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Schrock v. Amegy Bank of Texas, N.A.

Court of Appeals of Texas, First District

December 19, 2019

ALAN SCHROCK, Appellant
v.
AMEGY BANK OF TEXAS, N.A., AND ZB, N.A. D/B/A AMEGY BANK, Appellees

          On Appeal from the 113th District Court Harris County, Texas Trial Court Case No. 2016-85775

          Panel consists of Justices Keyes, Goodman, and Countiss.

          MEMORANDUM OPINION

          GORDON GOODMAN, JUSTICE

         This is an appeal from the trial court's summary judgment dismissing Alan Schrock's claims against Amegy Bank of Texas, N.A. and ZB, N.A. d/b/a Amegy Bank (collectively, "Amegy"). After many years of serving as Schrock's bank, Amegy began to suspect that Schrock might be structuring his cash deposits to avoid federal reporting requirements. Amegy notified Schrock of its concerns, warned him that the continued appearance of structuring could result in the closure of his accounts, and urged him to contact his account manager to discuss the matter further. Schrock did not contact his account manager and continued to make the concerning deposits. As a result, Amegy froze the accounts and sent Schrock notice that the accounts would be permanently closed in 30 days.

         The freeze to Schrock's accounts disrupted his professional and personal life, and he sued Amegy for breach of contract and negligence. Both claims were predicated on Schrock's contention that Amegy violated the parties' Deposit Agreement by freezing his accounts without giving him prior notice. But the Deposit Agreement expressly permits Amegy to freeze an account before giving notice when, as here, Amegy suspects fraudulent activity on the account. Because Amegy had the right to freeze Schrock's accounts before giving him notice, Schrock's claims fail as a matter of law. Therefore, we affirm.

         Factual Background

         This case arises from Amegy's decision to freeze and then close the accounts of one of its longtime depositors, Alan Schrock. Schrock is a landlord who owns various properties in and around Baytown, Texas. For many years, Schrock had two bank accounts with Amegy: a checking account and a savings account. Both accounts were governed by a Deposit Agreement. As relevant here, Paragraph 2 granted Amegy the right to close the accounts upon reasonable notice to Schrock:

We may also close this account at any time upon reasonable notice to you and tender of the account balance personally, by mail, or by electronic transfer. Items presented for payment after the account is closed may be dishonored. Reasonable notice depends on the circumstances, and in some cases it might be reasonable for us to give you notice after the change or account closure becomes effective. For instance, if we suspect fraudulent activity with respect to your account, or upon any refusal to provide us additional information requested about you, your account or your transactions, we may immediately freeze or close your account and then give you notice.

         In 2016, Amegy noticed that Schrock was making multiple cash deposits and grew concerned that Schrock might be structuring his deposits to avoid federal reporting requirements. To safeguard the financial industry from money laundering and other financial crime, federal law requires financial institutions to report currency transactions over $10, 000 as well as multiple currency transactions that aggregate to be over $10, 000 in a single day. Federal law makes it a crime to structure transactions for the purpose of evading these reporting requirements.

         Amegy sent Schrock a letter, dated March 2, 2016, notifying him that his cash deposits potentially violated federal reporting requirements. The letter began by explaining Amegy's currency transaction reporting obligations under federal law and Amegy's obligation to ensure that cash transactions with the bank are not structured to avoid reporting requirements:

As part of the Bank Secrecy Act (BSA) of 1970, Amegy Bank and other U.S. financial institutions are required to assist government agencies in detecting and preventing money laundering. Legally, Amegy Bank must keep records of large customer cash transactions, presently amounts in excess of $10, 000, 00, and must monitor all cash transactions to ensure they are not purposely "structured" in amounts less than $10, 000.00 to avoid the reporting requirements.

         The letter asked Schrock to conduct his "cash transactions in a manner that will avoid future conflicts with BSA reporting requirements." The letter warned that future conflicts with reporting requirements could result in Amegy closing his account. And the letter urged Schrock to contact his account relationship manager, Crystal Stevenson, to discuss the requirements as they related to Schrock's banking activity.

         After he received the letter, Schrock contacted his local branch customer service representative, Augustine St. Romain, who told Schrock that he "had nothing to worry about because the bank sends out these types of letters all the time." However, Schrock did not contact Stevenson, and he continued to make multiple cash deposits.

         Nearly five months later, Amegy sent Schrock a second letter, dated July 26, 2016, and titled "Second Notification," notifying him once again that his cash deposits potentially violated federal reporting requirements. The letter asked Schrock to "consider conducting [his] cash transactions in a manner that will avoid any future conflicts with [the] reporting requirements." The letter warned that continued conflicts, including "the appearance of 'structuring'," could result in the closure of Schrock's accounts. And the letter urged Schrock ...


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