Court Opinion

ID: 4232506
Source: CourtListenerOpinion
Date Created: 2017-12-26 21:14:44.757712+00
Date Added: 2024-06-11T14:43:06.713955
License: Public Domain

FILED
                                                                           17-0065
                                                                           12/20/2017 6:03 PM
                                                                           tex-21421836
                                                                           SUPREME COURT OF TEXAS
                                                                           BLAKE A. HAWTHORNE, CLERK

                                       No. 17-0065

                              In the Supreme Court of Texas

                                 Compass Bank, Petitioner

                                            v.

                            Francisco Calleja-Ahedo, Respondent

                  On Petition for Review from the First Court of Appeals
                                    in Houston, Texas
                                Case No. 01-15-00210-CV

                             Petitioner’s Brief on the Merits

                                             HIRSCH & WESTHEIMER, P.C.
                                              Michael D. Conner
                                             mconner@hirschwest.com
                                             State Bar No. 04688650
                                             William P. Huttenbach
                                             State Bar No. 24002330
                                             phuttenbach@hirschwest.com
                                             1415 Louisiana, 36th Floor
                                             Houston, Texas 77002
                                             Telephone: (713) 223-5181
                                             Facsimile: (713) 223-9319

                                             Attorneys for Petitioner,
                                             Compass Bank

930505.20140273/2851932.1
                            Identity of the Parties and Attorneys

          Petitioner:                             Counsel:

          Compass Bank                            William P. Huttenbach,
                                                  trial and appellate counsel
                                                  State Bar No. 24002330
                                                  phuttenbach@hirschwest.com
                                                  Michael D. Conner,
                                                  counsel in the Court of Appeals
                                                  State Bar No. 04688650
                                                  mconner@hirschwest.com
                                                  H IRSCH & W ESTHEIMER , PC
                                                  1415 Louisiana, 36th Floor
                                                  Houston, Texas 77002
                                                  Telephone: (713) 223-5181
                                                  Facsimile: (713) 223-9319

          Respondent:                             Counsel:

          Francisco Calleja-Ahedo                 Michael C. O’Connor, trial and
                                                  appellate counsel
                                                  State Bar No. 15187000
                                                  moconnor@oconnorcraig.com
                                                  Lesley C. O’Connor, trial and
                                                  appellate counsel
                                                  State Bar No. 24086952
                                                  loconnor@oconnorcraig.com
                                                  O’CONNOR & CRAIG
                                                  2825 Wilcrest Drive, Suite 261
                                                  Houston, Texas 77042
                                                  Telephone: (713) 266-3311
                                                  Facsimile: (713) 953-7513

930505.20140273/2851932.1
                                              i
                                                 Table of Contents

Identity of the Parties and Attorneys ............................................................................ i

Index of Authorities......................................................................................................... vi

Statement of the Case ....................................................................................................... 1

Statement of Jurisdiction................................................................................................. 3

Issues Presented................................................................................................................ 6

          Issue 1:            The Court of Appeals improperly construed and
                              applied Texas Business and Commerce Code section
                              3.406 without discussing and, thereby, rendering
                              judgment in conflict with cited authorities from other
                              jurisdictions in contravention of Texas Government Code
                              section 311.028 and Business and Commerce Code
                              section 1.103(c). ............................................................................... 6

          Issue 2:            The Court of Appeals’ decision conflicts with this
                              Court’s decision in Martin where this Court
                              concluded that the customer bears the risk of
                              non-receipt of bank statements. ................................................... 6

          Issue 3:            Other courts have interpreted the term
                              “made available” as it applies to Texas Business and
                              Commerce Code section 4.406, and the
                              Court of Appeals’ construction of section 4.406
                              differs from other courts when it determined that
                              Compass had not made the bank statements “available”
                              per section 4.406, which is likely a matter of
                              first impression under Texas law. ................................................. 6

          Issue 4:            There are strong policy reasons for the
                              Texas Supreme Court to decide this case
                              and affirm the trial court’s judgment. .......................................... 6

930505.20140273/2851932.1
                                                                ii
         Issue 5:            The Court of Appeals exceeded its authority by
                              finding or impliedly finding facts necessary to its
                             disposition which facts are not supported by or are
                             contrary to evidence in the summary judgment record.
                             See Texas Nat. Bank v. Karnes,
                             717 S.W.2d 901, 903 (Tex. 1986)................................................... 6

         Issue 6:            The Court of Appeals improperly analyzed
                             summary judgment evidence and/or applied a
                             different standard to Compass’ evidence as movant
                             than that applied to Calleja’s evidence as cross-movant. .......... 6

         Issue 7:            To support its disposition, the Court of Appeals
                             construed plain language in the trial court’s
                             order granting summary judgment in a manner that
                             effectively eliminated summary judgment evidence
                             that otherwise supports the trial court’s judgment.................... 7

         Issue 8:            Even if this Court determines that the
                             2008 Deposit Agreement should apply, Section 4.406
                             still bars Calleja’s claims because Calleja did not
                             timely report the alleged unauthorized disbursements. ............ 7

Statement of Facts ............................................................................................................ 7

         The Account and transactions. ........................................................................... 7

         The contract between Compass and Calleja. .................................................. 11

Summary of Argument .................................................................................................. 14

         The Court of Appeals impermissibly found facts in
         support of its decision. (Issues 5 and 4) ......................................................... 15

930505.20140273/2851932.1
                                                               iii
         The Court of Appeals applied one standard for
         Compass’ custodian’s affidavit and a different
         standard for Calleja’s. (Issues 6 and 4) ............................................................. 16

         Business and Commerce Code section 3.406. (Issue 1) ............................... 16

         Business and Commerce Code section 4.406. (Issues 2 and 3) .................. 16

         The 1988 signature card is a part of the parties’
         contract, which the Court of Appeals erroneously
         failed to give effect. (Issue 8)............................................................................. 17

         The Court of Appeals took expressly inclusive language
         in the trial court’s order and, without justification,
         called it exclusive. (Issue 7) ................................................................................ 18

Argument & Authorities ............................................................................................... 18
         A.                 The Court of Appeals exceeded its authority
                            by finding facts necessary to support its
                            conclusions. (Issues 5 and 4) ....................................................... 18

         B.                 The Court of Appeals failed to properly analyze
                            competing summary judgment affidavits. (Issues 6 and 4).... 22

         C.                 Calleja’s claims are precluded by Texas Business and
                            Commerce Code section 3.406. (Issue 1) ................................. 29

         D.                 Calleja’s claims are precluded under Business
                            and Commerce Code section 4.406. (Issues 2, 3, and 8)........ 42

         E.                 Other courts have interpreted the term
                            “made available” as it applies to Texas Business and
                            Commerce Code section 4.406, and the Court of Appeals’
                            construction of section 4.406 differs from other

930505.20140273/2851932.1
                                                           iv
                               courts when it determined that Compass had
                               not made the bank statements “available”
                               per section 4.406, which is likely a matter of
                               first impression under Texas law. (Issue 3) ............................... 59

          F.                   There are strong policy reasons for the
                               Court to decide this case and affirm the
                               trial court’s judgment. (Issue 4) ................................................. 63

          G.                   Without the 2012 agreement and without
                               the 2008 agreement, there is only one writing
                               material to the parties’ agreement in the record,
                               the 1988 signature card. (all issues) ............................................ 65

          H.                   The Court of Appeals improperly construed
                               plain language in the trial court’s order. (Issue 7) .................... 66

Conclusion ....................................................................................................................... 69

Prayer ................................................................................................................................ 70

Certificate of Compliance ............................................................................................. 71

Certificate of Service ...................................................................................................... 71

Appendix to Petitioner’s Brief on the Merits ............................................................ 72

930505.20140273/2851932.1
                                                                    v
                                          Index of Authorities

Texas Cases
1/2 Price Checks Cashed v. United Auto. Ins. Co.,
  344 S.W.3d 378 (Tex. 2011) ............................................................................... 37, 38

American Airlines Employees Federal Credit Union v. Martin,
 29 S.W.3d 86 (Tex. 2000) ....................................................................................passim

Apache Indus. Painting v. Gulf Copper & Mfg. Corp.,
 No. 01-08-00812-CV, 2010 WL 1611450
 (Tex. App.—Houston [1st Dist.] Apr. 22, 2010, no pet.) ................................... 49

Avery v. LPP Mortgage, Ltd.,
 No. 01-14-01007-CV, 2015 WL 6550774
 (Tex. App.—Houston [1st Dist.] Oct. 29, 2015, no pet.) ................................... 24

Barfield v. Howard M. Smith Co. of Amarillo,
 426 S.W.2d 834 (Tex. 1968) ................................................................................passim

Calleja-Ahedo v. Compass Bank,
 508 S.W.3d 791 (Tex. App.—Houston [1st Dist.] 2016, pet. filed) .............passim

Castilla v. Citibank (S. Dakota), N.A.,
 No. 05-11-00013-CV, 2012 WL 762822
 (Tex. App.—Dallas Mar. 9, 2012, no pet.) ............................................................. 24

Childers v. Advanced Found. Repairs, L.P.,
 No. 13-04-00193-CV,
 2007 WL 2019755 (Tex. App.—Corpus Christi July 12, 2007, no pet.) ........... 23

City of Keller v. Wilson,
 168 S.W.3d 802 (Tex. 2005) ............................................................................... 26, 66

930505.20140273/2851932.1
                                                        vi
CBM Engineers, Inc. v. Tellepsen Builders, L.P.,
 403 S.W.3d 339
 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) ..................................... 27, 29

Coastal Plains Development Corp. v. Tech-Can Corp.,
 531 S.W.2d 143
 (Tex. Civ. App.—Houston [1st Dist.] 1975, writ ref ’d n.r.e.) ................................. 48

Compass Bank v. Nacim,
 459 S.W.3d 95 (Tex. App.—El Paso 2015, no pet.) .......................................passim

Contractors Source, Inc. v. Amegy Bank Nat’l Ass’n,
 462 S.W.3d 128 (Tex. App.—Houston [1st Dist.] 2015, no pet.) ...................... 23

Cross Creek Investments, Inc. v. First State Bank,
 No. 03-00-00439-CV, 2001 WL 459177
 (Tex. App.—Austin May 3, 2001, no pet.) ...................................................... 43, 55

E.I. Du Pont De Nemours & Co. v. Shell Oil Co.,
 259 S.W.3d 800 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) ............... 26

El Paso Field Servs., L.P. v. MasTec N. Am., Inc.,
 389 S.W.3d 802 (Tex. 2012) ...................................................................................... 67

FM Props. Operating Co. v. City of Austin,
 22 S.W.3d 868 (Tex. 2000) ........................................................................................ 49

Gellatly v. Unifund CCR Partners,
 No. 01-07-00552-CV, 2008 WL 2611894
 (Tex. App.—Houston [1st Dist.] July 3, 2008, no pet.) ....................................... 24

Golden Eagle Archery, Inc. v. Jackson,
 116 S.W.3d 757, 761 (Tex. 2003) ...................................................................... 20, 50

930505.20140273/2851932.1
                                                         vii
Hathaway v. Gen. Mills, Inc.,
 711 S.W.2d 227 (Tex. 1986) ............................................................................... 48, 49

HECI Exploration Co. v. Neel,
 982 S.W.2d 881 (Tex. 1998) ...................................................................................... 31

Heritage Resources, Inc. v. NationsBank,
 939 S.W.2d 118 (Tex. 1996) ...................................................................................... 51

In Matter of Estate of Downing,
  461 S.W.3d 231 (Tex. App.—El Paso 2015, no pet.) ........................................... 66

In re Estate of Berry,
  280 S.W.3d 478 (Tex. App.—Dallas 2009, no pet.).............................................. 46

Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am.,
  341 S.W.3d 323 (Tex. 2011) ...................................................................................... 54

Jefferson State Bank v. Lenk,
   323 S.W.3d 146 (Tex. 2010) ........................................................................... 4, 46, 59

Johnson v. Bethesda Lutheran Homes & Services,
  935 S.W.2d 235 (Tex. App.—Houston [1st Dist.] 1996, writ denied)............... 23

Kachina Pipeline Co., Inc. v. Lillis,
 471 S.W.3d 445 (Tex. 2015) ............................................................................... 53, 54

Kennamer v. Estate of Noblitt,
  332 S.W.3d 559 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) ........ 26, 66

Levine v. Steve Scharn Custom Homes, Inc.,
 448 S.W.3d 637 (Tex. App.—Houston [1st Dist.] 2014, pet. denied) ........ 20, 50

930505.20140273/2851932.1
                                                        viii
Lewis v. Aurora Loan Services,
 No. 01-15-00362-CV, 2016 WL 887176
 (Tex. App.—Houston [1st Dist.] Mar. 8, 2016, no pet.).................. 21, 28, 49, 65

Miller v. Raytheon Aircraft Co.,
 229 S.W.3d 358 (Tex. App.—Houston [1st Dist.] 2007, no pet.) ...................... 25

Morrison v. Chan,
 699 S.W.2d 205 (Tex. 1985) ...................................................................................... 56

Nixon v. Mr. Prop. Mgmt. Co.,
 690 S.W.2d 546 (Tex. 1985) .................................................................. 21, 28, 49, 65

Okonkwo v. Washington Mutual Bank, FA,
 No. 14-05-00925-CV, 2007 WL 763821
 (Tex. App.—Houston [14th Dist.] Mar. 15, 2007, no pet.)....... 43, 55, 56, 59-60

Rizkallah v. Conner,
 952 S.W.2d 580 (Tex. App.—Houston [1st Dist.] 1997, no writ) .........23, 25, 26

Ryland Group, Inc. v. Hood,
 924 S.W.2d 120 (Tex. 1996) ...................................................................................... 23

Schiro v. Texas Community Bank,
  68 S.W.3d 55 (Tex. App.—Dallas 2001, no pet.) .............................. 43, 55, 56, 60

Schlumberger Tech. Corp. v. Swanson,
  959 S.W.2d 171 (Tex. 1997) ...................................................................................... 31

Shields Ltd. P’ship v. Bradberry,
  526 S.W.3d 471 (Tex. 2017) ............................................................................... 49, 50

Sw. Bank v. Info. Support Concepts, Inc.,
 149 S.W.3d 104 (Tex. 2004) ................................................................................passim

930505.20140273/2851932.1
                                                         ix
Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex.,
  253 S.W.3d 184 (Tex. 2007) ...................................................................................... 49

Texas Nat. Bank v. Karnes,
  717 S.W.2d 901 (Tex. 1986) ........................................................................... 6, 20, 50

Trico Techs. Corp. v. Montiel,
  949 S.W.2d 308 (Tex. 1997) .........................................................................27, 28, 29
Tyl. v. Henderson,
 162 S.W.2d 170 (Tex. Civ. App.—Fort Worth 1942, writ ref’d w.o.m.)........... 67

Union Bankers Ins. Co. v. Shelton,
 889 S.W.2d 278 (Tex. 1994) ...................................................................................... 56

Via Net v. TIG Ins. Co.,
 211 S.W.3d 310 (Tex. 2006) .........................................................................31, 37, 41

Wagner & Brown, Ltd. v. Horwood,
 58 S.W.3d 732 (Tex. 2001) ................................................................................. 31, 41

Waite v. BancTexas-Houston, N.A.,
 792 S.W.2d 538 (Tex. App.—Houston [1st Dist.] 1990, no writ) ...................... 25

Non-Texas Cases
 Bank of Nichols Hills v. Bank of Oklahoma,
196 P.3d 984 (Okla. Civ. App. 2008) ................................................................... 40, 67
Borowski v. Firstar Bank Milwaukee, N.A.,
 579 N.W.2d 247 (Wis. Ct. App. 1998) ............................................................. 58, 62

Dominion Const., Inc. v. First Nat’l Bank of Maryland,
 315 A.2d 69 (Md. 1974) ............................................................................................. 67

930505.20140273/2851932.1
                                                           x
First Citizens Bank of Clayton County v. All-Lift of Georgia, Inc.,
  555 S.E.2d 1 (Ga. Ct. App. 2001).............................................................................. 46

Gast v. Am. Cas. Co. of Reading, Pa.,
 240 A.2d 682 (N.J. Super. Ct. App. Div. 1968) ..................................................... 68

General Petroleum Products, Inc. v. Merchants Trust Co.,
 160 A. 296 (Conn. 1932)............................................................................................ 63

John Hancock Fin. Servs., Inc. v. Old Kent Bank,
  346 F.3d 727 (6th Cir. 2003) ..................................................................................... 34

Kaplan v. JPMorgan Chase Bank, N.A.,
 No. 14-C-5720, 2015 WL 2358240 (N.D. Ill. May 12, 2015).............................. 56

LaSalle Bank Nat’l Ass’n v. Sleutel,
 289 F.3d 837 (5th Cir. 2002) ............................................................................. 56, 60

McMickle v. Girard Bank,
 515 A.2d 16 (Pa. Super. Ct 1986) ............................................................................. 62

Myrick v. Nat’l Sav. & Trust Co.,
 268 A.2d 526 (D.C. 1970)....................................................................................passim

Putnam Rolling Ladder Co., Inc. v. Manufacturers Hanover Tr. Co.,
 546 N.E.2d 904 (NY 1989) ..........................................................................35, 37, 42

Stowell v. Cloquet Co-op Credit Union,
  557 N.W.2d 567 (Minn. 1997) .................................................................................. 61

Tatis v. U.S. Bancorp,
 473 F.3d 672 (6th Cir. 2007) ..................................................................................... 57

Terry v. Puget Sound Nat. Bank,
  492 P.2d 534 (Wash. 1972).................................................................... 31, 32, 37, 40

930505.20140273/2851932.1
                                                          xi
Thompson Maple Products, Inc. v. Citizens Nat’l Bank of Corry,
 234 A.2d 32 (Pa. Super Ct. 1967) ............................................................................. 39

Westport Bank & Tr. Co. v. Lodge,
 325 A.2d 222 (Conn. 1973) ....................................................................................... 63

Wetherill v. Putnam Investments,
 122 F.3d 554 (8th Cir. 1997) ..................................................................................... 62

Woods v. MONY Legacy Life Ins. Co.,
 641 N.E.2d 1070 (N.Y. 1994).................................................................................... 62
Statutes
Tex. Bus. & Com. Code § 1.103 .............................................................. 4, 4, 6, 36, 38

Tex. Bus. & Com. Code § 1.201(b)(36) ...................................................................... 46

Tex. Bus. & Com. Code § 3.406 ............................................................................passim

Tex. Bus. & Com. Code § 4.406 ............................................................................passim

Tex. Civ. Prac. & Rem. Code § 33.001 ....................................................................... 34

Tex. Estates Code § 351.102 ........................................................................................ 46

Tex. Fin. Code § 34.301(a) ...............................................................................30, 53, 65

Tex. Fin. Code § 34.302 ................................................................................................ 30

Tex. Gov’t Code § 22.001(a) .......................................................................................... 3

Tex. Gov’t Code § 311.028 ............................................................................3, 6, 37. 38

930505.20140273/2851932.1
                                                           xii
Rules
Tex. R. App. P. 9.4(e) .................................................................................................... 71

Tex. R. App. P. 9.4(i) ..................................................................................................... 71

Tex. R. Civ. P. 166a(c) ................................................................................................... 27

Tex. R. Civ. P. 166a(f) ............................................................................................ 23, 24

Other Authorities
Black’s Law Dictionary 284 (7th ed. 2001) ................................................................ 26

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                                                             xiii
                             Statement of the Case

  Nature of the Case                  Bank customer, Calleja, sued Compass
                                      for paying unauthorized items.
                                      Compass asserted various defenses,
                                      including defenses under the deposit
                                      agreement, and under sections 3.406
                                      and 4.406 of the Business and
                                      Commerce Code. Calleja argues he had
                                      no duty to notify Compass that he was
                                      no longer receiving his account
                                      statements. The parties also disagree as
                                      to whether bank statements were
                                      otherwise “made available” and
                                      whether Calleja timely reported the
                                      alleged unauthorized disbursements
                                      after not reporting same for 18
                                      months.

  Trial Court                         55th District Court, Harris County, the
                                      Honorable Jeff Shadwick presiding

  Trial Court Disposition             On cross motions for summary
                                      judgment the trial court granted
                                      Compass’s motion and denied
                                      Calleja’s.

  Court of Appeals                    First Court of Appeals, Houston;
                                      Justice Evelyn V. Keyes authored the
                                      opinion for the panel also including
                                      Chief Justice Sherry Radack and
                                      Justice Laura Higley

  Court of Appeals Opinion            Calleja-Ahedo v. Compass Bank, 508
S.W.3d 791 (Tex. App.—Houston [1st
                                      Dist.] 2016, pet. filed).

930505.20140273/2851932.1
                                      1
  Court of Appeals Disposition   The Court of Appeals reversed and
                                 rendered judgment in favor of Calleja.
                                 Both parties moved for rehearing. The
                                 court of appeals denied both motions,
                                 but withdrew its original opinion (see
                                 No. 01-15-00210-CV, 2016 WL
2342758 (Tex. App.—Houston [1st
                                 Dist.] May 3, 2016)), and issued its
                                 superseding opinion.

930505.20140273/2851932.1
                                 2
                             Statement of Jurisdiction

         This case present questions of law which are important to the

jurisprudence of the state. Tex. Gov’t Code § 22.001(a).

         This case involves the issue of whether a bank customer’s failure to

protect himself after previously experiencing bank fraud, identity theft, and

failure to monitor his account for an extended period constitutes a “failure to

exercise ordinary care,” which “substantially contribute[d]” to the making of a

forgery under section 3.406 of the Texas Business and Commerce Code. See

Tex. Bus. & Com. Code § 3.406(a). Construction and application of section

3.406 appears to be a matter of first impression for the Court.

         It is important to Texas jurisprudence that construction and application of

uniform statutes, e.g., sections 3.406 and 4.406 of the Texas Business and

Commerce Code, be construed to effect the general purpose of such uniform

acts to make uniform the law of this state with the law of those other states that

have adopted them. Tex. Gov’t Code § 311.028; Tex. Bus. & Com. Code §

1.103(c).

         This case presents a question of law of importance to Texas jurisprudence

within the “statutory scheme reflect[ing] an underlying policy decision that

furthers the Uniform Commercial Code’s (“UCC”) objective of promoting

930505.20140273/2851932.1
                                          3
certainty and predictability in commercial transactions’ [citations omitted] … by

allocating responsibility among the parties according to who is best able to

prevent a loss.” American Airlines Employees Federal Credit Union v. Martin, 29
S.W.3d 86, 92 (Tex. 2000). This case presents the question whether “the risk of

non-receipt of account statements”—applied by the Court in Martin—also

applies beyond the 4.406 context. See Martin, 29 S.W.3d at 90; Tex. Bus. & Com.

Code § 1.103.

         This case presents a question of law of importance to Texas jurisprudence

regarding the meaning of the phrases “makes available” and “made available” in

section 4.406 of the Texas Business and Commerce Code. See Tex. Bus. & Com.

Code § 4.406(a), (c), (f). The Court has addressed the issue, in part, in such cases

as Martin, 29 S.W.3d at 92 (where there was no dispute that statements were

mailed to customer’s correct address), and Jefferson State Bank v. Lenk, 323
S.W.3d 146, 149-50 n.6, n.7 (Tex. 2010) (addressing making statements available

when the customer is deceased). This case presents the opportunity to address

the meaning and application of “makes available” and “made available” in the

context of the broader statutory scheme, including section 1.103(a) of the Texas

Business and Commerce Code. See Tex. Bus. & Com. Code § 1.103(a)(1), (2).

930505.20140273/2851932.1
                                          4
         This case also includes the fundamentally important legal issue of the

limitations on a reviewing court’s authority to make original findings of fact in

support of its disposition.

         These questions of law will likely recur. The Court’s resolutions of the

questions presented in this case, including construction and application of

statutory and decisional language, are important to the jurisprudence of the state.

930505.20140273/2851932.1
                                          5
                                        Issues Presented

         Issue 1:           The Court of Appeals improperly construed and applied
                            Texas Business and Commerce Code section 3.406 without
                            discussing and, thereby, rendering judgment in conflict with
                            cited authorities from other jurisdictions in contravention of
                            Texas Government Code section 311.028 and Business and
                            Commerce Code section 1.103(c).

         Issue 2:           The Court of Appeals’ decision conflicts with this Court’s
                            decision in Martin where this Court concluded that the
                            customer bears the risk of non-receipt of bank statements.

         Issue 3:           Other courts have interpreted the term “made available” as it
                            applies to Texas Business and Commerce Code section 4.406,
                            and the Court of Appeals’ construction of section 4.406
                            differs from other courts when it determined that Compass
                            had not made the bank statements “available” per section
                            4.406, which is likely a matter of first impression under Texas
                            law.

         Issue 4:           There are strong policy reasons for the Texas Supreme Court
                            to decide this case and affirm the trial court’s judgment.

         Issue 5:           The Court of Appeals exceeded its authority by finding or
                            impliedly finding facts necessary to its disposition, which
                            facts are not supported by or are contrary to evidence in the
                            summary judgment record. See Texas Nat. Bank v. Karnes, 717
S.W.2d 901, 903 (Tex. 1986).

         Issue 6:           The Court of Appeals improperly analyzed summary
                            judgment evidence and applied a different standard to
                            Compass’ evidence as movant that applied to Calleja’s
                            evidence as cross-movant.

930505.20140273/2851932.1
                                                 6
         Issue 7:           To support its disposition, the Court of Appeals construed
                            plain language in the trial court’s order granting summary
                            judgment in a manner that effectively eliminated summary
                            judgment evidence that otherwise supports the trial court’s
                            judgment.

         Issue 8:           Even if this Court determines that the 2008 Deposit
                            Agreement should apply, section 4.406 still bars Calleja’s
                            claims because Calleja did not timely report the alleged
                            unauthorized disbursements.

                                       Statement of Facts
         The Court of Appeals correctly stated the nature of the case. The

following is offered for clarification and to further illuminate the context in

which the case arises and the importance of the legal issues it implicates.

The Account and transactions.

         This dispute involves allegedly unauthorized transactions from a regular

deposit account at Compass Bank (“Compass”). Respondent, Francisco Calleja-

Ahedo (“Calleja”), had previously had his banking information compromised,

and Calleja had previously suffered a loss due to bank fraud. Subsequently, in

this matter, more than 18 months after the first allegedly unauthorized

transaction, a $33.23 charge for blank checks (CR246), Calleja claimed various

transactions and withdrawals from his account (#****3759; the “Account”)

were also unauthorized.

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                                                 7
         Calleja, a citizen and resident of Mexico, opened the Account in Texas.

CR50, 230 (1988 signature card). Calleja, his wife, and his father all were

signatories on the Account until it was closed in 2014. CR46, 50. The wife and

the father are not parties to this suit and neither gave testimony or other

evidence. See, e.g., CR420, et seq. The Account signature card includes on the

address line “Hold All Correspondence”:

CR50; CR230. Paragraph 22 of the signature card, above, requires the customer to

“notify Bank in writing of any change in the information given to” Compass.

CR50; CR230. (A more legible copy of the signature card is attached as Tab 1 for

the Court’s convenience.)

         From 1988 until the Account was closed in 2014, Calleja’s statements

were available upon request at any Compass branch. CR397. Since before 2012,

Account statements were available on-line had Calleja so chosen. CR397.

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                                          8
         For at least four out of the 24-plus years of the relationship, Compass also

provided monthly Account statements by mail. According to Calleja, because he

lives in a suburb of Mexico City, “prior to July 2012, [Calleja] directed the bank

statements for the Account be mailed by the Bank to the address of [his]

brother” in The Woodlands, Texas, where Calleja would “retrieve” the

statements “from time-to-time.” CR46. The appellate record contains no

evidence that Calleja’s “direct[ion]” to Compass (see id.) was in writing. See CR50;

CR230. Compass accommodated the request. Nevertheless, the record contains

no evidence of any writing informing Compass “of any change in the information

given to the Bank” in 1988. CR50; CR230; see also CR65; CR212.

         The statement for May 2012 activity is the last statement mailed to the

brother’s Woodlands address. Similarly accommodating the request of someone

possessing sufficient information to identify the Account and to identify himself

as Calleja (and having his banking information), Compass mailed the Account

statement for the period from May 31 through June 28, 2012, to an address in

Cupertino, California. CR246. Subsequent statements were mailed to

Sacramento (CR249-57) and, later, to Georgia. CR 258, et seq. Although Calleja

claims he did not personally request these changes (see, e.g., CR46), he presented

930505.20140273/2851932.1
                                           9
no affidavit or other evidence from the other two Account owners.1 There also

is no evidence that Calleja, another owner, or Calleja’s brother contacted

Compass to notify it that Account statements were no longer being received in

The Woodlands.2 Calleja admits that he did nothing to monitor the bank

account for over 18 months, even though he had previously been the victim of

bank fraud.

         On June 26, 2012, the Account was debited $33.23 for new checks; this

charge appeared on the June statement. CR246. On July 30, 2012, a $38,700.00

check was paid from the Account. CR249. The debit appears on the July

statement. Id. From June 2012 until January 2014, Compass received no notice

from Calleja (or his wife, his father, or brother) of any complaint regarding the

Account.

         After ignoring his bank account for 18 months, Calleja alleges he

“discovered a problem” in January 2014, when “an acquaintance” to whom he

had written a check reported it as returned, marked “account closed.” CR47.

When Calleja finally contacted Compass in the last week of January 2014, he was

1    Co-signatories on the Account, Ana Elizabeth Haller de Calleja and Francisco Calleja
Cajigas, each also had the right to change the mailing address. CR65; CR212; see also CR412,
et seq. (Compass’s motion to strike); CR685 (Order at ¶ 6, overruling Compass’s objection).
2    The lack of such evidence is significant under terms of the 2012 (or the 2013) deposit
agreement. See CR212 (2012 deposit agreement at p. 6: “Notify us promptly if you do not
receive your statement by the date you normally would expect to receive it.”).

930505.20140273/2851932.1
                                             10
given information including a copy of the $38,700.00 check (id.) posted to the

Account and listed on the Account statement a year and one-half earlier. CR71.

He claimed the check was forged. CR47.

         When asked what he did to monitor the Account after January 2012 (6

months before the first allegedly unauthorized transaction), Calleja answered

under oath, “There was no need to ‘keep track’ of banking information because

no authorized checks (except perhaps two checks described in response to

Interrogatory No. 10) would be shown in statements after May 2012.” CR321-

22. Calleja’s brother who he had entrusted to receive his statements either told

Calleja that he was no longer receiving statements after May 2012 (and Calleja

did not care) or Calleja’s brother failed to tell Calleja that he was no longer

getting statements (and again Calleja did not care to get his bank statements).

The contract between Compass and Calleja.

         In the trial court, the parties argued that distinct editions of Compass’

deposit agreement should apply during the relevant period.3 In addition to the

1988 signature card (CR230), Compass offered the 2012 edition of the deposit

agreement described by its representative and records custodian as “the written

3   The respective deposit agreements in the record are poor copies. An accurate, more
legible copy of the 2008 edition of the deposit agreement is appended at Tab 2 for the
Court’s reference. An accurate, more legible copy of the 2012 edition of the deposit
agreement is appended as Tab 3.

930505.20140273/2851932.1
                                            11
contract governing the deposit relationship” and as “the agreement in effect

between Plaintiff and Compass Bank.” CR202-03; CR205, et seq.

         With his affidavit, Calleja submitted the 1988 signature card (CR50) and a

2008 edition of the Compass deposit agreement which he described as, “A true

and correct copy of the Agreement pertaining to the Account, which I received

from the Bank.” CR438; CR443, et seq.; see also CR51, et seq. Calleja did not say

how or when he “received” the 2008 deposit agreement and did not specify how

or when it “pertain[ed]” to the Account. CR438-41. The “true and correct copy”

Calleja placed in the record bears Compass’ “bates” numbering. CR443, et seq.;

CR51, et seq. 4 Thus, the exact copy of the document Calleja “received” from

Compass was provided by Compass’ attorney after Calleja filed this lawsuit, well

after the facts in dispute occurred.

         The 2008 and 2012 deposit agreements are similar in several respects.

Regarding periodic statements, for example, both editions provide:

         If we have a deliverable address on file for you, we will mail or deliver
         to you periodic statements for your account at approximately monthly
         intervals ….
         …

4   Calleja also submitted a copy of the 2013 edition of the deposit agreement as an
attachment to his counsel’s affidavit. CR 136, et seq. In addition to other revisions
distinguishing it from the 2008 edition, the 2013 deposit agreement (like the 2012 edition;
CR209) permits the “prevailing party” to recover attorney’s fees. CR139.

930505.20140273/2851932.1
                                             12
         [These materials] may be mailed to … the address shown in our
         records.
         …
         Our records regarding [the Account] will be deemed correct unless you
         timely establish with us that we made an error.
         …
         We may make statements, cancelled checks (if applicable to your
         account), notices or other communications available to you by holding
         all or any of these for you or delivering all or any of these items to you
         in accordance with your request or instructions.
         CR65 (2008); CR212 (2012).
         The 2012 agreement adds to prior editions and specifies that Calleja

should “[n]otify us promptly if you do not receive your statement by the date

you normally would expect to receive it.” CR212.5

         Both the 2008 and the 2012 deposit agreements include Calleja’s (and the

other account owners’) promise to “carefully examine each account statement

….” CR65; CR212. They include Calleja’s “agree[ment] to act in a prompt and

reasonable manner in reviewing your statement or notice and reporting any

exceptions to us.” CR65; CR212.

         Compass debited the Account in June for new checks (CR246); it paid a

check on July 30, 2012. CR249. Calleja did not report any problem or exception

5  While Compass believes that such a statement would be a “common sense”
understanding, it nevertheless added such a phrase to its then current version of the deposit
agreement.

930505.20140273/2851932.1
                                             13
for over 18 months.6 Likewise, Calleja did not tell Compass for 18 months that

statements were no longer being delivered to his brother’s address in The

Woodlands. Calleja made no effort to obtain copies of statements from any

Compass branch, via the internet, or otherwise, at any time between June 2012

and January 2014. See CR397.

                                Summary of Argument

         As a predicate matter, the existence of the 1988 signature card together

with the absence of pleading or proof that the contractual “Hold All

Correspondence” language was ever modified in writing should inform the

Court’s disposition. It informs Calleja’s lack of care under 3.406; it informs

Calleja’s failure to report under section 4.406. The undisputed language of the

signature card supports the concept and permits making account information

available other than by mailing. The absence of evidence that the contract was

modified informs the Court of Appeals’ errant process of review and illuminates

that court’s disparate treatment of competing summary judgment affidavits.

6  Compass takes no position on any claims Calleja may have against his own brother. In
other words, Calleja apparently entrusted his brother to receive his bank statements and
possibly do other banking activities. If Calleja’s brother was supposed to be monitoring the
account and notifying Calleja if the statements were received or not received, such issues
would be between Calleja and his brother.

930505.20140273/2851932.1
                                             14
         Compass will begin its discussion with the Court of Appeals’ departure

from normal review of cross motions for summary judgment.

The Court of Appeals impermissibly found facts in support of its
decision.
         When the Court of Appeals wrote, “Both parties agree that the 2008

Agreement was, at least at one point, effective as to Calleja,” the court exceeded

its authority. The Court of Appeals either found or impliedly found facts to

support its judgment. There is no evidence that the 2008 deposit agreement was

“effective” at any time material to this case. There is no evidence that the parties

ever agreed as the Court of Appeals said. Compass advocated the 2012 deposit

agreement was “in effect and,” Calleja said the 2008 deposit agreement

“pertained” to his account. In any event, assuming—as the Court of Appeals

did—that the 2008 deposit agreement was effective “at least at one point,” the

Court of Appeals’ judgment depends on the erroneous further assumption that

the “at one point” was a material point in time. There simply is no evidence of

the agreement inferred by the Court of Appeals on which its judgment is

necessarily predicated. That judgment should be reversed.

930505.20140273/2851932.1
                                         15
The Court of Appeals applied one standard for Compass’ custodian’s
affidavit and a different standard for Calleja’s.
         The Court of Appeals incorrectly analyzed the competing summary

judgment affidavits. First, it determined Compass’ records custodian’s affidavit

testimony was conclusory. It is not. But, in any event, Calleja’s affidavit is no

less conclusory on the salient point of which (if either) of the two editions of the

Compass deposit agreement was in effect at material times. That is, to the extent

the Court of Appeals’ analysis of Ms. Mueller’s affidavit is sustainable, the court

was obliged to analyze Calleja’s affidavit on equivalent bases. It did not.

Business and Commerce Code section 3.406.

         The Court of Appeals gave only cursory consideration to section 3.406.

That court omitted any reference to cited authorities from other jurisdictions

holding to the effect that a customer’s inattention to her or his account

statements constitutes negligence sufficient under section 3.406(a) to preclude

recovery. The Court of Appeals’ failure to consider these decisions contravenes

the statutory requirement that uniform acts be interpreted in a uniform manner.

Business and Commerce Code section 4.406.

         The Court of Appeals’ decision conflicts with this Court’s decision in

Martin by too narrowly applying this Court’s conclusion that customers bear the

930505.20140273/2851932.1
                                          16
risk of non-receipt of bank statements. By failing to properly allocate this risk,

the Court of Appeals failed to apply the underlying policy that furthers the

UCC’s objective of promoting certainty and predictability in commercial

transactions.

The 1988 signature card is a part of the parties’ contract, which the Court
of Appeals erroneously failed to give effect.

         There is only one writing both parties agree was part of the contract, the

1988 signature card, offered as summary judgment evidence by both parties.

The Court of Appeals wholly failed to give effect to the unambiguous

contractual language in the signature card: “Hold All Correspondence.”

Regardless whether the 2012 version of the deposit agreement, the 2008 version,

some other version, or no version of deposit agreement at all was “in effect” or

“pertained,” the signature card is part of the contract. The Court of Appeals

erred by failing to treat it as such.

         The Court of Appeals further erred by determining, again without

evidentiary support, that the signature card was modified. Neither the 2008 nor

the 2012 deposit agreement includes language modifying the “Hold All

Correspondence” term. To the contrary, both editions of the deposit agreement

contemplate the possibility that a customer might ask Compass to hold

930505.20140273/2851932.1
                                          17
statements as Calleja did. The Court of Appeals re-wrote the parties contract,

and in doing so, it erred. Its judgment cannot stand.

The Court of Appeals took expressly inclusive language in the trial court’s
order and, without justification, called it exclusive.
         The Court of Appeals read an expressly inclusive sentence to be exclusive

in order to support its conclusion that Calleja did not substantially contribute to

the forgery of the $38,000.00 check. This strained reading of the trial court’s

language effectively negated record evidence supporting the judgment and in

conflict with the disposition by the Court of Appeals.

                                Argument & Authorities
         Because the Court may determine this case should be remanded to the

trial court for determination of an essential fact—what edition, if any, of

Compass’ deposit agreement was in effect at material times, Compass first

addresses the Court of Appeals’ impermissible fact finding and its disparate

treatment of the parties’ respective summary judgment evidence.

         A.        The Court of Appeals exceeded its authority by finding facts
                   necessary to support its conclusions.

         There is no evidence that the 2008 deposit agreement was “in effect” at

any material time.

930505.20140273/2851932.1
                                           18
         As the Court of Appeals correctly stated, where parties both move for

summary judgment, and the trial court grants one motion and denies the other,

the court reviews both parties’ summary judgment evidence and determines all

questions presented. Calleja-Ahedo v. Compass Bank, 508 S.W.3d 791, 797 (Tex.

App.—Houston [1st Dist.] 2016, pet. filed) (citations omitted). Having further

stated that it “must determine which version of the deposit agreement governed

the parties’ relationship,” an inherently factual inquiry, without reference to

summary judgment evidence, the Court of Appeals said, “Both parties agree that

the 2008 Agreement was, at least at one point, effective as to Calleja.” Id. at 797.

The flaw in using this statement as the predicate for reversing and rendering

judgment is the utter lack of summary judgment evidence that the 2008 deposit

agreement was “effective” at any time material to this case. Even assuming—as

the court appeals did—that “at least at one point,” the 2008 deposit agreement

was “effective as to Calleja,” the Court of Appeals’ rendition of judgment for

Calleja necessarily further assumes there was no 2009, 2010, or 2011 edition of

the deposit agreement.

         The true state of the record is that Compass, as summary judgment

movant, attempted to establish that the 2012 deposit agreement was “the

written contract governing the deposit relationship” and was “the agreement in

930505.20140273/2851932.1
                                         19
effect between Plaintiff and Compass Bank.” CR202-03; CR205, et seq. Calleja,

also as summary judgment movant, described the 2008 edition of the deposit

agreement as “the Agreement pertaining to the Account, which I received from

the Bank.” CR438; CR443, et seq.; see also CR51, et seq. Contrary to the Court of

Appeals’ unsupported “finding,” neither party agreed or conceded that if its

version of the deposit agreement was not in effect at material times, then the

other party’s version was. Thus, the Court of Appeal’s assumption that it was

faced with a binary choice was just that —an assumption. Such an assumption

constitutes harmful, reversible error in this case.

         A court of appeals has no authority to act as fact finder. See, e.g., Levine v.

Steve Scharn Custom Homes, Inc., 448 S.W.3d 637, 653 (Tex. App.—Houston [1st

Dist.] 2014, pet. denied) (citing Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d
757, 761 (Tex. 2003). “[A] court of appeals cannot make original findings of

fact; it can only ‘unfind’ facts.” Texas Nat’l Bank v. Karnes, 717 S.W.2d 901, 903

(Tex. 1986) (citations omitted). The Court of Appeals ran afoul of this

established rule by setting up—without factual foundation—its either/or—if

not one then necessarily the other—decision.7 This is impermissible fact

7   There is no stipulation and no evidence or other indication that the parties agreed that if
the 2012 agreement was not the operative agreement, then the 2008 agreement necessarily
must be.

930505.20140273/2851932.1
                                              20
finding: that no other deposit agreement existed between the 2008 and 2012

editions. Calleja did not prove that to be the case. As summary judgment

movant, Calleja is not entitled to any such inference in his favor. See Lewis v.

Aurora Loan Services, No. 01-15-00362-CV, 2016 WL 887176, at *2 (Tex. App.—

Houston [1st Dist.] Mar. 8, 2016, no pet.) (citing Nixon v. Mr. Prop. Mgmt. Co.,

690 S.W.2d 546, 548–49 (Tex. 1985)). The classic aphorism, the absence of

evidence is not evidence of absence, should obtain, especially where the

judgment under review is a summary judgment.

         Calleja’s affidavit does not supply the missing facts. See CR46. In order to

be entitled to the rendition of judgment he got in the Court of Appeals, Calleja

must have conclusively established with admissible evidence that the 2008

deposit agreement was in effect (or still in effect) at material times after January

2012, the point from which Calleja admitted he paid no attention to his account.

He did not. Calleja’s affidavit does not aver that the 2008 agreement was in

effect at any material time. See CR46. Calleja says only, “A true and correct copy

of the Agreement pertaining to the Account, which I received from the Bank, is

attached hereto at Attachment 2.” Id.; CR438; see also CR51-70 (the 2008

agreement). Notably, he did not say when or how he received it. CR46; CR438.

As above, “Attachment 2” to the affidavit is a bates-labeled document produced

930505.20140273/2851932.1
                                           21
by Compass during discovery. CR51, et seq.; CR443, et seq. Calleja did not say,

moreover, that the 2012 agreement (or some other interim edition) did not

“pertain” to the account, and he did not deny “receiv[ing]” the 2012 or any

other edition of the deposit agreement. Calleja offered no testimony or other

evidence about which edition, if any, of the deposit agreement was in effect at a

particular time, or ever. Thus, the Court of Appeals’ assumption—if not the

one, then necessarily the other—has no factual support, and rendition of

judgment in Calleja’s favor was reversible error.

         B.        The Court of Appeals failed to properly analyze competing
                   summary judgment affidavits.

         The Court of Appeals stated: “As a threshold issue, we must determine

which version of the deposit agreement governed the parties’ relationship.”

Calleja-Ahedo v. Compass Bank, 508 S.W.3d 791, 797 (Tex. App.—Houston [1st

Dist.] 2016, pet. filed). Compass’ custodian of records, Ms. Mueller, testified by

affidavit that, among other things, “the [2012] account agreement evidences the

agreement in effect between the Plaintiff and Compass Bank.” CR203, ¶ 8. The

Court of Appeals determined Mueller’s affidavit testimony was conclusory.

Calleja-Ahedo, 508 S.W.3d at 799. It is not. But in the event the Court agrees with

the Court of Appeals, Calleja’s affidavit is no less conclusory; his affidavit is not

930505.20140273/2851932.1
                                          22
evidence, certainly not conclusive evidence, that the 2008 deposit agreement was

(or that the 2012 edition was not) in effect at any material time.

         Mueller’s statement is supported by additional facts, and it is clear,

positive, direct, and readily controvertible. Though he could have, Calleja did

not controvert the factual statement that the 2012 deposit agreement was “in

effect.” See, e.g., Childers v. Advanced Found. Repairs, L.P., No. 13-04-00193-CV,

2007 WL 2019755, at *2 (Tex. App.—Corpus Christi July 12, 2007, no pet.);

Johnson v. Bethesda Lutheran Homes & Services, 935 S.W.2d 235, 239 (Tex. App.—

Houston [1st Dist.] 1996, writ denied) (Hedges, J., concurring) (stating that

logical conclusions based on stated underlying facts are proper in both lay and

expert testimony). Affidavits “shall be made on personal knowledge, shall set

forth such facts as would be admissible in evidence, and shall show affirmatively

that the affiant is competent to testify to the matters stated therein.” Tex. R.

Civ. P. 166a(f); Contractors Source, Inc. v. Amegy Bank Nat’l Ass’n, 462 S.W.3d 128,

133 (Tex. App.—Houston [1st Dist.] 2015, no pet.). The Court of Appeals

relied on the general rule stated in Contractors Source, a case considering expert

witness affidavits. Calleja-Ahedo, 508 S.W.3d at 799; see also Ryland Group, Inc. v.

Hood, 924 S.W.2d 120, 122 (Tex. 1996); Rizkallah v. Conner, 952 S.W.2d 580, 587-

88 (Tex. App.—Houston [1st Dist.] 1997, no writ) (reviewing for “some

930505.20140273/2851932.1
                                           23
support in the record” for factual statements of interested witness). Mueller, a

Compass employee, was not offered as an expert; she testified as custodian of

records. CR202-03. The Court of Appeals omitted reference to cases stating that

an affiant’s testimony establishing her status as a custodian of records and her

relationship to the facts of the case satisfies the personal knowledge requirement

of Rule 166a(f). See, e.g., Avery v. LPP Mortgage, Ltd., No. 01-14-01007-CV, 2015
WL 6550774, at *2 (Tex. App.—Houston [1st Dist.] Oct. 29, 2015, no pet.);

Castilla v. Citibank (S. Dakota), N.A., No. 05-11-00013-CV, 2012 WL 762822, at

*6 (Tex. App.—Dallas Mar. 9, 2012, no pet.); Gellatly v. Unifund CCR Partners,

No. 01-07-00552-CV, 2008 WL 2611894, at *5 (Tex. App.—Houston [1st Dist.]

July 3, 2008, no pet.). Mueller’s affidavit is based on personal knowledge

(CR202, ¶ 1); she is a Compass employee and “[i]n this capacity” has “personal

knowledge of accounts held at Compass Bank.” CR202, ¶ 2. Mueller testified

that she is “a custodian of records” for Compass, that “Tabs 1 and 2” to the

affidavit are “true and correct” copies of bank records, and that “[she is]

personally familiar with the records.” CR203, ¶ 8. These are admissible,

uncontroverted facts about which Mueller testified. Mueller stated clearly,

positively, and directly, “the account agreement [2012] evidences the agreement

in effect between the Plaintiff and Compass Bank.” CR203, ¶8. The statement is

930505.20140273/2851932.1
                                        24
her logical conclusion based on stated underlying facts. See Rizkallah, 952 S.W.2d

at 588; Bethesda Lutheran Homes & Services, 935 S.W.2d at 239. Calleja could have,

but did not controvert the statement.

         Further, identifying herself as an employee and custodian of Compass’

records (CR202-03) “shows how [Mueller] gained personal knowledge.” See, e.g.,

Waite v. BancTexas-Houston, N.A., 792 S.W.2d 538, 540 (Tex. App.—Houston

[1st Dist.] 1990, no writ); see also Miller v. Raytheon Aircraft Co., 229 S.W.3d 358,

365-66 (Tex. App.—Houston [1st Dist.] 2007, no pet.). She identified Calleja’s

account as a “regular bank account.” CR202. She said, “Attached as Tab 1 is a

copy of the written contract governing the deposit relationship between [Calleja]

and Compass Bank.” Id. Mueller identified the 2012 agreement as a business

record of which she had personal knowledge and as the agreement “in effect

between” the parties. CR203.8

         Mueller’s second affidavit provides additional facts supporting her

statement that the 2012 agreement “evidences the agreement in effect between

[Appellant] and Compass Bank.” CR396-98; CR202-03. She states that the 2012

agreement has a revision date of February 2012—prior to the events at issue.

8  The words “believe” and “belief” do not appear in this affidavit. CR202-03; see Calleja-
Ahedo, 508 S.W.3d at 799.

930505.20140273/2851932.1
                                             25
CR396. That fact “has some support in the record.” See Rizkallah, 952 S.W.2d at

588; see also CR228 (final page of 2012 agreement). Mueller referenced Calleja’s

allegation that an imposter changed the account address in the summer of 2012;

she referenced the account signature card and its provision regarding

amendments to the account agreement. CR396; CR230. Those statements have

support in the record. CR46-47, 50 (Calleja’s affidavit recounting his version of

events with signature card attached); see Rizkallah, 952 S.W.2d at 588. Mere use

of the words believe or belief in the second affidavit does not render the

testimony in the first affidavit conclusory.

         “The term ‘conclusory’ is defined as ‘[e]xpressing a factual inference

without stating the underlying facts on which the inference is based.’” E.I. Du

Pont De Nemours & Co. v. Shell Oil Co., 259 S.W.3d 800, 809 (Tex. App.—

Houston [1st Dist.] 2007, pet. denied) (citing Black’s Law Dictionary 284 (7th

ed. 2001)). Reviewing the entire record, there is ample support for Mueller’s

statement—without resort to inference—that “the account agreement evidences

the agreement in effect between the Plaintiff and Compass Bank.” CR203; see

also City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005); Kennamer, 332
S.W.3d at 566.

930505.20140273/2851932.1
                                          26
         Further, “summary judgment based on the uncontroverted affidavit of an

interested witness is proper if the evidence is clear, positive, direct, otherwise

credible, free from contradictions and inconsistencies, and could have been

readily controverted.” Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex.

1997); Tex. R. Civ. P. 166a(c); CBM Engineers, Inc. v. Tellepsen Builders, L.P., 403
S.W.3d 339, 346 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (noting that

readily controvertible means the factual assertions “could be ‘effectively

countered by opposing evidence.” (quoting Trico Techs. Corp., 949 S.W.2d at

310)). Mueller testified that the 2012 agreement was “in effect between” the

parties. CR203. On this record, the testimony satisfies all requirements for a

summary judgment affidavit. Calleja could have, but did not controvert the

testimony.

         The totality of Calleja’s evidence about the deposit agreement is: “A true

and correct copy of the Agreement pertaining to the Account, which I received

from the Bank, is attached hereto at Attachment 2.” CR46; CR438; see also

CR51-70 (the 2008 agreement). Calleja did not say that the 2012 agreement did

not also “pertain” to the account; he did not say he did not “receive” the 2012

agreement; and he did not controvert Mueller’s testimony by saying the 2012

agreement was not in effect or that the 2008 agreement was in effect at any

930505.20140273/2851932.1
                                          27
material time. By his own admission, Calleja was not reviewing communications

from Compass in February 2012, when the account agreement was revised.

Nevertheless, he could have, but failed to controvert the testimony. See Trico

Techs. Corp., 949 S.W.2d at 310.

          Like the appellee in Trico Techs. Corp., in discovery Calleja could have

inquired about, “the meaning of the ‘Al Nova Branches Only.” Compare Trico

Techs. Corp., 949 S.W.2d at 310, and Calleja-Ahedo, 508 S.W.3d at 798. Calleja

could have inquired about how Compass gave notice of the amendment. See

Trico Techs. Corp.. Rather, Calleja relied solely on the statement that a 2008

document “pertain[ed]” to the account, and he “received” a copy from the

bank. CR46; CR438. Notably, the “true copy” Calleja relied on bears Compass’

“bates” numbers on each page. Calleja “received” the copy he attached in

discovery in this case, undermining any inference 9 or implication that Calleja

received the 2008 agreement in the normal course of his banking business but

did not receive the 2012 agreement the same way. See CR51-70. Thus, the Court

of Appeals’ conclusion that Compass did not establish that the 2012 deposit

agreement was “ever effective as to Calleja” is based on its outline of additional,

9   As cross-movant for summary judgment, Calleja is not entitled to any favorable
inference. See Lewis v. Aurora Loan Services, No. 01-15-00362-CV, 2016 WL 887176, at *2
(Tex. App.—Houston [1st Dist.] Mar. 8, 2016, no pet.) (citing Nixon v. Mr. Prop. Mgmt. Co.,
690 S.W.2d 546, 548–49 (Tex. 1985)).

930505.20140273/2851932.1
                                             28
hypothetical evidence that Calleja did not present to controvert Mueller’s

factually supported assertion that the 2012 agreement was the agreement in

effect between the parties. See Trico Techs. Corp., 949 S.W.2d at 310; CBM

Engineers, Inc., 403 S.W.3d at 346. Respectfully, Calleja is not entitled, by judicial

fiat, to the benefit of an available litigation strategy that he did not pursue. The

Court of Appeals erred by reversing the summary judgment in favor of

Compass.

         C.        Calleja’s claims are precluded by Texas Business and
                   Commerce Code section 3.406.

         A customer’s actions can help prevent bank fraud. Even if a customer has

never experienced fraud on a bank account, it is his duty under the law protect his

own interests. In this case, Calleja had already been the victim of bank fraud and

either knew or should have known that he needed to take care to protect himself.

At a minimum, Calleja should have reviewed his monthly statements and kept his

banking information protected, as he agreed to do in the Account agreement.

Calleja should have asked his brother each month for a copy of the statement that

his brother purportedly received on Calleja’s behalf.

         If Calleja had monitored the Account after January 2012, he would have

noticed that his June statement did not arrive as expected. Both the 2008 and

the 2012 editions of the deposit agreement provide: “You agree to act in a

930505.20140273/2851932.1
                                          29
prompt and reasonable manner in reviewing your statement or notice and

reporting any exceptions to us.” CR65; CR212. This should include noticing a

statement does not arrive when expected. The 2012 deposit agreement expressly

incorporates this common sense idea: “Notify us promptly if you do not receive

your statement by the date you would normally expect to receive it.” CR212.

Calleja did not notice the May-June statement never arrived. Therefore, he did

not notice or report a $33.23 charge for blank checks (CR246) that he later

claimed was not authorized. Likewise, Calleja did not notice the absence of

monthly statements until January 2014. CR47.10

         Regardless whether the 2008 edition, the 2012 edition, or some other

version of the deposit agreement was in effect, the deposit agreement between

Compass and Calleja is “a contract in writing for all purposes.” Tex. Fin. Code §

34.301(a). The contract “may be evidenced by one or more agreements, deposit

tickets, signature cards,11 or notices as provided by Section 34.302, or by other

documentation as provided by law.” Id.; see also Tex. Fin. Code § 34.302.

10 Calleja’s failure to notice that he did not receive statements until late January 2014 is even
more egregious since he had already been the victim of prior bank fraud on a different bank
account.
11 See CR50.

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                                               30
         As the Court has written:

         Contracting parties are generally not fiduciaries. See Schlumberger Tech.
         Corp. v. Swanson, 959 S.W.2d 171, 177 (Tex. 1997). Thus, due diligence
         requires that each protect its own interests. See Barfield v. Howard M.
         Smith Co. of Amarillo, 426 S.W.2d 834, 840 (Tex. 1968) (“As a party to
         arm’s length business transactions, respondent had a duty to use
         ordinary care for the protection of its own interests”). Due
         diligence may include asking a contract partner for information
         needed to verify contractual performance. See [Wagner & Brown, Ltd.
         v. Horwood, 58 S.W.3d 732 (Tex. 2001)] at 736; [HECI Exploration Co. v.
         Neel, 982 S.W.2d 881 (Tex. 1998)] at 886. If a contracting party
         responds to such a request with false information, accrual may be
         delayed for fraudulent concealment. Wagner & Brown, 58 S.W.3d at
         737; HECI, 982 S.W.2d at 886. But failing to even ask for such
         information is not due diligence. See Wagner & Brown, 58 S.W.3d at
         736; HECI, 982 S.W.2d at 886.

Via Net v. TIG Ins. Co., 211 S.W.3d 310, 314 (Tex. 2006) (emphasis added). By

failing even to ask about the May-June Account statement (or any subsequent

statement), Calleja demonstrated a lack of diligence which, under similar facts,

the Supreme Court of Washington said was “substantial evidence of negligence”

under section 3.406. See Terry v. Puget Sound Nat. Bank, 492 P.2d 534, 535 (Wash.

1972) (per curiam).12 In addition to their failure to “inquire of the bank” about the

absence of three successive months of statements, the Terry plaintiffs left blank

checks in an unlocked drawer, easily accessible to the bad actor. See id. Similarly, in

12  Terry was tried to a jury. The Washington court reviewed and found sufficient evidence
to support submission of the bank’s 3.406 affirmative defense.

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                                            31
addition to failing to inquire of Compass about the absence of at least 18 monthly

statements, Calleja, or one of the other account owners, left sufficient personal

information unguarded and accessible for an interloper to have Compass redirect

Account statements before the first transaction. Calleja failed to discharge his duty

to use ordinary care for the protection of his own interests. Barfield, 426 S.W.2d at

840; Tex. Bus. & Com. Code § 3.406(a); Terry, 492 P.2d at 535. Despite Compass’

citation to Terry, the Court of Appeals did not discuss the case.

         The first transaction Calleja claimed was not authorized was the imposter’s

order for blank checks. CR246. The charge appeared on the May-June

statement. Id. The statement had been redirected. Calleja did not ask why it did

not arrive as expected. The next statement shows a $38,700.00 check paid on

July 30, 2012. CR249. Calleja did not contact Compass to ask about this missing

statement either. See Terry, 492 P.2d at 535.13

13  Under Calleja’s analysis, if a bank customer such as Calleja instructs the bank to mail
statements to a relative, and then the bank complies as requested, there could be scenarios
where a bank customer then never has to monitor the account. For example, if that bank
customer then intentionally or inadvertently lets their banking information become
compromised to allow an imposter to call the bank and have all the necessary information to
change the address to which statements are sent, and such future statements are sent to a
different address, under Calleja’s analysis, Calleja never has to notice that his account
statements are no longer being sent per his direction, and he can simply ignore the account
for 18 months.

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                                            32
         In Myrick v. Nat’l Sav. & Trust Co., a case from the District of Columbia

court of appeals, the customer received only one bank statement and a few

cancelled checks over about nine months. See Myrick v. Nat’l Sav. & Trust Co.,

268 A.2d 526, 527 (D.C. 1970). The Myrick court affirmed judgment n.o.v. for

the bank where “[t]he record is devoid of any evidence justifying [customer’s]

failure to inquire of the bank as to her lack of receipt of monthly statements and

cancelled checks” and “[held] that Miss Myrick was negligent as a matter of law

in not making this inquiry of the bank ….” Id. at 527-28. Quoting its version of

3.406, the court held Myrick’s “‘negligence substantially contribute(d) [sic] … to

the making of an unauthorized signature,’” precluding her claim. Id. Despite

Compass’ citation to Myrick, the Court of Appeals did not discuss the case.

         From at least as early as January 2012, six months before someone used

his personal and account information to redirect the bank statements, Calleja

ignored his account. He said, “There was no need to ‘keep track’ of banking

information because no authorized checks (except perhaps two checks

described in response to Interrogatory No. 10) would be shown in statements

after May 2012.” CR321-22. It is not “authorized” activity that demands

vigilance. See Barfield, 426 S.W.2d at 840 (stating that a party to an arm’s length

business transaction has a duty to use ordinary care for the protection of his

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                                          33
own interests and is charged with knowledge of all facts that would have been

discovered by a reasonably prudent, similarly situated person). Rather, it is the

risk of unauthorized activity which the customer is in the best position to guard

against and demands Calleja’s diligence. See Martin, 29 S.W.3d at 92, 94 (noting

the UCC’s purpose of allocating responsibility to the person best able to prevent

loss and placing the risk of non-receipt of bank statements on the customer in

the 4.406 context); Sw. Bank v. Info. Support Concepts, Inc., 149 S.W.3d 104 (Tex.

2004) (resolving perceived tension between Texas Civil Practice and Remedies

Code Chapter 33 14 proportionate responsibility and UCC section 3–406’s

comparative fault and liability scheme allocating the loss between two

negligent—but innocent—parties.); John Hancock Fin. Servs., Inc. v. Old Kent Bank,

346 F.3d 727, 732 (6th Cir. 2003). Calleja willingly accepted the risk that

unauthorized transactions could go undetected by asking Compass to mail

statements to his brother’s home in The Woodlands then, “from time-to-time,”

retrieving them, unopened. CR46; CR152. Calleja claimed he “never signed up

for online access and relied completely” on reviewing statements mailed to The

Woodlands. CR321; but see CR50. Where Calleja’s complete reliance (CR321) on

retrieval of unopened statements “from time-to-time” meant Calleja did not

14 Tex. Civ. Prac. & Rem. Code § 33.001, et seq.

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                                              34
review statements for at least 18 to 24 months (see id.), there was, as the trial

court determined, a failure to exercise diligence as a matter of law. CR735; see

also, Barfield, 426 S.W.2d at 840.

         Unlike the trial court, the Court of Appeals focused on Calleja’s

inattention to his affairs during the 18 months after the first transaction. As to

the six months preceding the first transaction, the Court of Appeals noted,

“there is scant summary judgment evidence concerning the circumstances under

which the unknown third party obtained Calleja’s banking information and used

that information to change the account address, obtain a debit card, order blank

checks, and forge Calleja’s signature on several checks.” Calleja-Ahedo, 508
S.W.3d at 806. But scant evidence about how it occurred does not change the

undisputed fact that someone obtained and used Calleja’s information.

         There is no dispute that Calleja’s personal information was allegedly

purloined and used to effectuate the fraud.15 Precisely because there is “scant

evidence” of how that occurred, section 3.406 is implicated. Without evidence

to the contrary, one assumes Calleja and Compass are both “innocent,” if

potentially negligent, parties. With “scant evidence” (there is none) how Calleja’s

15  Calleja provided no evidence to the trial court that other signers had not changed the
address. In other words, even if Calleja swore that he did not change the address, if another
signer on the account had properly changed the address, the bank was doing as an account
owner had directed.

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                                             35
personal information was compromised, section 3.406 serves the “important

objective” of the UCC “of promoting certainty and predictability in commercial

transactions … [b]y prospectively establishing rules of liability that are generally

based not on actual fault but on allocating responsibility to the party best able to

prevent the loss by the exercise of care ….” Putnam Rolling Ladder Co., Inc. v.

Manufacturers Hanover Tr. Co., 546 N.E.2d 904, 908 (NY 1989); Sw. Bank v. Info.

Support Concepts, Inc., 149 S.W.3d 104, 109-10 (Tex. 2004). As the trial court

recognized, Calleja was that party.

         Calleja was in the best position to safeguard his personal and account

information used by an interloper to telephone the bank and redirect monthly

statements. 16 Regardless of the circumstances by which it was compromised,

Calleja (or one of the other account owners or the brother) failed to protect his

own interests by failing to safeguard the information. Barfield, 426 S.W.2d at 840.

Further, it was Calleja’s choice to “rel[y] completely” on his sporadic (at best)

approach to reviewing statements. CR321. Liberal construction and application

16  If this Court follows Calleja’s logic, one who has experienced bank fraud can notice that
he did not receive a bank statement for a month, and under Calleja’s analysis, the law
purportedly allows him to do nothing. Under Calleja’s analysis, even a person who has
experienced bank fraud on another account does not have to review bank statements for as
long as it takes to drain the entire account and then still can make a claim against his bank to
recover the entire amount of the loss. Calleja’s argument cannot be reconciled with this
Court’s prior determination that a customer is generally in the best position to prevent the
loss.

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                                              36
of section 3.406 in service of the purposes and policies of the UCC dictates that

Calleja, not Compass, was the party best able to prevent the loss. Tex. Bus. &

Com. Code § 1.103(a); Info. Support Concepts, Inc., 149 S.W.3d at 110; Martin, 29
S.W.3d at 93.

          Having done nothing to keep track of his account since at least January

(“there was no need” (CR321-22)), when the May-June 2012 statement did not

arrive at The Woodlands address, like the Terry and Myrick plaintiffs, Calleja’s

failure to make any inquiry compounded his negligence.17 Consistent with Terry

and Myrick, applying the Government Code, and under the same rule employed

by this Court in TIG Ins. Co., the Court of Appeals should have affirmed the

trial court’s judgment. Tex. Gov’t Code § 311.028; see TIG Ins. Co., 211 S.W.3d

at 314; 1/2 Price Checks Cashed v. United Auto. Ins. Co., 344 S.W.3d 378, 391 (Tex.

2011) (“The UCC should be construed to promote uniformity with other

jurisdictions.”). In service of the important objectives of the UCC, the Court of

Appeals should have affirmed. See Putnam, 546 N.E.2d at 908; Info. Support

Concepts, Inc., 149 S.W.3d 104.

17  Had Calleja promptly informed Compass that his May 31, 2012 – June 28, 2012,
statement was not received and requested a copy, he would have seen a debit for checks he
claims he did not order. Had Calleja exercised a modicum of diligence, the July 31, 2012,
transaction could have been prevented or, if not prevented, made known to Compass while
viable opportunities for recovering the funds still existed.

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                                           37
         Rather than properly applying section 3.406, the Court of Appeals based

its decision on the perceived absence of an explicit “operative statutory or

contractual[18] provision that required Calleja to notice that he was not receiving

statements … and to report those missing statements to the Bank within thirty

days.” Calleja-Ahedo, 508 S.W.3d at 805. The court’s reliance on the conjunctive, “to

notice” and “to report … within thirty days,” conflates sections 3.406 and 4.406.19

Section 3.406, a comparative negligence statute, recognizes a duty of ordinary care

and precludes Calleja if his failure to discharge his duty “substantially contributes

… to the making of a forged signature.” Tex. Bus. & Com. Code § 3.406. Thus,

contrary to the statement by the Court of Appeals, section 3.406 is the “operative

statutory … provision.” Calleja-Ahedo, 508 S.W.3d at 805. It is the operative

statutory provision of a uniform law which the Court of Appeals glossed over

with no reference to cited decisions of other jurisdictions. See Tex. Gov’t Code §

311.028; Tex. Bus. & Com. Code § 1.103(a)(3); 1/2 Price Checks Cashed, 344 S.W.3d

at 391.

18   The 2012 deposit agreement includes the term, “[n]otify us promptly if you do not
receive your statement by the date you normally would expect to receive it.” CR212. Both
the 2008 and the 2012 deposit agreements require the customer to “report exceptions to us
within thirty (30) days after we send or make the statement or notice available ….” CR65;
CR212.
19 Indeed, there are two different sections in the UCC for a reason, and in this case, Calleja

is trying to avoid both UCC sections and claim he never needed to review a bank statement
if an imposter gets his banking information and changes his address.

930505.20140273/2851932.1
                                              38
         The Court of Appeals also failed to properly analyze the causation

element of 3.406. See Calleja-Ahedo, 508 S.W.3d at 805. The court first

erroneously tied Calleja’s duty of ordinary care to the “trigger” of 4.406. Id. It

then utilized a questionable textual analysis of the trial court’s order to discount

the effect of Calleja’s “from time to time” method of monitoring the Account

on the interloper’s ability to drain the Account. Calleja-Ahedo, 508 S.W.3d at 806.

The Court of Appeals read an expressly inclusive sentence to be exclusive 20 to

support its conclusion. This analysis runs counter to the recognized objectives

of the UCC, including certainty, predictability, and allocation of responsibility to

the party best able to prevent the loss. See Info. Support Concepts, Inc., 149 S.W.3d

at 109-10.21

         Comment 2 to section 3.406 explains “what is intended” by use of

“substantially contributes” in subsection (a), referencing Thompson Maple Products,

Inc. v. Citizens Nat’l Bank of Corry, 234 A.2d 32, 34 (Pa. Super Ct. 1967). See Tex.

20  The trial court’s order states: “In particular, but not as the sole reason for this ruling, the
Court rules that where the check at issue was cashed on July 30, 2012, and the Plaintiff did
not notify the bank until January 29, 2014, as a matter of law Plaintiff has failed to exercise
diligence in protecting himself from alleged fraud regardless of any shortcomings in sending
bank statements.” CR539.
21 Under the Court of Appeal’s analysis, a bank customer can intentionally or inadvertently

allow a third-party to get his bank information and call the bank and change the address.
Then, the bank customer can do nothing indefinitely; and, if the bank account is drained, the
bank is apparently absolutely liable.

930505.20140273/2851932.1
                                                39
Bus. & Com. Code § 3.406 cmt. 2. As one Oklahoma court explained (in a case

not involving bank statements), “Section 3–406 requires less stringent proof than

the ‘direct and proximate cause’ test for general negligence. Conduct is a

contributing cause of an alteration or forgery if it is a substantial factor in

bringing it about, or makes it ‘easier for the wrongdoer to commit his wrong.’”

Bank of Nichols Hills v. Bank of Oklahoma, 196 P.3d 984, 986-87 (Okla. Civ. App.

2008) (citations omitted). The summary judgment record supports the trial

court’s determination that Calleja’s chosen method of monitoring the Account

by relying “completely” on reviewing statements delivered to The Woodlands,

which he did not bother to retrieve for at least two years (CR321-22), together

with the undisputed fact that some third party gained access to his personal and

banking information made it “easier for the wrongdoer to commit his wrong.”

Bank of Nichols Hills, 196 P.3d at 986-87.

         In the Terry v. Puget Sound case mentioned above, the Washington court,

relying on section 3.406, precluded the customers’ recovery for their failure to

“inquire of the bank” about the absence of three successive months of

statements, coupled with leaving blank checks in an unlocked drawer. Terry, 492
P.2d at 535. In the Myrick case, the District of Columbia court affirmed

judgment n.o.v. for the bank where “[t]he record is devoid of any evidence

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                                          40
justifying [customer’s] failure to inquire of the bank as to her lack of receipt of

monthly statements and cancelled checks” and “[held] that Miss Myrick was

negligent as a matter of law in not making this inquiry of the bank ….” Myrick,
268 A.2d at 527-28. Quoting its version of 3.406, the court held Myrick’s

“‘negligence substantially contribute(d) [sic] … to the making of an unauthorized

signature.’” Id. Despite Compass’ citations, the Court of Appeals did not discuss

either case.

          Ordinary care includes diligence to protect one’s own interests. See Via Net,
211 S.W.3d at 314. Like the customers in Myrick and Puget Sound, Calleja’s “failing

even to ask” for information about his account was “not due diligence.” Id. (citing

Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 736 (Tex. 2001)). Calleja’s cavalier,

“[t]here was no need to ‘keep track’ of banking information because no

authorized checks … would be shown” (CR321-22), was “not due diligence.” Via

Net, 211 S.W.3d at 314.

         As between Compass and Calleja, Calleja was in the best position to protect

his personal and banking information. Calleja had experienced bank fraud in the

past and should have had an even greater motivation to monitor his banking

activities. He was in the best position to know if he was not receiving bank

statements where and when he would normally expect them. Calleja was the party

930505.20140273/2851932.1
                                           41
best able to prevent the loss by the exercise of ordinary care. Info. Support

Concepts, Inc., 149 S.W.3d 104; Putnam Rolling Ladder Co., Inc., 546 N.E.2d at 908.

[The Court of Appeals erred by reversing the trial court’s judgment.]

         D.        Calleja’s claims are precluded under Business and Commerce
                   Code section 4.406.

         While Article 3 of the Texas Business and Commerce Code, “Negotiable

Instruments,” governs rights and duties of parties to negotiable instruments like

the check at issue here, Article 4, “Bank Deposits and Collections,” governs the

relationship between a bank and its customer. In Martin, a live-in girlfriend took

funds from Martin’s account without his permission and concealed her fraud by

intercepting monthly statements. See Am. Airlines Emps. Fed. Credit Union v. Martin,

29 S.W.3d 86 (Tex. 2000). Martin argued that since he never received the bank

statements, he never had a duty to report unauthorized transactions. This Court

rejected this argument and explained that the customer’s burden to discover

unauthorized transactions “includes the risk of non-receipt of account

statements.” Id. at 94.

         Calleja claims that because the monthly bank statements were sent to the

new address, Calleja had no duty to review the statements, report any alleged

improper disbursements, or alert the bank that he was no longer receiving

statements. Calleja acknowledges that he did nothing to monitor the account for

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                                          42
approximately 24 months and did not notice that funds were taken from the

account during this time. CR46-49; CR321-22. Between a customer and his bank,

the customer is in the best position to know whether he received his monthly

bank statement, and the customer should notify the bank accordingly and request

a duplicate copy.

         This argument ignores the UCC statutory scheme, which “provides for an

allocation of responsibility between the customer and a financial institution

according to which party is best able to prevent loss.” Okonkwo v. Washington

Mutual Bank, FA, No. 14-05-00925-CV, 2007 WL 763821, at *6 (Tex. App.—

Houston [14th Dist.] Mar. 15, 2007, no pet.).22

         The customer’s duty to exercise reasonable care to discover and report

unauthorized transactions is triggered when the bank provides “sufficient

information,” which is “statutorily defined as a bank ‘send[ing] or mak[ing]

available to a customer a statement of account showing payment of items for the

account….’” Okonkwo, 2007 WL 763821, at * 6 (quoting Tex. Bus. & Com. Code §

4.406(a)) (emphasis added); see, e.g., Schiro, 68 S.W.3d at 57. The official UCC

comment makes clear that: “[t]he ‘safe harbor’ provided by subsection (a) serves to

22  See also Schiro v. Texas Community Bank, 68 S.W.3d 55, 57 (Tex. App.—Dallas 2001, no
pet.); Cross Creek Investments, Inc. v. First State Bank, No. 03-00-00439-CV, 2001 WL 459177
(Tex. App.—Austin May 3, 2001, no pet.).

930505.20140273/2851932.1
                                              43
permit a bank, based on the state of existing technology, to trigger the

customer’s duties under subsection (c) ….” Tex. Bus. & Comm. Code § 4.406,

cmt. 1 (emphasis added).

         Compass made “available” to Calleja a statement of account and supplied

“sufficient information” identifying the disbursements and checks at issue.23 See

CR397. Again, if Calleja did not receive a statement, he should have exercised

ordinary care and contacted the bank to request a statement. See CR397. Calleja

presented no evidence that he did so.

         Calleja argues that he had no duty to monitor his monthly banking activity

unless and until Compass sent a monthly bank statement. This argument ignores

both provisions in the deposit agreement and that section 4.406 is entitled,

Customer’s Duty to Discover and Report Unauthorized Signature or

Alteration, and that this Court stated as follows:

         Section 4.406 acknowledges that the customer is best situated to detect
         unauthorized transactions on his own account by placing the burden on the
         customer to exercise reasonable care to discover and report such
         transactions.

23  If a bank customer’s account information becomes compromised, the bank is called with
that information, and the address is changed so the customer never receives another
monthly statement, under Calleja’s arguments, the customer never has to notify the bank
that he has not received statements, and he can recover damages from the bank for an
indefinite period of time once the account has been completely drained.

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                                           44
Martin, 29 S.W.2d 86 at 92. Later in its opinion, this Court stated,

         Further, as we have said, the purpose of section 4.406 is to place the burden
         on those best able to detect unauthorized transactions so that further
         unauthorized transactions can be prevented, and this burden includes the
         risk of non-receipt of account statements. Necessarily then, the burden
         must fall on the customer, the one most familiar with the underlying
         transaction.

Id. at 94 (emphasis added). A bank customer is in the best position to know

whether he received a monthly statement, and if not, the exercise of ordinary care

requires that he alert the bank. Allowing a customer to avoid a duty to report

unauthorized transactions in this situation undermines the reasoning of Martin.

         Even if the statements were no longer sent to his brother’s address—a

situation that apparently neither Calleja nor his brother were monitoring—Calleja

could have obtained additional copies of statements. Moreover, Compass made

them available in several different ways. See CR397-98. Calleja received statements

until the address was changed in 2012. All of the statements Calleja admitted

receiving stated, “If you have any questions about your statement, call Customer Service at 1-

800-266-7277.” CR397. Thus, Calleja had information available to contact the

bank to inquire about the status of his account. See CR397. Compass did not

refuse to make them available. See CR397-98. Calleja could also have visited a

bank branch to obtain them. See CR397. Alternatively, Calleja could have

reviewed the statements by obtaining online banking for free. See CR397-98. The

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                                             45
Court of Appeals used a strained interpretation of the contract and purported

facts to avoid holding Calleja responsible for failing to timely notify the bank.

         It is settled under section 4.406 that by mailing properly addressed

statements to the customer the bank makes them available. See, e.g., In re Estate of

Berry, 280 S.W.3d 478, 480–81 (Tex. App.—Dallas 2009, no pet.); Tex. Bus. &

Com. Code § 1.201(b)(36); see also Jefferson State Bank v. Lenk, 323 S.W.3d 146, 149

(Tex. 2010). The limits of what else may constitute making bank statements

available in particular circumstances are not yet defined.

         The Court determined in Lenk that when the customer is deceased and no

representative appointed, a bank holding statements makes them available. Lenk,
323 S.W.3d at 149 (noting an estate administrator’s authority and duties under the

Probate Code—now the Texas Estates Code—including, to “collect and take into

possession the personal property … of the estate ….”); see, e.g., Tex. Estates Code

§ 351.102. The Court distinguished its decision in Lenk from a Georgia Supreme

Court case, First Citizens Bank of Clayton County v. All-Lift of Georgia, Inc., 55 S.E.2d
1 (Ga. Ct. App. 2001), on the basis that the customer there was not deceased.

Lenk, 323 S.W.3d at 150, n. 7. The Georgia court found “that a bank does not

make statements available within the meaning of [4-406] by merely holding

statements and doing nothing more.” All-Lift of Georgia, Inc., 555 S.E.2d at 3. The

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                                           46
Georgia court further stated that the bank’s policy of holding statements pursuant

to a written request would “probably qualify as making them available within the

meaning of [4.406].” Id. But, in that summary judgment case, the bank produced,

“at best, only circumstantial evidence” of any such request and, All Lift’s president

submitted an affidavit providing direct evidence that the customer never

authorized the bank to hold statements. Id.

         The 1988 signature card states in the “mailing address” blank: “Hold All

Correspondence Fuente De Baco #13 Tecamachalco, Mexico D.F.” CR50, CR230.

The same document, a part of both Calleja’s and Compass’ summary judgment

evidence, provides: “Depositor shall immediately notify Bank in writing of any

change in the information given to Bank as appears herein.” CR50; CR230. Unlike

the All-Lift case, the record here includes more than mere circumstantial evidence

of Calleja’s written instruction to hold bank statements. And, in this case, there is a

complete absence of evidence that Calleja ever gave Compass written notice

changing the “information given to the Bank” in 1988. CR50; CR230.

         With no evidence of any written notice, the Court of Appeals credited

Calleja’s affidavit testimony that he “directed that the bank statements” be mailed

to his brother’s address (CR46), and that neither he nor another signatory

“requested or directed the Bank at any time after 2008 to change the address on

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                                          47
the Account … or to retain the Account statements at the Bank.” Calleja-Ahedo,
508 S.W.3d at 803. Upon this affidavit testimony, the Court of Appeals concluded

that “the parties contractually limited the ways in which the Bank could make

account statements available to Calleja, and both parties are bound by this

limitation.” Id. (citing Compass Bank v. Nacim, 459 S.W.3d 95, 108 (Tex. App.—El

Paso 2015, no pet.)).

         Parties, of course, have the power to modify their contracts. See, e.g.,

Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 228 (Tex. 1986). However, whether a

contract has been modified depends on the parties’ intent, a quintessentially

factual inquiry. Id. at 228-29 (citing Coastal Plains Development Corp. v. Tech-Can Corp.,

531 S.W.2d 143 (Tex. Civ. App.—Houston [1st Dist.] 1975, writ ref ’d n.r.e.)). Here

there are no facts to support a modification. By its terms, the signature card

requires notice “in writing of any change in the information given to” Compass.

CR50; CR230. Calleja presented no evidence or authority that would exclude

changing the record “Mailing Address” … “Hold All Correspondence Fuente De

Baco #13 Tecamachalco, Mexico D.F.” from the requirement for written notice.

CR50; CR230. In order to prove the contract was modified as the Court of

Appeals concluded, Calleja had the burden of proving (conclusively as summary

judgment movant) that he changed his mailing address of record by the agreed

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                                            48
method, written notice. See Hathaway, 711 S.W.2d at 229. There is no such

evidence—certainly no conclusive evidence. There is a complete absence of

evidence that Calleja notified Compass in writing or that Compass agreed at any

time that mailing statements to Calleja’s brother’s address would be the exclusive

method for making statements available.24

         Further, as summary judgment movant,25 Calleja is not entitled to an

inference that when he “directed” Compass to send statements to his brother’s

address that the direction was in writing.26 See Lewis v. Aurora Loan Services, No.

01-15-00362-CV, 2016 WL 887176, at *2 (Tex. App.—Houston [1st Dist.] Mar.

8, 2016, no pet.) (citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49

(Tex. 1985)). Calleja is not entitled to an inference that by accommodating the

24  Both editions of the deposit agreement include a “nonwaiver” provision: “No departure
by us from the provisions of this Agreement … shall constitute a waiver by us of any further
right to impose … or enforce the provisions of this Agreement ….” CR70; CR218.
Nonwaiver provisions in contracts are binding and enforceable. Shields Ltd. P’ship v. Bradberry,
526 S.W.3d 471, 481 (Tex. 2017).
25 The parties filed cross motions for summary judgment, and the court of appeals reversed

the summary judgment entered in favor of Compass (under which it would be proper to grant
an inference in favor of Calleja) and instead directed judgment be entered on Calleja’s
affirmative motion for summary judgment (under which all inferences should be resolved in
favor of Compass, as the non-movant). See, e.g., Apache Indus. Painting v. Gulf Copper & Mfg.
Corp., No. 01-08-00812-CV, 2010 WL 1611450, at *2 (Tex. App.—Houston [1st Dist.] Apr.
22, 2010, no pet.) (citing FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.
2000); Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192, 199 (Tex.
2007)).
26 Calleja produced no evidence in the trial court that other signatories had also not called

Compass or shared the banking information.

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                                              49
request Compass agreed that mailing statements to the brother’s address became

the exclusive method of making them available or that it waived the right to rely

on the signature card as a component of the written contract. Id.; see also Shields

Ltd. P’ship v. Bradberry, 526 S.W.3d 471, 481 (Tex. 2017) (acknowledging nonwaiver

provisions in contracts are binding and enforceable); CR70; CR218.

         The Court of Appeals, moreover, has no authority to find or impliedly find

such omitted, necessary facts. See, e.g., Texas Nat’l Bank v. Karnes, 717 S.W.2d
901, 903 (Tex. 1986); Levine v. Steve Scharn Custom Homes, Inc., 448 S.W.3d 637,

653 (Tex. App.—Houston [1st Dist.] 2014, pet. denied) (citing Golden Eagle

Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003). Without proof of those

facts, there is a complete absence of support for the Court of Appeals conclusion,

as stated, that “the parties contractually limited the ways in which the Bank could

make account statements available to Calleja.” Calleja-Ahedo, 508 S.W.3d at 803.

There is no evidence that the parties formed the contract the Court of Appeals

conclusion necessarily implies. Because the signature card formed a part of the

agreement at all times, moreover, any contractual limitation on how Compass

could make statements available necessarily includes Compass’ right to “hold all

correspondence,” unless and until that “information” was changed by written

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                                          50
notice, regardless whether the 2008 deposit agreement, the 2012 deposit

agreement, or neither of them was effective at material times. See CR50; CR230.

         The passage from the Nacim case quoted by the Court of Appeals is part of

the El Paso court’s contract analysis to determine the effect of what it determined

was a contractually modified section 4.406 “trigger” date. Nacim, 459 S.W.3d at

107-08. With respect for both courts, the ambiguity analysis in Nacim is inapposite,

if flawed,27 and the Court of Appeals reliance on Nacim in this case is misplaced.

         The deposit agreement language in Nacim and in this case is the same:

         You agree that you will carefully examine each account statement or
         notice you receive and report any exceptions to us promptly after you receive
         the statement or notice. You agree to act in a prompt and reasonable
         manner in reviewing your statement or notice and reporting any
         exceptions to us. If you do not report an exception to us within thirty (30)
         days after we send the statement or notice to you, you agree that we will not be
         liable to you for any loss you suffer related to that exception. This means
         that, if you do not report exceptions to us within thirty (30) days after
         we send the statement or notice to you, we will not reimburse you for
         any loss you suffer, including, but not limited to, any amounts lost as a
         result of: paying any unauthorized, forged, or altered item ....
27   “‘A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably
susceptible to more than one interpretation.’” Nacim, 459 S.W.3d at 107 (quoting Heritage
Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)). Contrary to the El Paso
court’s interpretation, the deposit agreement does not “require[]” in the first two sentences
quoted above that “the customer report questionable transactions once the customer actually
receives the account statement.” Nacim, 459 S.W.3d at 108. Rather, those sentences embody
the customer’s agreements to carefully examine and report exceptions after receiving a
statement and to act in a prompt and reasonable manner in reviewing statements and
reporting exceptions. See id. The two sentences which follow do not create ambiguity; they
merely specify when (“after we send the statement”) the agreed, thirty day reporting period
begins and what that means to the bank’s liability.

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                                              51
Calleja-Ahedo, 508 S.W.3d at 803 (emphasis by Court of Appeals); Nacim, 459
S.W.3d at 108; see also CR65 (2008 deposit agreement). The El Paso court in Nacim

reviewed the contract for ambiguity as to when the agreed, thirty day period to

report exceptions began to run. Nacim, 459 S.W.3d at 107. The parties’ agreement

that thirty days was the measure of “reasonable promptness” (Tex. Bus. Com.

Code § 4.406 (c)) in examining statements was central to the bank’s defense in

Nacim where thirty three days elapsed between “sending” and reporting. Nacim,
459 S.W.3d at 104. In this case, Compass’ defenses did not require reliance on a

contractually agreed notice period—Calleja did not notify Compass of any

exception for over eighteen months. And neither party here suggested ambiguity

in any part of the deposit agreement.

         To the extent the Court of Appeals relied on Nacim to hold that Calleja’s

duty to report “never arose under the 2008 Agreement” (Calleja-Ahedo, 508 S.W.3d

at 803) based on use of the word “send” (or “receive”) in the above quoted

excerpt, Compass and Calleja, nonetheless, agreed on the meaning of “made

available” in both the 2008 and the 2012 deposit agreements, and they expressly

agreed in the signature card that that Compass would hold all correspondence.

         Paragraphs (a) and (c) of section 4.406 each use the disjunctive, “sends or

makes available”; paragraph (f) uses the past tense, “made available.” Tex. Bus. &

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                                           52
Com. Code 4.406(a), (c), (f). These provisions of the UCC “shall be liberally

construed and applied to promote its underlying purposes and policies.” Martin, 29
S.W.3d at 93. Calleja and Compass agreed in 1988 that Compass would “hold all

correspondence.” CR50; CR230. They agreed in 1988 that the “Depositor [Calleja]

shall immediately notify Bank in writing of any change in the information given to

Bank as appears herein.” CR50; CR230. The signature card is part of the

agreement between Compass and Calleja. Tex. Fin. Code §§ 34.301(a). Compass

and Calleja reiterated in 2008 (and in 2012) their agreement that Calleja would give

written notice of any change of address. CR65; CR212.

         Compass and Calleja agreed in 2008 (and in 2012) that Compass “may make

statements … available” by “holding” them or delivering them to Calleja “in

accordance with your request or instructions.” CR65; CR212. Neither the 2008

nor the 2012 editions of the deposit agreement amends the terms of the signature

card to the effect that Compass can no longer “hold all correspondence.” To the

contrary, both writings permit it and expressly provide that by doing so, Compass

made such statements available. CR65; CR212. When courts interpret a contract,

they are to examine the entire agreement and give effect to each provision so that

none is rendered meaningless. See, e.g., Kachina Pipeline Co., Inc. v. Lillis, 471 S.W.3d
445, 450 (Tex. 2015).

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         To conclude that the language quoted by the Court of Appeals and by the

court in Nacim obviates the parties’ express agreement as to what constitutes

making statements available is contrary to this basic tenet of contract

construction. The agreement that, “We may make statements … available to you

by holding all or any of these items for you, or delivering all or any of these items

to you, in accordance with your instructions” (CR65; CR212), would be rendered

meaningless in the context of either deposit agreement. Kachina Pipeline Co., 471
S.W.3d at 450. It cannot have been the “true intention of the parties” (Kachina

Pipeline Co., 471 S.W.3d at 450 (quoting Italian Cowboy Partners, Ltd. v. Prudential Ins.

Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011)) that an agreement to a specific period

in which to report exceptions following receipt of a statement or the sending of a

statement means that when a statement is either not received, or is it made

available other than by sending, the customer is absolved of all responsibility to

monitor his account for all time. Such a result would undermine the UCC’s

“carefully considered allocation of responsibility” between a bank and its

customer. Info. Support Concepts, Inc., 149 S.W.3d at 107.

         As the Court stated in Martin:

         Section 4.406 acknowledges that the customer is best situated to
         detect unauthorized transactions on his own account by placing the
         burden on the customer to exercise reasonable care to discover and
         report such transactions.[] The customer’s duty to exercise this care is

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                                            54
         triggered when the bank satisfies its burden to provide sufficient
         information to the customer.

Martin, 29 S.W.3d at 92 (footnote omitted). Section 4.406 permits a bank either to

send or to otherwise make available the account information. Tex. Bus. & Com.

Code § 4.406(a), (c), (f). As in Martin, when Compass satisfied its section 4.406

burden by making sufficient information available as agreed, i.e., “by holding all or

any of these items for [Calleja] in accordance with [his] instructions” (CR65;

CR212; see also CR50; CR230), Calleja’s duty to “promptly notify” Compass was

triggered. Tex. Bus. & Com. Code § 4.406 (c). As the trial court correctly

determined, Calleja failed to discharge that duty. The judgment of the Court of

Appeals should be reversed and the judgment of the trial court reinstated.

         Other Texas courts have recognized and applied the UCC statutory scheme,

which “provides for an allocation of responsibility between the customer and a

financial institution according to which party is best able to prevent loss.”

Okonkwo v. Washington Mutual Bank, FA, No. 14-05-00925-CV, 2007 WL 763821, at

*6 (Tex. App.—Houston [14th Dist.] Mar. 15, 2007, no pet.) (citing Martin, 29
S.W.3d at 92); see also Schiro v. Texas Community Bank, 68 S.W.3d 55, 57 (Tex. App.—

Dallas 2001, no pet.); Cross Creek Investments, Inc. v. First State Bank, No. 03-00-

00439-CV, 2001 WL 459177 (Tex. App.—Austin May 3, 2001, no pet.). The

courts uniformly recognize the disjunctive nature of 4.406, that the customer’s

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                                           55
duty to exercise reasonable care to discover and report unauthorized transactions

is triggered when the bank provides “sufficient information,” which is “statutorily

defined as a bank ‘send[ing] or mak[ing] available to a customer a statement of

account showing payment of items for the account….’” Okonkwo, 2007 WL
763821, at * 6 (quoting Tex. Bus. & Com. Code § 4.406(a)) (emphasis added); see,

e.g., Schiro, 68 S.W.3d at 57.

         In Texas, the “cardinal rule of statutory construction is to ascertain the

‘legislature’s intent,’ and to give effect to that intent. The duty of the court is to

construe a statute as written and ascertain the legislature’s intent from the language

of the act.” LaSalle Bank Nat’l Ass’n v. Sleutel, 289 F.3d 837, 839 (5th Cir. 2002)

(citing Union Bankers Ins. Co. v. Shelton, 889 S.W.2d 278, 280 (Tex. 1994); Morrison v.

Chan, 699 S.W.2d 205, 208 (Tex. 1985)). Further informing the legislative intent,

the official UCC comment makes clear that: “[t]he ‘safe harbor’ provided by

subsection (a) serves to permit a bank, based on the state of existing

technology, to trigger the customer’s duties under subsection (c) ….” Tex. Bus.

& Com. Code §4.406 cmt. 1 (emphasis added). Existing technology includes on-

line access to account statements. See, e.g., Kaplan v. JPMorgan Chase Bank, N.A., No.

14-C-5720, 2015 WL 2358240 (N.D. Ill. May 12, 2015). The plaintiff in Kaplan

argued that she had not seen account statements, and this was why she waited

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                                            56
more than a year to report alleged unauthorized disbursements. The bank

confirmed that the account statements were made available online each

month. Kaplan claimed that she had problems using her online banking access,

but the court concluded the statements were made available after reasoning that

plaintiff also could have obtained her account statements by going to her local

branch by requesting them either in person or by phone.

         Here, if Calleja—who knew statements were being generated—could have

used online banking but chose not to, or he could have called the bank and

requested a copy of any monthly statement. See Tatis v. U.S. Bancorp, 473 F.3d 672,

675–76 (6th Cir. 2007) (finding that where Tatis, who knew that monthly

statements were generated and originally had elected to have his statements held

by the bank, that “the statements were ‘made available’” under Ohio’s version of

section 4.406). Like in this case, there was no evidence in Tatis that the bank ever

refused to provide any copy or refused to provide online access. CR397; Tatis, 473
F.3d at 675. Plus, the backs of the statements that were mailed to Calleja’s

brother’s address had both addresses and phone numbers for Calleja to call to get

information from Compass. See CR397. Nevertheless, Calleja never contacted

Compass to get a copy of his statement or to inquire why statements were no

being received at the Woodlands address. See CR397. Calleja elected not to take

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advantage of the existing technology, online banking; he did not visit or contact

any Compass branch; Calleja made no effort for eighteen months to review any

bank statements.28 See CR397-98. Nor did Calleja ever contact Compass to verify

the balance of his account. Calleja wholly failed to monitor the status of his bank

account for six months before and eighteen months after the first unauthorized

transaction. There is no evidence that he would have reviewed the statements even

if the statements had been delivered to his brother’s apartment.

         Again, if Calleja did not receive a statement, he had a duty of ordinary care

and should have contacted Compass to find out why statements were no longer

being sent to the Woodlands. Compare Borowski v. Firstar Bank Milwaukee, N.A.,

579 N.W.2d 247, 250 (Wis. Ct. App. 1998) (stating where properly addressed

statements are intercepted by an interloper, the customer still is not relieved of his

or her responsibilities to either examine the statements or find out why they are

not coming). Calleja presented no evidence that he made any effort to discharge

his responsibility. See Barfield, 426 S.W.2d at 840.

28 Calleja, through his brother who was allegedly receiving the monthly statements, knew or
should have known if the statements were, in fact, not being received. See CR306.

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         E.        Other courts have interpreted the term “made available” as it
                   applies to Texas Business and Commerce Code section 4.406,
                   and the Court of Appeals’ construction of section 4.406 differs
                   from other courts when it determined that Compass had not
                   made the bank statements “available” per section 4.406,
                   which is likely a matter of first impression under Texas law.
         The Appellate Court relied in part on Jefferson State Bank v. Lenk in trying

to analyze the “made available” provision in section 4.406. See Jefferson State

Bank v. Lenk, 323 S.W.3d 146 (Tex. 2010). In that case, the bank customer had

died, and the Court discussed what banks need to do after a customer’s death

because the customer was no longer able to receive statements or report

purported unauthorized transactions. The present case is distinguishable

because Calleja has always been alive throughout this dispute. Calleja simply

failed to review any of his bank statements for approximately two years. See

CR46-47.

         There does not appear to be any Texas case that has construed what

constitutes “mak[ing] available” bank statements when the customer is alive and

never tells the bank that he is not receiving statements or when an alleged

imposter causes bank statements to be sent to a new address, and the customer

fails to inform the bank he is no longer getting statements.

         Under section 4.406, “[t]he plain language of the statute [thus] simply

require[s] the Bank to ‘send or make available’ account statements.” Okonkwo

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                                           59
v. Washington Mutual Bank, FA, No. 14-05-00925-CV, 2007 WL 763821, at *6

(Tex. App.—Houston [14th Dist.] March 15, 2007, no pet.) (emphasis added);

see also Schiro v. Texas Community Bank, N.A., 68 S.W.3d 55, 57 (Tex. App.—

Dallas 2001, no pet.). In Texas, the “cardinal rule of statutory construction is to

ascertain the ‘legislature’s intent,’ and to give effect to that intent. The duty of

the court is to construe a statute as written and ascertain the legislature’s intent

from the language of the act.” LaSalle Bank Nat’l Ass’n v. Sleutel, 289 F.3d 837,

839 (5th Cir. 2002).29

         Here, if Calleja had called the bank and requested a duplicate copy of the

monthly statement, and the bank had refused to provide a duplicate copy, then

this would show that the statements were not made available. The backs of the

monthly statements Calleja did receive had several addresses or phone numbers

for Calleja to call to get information from Compass. However, Calleja in this

matter never contacted Compass to get a duplicate copy. See CR305; CR397.

Calleja could have used online banking, visited a branch or done other things to

review statements. 30 See CR397-98. Instead, Calleja wholly failed to monitor the

29 Surely the legislature did not intend for a bank customer to never have to notify a bank if
they stop receiving bank statements.
30 Calleja, through his brother who was allegedly receiving the monthly statements, knew or

should have known if the statements were not being received. See CR306.

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                                             60
status of his bank account. There is no evidence that he would have reviewed

the statements even if the statements had been delivered to his brother’s

apartment.

         The Supreme Court of Minnesota analyzed the issue of placing the risk of

non-receipt of bank statements on the bank customer as opposed to the bank.

See Stowell v. Cloquet Co-op Credit Union, 557 N.W.2d 567 (Minn. 1997). In Stowell,

the customer argued that the customer had not received statements and said the

statements were not “made available” under the UCC. The credit union mailed

duplicate statements, but Stowell claimed not to receive them, likely because

they were intercepted by the purported wrongdoer. At no time did Stowell go

to the bank branch and ask that a statement be printed or otherwise provided to

him. The court explained, “[a]llowing accountholders to avoid their duty to

inspect their account statements by denying receipt of the account

statements would place unreasonable financial burdens on banks and

other financial institutions by forcing them to prove receipt either

through the use of certified mail or by individually contacting the

customers, or to confirm that they had, in fact, received their account

statement. Such measures would often be prohibitively expensive.” Id. at

572 (emphasis added).

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                                         61
         Likewise, the court in Borowski confirmed that, even if a customer claimed

that the bank was at fault for allegedly not properly sending out the statements,

the bank customer is not relieved of his or her responsibilities “to either

examine those statements and/or find out why they are not coming.” Borowski v.

First Star Bank Milwaukee, 579 N.W.2d 247, 250 (Wis. Ct. App. 1998). In

Wetherill, the court explained that for several years, the plaintiff sought never to

review the account statements and never contacted the bank to ensure that

everything was as it should be. See Wetherill v. Putnam Investments, 122 F.3d 554,

556 (8th Cir. 1997). In Wetherill, the plaintiff argued that the statements were

not “properly addressed” because they were mailed to an address other than the

one that plaintiff had agreed to for the receipt. Id. at 556. However, the court

held that had Wetherill exercised “reasonable diligence”, he would have

discovered the forgeries years before he did so. Id. at 557.

         Similarly, other courts have held that bank statements were “made

available” although the depositor did not receive the statements. See Woods v.

MONY Legacy Life Ins. Co., 641 N.E.2d 1070 (N.Y. 1994); McMickle v. Girard

Bank, 515 A.2d 16 (Pa. Super. Ct 1986) Myrick, 268 A.2d at 527 (holdings that

(Myrick) was negligent as a matter of law for failing to inquire with the bank as

to her lack of receipt of monthly statements and cancelled checks).

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                                          62
         In Westport Bank & Tr. Co. v. Lodge, 325 A.2d 222 (Conn. 1973) the bank

depositor failed to receive her bank statements and did not notify the bank. See

Lodge, 325 A.2d at 223. Because the fraudster had changed the mailing address

on her bank account, Lodge failed to receive bank statements for more than two

years. Id. Lodge at no time attempted to reconcile her bank statements or

inquire of the bank during the two years, and the court held that the lack of

effort to examine the bank statements on the part of Lodge constituted

negligence so as to preclude liability of the bank. See also General Petroleum

Products, Inc. v. Merchants Trust Co., 160 A. 296, 299 (Conn. 1932).

         F.        There are strong policy reasons for the Court to decide this
                   case and affirm the trial court’s judgment.
         Because there is a substantial likelihood that similar facts will occur in the

future, this Court should continue to interpret and apply the UCC in a way that

clarifies that customers are responsible for monitoring their banking activity and

are not to be rewarded for their failure to do so. This Court should not excuse

Calleja’s admitted, intentional failure to monitor his account for two years

(particularly after he had already experienced bank fraud). See CR46-48. If the

court’s decision stands, nothing will prevent a bank customer from entrusting

oversight of an account to a friend or relative, abdicating all personal

responsibility. If the person allegedly monitoring the account has the

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                                           63
customer’s account information and personal information, the person can have

the bank change the account address without the customer’s knowledge. Then,

by omission or design, that person could fail to mention to the customer that

statements are not being received where the customer expected them for six

months, eighteen months, or two years. The customer’s willful ignorance would

allow a bad actor (or co-conspirator) to drain the account, supposedly without

the customer’s knowledge.

         Accordingly, if the Court of Appeals’ ruling in this case stands, the

customer has no duty to discover and to report the “loss” he facilitated by

failing to protect his banking information and willfully ignoring his account,

leaving the bank liable for the loss. There would be no way for the bank to

prevent this type of fraud. Permitting a customer to not report that he did not

get bank statements for 18 months and bear no responsibility is an unjust result.

The customer is in the best position to monitor his own account activity. Sound

policy dictates that there must be some degree of responsibility for a customer

to notify the bank if monthly statements stop arriving.

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                                           64
         G.        Without the 2012 agreement and without the 2008 agreement,
                   there is only one writing material to the parties’ agreement in
                   the record, the 1988 signature card.
         The only writing both parties agree was part of the contract is the 1988

signature card; both offered the card as evidence. See CR46, 50; CR203, 230.

Regardless whether the 2012 version or the 2008 version, or some other version

of deposit agreement also might have been “in effect,” the signature card is part

of the contract. Tex. Fin. Code § 34.301(a). The card includes the parties’

agreement that Compass was authorized to “Hold All Correspondence”:

CR50; CR230. Calleja offered no evidence that he rescinded his agreement

authorizing Compass to “hold all correspondence.” As a movant, he is not

entitled to any inference in his favor. See Lewis v. Aurora Loan Services, 01-15-

00362-CV, No. 2016 WL 887176, at *2 (Tex. App.—Houston [1st Dist.] Mar. 8,

2016, no pet.) (citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex.

1985)). Calleja offered no evidence or authority that Compass’ subsequent

agreement to provide copies of statements to Calleja’s brother necessarily

revoked the existing, written agreement authorizing Compass to hold all

correspondence. By the clear terms of the only writing in the record which both

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                                            65
parties agree applies, Compass made all statements available at its banking

locations as expressly agreed between the parties. Calleja’s claims are precluded

by the contract and by section 4.406 of the Business and Commerce Code.

CR50; Tex. Bus. & Com. Code § 4.406.

         H.        The Court of Appeals improperly construed plain language in
                   the trial court’s order.
         The Court of Appeals’ interpretation of the trial court’s statement that

Calleja “has failed to exercise diligence in protecting himself from the alleged

fraud” as referring only to “Calleja’s lack of diligence post-forgery” is

impermissibly narrow. See Calleja-Ahedo, 508 S.W.3d at 806. Rather than “the

context of the final judgment itself” (id.), the scope of the context should have

been the entire record: “Reviewing courts do not disregard the evidence

supporting the motion.” City of Keller v. Wilson, 168 S.W.3d at 824 (Tex. 2005); see

also Kennamer v. Estate of Noblitt, 332 S.W.3d 559, 566 (Tex. App.—Houston [1st

Dist.] 2009, pet. denied).

         The Court of Appeals read an expressly inclusive sentence to be

exclusive31 to support its conclusion. See In Matter of Estate of Downing, 461

31  The trial court’s order states: “In particular, but not as the sole reason for this ruling, the
Court rules that where the check at issue was cashed on July 30, 2012, and the Plaintiff did
not notify the bank until January 29, 2014, as a matter of law Plaintiff has failed to exercise
diligence in protecting himself from alleged fraud regardless of any shortcomings in sending
bank statements.” CR539.

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                                                66
S.W.3d 231, 238 (Tex. App.—El Paso 2015, no pet.) (citing El Paso Field Servs.,

L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 805–06 (Tex. 2012); see also Tyler v.

Henderson, 162 S.W.2d 170, 175 (Tex. Civ. App.—Fort Worth 1942, writ ref’d

w.o.m.) (“We must give verity to the judgment of the court having such

jurisdiction; we will not construe its language so as to destroy its legal effect

….”). The trial court’s judgment does not exclude or negate reliance on the

conclusively established facts that Calleja failed to safeguard his personal and

banking information and ignored his account for six months before account

funds paid for blank check stock in June (CR246) and before one of those

checks was paid in July, 2012 (CR249). See also CR321-22. Had Calleja paid

attention, personally or through his brother, he would have noticed when—

before any forgery occurred—his bank statement did not arrive at the

Woodlands address. See Myrick, 268 A.2d at 527-28. The Court of Appeals’

restrictive reading of the judgment fails to give due effect this material part of

the summary judgment record; i.e., Calleja’s lack of diligence pre-forgery, including

his obvious failure to safeguard his personal information, making it “easier for

the wrongdoer to commit his wrong.” Bank of Nichols Hills, 196 P.3d at 986-87;

Tex. Bus. & Com. Code § 3.406(a).

930505.20140273/2851932.1
                                         67
         As the Maryland court of appeals stated, “[t]he common thread running

through [cases discussing section 3-406] is that the substantial contribution test

under the UCC includes negligent conduct on the part of the [person precluded]

which previously had been viewed as too remote in the chain of causation to

preclude recovery.” Dominion Const., Inc. v. First Nat’l Bank of Maryland, 163, 315
A.2d 69, 73-74 (Md. 1974). The “new” UCC standard replaced proximate cause

with the “substantial factor” test. Id. The New Jersey court explained: “[t]he

language of [section 3.406] … states plainly that it is the contribution to the

forgery rather than the negligence that must be substantial.” Gast v. Am. Cas. Co.

of Reading, Pa., 240 A.2d 682, 685 (N.J. Super. Ct. App. Div. 1968). Thus,

Calleja’s inattention to his account, the obvious failure to safeguard his personal

information and his “failure to inquire of the bank as to [his] lack of receipt of

monthly statements,” was “negligent as a matter of law.” Myrick, 268 A.2d at

528. Just like Myrick’s, Calleja’s conclusively proven “negligence substantially

contribute(d) … to the making of an unauthorized signature” precluding his

claim. Id. (internal quotations omitted). The trial court’s judgment should be

affirmed.

930505.20140273/2851932.1
                                         68
                                     Conclusion
         This Court should not excuse Calleja’s admitted, intentional failure to

monitor his account for two years. It should not shift responsibility from Calleja

to Compass for Calleja’s failure to properly safeguard his personal and banking

information. If the Court of Appeals’ decision stands, nothing will prevent a

bank customer from entrusting the receipt of account statements to a friend or

relative, abdicating all personal responsibility. The Court of Appeals decision

sanctions Calleja’s chosen method of monitoring his account by relying

“completely” on reviewing statements delivered to The Woodlands, then not

bothering to retrieve a single statement for at least two years. The Court of

Appeals’ decision improperly shifts the burden of loss to Compass where Calleja

was always in the best position to protect against the loss. It was Calleja’s willful

inattention to his own interests and affairs that made it easier for a bad actor to

drain the account. If the Court of Appeals decision stands, Calleja will have

been absolved of all duty to discover and to report a “loss” he facilitated by

failing to protect his banking information and willfully ignoring his account.

There will be no way for a bank to prevent this type of fraud. Common sense,

sound policy, and the law dictate that an account owner bear a degree of

930505.20140273/2851932.1
                                          69
responsibility for protecting his own interests. The Court of Appeals’ decision

absolves Calleja and wrongly places the burden on Compass.

                                       Prayer
         Compass respectfully asks this Court to reverse the decision of the

Appellate Court and to affirm the summary judgment in favor of Compass. In

the alternative, Compass asks the Court to remand the case to resolve all issue of

fact necessary to disposition of this case.

                                       Respectfully submitted,

                                       HIRSCH & WESTHEIMER, P.C.

                                       By: /s/ Michael D. Conner
                                          Michael D. Conner
                                          mconner@hirschwest.com
                                          State Bar No. 04688650
                                          William P. Huttenbach
                                          State Bar No. 24002330
                                          phuttenbach@hirschwest.com
                                          1415 Louisiana, 36th Floor
                                          Houston, Texas 77002
                                          Telephone: (713) 223-5181
                                          Facsimile: (713) 223-9319

                                       Attorneys for Petitioner Compass Bank

930505.20140273/2851932.1
                                         70
                              Certificate of Compliance

      I do hereby certify that the relevant contents of this document consist of
14,956 words, in compliance with Tex. R. App. P. 9.4(i) and this document
complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has
been prepared in a proportionally spaced typeface using Microsoft Word 2013
in 14 point Garamond font, except for footnotes which are in 13 point typeface.

                                               /s/ Michael D. Conner
                                              Michael D. Conner

                                Certificate of Service

      I hereby certify that on this 20th day of December, 2017, a true and
correct copy of the foregoing document was served via e-service as follows:

                                Michael C. O’Connor
                            moconnor@oconnorcraig.com
                                 Lesley C. O’Connor
                            loconnor@oconnorcraig.com
                                O’CONNOR & CRAIG
                            2825 Wilcrest Drive, Suite 261
                               Houston, Texas 77042
                              Telephone: (713) 266-3311
                              Facsimile: (713) 953-7513

                                               /s/ Michael D. Conner
                                              Michael D. Conner

930505.20140273/2851932.1
                                         71
                                           No. 17-0065

                                   In the Supreme Court of Texas

                                      Compass Bank, Petitioner

                                                 v.

                                Francisco Calleja-Ahedo, Respondent

                  On Petition for Review from the First Court of Appeals
                                    in Houston, Texas
                                Case No. 01-15-00210-CV

                            Appendix to Petitioner’s Brief on the Merits

Signature Card (CR50)                                                      Tab 1

Consumer Disclosure (2008 deposit agreement; CR51 et seq.)                 Tab 2

Consumer Deposit Account Agreement
(2012 deposit agreement; CR205 et seq.)                                    Tab 3

930505.20140273/2851932.1
                                                72
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Tab 2
CoxsunrrEn DsclosuRE

Effeelive August   2e 20Oo

  Compass Banlç a member of the BBVA Group
Consumer Disclosure

Highllghts
    1.   Changes to Consumer Deposit Account Agreement        2
   2     Changes to Checking and Savings Accounb              4
Other Fees and Scrvlce Charges                                I
Consumer Depoclt Account Agte€ment                            11

    1, Definitions                                            11

    2. Account Operations                                     12
    3, Accouni Staiements and Notices                         t3
    4, AccountTransactisns                                    14
    5. Deposits, Colleetlons and Payment of ltems             15
    6, Withdrawals                                            17
    Z  Sub"accounls                                           17
    L  Arbikation
                                                              '18

    9. Whiver of Jury Trial                                   19
   10. Dormant and Abandoned/Unclaimed Accounts               19
   11. SetOff                                                 19
   .l2. Waivers                                               19
   13. Other Services                                          10
   14. lnterest¡ lnteres't Reporting                          2A
   1õ. Changes to Account Stah¡s                              20
   16, Applicable Law                                         20
    17   Additional Provisions                                20
Fund¡ Arailabi llty Dlsdosure                                  21

Elsctronic Ê¡nd ïtan¡fer Olsdosuro St¡tsment                  22
Terpayer ldentlllcati on Nu m b ars (Eadtup Witlth oldlng)     24
 Gompass Consumer        Prir¡ct Dlcdosure                     26
 lmportant tnfo¡maüon About Your Gheddng Account (Gh€d( 21)    29
 Vleao Gltedr Card Agreernent end Dl¡closurê 9tatement         31
HtGHuGl{ï5
Cha n ges to Gons umer Depos it Âccou¡tt                    Agreem ent
This Disclosure Booklet con{ains the terms and condiäons that will govern your consumer deposit
accounts at Cornpass Bank beginning August 22,2OA8,4 consumer deposit account includes any
Çpe of checkíng,'saving+ monéy market or NOW ectount to which funds may be deposited and that
is'used primuily for personal, family ol household purposès. Please qqêfully review tte Conguma.r
                                                -11-21
 Oapoiît Aø.tnl $ru'cment on pages                     of this Consumer Disclosure Booklet and keep Ìt
forir,¡ù-rre reference, Many terms of yòur Compass account will be difÞrent from those at Taras Staie
Bank, including, but not limited to, lhe followfngl
f    Postlng Onler and Ordêt of Payment At Compass Bank, checks and other debits to your
     account rnay be posted and/or paid in a ditferent order than at Texas State Bank lf two or more
     items are piesenied for payment from your account on the same day, we may Pay or clraçe the
     iterns to yòur account in any order. To avoid olerdrawing your account make surelou have a
     suffic¡eni available balance-in your account before you write a check use your Check Cârd or
     authorize an electonic paymenl
r    rAvailable Balanca, and '¡Posted Ealancal'At Compass Bank, we dislinguish batween the
     "available balanceo and the 'posted balancen for your accounl The term 'available balance" re{ers
      to the balance o{ funds in your account that ls avallable for immediate withdrawal. Unlike the
      posted balancq the avaíaÈle belânce reflects any holds placed on your accounl The term 'posted
      balance' refers to lhe balance of funds in your account based solely on items that ha,re been
       posted as credÍts or debits to your accounl Your available balance mqy be more or less Ú¡an the
      àmount of your posted balancê, but dses not include any cre/it available under any Compass Bank
       Overdratt Protect¡on Line of Credit you may have,
¡      l{olds lor Chod( Card Tlans¡ctiong. lf we issue a Msa6 Check Card for your account and you
       use your Ca¡d for cerùa¡n t¡ansactions (including every POS and many Visa transact¡ons), the
       merihant accepäng your Card may requesl advance aulhorization of that transaction. lf we
       auihorize a trarrsaction, we may place a temporary 'hold' on your accourtt for {he amount
       requested by the merchant Ihis hdd ls not payment for an authorized transacüoq and may be
       placed on yoor account bebre he scàJal fensactlon ls presented to ts fø paymenL Fot more
       infømdion abor¡t these holdg when they âre ß¡ease{ their effÊct on your sttor¡nt and the
       authori¿ations rcquested by nerciranfs, please relerlo the Check Card Agreenrent and Discbsure
       Statamant induded with put new Chedc Card,
 r      Una¡¡llþilzgl llans¡cüo¡¡ t¡d,lot Forgprlo¿         lt ls essantialthat any accounl erorc,
        una¡thorized bansac{ions, alteratfonq unauthorksd signatr.¡æq foqedq encodlng enors, pocting
        erorq or any other improper bansac{ons on your âccq¡nt (collcc{ively rebned to æ 'ctceptions)
        be repoded ùo us as soon as reasonabþ positrb. You must carefulþ acamine eacà accouttt
        statament or noüce you lece¡ve and eport any orceplions to us pronptly afur you recefue the
        statemoflt or noüca lf you do rmt report an orcepüon to ug within tñlËy (30) dafs afbr vyg sand
        he sbtsment or nolice to yor¡ we mây not be liable to you for any bss ¡ou sufror ßlat€d to thet
        encepüon. Different ruþs may appþ to ilems lhat a¡e eþcbonic fund bursfrß.
    ¡   Ferolvlng Dis$¡bs Relrted to Your A¡cor¡nt lf a dlspute of any         ldnd adses under your
        account agreement or ¡elales to ¡lour account or any lransaction* involving your acounl, either
        yor¡ or s/e can choose lo have that dlspute resolvad þ bindlng ubikatlon. ll (0 neither ¡ou nor we
        seek b compel arbitraüon of any dlspule wå ha\¡ê related b thls Agreemen[your æcunl orany
        fansactlons lnvolvirg your aocoun! or (10 some or allol the srblbdion prølsion is unenforceûble
        arrd we are ln a dispute ln a court of bw, üren êaú ol uÊ agreßs to waiva any rþht we may have to
        a jury bial ùo the artent pennltbd b la¡.lìa ¡rÞtb¡üon ¡nd lü¡y ùlal railergrovùrlonc ln
        yoqr ¡ccûunt agrÊcmelrt llmit your abillty to litigate dalm¡ ln court rnd your llght io a
        iury lrial. You should rsvlew lftese pmrlrlons carefully.
    r   Congunar fttlYrcy Dlrrdæurê.       Tho Compass Consumer Prfuacy Oisclosun is included in thls
        tonsumer Oisclosura Booklel. The Frivacy Disclosure conl¿lns information on Compass'sharing
        prac'tices within lhe Compass lamlþ of companies and provides information on how you may
        choose to limil markeling S our af{iliales basad on lnforrnglion lhat Cornpass sh¿res with ihern,

    For informdion on Miscellaneous fues at Compass Elanlq please see pege       I   of this Booklet.

    2
Other differences found in the Consumer Dìsclosure Eooklet include:
f   .   Concumq Deposit AscountÄgreement sectionsl
        il¡ ACCOUNTOPERATIONS
             - Fowers of AttorneY
             - Service Chargesl Other Charges
        a    ACCOUNT STATEMENTS AND NOTICES
             - Enors, Unauthorized Transactions
                                      and Forgedes
             - Record Retention
        ,f   ACCOUNTTRANSACÏONS
             - Signatu res; Facsimile Signatures
             - Wre Transfers
             - lnstrfficient Balance and Overdrafts
             - StoP Payment Orders
             - lnter-Account Transfers
             - lltegalTransactions
        g     DEPOSITS, COLLECTIONS, At{D PAYMËNT OF ITEMS
              - Deposits by Minors, Agents or Trustees
              - Collecäon as Agent
              - Check Endorsement Standards
              - Foreign Currencies
              - ATM Depositories, Night Depositories, Direct Deposìl and Deposits by Mail
              - Chargebacks
              - Stale and Postdated Checks;Miscellaneous
         ¡    WITHDRAWALS
         ¡r RESTRICTIONS ON WTI-HDRAWAI-S
         *    SË.T   OFF
         u    INTERESIi INIEREST REPORTING
         e    CHANGES TO ACCOúNT STATUS               -   Conversion to Business Accounts

         ;q AÐDITIONAL PROVISIONS           -   Closing Your Account
         Ë APPUCABLEI-AW
         a    AMENÐMENT TO THIS AGREEMENT
    2. FundsAv¡¡labi¡tty Disdosure
    3, Eleclronlc Fund Tlansfer Þlsclocure Statement
    4        Consumer PrlvacY Disdosu¡e
    5. lmportånt lnformallon About Your Chedtlng                   Acoount (Ghed¡ 21)

                                                                                                t

                                                                                                ¡
                                                                                                I
                                                                                                I

                                                                                                t

                                                                                                I
                                                                                                    ¡

                                                                                                    I
                                                                                                    I
                                                                                                    ¡

                                                                                                    t
                                                                                            3       t
                                                                                                    I
    ,       Changes to Checking and Savings Accounts
    '
,           Here are highlighls to the changas in tre terms and features of yolr accounts after they ttansfer to
:           Compass Bank

                Texas State Bank                      i CompaesBank          Please ilole Changas to These Account
                                                                             Terms and Fsatr¡res

                Regul ar Ched Payments    to partnerships nol engaged in a tr¿de or bus¡ness in the U.S, and wlrich have at leasl one noniesirjent parlner,
         )    Paymenls of patronage dividends where tlæ arnount recejved is nol paid ¡n money.
         )    Pâyments made by certain foreign orqanizatiorrs.
         r    Paynents ol interest nol generally subjecl to bâckup wjthho¡diru ¡nclude lhe fOìlowing:
         >    Payments of interest on obl¡gations issued by individuals. Noter YoLI may be suirject to backup wíthholding if thjs interest is
              $600 or more anci is pä¡d in lhe course of the payers lrade or business and you have not provided your corect Taxpayer
              ldentificalion Number to the payer
         > Paynrents     of tax'exempt interest (inclLrding exempt-interest dividends under Section 852).
         ll   Payments described in Section 6059bX05) to nonresident aliens
         > Payments on tax{ree covenant bonds uncjer Section            1451.

         > Pêymenis made by certain Toreign organizations.
         > lf you are uncerlain whether you qLnlify as an exenrpt recipienl         call your accountant or the Intetnal RevenLle Servce,

To avoid possible wilhholding, exempt recipients should complete the fornds) provided by Compass and should check the box captioned
Exempt Recipients. The forrn shoulci also conta¡n 1,our Taxpayer ldentification Nunber, and lhe certification stalement Ìrust be signed.
The form must then be returned lo Compass.

PTNALTIES
1.    Penalty for Fallure to Furnish Ïaxpayer ldentification Number. lf you fail to furnish your laxpapr identification number to a payei
      you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willfll neglect.

2,    Failure to Report Certain Dividend and lnterest Payments. lf you faii to include any portion of an includible paymenl ior inlerest,
      divicJends, or patronage dividends in gross income, such failure will be treated as b€¡ng clue        lo neglìgence and will be subjecl to   a
      penalty of 5% on any porlion of an underpayment ättribulable to that failure unless there        is clear   and convincing evidence to the
      contrary.

3.    Civil Penalty for False lnformation With Respect to Withholding. lf you make a false statement with no reasonable basis that results
      in no imposition of backup withholding, you are subject to a penalty of 9500.

4.    Criminal Penalty for Falsifying lnformation, Falsilying certifications or affirnlaTions rrìay subjecl you to cr¡miral penalties lncluding
      fines and/or imprisonment"

20
IMPORTANT INFORMATION ABOUT YOUR CHTCKING ACCOUNT (Check 21)
Subslitute Checks and Your Rights

What     is a   substìtute check?
To make check processing fasler, federal law permits banks to replace original checks with 'substilute checks," These checks are similar
in size Ìo original checks with a slightly reduced image of the front and back of the ûriqinal check. The f¡ont of a sLrbsUtute check states:
"This ìs a legal copy of your check. You
                                           can use il lhe same way you would r,se the original check" YoLl may use a sulrstitule check as
proof of payment just like the onginal check. Some or all of the checks that you receive back from us may be substitute checks. This
notice describes riQhts you have when you receive substitute checks lrom us The righls in this notice do not ðpp,y to original checks or to
electronic debìts to your account. Howevet, you have rights under other law with respecl to those transactìons.

What are nrv riohts reoarciino substitute checks?
ln cerlain cases, federal law provides a special proceCtre thal allows yau to request a refunci for lmses you suffer if a substilute check is
posted to your accounl ffor example, ¡t you ihink that u¡e wilhdrew the wrong amount flom your account or ihat we wilhcrew
                                                                                                                                    money
fron your account more than once for the same check). The losses you may attempl to recover under this procedure may include tne
amounl that was withrlrawn from youi account alrd fees that were clnrged as a result of the withdrawal (for example, NSF fees)

The amount of your refund under this prccedure is limited to the amount of your loss or ihe amount of lhe sL¡bstitute check. whichever is
less. You also are entltled to interest on the amount of your i'efund if your accoLnl is an interesL-bearing account lf your ioss exceeds ihe
amounl of the substitute check, you may be able io recover addiiional amounls ilnder other law

if you use this procedure, you may receive a refund      ol up to $2.500 or the ¡mount of the sullsiiillle check, wh'chever   is less, (plus interest
if   yolr account    earns interesÙ within 10 business days afler we receìved your clairn and lhe remainder of your refund    (plls interest   il your
accounl earns interest) not iater than 45 calencla¡ days    af   ter we received your claim,

We may reverse the refund (including any ¡nterest 0n the refund) ìf we later are able to clemonstrate that the substitute check was
correctly postecl to.vour accourrt.

How do I make a ciairy for a refunci?
lf you bclìeve ihal you have suffered a ioss relalÍng to a substitute check that you received and that was posied to your account, please
contact us aL Compass Bank, Allention; Electfon¡c Banking P0. Box 10566, Birminçham, AL 35296 or lelephone number l-800-
COI\¡PASS.

You musl contact us within 40 calendar days of the date thal we mailed (or olherwise delivered by a means to which yoLi agreerl) lhe
substitute check in qLrestion or the account siatement showing that the substitute check was posted to your account whichever is later
We will exlend tltis time perlod ¡l you were not able to make a timely claim because of exvaordinary circunlstances.

Your claim must inclucie      -
'      A descrìption ol why you have suflered a loss (for example, you thìnk the arnounL wiLhdrawn w¿s incorrect):
.      An estimate of the amount of your loss;
'     An explanation of wliy the subslitute chcck you receivecJ is insLrf icient lo confirm lhat you sLffered a loss; and
'     A copy of the substitLtte check or the following ìnformation to help us identify the substilute check: the check numbet the name of the
      person to whom you wrote the check and the amount 0f the check

                                                                                                                                                     21
Revision Feb2012. Al Nova Branches Onty
BBVA Compass is a trade name of Compass Bank,
a member of the BBVA Group. Compass Bank, Member FDIC

99-36-2A67