Counihan v. Webster Bank
A chief executive officer may not possess standing individually, as a corporate officer and employee, to allege that a bank breached its contract when it permitted a corporate officer to direct company funds into his personal account. Michael Counihan, an officer of BSC, or Banner Spring Corp., allegedly took possession of checks issued to BSC, presented the checks to Webster Bank and directed the bank to cash them or to deposit them into his personal account. BSC and Counihan's former wife, who was chief executive officer and the majority shareholder of BSC, sued Counihan and Webster Bank. The plaintiffs' amended complaint alleged breach of contract, negligence, conversion and fraud. The bank moved for summary judgment and claimed Counihan's former wife lacked standing to sue the bank in her personally capacity. The plaintiffs objected that as a corporate officer and an employee, Counihan's wife was a direct beneficiary of income to BSC that Counihan allegedly embezzled. The plaintiffs' complaint alleged that the bank failed to ensure that BSC checks were credited to BSC's account. It did not allege injury to the individual bank account of Counihan's former wife. The court found that Counihan's former wife lacked standing to assert claims against the bank in her individual capacity. A three-year statute of limitations barred claims for breach of the duty of good faith, aiding and abetting, negligence and unfair trade practices, because the bank did not negotiate BSC checks for Counihan after Oct. 28, 2007, the plaintiffs did not file suit until April 21, 2011, and the plaintiffs did not allege that the bank engaged in a continuing course of conduct or fraudulent concealment. Counts that alleged fraud, negligence and conversion by Counihan and breach of contract by the bank survived.