Opinion ID: 2539402
Heading Depth: 1
Heading Rank: 26

Heading: Issue 9: The panel erred in failing to reverse the trial judge's grant of judgment against KBS regarding Question 2.

Text: For its last argument, KBS contends that the Court of Appeals erred in failing to reverse the trial judge's judgment against KBS regarding Question 2 of the bond application. As mentioned, at the close of all the evidence the bank had argued there was no evidence to justify bond rescission based upon its answers to application Questions 1 and 2. The judge granted the bank's motion for judgment as a matter of law on both questions. In our analysis of Issue 3, we affirmed the panel's reversal of the trial judge on Question 1. We now address the panel's affirmation of the trial judge on Question 2. As a reminder, the bank answered yes to the question: Do you have a planned program requiring segregation of duties so that no single transaction can be fully controlled by one person? (Emphasis added.) The bank argues that its Internal Control Policy conclusively demonstrates that the bank had programs. It then points out that Question 2 does not particularly inquire into compliance with such programs. In affirming the trial judge's entry of judgment against KBS as a matter of law, the panel first quoted the Internal Control Policy, which states in relevant part: `Our policy is to promote whenever possible a segregation of duties involving incompatible functions. No person shall have control of a transaction from origination to completion. In addition, the following program will provide a secondary review function of all major transactions.' Slip op. at 31. The panel then ruled that Question 2, unlike Question 3 (analyzed in Issue 2), was limited to asking whether the bank had policies and procedures in place. It concluded that Question 2 did not ask whether the bank required certain conduct of its employees, i.e., actual performance. Slip op. at 31-32.