McLEESE, Associate Judge:
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
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.
"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.
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 Repl.), 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
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 contentions upon which it claims summary judgment could appropriately have been
As the dissent notes, this court in some circumstances will affirm a trial court's ruling on alternative grounds not decided by the trial court. In our view, that approach is not warranted in this case. With respect to Mr. Bartel's request for relief under section 28:3-312, the dissent would affirm on the ground that Mr. Bartel's sworn declaration of loss was deficient in two respects, because the declaration failed to allege both (1) that Mr. Bartel lost possession of the check and (2) that the loss of possession was not the result of a transfer by Mr. Bartel. As to the first asserted deficiency, however, the Bank did not raise either in the trial court or in this court the specific argument that the declaration failed to allege loss of possession. Affirmance on that ground therefore would not be appropriate. See, e.g., Linen v. Lanford, 945 A.2d 1173, 1180 n. 4 (D.C. 2008) ("Generally speaking, matters not properly presented to a trial court will not be resolved on appeal.") (internal quotation marks omitted); In re Shearin, 764 A.2d 774, 778 (D.C.2000) (points not raised on appeal "are treated as abandoned").
As to the second asserted deficiency, the Bank did argue that the declaration of loss was inadequate on the issue of transfer. In doing so, however, the Bank appears to have understood the declaration to have been supplemented by Mr. Bartel's sworn statements in response to interrogatories. Thus, as framed by the Bank, the question is whether the declaration and the response to interrogatories, taken together, were adequate on the issue of transfer. That question also arises under section 28:3-309, and we discuss that question on the merits briefly infra. But it would not be prudent or procedurally fair to affirm on the different ground, relied upon by the dissent, that the declaration must be considered in isolation and so considered is deficient. The Bank has not argued that the declaration must be considered in isolation, the parties have not briefed that issue, the trial court did not decide the issue, and the dissent does not explicitly address the issue.
With respect to Mr. Bartel's request for relief under section 28:3-309, the dissent first concludes that the undisputed facts establish that Mr. Bartel transferred the check to the McKinleys. See D.C.Code §§ 28:3-309(a)(2) (loss of possession must not be result of transfer). We do not share the dissent's confidence. As the dissent notes, "transfer" is defined as delivery "for the purpose of giving to the person receiving delivery the right to enforce the instrument." D.C.Code § 28:3-203(a) (2012 Repl.). Although the dissent states that Mr. Bartel "delivered the check to the McKinleys for the purpose of giving them the right to enforce it," Mr. Bartel indicated in a sworn statement that he did not intend the McKinleys to have any authority over the check other than to hold it until its return or until the contemplated
Second, the dissent concludes that Mr. Bartel failed to establish a material dispute of fact as to whether he was entitled to enforce the check at the time he lost possession, because the check at some point might have been endorsed by the McKinleys so as to permit a third party to enforce the check. This issue too seems far from settled. For one thing, it is unclear to us when Mr. Bartel lost possession of the check, and the dissent does not explicitly address that question. Mr. Bartel presumably lost actual possession of the check when the check was put in the McKinleys' safe, and no one has suggested that the McKinleys had endorsed the check at that point. It is less clear, however, for how long, if at all, Mr. Bartel thereafter had constructive possession of the check. Nor is obvious whether constructive possession counts as possession for purposes of section 28:3-309.
In any event, we think it unclear that Mr. Bartel failed to raise a material dispute of fact on the question whether the McKinleys endorsed the check before Mr. Bartel lost possession of the check. According to Mr. Bartel, (1) he obtained the check with his own funds; (2) he entrusted the check to the McKinleys' safekeeping in the hope that the check would become consideration for a business transaction; (3) the transaction never occurred; (4) he unsuccessfully demanded return of the check; (5) he has no information that the check was endorsed to a third party or presented to a bank for payment; (6) various searches failed to locate the check; and (7) an analysis of the McKinleys' financial records showed no transaction suggesting that the McKinleys presented the check for payment or endorsed the check to a third party in exchange for payment. Such evidence would not be dispositive, but the dissent does not explain why a reasonable factfinder could not infer by a preponderance of the evidence that the McKinleys did not violate their alleged agreement with Mr. Bartel by negotiating the check before Mr. Bartel lost possession of the check. Cf. Ruby v. Farmers Mut. Auto. Ins. Co., 274 Wis. 158, 79 N.W.2d 644, 645-48 (1956) (although insurance policy provided that mysterious disappearance of property would presumed to be due to theft, circumstantial evidence supported trial court's inference that property at issue was lost rather than stolen); cf. generally, e.g., Schwab v. Reilly, 560 U.S. 770, 790, 130 S.Ct. 2652, 177 L.Ed.2d 234 (2010) (noting "the presumption that parties act lawfully"); Rock River Commc'ns,
As the dissent points out, Mr. Bartel stated in his reply brief that the McKinleys had the right to alienate the check. We do not understand that statement, however, as a concession that Mr. Bartel would have had no legal complaint against the McKinleys had they negotiated the check contrary to the alleged agreement between Mr. Bartel and the McKinleys. More generally, whether it would have been wrongful for the McKinleys to negotiate the check under the alleged circumstances of this case seems yet another issue better left for consideration in the first instance by the trial court.
The dissent further points out that checks "do not disappear out of safes into thin air." It does not follow, however, that the check in this case must have been negotiated by the McKinleys, because — among other possibilities — checks can be inadvertently removed from safes and lost or misplaced.
Finally, we note that the dissent repeatedly suggests that Mr. Bartel bears the burden under section 28:3-309 of showing that the check was never endorsed by the McKinleys. That too seems unclear at best. It is true that section 28:3-309(a) requires a claimant to establish that he or she "is entitled to enforce the instrument." But the provision further indicates that a claimant may meet that requirement by showing (1) an entitlement to enforce the instrument at the time the claimant lost possession of the instrument, (2) that the loss of possession was not the result of transfer by the claimant or lawful seizure; and (3) that the claimant is unable to obtain possession of the instrument. D.C.Code § 28:3-309(a). On its face, at least, the provision focuses on a claimant's right of enforcement at the time the claimant loses possession of the instrument, not at the time the instrument later cannot be found by anyone or at the time the claimant brings suit. The provision thus does not appear to place on a claimant the very difficult task of proving what happened to the instrument after the claimant lost possession of the instrument.
In sum, we are not inclined to affirm the trial court's denial of relief under sections 28:3-309 and 28:3-312 on the alternative grounds relied upon by the dissent.
Accordingly, the judgment of the Superior Court is reversed and the case is remanded for further proceedings.
Dissenting opinion by Associate Judge THOMPSON at page 17.
THOMPSON, Associate Judge, dissenting:
I see no reason why we should drag out this litigation through a remand when, on the summary judgment record that is before us, we are able to conclude as a matter of law that appellant Bartel is not entitled to recover under either of the statutory provisions on which he relies: D.C.Code §§ 28:3-312 and 28:3-309 (2012 Repl. & Supp.2014).
On March 9, 1994, Mr. Bartel purchased a cashier's check in the amount of $30,761.00 from NationsBank, the predecessor of Bank of America N.A. (the "Bank")
Mr. Bartel eventually made demands for return of the check in "numerous emails, telephone calls, and personal visits to Dana." According to Mr. Bartel, Dana McKinley ("Dana") told him that he "never touched or moved the check" and that "the check was never removed from his house," but also stated at some point that the safe could not be opened because either he had fumbled a change in the combination or "his Guardian had changed the combination." The guardian had been appointed in 2008 because Dana was suffering from "deteriorating mental illness." At some point, the guardian had the safe drilled open, and the cashier's check was not found.
Edna McKinley ("Edna") died in April 2008, having at some point prior to that time become "blind and immobile." The record does not disclose at what point Edna became blind and immobile, but, according to Mr. Bartel, he and the McKinleys (i.e., both Edna and Dana) "continued to work together for several years" after the McKinleys declined to sell their Eclipse Holdings stock. Further, although averring that Dana stated that he "never touched or moved the check," Mr. Bartel made no reference to any equivalent representation by Edna.
Mr. Bartel stated in a May 2008 email that Rene McKinley (Dana's sister and Edna's daughter) had access to the McKinley safe "years ago" through "a combination given to her by a friend of Edna's, William Sharrar."
Dana McKinley died in September 2011. The cashier's check was not listed on either Dana's or Edna's estate inventory, and the representatives of the estates reported that, after diligent efforts, they could find no evidence that the check was deposited into an account belonging to either.
Mr. Bartel asserts that he had "no information indicating to [him] that the cashier's check was lost until the inventory of Dana McKinley's estate in 2013." On July 29, 2013, he wrote to the Bank, attaching a copy of the check, making what he labeled a "declaration of loss," and demanding payment. The Bank declined to honor his demand for payment. It explained that, in compliance with federal law, it keeps its records, including records of predecessor
On August 23, 2013 — more than 19 years after the cashier's check was issued by the Bank's predecessor — Mr. Bartel brought suit against appellee for the check amount of $30,761.00, asserting claims under Article 3 of the UCC. He argued in his summary judgment papers that, on the undisputed facts, he satisfies the requirements of § 28:3-312 ("§ 3-312") (entitled "Lost, destroyed, or stolen cashier's check, teller's check, or certified check") or, "alternatively," the requirements of § 28:3-309 ("§ 3-909") (entitled "Enforcement of lost, destroyed, or stolen instrument"). The appeal presents issues of statutory construction, as to which our review is de novo.
The summary judgment record enables us to conclude that Mr. Bartel does not satisfy the requirements of § 28:3-312. Section 3-312 creates an obligation for a bank (the "obligated bank") to pay the amount of a cashier's check to a "claimant" who declares, in a declaration of loss that comports with the requirements set out in the statute, that the check was lost, destroyed, or stolen. § 3-312(b)(4). To comply with § 3-312 with respect to a cashier's check, a declaration of loss must state under penalty of perjury "to the effect" that:
Mr. Bartel states that his "demand of July 29, 2013 ... satisfie[d] the definition of a "declaration of loss[.]"
Just as clearly, the summary judgment record shows that Mr. Bartel cannot satisfy the requirements of § 3-309. Section 3-309(a), entitled "Enforcement of lost, destroyed, or stolen instrument," provides that:
Thus, to prevail under § 3-309, Mr. Bartel must prove that "[t]he loss of possession [of the cashier's check] was not the result of a transfer by the person." Per D.C.Code § 28:3-203(a), an instrument is "transferred" "when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument." Mr. Bartel acknowledges that he handed over possession of the cashier's check to the McKinleys, named payees, in anticipation that they would accept the check as consideration for the sale of their shares of stock in Eclipse Holdings, Inc. In other words, he voluntarily and purposely delivered the check to the McKinleys for the purpose of giving them the right to enforce it.
Mr. Bartel also cannot prove through competent evidence that he has the right to enforce the instrument, § 3-309(b), or that he had that right "when loss of possession occurred[.]" § 3-309(a)(1).
Mr. Bartel argues that the Bank should bear the burden of proving (as an affirmative
There is a dearth of evidence about what the McKinleys might have done with the check in the years between 1994 and the years of their declining health and deaths (in 2008 and 2011). Mr. Bartel does not aver that Edna never touched or moved the check (although he made such an averment as to Dana). In addition, as Mr. Bartel himself explained, at some point during those many years, others (relative Renee McKinley and friend William Sharrar) had the combination (and, it can reasonably be assumed, access) to the McKinleys' safe. Because items do not disappear out of safes into thin air, it is more likely than not (if not certain) that someone removed the check from the safe. To conclude that it is more likely than not (or as likely as not) that the check was removed from the safe and negotiated, it is not necessary, as the majority opinion appears to suggest, to assume that the check was wrongfully negotiated by one of the McKinleys, or that they or anyone else acted or intended to act unlawfully. As Mr. Bartel acknowledges in his Reply Brief, the McKinleys, as named payees, had an "indisputable right to alienate the check" (emphasis added). One of the McKinleys might lawfully have endorsed and negotiated or cashed the check,
It is far from clear that the presumption on which the majority opinion relies — a presumption that people act lawfully, ante at 1049-50 — would apply in the UCC Article III context, given the many references in the official comments to theft, forgery, and fraudulent allegations of loss. See, e.g., comments 2 and 3 to § 3-312; see also (Darlene) Brown, note 10 supra, 359 P.3d at 779 (noting that the UCC Article III rule about who is entitled to enforce an instrument, such as a mortgage note, "focuses on the party who possesses the note in order to protect the borrower from being sued fraudulently or by multiple parties on the same note"). But even if it is assumed that our jurisdiction would apply a general presumption that people act lawfully and would also do so in the UCC Article III context, that presumption would not negate or overcome the presumption under the law pertaining to negotiable instruments, applied in the cases cited at the end of the preceding paragraph, that a person in possession of an instrument made payable to that person or to the bearer may lawfully enforce that instrument.
The record does not enable us to say what happened to the check, but what is clear on the record before us is that Mr. Bartel cannot prove by a preponderance of competent evidence a critical element of his § 3-309 claim: that he retained entitlement to enforce the check at the time it allegedly was lost.
My colleagues in the majority have elected to "exercise our discretion to leave [those] issue[s] for resolution by the trial court in the first instance" (quoting Folks v. District of Columbia, 93 A.3d 681, 686 (D.C.2014)), and they rely on case law "caution[ing] that it usually will be neither prudent nor appropriate for this court" to affirm a grant of summary judgment on alternative grounds not decided by the trial court. Ante at 1047-48 (citing Jaiyeola v. District of Columbia, 40 A.3d 356, 372 (D.C.2012)). However, in Folks, the proposed alternative basis for summary judgment turned on whether the plaintiff had provided sufficient evidence that the defendants had acted negligently, and we relied on authority holding that issues of negligence are inappropriate for resolution on summary judgment. 93 A.3d at 686 (citing Crawford v. Katz, 32 A.3d 418, 435-436 (D.C.2011) (brackets omitted)). In Jaiyeola, the posture was that trial court had not considered "whether appellant genuinely needed to depose his former supervisor and obtain other discovery" in order to try to establish a prima facie case of discrimination, 40 A.3d at 372, and we treated the case as one where "the issues are not ripe for consideration, not clearly presented by the record or ... it would be better to leave to the trial court the task of sifting through the summary judgment record." Id. at 373 (quoting Franco v. District of Columbia, 3 A.3d 300, 307 (D.C.2010)).
Given the record in this case — no one contends that additional discovery is needed, the issues were clearly presented below, the record is not voluminous, the issue is not negligence or any other basis on which summary judgment "should be granted sparingly,"
Id. at 1289 n. 6 (internal quotation marks and citations omitted); see also Grimes v. District of Columbia, 89 A.3d 107, 112 n. 3 (D.C.2014) (rejecting the trial court's rationale for dismissal of a retaliation claim, but affirming the dismissal on the alternative ground, reasoning that there was "no unfairness in affirming on the [alternative] ground [that the complaint failed to state a DCHRA retaliation claim] ..., because [appellant] briefed that issue in this court and in the trial court").
For the foregoing reasons, I would affirm the judgment of the Superior Court in favor of appellee, on the ground that, on the undisputed factual record, appellant failed to satisfy the requirements of § 3-312 or § 3-309.
I recognize that Mr. Bartel has asserted in his sworn interrogatory responses that he placed the check in the McKinleys' safe "for safekeeping," but, even if fully credited, that statement does not negate Mr. Bartel's further sworn assertion that by delivering to the McKinleys the check payable to either of them, he gave them the authority to enforce the check, albeit in contemplation of their coming "to an accord regarding the sale" of their stock to Mr. Bartel.
Moreover, to conclude that there was no transfer within the meaning of D.C.Code § 28:3-203(a) because of circumstances related to the anticipated business deal would contravene the general scheme of Article 3 of the U.C.C., which is to make it unnecessary to "delve into the contractual relationships of named payees[.]" Cf. American Nat'l Ins. Co. v. Citibank, 543 F.3d 907, 910 (7th Cir.2008); see also id. at 909-10 ("Instead of being able to look at the payee line and to verify that the person presenting the check was indeed entitled to do so, banks in ANICO's world would need to conduct a full-blown investigation every time to make sure that a party with an equitable interest in the check was not lurking in the background. Such a system would bring commercial transactions to a grinding halt.").
I note that even if we assume that Mr. Bartel had (joint) constructive possession of the check in the safe, he still cannot prove that he lost it. If it was cashed or negotiated by one of the alternative payees, it was not lost. See Bank of Am. Nat'l Trust & Sav. Ass'n v. Allstate Ins. Co., 29 F.Supp.2d 1129, 1145 (C.D.Cal.1998) ("The instrument in question was not lost ... — it was cashed.").