NO. COA13-691

NORTH CAROLINA COURT OF APPEALS

Filed: 1 April 2014

LAWYERS MUTUAL LIABILITY INSURANCE 

COMPANY OF NORTH CAROLINA,

Plaintiff,

v. Wake County

No. 11 CVS 16860

SUE E. MAKO; R. SCOTT GIRDWOOD;

and MAKO & ASSOCIATES, P.A.,

Defendants.

Appeal by defendants from order entered 18 December 2012 by 

Judge Lucy N. Inman in Wake County Superior Court. Heard in the 

Court of Appeals 5 November 2013.

Poyner Spruill LLP, by T. Richard Kane and Andrew H. 

Erteschik, for plaintiff-appellee.

Girdwood & Williams, PLLC, by Benjamin D. Williams, for 

defendant-appellants.

BRYANT, Judge.

As our General Statutes hold that a cashier’s check is to 

be treated in the same fashion as a traditional check, a 

cashier’s check must undergo a provisional settlement period 

before it can be deemed irrevocably credited by the payor bank. 

Where there is no issue as to any material fact regarding our 
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statutory language concerning the processing of a cashier’s 

check, summary judgment is appropriate. 

Defendants Sue E. Mako; R. Scott Girdwood; and Mako &

Associates, P.A. (“defendants”) had a professional liability 

insurance policy (“the policy”) with plaintiff Lawyers Mutual

Liability Insurance Company (“Lawyers Mutual”) for the period of 

7 August 2011 through 7 August 2012. On 17 June 2011, 

defendants received an email from a potential client, Oliver 

Burkeman (“Burkeman”). Burkeman contacted defendants seeking 

assistance in collecting $350,000.00 allegedly owed him by his 

former employer, Crest Iron and Steel; Burkeman claimed the 

money was part of a workers’ compensation claim settlement. 

On 23 June 2011, Burkeman sent a signed Fee Agreement to 

defendants, and defendants agreed to represent Burkeman in 

collecting his settlement money. Defendants would assess 

Burkeman a contingent fee of 20% of any amount obtained. 

On 11 July 2011, defendants received an initial check for 

$175,000.00 from Crest Iron and Steel in partial payment of the 

amount purportedly owed to Burkeman. Defendants deposited the 

check into their trust account on 12 July 2011. Although 

defendants had a policy of holding funds for ten days prior to 

distribution, the policy was not enforced and distribution of 
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the funds was authorized that same day. Burkeman was to collect

$140,000.00 after defendants’ contingent fee of $35,000.00 had 

been deducted from the $175,000.00 check. Defendants attempted 

to wire $140,000.00 to a bank account in Japan per Burkeman’s 

instructions. However, due to an error in account information, 

the wire was unsuccessful and defendants could not collect their 

contingent fee.

1 

On 14 July 2011, defendants received a second check for 

$175,000.00 from Crest Iron and Steel in partial payment of the 

amount purportedly owed to Burkeman. On 15 July 2011, 

defendants deposited the second check and, again not abiding by 

their policy of holding funds for ten days, immediately wired 

$140,000.00 to the Japanese bank account. Defendants collected

from the second check a $35,000.00 contingent fee which was

deposited to defendants’ trust account. Also on 15 July 2011, 

defendants were notified by RBC Bank that the first of the two 

checks was being returned unpaid. On 18 July 2011, RBC Bank 

notified defendants that the second check was also being 

returned unpaid. Both checks were determined to be fraudulent. 

 

1 Defendants charged Burkeman a 20% contingent fee for any amount 

recovered; as such, defendants’ contingent fee for assisting 

Burkeman with the first purported settlement check of 

$175,000.00 was $35,000.00. Defendants would likewise assess a 

contingent fee of $35,000.00 for assisting Burkeman in 

collecting the second purported settlement check of $175,000.00.
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As a result, defendants suffered a total loss of $175,000.00 

from their client trust account.

On 1 November 2011, defendants filed a claim with Lawyers 

Mutual to recover $175,000.00 in funds lost as a result of the 

fraud. Lawyers Mutual filed a complaint for declaratory relief 

on 2 November 2011. On 12 December 2011, Lawyers Mutual filed a 

motion for summary judgment but withdrew that motion on 21 

December 2011. Lawyers Mutual then filed a motion for judgment 

on the pleadings that same day, but the motion was not heard. 

Defendants filed a motion for summary judgment on 23 December 

2011, which was denied by the trial court on 3 April 2012. 

On 30 May 2012, Lawyers Mutual filed an amended complaint 

for declaratory relief. Lawyers Mutual then filed for summary 

judgment on 15 October 2012. On 18 December 2012, the trial 

court granted Lawyers Mutual’s motion for summary judgment

determining in relevant part that: “It is undisputed that the 

funds at issue in this action were lost at a time when the 

deposit had not yet ‘cleared’ Defendants’ trust account at the 

depositary bank. The court concludes that the phrase 

‘irrevocably credited’ in the insurance policy precludes 

coverage of Defendants’ claim of loss.” Defendants appeal.

________________________________
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On appeal, defendants argue that the trial court erred in 

granting Lawyers Mutual’s motion for summary judgment. We 

disagree.

Summary judgment is appropriate "if the pleadings, 

depositions, answers to interrogatories, and admissions on file, 

together with the affidavits, if any, show that there is no 

genuine issue as to any material fact and that any party is 

entitled to a judgment as a matter of law." N.C. Gen. Stat. §

1A-1, Rule 56(c) (2013). Thus, this Court must “determine, on 

the basis of the materials presented to the trial court, whether 

there is a genuine issue as to any material fact and whether the 

moving party is entitled to judgment as a matter of law.”

Coastal Plains Utils., Inc. v. New Hanover Cnty., 166 N.C. App. 

333, 340, 601 S.E.2d 915, 920 (2004) (citation omitted). We 

review the granting of summary judgment de novo. Va. Elec. & 

Power Co. v. Tillett, 80 N.C. App. 383, 385, 343 S.E.2d 188, 

190—91 (1986).

Defendants contend that the trial court erred in granting 

summary judgment to Lawyers Mutual because, under Provision I., 

Section (r) of their insurance policy with Lawyers Mutual, the 

term “irrevocably credited” is ambiguous. Specifically,

defendants argue that they understood “irrevocably credited” to 
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mean that the policy would cover losses involving forged 

cashier’s checks because they assumed that a cashier’s check is, 

like cash, irrevocably credited upon deposit. Defendants’ 

insurance policy provides in part that:

I. Exclusions . . . [T]his policy does not 

afford to any Insured any coverage or 

benefits whatsoever, including, but not 

limited to, any right to any defense, with 

respect to:

. . .

(r) any claim, or any theory of liability 

asserted in a suit, based in whole or in any 

part upon disbursement by any Insured, or 

any employee or agent of any Insured, of 

funds, checks or other similar instruments 

deposited to a trust, escrow or other 

similar account unless such deposit is 

irrevocably credited to such account[.]

Pursuant to N.C. Gen. Stat. § 25-3-104(f), “‘Check’ means 

(i) a draft, other than a documentary draft, payable on demand 

and drawn on a bank or (ii) a cashier’s check or teller’s 

check.” N.C.G.S. § 25-3-104(f) (2013); Thompson v. First 

Citizens Bank & Trust Co., 151 N.C. App. 704, 707, 567 S.E.2d 

184, 187 (2002) (“Negotiable instruments, also called simply 

"instruments," may include, e.g., a personal check, cashier's 

check, traveler's check, or CD [pursuant to] N.C.G.S. § 25-3-

104.”). A settlement agreement to pay a negotiable instrument 

can be either provisional or final. N.C. Gen. Stat. § 25-4-
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104(11) (2013). A negotiable instrument may also be referred to

as an “item.” Id. § 25-4-104(9). 

An item is finally paid by a payor bank when 

the bank has first done any of the 

following: 

(1) Paid the item in cash; 

(2) Settled for the item without having a 

right to revoke the settlement under 

statute, clearing-house rule, or 

agreement; or

(3) Made a provisional settlement for the 

item and failed to revoke the 

settlement in the time and manner 

permitted by statute, clearing-house rule, 

or agreement.

Id. § 25-4-213(a). A payor bank may revoke a provisional

settlement prior to making final payment and before its midnight 

deadline by returning the item. Id. § 25-4-301(a).

Defendants argue that “irrevocably credited” is ambiguous 

because a cashier’s check differs from a traditional check. 

Defendants further argue that it was their understanding that a 

cashier’s check was as good as cash. Defendants’ argument is 

without merit, as pursuant to N.C.G.S. § 25-3-104(f), a 

cashier’s check is treated the same as a traditional check. A

traditional check cannot be deemed fully credited until its 

provisional settlement period has elapsed without action by the 

bank to reject the check; the same is true for a cashier’s 
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check. Therefore, the provisional settlement period that 

accompanies traditional checks must also apply to cashier’s 

checks. As such, Lawyers Mutual’s policy’s use of “irrevocably 

credited” refers to the statutory provisions which govern a 

check’s acceptance or rejection during its provisional 

settlement period. Accordingly, Provision I., Section (r) of 

Lawyers Mutual’s insurance policy would not protect defendants 

unless defendants deposited a check and waited until the 

provisional settlement period had finally elapsed to ensure that 

the check had been accepted and fully credited by the payor 

bank, regardless of whether it was a traditional check or 

cashier’s check. Therefore, the trial court did not err in 

granting Lawyers Mutual’s motion for summary judgment.

Affirmed.

Judges McGEE and STROUD concur.