Opinion ID: 59586
Heading Depth: 3
Heading Rank: 2

Heading: McCann's Evidentiary Challenge

Text: McCann next argues that the district court's judgment lacks a factual basis. He also asserts an affirmative defense not timely raised in the courts below: that Huntington was negligent in failing to obtain the endorsements of all payees listed on the checks before accepting them for deposit. An appellate court reviews the decision of a district court, sitting as an appellate court, by applying the same standards of review to the bankruptcy court's findings of fact and conclusions of law as applied by the district court. Nesco Acceptance Corp. v. Jay (In re Jay), 432 F.3d 323, 325 (5th Cir. 2005) (citing Carrieri v. Jobs.com Inc., 393 F.3d 508, 517 (5th Cir. 2004)). A bankruptcy court's findings of fact are reviewed for clear error . . . . Id. A finding of fact is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with a firm and definite conviction that a mistake has been committed. In re Missionary Baptist Found. of Am., 712 F.2d 206, 209 (5th Cir. 1983) (internal quotation marks and citation omitted). Michigan has adopted the Uniform Commercial Code for purposes of establishing the various warranties that arise in the transfer of negotiable instruments such as checks. See Starbrite Distrib. v. Excelda Mfg. Co., 454 Mich. 302, 306 n.2 (Mich. 1997). Michigan law provides that: [a] person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by endorsement, to any subsequent transferee . . . (a) [t]hat the warrantor is a person entitled to enforce the instrument; (b) [t]hat all signatures on the instrument are authentic and authorized; [and] (c) [t]hat the 5 No. 06-20488 instrument has not been altered . . . . A person to whom the[se] warranties . . . are made and who took the instrument in good faith may recover from the warrantor as damages for breach . . . . Mich. Comp. Laws § 440.3416(1)-(2) (LexisNexis 2008) (hereinafter MCL). The bankruptcy court found that McCann breached various warranties to Huntington that arose upon endorsement and deposit of the altered checks because (1) McCann endorsed and transferred the checks to Huntington; and (2) he did so for consideration. Because McCann has never disputed these two findings, he relies solely on his affirmative defense of negligence, an argument premised on Huntington's failure to obtain the endorsements of all payees listed on the checks, rather than just McCann's, before accepting them for deposit. The bankruptcy court's factual findings, which amount to a prima facie case of McCann's liability, are supported by the record and therefore are not clearly erroneous. Further, McCann failed to raise his affirmative defense of Huntington's negligence at trial. It is therefore waived. See Little, 37 F.3d at 1071 n.1.