Ozer Holdings, LLC and Joint Properties, LP v. Citibank, N.A.

CourtDistrict Court, E.D. California
DecidedOctober 14, 2025
Docket1:24-cv-00210
StatusUnknown

This text of Ozer Holdings, LLC and Joint Properties, LP v. Citibank, N.A. (Ozer Holdings, LLC and Joint Properties, LP v. Citibank, N.A.) is published on Counsel Stack Legal Research, covering District Court, E.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ozer Holdings, LLC and Joint Properties, LP v. Citibank, N.A., (E.D. Cal. 2025).

Opinion

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA 7 8 OZER HOLDINGS, LLC AND JOINT No. 1:24-CV-00210-KES-CDB PROPERTIES, LP, 9 ORDER GRANTING DEFENDANT’S Plaintiffs, MOTION FOR RECONSIDERATION 10 v. 11 CITIBANK, N.A., Docs. 20, 22 12 Defendant. 13

14 15 Defendant Citibank, National Association (“Citibank”) moves for reconsideration of this 16 Court’s order, Doc. 20, granting in part and denying in part Citibank’s motion to dismiss, filed 17 May 15, 2024. Docs. 9, 22. Citibank argues that the prior order did not address its threshold 18 argument that it lacks privity with plaintiffs Ozer Holdings, LLC (“Ozer”) and Joint Properties, 19 LP (“Joint”) and therefore cannot be liable on plaintiffs’ California Commercial Code section 20 11207 claims for Citibank’s handling of wire transfer requests it received from plaintiffs’ bank. 21 Doc. 22. For the reasons set forth below, Citibank’s motion for reconsideration, Doc. 22, is 22 granted. This Court’s June 23, 2025 order, Doc. 20, is amended as set forth below and Citibank’s 23 motion to dismiss, Doc. 9, is granted in full and this action is dismissed with prejudice. 24 I. Background 25 Ozer and Joint filed this action against Citibank on February 15, 2024, alleging that 26 Citibank violated California Commercial Code section 11207 and that it also breached its duty of 27 care under California law regarding the bailment of Ozer and Joint’s funds. Doc. 1. Plaintiffs 28 allege that they issued instructions to their bank to wire transfer funds to an account at Citibank 1 believing it was the account of plaintiffs’ payee, but that an unknown perpetrator had caused 2 plaintiffs to list the perpetrator’s Citibank account number rather than the account number for the 3 intended beneficiary of the funds.1 4 On May 15, 2024, Citibank filed a motion to dismiss for failure to state a claim under 5 Rule 12(b)(6). Doc. 9. On June 23, 2025, the Court issued an order granting in part and denying 6 in part the motion. Doc. 20. The order denied Citibank’s motion as to Ozer and Joint’s section 7 11207 claims, finding that Ozer and Joint plausibly alleged that Citibank had actual knowledge of 8 material discrepancies in the wire instructions, and of fraud alerts on the perpetrator’s Citibank 9 account, and was therefore not entitled to the safe-harbor provision under section 11207(b)(1). 10 Id. at 5–12. The Court granted Citibank’s motion as to Joint and Ozer’s common law bailment 11 claims, and dismissed them without leave to amend, finding those claims preempted by section 12 11207. Id. at 12–14. 13 On July 7, 2025, Citibank filed a motion for reconsideration, arguing that, as to Ozer and 14 Joint’s section 11207 claims, the Court did not address Citibank’s threshold argument that it 15 cannot be liable under section 11207 because Citibank is not in privity with Ozer and Joint. 16 Doc. 22. Ozer and Joint filed an opposition, to which Citibank replied. Docs. 23, 25. 17 II. Legal Standard 18 Rule 54(b) provides that “any order . . . that adjudicates fewer than all the claims or the 19 rights and liabilities of fewer than all the parties . . . may be revised at any time before the entry 20 of a judgment adjudicating all the claims and all the parties’ rights and liabilities.” Fed. R. Civ. 21 P. 54(b). The Court has discretion under Rule 54(b) to reconsider its prior order where a party 22 has shown sufficient cause. See City of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 23 254 F.3d 882, 885 (9th Cir. 2001) (“As long as a district court has jurisdiction over the case, then 24 it possesses the inherent procedural power to reconsider, rescind, or modify an interlocutory order 25 for cause seen by it to be sufficient.”) (quoting Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th 26 Cir. 1981)). The Court finds sufficient cause for reconsideration here as its prior order granting in 27

28 1 The factual background is more fully set out in the Court’s June 23, 2025 order. See Doc. 20. 1 part and denying in part Citibank’s motion to dismiss, Doc. 20, did not address the privity 2 argument that Citibank properly raised in its motion to dismiss. This order addresses that privity 3 argument below. 4 III. Discussion 5 Joint and Ozer’s fraudulent wire transfer claims are based on section 11207 of the 6 California Commercial Code. Subdivision (a) of that statute provides that “[s]ubject to 7 subdivision (b), if, in a payment order received by a beneficiary’s bank, the name, bank account 8 number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person 9 or account, no person has rights as a beneficiary of the order and acceptance of the order cannot 10 occur.” Cal. Comm. Code § 11207(a). Section 11207(b) provides various requirements that 11 apply when, as in the present case, “a payment order received by the beneficiary’s bank identifies 12 the beneficiary both by name and by an identifying or bank account number and the name and 13 number identify different persons.” Id. § 11207(b). Plaintiffs argue that Citibank is liable under 14 section 11207(b) because it had actual knowledge of material discrepancies in the wire 15 instructions and of fraud alerts on the perpetrator’s Citibank account. Citibank argues that it 16 cannot be liable under section 11207 because it is not in privity with Ozer and Joint. Doc. 22 at 17 6–8. 18 Section 11207 codifies Uniform Commercial Code (“UCC”) section 4A-207. TME 19 Enterprises, Inc. v. Norwest Corp., 124 Cal. App. 4th 1021, 1025 n.3 (2004). In enacting section 20 11207, “the [California] Legislature adopted article 4A of the Uniform Commercial Code exactly 21 as written.” Zengen, Inc. v. Comerica Bank, 41 Cal. 4th 239, 252 (2007). Neither the Ninth 22 Circuit nor the California Supreme Court has addressed whether there is a privity requirement for 23 claims brought under section 11207. However, because the UCC was “meant to make law 24 uniform among the various jurisdictions,” California courts generally “afford great deference to 25 the decisions of [their] sister jurisdictions interpreting its provisions.” In re Bartoni-Corsi 26 Produce, Inc., 130 F.3d 857, 861 n.7 (9th Cir. 1997) (quoting Oswald Mach. & Equip. v. Yip, 10 27 Cal. App. 4th 1238, 1247 (1992)). 28 The Seventh Circuit, construing Indiana’s statute setting out the same UCC provision, 1 found that a privity requirement applied to claims brought under section 207. Approved 2 Mortgage Corp. v. Truist Bank, 106 F.4th 582, 590–92 (7th Cir. 2024). In that case, customers of 3 Approved Mortgage directed that wire transfers be paid to a certain company upon the closing of 4 a transaction. Id. at 586. However, before Approved Mortgage issued the wire transfer orders, 5 unknown perpetrators illegally accessed Approved Mortgage’s system and modified the 6 instructions to substitute a different bank account as the purported account of the beneficiary. Id. 7 Approved Mortgage forwarded the now-modified wire transfer instructions to a title company, 8 MVP National Title Company (“MVP”), which in turn issued the wire instructions to its bank, 9 Bank United, to pay the funds to Truist Bank for the listed account and named beneficiary. Id. 10 Pursuant to the fraudulently modified wire instructions, Bank United wired funds to Truist, which 11 deposited the funds into the account listed in the instructions. Id.

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Related

Larry Melancon v. Texaco, Inc.
659 F.2d 551 (Fifth Circuit, 1981)
Cervantes v. Countrywide Home Loans, Inc.
656 F.3d 1034 (Ninth Circuit, 2011)
Grain Traders, Inc. v. Citibank, N.A.
160 F.3d 97 (Second Circuit, 1998)
TME Enterprises, Inc. v. Norwest Corp.
22 Cal. Rptr. 3d 146 (California Court of Appeal, 2004)
Zengen, Inc. v. Comerica Bank
158 P.3d 800 (California Supreme Court, 2007)
Approved Mortgage Corporation v. Truist Bank
106 F.4th 582 (Seventh Circuit, 2024)
Rosemary D'augusta v. American Petroleum Institute
117 F.4th 1094 (Ninth Circuit, 2024)

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Bluebook (online)
Ozer Holdings, LLC and Joint Properties, LP v. Citibank, N.A., Counsel Stack Legal Research, https://law.counselstack.com/opinion/ozer-holdings-llc-and-joint-properties-lp-v-citibank-na-caed-2025.