Decker

Decker v. YORKTON SECURITIES, INC.

Good Law

106 Cal. App. 4th 1315·131 Cal. Rptr. 2d 645·2003 Cal. App. LEXIS 391·2003 Daily Journal DAR 2903·50 U.C.C. Rep. Serv. 2d (West) 271

Court of Appeal of CaliforniaMarch 13, 2003A096965California6,069 words

Opinion

Stevens, J.

Suzanne L. Decker, as trustee for InnovaCom, Inc., appeals from a judgment entered after the trial court granted summary judgment in favor of respondents Yorkton Securities, Inc. (Yorkton), and Wolverton Securities, Ltd. (Wolverton). In resolving this appeal, we consider when an introducing broker has notice of an adverse claim under California Uniform Commercial Code section 8105, subdivision (a)(2), such that it may be liable for losses sustained in connection with stolen stock certificates despite the immunity afforded by California Uniform Commercial Code section 8115, subdivision (3). We conclude that notice of an adverse claim in this context requires subjective knowledge of a significant probability of an adverse claim, and we affirm the judgment.

I. Facts and Procedural History

In July 1996, InnovaCom Corp., a Florida company, merged with Jettson Real Estate Development, Inc. (JRD). The resulting entity was renamed InnovaCom, Inc. (InnovaCom) and is the appellant in this action. Around the time of the merger, persons associated with JRD, including Michael Haynes and David Jett (collectively the Conspirators), fraudulently caused the issuance of millions of…

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