## Facts

- Amy Powers and Michael D’Ambrosia held a joint-and-survivor mutual fund investment account with American Express Financial Advisors, Inc. (American Express).
- The account was funded primarily (and undisputedly) by D’Ambrosia’s deposits, and Powers did not report the account’s income or losses on her taxes.
- The investment application required signatures of both account holders for any redemption request over $50,000.
- After Powers and D’Ambrosia ended their relationship, D’Ambrosia asked American Express to place a freeze on the account.
- On October 16, 1997, D’Ambrosia faxed American Express instructions—signed only by him—requesting redemption of the investments and transfer of the proceeds to a joint bank account held by both Powers and D’Ambrosia.
- Attached to the fax was a September 26, 1997 letter addressed to American Express that appeared to be signed by both Powers and D’Ambrosia, appeared notarized, and purported to release the freeze and direct transfer of the proceeds to a Prudential Securities account.
- An American Express employee compared Powers’s purported signature on the September letter to an exemplar signature and concluded it matched.
- American Express processed the redemption and transferred more than $86,000 to the joint bank account, consistent with the October 16 instructions.
- D’Ambrosia withdrew the funds from the joint bank account and disappeared.
- It was later discovered that Powers’s signature on the September 26 letter was forged.
- Powers sued American Express (and D’Ambrosia as a third-party defendant) seeking to recover the loss, including under Md. Code Ann., Com. Law § 8-507(b) (UCC Article 8). The case was removed to federal court, and the parties filed cross-motions for summary judgment.

## Issues

1. Whether American Express, as a securities intermediary, was liable to Powers under Md. Code Ann., Com. Law § 8-507(b) for transferring joint-account assets based on instructions and supporting documents later shown to include a forged signature.
2. Whether American Express’s reliance on a facially regular, apparently notarized authorization and internal signature comparison defeated Powers’s claim as a matter of law.
3. Whether either party was entitled to summary judgment on Powers’s Article 8 theory (and related theories) on the undisputed record.

## Decision

- The court denied Powers’s motion for summary judgment.
- The court granted American Express’s motion for summary judgment.
- The court held that Powers did not establish that American Express breached duties owed to her under § 8-507(b) on these facts, where the intermediary acted on documents that appeared valid and had no proven actual knowledge that Powers’s signature was forged.
- Judgment was entered for American Express on the claims addressed at summary judgment.

## Legal Principles

- Summary judgment is appropriate when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56.
- Md. Code Ann., Com. Law § 8-507(b) governs a securities intermediary’s liability to its entitlement holder in connection with transfers made in response to entitlement orders.
- When a securities intermediary receives instructions and supporting documentation that are facially regular (including apparently proper signatures and notarization) and lacks proven actual knowledge of a forgery or lack of authority, honoring the instruction does not, without more, establish intermediary liability under § 8-507(b).
- In a joint-account setting, loss caused by one joint owner’s fraud is not automatically shifted to the intermediary when the intermediary processes a transaction based on documentation that reasonably appears to satisfy the account’s authorization requirements.

## Conclusion

The court ruled that American Express was not liable under Maryland UCC § 8-507(b) for redeeming and transferring joint investment assets where it acted on facially valid, apparently notarized authorizations and had no proven actual knowledge that Powers’s signature had been forged, and it therefore granted summary judgment for American Express and denied Powers’s motion.


Powers v. American Express Advisors, Inc., 82 F. Supp. 2d 448 (2000)