Court Opinion

ID: 5163944
Source: CourtListenerOpinion
Date Created: 2022-01-02 03:14:47.351142+00
Date Added: 2024-06-11T08:25:45.555809
License: Public Domain

Justice ERICKSON,
specially concurring in part and dissenting in part:
The district court granted summary judgment and the court of appeals affirmed. Mancuso v. United Bank, 796 P.2d 7 (Colo.App.1990). We granted certio-rari to determine three issues. First, whether the funds in Grace Mancuso’s joint savings account and certificates of deposit were special deposits and, thus, were insulated from United Bank’s right of setoff under section 11-6-105, 4B C.R.S. (1990 Supp.). Second, whether the bank had a duty to exercise reasonable care in rendering advice to Mancuso and, if so, whether it violated that duty. Third, whether a triable issue of fact exists that forecloses the entry of summary judgment on Mancuso’s claim for a constructive or a resulting trust.
I concur with the majority on the first issue. The accounts at issue here do not qualify as special deposits since they were not made for a specific purpose. The majority does not address the negligence issue, but reverses the entry of summary judgment on the constructive trust and resulting trust issues. I write separately to address the bank’s duty in opening an account for Mancuso under the facts of this *742case and to consider whether the record supports the granting of summary judgment on the constructive and resulting trust claims. I also emphasize that the factual dispute relates only to accounts opened in 1977. Because the damages suffered by Mancuso occurred as a result of the setoff of accounts opened by Mancuso in 1981 and 1982, and because there is no factual dispute regarding these accounts, summary judgment is proper.
Mancuso, in her amended complaint, contended that United Bank was negligent in advising her to put her money in a joint account, in exercising a setoff against her joint accounts to satisfy Neal’s debt, and in failing to advise her that: (1) there were other account options that would meet her needs; (2) if her son, Neal, borrowed from the bank at any time in the future and then defaulted, her funds could be seized; and (3) she should seek the advice of an attorney to inform her of the consequences of opening a joint account. Mancuso further claimed that her funds had been converted and that the bank could not set off her funds because they had been accepted for special purposes or, in the alternative, because the bank knew the accounts were held by Neal in trust for his mother. Man-cuso requested the return of the money with interest, damages for mental anguish, and $200,000 in punitive damages. The trial court granted summary judgment for United Bank on all claims. The court of appeals affirmed, holding that United Bank was not negligent for failing to disclose the bank’s right of setoff and that the facts were insufficient to establish either special accounts or a confidential relationship, which was necessary to create a constructive trust. The court of appeals did not address the resulting trust issue.
I
To resolve these issues it is necessary to summarize the relevant facts. Before Mancuso moved to Colorado, she had two New York bank accounts: one in her name alone and another that she held jointly with her husband. When she moved to Colorado, she opened a personal account in her name and a joint account with her son at Republic Bank. Upon her son’s recommendation, Mancuso went with Neal to open accounts at United Bank. The following accounts, all payable to the order of Grace Mancuso or Neal A. Mancuso, were opened on October 12, 1977: a certificate of deposit for $2,000 payable on October 12,1978; a certificate of deposit for $4,000 payable on April 12, 1980; and a certificate of deposit for $4,000 payable on October 12, 1981. A joint savings account was also opened in the names of Grace Mancuso and Neal A. Mancuso with an initial deposit of $12,-218.89. Both Mancuso and Neal signed a signature card for the joint savings account, which provided on the back:
We agree and declare that all funds now, or hereafter, deposited in this account are, and shall be, our joint property and owned by us as joint tenants with right of survivorship, and not as tenants in common, and upon the death of either of us any balance in said account shall become the absolute property of the surviv- or. The entire account or any part thereof may be withdrawn by, or upon the order of, either of us or the survivor.
Above the signature line the card stated, “[T]he undersigned ... acknowledges and agrees to the provision of the savings account agreement on the reverse side hereof.” Mancuso claims she did not read the back of the card.
At her deposition in 1986, Mancuso testified that she could not remember which United Bank representative she spoke with at the time the 1977 accounts were opened or the contents of their conversation. In an affidavit prepared in 1988, however, Mancuso made the following statements concerning that event:
I requested from a bank employee advice about what type of account should be opened. I advised the employee that I wanted my son Neal to have the ability to send me money from the accounts in case of an emergence [sic], but I did not want him to be able to take the money out whenever he felt like it. The employee advised me to put my money in a joint account and gave us the cards to open the account for my son and I to sign. *743Relying upon the employee’s advice, we signed those cards and opened up the account.
Neither Mancuso nor Neal had any outstanding loans at the bank when these accounts were opened.
Several years later, Mancuso and Neal opened other joint accounts at United Bank. In March 1981, a joint certificate of deposit for $10,000 was opened in the name of Grace or Neal Mancuso with a cashier's check from Republic Bank. A new joint savings account was also opened. Both Mancuso and Neal signed another signature card identical to the one signed in 1977. In October 1982, Mancuso and Neal opened a joint certificate of deposit in the amount of $18,423.98. According to the record, United Bank’s employees made no representations to Mancuso when she opened these later accounts.
In 1982, Neal personally guaranteed a loan in the amount of $65,000 to a corporation he controlled. In 1983, he guaranteed an additional loan of $20,000 to the same corporation. Both loans went into default in April 1985. Since Neal had guaranteed the loans, United Bank exercised its statutory right of setoff against the 1981 and 1982 accounts. Neal made no withdrawals from the accounts opened in 1977, and the setoff was not made against those accounts.1
II
Mancuso claimed that United Bank was negligent in its dealings with her. The majority dismisses certiorari as improvidently granted on the negligence issue on the ground that the claim was not properly raised in the trial court. I disagree. A short and plain statement of the negligence claim was contained in the complaint.2 Mancuso alleged that the bank was negligent, that the bank caused her funds to be subject to setoff, and that she was injured as a direct and foreseeable result of the bank’s negligence. The negligence issue, which was briefed and argued, should be addressed on certiorari.
To recover on a claim of negligence, a plaintiff must show that the defendant owed a duty to the plaintiff, that the defendant breached that duty, and that the breach was the proximate cause . of the plaintiff’s injuries or damages. Observatory Corp. v. Daly, 780 P.2d 462, 465 (1989). The court must determine the existence and scope of the defendant’s duty in light of the particular circumstances of the case, including the foreseeability of harm, the social utility, and the magnitude of the burden on the defendant. Id. at 466.
Generally, a bank does not have a duty to give financial planning advice to its depositors. However, if a bank undertakes to render services for another, it may assume a duty to exercise reasonable care if the other detrimentally relies upon the advice given. See Jefferson County School Dist. R-1 v. Justus, 725 P.2d 767, 770 (Colo.1986); Restatement (Second) of Torts § 323(b) (1965). In her amended complaint, Mancuso claimed that the bank negligently failed to inform her of other account options.3 The affidavit and depositions submitted on behalf of Mancuso established a question of fact as to the extent to which the bank undertook to give financial planning advice to Mancuso in 1977 and wheth*744er it exercised reasonable care in rendering that advice.
Mancuso also claimed United Bank was negligent in failing to warn her that her funds were subject to seizure if her son ever defaulted on a loan.4 Generally, a party to a business transaction has a duty to exercise reasonable care to disclose facts basic to that transaction “if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect the disclosure of those facts.” Bair v. Public Service Employees Credit Union, 709 P.2d 961 (Colo.App.1985) (quoting Restatement (Second) of Torts § 551(2)(e) (1977)). The reasonableness of United Bank’s lack of disclosure should be determined in light of the circumstances apparent to the bank at the time of the event, not those which arise after the fact. See McMillan v. Hammond, 158 Colo. 40, 404 P.2d 549 (1965). When Mancuso opened the account in 1977, Neal had not borrowed any funds from United Bank. Consequently, the bank was under no duty to warn against a possible setoff. To impose such a rule would require banks to warn customers of all conceivable legal consequences related to opening an account.
Mancuso also claims that the bank had a duty to inform her that she should seek the advice of an attorney prior to opening an account. Although an attorney might have provided help in arranging her affairs in a prudent manner, a bank has no duty to advise potential depositors to obtain counsel before opening accounts.
Since a factual dispute exists as to what was said and what occurred when Mancuso opened her accounts at United Bank in 1977, we must assume the bank was negligent in advising Mancuso to open those accounts. Mancuso presented no evidence that the bank's presumed negligence in 1977 extended to the opening of the joint accounts in 1981 and 1982 — the accounts against which the right of setoff was exercised. Since Mancuso did not raise a material issue of fact as to United Bank’s negligence and the damage she incurred, summary judgment was proper. Neal made no withdrawals from the 1977 joint accounts, and his subsequent indebtedness to the United Bank did not result in a setoff against the 1977 accounts. Accordingly, any breach of duty by the bank in 1977 did not cause damage to Mancuso. See Continental Airlines, Inc. v. Keenan, 731 P.2d 708, 712 (Colo.1987) (summary judgement is proper if the nonmoving party fails to establish a triable issue of fact).
Ill
The majority holds that there is a triable issue as to (1) whether United Bank’s advice to Mancuso through its “personal banker” was sufficient to impose a constructive trust, or (2) whether a constructive trust should be imposed because the bank knew Mancuso’s son held the account subject to a resulting trust.
A constructive trust is generally used as a remedy to prevent unjust enrichment of the party holding title to the property. See Page v. Clark, 197 Colo. 306, 315-16, 592 P.2d 792, 797-98 (1979). Because the majority has treated the constructive trust issue as a legal theory rather than as a remedy, I write separately as to the standards applicable to the imposition of a constructive trust and to clarify the connection between a resulting trust and the setoff of a codepositor’s funds.
A
Mancuso asserted that the bank held the funds in the joint accounts subject to a constructive trust because, by setting up those accounts, the bank breached a confidential relationship it had with Mancuso. Cf. Page v. Clark, 197 Colo. 306, 316, 592 P.2d 792, 798 (1979) (a constructive trust may be imposed to set aside transactions within the scope of a confidential relation*745ship which has been abused). Finding that Mancuso alleged facts which could support the imposition of a constructive trust, the majority held summary judgement on this issue to be improper. I respectfully dissent.
In a motion for summary judgment, once the moving party has met its burden of showing that no genuine issue of material fact exists, the nonmoving party must present evidence to support the existence of a genuine issue of material fact. Continental Airlines Inc. v. Keenan, 731 P.2d 708, 712-13 (Colo.1987). Mere allegations are insufficient to prevent the granting of summary judgment. See id. at 713. Man-cuso presented no evidence of a confidential relationship pertaining to the 1981 and 1982 accounts, against which the setoff was exercised. Therefore, even assuming an abuse of a confidential relationship could be proven with respect to the 1977 accounts, summary judgment on the constructive trust issue was proper. However, since the majority opinion is based in part on an analysis of the constructive trust issue, I address this issue to clarify the application of a constructive trust under the facts in this case.
A bank generally does not have a confidential relationship with its customers. Rather, the deposit of funds in a bank creates a debtor-creditor relationship: the bank’s obligation is to pay the funds to the depositor or to the depositor’s written order. Cox v. Metropolitan State Bank, 138 Colo. 576, 584, 336 P.2d 742, 747 (1959).5 Opening a new account for a customer or having an employee with the title “personal banker” does not raise this debtor-creditor relationship to the level of a confidential relationship.
There is no evidence that the bank attempted to gain Mancuso’s trust and confidence. Although a bank may take on the duties of a fiduciary or may create a confidential relationship, a “personal banker’s” recommendation of a joint account is not enough to impose a duty to inform the depositor of all liabilities related to such accounts. See Simmons v. Jenkins, 230 Mont. 429, 432-34, 750 P.2d 1067, 1070 (1988); Tokarz v. Frontier Fed. Savings & Loan Ass’n, 33 Wash.App. 456, 458-60, 656 P.2d 1089, 1092 (1983). In Simmons v. Jenkins a bank’s fiduciary duty was reviewed:
The relationship between a bank and its customer usually does not give rise to a fiduciary duty. Deist v. Wachholz (Mont.1984), 678 P.2d 188, 193, 41 St.Rep. 286, 290. There is an exception, however, when the Bank is thrust beyond the simple role of creditor and into the role of an advisor. In Deist we held that a bank officer is vested with a fiduciary duty were [sic] there is a long history of dealing with the bank and evidence of the bank acting as a financial advisor in some past capacity....
More recently, however, we encountered a situation where a bank had no fiduciary duty. In Pulse v. North American Land Title Co. (Mont.1985), 707 P.2d 1105, 42 St.Rep. 1578, the appellants, the Pulses, were involved in a land purchase which their bank financed through a mortgage. When problems arose, the Pulses sued for breach of fiduciary duty. We held that because the special circumstances that existed in Deist were not present, the bank had no fiduciary duty to the Pulses. Unlike Deist, the bank had not located buyers for the Pulses; the bank was not a party to the transaction beyond its role as the buyer’s lender; the sale was not a product of the bank’s advice; and the Pulses had not dealt with the bank extensively or exclusively.
230 Mont, at 433, 750 P.2d at 1070. Here, Mancuso’s dealings with United Bank’s personal banker consisted of a conversation relating to opening a new account. There was no history of exclusive dealing with the bank or of the bank acting as a financial advisor. Thus, under Simmons, Unit*746ed Bank did not owe Mancuso a fiduciary-duty.
In Tokarz, the court emphasized that a bank’s fiduciary duty may turn on advice regarding a complex financial transaction:
Present-day commercial transactions are not, as in past generations, primarily for cash; rather, modern banking practices involve a highly complicated structure of credit and other complexities which often thrust a bank into the role of an adviser, thereby creating a relationship of trust and confidence which may result in a fiduciary duty upon the bank to disclose facts when dealing with the customer.
33 Wash.App. at 459, 656 P.2d at 1092. The opening of a joint savings account or a joint certificate of deposit is not, however, the type of complex and sophisticated transaction that imposes a fiduciary duty.
A finding of no fiduciary duty, however, is not dispositive. A constructive trust may also be imposed to set aside a transfer of property obtained by the abuse of a confidential relationship. Page v. Clark, 197 Colo. at 315-16, 592 P.2d at 798. Although the standard for a confidential relationship is less restrictive than that applicable to a fiduciary relationship — “[a] confidential relationship arises when one party has justifiably reposed confidence in another” — the burden of establishing a confidential relationship is on the party wishing to set aside the transaction. Id. Since there is no evidence that the bank held its personal bankers out as giving more than basic account advice, Mancuso has failed to prove the existence of a confidential relationship.
Even assuming that a confidential relationship existed, a constructive trust is nevertheless improper because the record lacks evidence that United Bank abused the relationship. “If one person is in a confidential but not a fiduciary relation to another, a transaction between them will not be set aside at the instance of one of them unless in fact he placed confidence in the other and the other abused the confidence placed in him.” Id.; Restatement of Restitution § 166 comment d (1937). Under the facts of this case, to prove abuse it would be necessary to show not only that Mancu-so placed confidence in her personal banker, but also that the banker either (1) affirmatively misled Mancuso into opening a joint account for the purpose of reserving United Bank’s right of setoff against Neal’s prospective accounts or (2) told Man-cuso that there would be no right of setoff. Since there is nothing in the record to suggest that United’s representative misused her superior knowledge to Mancuso’s disadvantage when she advised her to open a joint account or that United Bank subsequently failed to perform any promise, a constructive trust is not a proper remedy.
B
Mancuso asserted that United Bank’s setoff of the funds in the joint accounts against the loans guaranteed by Neal was unlawful because the bank knew that Neal held those funds as trustee for Mancuso.
Section 11-6-105, 4B C.R.S. (Supp.1990), provides:
[WJhen a bank deposit in any bank transacting business in this state is made in the names of two or more persons payable to them or to any of them, ... such deposit shall be deemed, so far as the rights and liabilities of the bank are concerned, to be owned by said persons in joint tenancy with the right of survivor-ship, but the bank has the right of setoff against such deposit, to the extent thereof, to collect a debt owed to the bank by any joint depositor.
Thus, while some states allow a bank to exercise its right of setoff only to the extent of the interest of the codepositor-debt- or, see Teselle, Banker’s Right of Set-Off, 34 Okla.L.Rev. 40 (1981), the Colorado legislature has chosen to allow the setoff against the entire account of the debtor without regard to that person’s specific interest in the account.
Despite this legislative mandate, Mancu-so asserts that Neal held the money in the joint accounts subject to a resulting trust and that, because United Bank had notice of that fact, it was not entitled to apply the funds in those accounts as a setoff against Neal’s debts. A resulting trust may arise
where an express trust fails in whole or in part [or] ... where property is pur*747chased and the purchase price is paid by one person and at his direction the vendor conveys the property to another person .... In each of these cases there is an inference that the person taking title to the property is not intended to have the beneficial interest and in each of these cases the inference arises from the character of the transaction.6
Page v. Clark, 197 Colo. at 314-15, 592 P.2d at 797. See generally Restatement (Second) of Trusts § 322-26 (1959). Here, no evidence was presented to show the existence of an express trust. Evidence that Mancuso opened the joint accounts with her own money could give rise to a resulting trust in her favor. However, even if this were shown, when property is put in the name of a relative, the presumption is that the transferor intended to make a gift, and a resulting trust may not arise unless that presumption is rebutted. See maj. op. at 739; Restatement (Second) of Trusts § 442. Mancuso presented no evidence to rebut this presumption.
Even if a resulting trust were shown to exist between Mancuso and Neal, it would only be enforceable against United Bank if the bank knew or should have known that the money was held in trust for Mancuso. No connection was shown between the original accounts opened in 1977 and those opened in 1981 and 1982 against which the setoff was exercised. Without more, any knowledge the bank may have had of a resulting trust at the opening of the original accounts would not provide a basis for reversing the summary judgment.
Accordingly, the trial court properly entered summary judgment for United Bank. The court of appeals affirmed the summary judgment and I would affirm the court of appeals.
ROVIRA, C.J., and VOLLACK, J., join in this special concurrence and dissent.

. According to the record, the 1977 certificates of deposit came due in October 1978, April 1980, and October 1981. The setoff was exercised in 1985 against accounts that were opened in March 1981 and October 1982.

. The requirements for a proper complaint are set forth in C.R.C.P. 8:
(a) Claims for Relief. A pleading which sets forth a claim for relief ... shall contain ... a short and plain statement of the claim showing that the pleader is entitled to relief....
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(e) Pleading to Be Concise and Direct.... (1) Each averment of a pleading shall be simple, concise, and direct.... No technical forms of pleading or motions are required. Pleadings otherwise meeting the requirements of these rules shall not be considered objectionable for failure to state ultimate facts as distinguished from conclusions of law.

.Mancuso had both a personal and a joint account at Republic, but she chose to open only joint accounts at United Bank. Had she kept a personal account, the funds in that account would have been insulated from setoff when the loans guaranteed by Neal went into default.

. Mancuso’s affidavit states that she requested an account that would give Neal limited access in case of an emergency. Arguably, the joint account chosen was insufficient to achieve that goal since Neal had equal access at all times.

. In Cox the court upheld the bank’s setoff of funds in a depositor’s account that were held in trust for the plaintiff. However, in that case (1) the depositor's debts were incurred before the money was deposited into the account as a special deposit, and (2) the bank had not detrimentally relied on or changed its position based on that deposit.

. A resulting trust may also arise "where an express trust is fully performed without exhausting the trust estate.” Page v. Clark, 197 Colo. 306, 314, 592 P.2d 792, 797 (1979).