PlainsCapital/Hillary Court Date Set'Reasonable Security' Case to be Heard in Texas on March 7, 2011 A judge in Texas has set the date for the legal showdown between PlainsCapital Bank and its business customer Hillary Machinery: March 7, 2011.
This case, which pits a bank against its business customer, began when PlainsCapital, a $4.4 billion institution headquartered in Dallas, filed suit against Hillary Machinery Inc., following a series of incidents that began last November, when cyber thieves made a series of ACH and wire transactions from Hillary's bank account, totaling $801,495.
The bank was able to retrieve about $600,000, but when Hillary subsequently sent a letter requesting that the bank refund the remaining $200,000, PlainsCapital responded by filing a lawsuit in U.S. District Court for the Eastern District of Texas. The lawsuit requests that the court certify that PlainsCapital's security was reasonable and that the bank processed the wire transfers in good faith. Hillary Machinery filed a countersuit in February, saying it would not be bullied by the bank, and has since moved its business accounts to another bank in Texas, citing security as a factor.
The judge presiding over the case, Amos Mazzant of US District Court Eastern District of Texas, signed the scheduling order with a trial date set for March 7, 2011.
The reaction to the timeline by Hillary Machinery is positive. Troy Owen, a Hillary Machinery partner, says this delay allows the company to continue raising awareness with small businesses, financial institutions, banking associations and the IT security industry. "There are still a lot of small businesses out there that bank at smaller institutions and don't know they aren't well protected because their banks are just not required to," Owen says.
Current regulations, including Regulation E and Regulation Z, require financial institutions to reimburse consumers that fall victim to fraud, but financial institutions are not required to do the same for commercial banking customers. The PlainsCapital Bank case is one of at least two similar cases pending in courts across the country, but it is the only case where the bank sued its customer.