Ohio State Bur., Work. v. Key Bk. Nat'l.

Citations: 748 N.E.2d 1189; 140 Ohio App. 3d 698; 2000 Ohio App. LEXIS 6140Docket: No. 00AP-404

Court: Ohio Court of Appeals; December 25, 2000; Ohio; State Appellate Court

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On October 1, 1986, Doehler-Jarvis Division of Farley Metals, Inc. opened a $1.375 million nonrenewable certificate of deposit (CD) with The Toledo Trust Company as security for workers' compensation claims. The original CD, along with an "Assignment" and "Security Agreement," was delivered to the Ohio State Bureau of Workers' Compensation (BWC) without notifying Key Bank of BWC's claim. The CD matured on October 1, 1987, but BWC did not renew it. Key Bank paid the CD to Farley in two installments shortly after maturity. Following Farley's default on its obligations, BWC paid claims from the surplus fund and in April 1998 demanded payment from Key Bank. Key Bank denied the request, leading BWC to file a complaint on May 12, 1998, claiming entitlement to the CD proceeds. Key Bank moved for summary judgment, citing a six-year statute of limitations under R.C. 1109.69(F), arguing BWC's claim was time-barred. Conversely, BWC argued its claim was governed by R.C. 1303.16(E) and was not time-barred since the demand was made in April 1998. The trial court ruled on March 3, 2000, that BWC's claim was barred by both statutes of limitations and dismissed the case with prejudice on March 10, 2000. BWC appealed, contending that the trial court misapplied the statute of limitations and failed to evaluate the merits of its claims. Summary judgment is appropriate only if there is no genuine issue of material fact, the moving party is entitled to judgment as a matter of law, and reasonable minds can only reach a conclusion adverse to the nonmoving party.

In Tokles Son, Inc. v. Midwestern Indemn. Co., the Ohio Supreme Court establishes that appellate courts review summary judgment motions using the same standard as trial courts, without deference to the trial court's decision. Summary judgment is a means to expedite litigation, requiring cautious application with doubts resolved in favor of the nonmoving party. The Bureau of Workers' Compensation (BWC) argued that the trial court incorrectly granted summary judgment to Key Bank based on statute of limitations, specifically R.C. 1109.69(F) and 1303.16(E). R.C. 1109.69 outlines the required retention periods for bank records, generally mandating a six-year retention for various types of records, including those related to demand and time deposit accounts. Key Bank had no obligation to keep records related to a twelve-month certificate of deposit (CD) beyond six years post-maturity, which expired on October 1, 1992, or for six years post-final payment, which expired on October 6, 1993. Therefore, the BWC's claim was time-barred, affirming the trial court's ruling.

In Abraham v. Nat'l City Bank Corp. (1990), the Ohio Supreme Court ruled that claims against a bank were untimely under R.C. 1101.08(F), now R.C. 1109.69(F). Abraham opened a passbook savings account in 1969 and lost the passbook in 1972 without notifying the bank. The last recorded balance was from September 30, 1972, and the account was closed before January 1977, though the closure's details were unclear. After finding the passbook in 1985, Abraham sought payment from the bank in 1986, which was refused, leading to her lawsuit. The court determined her claim was barred because the bank was only required to retain records for six years, until January 1983, after which it could destroy them under R.C. 1101.08(E). Abraham argued that her case did not rely on the bank's internal records, but the court emphasized that such records were essential for the bank's defense. Consequently, the court dismissed her claim as it was filed three and a half years after the record retention period expired. The case's principles were echoed in Bucheit Int'l, Inc. v. Ameritrust Co. N.A. (1997), where the Sixth Circuit ruled similarly, affirming that claims were also barred under R.C. 1109.69(F) due to the expiration of the relevant documentation retention period.

Bucheit contended that R.C. 1109.69(F) did not apply to his claim, asserting that the statute only prohibits claims if records are actually destroyed under its provision, and there was no evidence of such destruction. However, the court ruled that the statute does not necessitate actual destruction of documents. It clarified that R.C. 1109.69 specifies the record retention period for banks, and any claims related to those records must be initiated within that time frame. Bucheit's claim was filed beyond this period, thus barred by the statute of limitations. 

The court emphasized that since the letter of credit and supporting documents are classified as bank records under Ohio Rev. Code Ann. 1109.69(A)(2)(c), they must be retained for six years, after which destruction is permissible (R.C. 1109.69(E)). Consequently, any action dependent on these records, including Bucheit's claim against Key Bank regarding a certificate of deposit (CD), had to be filed within that six-year limit, expiring on October 6, 1993. 

Additionally, the court addressed R.C. 1303.16(E), which pertains only to negotiable instruments. It noted that the CD did not qualify as a negotiable instrument as defined by R.C. 1303.03(D), due to the conspicuous statement of "nonnegotiable" on its face. Even if the CD were considered negotiable, R.C. 1303.16(E) would still bar BWC's claim since the action must be brought within six years after a demand for payment. Overall, the trial court's decision to dismiss BWC's claim as time-barred was upheld.

BWC claims that only it, as the party entitled to enforce the instrument under R.C. 1303.16(E), could trigger the statute of limitations by making a demand for payment, which BWC argues was made in April 1998. However, the statute states that the limitations period begins when a demand for payment is effective and the due date has passed, without referencing a specific party's entitlement. The court finds BWC's interpretation unsupported, emphasizing that Farley, who opened the CD in 1986, demanded and received payment shortly after the CD matured in October 1987. Key Bank's decision to pay Farley was reasonable, as the CD was in his name, and BWC did not inform Key Bank of any assignment or claim to the funds. Thus, the court concludes that the six-year statute of limitations began in October 1987 and expired in October 1993, well before BWC's claim. The court acknowledges the harshness of this outcome but attributes it to BWC's inaction in notifying Key Bank. Consequently, BWC's assignment of error is overruled, and the judgment of the Franklin County Court of Common Pleas is affirmed. Key Bank is referred to as such, regardless of its historical name changes, and BWC is identified without distinction from the Industrial Commission, which it replaced as plaintiff.