Statutory Interpretation – Uniform Fiduciaries Act

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WI Supreme Court

Case Name: Koss Corporation v. Park Bank, et al.

Case No.: 2019 WI 7

Focus: Statutory Interpretation – Uniform Fiduciaries Act

We review a published decision of the court of appeals that affirmed an order of the circuit court granting summary judgment dismissing Koss Corporation’s Uniform Fiduciaries Act (UFA) claim against Park Bank. Our review centers on two related issues: First, consistent with the UFA, we interpret and apply the terms “good faith” as set out in Wis. Stat. § 112.01(1)(c) and “bad faith” employed in § 112.01(9); and second, we determine whether summary judgment dismissing Koss Corporation’s claim was properly granted.

We conclude Wis. Stat. § 112.01(1)(c) describes the term “good faith” as honest bank acts, even when negligently done, and consistent with the majority of jurisdictions’ interpretations of the UFA, “bad faith” is inconsistent with the statutory criteria for “good faith.” Therefore, bad faith pursuant to § 112.01(9), which is an intentional tort, may be shown by acts evidencing bank dishonesty such as a bank willfully failing to further investigate compelling and obvious known facts suggesting fiduciary misconduct because of a deliberate desire to evade knowledge of fiduciary misconduct.

We further conclude that given the allegations that Koss Corporation asserts in regard to its claim that Park Bank is liable for the intentional tort of bad faith, no proof has been proffered of bank dishonesty wherein Park Bank willfully failed to further investigate compelling and obvious known facts suggesting fiduciary misconduct because of a deliberate desire to evade knowledge of fiduciary misconduct.

Accordingly, we affirm the court of appeals’ affirmance of the circuit court’s dismissal of Koss Corporation’s claim that Park Bank acted in bad faith in processing the transactions that Sujata Sachdeva initiated. Because we conclude Park Bank is not liable to Koss Corporation, we also affirm the dismissal of Park Bank’s third-party claims.

Affirmed

Concur: A.W. BRADLEY, J. concurs, joined by ABRAHAMSON, J., and DALLET, J. (opinion filed).

Dissent: KELLY, J. dissents joined by R.G. BRADLEY, J. (opinion filed).

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.