A client whose attorney misappropriated funds from a client account at a bank could not hold the bank liable, the Supreme Judicial Court has ruled.
The client argued that the bank should have recognized that the attorney, Morris M. Goldings, was engaged in the misappropriation of client funds based on his unauthorized transfer of $200,000 of his law firm’s IOLTA funds in late 1999 or early 2000, many months before the client wired the $5 million to Goldings’s client account.
“Where the summary judgment record does not reflect whether the law firm’s clients suffered any loss from this unauthorized transfer, this information alone is insufficient to support a reasonable inference that the bank knew that Goldings was using his client account at the bank in July, 2000, to misappropriate funds from his clients,” Justice Ralph D. Gants replied for a unanimous court. “Without such knowledge, the bank did not have a duty to take reasonable steps to prevent the misappropriation.”
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Bank not liable for lawyer’s theft from account