Facts

Plaintiff Zarate opened up an IRA account with defendant First Imperial Credit Union in July 2001 in the amount of $108,776. Plaintiff contended thereafter, on Sept. 17, 2001, the plaintiff's wife, MaryJane Zarate, submitted a document to the Credit Union. Plaintiff maintained that the document was submitted without his permission. MaryJane maintained that she had plaintiff's permission.

Thereafter, beginning in October 2001 through August 2004, the cross-defendant MaryJane Zarate withdrew varying amounts of cash from the IRA account in a total amount of $95,227.72. Cross-Defendant MaryJane Zarate indicated that she had plaintiff Zarate's permission to make the withdrawals. MaryJane Zarate also maintained that she spent most of the money paying community property debts. According to the Credit Union, MaryJane submitted an account agreement purporting to bear Arnaldo Zarate's signature and purporting to add her to the account.

Statements were sent out quarterly to the plaintiff at a post office box, but plaintiff maintained that MaryJane Zarate intercepted the statements and destroyed those statements. According to the Credit Union, Mr. Zarate admitted the statements were sent to the proper post office box.

Plaintiff sued First Imperial Credit Union for breach of contract, negligence, breach of fiduciary duty, and aiding and abetting the tort of another. The Credit Union filed a cross-complaint for indemnity against MaryJane Zarate. Mr. Zarate and MaryJane Zarate thereafter divorced.

PLAINTIFF'S CONTENTIONS:
Plaintiff asserted First Imperial Credit Union violated banking regulations and the IRA federal statute creating IRA accounts by adding another person onto the account when only one person can be the owner of an IRA account. Plaintiff contended the Credit Union went ahead and added plaintiff's name onto the account without notification to the plaintiff.

DEFENDANT'S CONTENTIONS:
MaryJane Zarate indicated she had the verbal permission of plaintiff to make withdrawals and that the money was spent on community property debts. First Imperial Credit Union maintained that MaryJane submitted a signature card changing the account to a joint account and that plaintiff had knowledge of the withdrawals. His damages were limited because of the testimony of MaryJane Zarate that plaintiff benefited from the withdrawals by the paying off of community property debts with the money withdrawn.

The Credit Union also raised defenses under Commercial Code Section 4406, the account agreement and Arnaldo Zarate's comparative fault.

Settlement Discussions

According to plaintiff, at mediation the defendant and cross-defendant indicated that they were willing to come up with a joint settlement offer of approximately $40,000 to $45,000. According to the Credit Union, settlement discussions began with a demand of $150,000. The Credit Union's last offer, prior to settlement, was $50,000.

Damages

Plaintiff Arnaldo Zarate maintained that before he discovered the unlawful withdrawals, MaryJane Zarate had withdrawn approximately $90,000 that she spent and that was not recoverable. Plaintiff was also making a claim for non-economic damages in an unspecified amount and a claim for punitive damages against First Imperial Credit Union for aiding and abetting the tort of another.

Result

Global settlement of this action as well as the dissolution action between Arnaldo Zarate and MaryJane Zarate. The case settled with First Imperial Credit Union paying the plaintiff $75,000. In addition to the settlement proceeds MaryJane Zarate agreed not to make any claim of community property against these settlement proceeds or the leftover funds in the IRA account at First Imperial Credit Union, nor to make any community property claim on settlement proceeds Arnaldo Zarate received as a result of a wrongful termination settlement from his former employer. Arnaldo Zarate agreed to not make any claim on the pension of MaryJane Zarate from her employer. Arnaldo Zarate and MaryJane Zarate also agreed to split any tax liability as a result of the withdrawals from the IRA account at First Imperial Credit Union for the year 2004. First Imperial Crdit Union and MaryJane Zarate also reached an agreement on the cross-complaint whereby MaryJane Zarate would reimburse the Credit Union in part for $55,000 of the $75,000 in settlement proceeds the Credit Union paid to the plaintiff Arnaldo Zarate.

Other Information

The settlement was reached approximately two and one half weeks before trial was set to commence. At the time of settlement there was a summary judgment motion that had been taken under submission by the Court on the plaintiff's fifth cause of action against the Credit Union for aiding and abetting the tort of another. According to cross-defendant MaryJane, under the terms of the settlement agreement there was no admission of any fraudulent conduct on the part of MaryJane.