Court Opinion

ID: 9894848
Source: CourtListenerOpinion
Date Created: 2023-11-03 14:10:15.062345+00
Date Added: 2024-06-11T09:10:53.268137
License: Public Domain

RENDERED: OCTOBER 27, 2023; 10:00 A.M.
                         TO BE PUBLISHED

               Commonwealth of Kentucky
                         Court of Appeals
                            NO. 2023-CA-0025-MR

CUBBY ANGEL PROPERTIES, LLC                                        APPELLANT

              APPEAL FROM JOHNSON CIRCUIT COURT
v.        HONORABLE HOWARD KEITH HALL, SPECIAL JUDGE
                     ACTION NO. 21-CI-00074

CITIZENS BANK OF KENTUCKY,
INC.                                                                 APPELLEE

                                  OPINION
                                 AFFIRMING

                                 ** ** ** ** **

BEFORE: THOMPSON, CHIEF JUDGE; CETRULO AND COMBS, JUDGES.

CETRULO, JUDGE: Appellant Cubby Angel Properties, LLC (“Cubby Angel”)

appeals the Johnson Circuit Court order granting the summary judgment to

Appellee Citizens Bank of Kentucky, Inc. (“Citizens Bank”).

                 I.   FACTS AND PROCEDURAL HISTORY

            Cubby Angel is a limited liability company that owns rental

properties. Dr. Melissa F. Knuckles (“Dr. Knuckles”) is Cubby Angel’s sole
member and manager. In December 2018, Dr. Knuckles, on behalf of Cubby

Angel, engaged James David Johnson (“Johnson”) as an independent contractor to

assist with managing Cubby Angel’s properties. Johnson assisted with the day-to-

day management of Cubby Angel’s real estate business, including obtaining lease

applications, reviewing applications, issuing leases, arranging repairs, and other

maintenance activities.

               Two months into his work with Cubby Angel, Johnson recommended

to Dr. Knuckles that she execute a limited power of attorney authorizing him to

undertake certain administrative matters for Cubby Angel.1 In pertinent part, the

power of attorney gave Johnson “full power and authority” to “[e]stablish, modify,

operate and terminate bank account[s] for and on behalf of Cubby Angel . . . and

manage the day to day business of Cubby Angel [], including binding in

contract[.]”

               Dr. Knuckles admitted that she executed the limited power of

attorney; however, she claimed that she signed it outside the presence of witnesses

or a notary and did not have it “reviewed by legal counsel.” Johnson then had his

sister, Susan Spradlin (“Spradlin”), notarize the document outside of Dr.

1
 Cubby Angel’s Complaint, verified by Dr. Knuckles, admitted that she turned over all
management and control of the financial affairs of the company and alleged that she did not learn
until March 2020 that Johnson was disbarred in 2017 and that he was not licensed by the Real
Estate Commission to perform these management services.

                                              -2-
Knuckles’s presence and recorded it with the Madison County Clerk. Later,

Johnson recorded the same limited power of attorney with the Johnson County

Clerk, except this version contained an extra page with two purported witnesses’

signatures.2

                 Five months later, Dr. Knuckles executed a second financial power of

attorney without “making a thorough review of it or having it reviewed by legal

counsel.” The financial power of attorney, in pertinent part, granted Johnson the

power to

                 receive and deposit funds in any financial institution, and
                 to withdraw funds by check or otherwise to pay for goods,
                 services, and any other personal and business expenses for
                 my benefit. If necessary to effect my attorney-in-fact’s
                 powers, my attorney-in-fact is authorized to execute any
                 document required to be signed by such banking
                 institution.

                 ...

                       Comprehensively,        my     Attorney-In-Fact      is
                 authorized to do any and all things that I could do if I were
                 present which includes, but is not limited to, legal
                 matters[.]

                 ...

                       Any party dealing with my attorney-in-fact
                 hereunder may rely absolutely on the authority granted
                 herein and need not look to the application of any proceeds
                 nor the authority of my attorney-in-fact as to any action
                 taken hereunder. In this regard, no person who may in

2
    The validity of the witnesses’ signatures is not pertinent to our limited review here.

                                                   -3-
             good faith act in reliance upon the representations of my
             attorney-in-fact or the authority granted hereunder shall
             incur liability to me or my estate as a result of such act.

             Again, Johnson subsequently had Spradlin notarize the document and

had two “witnesses” sign the document, although none of the individuals was

present when Dr. Knuckles signed it. Johnson then filed the financial power of

attorney with the Madison County Clerk.

             Two days later, on August 1, 2019, Johnson drafted a resolution for

Cubby Angel purportedly authorizing him to “transact all business of and do all

things necessary and appropriate in the operation of Cubby Angel . . . this includes

the managing, opening, and closing of banking and financial institution accounts.”

Although the resolution also appears to be signed by Dr. Knuckles as Manager/

Sole Member, she did not recall seeing or signing this document. Again, Spradlin

notarized the document.

             A few weeks later, Johnson sent a letter to Citizens Bank directing it

to open a checking account for Cubby Angel. Johnson also submitted to Citizens

Bank a Certification of Beneficial Owners of Legal Entities form identifying Dr.

Knuckles as the sole beneficial owner of the account and listing himself as

“General Manager” of Cubby Angel and the “Person with Control.”

             Johnson then submitted Citizens Bank’s form Limited Liability

Company Authorization Resolution (“the Resolution”) on behalf of Cubby Angel,

                                         -4-
which certified that he was a “Manager or Designated Member” of Cubby Angel.

The Resolution stated that it was adopted at a meeting of Cubby Angel’s members

on August 23, 2019. Johnson signed the Resolution as “Manager or Designated

Member.”3 Cubby Angel contends the Resolution required a signature by “One

Other Manager or Designated Member”; however, the form listed a “1” in the

column indicating how many signatures were needed.

               On August 27, 2019, Johnson and Citizens Bank entered an Account

Agreement for a Business Checking Account for Cubby Angel (“Agreement”).

The Agreement listed Johnson’s personal P.O. Box as the address, indicated that

the ownership of the account was an LLC, and that the business was “Rental.”

After opening the Citizens Bank account, Johnson began to deposit rent proceeds

from Cubby Angel’s properties. He then began converting those funds for his

personal use.4

3
  The Resolution provided that “[t]he signature of an Agent on this resolution is conclusive
evidence of their authority to act on behalf of the Limited Liability Company. Any Agent, so
long as they act in a representative capacity as an Agent of the Limited Liability Company, is
authorized to make any and all other contracts, agreements, stipulations and orders which they
may deem advisable for the effective exercise of the powers indicated[.]”
4
  Cubby Angel’s complaint alleges that Johnson (1) cashed a portion of the rent checks when he
deposited them in the account; (2) paid personal expenses, like his mortgage and his personal car
loan, using the account; (3) withdrew cash from bank tellers and ATMs; (4) transferred funds
from the account to his personal accounts; (5) had Citizens Bank issue counter checks or
cashier’s checks that he would cash or use to pay for personal expenses; and (6) transferred funds
out of the account via online payment services like PayPal and Venmo.

                                               -5-
            Once Cubby Angel became aware of Johnson’s conduct, around

March 2020, it terminated all powers of attorney, notified Citizens Bank that

Johnson was no longer affiliated with Cubby Angel, and requested Citizens Bank

to remit any funds from the account to Dr. Knuckles. A year later, in March 2021,

Cubby Angel filed suit against Citizens Bank, Johnson, and Spradlin. As to

Citizens Bank, the complaint alleged that it had committed (1) common law

conversion; (2) common law negligence; and (3) statutory conversion.

            Cubby Angel claimed Citizens Bank committed common law

conversion because it took possession of and paid Cubby Angel’s instruments to

Johnson. Likewise, Cubby Angel claimed Citizens Bank was negligent because it

            failed to exercise ordinary care in opening the [Cubby
            Angel] account, allowing [] Johnson to conduct banking
            transactions for [Cubby Angel] . . . making cash
            withdrawal payments to [] Johnson . . . permitting []
            Johnson to execute transfers and electronic payments from
            the [Cubby Angel] account, issuing “counter checks” for
            payments to [] Johnson’s personal creditors and vendors
            . . . and in closing the [Cubby Angel] account,
            investigating the wrongful conduct . . . and remitting funds
            . . . to [] Johnson.

            Finally, Cubby Angel claimed Citizens Bank committed statutory

conversion, pursuant to Kentucky Revised Statute (“KRS”) 355.3-420, because it

paid Johnson on multiple instruments payable to Cubby Angel, and Johnson was

not entitled to enforce such instruments or receive such payment.

                                        -6-
               In May 2021, Citizens Bank moved the circuit court to dismiss all

claims against it for failure to state a claim upon which relief could be granted.

Citizens Bank argued that it could not be held liable as a matter of law because

Kentucky’s version of the Uniform Commercial Code (“UCC”) disposed of Cubby

Angel’s common law claims and Cubby Angel’s statutory conversion claim was

insufficient. Specifically, Citizens Bank argued the statutory claim was

insufficient because Cubby Angel had signed the powers of attorney that gave

Johnson authority to open bank accounts and “manage the day to day business[.]”

The parties submitted the motion on the briefs in June 2021, and in April 2022, the

court heard arguments on the motion.

               In December 2022, the circuit court granted Citizens Bank’s motion,

treating it as one for summary judgment because the court had considered more

than the pleadings.5 See Harrodsburg Indus. Warehousing, Inc. v. MIGS, LLC,

182 S.W.3d 529, 533 (citing Ferguson v. Oates, 314 S.W.2d 518, 521 (Ky. 1958))

(“Where matters outside the pleadings are considered on a motion to dismiss for

failure to state a claim, the motion must be treated as one for summary

judgment.”).

5
 Business records were submitted and attached to the complaint and memoranda that were
presented to the court.

                                            -7-
             The brief order provided

             that Citizens Bank[’s] Motion for Summary Judgment as
             to the Plaintiff’s claims against it is GRANTED, because
             (1) a common law duty alleged in Counts VI [common law
             conversion] & VIII [common law negligence] does not
             exist under Kentucky law, (2) even if a common law duty
             alleged in Counts VI [common law conversion] & VIII
             [common law negligence] did exist under previous
             Kentucky law, it has been superseded by the Kentucky
             version of the Uniform Commercial Code, and (3) KRS
             61.060 and American Surety Company [of New York] v.
             Boden, 50 S.W.2d 10 (Ky. 1932), protect Citizens Bank []
             from the claim under the Kentucky version of the Uniform
             Commercial Code (KRS 355.3-420) for conversion of an
             instrument (Count VII [statutory conversion]).

             Cubby Angel appealed.

                         II.   STANDARD OF REVIEW

             In reviewing a circuit court’s decision granting summary judgment,

this Court must determine “whether the record, when examined in its entirety,

shows there is no genuine issue as to any material fact and the moving party is

entitled to a judgment as a matter of law.” Phoenix Am. Adm’rs, LLC v. Lee, 670

S.W.3d 832, 838 (Ky. 2023) (quoting MGG Inv. Grp. LP v. Bemak N.V., Ltd., 671

S.W.3d 76, 82 (Ky. 2023)); Kentucky Rule of Civil Procedure 56.03. The circuit

court must view the record “in a light most favorable to the party opposing the

motion for summary judgment and all doubts are to be resolved in his favor.”

Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 480 (Ky. 1991)

(citations omitted).

                                         -8-
             “Because summary judgment does not require findings of fact but

only an examination of the record to determine whether material issues of fact

exist, we generally review the grant of summary judgment without deference to

either the trial court’s assessment of the record or its legal conclusions.” Hammons

v. Hammons, 327 S.W.3d 444, 448 (Ky. 2010) (citation omitted). As such, this

Court reviews the circuit court’s summary judgment ruling de novo. Baptist

Physicians Lexington, Inc. v. New Lexington Clinic, P.S.C., 436 S.W.3d 189, 194

(Ky. 2013) (citation omitted).

                                 III.   ANALYSIS

             Cubby Angel argues that the circuit court erred when it determined

Articles 3 and 4 of the UCC preempted Cubby Angel’s common law claims,

leaving only the statutory claim. Likewise, Cubby Angel claims the court erred

when it found that the statutory conversion claim was ineffective against Citizens

Bank as a matter of law.

      A.     UCC Preemption of Common Law Claims

             Cubby Angel contends that the UCC does not preempt its common

law claims against Citizens Bank and asserts that the circuit court misapplied the

Supreme Court’s decision in Mark D. Dean, P.S.C. v. Commonwealth Bank &

Trust Co., 434 S.W.3d 489 (Ky. 2014). We disagree.

             Kentucky’s UCC, at KRS 355.1-103(2), provides that

                                         -9-
              [u]nless displaced by the particular provisions of the
              [UCC], the principles of law and equity, including the law
              merchant and the law relative to capacity to contract,
              principal and agent, estoppel, fraud, misrepresentation,
              duress, coercion, mistake, bankruptcy, and other
              validating or invalidating cause, supplement its
              provisions.

              The Kentucky Supreme Court has explained that “there is a strong

policy in favor of treating the UCC as occupying the field and displacing common-

law causes of action.” Dean, 434 S.W.3d at 505. Nevertheless, our Supreme

Court acknowledged that the UCC left “some room for the common law[.]” Id. at

506. The official comments to UCC § 1-1036 further explain that

              while principles of common law and equity may
              supplement provisions of the [UCC], they may not be used
              to supplant its provisions, or the purposes and policies
              those provisions reflect, unless a specific provision of the
              [UCC] provides otherwise. In the absence of such a
              provision, the [UCC] preempts principles of common law
              and equity that are inconsistent with either its provisions
              or its purposes and policies.

Dean, 434 S.W.3d at 506 (quoting UCC § 1-103 Official Cmt. 2 (2002)) (emphasis

added).

              Therefore, our first question is whether the UCC’s provisions preempt

Cubby Angel’s common law claims against Citizens Bank. To make such

6
  KRS 355.1-103(3) provides that the UCC official comments “represent the express legislative
intent of the General Assembly and shall be used as a guide for interpretation of this chapter,
except that if the text and the official comments conflict, the text shall control.”

                                              -10-
determination, our Supreme Court has used the “comprehensive rights and

remedies test,” which provides that common law claims are barred “where the

[UCC] provides a comprehensive remedy for the parties to a transaction[.]” Id. at

506-07 (quoting Sebastian v. D & S Express, Inc., 61 F. Supp. 2d 386, 391 (D.N.J.

1999)) (internal quotation marks omitted).

                 As the UCC should be applied “whenever possible” – Id. at 506

(citation omitted) – “courts dealing with ‘hard cases’ should be hesitant to

recognize common-law or non-U.C.C. claims or to employ common-law or non-

UCC remedies in the mistaken belief that they are dealing with one of the rare

transactions not covered by the UCC.” Id. (quoting C-Wood Lumber Co., Inc. v.

Wayne Cnty. Bank, 233 S.W.3d 263, 281 (Tenn. Ct. App. 2007)) (internal

quotation marks omitted).

                 We will begin with Cubby Angel’s common law conversion claim:

does the UCC provide a comprehensive remedy for conversion claims? In its

complaint, Cubby Angel argues that Citizens Bank committed common law

conversion when it took possession of and paid portions of instruments intended

for Cubby Angel. However, the UCC provides a comprehensive remedy for such

claims. KRS 355.3-420 plainly provides a cause of action for conversion of an

instrument:7

7
    Cubby Angel’s statutory conversion claim is addressed separately below.

                                               -11-
            (1) The law applicable to conversion of personal property
            applies to instruments. An instrument is also converted if
            it is taken by transfer, other than a negotiation, from a
            person not entitled to enforce the instrument or a bank
            makes or obtains payment with respect to the instrument
            for a person not entitled to enforce the instrument or
            receive payment. An action for conversion of an
            instrument may not be brought by:

                   (a) The issuer or acceptor of the instrument; or

                   (b) A payee or indorsee who did not receive delivery
                   of the instrument either directly or through delivery
                   to an agent or a co-payee.

            (2) In an action under subsection (1) of this section, the
            measure of liability is presumed to be the amount payable
            on the instrument, but recovery may not exceed the
            amount of the plaintiff’s interest in the instrument.

            In fact, Cubby Angel also brought a UCC conversion claim, under

KRS 355.3-420, against Citizens Bank citing the same issues. Therefore, the UCC

disposes of Cubby Angel’s common law conversion claim.

            Next, we must determine whether the UCC disposes of the common

law negligence claim. Cubby Angel initially argued in its complaint that Citizens

Bank

            failed to exercise ordinary care in opening the [Cubby
            Angel] account, allowing [] Johnson to conduct banking
            transactions for [Cubby Angel] in the account, making
            cash withdrawal payments to [] Johnson from the [Cubby
            Angel] account, permitting [] Johnson to execute transfers
            and electronic payments from the [Cubby Angel] account,
            issuing “counter checks” for payments to [] Johnson’s
            personal creditors and vendors from the [Cubby Angel]

                                        -12-
             account, and in closing the [Cubby Angel] account,
             investigating the wrongful conduct of Johnson, and
             remitting funds remaining in the account to [] Johnson.

             However, on appeal, Cubby Angel focuses only on Citizens Bank’s

alleged negligence in opening the account. Specifically, it argues that Citizens

Bank was negligent in opening the account because Johnson “was not authorized

by [Cubby Angel]” to do so; i.e., Citizens Bank was negligent when it accepted an

“unauthorized signature.” Cubby Angel argues that the UCC does not address the

creation of bank accounts; therefore, the UCC’s “particular provisions” could not

displace a common law negligence claim regarding the same. However, the claim

is contingent on Johnson’s authority (or lack thereof) to sign the requisite

documents to open the account. While the UCC does not reference opening

accounts explicitly, it extensively discusses authorization of signatures.

             As discussed, the UCC preempts common law claims when the UCC

has a “comprehensive remedy for the parties to a transaction[.]” Dean, 434

S.W.3d at 506 (internal quotation marks and citation omitted). The UCC “should

also be understood to intend the displacement of the common law whenever both

the code and the common law would provide a means of recovery for the same

loss.” Id. (quoting Clancy Sys. Int’l, Inc. v. Salazar, 177 P.3d 1235, 1237 (Colo.

2008)).

                                         -13-
             Here, the UCC provides direct guidance on authorization of signatures

or lack thereof. KRS 355.1-201(2)(ao) defines an “unauthorized signature” as “a

signature made without actual, implied, or apparent authority” and “includes a

forgery[.]” See Dean, 434 S.W.3d at 498. Our Supreme Court has explained that

             [i]f a person acting, or purporting to act, as a representative
             signs an instrument by signing either the name of the
             represented person or the name of the signer, the
             represented person is bound by the signature to the same
             extent the represented person would be bound if the
             signature were on a simple contract.

Id. (quoting KRS 355.3-402).

             Cubby Angel argues Dean is distinguishable because there, the

account was set up by the owner of the law firm and here, Johnson alone set up the

account. However, there is no dispute that Dr. Knuckles gave Johnson the

authority to act as her representative by signing a power of attorney, not once, but

twice. As the Court held in Dean, “[t]he simple fact is that Dean (as owner of the

firm) was in the best position to stop or alleviate any loss.” Id. at 510. Similarly,

Dr. Knuckles was in the best position to alleviate her losses. We do not find Dean

distinguishable.

             As discussed, our precedent strongly encourages reliance on the UCC

“whenever possible” – Id. at 506 (citation omitted) – and instructs this Court to “be

hesitant to recognize common-law or non-U.C.C. claims . . . in the mistaken belief

that [we] are dealing with one of the rare transactions not covered by the UCC.”

                                          -14-
Id. (internal quotation marks and citation omitted). Under such guidance, we find

that the UCC preempts claims regarding authorization to open an account, like that

found here.

      B.      Statutory Conversion Claim

              Alternative to its common law claim for conversion, Cubby Angel

argues Citizens Bank committed statutory conversion under KRS 355.3-420

because Citizens Bank paid Johnson on numerous instruments payable to Cubby

Angel. As discussed, KRS 355.3-420(1) details the cause of action for conversion

of an instrument:

              (1) The law applicable to conversion of personal property
              applies to instruments. An instrument is also converted if
              it is taken by transfer, other than a negotiation, from a
              person not entitled to enforce the instrument or a bank
              makes or obtains payment with respect to the instrument
              for a person not entitled to enforce the instrument or
              receive payment. An action for conversion of an
              instrument may not be brought by:

                    (a) The issuer or acceptor of the instrument; or

                    (b) A payee or indorsee who did not receive delivery
                    of the instrument either directly or through delivery
                    to an agent or a co-payee.

(Emphasis added.)

              Cubby Angel claims Johnson was not entitled to enforce the

instruments; therefore, Citizens Bank improperly made payments under the statute.

However, Citizens Bank contends that Johnson had the requisite authority to

                                         -15-
enforce the instruments.8 As such, our first question is whether there is a genuine

issue of material fact regarding whether Dr. Knuckles granted Johnson the power

to transact on behalf of Cubby Angel.

               Again, there is no dispute that Dr. Knuckles executed the powers of

attorney granting Johnson the power to “[e]stablish, modify, operate and terminate

bank account[s] for and on behalf of Cubby Angel[,]” to execute any documents

necessary to do so, and specifically authorizing “[a]ny party dealing with my

attorney-in-fact hereunder [Johnson] [to] rely absolutely on the authority granted

herein[.]” Indeed, Cubby Angel’s complaint expressly stated that Dr. Knuckles, on

her own volition, signed the powers of attorney explicitly giving Johnson the

power to receive, deposit, and withdraw funds from any financial institution on

behalf of Cubby Angel.

               Cubby Angel argues only that Dr. Knuckles failed to “thoroughly

review” the documents and did not have an attorney review them prior to signing.9

8
  Alternatively, Citizens Bank argues Cubby Angel would have been barred under KRS
355.3-420(1)(b) if Johnson did not have the requisite authority because that would have meant
Cubby Angel did not “receive delivery of the instrument . . . through delivery to an agent[,]”
citing Software Design & Application, Ltd. v. Hoefer & Arnett, Inc., 56 Cal. Rptr. 2d 756, 764
(Cal. App. 1996). However, because we find there was no genuine issue of material fact
regarding Johnson’s authority, we need not address this argument.
9
  The circuit court and parties also discussed the validity of the notarization of the powers of
attorney under KRS 61.060 and Boden; however, “[p]ursuant to [KRS] 61.060, a notary’s
acknowledgment that appears valid on its face may only be attacked by: (1) a direct action
against the notary, (2) an allegation of fraud by the party benefitted, or (3) a mistake by the
notary.” In re Pelfrey, 419 B.R. 10, 17 (B.A.P. 6th Cir. 2009) (citing In re St. Clair, 380 B.R.
478, 484 (B.A.P. 6th Cir. 2008)). As the notarization was valid on its face and there is no action

                                               -16-
However, that does not render the documents unenforceable. See Morgan v.

Mengel Co., 242 S.W. 860, 862 (Ky. 1922) (citation omitted) (“It is well settled

that a person who signs an instrument without reading it, when he has the

opportunity to read it and can read, cannot avoid the effect of his signature merely

because he was not informed of its contents.”). Dr. Knuckles admits that she

knowingly signed the documents, which gave Johnson the power to conduct

business on behalf of Cubby Angel.

               Because Cubby Angel could not undermine Dr. Knuckles’s admitted

signatures, it instead tried to argue that Citizens Bank should have questioned her

blatant grant of authority. Cubby Angel argues that it “was totally unaware of the

account’s existence . . . [and] never signed any customer agreement with [Citizens

Bank,]” which it believes Citizens Bank should have required. However, our

Supreme Court has found that such assertions are not enough to show liability on

the part of the bank. The fact “[t]hat a principal did not approve an individual

transaction (that is, a single instance of a signature) does not change the fact that an

agent can have apparent authority to make the signature and thus engage in the

transaction, at least when viewed from the perspective of the bank.” Dean, 434

S.W.3d at 500.

for fraud or mistake, any issue regarding the notary is relevant only to the direct action against
the notary.

                                                -17-
               Moreover, simply raising alleged issues of fact is not enough to

withstand summary judgment. As our Supreme Court explained,

                      While reasonableness, like all factual questions, is
               ordinarily determined by the finder of fact, merely raising
               the question is not by itself sufficient to present it to the
               fact finder. The reasonableness of an act or omission is
               required to go to the jury only where there is a “factual
               dispute regarding the reasonable[ness].”             But if
               “reasonable minds cannot differ,” then the matter need not
               be submitted to a jury.

Id. at 503 (internal citations omitted).

               Here, reasonable minds cannot differ. The parties agree that Dr.

Knuckles signed the powers of attorney that explicitly gave Johnson the power to

conduct business on behalf of Cubby Angel. As such, there exists no issue of

fact10 regarding whether Johnson was entitled to enforce the instruments under

KRS 355.3-420(1). For the foregoing reasons, the circuit court properly granted

summary judgment on the claims against Citizens Bank.

                                   IV.     CONCLUSION

               The UCC preempts Cubby Angel’s common law claims, and Cubby

Angel’s statutory conversion claim is not sufficient as a matter of law. We

AFFIRM the Johnson Circuit Court order.

10
  Additionally, Cubby Angel alleged numerous “issues of fact” that it stated, if proven true
during discovery or trial, would entitle it to relief against Citizens Bank. However, because the
UCC preempts the common law claims and the statutory claim is not sufficient as a matter of
law, there is no set of facts which could entitle Cubby Angel to relief against Citizens Bank.

                                               -18-
           ALL CONCUR.

BRIEFS FOR APPELLANT:            BRIEF FOR APPELLEE:

David T. Royse                   John T. McGarvey
Lexington, Kentucky              M. Thurman Senn
                                 Louisville, Kentucky
Laurel K. Swilley
Myrtle Beach, South Carolina     Darrin W. Banks
                                 Paintsville, Kentucky

                               -19-