Travelers Indemnity Co. v. Good

Sobeyda Good (defendant) was a bookkeeper for a law firm. Between October and December 1996, Good obtained almost $77,000 by forging signatures on checks drawn on the firm’s account with PNC Bank (PNC) (defendant). Travelers Indemnity Company (Travelers) (plaintiff), PNC’s insurer, reimbursed the firm for its loss and then, as the firm’s subrogee, sued PNC, Good, and others. Travelers alleged, among other things, that PNC violated §§ 3 and 4 of the Uniform Commercial Code (UCC) by failing to exercise ordinary care or comply with reasonable commercial banking standards. The superior court granted partial summary judgment to PNC regarding forged checks that were processed at a PNC local branch and permitted Travelers to take additional discovery regarding checks that were processed at PNC’s central unit. Specifically, the superior court allowed Travelers to investigate PNC’s check-clearing operations and procedures at its central processing unit. PNC moved for summary judgment after Travelers conducted some such discovery, which revealed that PNC trained the relevant employees and assigned mentors to the relevant employees to supervise and help with verification. However, Travelers sought further discovery regarding whether PNC complied with its policies. The superior court declined to allow more discovery, finding that (1) the firm did not review its October PNC account statement and would have prevented two forged checks if it had done so, (2) there was no evidence that PNC’s central processing procedures were not commercially reasonable, and (3) Travelers waited too long to request additional discovery. Accordingly, the superior court granted summary judgment to PNC. Travelers appealed.