Court Examines Bank's Duty to Elderly Customers
by Sam Ott
Does a bank owe a duty of care to an elderly customer? The Rhode Island Supreme Court recently considered the question in the case of Santucci v. Citizens Bank of Rhode Island.
The co-guardians of an elderly bank customer who increased the amount of her monthly withdrawals from her certificate of deposit account from $300 to over $3,000 filed the case against the bank. The guardians, who were appointed after the withdrawals occurred, contended that a drug abuser who accompanied the customer to the bank stole the funds.
They filed a multi-count complaint that included negligence, breach of contract and breach of fiduciary duty. The bank's motion for summary judgment was granted by the superior court. The plaintiffs appealed.
The Court reviewed each of the counts raised by the plaintiffs. It noted the general rule is a defendant cannot be liable under a negligence theory unless the defendant owes a duty to the plaintiff. Several factors may be considered in determining whether or not a duty exists, including the foreseeability and likelihood of injury to the plaintiff, the connection between the defendant's conduct and the injury and the consequences to the defendant and to the community of imposing a duty of care on the defendant. The Court determined that the facts presented by the plaintiffs did not trigger a duty of care on the part of the bank. In addition it stated "unless it is specifically agreed otherwise, a banking institution and its depositors stand in the debtor creditor relationship."
The plaintiffs argued that the bank breached its contract with the customer by releasing the funds in her account. The Court noted no evidence was presented that indicated any withdrawal was made without the customer's authorization and all withdrawals in question were made prior to her being declared incompetent. The plaintiffs contended the bank had the right to refuse the customer's requests under the circumstances and the bank was negligent when it did not exercise the right. After review of the certificate of deposit account agreement, the Court determined the account holder could make withdrawals before maturity only if the bank agreed to the withdrawal. The agreement, however, did not specify the circumstances that allowed the bank to refuse a customer's request to withdraw funds and the bank was not obligated to inquire into the reason for any withdrawal. The plaintiffs attempted to introduce as evidence an employee-training manual that allegedly established a duty of care. The Court noted the bank had not adopted the manual and only received a copy after the case was filed.
The last contention of the plaintiffs was that a fiduciary relationship existed between the customer and the bank and the bank breached the fiduciary duty it owed to the customer. The Court held a depositor relationship does not in and of itself give rise to a fiduciary relationship. The plaintiffs had the burden of showing such a relationship existed and failed to do so. The Supreme Court affirmed the judgment of the superior court, in favor of the bank.
Summary
The Supreme Court of Rhode Island held that the establishment of a deposit relationship between a bank and its customer did not create a duty of care to an elderly depositor to investigate and report alleged suspected financial exploitation. The Court held the bank could not be liable under a negligence theory since no duty was owed to the plaintiff. The bank apparently did not have any knowledge of any irregularity except the customer was making progressively larger withdrawals from her account. The Court did not rule whether or not the adoption by the bank of an employee training manual that addressed the issue could have established a duty of care, but it dangled that possibility . . .
Copyright, 2002, Bankers Online. First published on BankersOnline.com 7/19/02.
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