a transfer of funds in the amount of $25,065.24 from a CD account to the checking account. Although the teller coordinator noted that a two-signature requirement was referenced on the account, she testified that she did not consider the transfer to be a withdrawal. On July 29, 2004, Arturo wrote check No. 1001, signed by him alone and made payable to him alone. The check was honored by respondent, which paid the check to Arturo Pertierra as payee and endorser of the check.

In September 2004, Arturo Pertierra spoke with the same individual at the Sand Hill branch and again requested a transfer of funds from a CD account to the checking account. The teller again allowed the transfer. Arturo then wrote check No. 1002, in the amount of $150,000, made out to himself as payee. Arturo endorsed the check and it too was honored by respondent.

In September 2004, appellant became aware of the missing money. She contacted the San Francisco office, and at the instruction of that office, on September 24, 2004, she sent a letter asking respondent to place a stop payment on the checks and for respondent to begin an investigation as to how the withdrawals could have occurred. Janet L. Anderson, senior customer solutions officer of respondents customer solutions division, sent a letter to appellant on October 1, 2004, in response. The letter explained: All persons whose names appear on a joint account are co-owners of the account regardless of whose money is deposited or who makes the deposit. . . . Each co-owner authorizes the other co-owner to operate the account without the consent of the other co-owner. This includes authority to: add persons; deposit funds; withdraw funds; endorse for deposit to the joint account on behalf of the other co-owner; and instruct us to perform transactions on the account. In addition, the letter explained that Arturo B. Pertierra was an authorized signer on the accounts in question and was allowed to perform any of the above-listed transactions. The letter concluded, While I understand that it is not the response you were hoping for, I trust that this letter clarifies our position.

Appellant immediately thereafter flew to the United States to personally attend to the accounts. On or about November 30, 2004, appellant went to the San Francisco office to close the accounts and withdraw the remaining funds. Appellant was not permitted to withdraw any money on the ground that there was a two-signature requirement on the accounts. Appellant returned to the Philippines without accomplishing her goal of withdrawing the money. After retaining counsel, appellant was permitted to withdraw the remaining money in August 2005 with the co-signature of her daughter.

PROCEDURAL HISTORY

Appellant filed suit against respondent on January 17, 2006, alleging causes of action for breach of written contract, breach of oral contract, promissory estoppel, negligence, and violation of the Commercial Code.^[4] Appellant sought to recover the $175,000 paid out to Arturo Pertierra, as well as damages under Commercial Code section 4103, subdivision (e), incidental damages, interest, and the costs and attorney fees associated with the lawsuit.

Respondent filed a cross-complaint against Arturo Pertierra for indemnity, breach of warranty, unjust enrichment, and imposition of a constructive trust, among other things. Respondent served Arturo Pertierra in the Philippines and obtained a default judgment against him.

On October 5, 2006, respondent filed its motion for summary judgment or, alternatively, summary adjudication of issues (summary judgment motion). Respondent presented three theories in support of its summary judgment motion: (1) that respondent acted properly under its deposit contract in paying the two checks of which appellant complains; (2) that all of appellants claims are barred by the one-year statute of limitations found in section 340(c); and (3) that appellant ratified respondents payment of $175,000 to Arturo Pertierra by making a claim for that money against Arturo Pertierra in the Philippines. Appellant opposed the motion, and the matter was heard on January 4, 2007. The trial court granted respondents motion, finding that [respondents] affirmative defense of statute of limitations bars [appellants] claims based upon the two checks paid over the signature of ARTURO B. PERTIERRA.

On February 22, 2007, the court filed a detailed written Order for Summary Adjudication of Issues. The court found that respondent proffered evidence that established each necessary element of the affirmative defense of statute of limitations to claims based upon [respondents] payment of the two checks. Among such evidence was the fact that appellant received knowledge that ARTURO B. PERTIERRA had removed $175,000 from the SUBJECT ACCOUNTS before the end of September, 2004; and that appellant filed the Complaint in this action on January 17, 2006. Neither of these facts were disputed by appellant.

On January 11, 2007, appellant applied to the trial court for an ex parte order reconsidering the courts ruling on respondents summary judgment motion. Appellant argued that section 340(c) does not apply because Arturo Pertierras signature was not an unauthorized endorsement under that section. Appellant argued that, as set forth in Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110 (Fineman), the applicable statute is Commercial Code section 4111, which provides for a three-year statute of limitations. The trial court denied appellants request for reconsideration, and on February 22, 2007, adopted respondents proposed order as the order of the court. On March 22, 2007, appellant appealed from the courts February 22, 2007 order.

In appellants petition for writ of supersedeas, filed in this court on April 13, 2007, appellant argued that appeal was necessary because the courts order, as worded, did not operate as a summary adjudication of issues but in fact operated as a summary judgment order, disposing of all issues in the case. Appellant argued that the purpose of her complaint was to recover the $175,000 from the two checks written by Arturo Pertierra, and that Appellant did not sue on anything else but to recover the $175,000. Appellant cited Niederer v. Ferreira (1983) 150 Cal.App.3d 219 for the proposition that an exception to the rule that summary adjudication rulings are not appealable lies where all issues necessary to a disposition of the remaining causes of action have been decided by the trial court . . . or can be decided as a matter of law on the basis of the record. Appellant further argued that proceeding to trial would be a wasteful act, and that appellant would suffer great prejudice if required to travel overseas to the United States for the trial if she were precluded from recovering her only claim for $175,000 on any and all claims based on the two checks. This court granted appellants petition for writ of supersedeas, agreeing that the trial courts order disposed of the entire action and was therefore an appealable order.

DISCUSSION

I. Standard of Review

We review a grant of summary judgment de novo, and decide independently whether the facts not subject to triable dispute warrant judgment for the moving party as a matter of law. (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.) The trial courts stated reasons for granting summary judgment are not binding on the reviewing court. (Kids Universe v. In2labs (2002) 95 Cal.App.4th 870, 878.)

We may affirm an order granting summary judgment on a ground not relied on by the trial court, if the parties have been afforded an opportunity to brief the issue. ( 437c, subd. (m)(2).)

II. Section 340(c) is Inapplicable

We first address the statute of limitations found in section 340(c). The statute provides a one-year limitation on actions by a depositor against a bank for the payment of a forged or raised check, or a check that bears a forged or unauthorized endorsement. It is undisputed that appellant became aware of the two checks that Arturo Pertierra had written in September 2004, and that appellant filed the complaint in this action on January 17, 2006. Therefore, if the checks that Arturo Pertierra wrote can be considered to be forged or raised checks, or checks bearing a forged or unauthorized endorsement, then appellants claim is barred.

Neither party argues that the checks are raised checks. In addition, the parties agree that an unauthorized signature may not be equated with an unauthorized endorsement. As respondent has admitted: It is clear that appellants claim rests on the single drawers signature rather than endorsements on the two checks in issue. Because there is no endorsement at issue, the only question we must decide is whether the two checks may be considered forged checks.

The parties agree that, if an enforceable two-signature requirement existed, Arturo Pertierras single signature on a check would constitute an unauthorized signature under the Commercial Code. (Cal. U. Com. Code, 3403, subd. (b) [If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking].)^[5] However, the parties disagree as to whether the alleged unauthorized signatures at issue may be equated with forgeries under the circumstances of this case.

Respondent has presented authority that the term unauthorized signature includes a forgery. (Cal. U. Com. Code, 1201, subd. (b)(41) [Unauthorized signature means a signature made without actual, implied, or apparent authority. The term includes a forgery].) However, this definition does not get respondent far enough. Under Commercial Code section 1201, subdivision (b)(41), every forged signature is an unauthorized signature. However, the opposite is not necessarily true. In other words, respondent has not shown that every unauthorized signature isa forgery. At best, forgery is one category of signatures which may be defined as unauthorized. And respondent has presented no authority for its position that the alleged unauthorized signatures in this case can, in fact, be considered forgeries.

The definition of forgery, found in Penal Code section 470, includes circumstances under which a person signs the name of another person or of a fictitious person to any document having legal effect on the rights of another. (Pen. Code, 470, subd. (a).) In addition, it includes a person who, with intent to defraud, counterfeits, forges, alters, or falsifies any such documents. (Pen. Code, 470, subds. (b)-(d).) The statute does not encompass a situation such as the one before us, where an individual signs his own name to a check drawn from an account of which he is a co-owner even where a second signature is required. We therefore conclude that Arturo Pertierras signatures on the checks at issue were not forgeries.

In sum, the checks at issue are not forged or raised checks, or checks bearing a forged or unauthorized endorsement. Therefore section 340(c) does not apply to bar appellants claims.

Fineman, supra, 66 Cal.App.4th 1110 supports this conclusion. In Fineman, a business maintained a payroll checking account at Bank of America. Under the terms of the account, two signatures were required for certain withdrawals. Over the course of five years, between 1991 and 1996, Bank of America honored and paid 83 checks in violation of the two-signature requirement. The Court of Appeal held that the trial court properly applied the three-year statute of limitations found in Commercial Code section 4111 to bar the plaintiffs claims as to 23 of those checks. (Fineman, at pp. 1125-1126.) Thus, under Fineman, the applicable statute of limitations in the matter before us is Commercial Code section 4111, not section 340(c).

Respondent cites Chatsky & Associates v. Superior Court (2004) 117 Cal.App.4th 873 (Chatsky) for the proposition that Fineman does not hold that Uniform Commercial Code Section 4111 controls over [Section 340(c)]. However, Chatsky involved forged checks, therefore it is inapplicable. (Chatsky, supra, at p. 876.) Roy Supply v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051, 1065 (Roy), also cited by respondent as support for its position that section 340(c) applies, also involved forged checks. In addition, the Roy court did not reach the question of which statute of limitation applied, because it held that the depositors claims were precluded by Commercial Code section 4406, which requires a depositor to notify the bank of disputed checks within one year of receiving account statements and canceled checks.^[6]

Respondent has not cited any authority which conflicts with our conclusion that section 340(c) is inapplicable to the situation before us. We therefore conclude that the trial court erred in granting summary judgment on the ground that appellants claims were barred under that statute.

III. Appellant Has Failed to Demonstrate That a Triable Issue of Material Fact Exists as to Her Causes of Action for Violation of the Commercial Code and Breach of Contract^[7]

A. Summary judgment briefing on the merits of appellants causes of action

In addition to its statute of limitations claim - which we have found does not support summary judgment in favor of respondent - respondent raised two other issues as grounds for summary judgment: (1) that respondent acted properly under its deposit contract in paying the two checks of which appellant complains; and (2) that appellant ratified respondents payment of $175,000 to Arturo Pertierra by making a claim for that money against him in the Philippines.

In support of its argument that it acted properly in honoring the two checks, respondent argued that, at the time the two checks were negotiated, only one signature was required for withdrawal of funds. In opposition, appellant pointed to three continuing breaches by respondent:

a. failing to get [appellants] consent regarding the transfer of the Accounts from the San Francisco Private Banking Office to the Sand Hill Retail Banking Branch;

b. failing to get [appellants] consent regarding the conversion of the two Accounts to four different accounts; and

c. allowing Arturo to transfer funds from the time deposit account to the checking account to enable him to withdraw funds in excess of $175,000.00 without enforcing the two-signature requirement even when [respondent] admitted the computer account profile was clear regarding this.^[8]

In respondents reply to appellants opposition, respondent referenced the account agreement signed by appellant and Arturo Pertierra in 2000. This agreement contained a provision, similar to the one contained in the 2003 agreement, which provided that: We may change these terms at any time. Well inform you of changes that affect your rights and obligations as a depositor. Thus, respondent argued, appellant had agreed to allow respondent to make changes such as the transfer of accounts from San Francisco to Sand Hill. As to the conversion of accounts, respondent pointed out that this was done at the direction of Arturo Pertierra, an authorized signatory on the account. And as to appellants argument that Arturo should not have been permitted to transfer and withdraw the funds without two signatures, respondent again pointed to the change in the terms of the agreement of which appellant was notified on March 5, 2004 - including the specification that the two-signature requirement would no longer be enforced.

These arguments, made in the summary judgment proceedings, show that the merits of appellants claims for breach of contract were fully briefed before the trial court. In addition, respondent has raised this issue on appeal, and appellant has had the opportunity to respond. While Code of Civil Procedure section 437c, subdivision (m)(2) prohibits an appellant court from affirming a grant of summary judgment on a ground not relied upon by the trial court unless the appellate court permits supplemental briefing, we do not believe that supplemental briefing is required in this case since the issue was raised below and has already been briefed on appeal. (Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1147, fn. 7) We therefore turn to an independent analysis of the question of whether any triable issue of fact exists as to these claims.

B. Applicable principles of summary judgment

A defendant moving for summary judgment has met its burden of showing that a cause of action has no merit if the defendant has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of material fact exists as to that cause of action or a defense thereto. The plaintiff . . . may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists. ( 437c, subd. (p)(2).)

The elements of a cause of action for breach of contract are: (1) the existence of a contract; (2) plaintiffs performance or excuse for nonperformance; (3) defendants breach; and (4) resulting damages to plaintiff. (Careau & Co. v. Sec. Pac. Bus. Credit (1990) 222 Cal.App.3d 1371, 1388.)

In its motion for summary judgment, respondent argued that appellant failed to show the third element of her cause of action for breach of written contract. In sum, respondent argues that none of the alleged breaches set forth by appellant violated the terms of the written contract between the parties. We analyze each of the alleged breaches below. We conclude that respondent has shown that the element of breach cannot be established, and that appellant has failed to raise a triable issue of material fact as to her causes of action for breach of written contract.

C. Respondents action in transferring the accounts from San Francisco to Sand Hill

Appellant claims that the first breach by respondent occurred in 2003 when respondent failed to get appellants consent for the transfer of the accounts from the San Francisco private banking office to the Sand Hill retail banking branch. However, appellant admitted that she and Arturo Pertierra signed an account agreement in 2000 which contained a provision, similar to the one contained in the 2003 amendment, which provided that: We may change these terms at any time. Thus, respondent argued, appellant had agreed to allow respondent to make changes such as the transfer of accounts from San Francisco to Sand Hill. The written deposit agreement and disclosures effective as of June 2001, provided that appellants decision to continue to use [her] account or keep it open indicated her agreement to any unilateral changes such as this.

Appellant presented no evidence of a superseding agreement regarding respondents obligation to maintain the accounts in the San Francisco private banking office. Instead, appellant argued that the contract was incomplete in that The form was not completely filled: nowhere was it indicated what . . . title the Accounts were held in, or how many signatures required withdrawals [sic]. However, appellant does not contend that any specific irregularities or omissions rendered the contract ineffective or invalid. Appellant further argued that: Upon notice, [appellant] immediately sent letters of protests to [respondent] in April 2004 and then again in June 2004. However, there was a fatal lapse in [respondents] system result[ing] in no one at [respondent] acting upon [appellants] protest and non-acceptance of [respondents] unilateral act.

Appellants act of sending letters to respondent protesting respondents actions did not serve to create an amendment of the agreement or impose any additional contractual obligations on respondent. Thus, appellant has failed to create a triable issue of fact as to the terms of the agreement in effect between the parties at the time that respondent moved appellants accounts from San Francisco to Sand Hill. That agreement specifically allowed respondent to unilaterally change its terms at any time. In addition, the facts show that on March 5, 2004, the banking center manager of the Sand Hill branch sent a letter to appellant explaining the changes that had occurred. This action completed respondents obligation to inform appellant of changes that affected her rights and obligations as a depositor.

Based on the evidence described above, we find that respondent has shown that its actions in transferring the accounts from San Francisco to Sand Hill did not constitute a breach of contract. The burden thus shifts to appellant to show that a triable issue of material fact exists as to this alleged breach. Appellant has failed to meet that burden.

D. Respondents action in converting the accounts at the direction of Arturo Pertierra

Appellants next claim is that a breach occurred when respondent converted appellants CD account and cash maximizer account to four new accounts. However, appellant acknowledges both that these conversions occurred at the direction of Arturo Pertierra, and that Arturo was a co-owner of the accounts. Respondent has presented evidence that appellant agreed to the following terms:

All persons whose names appear on a joint account are co-owners of the account, regardless of whose money is deposited or who makes the deposits. . . . Each co-owner authorizes each other co-owner to operate the account without the consent of any other co-owner. This includes authority to: . . . deposit funds and withdraw or transfer funds from the account.

These terms were contained in the 2003 deposit agreement as well as the 2001 version of the deposit agreement.

Appellant attempts to show the existence of a two-signature requirement for conversions such as the one that occurred in 2004 at Arturo Pertierras request. She states that the bank employee who carried out the conversions at Arturos request was apparently aware that there existed a two-signature requirement before any changes were to be made on the Accounts because she referenced in her letter of March 5, 2004 that the two-signature requirement on the withdrawal is not guaranteed.

However, that same March 2004 letter attached the deposit agreement and disclosures effective December 1, 2003, and the personal schedule of fees effective August 15, 2003.^[9] The deposit agreement attached to the letter specified: We do not offer accounts on which two or more signatures are required for a withdrawal. If you indicate on your signature card or other documents that more than one signature is required for withdrawal, this indication is for your own internal procedures. It is not binding on us. We may pay out funds from your account if the check, item, or other withdrawal instruction is signed or approved by any one of the persons authorized to sign on the account. We are not liable to you if we do this.

Appellant has attempted to show the existence of a superseding, specific agreement to enforce a two-signature requirement on all changes to the account. Appellants evidence shows that respondent agreed to enforce a two-signature requirement starting in 1992. That commitment continued through respondents last written representation confirming the two-signature requirement, which occurred in October 2000. However, the terms of the December 2003 agreement unequivocally retracted respondents agreement to enforce the two-signature requirement. Under the terms of that agreement, appellant specifically agreed that Arturo Pertierra was a co-owner with full authorization to operate the account. She further agreed that no two-signature requirement would be enforced. No other agreement existed between the parties at the time that the accounts were converted in March 2004.

In sum, respondent has shown that the conversion of accounts that occurred at the request of Arturo Pertierra in 2004 was a valid action under the agreement between the parties effective at the time the conversion occurred. Appellant has failed to create a triable issue of fact as to whether this action constituted a breach of any existing agreement between the parties.^[10]

E. Respondents action in permitting Arturo Pertierras 2004 withdrawals

Appellants final claim for breach of contract involves respondents actions in transferring funds from appellants CD account to the checking account at the request of Arturo Pertierra, and subsequently honoring the two checks written and signed by Arturo Pertierra alone.

Appellant does not dispute the facts described in the preceding section regarding the 2003 deposit agreement and its specific terms regarding the enforceability of two-signature requirements. Appellant also acknowledged receiving respondents letter of March 5, 2004, which specified that the 2 signature requirement on the withdrawal is not guaranteed and the bank will not be liable for any withdrawal made by any authorized signers, who are legal owners to the account.

However, appellant again attempts to show the existence of a superseding specific agreement. Appellant notes that documents produced by respondent show that, when respondents employee viewed appellants accounts, the computer screen showed very clear and simple instructions reflected therein which called for, 2 SIGNATURES REQUIRED and asked that specific employees of respondent be contacted for further information. Appellant claims that, upon viewing this computer message, the bank employee who transferred funds to the checking account at the request of Arturo Pertierra, in order to enable him to withdraw those funds, had actual notice of this two-signature requirement for withdrawals. While that bank employee, Simin Hedayat (Hedayat), testified that she noted a two-signature requirement for withdrawals on the computer screen in July 2004 when discussing the transfer of funds with Arturo Pertierra, she testified that she did not consider the transfer of funds to be a withdrawal. Hedayat again ignored the instructions on the computer screen stating 2 signatures required in September 2004 when Arturo Pertierra again called her to ask for a transfer of funds from the CD account to the checking account.

While appellant has shown that Hedayat was aware of the computer screen instructions, appellant has failed to produce evidence of any agreement, oral or written, that those instructions created a contract between the parties which superseded the December 2003 deposit agreement. The 2003 deposit agreement, which was the operative agreement between the parties at the time, contemplated that such two-signature requirements might remain on some accounts after the 2003 amendments went into effect. It specified that any such instructions are for the customers internal procedures only and are not binding on respondent. Thus, respondent acted in accordance with the 2003 deposit agreement when it honored the checks written by Arturo Pertierra.^[11] Appellant has failed to show that a unique agreement existed between respondent and appellant requiring respondent to enforce a two-signature requirement for the accounts in question at the time the checks were written.

F. Appellant has failed to show the existence of an oral contract

We have concluded that respondents actions in transferring appellants accounts from San Francisco to Sand Hill, converting the two accounts to four accounts, and permitting Arturo Pertierra to move funds and write checks, did not breach the operative written agreements between appellant and respondent. We further find that appellant has failed to proffer any evidence showing the existence of a valid oral contract. Indeed, the agreement to enforce the two-signature requirement, which remained effective until 1993, was in writing. Letters written on August 28, 1992, and January 13, 1993, confirmed the consent of appellant and her husband to the imposition of the two-signature requirement. On October 12, 2000, respondent again confirmed in writing with both appellant and her husband that the two-signature requirement would continue to be enforced. These written acknowledgements confirmed respondents agreement to enforce the two-signature requirement until the 2003 changes

- which were also in writing - revised the agreement to indicate that the two-signature agreement would no longer be enforced. Put simply, appellant has presented no evidence which suggests the existence of an oral contract.^[12]

IV. Appellant May Not Proceed Under a Negligence Theory

We have determined that appellants causes of action for breach of contract and violation of the Commercial Code are without merit. We further find that appellant may not proceed under a negligence theory because appellants negligence claim is preempted by the Commercial Code.

If the Commercial Code covers a situation alleged in a plaintiffs complaint, causes of action for common law negligence are displaced. (Cal. U. Com. Code, 1103; see also Firemans Fund Ins. Co. v. Security Pacific Natl Bank (1978) 85 Cal.App.3d 797, 827 [Noting that [Commercial Code] section 3418 articulates a loss distributive scheme that is applicable to the fact pattern as alleged herein (forged drawers signature), we further find that this section displaces an action for common law negligence]; Roy, supra, 39 Cal.App.4th at p. 1067 [[W]e find the provisions of the [Commercial] Code to be clear and unambiguous. We also find that they expressly cover the allegations of plaintiffs complaint. Under these circumstances the provisions of the Code are controlling and must be deemed to displace common law negligence principles with respect to the payment of forged checks by a payor bank].)^[13] Appellants cause of action against respondent for negligence focuses on the same actions which appellant referenced in support of her causes of action for breach of contract. Those actions are covered by the Commercial Code, which provides a uniform scheme allocating rights and responsibilities between customers and banks regarding the relationship between a bank and its customer, and specifically, the circumstances under which a bank may charge a customers account.^[14] (Cal. U. Com. Code, 4401 et seq.)

In support of appellants claim that her negligence cause of action should be allowed to proceed, appellant cites Fineman, supra, 66 Cal.App.4th 1110. We find no support for appellants position in Fineman. While the plaintiff in Fineman had proceeded on theories of breach of contract, negligence, and damages for the banks payment of unauthorized checks, the Court of Appeal found that all of the plaintiffs claims on the checks written between 1991 and 1993 were barred by Commercial Code sections 4111 and 4406. (Fineman, supra, at pp. 1125-1126.) Fineman thus fails to support appellants position that her negligence cause of action should be allowed to proceed. Appellant also cites Commercial Code section 4103, which states that: The effect of the provisions of this division may be varied by agreement, but the parties to the agreement cannot disclaim a banks responsibility for its lack of good faith or failure to exercise ordinary care . . . . We disagree with appellants characterization of this statute as recognizing her right to bring a negligence action. In addition, appellant has failed to point to any specific contractual provisions which constitute a disclaimer of respondents duty to exercise ordinary care. Therefore the statute is inapplicable.

Appellant has failed to present any law supporting her position that her negligence claim is not preempted by the Commercial Code. We conclude that appellant may not proceed on a negligence theory.^[15]

V. Ratification

Because we have determined that no triable issue of material fact exists as to appellants causes of action for breach of contract and violation of the Commercial Code, and that appellant may not proceed under a negligence theory, we need not discuss respondents argument that appellant ratified respondents payment of the $175,000 to Arturo Pertierra.

DISPOSITION

The trial courts order granting summary judgment is affirmed on the ground that no triable issue of fact exists as to any of appellants causes of action against respondent, therefore respondent is entitled to judgment as a matter of law. Appellant shall pay the costs of appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

_, J.

CHAVEZ

We concur:

, P. J.

BOREN

, J.

ASHMANN-GERST

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^[1] Appellant and her husband are both Philippine nationals residing in the Philippines. Appellant testified in her deposition that she has also made a claim for the $175,000 in a Philippine proceeding for annulment of the marriage.

^[2] All further statutory references are to the Code of Civil Procedure unless otherwise indicated.

^[3] Because we have determined that the trial courts order granting summary adjudication effectively disposed of all issues in the case, we shall refer to the order as an order granting summary judgment.

^[4] The promissory estoppel cause of action was stricken on demurrer.

^[5] The definition of organization covers not only commercial entities but two or more persons having a joint or common interest. (Cal. U. Com. Code, 3403, com. 4.)

^[6] Appellant complied with Commercial Code section 4406 when she sent respondent her letter of September 24, 2004, requesting that respondent stop payment on the two checks.

^[7] Appellant sued respondent for violation of Commercial Code section 4401, which governs a banks ability to charge items against a customers account. It provides that A bank may charge against the account of a customer an item that is properly payable from that account. . . . An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and the bank. (Cal. U. Com. Code, 4401, subd. (a).) Therefore, appellants cause of action for violation of the Commercial Code is dependent on her ability to show that respondents actions violated an agreement between the parties. If we determine that respondents action in honoring the two checks written by Arturo Pertierra did not breach any agreement between appellant and the bank, appellants cause of action for violation of Commercial Code section 4401 fails as a matter of law. We therefore focus this discussion on the question of whether respondents actions, including its action in charging the two checks against appellants account, violated any agreement between the parties.

^[8] In addition, appellant argued that respondent committed negligence by: a. failing to exercise due care in giving specific instructions on the Accounts when they were transferred from the San Francisco private Banking Branch 35 miles to the Sand Hill Retail Banking Branch; and [] b. failing to exercise due care in verifying instructions on the Accounts before effecting any transfer, withdrawals or changes thereon.

^[9] In response to respondents request for production of documents, appellant produced the deposit agreement and disclosures effective December 1, 2003, and the personal schedule of fees effective August 15, 2003. Appellant also testified in her deposition that she received this booklet, although she could not recall when. We note that the deposit agreement terms booklet used as an exhibit to appellants deposition was an earlier version, effective June 1, 2001. However, the terms regarding changes to agreement and multiple signatures are identical to those found in the deposit agreement terms effective December 1, 2003.

^[10] Appellants claims that respondent breached its contract by (1) transferring the accounts to Sand Hill; and (2) permitting Arturo Pertierra to convert the accounts, fail for a separate, independent reason: appellant has failed to make any showing that she was damaged by these actions. Damages are an essential element of a cause of action for breach of contract. (Careau & Co. v. Sec. Pac. Bus. Credit, supra, 222 Cal.App.3d at p. 1388.) Appellant concedes that the only damages she suffered resulted from the $175,000 paid to Arturo Pertierra on the two checks written in July and September 2004. Specifically, appellant states: Apart from the monies of $175,000 paid over these two checks, Appellant has no other damages, save and except loss of use of such monies, interest and the costs and attorneys fees associated with this litigation. Because appellant did not suffer damages when respondent moved her accounts to the retail bank in Sand Hill, or when respondent converted the two accounts to four accounts, her causes of action for breach of contract for those actions must fail as a matter of law.

^[11] Respondent points out that, had it failed to pay the checks, respondent would have been liable to Arturo Pertierra for wrongful dishonor under Commercial Code section 4402. Respondent further points out that, had appellant wished to block the accounts, she could have done so by following the procedures set forth in Financial Code section 952. She did not do so at any time.

^[12] As explained above, our determination that appellants causes of action for breach of contract lack merit disposes of appellants claim under the Commercial Code as a matter of law.

^[13] We note that in Sunn Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671, the Supreme Court allowed an action for negligence against a bank in the following narrow circumstance: when checks, not insignificant in amount, are drawn payable to the order of a bank and are presented to the payee bank by a third party seeking to negotiate the checks for his own benefit. (Id. at p. 695.) That is not the situation before us, therefore the exception is inapplicable.

^[14] Even if appellants claims concerning the transfer of funds were not displaced by the Commercial Code, those claims would still fail as a matter of law because, as explained above in footnote 8, appellant has not made any claim that she was damaged by those actions.

^[15] Appellant raises for the first time in her reply brief an argument that respondent deviated from public policy in setting forth its own internal policy that the wealthier individual should be treated in compliance with any agreement between the bank and depositors as to signature requirements. Because appellant did not raise this argument earlier, we do not address it.