Roy Supply, Inc. v. Wells Fargo Bank

In this case we consider whether corporate depositors may pursue causes of action against their bank for the negligent payment of forged checks when they failed to discover and report the forgeries to the bank in a timely manner. We hold that the statutory provisions of the California Uniform Commercial Code preclude the depositors from asserting the forged checks against the bank and this preclusion is fatal to their claims for the negligent payment of forged checks not timely reported to the bank.

Plaintiffs Roy Supply, Inc. (Roy Supply), R.M.R. Drywall, Inc. (Drywall), and Edward Roy (Roy), appeal from a judgment of dismissal entered after the trial court sustained without leave to amend the demurrer of defendant Wells Fargo Bank, N.A. (the Bank). Although we conclude that the trial court properly sustained the Bank’s demurrer, we shall reverse the judgment of dismissal as to the corporate plaintiffs and remand with directions that they be given leave to amend their complaint on the question of timeliness.

Also at issue on appeal is the question whether the trial court properly ruled that plaintiff Roy does not have an individual cause of action in negligence against…