Court Opinion

ID: 9465420
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:45:59.09229+00
Date Added: 2024-06-11T17:39:10.256888
License: Public Domain

KENNEDY, Circuit Judge,
dissenting:
In Sun ’n Sand, Inc. v. United California Bank, 21 Cal.3d 671, 148 Cal.Rptr. 329, 582 P.2d 920 (1978) the California Supreme Court held that it was negligence for a bank to permit a hotel’s checks on which it was named as payee to be deposited in the personal account of the hotel’s bookkeeper, who was an embezzler. The negligence was misfeasance, as contrasted with nonfeasance, and in reliance on that distinction the court held the bank owed a duty of reasonable care to the hotel to discover the employee’s lack of authority to deposit the funds in her personal account. See id. at 692-96, 148 Cal.Rptr. at 344-46, 582 P.2d at 935-37. The Sun ’n Sand decision is of controlling importance in interpreting Stockton’s counterclaim, and under its principles the counterclaim might be interpreted, or properly amended, to allege actionable misfeasance on the part of Mid-Cal Bank.
The majority holds in the case before us that Stockton’s theory of recovery must necessarily rest upon nonfeasance. While recognizing the difficulties of the misfeasance/nonfeasance distinction, I think the counterclaim can be interpreted to allege the negligent performance of active conduct, which should be characterized as misfeasance. It is undisputed that both banks accepted checks by the perpetrator of the scheme, and it was so alleged in the counterclaim. The negligent failure by the bank to discover the kiting, I concede, is an omission and nonfeasance, but it is necessary to evaluate also the bank’s acts after the negligent failure to discover. See Sun ’n Sand, supra, at 693, 148 Cal.Rptr. at 344, 582 P.2d at 935. Under the theory of the complaint before us, as was also the *765case in Sun ’n Sand, the act of omission was followed by negligent acceptance of the checks. Sun ’n Sand characterized this as misfeasance and active negligence, notwithstanding that it was the earlier omission that made the act of accepting the checks unreasonable.
The allegation of Stockton’s counterclaim is that Mid-Cal “negligently failed to refer to information which it had in its possession which would have disclosed the existence of said kiting scheme.” I agree that this is an inartful way to allege active conduct on the part of Mid-Cal. Nevertheless, “the Federal Rules of Civil Procedure were designed, and should be interpreted and applied, to do away with this kind of technicality,” Dunn v. TWA, 589 F.2d 408 (9th Cir. 1978), and we should remember that a “complaint is not to be dismissed because the plaintiff’s lawyer has misconceived the proper legal theory of the claim.” United States v. Howell, 318 F.2d 162, 166 (9th Cir. 1963), quoting Dotschay v. National Mutual Insurance Co., 246 F.2d 221, 223 (5th Cir. 1957). We should be particularly careful to follow this rule where the Supreme Court of the state whose law is applicable to the proceeding has rendered a controlling decision after the complaint was drafted.
Admittedly,- the existence or not of the nonfeasance doctrine in California and the presence or absence of a special relationship between Mid-Cal and Stockton appear to have received more attention at the trial court level than whether the counterclaim alleged misfeasance and if so whether it stated a claim upon which relief could be granted. On the other hand, the district court and Mid-Cal were aware that Stockton was proceeding on the theory of misfeasance, at least in the alternative. I do not think the counterclaim as drafted should prevent Stockton from arguing that Mid-Cal’s conduct was misfeasance of the kind held actionable in Sun ’n Sand, and from seeking leave to amend to state that theory with specificity. Cf. Fed.R.Civ.P. 15(b).
The question before us is somewhat obscure because the evidence supporting the claim of active negligence is essentially identical to that supporting a theory of passive negligence. That, however, is simply because misfeasance and nonfeasance both may spring from the same facts. I would remand the case to the district court so that Stockton has the opportunity to prove that active negligence is a substantial cause of its injury and that Mid-Cal owed it a duty of due care to avoid engaging in such conduct. It appears to be Stockton’s theory that Mid-Cal continued to accept the checks after a subordinate notified a Mid-Cal branch officer of irregularities in the subject accounts disclosed by a computer analysis, irregularities that justified further investigation. It should be open to the appellant by way of further pleadings and discovery, to develop a theory upon which it could at least argue that Mid-Cal’s conduct in this case was below the minimum standard of care which controls the conduct owed by one bank to another. Therefore, although the views of the majority are well stated, I respectfully dissent from the judgment.