gno.law

Chatsky & Associates v. Superior Court

California Court of Appeal · No. D043096 · 2004-04-12 · Published · 117 Cal. App. 4th 873 · 2004 Cal. Daily Op. Serv. 3166 · 2004 Daily Journal DAR 4513 · 12 Cal. Rptr. 3d 154 · 53 U.C.C. Rep. Serv. 2d (West) 99 · 2004 Cal. App. LEXIS 495

CHATSKY AND ASSOCIATES v. THE SUPERIOR COURT OF SAN DIEGO COUNTY, Respondent BANK OF AMERICA CORP., Real Party in Interest

Area
civil
Panel
McINTYRE (author)

Analysis

A model's reading — qwen3.8-27b, prompt v1, 2026-10-13T07:15Z · confidence high

The trial court granted the bank's motion for summary adjudication, ruling that the plaintiffs' claims for payment of forged checks were barred by the one-year statute of limitations in Code of Civil Procedure section 340(c). The Court of Appeal affirmed the trial court's ruling, holding that section 340(c) is the specific statute governing such claims and was not impliedly repealed by the general three-year limitation period in Commercial Code section 4111.

Ruling reviewedStandardThe courtThe model
Granting of the Bank's motion for summary adjudication based on the expiration of the one-year statute of limitations under Code of Civil Procedure section 340(c).
“we conclude that the trial court properly granted summary adjudication based on expiration of the one-year limitation period of section 340(c).”
de novocorrectagree with court
The appellate court correctly applied de novo review to the question of statutory interpretation. It properly identified that section 340(c) is a specific statute governing actions by depositors against banks for forged checks, while Commercial Code section 4111 is a general statute for obligations under Division 4. Under the principle that specific statutes control over general ones, and given the high bar for implied repeal, the court correctly determined that the one-year period applies and the trial court's ruling was legally sound.

Authorities

  • relied: Roy Supply, Inc. v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051 — Establishes that the one-year limitations period of section 340(c) applies to actions by a depositor against a bank for the payment of a forged or raised check, and that the period begins when the charge is reported in a regular monthly account statement.
  • relied: Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110 — The court distinguished this case, noting that because the three-year limitation period under Commercial Code section 4111 had already expired, the court in Fineman did not need to address or rule on the applicability of the one-year period under section 340(c).
  • relied: Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553 — Supports the principle that the law shuns repeal by implication and courts must maintain the integrity of both statutes if possible.
  • relied: In re Thierry S. (1977) 19 Cal.3d 727 — Defines the high standard required for implied repeal, stating it is only invoked when statutes are irreconcilable or there is undebatable evidence of intent to supersede.
  • relied: Hays v. Wood (1979) 25 Cal.3d 772 — Reinforces the requirement that a later provision must provide 'undebatable evidence of an intent to supersede the earlier' provision for implied repeal to occur.
  • relied: Voss v. Superior Court (1996) 46 Cal.App.4th 900 — Supports the presumption that the Legislature had existing laws in mind when enacting a new statute, which is why the high standard for implied repeal exists.
  • relied: Bialo v. Western Mutual Ins. Co. (2002) 95 Cal.App.4th 68 — Establishes that statutory interpretation presents a question of law subject to de novo review on appeal.
  • relied: Estate of McDill (1975) 14 Cal.3d 831 — States the goal of harmonizing seemingly inconsistent statutes to avoid an interpretation that requires one statute to be ignored.
  • relied: Fuentes v. Workers' Comp. Appeals Bd. (1976) 16 Cal.3d 1 — Reinforces the goal of avoiding an interpretation that requires one statute to be ignored when interpreting two seemingly inconsistent statutes.
  • relied: In re White (1969) 1 Cal.3d 207 — Provides the standard that statutes must be 'irreconcilable, clearly repugnant, and so inconsistent that the two cannot have concurrent operation' for implied repeal.
  • relied: People v. Superior Court (Zamudio) (2000) 23 Cal.4th 183 — Supports the principle that cases are not authority for propositions not considered.

The appellate opinion: sound — The opinion is sound because it correctly applies the specific-over-general rule of statutory construction and the high bar for implied repeal to determine that the specific one-year statute of limitations for forged checks controls over the general three-year UCC limitation period. It effectively distinguishes prior case law that might have suggested the opposite by clarifying that those cases did not actually address the conflict between the two statutes.

How this analysis was made · dispute it

A model's reading — claude-fable-5-1, prompt v1, 2026-10-13T04:31Z · confidence high

The trial court granted Bank of America's motion for summary adjudication, holding that the depositors' claims on forged checks dated February 2001 or earlier were barred by the one-year limitations period of Code of Civil Procedure section 340(c) because suit was not filed within one year after the bank statements listing the checks were provided. On the depositors' writ petition, the Court of Appeal held de novo that section 340(c), not the three-year period of California Uniform Commercial Code section 4111, governs a depositor's forged-check claims against its bank, denied the petition, and vacated its temporary stay.

Ruling reviewedStandardThe courtThe model
Grant of summary adjudication to the Bank on the ground that the one-year limitations period of Code of Civil Procedure section 340(c), rather than the three-year period of Commercial Code section 4111, bars recovery on forged checks reported in statements more than one year before suit.
“We agree with the trial court’s conclusion that section 340(c) is the more specific statute because it expressly concerns the factual circumstances at issue—an action by a depositor against its bank for the payment of a forged check.”
de novocorrectagree with court
The facts were undisputed, so the only question was statutory interpretation reviewed de novo. Section 340(c) speaks directly to actions by a depositor against a bank for payment of a forged check, while section 4111 is a general catch-all for Division 4 claims; the specific-over-general canon and the duty to harmonize statutes support giving effect to both. The result is reinforced by Commercial Code section 4406(f), whose one-year preclusion period the Code Comments describe as consistent with section 340(c), and by the Legislature's 2002 amendment of section 340 without disturbing the forged-check provision.
Rejection of plaintiffs' contention that Commercial Code section 4111 impliedly repealed section 340(c).
“We reject plaintiffs’ suggestion that the Legislature impliedly repealed section 340(c) when it enacted Commercial Code section 4111, as neither of the two conditions necessary to implement the doctrine of implied repeal is met.”
de novocorrectagree with court
The court correctly applied the Supreme Court's implied-repeal test from In re Thierry S. and Hays v. Wood: the statutes can operate concurrently once section 340(c) is read as the specific provision, and nothing in section 4111's text or legislative history shows an undebatable intent to supersede section 340(c). The court also properly distinguished Edward Fineman Co., which never considered section 340(c) and so is not authority on the point under Zamudio.

Authorities

  • relied: Roy Supply, Inc. v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051 — Section 340(c) imposes a one-year limitations period on depositor actions against a bank for payment of forged checks, running separately for each check from the account statement reporting it; Commercial Code section 4406 is an issue-preclusion statute consistent with section 340(c).
  • relied: Hays v. Wood (1979) 25 Cal.3d 772 — Implied repeal requires undebatable evidence of legislative intent that the later provision supersede the earlier one.
  • relied: In re Thierry S. (1977) 19 Cal.3d 727 — Implied repeal is found only when two statutes are irreconcilable, clearly repugnant, and incapable of concurrent operation.
  • relied: Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553 — The law shuns repeal by implication; courts must maintain the integrity of both statutes if possible.
  • relied: Estate of McDill (1975) 14 Cal.3d 831 — When interpreting seemingly inconsistent statutes, the court's goal is to harmonize the law.
  • relied: Fuentes v. Workers' Comp. Appeals Bd. (1976) 16 Cal.3d 1 — Courts should avoid an interpretation that requires one statute to be ignored.
  • relied: Voss v. Superior Court (1996) 46 Cal.App.4th 900 — The Legislature is presumed to be aware of existing statutory law and its judicial construction when it enacts a new statute.
  • relied: Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110 — Distinguished: Fineman applied section 4406 preclusion and noted section 4111 had run, but never considered section 340(c), so it is not authority that section 4111 governs forged-check claims.
  • relied: People v. Superior Court (Zamudio) (2000) 23 Cal.4th 183 — Cases are not authority for propositions not considered.
  • relied: Bialo v. Western Mutual Ins. Co. (2002) 95 Cal.App.4th 68 — Statutory interpretation presents a question of law reviewed de novo.

The appellate opinion: sound — The court framed the issue as a pure question of statutory interpretation, applied the correct harmonization and implied-repeal standards from controlling Supreme Court authority, and squarely answered plaintiffs' reliance on Fineman and the argument that section 4111 would be rendered meaningless. Although it cited no case for the specific-over-general canon it applied, that canon is settled and its application here is well supported by the text of section 340(c), the consistent one-year period in Commercial Code section 4406(f), and the Legislature's 2002 amendment leaving the forged-check provision intact.

How this analysis was made · dispute it

Opinion — McIntyre

Opinion

McINTYRE, J.

In this case we conclude that the one-year limitations period of Code of Civil Procedure section 340, subdivision (c) (section 340(c)), rather than the three-year limitations period of California Uniform Commercial Code section 4111, applies to claims by depositors against their bank for payment of forged checks written on the depositors’ accounts. (All references to the Commercial Code refer to the California Uniform Commercial Code.)

FACTUAL AND PROCEDURAL BACKGROUND

Chatzky and Associates (Chatzky) and nine other related companies (together plaintiffs), opened checking accounts at Bank of America (the Bank). *876On March 19, 2001, plaintiffs notified the Bank that some checks written on the accounts had been forged and Chatzky subsequently terminated the alleged forger, who was its bookkeeper and office manager. On March 19, 2002, plaintiffs sued the Bank, alleging causes of action for conversion (Com. Code, § 3420), breach of contract, violation of Commercial Code section 4103 and unfair business practices. The trial court subsequently granted the Bank’s motion for summary adjudication, concluding that recovery on checks dated February 2001 or earlier was barred by the one-year limitation period of section 340(c) because plaintiffs failed to bring their action within one year after being provided with bank statements listing the forged checks.

Plaintiffs sought writ review of the trial court’s order, requesting that the order be vacated and a new and different order be entered denying the motion. We issued an order to show cause why the relief sought should not be granted.

DISCUSSION

Issue Presented and Standard of Review

This appeal presents the legal question of whether the one-year limitations period of section 340(c) or the three-year limitations period of Commercial Code section 4111 applies to claims by depositors against their bank for the payment of forged checks written on the depositors’ accounts. Although this issue comes to us on a motion for summary adjudication, we need not engage in the traditional summary judgment analysis because the parties do not dispute the facts underlying application of the applicable limitation period.

The question presented involves statutory interpretation, which presents a question of law subject to de novo review on appeal. (Bialo v. Western Mutual Ins. Co. (2002) 95 Cal.App.4th 68, 76-77 [115 Cal.Rptr.2d 3].) Where, as here, we are called upon to interpret two seemingly inconsistent statutes to determine which applies under a particular set of facts, our goal is to harmonize the law (Estate of McDill (1975) 14 Cal.3d 831, 837 [122 Cal.Rptr. 754, 537 P.2d 874]) and avoid an interpretation that requires one statute to be ignored. (Fuentes v. Workers’ Comp. Appeals Bd. (1976) 16 Cal.3d 1, 7 [128 Cal.Rptr. 673, 547 P.2d 449].)

When two statutes concern the same subject matter and cannot be reconciled with each other, the more recent statute is deemed to have repealed the first statute by implication under the doctrine of implied repeal. (In re Thierry S. (1977) 19 Cal.3d 727, 744 [139 Cal.Rptr. 708, 566 P.2d 610].) However, the law shuns repeal by implication and, if possible, courts must maintain the integrity of both statutes. (Stop Youth Addiction, Inc. v. Lucky *877Stores, Inc. (1998) 17 Cal.4th 553, 569 [71 Cal.Rptr.2d 731, 950 P.2d 1086].) For this reason, the implied repeal doctrine is properly invoked only when (1) two potentially conflicting statutes cannot be harmonized and are “ ‘irreconcilable, clearly repugnant, and so inconsistent that the two cannot have concurrent operation . . .’ ” (In re Thierry S., supra, 19 Cal.3d at p. 744, quoting In re White (1969) 1 Cal.3d 207, 212 [81 Cal.Rptr. 780, 460 P.2d 980]) or (2) the later provision gives “undebatable evidence of an intent to supersede the earlier” provision. (Hays v. Wood (1979) 25 Cal.3d 772, 784 [160 Cal.Rptr. 102, 603 P.2d 19].) This high standard of conflict exists because it must be presumed that the Legislature had existing laws in mind when it enacted a new statute. (Voss v. Superior Court (1996) 46 Cal.App.4th 900, 925 [54 Cal.Rptr.2d 225].)

Analysis

Enacted in 1905, section 340(c) (formerly section 340(3)) imposes a one-year statute of limitations on certain actions, including actions “ ‘by a depositor against a bank for the payment of a forged or raised check.’ ” (Roy Supply, Inc. v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051, 1065 [46 Cal.Rptr.2d 309] (Roy), quoting Stats. 1905, ch. 258, § 2, pp. 231-232.) In 1929, the Legislature amended the statute to include actions by a depositor against a bank for the payment of checks bearing “ ‘. . . a forged or unauthorized indorsement.’ ” (Roy, supra, 39 Cal.App.4th at p. 1065, quoting Stats. 1929, ch. 518, § 1, p. 896.) The one-year limitations period applies independently with respect to each forged check and begins to run when the charge is reported to the depositor in a regular monthly account statement. (Roy, supra, 39 Cal.App.4th at p. 1074.)

Section 340(c) dovetails with Commercial Code section 4406, subdivision (f), which precludes a bank customer from asserting a claim against a bank based on a forged or unauthorized signature unless the customer discovers and reports the matter within one year after the bank made available a statement of account showing payment of the item, regardless of either the customer’s or the bank’s lack of care. This section acts as an issue-preclusion statute (rather than a statute of limitations) and claims that are not dependent upon proof of the forgery will not be precluded. (Roy, supra, 39 Cal.App.4th at pp. 1065-1066.) Code Comments to this section expressly indicate that the one-year preclusion period is consistent with the statute of limitation contained in section 340(c). (23B pt. 1 West’s Ann. Cal. U. Com. Code (2002 ed.) foll. § 4406, pp. 187-188.)

Effective in January 1993, Commercial Code section 4111 sets forth a general three-year limitation period for actions “to enforce an obligation, duty, or right” arising under Division 4 of the Commercial Code. (Stats. *8781992, ch. 914, § 17, p. 4339.) In adopting Commercial Code section 4111, the Legislature intended to correct an omission in the original division 4, which did not contain an express statute of limitations. (Sen. Com. on Judiciary, Sen. Bill No. 833 (1991-1992 Reg. Sess.) as amended Apr. 29, 1991.) Significantly, division 4 of the Commercial Code addresses not only the relationship of banks with their customers, but also the relations between different banks as to bank deposits and collections. (See Introductory Comment, 23B pt. 1 West’s Ann. Cal. U. Com. Code (2002 ed.) p. 25.) The legislative history for this section does not address section 340(c).

Plaintiffs contend that the one-year limitation period of section 340(c) was supplanted by the three-year limitation period of Commercial Code section 4111, arguing that any other conclusion renders Commercial Code section 4111 meaningless. Applying the previously mentioned principles of statutory construction to the present case, we conclude that the trial court properly granted summary adjudication based on expiration of the one-year limitation period of section 340(c). (While the Bank also moved for summary adjudication under Commercial Code section 4406, and plaintiffs conceded that their claims as to some of the checks at issue were precluded under this section, there is no need for us to address this section, based on our conclusion that the limitation period has expired. The motion also addressed other issues, which are not before us in this writ proceeding.)

Plaintiffs’ argument to the contrary requires us to conclude that the Legislature either ignored section 340(c) or intended to repeal this section when it enacted Commercial Code section 4111. However, we are required to harmonize these two seemingly inconsistent statutes, if possible, to avoid an interpretation that requires one statute to be ignored. We agree with the trial court’s conclusion that section 340(c) is the more specific statute because it expressly concerns the factual circumstances at issue—an action by a depositor against its bank for the payment of a forged check. (§ 340(c).) In contrast, Commercial Code section 4111 generally applies to other actions arising between banks or a bank and its customers “to enforce an obligation, duty, or right.” When so construed, the statutes work in harmony and do not contradict each other.

We reject plaintiffs’ suggestion that the Legislature impliedly repealed section 340(c) when it enacted Commercial Code section 4111, as neither of the two conditions necessary to implement the doctrine of implied repeal is met. As addressed above, the two statutes are not irreconcilable or clearly repugnant; rather, they can be harmonized so as to maintain the integrity of both statutes. Additionally, Commercial Code section 4111 does not provide “undebatable evidence of an intent to supersede the earlier” provision. (Hays v. Wood, supra, 25 Cal.3d at p. 784.) Nothing in Commercial *879Code section 4111 or its history establishes that the Legislature intended to repeal section 340(c), and we will not presume the existence of such intent in the absence of an express declaration. Because the Legislature is presumed to have been aware of the existing statutory law and its judicial construction, we assume that the Legislature was aware of section 340(c) when it enacted Commercial Code section 4111. (Voss v. Superior Court, supra, 46 Cal.App.4th at p. 925.)

Moreover, if the Legislature had wanted to abrogate application of section 340(c) in favor of the general limitation period of Commercial Code section 4111 where a depositor sues its bank for payment of a forged check, it had two opportunities to do so. First, when it enacted Commercial Code section 4111 and second, when it changed section 340(c) to remove personal injury and wrongful death actions, making these actions subject to a two-year limitation period. (Code Civ. Proc., § 335.1; see Stats. 2002, ch. 448, § 2.) The Legislature’s failure to act persuades us that it did not intend the general limitation period of Commercial Code section 4111 to apply to the specific situation at issue.

We reject plaintiffs’ assertion that the court in Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110 [78 Cal.Rptr. 478] held that all actions arising under division 4 are governed by the three-year limitation period of Commercial Code section 4111 and that claims based on forgeries are not excluded. In Fineman, a bank moved for summary adjudication on certain checks, contending recovery was barred by the issue-preclusion effect of Commercial Code section 4406 and the three-year limitation period of Commercial Code section 4111. (Fineman, supra, at p. 1115.) The Fineman court held that Commercial Code section 4406 precluded the plaintiff from pursuing its claim because it failed to report unauthorized signatures on the checks to its bank within the one-year period. (Fineman, supra, at p. 1125.) The court also noted that the three-year limitation period of Commercial Code section 4111 had expired. (Fineman, supra, at p. 1125.) Thus, there was no need for the bank to move for summary adjudication under section 340(c) (or for the court to discuss this statute) because the longer three-year limitations period under Commercial Code section 4111 had already expired. It is axiomatic that cases are not authority for propositions not considered. (People v. Superior Court (Zamudio) (2000) 23 Cal.4th 183, 198 [96 Cal.Rptr.2d 463, 999 P.2d 686].)

Roy, supra, 39 Cal.App.4th 1051, is also of little assistance in resolving the instant dispute. In Roy, the court applied Commercial Code section 4406, holding that depositors were precluded from asserting certain claims against its bank where they did not discover and notify the bank of forged checks within one year of receiving account statements and canceled checks. (Roy, *880supra, 39 Cal.App.4th at p. 1058.) As such, the Roy court had no need to address what limitation period applied. (Id. at p. 1073, fn. 25.) Despite this, Roy implicitly recognized the continuing application of section 340(c) by noting that the time period in which a customer must act under Commercial Code section 4406 begins to run at the same time that the limitation period of section 340(c) begins to run. (Roy, supra, 39 Cal.App.4th at p. 1073, fn. 25.)

In summary, we conclude that the trial court correctly applied the one-year limitation period of section 340(c) in this action. If the foregoing interpretation is not what the Legislature intended, then it is up to the Legislature to act.

DISPOSITION

The petition is denied. Our temporary stay of the proceedings is vacated. The Bank is entitled to costs in this writ proceeding.

Huffman, Acting P. L, and Aaron, L, concurred.

Petitioners’ petition for review by the Supreme Court was denied August 11, 2004. Chin, L, did not participate therein.

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