Barvie et al v. Bank of America, N.A., No. 3:2018cv00449 - Document 15 (S.D. Cal. 2018)
Court Description: ORDER granting 11 Defendant's Motion to Dismiss. The Court grants Plaintiffs leave to amend their Complaint. Plaintiffs may file an amended complaint on or before thirty (30) days of the electronic docketing of this Order. Signed by Judge Janis L. Sammartino on 9/21/2018. (jpp)
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Barvie et al v. Bank of America, N.A. Doc. 15 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 NICOLE BARVIE and JEFFREY HERMAN, 15 16 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Plaintiffs, 13 14 Case No.: 18-CV-449-JLS (BGS) v. (ECF No. 11) BANK OF AMERICA, N.A., Defendant. 17 18 Presently before the Court is Defendant Bank of America, N.A.’s Motion to Dismiss 19 (“Mot.,” ECF No. 11). Also before the Court is Plaintiffs Nicole Barvie and Jeffrey 20 Herman’s Response in Opposition to the Motion (“Opp’n,” ECF No. 12) and Defendant’s 21 Reply in Support of the Motion (“Reply,” ECF No. 14.) The Court vacated oral argument 22 on the Motion and took the matter under submission without oral argument. ECF No. 13. 23 Having considered the parties’ arguments and the law, the Court rules as follows. 24 BACKGROUND 25 Plaintiffs gave birth to a child (“Baby Herman”) and subsequently opened up a 26 savings account with Defendant in the baby’s name. ECF No. 1 (“Compl.”) ¶¶ 18–19. 27 Plaintiffs receive statements from Defendant regarding the account. Id. ¶ 20. Beginning 28 in April 2017, seven unauthorized charges were debited from Baby Herman’s account: 1 18-CV-449-JLS (BGS) Dockets.Justia.com 1 2 3 4 5 6 7 • • $662.62 on April 4, 2017; • $185.66 on October 4, 2017; • $352.98 on December 4, 2017; • $103.52 on August 4, 2017; • $228.75 on November 6, 2017; • $180.58 on January 4, 2018; and $218.34 on February 5, 2018. 8 9 Id. ¶ 25. In total, $1,932.45 was debited from Baby Herman’s account. Id. ¶ 28. 10 Plaintiffs first became aware of these charges in February 2018, upon reviewing the 11 account details. Id. at ¶ 30. Plaintiffs informed Defendant, which refunded the withdrawn 12 money to the account. Id. ¶¶ 31, 36. Defendant told Plaintiffs the money should have been 13 withdrawn from a third party’s bank account and that the withdrawals were in error. Id. 14 ¶¶ 32–33. 15 Plaintiffs filed the present Complaint, alleging: (1) violation of the Electronic Fund 16 Transfers Act (“EFTA”), (2) violation of the Rosenthal Fair Debt Collection Practices Act 17 (“RFDCPA”), (3) Negligence, (4) Conversation, and (5) Trespass to Chattels. 18 generally Compl. Defendant moves to dismiss all claims without leave to amend. See 19 generally Mot. See LEGAL STANDARD 20 21 Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 22 defense that the complaint “fail[s] to state a claim upon which relief can be granted,” 23 generally referred to as a motion to dismiss. The Court evaluates whether a complaint 24 states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil 25 Procedure 8(a), which requires a “short and plain statement of the claim showing that the 26 pleader is entitled to relief.” 27 allegations,’ . . . it [does] demand more than an unadorned, the-defendant-unlawfully- 28 harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Although Rule 8 “does not require ‘detailed factual 2 18-CV-449-JLS (BGS) 1 Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation to 2 provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 3 conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 4 Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A 5 complaint will not suffice “if it tenders ‘naked assertion[s]’ devoid of ‘further factual 6 enhancement.’ ” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 557). 7 To survive a motion to dismiss, “a complaint must contain sufficient factual matter, 8 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting 9 Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible 10 when the facts pled “allow the court to draw the reasonable inference that the defendant is 11 liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 12 556). That is not to say that the claim must be probable, but there must be “more than a 13 sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely consistent 14 with’ a defendant’s liability” fall short of a plausible entitlement to relief. Id. (quoting 15 Twombly, 550 U.S. at 557). Further, the Court need not accept as true “legal conclusions” 16 contained in the complaint. Id. This review requires context-specific analysis involving 17 the Court’s “judicial experience and common sense.” Id. at 678 (citation omitted). 18 “[W]here the well-pleaded facts do not permit the court to infer more than the mere 19 possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the 20 pleader is entitled to relief.’” Id. 21 22 ANALYSIS I. Electronic Funds Transfer Act 23 Under the EFTA, “an electronic fund transfer from a consumer’s account initiated 24 by a person other than the consumer without actual authority to initiate such transfer and 25 from which the consumer receives no benefit” is prohibited. 15 U.S.C. § 1693a(12). 26 Defendant’s main argument for dismissal is that it is not a “person” and therefore 27 cannot be liable under Section 1693m of the EFTA. Mot. at 9 (citing 15 U.S.C. § 1693m 28 (“Except as otherwise provided by . . . section 1693h of this title, any person who fails to 3 18-CV-449-JLS (BGS) 1 comply with any provision of this subchapter with respect to any consumer . . . is liable to 2 such consumer.”)). According to Defendant, Section 1693h, entitled “Liability of Financial 3 Institutions,” provides when a financial institution is liable. Mot. at 9 (citing Friedman v. 4 24 Hour Fitness USA, Inc., 580 F. Supp. 2d 985, 996 (C.D. Cal. 2008) (finding Section 5 1693m “provides for civil liability as against persons other than financial institutions”)). 6 Defendant notes that Plaintiffs do not reference this section in their Complaint, nor could 7 they allege that Defendant violated this section. Mot. at 9. Indeed, Defendant explains, 8 “Section 1693m ‘is not a basis of liability under the statute but simply provides an 9 enforcement mechanism for other provisions.’” Id. (quoting I.B. ex rel. Fife v. Facebook, 10 Inc., 905 F. Supp. 2d 989, 1006 (N.D. Cal. 2012)). In fact, Defendant notes, the court in 11 I.B. dismissed the plaintiffs’ claims under Section 1693m for failing to allege which 12 provision of the EFTA had been violated. Mot. at 9 (citing I.B., 905 F. Supp. 2d at 1007). 13 Assuming Plaintiffs intended to assert a claim under Section 1693h, this statute 14 provides that “a financial institution shall be liable to a consumer for all damages 15 proximately caused by . . . the financial institution’s failure to make an electronic fund 16 transfer, in accordance with the terms and conditions of an account, in the correct amount 17 or in a timely manner when properly instructed to do so by the consumer.” 15 U.S.C. 18 § 1693h. Here, however, Plaintiffs have neither provided the “terms and conditions” of 19 Baby Herman’s account nor asserted that Defendant failed to make an electronic fund 20 transfer in accordance with those terms and conditions. 21 In their Opposition, Plaintiffs assert that they allege Defendant violated Section 22 1693e(a) and merely seek relief under Section 1693m. Opp’n at 18 (citing Compl. ¶ 73). 23 Section 1693e(a) provides when a preauthorized electronic fund transfer may be authorized 24 and stopped by a consumer. 1 Defendants point to Section 1693a(12), which provides the 25 26 27 28 1 Defendant argues that Plaintiffs improperly raise new arguments in their Opposition by referring to preauthorized electronic fund transfers in violation of Section 1693e. See Reply at 7. Plaintiffs do allege in their Complaint, however, that Defendant violated Section 1693e. See Compl. ¶ 73. It appears Plaintiffs are arguing that Defendant violated this section because the electronic fund transfer was made without Plaintiffs’ preauthorization, which is equivalent to arguing that the transfer was unauthorized. 4 18-CV-449-JLS (BGS) 1 term “unauthorized electronic fund transfer” does not include a fund transfer “which 2 constitutes an error committed by a financial institution.” Reply at 2–3. 3 Without further factual allegations—or even an allegation as to which provision of 4 the EFTA allegedly was violated—Plaintiffs fail to state a claim for this cause of action. 5 See Nordberg v. Trilegiant Corp., 445 F. Supp. 2d 1082, 1095 (N.D. Cal. 2006) 6 (“[P]laintiffs’ broad averments of violations of the EFTA are inadequate and . . . their 7 claims must be amended to make specific reference to the portions of the act upon which 8 they intend to rely.”). The Court therefore GRANTS Defendant’s Motion. Although the 9 Court harbors reservations that Plaintiffs will be unable to plead an unauthorized electronic 10 fund transfer given their admission that the unauthorized charges here were the result of 11 Defendant’s error, see Compl. ¶¶ 32–33; see also 15 U.S.C. § 1693a(12) (“[T]he term 12 ‘unauthorized electronic fund transfer’ . . . does not include any electronic fund transfer . . . 13 which constitutes an error committed by a financial institution.”), the Court will provide 14 Plaintiffs the opportunity to amend and DISMISSES WITHOUT PREJUDICE their first 15 cause of action. 16 II. Rosenthal Fair Debt Collection Practices Act 17 The RFDCPA is the California state equivalent of the Fair Debt Collection Practices 18 Act (“FDCPA”). See Cal. Civ. Code § 1788 et. seq. The RFDCPA “mimics or incorporates 19 by reference the FDCPA’s requirements . . . and makes available the FDCPA’s remedies 20 for violations.” Riggs v. Prober & Raphel, 681 F.3d 1097, 1100 (9th Cir. 2012). The 21 RFDCPA states that “every debt collector collecting or attempting to collect a consumer 22 23 24 25 26 27 28 In their Opposition, Plaintiffs cite to Park v. Webloyalty.com, Inc., 685 Fed. App’x. 589 (9th Cir. 2017). See Opp’n at 7. In Park, the Ninth Circuit determined that the plaintiff had pled a plausible EFTA claim when he clicked on a button to receive a coupon, but instead unknowingly transferred his billing information to an unknown company. In arguing that this case supports their position, Plaintiffs state it is sufficient to allege an unauthorized electronic fund transfer when one alleges a defendant permitted an unauthorized “electronic fund transfer from a consumer’s account initiated by a person other than the consumer without actual authority to initiate such transfer and from which the consumer receives no benefit.” Opp’n at 6–7. The quoted language is simply the definition of an “unauthorized electronic fund transfer.” See 15 U.S.C. § 1693(a)(12). The Court finds that the facts and allegations in Park are distinguishable from the present case and that Park does not support Plaintiffs’ position. 5 18-CV-449-JLS (BGS) 1 debt shall comply with the provisions of Sections 1692b to 1692j” of the FDCPA. Cal. 2 Civ. Code § 1788.17. To establish a violation of the FRDCPA, a plaintiff must show (1) the 3 defendant was attempting to collect a “consumer debt,” (2) the defendant was a “debt 4 collector,” (3) the plaintiff was a “debtor,” and (4) the defendant’s collection activities 5 violated the FDCPA and thus the RFDCPA. See Cal. Civ. Code § 1788.17. 6 “Consumer debt” is defined as money “due or owing or alleged to be due or owing 7 from a natural person by reason of a consumer credit transaction.” Cal. Civil Code 8 § 1788.2(f). A “debt collector” is “any person who, in the ordinary course of business, 9 regularly, on behalf of himself or herself or others, engages in debt collection.” Cal. Civ. 10 Code § 1788.2(c). 2 “Debtor” means “a natural person from whom a debt collector seeks 11 to collect a consumer debt which is due and owing or alleged to be due and owing from 12 such person.” Cal. Civ. Code § 1788.2(h). “Debt collection” is defined as “any act or 13 practice in connection with the collection of consumer debts.” Cal. Civ. Code § 1788.2(b). 14 Defendant argues Plaintiffs are not “debtors,” nor is there any “consumer debt” here. 15 Mot. at 11. Defendant further argues that there are no allegations it engaged in any debt 16 collection activity on a debt owed by Plaintiffs. Id. Plaintiffs respond that they are debtors 17 because when the unknown third party used funds from Baby Herman’s account to pay a 18 creditor, Plaintiffs “were alleged to be indebted to an unknown original creditor.” Opp’n 19 at 13. Plaintiffs also argue that they may assert violations of the RFDCPA even though 20 they did not owe a debt. Id. at 14. 21 Here, Plaintiffs allege that an unknown third party owed a debt to an unknown 22 creditor. Compl. ¶ 22. Although “Plaintiffs have no connection to this debt and have no 23 knowledge as to who[m] i[t] belongs,” id. ¶ 40, Defendant debited several charges from 24 Baby Herman’s account “to satisfy the debt of a third-party for which Plaintiffs bore no 25 responsibility.” Id. ¶¶ 24–25, 41. There is no indication that Defendant communicated to 26 27 28 2 “Person” covers not only a natural person but also a corporation and other entities. Cal. Civ. Code § 1788.2(g). 6 18-CV-449-JLS (BGS) 1 Plaintiffs at any time its belief that they owed a debt to Defendant on which Defendant was 2 collecting. Instead, it appears only that Defendant acted at the direction of an unknown 3 third party to pay amounts to an unknown creditor. 4 Given these facts, the law favors Defendant. It is well-established that a plaintiff 5 lacks standing to bring a cause of action under the RFDCPA when she does not owe or is 6 not alleged to owe the debt. See, e.g., Inzerillo v. Green Tree Servicing, LLC, No. 13-CV- 7 06010-MEJ, 2014 WL 6660534, at *1, *6 (N.D. Cal. Nov. 24, 2014) (parents of mortgagor 8 who never had account with mortgagee and from whom mortgagor never attempted to 9 collect a debt lacked standing); Sanchez v. Client Servs., Inc., 520 F. Supp. 2d 1149, 1153, 10 1155 n.3 (N.D. Cal. 2007) (holding that daughter of cardholder who did not owe the debt 11 at issue and was not otherwise obligated to pay the debt was not a “debtor” and therefore 12 lacked standing); see also People v. Persolve, LLC, 218 Cal. App. 4th 1267, 1272 n.1 13 (2013) (“Only the person who owes the debt or is otherwise obligated to pay the debt has 14 standing to assert violations under the [Rosenthal] Act.”); cf. Masuda v. Citibank, N.A., 38 15 F. Supp. 3d 1130, 1132–34 (N.D. Cal. 2014) (finding that plaintiff was a “debtor” where 16 defendant bank called over 300 times attempting to collect a debt that plaintiff did not in 17 fact owe). Although the Court questions Plaintiffs’ ability to cure this defect in its 18 RFDCPA claim, the Court will provide Plaintiffs the opportunity to amend and 19 DISMISSES WITHOUT PREJUDICE their second cause of action. 20 III. Negligence 21 The elements of a negligence cause of action are (1) duty; (2) breach of duty; 22 (3) causation; and (4) damages. Koepke v. Loo, 18 Cal. App. 4th 1444, 1448–49 (1993). 23 The parties agree that Defendant’s duty of care arises from the contract between Defendant 24 and Plaintiffs, see Reply at 9 (citing Opp’n at 15), although Defendant argues that 25 “Plaintiffs identify no contractual duty that [Defendant] allegedly failed to uphold,” Mot. 26 at 12, and that “Plaintiffs do not allege that they have been damaged” because “they admit 27 that [Defendant] has restored all funds debited from the Account.” Id. at 13. Plaintiffs 28 counter that Defendant “blatantly ignored the ‘danger signals’ that [the relevant] 7 18-CV-449-JLS (BGS) 1 transactions were not the intended transactions,” Opp’n at 16 (citing Joffe v. United Cal. 2 Bank, 141 Cal. App. 3d 541, 556 (1983)), and that Plaintiffs have suffered damages in the 3 form of “severe emotional distress, loss of access to Baby Herman’s account and the funds 4 illegally taken, lost wages in dealing with this situation, and inconvenience.” Id. at 16–17. 5 Here, rather than pointing to specific contractual duties breached by Defendant, 6 Plaintiffs point to various, unspecified duties Defendant owed “to Plaintiffs pursuant to the 7 EFTA[] and RFDCPA.” See Compl. ¶¶ 81–82. Those claims, however, have been 8 dismissed. See supra Sections I and II. Further, the law is clear that Defendant is under 9 no duty to supervise the activity of Plaintiffs’ accounts. See, e.g., Ghlachi v. U.S. Bank, 10 N.A., No. CV 14-6619 PSG (CWx), 2015 WL 12655411, at *8 (C.D. Cal. Apr. 29, 2015) 11 (“[T]here is no implied duty to supervise account activity or to inquire into the purpose for 12 which the funds are being used.”) (citation omitted); Chazen v. Centennial Bank, 61 Cal. 13 App. 4th 532 (1998) (“The relationship of bank and depositor is founded on contract, which 14 . . . does not involve any implied duty to supervise account activity or to inquire into the 15 purpose for which the funds are being used.”). Plaintiffs and Defendant appear to agree 16 that, absent allegations of specific “danger signals” or “red flags” indicative of negligence 17 stemming from the debits from Baby Herman’s account, Plaintiffs fail to allege breach of 18 any duty owed by Defendant. See Opp’n at 16 (citing Joffe v. United Cal. Bank, 141 Cal. 19 App. 3d 541, 556 (1983)); Reply at 10–11. 20 The Court finds such allegations lacking here. See Reply at 11 (“Plaintiffs present 21 no facts that the transaction in question should have put [Defendant] on alert that they were 22 not authority. Plaintiffs also provide no facts demonstrating ‘suspicious circumstances.’”); 23 see also QDOS, Inc. v. Signature Fin., LLC, 17 Cal. App. 5th 990, 1001 (2017) (no red 24 flags where merchant receives payment for merchandise through a check from a person or 25 entity other than its customer), review denied (Mar. 14, 2018); Rodriguez v. Bank of W., 26 162 Cal. App. 4th 454, 466 (2008) (no red flags when a bank’s customer opens up an 27 account in a name other than her own); Karen Kane, Inc. v. Bank of Am., 67 Cal. App. 4th 28 1192, 1198–99, 1202–03 (1998) (no red flags when a check-cashing business’s customer 8 18-CV-449-JLS (BGS) 1 presents a check endorsed by hand rather than with a stamp or when a check-cashing 2 business’s customer seeks to cash a business-to-business check); Software Design & 3 Application, Ltd. v. Hoefter & Arnett, Inc., 49 Cal. App. 4th 472, 483 (1996) (no red flags 4 when a brokerage firm’s customer has frequent transactions involving large sums of 5 money). 6 It also appears likely that Plaintiffs’ negligence claim is precluded by the economic 7 loss doctrine, under which “plaintiffs may recover in tort for physical injury to person or 8 property, but not for ‘purely economic losses that may be recovered in a contract action.’” 9 Lusinyan v. Bank of Am., N.A., No. CV-14-9586 DMG (JCX), 2015 WL 12777225, at *4 10 (C.D. Cal. May 26, 2015) (quoting S.F. Unified Sch. Dist. v. W.R. Grace & Co., 37 Cal. 11 App. 4th 1318, 1327 (1995)) (citing Minkler v. Apple, Inc., No. 5:13–CV–05332–EJD, 12 2014 WL 4100613, at *6 (N.D. Cal. Aug. 20, 2014)); see also Kalitta Air, LLC v. Cent. 13 Tex. Airborne Sys., Inc., 315 Fed. App’x 603, 605 (9th Cir. 2008) (“In actions for 14 negligence in California, recovery of purely economic loss is foreclosed in the absence of 15 (1) personal injury, (2) physical damage to property, (3) a ‘special relationship’ existing 16 between the parties, or (4) some other common law exception to the rule.”). In Lusinyan, 17 an anonymous caller, presenting himself as the plaintiff, called the defendant bank on two 18 separate dates requesting that thousands of dollars be wire transferred from plaintiff’s 19 account to the U.S. Money Reserve, Inc., which then fulfilled orders for precious metals 20 using the funds and shipped the orders to addresses different than the plaintiff’s home 21 address. 2015 WL 12777225, at *1. The court concluded that the plaintiff’s negligence 22 claim against the defendant bank was precluded by the economic loss doctrine because the 23 plaintiffs could “[]not allege facts showing noneconomic loss.” Id. at *4. 24 Here, as in Lusinyan, Plaintiffs only allege facts showing—at most—that Defendant 25 failed to act with reasonable care in its transactions with its customers, which is an implied 26 term in the contract between the bank and its depositor. See id. (citing Chazen, 61 Cal. 27 App. 4th at 543). Accordingly, Plaintiffs’ negligence cause of action is barred by the 28 economic loss doctrine. 9 18-CV-449-JLS (BGS) 1 Although the Court believes it unlikely that Plaintiffs can amend their Complaint to 2 cure these deficiencies, the Court DISMISSES WITHOUT PREJUDICE Plaintiffs’ third 3 cause of action for negligence. 4 IV. 5 6 Conversion and Trespass to Chattels Because Plaintiffs have withdrawn these claims, see Opp’n at 17, they are DISMISSED WITHOUT PREJUDICE. 7 CONCLUSION 8 For the foregoing reasons, the Court GRANTS Defendant’s Motion to Dismiss 9 (ECF No. 11) and DISMISSES WITHOUT PREJUDICE Plaintiffs’ Complaint (ECF 10 No. 1) in its entirety. The Court GRANTS Plaintiffs leave to amend their Complaint. 11 Plaintiffs MAY FILE an amended complaint on or before thirty (30) days of the electronic 12 docketing of this Order. Should Plaintiffs choose not to file an amended complaint by this 13 time, this case shall be dismissed and the file closed. 14 IT IS SO ORDERED. 15 16 Dated: September 21, 2018 17 18 19 20 21 22 23 24 25 26 27 28 10 18-CV-449-JLS (BGS)
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