Banks’ duties to customers who have accounts are carefully set forth in contract and, to some extent, are governed by state and federal laws. Courts and juries sometimes write their own rules when they decide disputes between banks and customers, and the opinions that arise from judicial cases can add confusion. In Highlands Capital Partners v. Bank of the West the issue is whether a bank owes a heightened duty of care to limited partners when the general partner (later convicted) defrauds them by conducting transactions that are properly authorized.

In California there are good published decisions that protect banks from being treated as guarantors against fraud losses. CBA filed a letter with the California Appellate Court urging the court to follow these precedents. CBA’s letter was ably written pro bono by Jan Chilton, partner of the law firm of Severson Werson, and an advocate who has been involved in some of those important cases.