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Click here for the full text of this decision FACTS:Duong & Associates and Hanh H. Duong sued Prince Dao, a former employee, for fraudulently endorsing 28 checks made payable to Duong and Duong’s clients, and one check drawn on Duong’s account made payable to Spinal Care Clinic. Dao allegedly deposited the checks into a Bank One account with the name “Law Office Legal and Translation Services.” Duong also sued Bank One and Angie Nguyen, an assistant branch manager, for accepting the checks and depositing them. As part of their requests for admission Bank One and Nguyen asked Duong to admit that Dao “had authority to supply information determining the names or addresses of payees of instruments to be issued in your name.” Duong responded that he could not comply with the request because the phrase “supply information determining” was vague. He said he was waiving the question without admitting to it. Bank One and Nguyen moved for summary judgment. The asserted that they proved as a matter of law that Dao was a faithless employee under Bus. & Comm. Code �3.405. The trial court granted the motion. HOLDING:Affirmed in part; reversed and remanded in part. The court explains that �3.405 adopts a system of comparative negligence between an employer who grants an employee responsibility with respect to an instrument and a bank. The initial risk of loss is on the employer based on the belief that the employer is in a far better position to avoid the loss by care in choosing employees, in supervising them, and in adopting other measures to prevent forged endorsements on instruments payable to the employer or fraud in the issuance of instruments in the name of the employer. But, such an employer can shift part of the responsibility to a bank to the extent it can prove that the bank’s failure to exercise ordinary care contributed to the employer’s loss. Duong insists that there is no evidence that Dao was entrusted with responsibility because Duong did not admit to such a statement in the requests for admission. He offered only a qualified admission, and the trial court would not let him substitute a flat-out denial, he argues. The court, however, does not find the unanswered discovery question to be vague, as Duong claimed below. It tracks the language of �3.405. The court also notes that Duong did not answer other questions, yet offered a qualified admission in response to this question. The court adds that the admission is not a legal conclusion. The underlying question asks only if the facts of the case fit the definition of one of the types of responsibility set forth in the statute. Whether Dao actually has responsibility remains a question of fact until the question is answered or admitted. Duong’s admission was factual in nature. Moreover, the trial court did not abuse its discretion in disallowing Duong to substitute a denial to the particular questions. The court, therefore, rules that Duong has not shown that the trial court impermissibly considered Duong’s admission as summary judgment evidence. The court, however, rejects Bank One’s and Nguyen’s argument that the admission, which was in reference to the one check drawn on Duong’s account to the Spinal Care Clinic, extends to an admission as to all remaining checks. Under �3.405(b), Duong’s admission proves only that Dao had responsibility with respect to the check that was issued in Duong’s name to Spinal Care Clinic. Therefore, summary judgment was proper with respect to that check only and not with respect to the remaining checks, which were made payable to Duong and others, not issued in Duong’s name. OPINION:Terrie Livingston, J.; Livingston, Gardner and McCoy, JJ.

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