-RZ Melika, Inc. et al v. Bank of America Corporation et al, No. 2:2011cv00825 - Document 16 (C.D. Cal. 2011)
Court Description: ORDER Denying 4 Motion to Dismiss in Part and Granting in Part by Judge Dean D. Pregerson. For the reasons stated above, the Motion to Dismiss is DENIED in part and GRANTED in part. (See Order for Details). (sch)
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-RZ Melika, Inc. et al v. Bank of America Corporation et al Doc. 16 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 MELIKA, INC., a California corporation; ELHAM SHAFIEE, an individual, 13 Plaintiffs, v. 14 15 BANK OF AMERICA CORPORATION, a Delaware corporation, 16 Defendant. ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 11-00825 DDP (RZx) ORDER DENYING MOTION TO DISMISS IN PART AND GRANTING IN PART [Motion filed on 2/3/11] 17 18 Presently before the court is Defendant Bank of America 19 Corporation (“the bank”)’s Motion to Dismiss. 20 parties’ moving papers and heard oral argument, the court denies 21 the motion in part, grants in part, and adopts the following order. 22 I. 23 Having reviewed the Background Plaintiff Elham Shafiee (“Elham”) is the principal of Melika, 24 Inc. (“Melika”), which operates an automobile dealership. 25 Amended Complaint (“FAC”) ¶ 1.) 26 account with Bank of America. 27 individual authorized to write checks drawn upon Melika’s checking 28 account. (First In 2000, Melika opened a checking (FAC ¶ 7.) Elham was the only (FAC ¶ 8.) Dockets.Justia.com 1 On August 22, 2007, Elham discovered that Mahmoud Shafiee 2 (“Mahmoud”) had written a $100,000 check on the Melika account. 3 Elham contacted the bank to inquire about the unauthorized check. 4 (FAC ¶ 17.) 5 on the account’s signature card, and that Mahmoud was authorized to 6 make transactions upon the account. 7 August 21, 2001 and August 28, 2007, the bank paid four checks 8 written by Mahmoud on the Melika account, totaling $277,000. 9 ¶ 10.) 10 The bank informed Elham that Mahmoud’s signature was (Id.) (FAC ¶ 9.) Between (FAC Also during August 2007, the same month that he wrote four 11 checks drawn upon the Melika account, Mahmoud intercepted at least 12 sixteen checks payable to Melika, endorsed them, and deposited them 13 with the bank into his own separate accounts. 14 endorsed checks totaled approximately $215,000. 15 did not become aware of the diverted checks until August 9, 2010. 16 (FAC ¶ 43.) (FAC ¶¶ 38-39.) (FAC ¶ 38.) The Elham 17 After informing Elham on August 22, 2007 that Mahmoud had 18 access to the Melika account, the bank reiterated that fact “[f]rom 19 time to time thereafter” until May 2010. 20 however, the bank informed Elham that Mahmoud was not a signatory 21 on the Melika account. 22 against the bank in California state court on August 27, 2010, and 23 amended the complaint on December 20. 24 The First Amended Complaint alleges causes of action for (1) 25 Unauthorized Drawer’s Signature, (2) Breach of Contract, (3) 26 Failure to Honor Stop Payment Order, (4) Unauthorized Endorsement - 27 Conversion, (5) Negligence, (6) Fraud, and (7) Civil Conspiracy. (FAC ¶ 19.) 28 2 (FAC ¶ 18.) In May 2010, Plaintiffs filed a complaint (Opp. at 4; Dkt. No. 1). 1 The bank removed to this court on January 27, 2011, and now moves 2 to dismiss all claims.1 3 II. 4 Legal Standard A complaint will survive a motion to dismiss when it 5 “contain[s] sufficient factual matter, accepted as true, to state a 6 claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 7 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 8 550 U.S. 544, 570 (2007)). 9 motion, a court must “accept as true all allegations of material When considering a Rule 12(b)(6) 10 fact and must construe those facts in the light most favorable to 11 the plaintiff.” Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 12 2000). 13 allegations,” it must offer “more than an unadorned, the-defendant- 14 unlawfully-harmed-me accusation.” 15 Conclusory allegations or allegations that are no more than a 16 statement of a legal conclusion “are not entitled to the assumption 17 of truth.” Id. at 1950. In other words, a pleading that merely 18 offers “labels and conclusions,” a “formulaic recitation of the 19 elements,” or “naked assertions” will not be sufficient to state a 20 claim upon which relief can be granted. Id. at 1949 (citations and 21 internal quotation marks omitted). 22 Although a complaint need not include “detailed factual Iqbal, 129 S. Ct. at 1949. “When there are well-pleaded factual allegations, a court should 23 assume their veracity and then determine whether they plausibly 24 give rise to an entitlement of relief.” Id. at 1950. Plaintiffs 25 must allege “plausible grounds to infer” that their claims rise 26 27 28 1 Plaintiffs do not oppose the bank’s motion to dismiss Elham’s individual claims and Plaintiffs’ “Stop Order” claims (Third Cause of Action). Accordingly, those claims are dismissed. 3 1 “above the speculative level.” Twombly, 550 U.S. at 555- 2 56. “Determining whether a complaint states a plausible claim for 3 relief” is “a context-specific task that requires the reviewing 4 court to draw on its judicial experience and common sense.” Iqbal, 5 129 S. Ct. at 1950. 6 III. 7 Discussion As an initial matter, the court must address the bank’s 8 contention, upon which several of the bank’s arguments depend, that 9 this is a case about forgery. See, e.g. Mot. at 5 n.5 (“A checked 10 lacking a required signature is a forged check for these 11 purposes.”) 12 alteration of a writing with intent to defraud anyone, so as to 13 make the writing appear to be different from what it was originally 14 intended to be.” 15 Angeles, 192 Cal. 40, 52 (1923). “Unauthorized signature, in 16 contrast, “means a signature made without actual, implied, or 17 apparent authority. 18 1201(41). 19 a forgery and an unauthorized signature is not a “hyper-technical” 20 one. 21 therefore qualifies as a subset of “unauthorized signature.” 22 Com. Code § 1201(41). 23 unauthorized signatures, however, are material alterations of 24 writing made with the intent to defraud. 25 facts of this case, the realm of unauthorized signatures made 26 “without actual, implied, or apparent authority” is far more 27 expansive than the narrow scope of the definition of “forgery.” 28 Here, Mahmoud did not alter any writing or make any writing appear The court disagrees. A forgery is a “material Union Tool Co. v. Merchants’ Nat’l Bank of Los The term includes a forgery." Cal. Com. Code § Contrary to the bank’s assertion, the difference between (Reply at 7.) A forgery is made without authority, and Cal. This does not mean, however, that all 4 As is evident from the 1 different from what it was intended to be. 2 his own name to the Melika checks, despite his lack of 3 authorization to draw on the Melika account. 4 about forgery.2 Instead, Mahmoud signed This is not a case 5 A. 6 The bank argues that Melika’s claims are barred by the one- Timeliness of Melika’s Claims 7 year statute of limitations set out by California Code of Civil 8 Procedure Section 340(c). 9 to actions “by a depositor against a bank for the payment of a The one-year limitation applies 10 forged or raised check, or a check that bears a forged or 11 unauthorized endorsement.” 12 added). 13 Melika’s claims regarding Mahmoud’s unauthorized endorsement of 14 checks payable to Melika. 15 Cal. Code Civ. P. § 340(c) (emphasis Thus, it would appear that Section 340(c) does apply to Nevertheless, the court concludes that Section 340(c) does not 16 bar any of Melika’s claims. 17 of limitation, is subject to principles of waiver and estoppel.” 18 Roy Supply, Inc. v. Wells Fargo Bank, 39 Cal.App.4th 1051, 1066 19 n.16 (1995). 20 transaction “and the bank induces the customer to forego filing 21 suit, the bank will not be permitted to rely upon the statute of 22 limitations.” 23 Section 340(c), “like other statutes Where a bank has been notified of an unauthorized Id. Here, Mahmoud wrote and endorsed the checks in August 2007. 24 Elham received statements from the bank “reflecting the monies 25 stolen via forged/unauthorized signatures and endorsements.” 26 2 27 28 Accordingly, the court does not address the bank’s arguments that California’s Uniform Commercial Code’s loss distributive scheme for “forged signatures and forged endorsements” bars Plaintiffs claims. (Mot. at 7.) 5 1 (Defendant’s request for Judicial Notice; Reply at 5.)3 2 immediately contacted the bank to inquire about the unauthorized 3 transactions. 4 authorized to access Melika’s account. 5 that Mahmoud was in fact not authorized to make transactions until 6 roughly three years later in 2010, well after the one-year statute 7 of limitations had expired. 8 forego filing suit for almost three years by leading her to believe 9 that there had been no unauthorized activity on the account, the 10 bank cannot now rely upon the one-year statute of limitations to 11 bar Melika’s claims. Elham The bank repeatedly informed Elham that Mahmoud was The bank did not disclose Because the bank induced Elham to 12 B. Sufficiency of the Pleadings 13 The bank also argues that Melika’s fraud and civil conspiracy 14 claims fail to meet the requirements of Federal Rules of Civil 15 Procedure 8(a) and 9(b). 16 Procedure 8(a) provides that a complaint need only contain “(1)a 17 short and plain statement of . . . jurisdiction, . . . (2) a short 18 and plain statement of the claim showing that the pleader is 19 entitled to relief, and (3) a demand for judgment for the relief 20 the pleader seeks. 21 allows the court to draw the reasonable inference that the 22 defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. 23 at 1949. 24 sufficient to satisfy these minimal pleading standards. (Mot. at 12-13.) Federal Rule of Civil A complaint must contain “factual content that The FAC’s allegations of fraud and civil conspiracy are 25 26 3 27 28 It is unclear whether Elham learned of the endorsements in 2010 or in 2007. Construing the facts in the light most favorable to Plaintiffs, the bank induced Elham to believe that Mahmoud was authorized both to write and endorse Melika checks. 6 1 Federal Rule of Civil Procedure 9(b) provides that the 2 “circumstances constituting fraud or mistake shall be stated with 3 particularity” in a complaint. 4 complaint alleging fraud must state the time, place, and specific 5 content of misrepresentations, as well as the misrepresenting 6 parties. 7 2010). 8 defendants notice of the particular misconduct so that they can 9 defend against the charge.” To comply with Rule 9(b), a Sanford v. MemberWorks, Inc., 625 F.3d 550, 558 (9th Cir. The complaint must be sufficiently specific “to give Id. (quotation, alteration, and 10 citation omitted). 11 fraud claims, but also to claims that rely entirely on a fraudulent 12 course of conduct. 13 (9th Cir. 2009). 14 Rule 9(b)’s requirements apply not only to Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 Melika has plead its fraud and civil conspiracy claims with 15 sufficient detail. 16 misrepresented Mahmoud’s status on a specific date, August 22, 17 2007, and that the misrepresentations continued through May of 18 2010. 19 of the misrepresentations: that Mahmoud was a signator on the 20 Melika account and had the authority to transact upon it. 21 These allegations give the bank sufficient notice to defend against 22 Melika’s charges. 23 IV. 24 (FAC ¶ 18.) The complaint alleges that the bank The complaint makes clear the specific content (Id.) Conclusion For the reasons stated above, the Motion to Dismiss is DENIED 25 in part and GRANTED in part. 26 IT IS SO ORDERED. 27 Dated: September 30, 2011 DEAN D. PREGERSON 28 United States District Judge 7
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