Clean World Engineering, Ltd. v. MidAmerica Bank, FSB

Nicholas Fredich (“Landrum”) pretended to be someone named “Robert C. Landrum” to procure a bookkeeping position with Clean World Engineering, Ltd. (Clean World) (plaintiff). “Landrum” used a newspaper ad for a fake-booking position to obtain Landrum’s resume and personal information. Accordingly, when Clean World’s president, Rita Kapur, reviewed the resume, verified the references, and ran a credit report, everything checked out. Clean World offered “Landrum” the job, and “Landrum” accepted. “Landrum” created a company and opened a company-bank account. Then, “Landrum” used blank checks from Clean World’s checking account with MidAmerica Bank, FSB (MidAmerica) (defendant), deposited $137,445.02 into the company’s account using forged signatures, and withdrew those funds for his personal use. Kapur became suspicious when “Landrum” stopped showing up for work, and then Kapur discovered that some checks were missing from her office. When Kapur contacted MidAmerica about the situation, the missing checks had already been processed. MidAmerica recovered $85,516.82 on Clean World’s behalf but refused to credit the remaining funds to Clean World’s account. Clean World sued MidAmerica for damages and alleged that MidAmerica violated Uniform Commercial Code (UCC) § 4-401 by unlawfully charging its account for items that were not properly payable. At his deposition, “Landrum” testified that although Kapur locked her office door at the end of each day, Kapur never locked the credenza where she kept the checks and “Landrum” had access to the checks as needed. “Landrum” further testified that he could print checks from Clean World’s accounting computer program without inputting any passwords and that Clean World did not have a policy for safeguarding its checking account. Based on “Landrum’s” testimony, MidAmerica argued that Clean World’s negligence substantially contributed to the forged checks. The trial court ruled for Clean World.