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Bartel v. Bank of America Corp.

Court of Appeals of Columbia District

December 24, 2015


Argued: June 3, 2015.

Appeal from the Superior Court of the District of Columbia. (CAB-5798-13). (Hon. Neal E. Kravitz, Motions Judge).

Matthew August LeFande for appellant.

David M Ross for appellee.

Before THOMPSON and MCLEESE, Associate Judges, and STEADMAN, Senior Judge. OPINION by Associate Judge MCLEESE. Dissenting opinion by Associate Judge THOMPSON at page 17.

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This case came to be heard on the transcript of record, the briefs filed, and was argued by counsel. On consideration whereof, and as set forth in the opinion filed this date, it is now hereby

ORDERED and ADJUDGED that the judgment on appeal is remanded for further proceedings.

Appellant Richard C. Bartel sued appellee Bank of America Corporation, seeking to compel the Bank to honor a lost cashier's check. The trial court granted summary judgment to the Bank on the ground that Mr. Bartel had failed to proffer admissible evidence from which a reasonable factfinder could find that the check has not already been paid. We reverse and remand for further proceedings.


In the trial court, Mr. Bartel alleged the following. In 1994, Mr. Bartel purchased a cashier's check in the amount of $30,761 from the Bank's predecessor in interest. The check was payable to " Dana McKinley or Edna McKinley or Richard Bartel." The check was intended to serve as consideration for a contemplated business transaction between Mr. Bartel and the McKinleys. Shortly after the check was issued, Mr. Bartel and Ms. McKinley placed the check in the McKinleys' fireproof safe, for safekeeping. The McKinleys agreed to hold the check until Mr. Bartel wanted to retrieve the check or request its return. The McKinleys decided not to go ahead with the contemplated transaction, but Mr. Bartel left the check with them in the hope that they might nevertheless come to an agreement.

The contemplated transaction never took place, and Mr. Bartel eventually made unsuccessful efforts to obtain the check from the McKinleys. Ms. McKinley, who was blind and could not open the safe, died in 2008. Mr. McKinley, who had been appointed a guardian due to failing

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health, said that he no longer knew the correct combination to the safe. Mr. McKinley also said that he had not moved or touched the check and that the check had not been removed from the house.

In 2009, Mr. Bartel filed an action in Florida seeking to obtain possession of the check. When the safe was eventually drilled open, the check was not found inside. Mr. McKinley died in 2011. The check was not listed on the inventories prepared in connection with the McKinleys' estates. An inquiry into the McKinleys' financial records found no evidence of a deposit other than ordinary pension deposits. The check did not escheat to the State of Maryland and was not found in Maryland records of unclaimed property.

In 2013, Mr. Bartel filed a declaration of loss and demanded that the Bank pay the check. After the Bank refused to pay, Mr. Bartel filed suit in Superior Court. In pertinent part, Mr. Bartel sought relief under D.C. Code § § 28:3-309 and -312 (2015 Supp.), which establish procedures by which a party can obtain payment of a lost cashier's check or other negotiable instrument. The trial court granted summary judgment to the Bank. Specifically, the trial court concluded that Mr. Bartel had failed to carry his burden of offering admissible evidence that the check has not already been paid to someone entitled to enforce it.[1]


" To prevail on a motion for summary judgment, a party must demonstrate that there is no genuine issue of material fact and that [it] is entitled to judgment as a matter of law. This court's review of orders granting summary judgment is de novo, with the court conducting an independent review of the record and applying the same substantive standard used by the trial court. We construe the record in the light most favorable to the party opposing summary judgment." Boyrie v. E & G Prop. Servs., 58 A.3d 475, 477 (D.C. 2013) (citations and internal quotation marks omitted). Because we conclude that neither section 28:3-309 nor section 28:3-312 places on Mr. Bartel the burden of proving that the check has not already been paid, we reverse the grant of summary judgment.

We turn first to section 28:3-309.[2] Under that provision, a person seeking payment

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of a lost instrument must demonstrate that he or she has the right " to enforce the instrument." D.C. Code § 28:3-309 (b). Subsection (a) specifies three requirements for establishing an entitlement to enforce the instrument. First, the person seeking payment must either (A) have been entitled to enforce the instrument at the time possession was lost or (B) have acquired ownership from someone so entitled. D.C. Code § 28:3-309 (a)(1). Second, the loss of possession must not be the result of a transfer by the person seeking payment. D.C. Code § 28:3-309 (a)(2). Third, the person seeking payment must not be reasonably able to obtain possession of the instrument. D.C. Code § 28:3-309 (a)(3). The second and third requirements (non-transfer and unavailability of instrument) plainly do not impose any burden on the person seeking payment to prove that the instrument has not already been paid to a person entitled to enforce the instrument. Although the analysis is more complicated, we conclude that the same is true of the first requirement.

In the present case, Mr. Bartel apparently relies on section 28:3-309 (a)(1)(A), which requires that he show that he was entitled to enforce the instrument when he lost possession of the instrument. Under D.C. Code § 28:3-301 (2012 Repl.), the phrase " person entitled to enforce" an instrument includes a holder of the instrument, a non-holder in possession of the instrument, and a person entitled to enforce the instrument under section 28:3-309. Under D.C. Code § 28:1-201 (20) (2012 Rept.), one way to qualify as a holder of a negotiable instrument is to be in possession of an instrument payable to the person. These provisions do not require Mr. Bartel to establish that the check at issue in this case has not already been paid.

Section 28:3-309 functions sensibly under this reading. Qualifying as a person entitled to enforce an instrument does not establish a right to payment of the instrument. Rather, the Bank in this case can avoid having to pay the cashier's check if the Bank can establish a defense to payment under D.C. Code § 28:3-308 (b) (2012 Repl.). Critically for current purposes, however, section 28:3-308 places the burden on the bank to prove any defense it may have. D.C. Code § 28:3-308 (b) (person entitled to enforce instrument is entitled to payment unless " the defendant proves a defense or claim in recoupment" ). Moreover, prior payment of an instrument is generally treated as an affirmative defense. See, e.g., Household Fin. Co. v. Watson, 522 S.W.2d 111, 114 & n.1 (Mo.Ct.App. 1975) (" Payment is an affirmative

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defense . . . ." ); Estate of Kosuga v. Rockstar Media, LLC, No. 10. Civ. 6628(ER), 2013 WL 1268612, at *6 (S.D.N.Y. Mar. 28, 2013) (" [P]ayment is essentially an affirmative defense, of which the burden of proof rests on the party who pleads it." ); Lawrence's Anderson on the Uniform Commercial Code § 3-603:28, Westlaw (3d ed. database updated Dec. 2014) (" Payment is an affirmative defense and the burden of proof is on the party asserting it." ). We also note that section 28:3-309 (b) precludes the trial court from requiring payment of a lost instrument unless the person required to pay " is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means." [3]

For the foregoing reasons, we conclude that section 28:3-309 does not place a burden on Mr. Bartel to prove that the cashier's check has not previously been paid. We reach the same conclusion as to section 28:3-312, which provides an alternative procedure, available in addition to the procedure established under section 28:3-309, to parties seeking payment of lost cashier's checks. D.C. Code § 28:3-312 (d). Under section 28:3-312's procedure, the claimant must demand payment from the bank. D.C. Code § 28:3-312 (b). Among other requirements, the demand must include a sworn declaration of loss. D.C. Code § 28:3-312 (b)(ii). The declaration of loss must state that " (i) the declarer lost possession of a check, (ii) the declarer is the . . . payee of the check, in the case of a cashier's check or teller's check, (iii) the loss of possession was not the result of a transfer by the declarer or a lawful seizure, and (iv) the declarer cannot reasonably obtain possession of the check . . . ." D.C. Code § 28:3-312 (a)(3). Subject to various timing requirements, a properly submitted claim becomes " enforceable." D.C. Code § 28:3-312 (b).

Once the claim is enforceable, " the obligated bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check." D.C. Code § 28:3-312 (b)(4). This provision is not explicit about whether claimants or banks bear the burden of proof on the issue of prior payment. We conclude that the provision is better read as implicitly imposing the burden on banks. First, information about whether a check has already been paid will in general be more readily available to banks than to claimants. See generally, e.g., Riggs Nat'l Bank of Washington, D.C. v. District of Columbia, 581 A.2d 1229, 1249-50 (D.C. 1990) (allocating burden of proof on issue to banks because, among other reasons, facts relevant to issue were " more likely to be within the knowledge of the bank" ) (brackets and internal quotation marks omitted). Second, as we have already noted, the applicable statutory scheme treats comparable issues as matters of defense. D.C. Code § § 28:3-309, -308 (b).

In sum, we conclude that Mr. Bartel does not have the burden of proving that the cashier's check in this case has not already been paid. We therefore disagree with the ground upon which the trial court granted summary judgment. In this court, the bank raises several alternative ...

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