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Frost National Bank v. Heafner


Frost National Bank f/k/a National Bank of Commerce (Frost), the defendant below and appellant here, appeals from a jury verdict in favor of Mary Heafner, the plaintiff below and appellee here. We affirm in part and reverse in part.

Factual Background

Heafner is a Houston attorney who maintains several bank accounts in the Houston area. Heafner maintained a personal money market account at Frost and her firm's operating account at Bank United.

In 1991, Heafner represented Duane Lavely in several lawsuits. Because he could not always afford to pay her, she allowed him to run errands, do yard work, and make repairs on her office and rental property. In 1992, Heafner taught Lavely how to serve process and subpoenas, skip trace, and use the computer. Lavely was allowed to use her office equipment in his new business. In return, he occasionally answered her telephones and helped with other errands around her office.

When Heafner later became too sick to go into the office, she would call Lavely at the office, review bills with him, and authorize him to pay certain bills by signing her signature to the Bank United checks. She did not authorize Lavely to sign her name to checks on the Frost account or any other bank account.

When Heafner returned to work, she discovered discrepancies in her Bank United operating account. She asked Lavely to vacate her offices. Heafner met with Bank United to discuss the discrepancies, and she distinguished the checks Lavely was authorized to write for her office expenses from those he wrote for his own use. Heafner signed forgery affidavits on the checks Lavely wrote for himself, but she did not sign forgery affidavits on the checks he wrote for her benefit. Despite the forgeries, Heafner decided not to sue Bank United, because she thought it would be unfair to hold Bank United responsible for determining which checks she had actually given Lavely authority to sign on her behalf.

Heafner also discovered that Lavely forged her signature on two $5,000 checks on her Frost account, which he deposited into Heafner's Bank United account over a forged endorsement. Heafner reported the forgeries to Frost, where she met with Tina Veserra, head of Frost security. Heafner told Veserra that the signature and endorsement on both $5,000 checks were forged. Veserra agreed the signatures were forgeries. Heafner admitted that both $5,000 checks were deposited into her Bank United account.

Heafner sued Frost, alleging the following causes of actions:

1. Breach of contract and violation of the Texas Deceptive Trade Practices Act, alleging Frost breached the deposit account agreement and violated the warranties contained in the agreement.

2. Negligence, alleging Frost breached its duty of care by allowing $10,000 to be withdrawn from her money market account, not comparing the signatures on the checks to her signature on the account signature card, not following its own rules and policies, and not exercising ordinary care to determine whether the checks were authorized transactions.

3. Spoilation of evidence, alleging Frost intentionally or negligently spoiled evidence of the forgeries and interfered with a prospective civil action on Heafner's part against Lavely.

4. Breach of the duty of good faith, alleging, among things, that Frost did not inform her of its investigation into the forgeries and did not cooperate with her in pursuing criminal charges against Lavely.

Heafner asked for actual and punitive damages.

The jury found that Frost knowingly engaged in false, misleading, or deceptive acts or practices, committed

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