Bank Not Liable For Improper Withdrawals from Nursing Home Resident’s Account Made By Resident’s Agent Under Power of Attorney

In 2003, Michael Yahatz opened a bank account. The following year, the bank was acquired by Bank of America (“BOA”) and the account was converted to a money market account. In 2005, Mr. Yahatz signed a BOA signature card, which included an acknowledgement that the account would be governed by BOA’s deposit agreement. The deposit agreement included the following:

We Are Not Liable If You Fail To Report Promptly: … [If] you fail to notify us in writing of suspected problems or unauthorized transactions within 60 days after we make your statement … available to you, you agree that: You may not make a claim against us relating to the unreported problems or unauthorized transactions, regardless of the care or lack of care we may have exercised in handling your action; and [y]ou may not bring any legal proceeding or action against us to recover any amount alleged to have been improperly paid out of your account.

It also provided that, with respect to powers of attorney, “We may [] accept any form that we believe was executed by you and act on instructions we received under that form without any liability to you.”

In November 2012, while a resident of a nursing and rehabilitation facility, Mr. Yahatz signed a power of attorney naming Nydia Davila, an employee of the facility, as his agent. The following month, Ms. Davila withdrew more than $80,000 from Mr. Yahatz’s BOA account. Mr. Yahatz died in January 2013. That same month, BOA sent his monthly statement to his address.

BOA did not receive notice of the withdrawals until July 2013, when Mr. Yahatz’s estate filed a complaint against Davila, the rehabilitation center, and BOA. The claims against BOA alleged negligence and liability under N.J.S.A. 3B:14-57 (“Checks Drawn By Fiduciary Upon Principal’s Account”). BOA moved for summary judgment, which was granted.

On appeal, the dismissal of the complaint against BOA was affirmed. The Appellate Division agreed that the claims were time-barred under the terms of the deposit agreement that Mr. Yahatz had signed, because notice of the claim was made more than sixty days after the January 2013 statement was sent.

The estate argued that summary judgment was inappropriate because additional discovery was needed, based on its claim that the power of attorney was “invalid on its face,” and that discovery might establish that BOA was negligent or acted in bad faith in relying on the power of attorney. The Appellate Division rejected this argument, agreeing with the trial court that the estate had failed to demonstrate that additional discovery could make a difference in the outcome. The estate claimed that the power of attorney was “invalid on its face” because of the manner in which it was signed and notarized. However, the estate conceded that Mr. Yahatz had signed the document, and N.J.S.A. 46:2B-17 states that a power of attorney for banking transactions that is otherwise valid is not rendered invalid because it fails to comply with statutory requirements regarding execution/notarization. Because the estate admitted that the signature was that of Mr. Yahatz, the Appellate Division concluded that “[t]here can be no violation of a duty of ordinary care, or a finding of bad faith, where a bank fails to take action to confirm the authenticity of a signature the customer does not dispute is his own.”

 A copy of In re Estate of Yahatz can be found here – In re Estate of Yahatz