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Wells Fargo Bank, N.A. v. National Bank of Commerce

Supreme Court of Alabama

June 30, 2017

Wells Fargo Bank, N.A.
v.
National Bank of Commerce

         Appeal from Jefferson Circuit Court (CV-12-901247)

          MURDOCK, Justice.

         Wells Fargo Bank, N.A. ("Wells Fargo"), appeals from the Jefferson Circuit Court's denial of its claim for attorney fees against National Bank of Commerce ("NBC"). We affirm the judgment of the circuit court.

         I. Facts

         The claim at issue in this appeal stems from a lawsuit concerning the deposit of a check issued on June 18, 2009, by Jennifer Champion, treasurer of Jefferson County, in the amount of $178, 916.42 in settlement of claims made in Winston v. Jefferson County, Case No. CV-07-2297, a class-action lawsuit concerning excess tax bids. The check was drawn on Jefferson County's account with Wachovia Bank, N.A., a predecessor to Wells Fargo, and it was jointly payable to the order of Carl Prewitt, Debra Prewitt, Renasant Bank, and Moore Oil Co., Inc. ("Moore Oil").[1]

         After the check was issued, it was mailed to the Prewitts at their home in Trussville, and it was received by Debra Prewitt. On June 22, 2009, the check was stamped "for deposit only, " and it was deposited to an account in the name of Liberty Investing, LLC ("Liberty Investing"), at Red Mountain Bank, a predecessor to NBC, using a remote scanner that was provided by NBC's predecessor to Creative Edge Landscaping, Inc. ("Creative Edge").[2] It is undisputed that the check was deposited without endorsements and that the Prewitts were not signatories on the Liberty Investing account.

         After NBC's predecessor accepted the check and credited the Liberty Investing account, it presented the check to Wells Fargo's predecessor for payment. Wells Fargo's predecessor paid the check and debited Jefferson County's account. The Prewitts received the proceeds of the check over time through a series of withdrawals and transfers from the Liberty Investing account.

         In 2011, Moore Oil became aware of the check, and by a letter dated September 14, 2011, it demanded that Jefferson County pay Moore Oil the amount of the check because, Moore Oil contended, it was entitled to the proceeds of the check. Wells Fargo asserts that Jefferson County then "contacted Wells Fargo, seeking repayment" of the check. In contrast, NBC asserts that Jefferson County has not "made a demand to Wells Fargo for reimbursement of the proceeds from the check." Neither party, however, provides record support for these assertions concerning the treasurer's actions.[3]

         On October 13, 2011, Wells Fargo sent a letter to NBC asserting that NBC's predecessor had breached its presentment warranty under § 7-4-208, Ala. Code 1975, by accepting the check for payment without proper endorsements and then presenting it for payment to Wells Fargo's predecessor. On October 26, 2011, NBC sent a response to Wells Fargo in which it asserted that "applicable Alabama law precludes any recovery by Wells Fargo based on a presentment warranty against NBC for any funds paid under this check."

         On April 20, 2012, Moore Oil filed an action in the Jefferson Circuit Court against the Prewitts, Wells Fargo, and NBC, alleging that each of the defendants was liable for conversion of the check. On May 3, 2012, Wells Fargo sent a letter to NBC demanding that it defend and indemnify Wells Fargo in the action filed by Moore Oil. On May 9, 2012, NBC sent a response in which it declined to defend or to indemnify Wells Fargo, citing the reasons provided in its previous letter to Wells Fargo.

         On May 30, 2012, Wells Fargo answered Moore Oil's complaint, denying liability for conversion of the check, and it filed cross-claims against both NBC and the Prewitts for indemnity and money had and received and cross-claims solely against NBC for breach of warranty and unjust enrichment.

         On June 18, 2012, NBC answered Moore Oil's complaint, denying liability for conversion of the check, and it filed cross-claims and third-party claims against Liberty Investing, Creative Edge, the Prewitts, Edward Parker, and Shea and Amanda Mitchell, including claims alleging contractual indemnity, common-law indemnity, breach of contract, breach of transfer warranty, fraud, and fraudulent suppression based on the wrongful deposit of the check in violation of NBC's predecessor's remote-deposit-account agreements.

         Moore Oil subsequently amended its complaint several times to assert claims against Liberty Investing, Creative Edge, Parker, and Shea Mitchell alleging conversion and conspiracy and seeking prejudgment interest. On August 12, 2013, the circuit court granted a motion to stay the action pending this Court's ruling in First United Security Bank v. McCollum, 178 So.3d 372 (Ala. 2014). The trial court returned the action to its active docket by order dated October 30, 2014.

         On April 29, 2015, Wells Fargo moved for a partial summary judgment against NBC. On May 22, 2015, NBC filed its response in opposition to the motion. Wells Fargo filed a reply in support of its motion on May 27, 2015.

         On September 25, 2015, Moore Oil filed a motion for a partial summary judgment on its claims against NBC, Wells Fargo, Liberty Investing, Creative Edge, the Prewitts, and Shea Mitchell. Both Wells Fargo and NBC opposed the motion on the ground that Moore Oil was not entitled to the proceeds of the check.

         On November 9, 2015, the circuit court issued an order in which it entered a partial summary judgment in favor of Moore Oil on its conversion claims against Wells Fargo, NBC, the Prewitts, and Shea Mitchell, stating:

"The Plaintiff's Motion for Partial Summary Judgment is granted in part. The plaintiff's claims against defendants National Bank of Commerce and Wells Fargo Bank, N.A., under Ala. Code §§ 7-3-420 and 7-3-310 [are] granted. Judgment against these defendants on this claim will be entered. Additionally, the plaintiff's motion with regard to its conversion claims against defendants Carlton Prewitt, Debra Prewitt and Shea Mitchell is granted. In all other respects, plaintiff's motion is denied."

         In the same order, the circuit court granted in part Wells Fargo's motion for a summary judgment against NBC, stating:

"The Motion for Partial Summary Judgment, filed by Wells Fargo, N.A, against co-defendant National Bank of Commerce is granted in part. The court finds that NBC is legally obligated to indemnify Wells Fargo against any demand of the plaintiff herein against Wells Fargo. The court denies Wells Fargo's request for attorneys' fees."

(Emphasis added.)

         According to NBC, following the circuit court's November 9, 2015, order, Moore Oil, NBC, Parker, Creative Edge, and Liberty Investing entered into a settlement agreement resolving the claims between them. Wells Fargo did not participate in the settlement.

         On April 28, 2016, the circuit court entered an order in which it observed that "[b]y separate orders entered today, several defendants have been dismissed from this action." The circuit court requested that the parties inform it as to whether any other disposition was required in the case. On May 9, 2016, the circuit court entered an order dismissing all remaining claims in the action with prejudice.

         Wells Fargo subsequently filed this appeal from the circuit court's November 9, 2015, order, specifically challenging the denial of its claim for attorney fees.

         II. ...


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