Karen Kane, Inc. v. Bank of America National Trust & Savings Ass'n

As the result of the wrongful activities of a scheming employee, appellant Karen Kane, Inc., wrote over seventy-six checks over a period of two or three years, totaling approximately $760,000, for merchandise which it never received. The checks were printed, unaltered checks which bore genuine signatures and were deliberately issued by Karen Kane in what appeared to even Karen Kane to be the regular course of business. The checks were cashed at a check cashing service called Soto Check Cashing and were deposited by Soto into its account at the Bank of America National Trust and Savings Association,' Inc. There is no claim that the checks or endorsements were forged, or that funds were paid to other than the payees selected by Karen Kane, albeit selected as the result of internal fraud.

Karen Kane sued Soto and the Bank for negligence, alleging that the checks bore indicia of wrongdoing, such as unconventional endorsements and unbusinesslike negotiation for cash at a check cashing service. Karen Kane claims that these circumstances gave respondents notice that it was probable that Karen Kane had unwittingly issued the checks as the’ result of an unlawful scheme, made harm…