Opinion ID: 2994894
Heading Depth: 3
Heading Rank: 1

Heading: e., if there had been a fiduciary or

Text: confidential relationship between Frost and FOA, if there were a contractual relationship between the two banks, if a more stringent duty had been created by law, or if FOA had committed fraud in dealing with Frost, we find no such exceptions here. Therefore, FOA’s duty of good faith did not require it to disclose to Frost that it suspected that Geekie was running a check kiting scheme. Likewise, FOA did not have to refrain from attempting to shift the inevitable loss away from itself and onto the other financial institutions victimized by Geekie and Parker. In its second criticism of the district court’s decision, Frost argues that even if the district court correctly relied on the legal analysis set out in First National Bank, there are glaring factual distinctions between the two cases that render the district court’s reliance on that court’s decision erroneous. Frost contends that FOA took steps beyond the actions of the depository bank in First National Bank, and that these steps constitute bad faith. Once again Frost attacks the manner in which FOA collapsed the kite. As evidence of FOA’s bad faith, Frost points to FOA’s use of a holding account, and FOA’s refusal to tell Frost of the kite, both in the manner in which it returned checks, and by declining to inform Frost of the kite even when Frost directly contacted FOA seeking information. Frost also argues that FOA breached its duty of good faith by representing to the banking community that the Midwest Autohaus account was a traditional deposit checking account, when in fact it was the functional equivalent of a line of credit from FOA. Having already found that FOA’s duty of good faith under the UCC did not require it to either disclose to Frost that it suspected a check kiting scheme or refrain from attempting to shift the loss from the kite on to Frost, we are able to dispose of this final claim in short order. Despite Frost’s insistence to the contrary, the manner in which FOA returned checks, its failure to disclose its suspicions to Frost, its use of a holding account, and its representations to the banking community as to the nature of Geekie’s account do not constitute bad faith. Our de novo review of the actions taken by FOA to collapse the suspected kite support only one conclusion, that [a]t worst, the facts in this case demonstrate that FOA successfully shifted to Frost the loss from Geekie and Parker’s kite. Frost Nat’l Bank, No. 95-2150, at 22 (C.D. Ill. Feb. 26, 1999).