Thomas v. Southern Bancorp Bank

Filing 45

MEMORANDUM OPINION and ORDER denying 29 Motion for Summary Judgment. A Third Amended Final Scheduling Order setting a new trial date will issue. Signed by Chief Judge D. P. Marshall Jr. on 8/20/2019. (jak)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
CHRISTOPHER BERRY THOMAS
v.

PLAINTIFF

No. 4:17-cv-497-DPM

SOUTHERN BANCORP BANK

DEFENDANT

MEMORANDUM OPINION and ORDER
1. After the death of a wealthy matriarch, her son and grandson

made competing claims to a $100,000 certificate of deposit issued long
before by Southern Bancorp's predecessor. The son threatened to sue.
The bank paid him, receiving an indemnity agreement in return. This
case is the grandson's answering suit against Southern Bancorp.
In 1998, Mary Berry opened a $100,000 certificate of deposit at
First National Bank of Blytheville. CD No. 55594 named Mary Berrythe Grandmother-and Kenneth Berry Jr. -the Son-as joint tenants
with right of survivorship. The CD stated on its face that it was "NOT
NEGOTIABLE" and "NOT TRANSFERABLE." NQ 31-1. For about six
years, the bank issued interest checks and renewal notices in the names
of Grandmother and Son. Grandmother had many CDs at the bank.
She did her business there in person. In February 2005, Christopher
Berry Thomas - the Grandson - replaced Son on the interest checks and
renewal notices for CD No. 55594. For more than a decade, the bank

issued these checks and notices in the names of Grandmother and
Grandson. NQ 42 at 8-11. These renewal notices, addressed to both
Grandmother and Grandson, stated that "your certificate will mature"
and "your certificate of deposit (CD) number ******** 594 will
automatically

renew ... [.] " NQ 42 at 11-12. Like all the CD-related

mailings, the notices were sent to Grandmother's home. Grandmother
died in November 2014.

Grandson continued to cash the interest

checks after her death. NQ 41-2 at 1. In December 2015, Grandson
demanded payment on the CD, along with two other CDs, from
Southern Bancorp, which had acquired First National.

Son also

demanded payment, threatening a lawsuit. NQ 42 at 16-17. Neither
Grandson nor Son presented the original CD to the bank It never
surfaced. The bank was faced with conflicting internal records - its
computer system, along with renewal statements and interest checks,
showed Grandson as the owner; the bank's vault copy of the CD
showed Son as the owner. Southern Bancorp paid about $105,000 to
Son in December 2015. Son agreed to indemnify the bank if someone
else was entitled to the CD proceeds. NQ 42 at 14. The bank's form
closing the account listed the CD's owners as "Mary Berry, Christopher
Thomas or Kenneth Berry." NQ 42 at 13.
These are the material facts, taken in Grandson's favor where
genuinely disputed, on Southern Bancorp's renewed motion for
summary judgment. Woods v. DaimlerChrysler Corporation, 409 F.3d 984,

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990 (8th Cir. 2005). The Court granted the bank's original motion on
Grandson's fraud claim, denied the original motion on his contractbased claims, and directed more discovery to fill out the record so the
Court could decide whether there were any issues for a jury. The
discovery was done. And Southern Bancorp has renewed its request
for judgment as a matter of law on the rest of the case.
2. The first difficulty for Grandson's contract-based claims is that
the breach claim belonged to Grandmother, then her estate, not
Grandson. The CD was a contract between Grandmother and the bank.
And the estate did not pursue this claim, perhaps because both of Mary
Berry's children (Son and Grandson's mother) were the co-executors.
The bank argues that Grandson could not have been an owner of
the CD. The vault copy of the certificate named Grandmother and
Uncle as joint tenants with right of survivorship. Under Arkansas law,
the designation of ownership in an account document, including a CD,
"shall be conclusive evidence in any action or proceeding involving the
deposit account of the intention of all depositors to vest title to the
deposit account in the manner specified in the account documents."
ARK. CODE ANN. § 23-47-204(b)(3). And, in the absence of fraud, the
surviving joint tenant owns the account by operation of law. Williams

v. Davis, 2009 Ark. App. 850, at 7-8, 373 S.W.3d 381, 386. While the
statute may answer the question about the ownership of the now-lost
CD No. 55594, it does not address Grandson's deeper point.

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Grandson contends that he was a third-party beneficiary of a
contract between Grandmother and the bank made in late 2004 or early
2005 to cash out CD No. 55594 and create a new CD naming Grandson
instead of Son the co-owner. To reach the jury, Grandson must offer
sufficient evidence that Grandmother and First National made an
enforceable contract. And he must show "substantial evidence of a
clear intention to benefit [him]." Perry v. Baptist Health, 358 Ark. 238,
244-45, 189 S.W.3d 54, 58 (2004).
There's no document or note reflecting an agreement between
Grandmother and the bank to make Grandson a co-owner of the CD.
NQ 42 at 14. But the bank's computer system showed Grandson instead

of Son as one of the CD's owners. And it's undisputed that the bank
sent interest checks and renewal notices to Grandmother and Grandson
at her home address for more than ten years. The checks named them
both. The bank's 30(b)(6) witness agreed that, other than one instance
involving a recurring charitable donation that she knew about, interest
flows to an account's owners. And the notices referred repeatedly to
the CD as "your certificate."
Grandson also offers affidavits from his mother, Melinda Porter,
and his Grandmother's sister, Margaret Childers. NQ 41-1 & NQ 41-3.
The bank points out that most all this testimony is inadmissible.
Statements about what Grandmother told them about the CD and the
interest checks are hearsay, not within any exception. Attached to one

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of the affidavits, there's a note - "This is for Christopher on my death
9-11-09" - seemingly handwritten by Grandmother on an envelope
containing a CD statement. Ng 41-1 at 3. The note is also inadmissible
hearsay. Grandmother's remarks and the note don't prevent summary
judgment. Brooks v. Tri-Systems, Inc., 425 F.3d 1109, 1111 (8th Cir. 2005).
Grandson doesn't need the hearsay, though. Based on the rest of
the record, taken in the light most favorable to Grandson, a reasonable
jury could find that Grandmother and the bank had an agreement to
make Grandson a co-owner of the CD, and that the bank failed to
properly implement the ownership change. Grandmother's sister says
she often accompanied Grandmother to the bank, where she did her
business in person. In the mid-2000s, Grandmother made several CD
ownership changes favoring Grandson in her many CDs. The original
CD No. 55594 has never been found. And years and years of renewal
statements and interest checks listed Grandson as a co-owner. One
reasonable inference from the whole is that the bank fumbled on this
CD. Another, of course, is that it did not-see, for example, the absence
of any bank document about a requested ownership change. A jury
must decide.
Grandson also argues that promissory estoppel applies. He must
establish this claim" strictly, there must be certainty to every intent, the
facts constituting it must not be taken by argument or inference, and
nothing can be supplied by intendment."

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K. C. Properties of N. W

Arkansas, Inc., v. Lowell Investment Partners, LLC, 373 Ark. 14, 30, 280

S.W.3d 1, 14 (2008). There's not enough evidence to support a verdict
for Grandson on this alternative theory.
3. The second difficulty for Grandson is the calendar. The statute
of limitations for breach of a written contract is five years; for an oral
contract, it's three years. ARK.

CODE

ANN. §§ 16-56-111 & 16-56-105.

The new CD should have been created, Grandson says, in late 2004 or
early 2005. He sought payment in 2015, some ten years later.
No fraudulent concealment occurred.

That defense requ1res

"something more than a continuation of a prior nondisclosure[;]" there
must be some "furtively planned and secretly executed" scheme.
Meadors v. Still, 344 Ark. 307, 315-16, 40 S.W.3d 294, 300-01 (2001).

There's no evidence the bank prevented Grandmother or Grandson
from reviewing all the bank's account information and discovering the
conflicting ownership information. No scheme was involved.
Grandson also says the bank should be estopped from invoking
the limitation period. Estoppel tolls the statute when a party's actions
"have fraudulently or inequitably invited a party to delay commencing
legal action until the relevant statute of limitations has expired, or when
he has done anything that would lull the other party into inaction so
that his vigilance is relaxed." Taylor v. Taylor, 2009 Ark. App. 605, at 78, 343 S.W.3d 335, 339. The bank must have known the facts; it must
have intended that its conduct be acted on, or must have acted so

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Grandson had a right to believe the bank so intended; Grandson must
have been ignorant of the facts; and Grandson must have relied on the
bank's conduct to his detriment. Sterne, Agee & Leach, Inc. v. Way, 101
Ark. App. 23, 27-28, 270 S.W.3d 369, 374 (2007). Whether estoppel
applies is usually for the trier of fact. Taylor, 2009 Ark. App. at 8.
There is no sound fraud basis for an estoppel. But a jury could
find that the bank's actions over the course of a decade lulled
Grandmother and Grandson into inaction. According to a record that
appears to be from Southern Bancorp' s predecessor, Grandmother had
extensive dealings with the bank and owned more than a dozen CDs.
NQ 42 at 7. She and Grandson could have reasonably expected the bank

to properly carry out Grandmother's alleged wishes in issuing a new
CD. Corning Bank v. Rice, 278 Ark. 295, 298-99, 645 S.W.2d 675, 677
(1983). Coupled with the more than ten years of interest checks and
renewal notices in Grandson's name for the disputed CD, the estoppel
question presented is best answered by a jury, too.

*

*

*

Southern Bancorp' s second motion for summary judgment, NQ 29,
is denied. A Third Amended Final Scheduling Order setting a new trial
date will issue.

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So Ordered.
D.P. Marshall Jr.
United States District Judge

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