good morning may please the court money's tight ketchum and i represent national union fire insurance company were segregated to the interests of investments subrogated to the interests of the investment centers of america and we brought this lawsuit because hometown bank allowed mark henry to come into the bank and open an account doing business as investment centers of america and in doing so the bank we alleged did absolutely nothing to verify that marken really had the authority to do that on behalf of investment centers of america and in fact he didn't have that authority we're here today because the district court granted a rule twelve motion in favor of hometown bank and i won't spend a lot of time on what the standard is because i'm sure you know that standard very well but  based upon the facts that we've alleged in our complaint that we have alleged the requisite facts to establish a plausible claim for relief here for making a negligence claim against hometown bank in connection with the opening of the account the district court found that there was no duty as a matter of law the court's ruling with respect to duty relates i believe  as i interpret it to two things one is that the statutes rules principles and precedents don't support a duty under these factual circumstances and then the other basis the courts and the court also analyzed the duty issue under the factors that exist in the state of missouri for determining whether or not a duty should exist based upon public policy we believe that we have alleged facts here to support the excess existence of a duty on the part of hometown bank to take reasonable precautions to make sure that when it opens an account on behalf of a company like investment centers of america that it knows what investments centers of america is that it that it make sure that it do something it did absolutely nothing here that it do something to make sure that mark in re has some connection to investment centers of america what would that to look like well your honor i believe it could take the form had of a number of things what some of the things that we've alleged in our petition or in our complaint is that the bank make an effort to ensure that mark henry actually was doing business as investments and as of america and one way that they do that now is by contacting the secretary of state in the state of missouri and making sure that the individual has a fictitious name registration in the state of missouri which would provide an indication that this particular individual actually is according to the state of missouri doing business as investment centers of america here mark henry shows up on i think november fifth two thousand and four with a check for one hundred thousand dollars made out to investment centers of america and he says i want to open an account so that i can cash or deposit this check and the bank says ok can we see your i d and he shows he shows them his personal id and that's it they have no information whatsoever that he has any connection to this investment brokerage firm that he's holding a check made out to in the amount of one hundred thousand dollars well you probably had to get the money but that the bank was probably happy to get the money well and i think that that goes to the issue of duty when the bank is is in a position like this where it's been a fitty from the fact that money is being deposited in its accounts made out to an investment brokerage firm like investment centers of america the bank ought to have a duty to do something to make sure that this individual actually does have authority to open   the duty here and this is a hot topic i think the duty here the position we're taking is that the duty here did run to investments in terms of america because they felt that they had a relationship with investment centers that's our position and if you're analyzing missouri law with respect to when a court will acknowledge a duty some of the things they look at is whether or not there's a relationship between the defendant in the point and also whether or not there are special circumstances that exist that would warrant the imposition of a duty and our argument in part is that when when the bank allows more can read to do this and then accept checks made out to investment centers of america without doing anything at all to ascertain specifically what the connection between martin reinvestment centers of america was they they believe they had a relationship with investment centers of america and therefore there is a relationship so the duty arises because they allowed him to open the account and accepted checks at a later date to me well they were the position that we're taking in this case is that the duty arose in connection with the opening of the ok so the check business is not relevant to the new it's any time somebody comes into a bank and says they're opening an account and lists an affiliate then the bank has a duty to the other party even if it's a complete stranger and that's that's the rule for the facts in this case that's our position in this particular instance what do you mean by that for the facts well president apply to the next case when john doe comes in and says i'm d b a a mom and pop grocery does there is her duty to mom and pop grocery i think there is a do not right you know it's not just this that's the rule any case where somebody comes in and says i'm opening i have affiliated with or doing business says a third party you say there's a duty to that third party even if it's a complete stranger to the bank well i want to be clear on what the rule would be right i believe that there is a duty in the state of missouri for a bank to inquire with respect to whether or not the individual who comes in to open the account on behalf of the d b a or on behalf of another company actually has the authority to do that and i would also submit that in connection with the specific facts that we've alleged in our complain the circumstance definitely demonstrate that it do the other exist here were there any states that have adopted the rule you are proposing because i think several have said no there's no duty to non customers there are there are a lot of cases that hol that no you feel sure that alabama case but the alabama court itself came back later and arguably narrow that yester out x yeah i think you're referring to the patrick case from texas does arc or yeah there's a district court case where a similar situation existed we saw him where those somewhere though or others were people seems like one or two of those or maybe both well actually i don't think so in terms of whether or not there is a duty excess you know we've all ledged very specific facts that relate to the opening of an account and what the bank did not do here and what the bank should have done here in order to ensure that this exact type of fraud didn't exist and in the patrick case i agree with you that the facts are exactly the same  in the patrick case where the court was dealing with an individual who was who had used the identity of another individual and that the the plaintiff ended up spending some time in prison in connection with bad checks that were written actually identical we can see but we believe that there is a duty of inquiry under these circumstances to circumstances excuse me to make sure that the bank knows its customer another thing that we've cited to the court in our brief is a reference to the bank secrecy act part of the reason why the district court granted the rule twelve motion was because the court found that there were no statutes precedents rules principles upon which the court could rely to find that there was a duty and i believe that the bank secrecy act does provide an example of a social consensus that these interests that we're trying to protect here need to be protected by the  bank that under the bank secrecy act a bank has a duty to make sure that it knows its customers and the bank secrecy accepts for some minimum standards with respect to what needs to be done but the bank secrecy act also as a general matter requires the bank to know its customers and here hometown bank did not know its customer and the reason why it didn't know its customers because it didn't do anything to know anything about its customer  i think the harm here certainly was foreseeable it anytime someone comes in and tries to open up an account when they don't have authority to do that i think it can be assumed that the individual on behalf of being open is going to suffer damage where and i also don't think the magnitude of the burden that would be required upon the bank to make sure this type of thing doesn't happen actually i don't believe that's the standard to take reasonable precautions to try to prevent this from happening is not great and in fact i think the bank secrecy act requires them to do this and it was and acted before the bank allowed this account to be opened well what do you think your b the best case your honor that that deals with the opening of an account is the better case out of alabama and we've also argued to the court that the dalton marbury case from missouri recognizes that there is a common law negligence claim that that exists in connection with the breach of a duty to inquire as to whether an agent has the authority to do banking business on behalf of the employer and so we believe that's a that's an important case as well and that cites to the martin case in missouri i've used up the allotted time i was going to do in my first round and so there's no questions at this time i'm going to sit into the meat of this i wanted to address one point that was made in the appellants reply brief the first page of the brief first footnote they indicated an arbor if we appeared to have misapprehended their negligence claims and that their claims of negligence in this case relate soley to the opening of the mark henry doing business investment centers of america but i think this is important because that admission i think is a waiver of half of their negligence claims in this case and is mark henry without customers authorization opened a money market account in each of those customers names at investment centers of america and he put himself in his wife as joint account holders of those accounts he then took those customers f and deposited into those accounts he then wrote checks from those accounts into his personal account and hometown back not his d b a account as personal account and then he spent the money on his personal business given or not there's no causal relationship whatsoever between the opening of the dva account and their losses so whatever the court does with the other legal arguments here at asd that your firm judge finished dismissal of the negligence contributions claims and this case was dismissed under rule twelve b because the court found that hometown bank and they did not owed duty to investment centers of america or to its customers to check the missouri secretary of state website to ascertain that mark henry had registered the fictitious name investment centers of america before permitting him to open the d p a account for the general rule in missouri is that there is no duty to protect anyone from a third party's criminal acts what mark henry did here was criminal there's no dispute about that was deliberate is an exception to that rule however where there's a special relationship between the injured party in the party of for him corporation investment centers of america was sufficient to create some kind of special relationship and in support of that they cite the patrick case from alabama the taurus case from texas you know and in those cases what happened is an imposter opens an account the album in texas courts went through a negligence analysis pretty much identical to missouri and they said well you know the special relationship exception applies here you know why because the people who got hurt here are the people who you thought you were your account holders you have a duty to inquire you know when an account gets open who your account holder is there's a special exception you had a duty you breached it but those cases aren't this case and i think the case that makes that clear is another texas case we say that's the guerra case ending where a starts out the same way as torres and patrick posture comes and opens account name of a gentleman pedro guerra whole bunch of bad checks get written out of the account prosecutor she's a warrant except this time he didn't issue the warrant for the pedro where and whose name the account was opened he issued in the name of a totally different pedro guerra and so mr where totally innocent gets arrested has a whole bunch of trouble he files a lawsuit against the bank goes up to the texas court of appeals and they say hey sorry no special relationship you weren't the bank's customer the bank had a relationship with a paid role where that's not you it's a different pedro where and that's the case here you know and judge from his decision he went be imposed on a party and in the opponent's reply brief i saw i think seven times they stated as a matter of fact that hometown bank thought that it had a relationship with investment centers of america and well that that was never pled and in fact that's not true because a d b a account is not the same thing as a corporate business account the account  simply the account is own to every legal interest and it is held by mark henry it's simply denotes that he's doing business under the name investment centers of america and it's a perfectly appropriate palming thing for people to do now the point about i think just finished more about efficacy is you know the opponents pointed out it is easy as pie for hometown bank to go to the secretary of state's website and see if mark henry is registered as it is it takes two seconds to type in the name you don't have to pay anything it's not like oh you're written out it's really simple but what he doesn't point out is that it's also incredibly simple to register a fictitious name that takes all of one minute and cost seven dollars and missouri's or most other state people don't own a business name you can do business under any name you want it's perfectly legal proper and appropriate for mark penn or anyone else to register the business name investment centers of america anybody can do it and so i know the people at home town bank and what would have happened here if we had follow through with the duty of the opponent proposes is the bank officer with a looked up l hey you know mr henry you haven't registered the business name investment center's america to do that for we can open the account if you want to use my computer you can go ahead he would have done it there would have been a fictitious name registration but that would have no tendency what so ever to avoid the harm here so what if there was a duty what could the bank do to confirm that this person had that authority well  and forgive me i don't know what the statute is but it is unlawful missouri to do business under fictitious name without registering the name but any person can register any name at any time so simply the act of saying hey i am going to do business under such and such name is sufficient to permit you to do it you know i'm doing business as bob's plumbing for example you're allowed to put out a sign that says bob's plumbing your customers write checks to  account where you deposit checks payable to bob split up there's already a bob's plumbing you're allowed to do that but now copyright trademark law so forth might have something so is your position there's really that even to impose a duty would be to impose no duty because it would be in an ineffective there's nothing that you can do because anyone's allowed to use any name and that was always employees who are filing you know we haven't made that argument are pleadings it just when i saw seven separate times in this reply brief this statement of fact that we thought we were doing with a particular corporation that's not true if you look at the register dames database at any state and you look up any sort of common company name you'll see twenty or thirty companies with that man that's fine proper and appropriate people are allowed to have the same business pretend to irk scuse me prompted by the uniform commercial code and section four hundred dash three point four zero five a missouri statutes governs a bank's handling of instruments and it provides that when an employer gives an employee authority to handle instruments in the employee fraudulent lee endorses them and steals the money the default rule is that the employer asked for the liability for that now in the latter part of section b there's sort of an affirmative defense or counter claim where if the bank didn't exercise ordinary care and its failure to exercise ordinary care substantially contributed to the loss in the bank has to bear the loss t the exact agreed to which its breach of its duty of ordinary care occurred that's this case a matter of fact there's an example in missouri statutes it's case number three under section three days four zero statutory commentary says is the bank's not liable in that situation unless it failed to exercise ordinary care and you know the appellant hasn't and does contest application of the statute because they say hey there's no evidence whatsoever that mark henry had the authority from investment centers or matters america to handle instruments well given the facts pled by the plaintiff i think the only fair inference is that he did what  complaint says is that mark henry was the only representative of investment centers american carthage missouri that he had an office or funny part of the missouri and that he solicited investment business from residents who lived around carthage m i think the only reasonable inference from those facts is that those people were supposed to give him checks but even if the court wouldn't find that it's a fair inference from those facts then there's another u c c statute that governs liability that's u c c three point four dash twenty and that's statute actually creates a default rule that if a bank pays an instrument under a forged endorsement which is what happens here the bank is liable period now as an affirmative defense where the pay of the instrument failed exercise ordinary care but the default roles of banks liable now one of the statutes governs this case think about the statute is there governed by the statue of limitations for the four customers who suffered losses in this case i see a settle with the last one of them more than three years before this case was filed so this case is governed by and i'm running low on time but i'd like to address one thing which goes to your line of questioning mr tyson regarding investments in his america and i think the implication is that my client had some awareness that it was a corporation or that he was employee and there's nothing in the record at all to indicate that he had a small office where he worked alone in a store front with a fairly generic name of a company called investments and owners of america they had no idea that worked for anyone else they had no idea that these are anyone's chaps anyone else's checks what did they ask or what sort of identification always personal id his driver's license yeah that  at the time it was customary all they asked for when opening in the media and as we point out when he did open this t v account he'd been backing at hometown bank personally for six years his office is just right that wall not there anymore but was just right down the street from the back i mean he was in the rotary club he was in the dock hunting club i know a bank president from the doctrine of theirs they knew what he was one of the guys from carthage so you know mr cashel talks about it you know you're on on just address a couple of the issues that mr weber brought a judge you asked him what are some of the things that the bank could have done we've alleged those things in our complaint they could have they could have contacted the secretary of state like  would only take a couple seconds they could have contacted investment centers of america that would only take a minute they could have asked for a municipal business license to show that this guy actually was doing business as investment centers of america it makes no sense at all to me that a bank ought to be allowed to open up an account on behalf of someone all it has is an idea of id personal id from a sole proprietorship account doing business as an investment firm to me that just makes sense and there ought to be a duty on behalf of a bank to do something to make sure that the person to take reasonable precautions to make sure that that person had the authority to do that pleadings this is a rule twelve motion we are to be given all reasonable inferences i don't believe the court is to infer anything in favor of the of the defendant at this stage so with respect to what i ca or what hometown bank fought and who hometown bank thought it was dealing with we get the benefit of those reasonable inferences not the defendant and then we've  any of the requisite facts to demonstrate that mr henry have responsibility as that term is defined in the u c c and in any event we are what we've alleged is negligence associated with the opening of an account and that is not specifically addressed by the u c c thank you both for your