ma'am please the court one of the most basic principles of civil law is that everyone is responsible for exercising reasonable care to avoid harm and loss to him or herself or to others in the case of small and large businesses ordinary care requires that two people look at checks and deposits and records kept the division of responsibilities of central to avoid embezzle failure to divide responsibilities is a breach of the duty of ordinary care of every business so somebody has to be looking over their shoulder and if no one's looking over their shoulder the temptation to steal is too much for a lot of people since eight hundred eighty five california law has held that persons whose failure to use ordinary care contributes to the making of a forged or unauthorized interest when an instrument or depositing an instrument with no indorsement that person is precluded from asserting the force missing indorsement against a person who in good faith pays the instrument or takes it for collection now that law remains the law in the california uniform commercial code commercial code which is current today in the one nine hundred sixty three code the preclusion appeared in both section three four zero four unauthorized signatures and section three four zero six negligence contributing to this one of your arguments i think in this case is that under thirty four or five you should prevail correct are we have arguments under three four zero four and three four zero five that we should prevail but we also have the argument that i'm talking about now which  let's get to thirty four or five because we have a limited amount of time we want to make sure we have clarity on what i think may be a key issue for you in this case thirty four o five b and c specifically thirty five of c seems to be a good statute for you in this case yes the idea that if the names are very similar right that's a potential defense for the bank right can you confirm to me how this was addressed or not addressed by the district court thirty four zero five right and i'm going to guide the parties to i saw in your briefing you raised it in an opposition summary judgment as well as in your motion or summary judgment and then you filed a motion for reconsideration which is just a court denied an excerpt of record page twenty three names of the accounts were substantially similar if clearly there is an issue for the account of ed meyers corporation d b a lori b being similar to the name on the checks lori piolo see the point i wanted to address here is point that issue preclusion precludes the whole action the court didn't apply comparative negligence at all and she says she mistakenly thought that the issue preclusion was removed from uniform commercial code entirely in one thousand nine hundred two and didn't even address the issue now we've raised out in in our brief and the supreme court in cooper versus union bank in one nine hundred seventy three explained that everybody has to be careful that all through the history of our commercial law if somebody is negligible and doesn't have this d responsibility and allows someone to steal after a reasonable period not exceeding six months that person is precluded from suing whatever bank is dealing with the embezzler in this case the guy was stealing from two thousand and six two thousand statute of limitation are what the bank is being sued for now he had so much power over the books and records that he signed twenty seven of the checks that are part of the subject of this judge gets the bank with authority to sign up he had authority to make the checks deposit him transfer money between accounts and he misused that authority from two thousand and nine to two thousand and ten to the extent of more than one hundred sixty thousand dollars clearly set forth the fact that the one nine hundred ninety two amendments to the uniform commercial code did not eliminate that long established law although the commercial code the state statute has been adopted by forty nine states including all the all the states of the ninth circuit so it's an important issue yet and we're sitting here as a federal court interpret california law should we be looking for opportunities to clarify california law don't we don't let the state courts do that well i'm i'm trying to understand why you seem to run away from your thirty five i'm sorry from your thirty four oh i see two argument well three forms i mean seems to me that's one of your best arguments but you can't want to go back to the other one is what i'm missing about this one i wanted to make that point and can finish with that so yes thirty four zero five is an important part of the defense of mine or was a person with responsibility for the checks in the checks were deposited in an account in the name substantially similar and just following up on my colleague's a comment we usually like to see some case law that flushes out the issue in this case you got an ambiguity in the names and the only case i believe was cited and perhaps what he would say to me we found it was shane smith enterprises inc versus bank of america it's an arkansas district court case which is not exactly a overwhelming precedent but john i can find in the commercial code of course we are authorized to look nationwide given the uniformity of most commercial code provisions you have any other case that would  buttress your argument that the if you will that the names of the parties are substantially similar enough that this is not a go back to court for a jury yes you we begin page fifty of our brief talking about cases that found as a matter of law didn't divorce most were names substantially similar to the name  circuit case in which the court found as a matter of law that the name jimmy holloway deviate postal aggregate cultural on its own supply was substantially similar to the name of the paychex coastal cultural suppl incorporated and then we just a number of cases let's say that that the names are substantially similar in those cases and the i reserve five minutes or whatever you want i good afternoon at the net stephen glaser on behalf of the apple the lori b c let me get right to this issue of substantial similarity of the two names under section thirty five zero four see  the two names are not substantially similar as a matter of law because the name on the account can as a whole desert underground utilities incorporated d but there is a clear line of demarcation in the cases that exist that when what you want is your what is your best case for your argument that any confusion between the and to ts for purposes of whether this was  appropriately deposited what's your best case that as a matter of law no one could have permitted this to occur and been in their right mind i think the best case is in re mcmullin oil company w enterprises they were put into an account with an individual's first name a name d b a s smith enterprises and in determining that those two were substantially similar the court looked at the wells fargo's brief contrary to shane smith enterprises assertion the addition of the words quote melvin lewis walker d b a that's the part that proceeds does not signify that the account is foreign and distinct but that's not what the case actually says what the case says is that the the words that precede the d b a in the name of the account does not signify that the account is for an entity distinct from the name of the payee and it goes on to say compare that with in re macmall an oil company where the two names indicate that they are different legal entities is it your position counsel that unless we agree with you that as a matter of law if you use the term d b a and the predecessor portion is same no that that's my position is that where the name of the account considered as a whole indicates that the account is for an entity distinct from the name of the pay on the check in this case a corporation and an l l c which are obviously different legal and it is that as a matter of law those can't be confused is that your position that's correct those two names are dissimilar in a substan bank on which again to make more of the oil company case rely and i would i would submit that this this issue is an application of undisputed facts the names of the account asian where we could decide this is a matter of law without sending it back for a jury trial yes in this instance that i could see a situation where for example although the two names did not clearly signify that they were  entities where there was it was close but maybe not close enough you could send that back to a jury but the line of demarcation is where they are represent two distinct separate entities and the law would it have been substantially similar even though they're they're not the same legal entity i think that let me answer that in that you could not get a fictitious business name in the name of lori b l l c that's why the corporations called requires limited liability companies to have limited liability company in their name or l l c and corporations to have the name were corporation or incorporated but i will answer your question this way there were checks in this case made payable just to lori b with no limited liability designation in them and we withdrew those from contention because i think that that could raise know you could not get a fictitious business name with the term l l c in it because that because now that's no longer a fictitious business name that indicates the it's just it's a business entity that's a limited understand i don't understand your and i'm sorry i think it's when you submit a fictitious business name statement that you're doing business under a fictitious business name i don't believe you can have a b c corporation as your fictitious business name because the word corporation denotes that the entity is a corporation and i don't want your tissues that's what i don't understand i'm missing something that certainly doesn't on the ground utilities i think was fictitious but i was a corporation that underground utilities inc was a corporation with the california secretary of state and there's a separate process for applying for a a fictitious business name where you submit fictitious business name statement with your fictitious business name but i am not a securities lawyer or a corporate lawyer but i do not believe you can get a fictitious business name that you know you publish them it's out there you say whatever you want and you can say later on well you should have done that but so if it were true if it had said what my colleagues said and what your answer i think that's a much closer case turn on what kind of legal entity it is yes yes when when when the name of the account is mcmullan oil company pension plan which is a separate legal entity checks made payable to make mo an oil company are not substantially similar that's what the court held in that case because a bank is required to know that a pension plan has to have its own separate account and a corporation has to have its own separate account and a limited liability company has to have its own separate account and then the names denote different persons under the law such that the page on the check cannot be the account holder and the other question i have these checks are processed and seems to me very quickly their problem so far as i can tell often processed through twenty four hours what is the nature of the normally when when they're processed by in case wells fargo i assume this goes through fairly quickly that this is people don't sit around doing searches and and i taking some kind of sophisticated analysis you're making isn't it relevant in terms of the subsample similarity what the process is for a bank any bank not just wells fargo in determining whether to go to to pass the pay the check or not under the commercial code and i know that's a diff the commercial code doesn't section thirty four twenty it's clear that if a bank takes a check other than by negotiation from someone not entitled to enforce a check or makes tapes payment for someone not entitle to enforce the jack it's liable for conversion now there are a lot of exceptions and certain least we've discussed in this case thirty four of five being one of them deposit they don't that nobody does the thing that you would normally think a teller would do in the old days where you go and look at that the name of the check and look at the back and look at the name of the count that process of determining negotiate billy wells fargo doesn't even do that but the commercial code doesn't give the depositary bank i mean i'm mistaken but when i give a check to the teller my bank she looks at it right she looks to see who  payable and i but but these days people are not only depositing checks by a t m they're taking pictures of them and sending the photos and it's of these banks had a lot of checks and they don't they don't check maybe as much as thirteen fourteen of them should have been they call it outsourcing for actual review like a teller would over the counter and then they're subject to you know scrutiny by somebody trained in determining checks and and we don't know if that was done or not done i'm not sure that this makes any difference in terms of possible negligence but nobody seems to raise the patriot act here which requires careful examination of these things in order to avoid people money laundering terrorism and the like does that play any role at all in this case and if so what i have no sorry to say that you know i know banking procedures for commercial banks like big banks like like wells fargo and i have no i just argue went on if i told you that the patriot act requires a bank before except in a deposit to look at the check and make certain that the name of the check and the deposit t e are the same argument and say that's right and if they didn't do it what role if any should that play given your understanding of the commercial code i believe that if you ever get the first that's right thirty four twenty makes conversion automatic without you know if they pay the check to the wrong person they're liable for for  you your opponent has about five minutes left i think whenever it is he has  coastal arms are agricultural lone star limestone supply was indorsed coastal agricultural supply incorporated not was found sufficient this is from page fifty fifty one fifty two in my brief in penny technologies person city bank in a new york case cited in page fifty one of my brief so camel the penny technology you think was indorsed simply petty technologies and deposited to an account opened by the former president of the company with the d b a name penny technology those cases in those cases did the court of appeal decide the issue or was a sent back for jury determination i believe these these are cases of the court of appeal finding that these names were a jury question how would the jury be instructed on the question of substantial similarity with the question would be whether or not there they similar and we would be make a dent same arguments that we're talking about here about what's substantially similar but it's certainly an issue of fact that you can't get to term and as a matter of law there's certain things substantially similar failure to follow reasonable commercial standards by accepting checks without the endorsement of the named pay he does not make the bank liable to the payee for conversion if the checks were deposited by an entity that was authorized by the payee to enforce the checks and this it certainly was entitle to enforce checks and if he's entitled to enforce checks uniform commercial code sections three four two zero doesn't apply at all because it only applies to people not entitled to enforce and namely not given the check by the company and told to endorse it and deposit it so the man isn't subject to uniform commercial code sections twenty four to all and all i ask your opposing counsel about the is hypothetically if it says you can't deposit something that's different than the name of the depository for example if you have a check to an individual and you wanted to follow that into a trust or vice versa you're not supposed to do that are you if you have a check payable to an individual and want to deposit it into a trust or vice versa can you do that without evidence that the owner of the individual owns the trust or is a beneficiary of the trust well if it's payable to an individual the so are there any other questions i don't think so thank you both thank you thank you both for your argument we appreciate it the case just argued is limited and me i just make of the personal