it's a basic proposition your honour's that under illinois law banks oh a duty of ordinary care to their customers in all of their new ones that is as the seventh circuit said in the mutual service case so entrenched in the l on oil law that you see  explicitly requires that the parties may not by agreement abandon that duty in the trial court it was the view that it was the plaintiff's obligation to establish that there was some specific authority under the circumstances alleged in the complaint that there was a duty we submit that the correct perspective and the perspective required by annoyed case law and the u c c is that there is a duty of ordinary care unless there is a specific provision that if you have these kinds of cases you don't go to tor if you look at contracts i don't think that that's the case at all justice carter first of all there is no question about the application under the u c c itself of a doctrine of ordinary care if you look at for example comment four to fo hundred three you will see that the statement is there that generally a duty of ordinary care applies now in this case the economic los doctrine was injected by the trial court and a supplemental order as sort of a last minute thought you know he's if you think about first of all the law is pretty clear that mormon does not apply if there are extra contractual duties which is clearly the case here but if you were to conclude what are the actions are contractually duty of ordinary care that is implicit in every agreement between a bank and its customers so are you seeking toward damages yes absolutely and mormon deals with whether or not you can recover tort damages in a contractual relationship correct it deals with whether or not if your relationship is contractual and your duties are defined by contract you may recover in the glitches that's what it deals with but there is no doubt based on illinois supreme court case law that we discuss in our briefs illinois appellate law the u c c that there is a duty of ordinary care if you say that the economic loss doctrine pre amps that then you have changed the basic rules of the u c c in the relationship between banks and their customers because unless you hit somebody over the head with a check you're not going to have anything but economic loss in a case like this and that i think that the case law it just doesn't support the thought that the trial court had at the negligence duty of ordinary care is it still applies but specific to this case you have i mean what provision are you saying you know isn't hasn't been overridden by you know the u c c i mean there there is no specific provision in article four or article three of the u c c that directly addresses the allegations that are made in this complaint we say that there is a general duty of ordinary care we think that that's clear in the supplemental order the trial court said well we think that there is some sort of a general remedial scheme here with respect to the collection of items but there was no articulation in that order of what that general remedial scheme was how it would be swore to by recognising the duty ordinary care and there is really in our estimation no basis for the conclusion there's he hampshire and that all of the duty of ordinary here in these circumstances but under that duty what specifically are you saying that the busa bank failed to do on behalf of your client what i guess you know what duty did they have underneath is the duty of ordinary care what specifically are you saying that they should have done that they failed to do the allegations in the first amended complaint with respect to the breach of the duty of ordinary care or three f first being the failure to identify the check as a counterfeit item and inform their customer of that the second being the failure to recognize that under the circumstances and recall that what's alleged in the complaint is that this is an item that was drawn canadian bank supposedly of a canadian insurance company by some agent and obviously had to be processed through international needs you had questions about whether or not there was a watermark on the check and questions about this third party pay easy of the check under the circumstances our allegation is that under those circumstances particularly where this was a trust account was and i all take account the bank knew it was and i ho to account so they knew that the phones in this account belong to clients on one was not just some commercial account that was own by the firm that they just hope that  gee if there's check just clears will have a bunch of money it was not their money under those circumstances the bank should have said wait a minute you know we can give you provisional credit both under the u c c and under our dream and but under these circumstances you better wait till final settlement before any draw against that account that was not we believe that that is a breach of the duty finally it's alleged that there was a failure at the earliest possible time to inform the pla that there was a problem with the checks that may not be stated as fully and artfully as it could be but what's referenced is if for example you look at the green r case there's a reference to a process whereby through electronic means banks are notified that there is a problem with an item and it will be coming back there we're not talking about ultimate notice of this on or coming back through the collection system we're talking about what we think is a reasonable probability that there was a means by which the bank knew that the item was bad and they didn't tell us they could have told us they could have withdrawn the provisional credit assuming that we can prove what we'll and should of course we haven't had that opportunity we haven't had the opportunity to conduct discovery but those three matters your honor are what we allege are a breach of duty so under these circumstances how do you determine that there's been a breach well it's what is done by other banks in the ordinary course of business the usual course of business in the general area where the bank conducts business that's the standard and there will be evidence on that and either that's true or it's not true but we have not had the opportunity to get to that point obviously we think that we under the law are intitle to get there and of course that's why we're asking for mercy mr call has your client had the opportunity to look at that check first it was given to them  use in your complaint you allege that it said that it wasn't genuine without a watermark they had the opportunity to check and see if there was a watermark on it it looks from the language of the of the code that's applicable here that the legislature intended to impose the responsibility for the check on the on your client rather than on the bank the the language the structure that the flow of the code appears to be protective of the bank your honour's obviously correct that we have to check first and we could look at it that's an issue of comparative fault in this negligence case it is not a bar to the action with respect to whether or not the risk should be on the customer i think that the general duty of ordinary here cuts against that justice mcdade and also if you look at the greenberg case that has been discussed by both parties extensively in their briefs the discussion regarding who should bear the loss occurs in the final section of the opinion dealing with the equitable a stoppel issue where the customer was claiming against both citibank and h s b c that they should be equitably a stopped in that section of the opinion the court said yeah the customer should bear the loss under those circumstances in the absence of a breach of duty in the absence of a breach of duty and of course in the prior section the court of appeals of new york held that yes there is a common law duty on the part of the collecting bank in those circumstances but the evidence in that case and it was on summary judgment the evidence in that case was that the bank had proved that what they had done was consistent with the reasonable commercial standards and that was not read budded by the customer  an ordinary care is actually set out the duty of ordinary care in the in the code in section four two two zero doesn't the fact that it imposes expressly ordinary care on collecting bank obviate any argument that there is an additional duty of ordinary care that exists outside code the only standard in four to will to that displaces negligence is action by the midnight  you read the comments it makes it clear that that standard of meet the midnight deadline is completely different from the standard of whether proper action was taken if you look at that section it talks about proper action being taken by the midnight deadline essentially the proper action is where the ordinary care issue comes into play and there is nothing to it deals with presentment and so on you know in this case we're saying the check should have been presented no that's part of there's nothing that sets a standard on that under these circumstances our first specification of a breach of duty is the text should've been put into the system the issues of wait a minute there's a problem here and as a result of you know we were we were damaged that's why we're here today there is nothing whatsoever in the account agreement that sets any kind of a standard there's nothing that this this plaintiff is untitled under these circumstances under ellen oil law to have the opportunity to try to prove their case this would be the first case under these kinds of circumstances to hold this one under these circumstances it be the first case to address this particular issue but there is no contrary case your honor all of the other cases deal with claims that i was told the check cleared some kind of misrepresentation type of issue but it's certainly not the first case will not be the first case to hold that ordinary care applies and we're entitled to the i know what i'm talking about are these in these kinds of circumstances right where you're giving and were you say give rise to a toward this would be the first case certainly after mormon that would do something like this and say there's this is turned into a tor damage case oh  morning your honor thank you to please the court clerk counsel and honor guess who may very well one day be the future of this process and thank you by the way justices for allowing us to be part of this  program our issue here and there's a lot that we agree on in this case there are certainly some very important things that we disagree on and we were in agreement on the fact going to like facts there's a terrible terrible fraud perpetrated against this plane if we all agree on that there are a victim here we agree with that  the problem is a two hundred seventy thousand dollars absolutely your honor and and that's a terrible thing but at but we also need to understand the bad guy the perpetrator of this fraud wasn't in the trial court isn't in the room here today there are no allegations that busey bank is the bad guy here that took any role in perpetrating the fraud there's no intention there are no allegations of intentional conduct or anything what we were we were we don't really disagree with back what we disagree with i think is the framing of the issue on appeal put the concept of negligence on trial this is a negligence case let's stand on the hill of a mountain on the peak of a mountain and look at this case and say negligence doesn't go away whether in the banking industry or not th not really the question for the court the question is one of duty the question is the way that the plaintiff is alicia's complaint in other words allegations by a negative which always mean that's always a trigger that you look is there a duty when they're alleging these three things weren't done therefore we're damaged because these three things should have been done well that's a clear indication at the initial pleading level that we need to take a look well to the defendant had a duty to do those three things and the trial court very clearly believes you see bank did not have the duty to do that what are those three things will basically inquire about the check investigate the check and notify the plate of that there's a problem with the check that's what i'm talking about it in essence that's what they're saying are negligent conduct was and i understand that you filed your motion to dismiss under both two six fifteen saying that you know this is just couldn't stand are also under two six nineteen that you know there  defenses to that and i think that that's where the point of his coming was that they haven't gotten their opportunity yet to say what the you know what duty exactly was very sure at least that that sort of what i'm saying now the judge specifically just found under two six fifteen that there was a dismissal or that's in didn't address to six nineteen do you feel that the outcome would be any different no matter how we looked at it if we said you know and if we said it it should have been you know they should have been able to present a little more information and then you think either way here that's a very good question your honor let me shuts light on that at the trial level judge too big he was very clear that he rarely in fact i think he said he couldn't recall a time where he has granted to six nineteen really a trial he simply was diametrically opposed to granting it he believed those questions were better answered on summary judgment and that's why we don't see a two six one thousand orders in this case i believe judge to biggie did a two six nineteen analysis of the case in looking at the contract and in looking at the at davis but that's i believe just because of fundamental issue he has with section two nineteen we don't see it to one thousand nine hundred here do i think it would be different  the answer to that is no in his two sixteen analysis recall he gave the plaintiff a second time to plead and the two questions the court asked that play of the two questions on both levels of the motion to dismiss are the two questions that counsel heard before this court number one is there any case or any of the already out there where any fraudulent checks seem the bank is held to have a duty to inquire a duty to investigate a duty to inform i mean i think the answer was the same the dru war is is today the answer to that is no you can argue by analogy on other cases again let's stand on the mountain cause in negligence case but in reality when you look at as the greenberg case tells us to do look at the realities of the modern day banking system we need to do that in this case and look at the duty and no authority out there holds that you see bank had that duty now the second part of the two sixteen part of that analysis was this judge to begin i believe that you need to come back and replete because you're saying there's this separate of ordinary care out there and you're defining it you're taking language out of the u c c and you're calling it a customary practice in the area where you work and that's how you're defining it well again you're leading in the negative so you need to give us a little more about this duty and about this area and the problem is after two opportunities the plate of couldn't even define the area what does area mean is it geographic is it metaphoric they were never able to define what area in that definition let alone what customary practices are so that's my long winded answer to your question just i don't think i don't think the analysis would have been any different i certainly don't think the result would have been different tha code relieves the pain of its ordinary duty i mean the duty of ordinary care i think that's a good question what in the code is simple and i but i think it whether you look at the contract or the u c c the analysis of the say that comes to the two terms in our contract it says right there your credit is provisional till the entire check collecting process is done the second term all equally clear any shortages resulting from any charge backs we as the collecting or depositary back need to do is on you and again the case laws clear the cases that we've cited this is a clear to risk of loss on the bank customer and i understand that it's just that as mr cole has explains that the plaintiff's allegation of failure of ordinary care comes in the area of present month where the bank is acting as a depository bank you're focusing on the area where it's a collecting bank and so you're you're looking at an entirely different point in the process than they are and i guess my question is where in the code are you relieved is bucy bank relieved as the depository bank duty of ordinary care and i guess my answer to that is we're we're assuming right now because of of the plaintiff's argument that these are two separate points in time and two separate poses i don't believe they are i don't think the bank has two different hats depository and and collecting bank i think both of those hats are on the moment the check is handed to the bank i think yes where the depository bank but we're also the collecting bank and that begins the collection process under under article two fourteen bank doesn't become a collecting bank until it forwards the check to the clearinghouse greg or to the intermediary bank so it's not a collecting bank at the time of prison correct correct and again i'll point to the contract and remember the u c c article two zero one still says the same thing and two fourteen both contain the same language that we find in our contracts so i would refer back to those sections that say when credit provisional and when the bank has the right to charge back any shortages resulting in the collection process the risk of loss is on the customer i think that's what those two sections say and it's also where contracts us ok but that doesn't talk about the time of prison which is what they're focusing on what i think the contract does the contract talks that mean that the contract doesn't limit itself to the collecting process at all this is the count that in this is the account contract referring to this is the contract that the customer signed when the accounts open i think it refers to all points in time negligence claim against the bank that survives outside of the u c c and outside of the sections that we keep citing that protect the band well simply couldn't be more than common law and counsel argues that we don't look at simply because of how old yes and i understand the case law that says cases that predate nine hundred thirty five have limited presidential value doesn't mean it has limited persuasive value and i will also say that that case has been cited by the only practices as recently as two thousand and twelve in the latest edition on the issue of the check collecting process so i don't and i think i don't think we've seen anything that suggests italy has been negatively treated on these issues since it came out in one thousand nine hundred eighty the greenberg case the attempt to distinguish greenberg which which is factually it couldn't be closer it's the exact same type of fraudulent scheme we have in this case the same arguments are made which section and which headlined in that opinion we find the language under i don't think matters we still have a depository and a collecting bank facing a common law negligence claim and i think that case is very clear under this scheme it doesn't apply we also haven't talked about the ronan case that's from the supreme court of montana about been involved a lot from but  negligent claims are preempted by the u c c substantially similar u c c provisions is what we have here we also need to talk about the mormon doctrine i don't believe the mormon doctrine was a complete afterthought i think it was raised on more  out on more than one occasion by the trial court and two to distinguish the mormon doctrine from our situation by virtue of an extra contractual relationship i think that argument is disingenuous because they doesn't occur that lawyers and accountants are fiduciary is to their clients banks are not and in a highly regulated industry today the last still holds that concept true that banks are not fiduciaries attorneys and accountants do have extra contractual or sorry extra contractual relationships with their customer banks don't follow up question to just suspected questions earlier regarding the presentment is what you're saying is that whether or not they had any duty to check that the check for its watermark authenticity that because of the provisions regarding the provisional credit and the twenty four hour rule that resentment and what do they owe really doesn't have any connection on the other end because the provisions of the contract are so clear that you know whether they have looked at it and thought it was legitimate failed to look at heavy duty whatever that at the end of the day until that check clears there is that is that is a a loan to the account holder until that you get the check back that you know there is no guarantee of funds until it is actually come all the way back i think there are several layers on which you can analyze that at the answer to your question is yes i also believe you need to look at the contract but i also think we need to look at the common law that keep in mind the sibley case in the greenburg case both didn't just have a situation where the customer hands the check to the bank teller and that starts the process they go one step further in those cases those cases have the bank teller sand oh yeah this check is good we had better bac in those cases seeking a common law negligence claim than we have here and those cases still said there's no duty under common law there's no duty they didn't necessarily rely the entire opinion didn't rely on section two fourteen of the u c c i think we look at three different layers on this u c c protects the banks the contract protects the banks and when we look at the case law that we have an authority that we have the common law a duty to investigate inquire and notifying a customer that there's a problem with the check simply q thank you thank you mr van fleet thank you just as mcdade a couple of quick quotes if i may comment for five for one or three of the u c c under this article banks come under the general obligations of the use of good faith and the exercise of ordinary care it can't be plainer five four to fourteen d to the right to charge back is not affected by two failure of by any bank to exercise ordinary care with respect to the item but a bank is sole failing remains liable for two fourteen d to their contract at least and it's relevant here is that c fifty in the record in a circumstance like this all i can say is i've read it he's read it you've got to read it too because what he's saying ain't there see fifty to these other cases i sound like a broken record here you read greenberg and follow what we when you read roan and follow what we when those cases favor us both of them well and so can your case it's pardon me for those new york cases  greenberg's new york thrown in as montana ok and do we know whether those two states have adopted the same version of the u c c that illinois is we do the answer is yes with respect to the idea that tellers were saying in these other cases the checks are good those are the allegations the allegations are that someone said that  cleared that's a different circumstance those allegations relate to the check clearing with respect to mormon it's discussed at length in the briefs but if you look at the from tooth ross on page eighteen in our brief the on always supreme court makes it clear that it doesn't apply to extra contractual duties runners we thank you for your time and thank you we thank both of you for your arguments this morning will take the case under advisement and the issue of written decision as quickly as possible the court will now stand in recess or