Michael and Theresa Annechino had a long-standing banking relationship with the Bank of Clark County. Before the events at issue, the Annechino had an approximately $1,150,000 balance at the Bank. Additionally, Mr. Annechino was an investor with the Bank. Shortly after the Federal Deposit Insurance Corporation (“FDIC”) increased its coverage for deposit accounts, the Annechinos’ contacted the Bank about depositing an additional $1,850,000, so long as it would be protected by the FDIC’s coverage. Before making the transfer, the Annechinos discussed the transfer with defendants Kelli Reynolds and Michael Worthy, both officers with the Bank. Both individuals advised the Annechinos that the Bank could restructure their accounts to provide a total of $3,000,000 in FDIC coverage. As a result, the Annechinos transferred an additional $1,850,000 to the Bank, giving them a $3,000,000 balance, spread across seven accounts. At the time of transfer, Mr. Annechino requested that one of their accounts be placed in the name of the family trust. This was never done.

Subsequently, the Bank went into involuntary receivership and the FDIC was appointed receiver. The FDIC asserted that nearly $500,000 of the account funds was uninsured. According to the defendants, the cause of the insufficient coverage was that in an attempt to fulfill Mr. Annechino’s request that one of his accounts be in the name of the family trust, someone at the Bank mistakenly transferred the wrong account. And neither the Bank nor the Annechinos discovered the discrepancy. There was no evidence produced of malfeasance or self-dealing.

The Annechinos then brought suit against Worthy, Reynolds, another Bank employee, the Bank and related entities. The Annechinos then moved for partial summary judgment against Reynolds and Worthy. Reynolds, Worthy, and the other bank employee filed a cross motion for partial summary judgment, and asserted that they could not be held personally liable for the Annechinos’ loss. The trial court denied the Annechinos’ motion and granted the employees’ motion, finding the Bank’s employees not personally liable. The issue of the Bank’s liability was not before the trial court. Division Two of the Court of Appeals affirmed, also finding that the Annechinos failed to establish that the bank employees were personally liable

The Washington Supreme Court, affirmed:

  • Generally, participants in a business transaction deal at arm’s length; however, Washington law will impose a duty on such parties in certain, limited circumstances.
  • Agents and employees, such as Worthy and Reynolds, are not personally liable for quasi-fiduciary duties that may arise when dealing on behalf of a disclosed principal, so long as the agent does not owe an independent duty to the third party.

In affirming the Court of Appeals, the Court repeatedly noted that whether the Bank owed the Annechinos a duty was not before the court.

Read the October 18, 2012 decision