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Dixon, Laukitis and Downing, P.C. v. Busey Bank

Court of Appeals of Illinois, Third District

July 31, 2013

DIXON, LAUKITIS AND DOWNING, P.C., Plaintiff-Appellant,
BUSEY BANK, Defendant-Appellee.

Held [*]

Plaintiff’s complaint alleging that defendant bank breached its duty of ordinary care in connection with a fraudulent check plaintiff deposited and drew against that was later found not to be collectible was properly dismissed for failure to state a cause of action, since the bank had no duty to investigate the check’s genuineness or to tell plaintiff that it could be counterfeit, the account agreement was satisfied, the agreement was not unreasonable, and the complaint was barred by the Moorman doctrine that no recovery could be had for a solely economic loss under a tort theory.

Appeal from the Circuit Court of Peoria County, No. 12-L-8; the Hon. David J. Dubicki, Judge, presiding.

William R. Kohlhase (argued) and Joshua Herman, both of Miller, Hall & Triggs, of Peoria, for appellant.

Joseph B. VanFleet (argued) and Emily H. Wilburn, both of VanFleet Law Offices, of Peoria, for appellee.

Justices Carter and McDade concurred in the judgment and opinion.



¶ 1 Plaintiff Dixon, Laukitis, & Downing, P.C. (DLD), filed this negligence action against defendant Busey Bank, alleging that Busey breached a duty of ordinary care it owed DLD regarding a fraudulent check DLD deposited and drew against, which was later determined to be uncollectible. The trial court dismissed the complaint on Busey's motion and DLD appealed. We affirm.


¶ 3 Plaintiff Dixon, Laukitis & Downing, P.C., is a law firm that maintained its client trust account at defendant Busey Bank. On May 25, 2011, DLD deposited into its trust account a check from one of its clients in the amount of $350, 000. The check was drawn on the account of Intact Insurance Company at Royal Bank of Canada in Toronto, Ontario. The check was marked, "US Funds" and "This Cheque contains a true security watermark–hold at an angle to view." On June 6, 2011, DLD transferred $210, 000 from its trust account to the client who provided the $350, 000 check. On June 8, 2011, DLD transferred $60, 000 from the trust account to the client. On June 10, 2011, the check was returned to Busey uncollected, and Busey notified DLD and charged back $350, 000 to DLD's account the same day.

¶ 4 DLD filed a complaint sounding in negligence in January 2012. After the complaint was dismissed without prejudice for failure to state a claim (735 ILCS 5/2-615 (West 2010)), DLD filed an amended complaint in April 2012. In its amended complaint, DLD alleged that Busey owed it "a duty to act with ordinary care by observing such reasonable commercial standards as prevail in the area where the Bank conducts business" and that the Bank breached its duty by failing to inquire as to the circumstances of how DLD acquired the check; to recognize the check as counterfeit and inform DLD; to advise DLD that funds should not be withdrawn until final payment given the nature of the check and the account; and to notify DLD at the "earliest time it knew or should have known that the Check would not be paid by the drawee bank."

¶ 5 Busey filed a motion to dismiss under section 2-619.1 of the Code of Civil Procedure (Civil Code) (735 ILCS 5/2-619.1 (West 2010)), arguing that dismissal was proper under section 2-615 (735 ILCS 5/2-615 (West 2010)) based on the insufficiency of facts to support a negligence claim and under section 2-619 (735 ILCS 5/2-619 (West 2010)) on the basis that the Moorman doctrine precluded recovery. See Moorman Manufacturing Co. v. National Tank Co., 91 Ill.2d 69 (1982). Attached to its motion to dismiss was the account agreement DLD executed with Busey when the law firm established the client trust account. The agreement provided that it was subject to all applicable state and federal laws, except where varied in the agreement, and that the account holders "agree to be jointly and severally (individually) liable for any account shortage resulting from charges or overdrafts." The agreement further stated, in pertinent part: "DEPOSITS–We will give only provisional credit until collection is final for any items, other than cash, we accept for deposit (including items drawn 'on us')." Also attached to Busey's motion to dismiss was the affidavit of Daniel Daly, executive vice president/market president of Busey Bank. He attested "[t]here was nothing on the face of this Check that gave any indication that it may not be genuine or that it may be dishonored"; the check complied with the requirements for a negotiable instrument under section 3-104 of the Uniform Commercial Code (UCC) (810 ILCS 5/3-104 (West 2010)); the Bank provided written and oral notice to DLD on June 10, 2011, the same day the Bank was informed the check was uncollectible; and the Bank charged back $350, 000 against DLD's account per the account agreement.

ΒΆ 6 A hearing took place on the Bank's motion to dismiss and the trial court issued a verbal ruling granting the motion. Thereafter, the trial court issued a written order granting the section 2-615 motion to dismiss and declining to address the section 2-619 motion to dismiss. The trial court stated the motion to dismiss was granted "for all the reasons stated by the Court in its verbal Ruling from the Bench." The record on appeal does not contain a transcript from the hearing. The trial court also issued a supplemental order in which it found that Busey did not owe DLD a duty under the common law because the UCC provides a comprehensive remedy for check processing which places the risk of ...

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