January 27, 2011
Bank May Be Liable For Attorney Thefts
The New York Lawyers' Fund for Client Protection filed a subrogation action against JP Morgan Chase Bank seeking to recover about $1 million paid to 14 claimants who were victims of an attorney's misappropriation of fiduciary funds. The suit alleges that the bank retained the attorney and his firm to close mortgage loans and that reasonable inspections and procedures would have prevented his check-kiting scheme.
The bank appealed the denial of its motion to dismiss for a purported failure to identify claimants and losses. The New York Appellate Division for the Third Judicial Department affirmed the denial of the motion, concluding that the original and amended complaint provided notice to the bank. The amended complaint was properly considered as it was a "mere expansion" of the original allegations. (Mike Frisch)
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