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STATE OF MICHIGAN
COURT OF APPEALS


CARSON FISCHER, PLC, Plaintiff/Counter-DefendantAppellant, v STANDARD FEDERAL BANK and STANDARD FEDERAL BANCORPORATION, Defendants/Counter-PlaintiffsAppellees. _________________________________________ CARSON FISCHER, PLC, Plaintiff/Counter-DefendantAppellant, V MICHIGAN NATIONAL BANK and MICHIGAN NATIONAL CORPORATION, Defendants/Counter-PlaintiffsAppellees.

UNPUBLISHED February 8, 2005

No. 248125 Oakland Circuit Court LC No. 2001-030746-CZ

No. 248167 Oakland Circuit Court LC No. 2001-029814-CZ

Before: Markey, P.J., and Fitzgerald and Owens, JJ. PER CURIAM. In Docket No. 248167, plaintiff/counter-defendant Carson Fischer, PLC, appeals as of right the orders granting summary disposition pursuant to MCR 2.116(C)(10) in favor of defendants/counter-plaintiffs Michigan National Bank and Michigan National Corporation (collectively referred to as "Michigan National"). This case concerns the proper allocation between a bank and its customer, Carson Fischer, of the loss brought about through a check fraud scheme perpetrated by Carson Fischer's office manager, Chip Rasor. In Docket No. 248125, plaintiff/counter-defendant Carson Fischer, PLC, appeals as of right the order granting summary

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disposition pursuant to MCR 2.116(C)(8) in favor of defendants Standard Federal Bank and Standard Federal Bancorporation, Inc (Standard Federal). Carson Fischer employed Rasor as its officer manager from approximately 1990 to October 30, 2000. Rasor was given broad responsibility for Carson Fischer's financial transactions. Shortly after he was hired, Rasor began embezzling money from Carson Fischer in a relatively simple scheme. Rasor would prepare checks drawn on Carson Fischer's Michigan National Checking accounts, payable to Michigan National and ostensibly to pay Carson Fischer's withholding tax liability. An account signatory apparently signed the checks. Rasor inserted his personal loan number on the face of the check1 and used the check to pay his personal loans without endorsing the check. This embezzlement scheme continued for nearly ten years, during which Rasor embezzled approximately $5,000,000. The embezzlement scheme was discovered when a Michigan Secretary of State investigator informed Michigan National that Rasor had tried to use several different driver's license numbers while purchasing a Bentley automobile. Carson Fischer then commenced an action against Rasor and obtained a final judgment against Rasor for $20,000,000.2 On February 23, 2001, Carson Fischer filed a complaint against Michigan National seeking over $5,000,000 from Michigan National Bank for the embezzled funds. The gist of Carson Fischer's claims of aiding and abetting conversion and breach of fiduciary duty was that Michigan National knew or should have known that Rasor used false documents to procure personal loans from Michigan National. Carson Fischer alleged that because Rasor used the embezzled funds to pay these personal loans, Michigan National allegedly aided and abetted Rasor's conversion and breach of fiduciary duty to Carson Fischer. With regard to the claim to recredit Carson Fischer's account, Carson Fischer alleged in part that the checks were not properly payable because the persons signing those checks as or on behalf of Michigan National did not intend payment to Rasor, and because Michigan National made payment on the checks without requiring the checks to be endorsed. Michigan National moved for summary disposition under MCR 2.116(C)(10) on the ground that all of Carson Fischer's claims were limited to damages sustained after September 1, 2000, pursuant to MCL 440.4406(6), the parties Account Agreement, MCL 440.4103(1), and Siecinski v First State Bank of Detroit, 209 Mich App 459, 464; 531 NW2d 768 (1995). Michigan National argued that under the requirements of MCL 440.4406(6) of Michigan's Uniform Commercial Code, Carson Fischer's failure to notify Michigan National of unauthorized signatures or alterations precluded it from asserting claims against the bank. Carson Fischer contended that Michigan National breached its duty of care to Carson Fischer by allowing Rasor to deposit Carson Fischer's checks payable to Michigan National into Rasor's own accounts and by failing to notify Carson Fischer that Rasor was depositing Carson Fischer's checks to Rasor's own account despite a clear duty to do so.

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It is unknown whether the loan number was on the check before it was signed. Rasor was later convicted in federal court of bank fraud and is imprisoned.

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The trial court granted Michigan National's motion for partial summary disposition in an order dated November 27, 2002. The court held that damages on all of Carson Fischer's claims were limited to those checks listed in Carson Fischer's post-notification bank statements after September 1, 2000. In an order dated March 5, 2003, the trial court, relying on In re Goldman's Estate, 236 Mich App 517, 521-522; 601 NW2d 126 (1999), and finding that Carson Fischer failed to present evidence to dispute Michigan's National's evidence that it did not know of or actively participate in Rasor's embezzlement, granted partial summary disposition in favor of Michigan National Bank and dismissed Carson Fischer's aiding and abetting claims. On March 30, 2001, Carson Fischer filed a complaint against Standard Federal. The complaint alleged that Rasor used false information to obtain personal loans from Standard Federal and subsequently repaid the loans with funds that he embezzled from Carson Fischer. Carson Fischer alleged that Standard Federal was negligent and that it aided and abetted Rasor's embezzlement scheme. Standard Federal moved for summary disposition under MCR 2.116(C)(8), asserting that Carson Fischer failed to state a cause of action for negligence or aiding and abetting. In an opinion and order dated January 29, 2003, the trial court granted Standard Federal's motion for summary disposition pursuant to MCR 2.116(C)(8). Docket No. 248167 (Michigan National) I. Carson Fischer first argues that the trial court erred in holding that MCL 440.4406(6) preempted and limited all of Carson Fischer's common law claims. Statutory interpretation constitutes a question of law that this Court reviews de novo. MacKenzie v Wales Twp, 247 Mich App 124, 127; 635 NW2d 335 (2001). There is a universal rule of common law that "where a check is drawn to the order of a bank to which the drawer is not indebted, the bank is authorized to pay the proceeds only to persons specified by the drawer; it takes the risk in treating such a check as payable to bearer and is placed on inquiry as to the authority of the drawer's agent to receive payment." Allis Chalmers Leasing Services Corp v Byron Center State Bank, 129 Mich App 602, 606; 341 NW2d 837 (1983). See also Terre Haute Industries, Inc v Pawlik, 765 F Supp 925, 930 (ND Ill. 1991); 9 CJS, Banks and Banking,

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