1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 WILLIAM AND AVE BORTZ, Case No.: 21-CV-618 TWR (DEB)
12 Plaintiffs, ORDER (1) GRANTING 13 v. DEFENDANTS’ MOTION TO DISMISS FIRST AMENDED 14 JPMORGAN CHASE BANK, N.A.; COMPLAINT, AND SHAWNA BROWN; ARCHIE 15 (2) DISMISSING WITH PREJUDICE ALVARADO; JOEL PETRIASHVIL- PLAINTIFF’S FIRST AMENDED 16 REYES; MICHELLE MARTINEZ; COMPLAINT ARNIE SINGSON; BRIAN CRUZ; and 17 DOES 1–50, inclusive, (ECF No. 16) 18 Defendants. 19
20 21 Presently before the Court is the Motion to Dismiss Plaintiffs’ First Amended 22 Complaint (“Mot.,” ECF No. 16) filed by Defendants JPMorgan Chase Bank, N.A. 23 (“Chase”); Shauna Brown (erroneously named as Shawna Brown); Archie Alvarado; Joel 24 Petriashvili-Reyes (erroneously named as Joel Petriashvil-Reyes); Michele Martinez 25 (erroneously named as Michelle Martinez); Arnie Singson; and Brian Cruz, as well as 26 Plaintiffs William and Ave Bortz’s Opposition to (“Opp’n,” ECF No. 20) and Defendants’ 27 Reply in Support of (“Reply,” ECF No. 21) the Motion. The Court held a hearing on 28 April 6, 2022. (See generally ECF No. 22.) Having carefully reviewed Plaintiffs’ First 1 Amended Complaint (“FAC,” ECF No. 15), the Parties’ arguments, and the law, the Court 2 GRANTS Defendants’ Motion. 3 BACKGROUND1 4 I. Plaintiffs’ Experience with the Scam 5 At the time of the transactions that are subject of their First Amended Complaint, 6 Plaintiffs William and Ave Bortz were 76 and 77 years old, respectively. (See FAC 7 ¶¶ 1–2.) Plaintiffs have been banking with Defendant Chase since approximately 1971. 8 (See id. ¶ 23.) During those 49 years, Plaintiffs had never wired “extraordinarily large 9 sums of money” to foreign countries. (See id. ¶ 24.) 10 On January 20, 2021, scammers took over Plaintiffs’ bank accounts and directed 11 Mr. Bortz to go to a Chase branch located at 7176 Avenida Encinas, Carlsbad, California 12 92011 (the “Encinas branch”), (see id. ¶ 26), which is managed by Defendant Brown. At 13 the scammers’ instruction, Mr. Bortz kept them on the phone at the bank. (See id.) The 14 scammers “groomed” Mr. Bortz to answer questions related to his wire transfer, including 15 whether he knew the recipients. (See id.) As instructed by Mr. Bortz, Defendant Alvarado 16 wired $198,000 to a Standard Chartered Bank (Hong Kong) Limited (“SCHK”) account 17 belonging to “eshamuddin.” (See id.) After Defendant Alvarado processed the wire 18 transfer, Chase charged Plaintiff’s account a $50 wire transfer fee, and Defendants 19 Alvarado and Brown asked Mr. Bortz to become a client of Chase’s private banking 20 service. (See id.) 21 At the scammers’ behest, Mr. Bortz made three additional wire transfers. (See id. 22 ¶¶ 27–29.) Each time Mr. Bortz requested a transfer, he did so after the scammers had 23 doctored Plaintiffs’ online accounts and advised him that his transfer had not gone through. 24 (See id.) First, on January 22, 2021, Mr. Bortz returned to the Encinas branch as directed 25 by the scammers. (See id. ¶ 27.) At Mr. Bortz’s request, Defendant Petriashvil-Reyes 26
27 1 For purposes of Defendants’ Motion, the facts alleged in Plaintiffs’ First Amended Complaint are 28 accepted as true. See Vasquez v. Los Angeles Cty., 487 F.3d 1246, 1249 (9th Cir. 2007) (holding that, in 1 wired another $197,850 to a SCHK account belonging to “Boloy Analizo Jono.” (See id.) 2 Second, on January 26, 2021, the scammers sent Mr. Bortz to another Chase branch located 3 in Poway (the “Poway branch”), where Defendant Martinez wired $197,500 to a SCHK 4 account belonging to “Tunit Rustiyawali,” as directed by Mr. Bortz. (See id. ¶ 28.) Finally, 5 on January 28, 2021, after the scammers instructed Mr. Bortz to return to the Poway branch, 6 Defendant Singson wired $97,500 to a SCHK account belonging to “eshamuddin” at 7 Mr. Bortz’s request. (See id. ¶ 29.) After each individual defendant processed the 8 respective wire transfer, Chase charged Plaintiff’s account a $50 wire transfer fee. (See id. 9 ¶¶ 27–29.) Then, each of the individual defendants, at times along with bank manager 10 Defendant Brown, also asked Mr. Bortz to become a client of Chase’s private banking 11 service. (See id.) 12 On January 28, 2021, Plaintiffs’ daughter, Ave Williams, learned of the wire 13 transfers and drove her parents to the nearest Chase branch, located at 16861 Bernardo 14 Center Drive, San Diego, California 92128 (the “Rancho Bernardo branch”). (See id. ¶ 30.) 15 Defendant Cruz, Vice-President and Branch Manager of the Rancho Bernardo branch, 16 advised Ms. Williams that “the only thing Chase Bank could do was contact the wires 17 department in New York but that he could not do that until the next day when they opened.” 18 (See id.) Defendant Cruz took no affirmative actions to reverse the pending wire transfers 19 or to contact Chase’s fraud department. (See id.) On February 2, 2021, Ms. Williams 20 attempted to contact Defendant Chase’s fraud department, and a Chase representative “told 21 Ms. Williams that he would send the issue to JP Morgan Chase Bank’s dispute 22 department.” (See id. ¶ 33.) The funds were never recovered. (See id. ¶ 54.) 23 II. Procedural History 24 On March 4, 2021, Plaintiffs initiated this action in the Superior Court for the State 25 of California, County of San Diego, alleging two causes of action against all Defendants 26 for (1) financial elder abuse pursuant to subsection (a)(2) of California Welfare and 27 Institutions Code § 15610.30 (the “California Elder Abuse Law”), and (2) negligence. (See 28 generally ECF No. 1.) Defendants removed to this Court on April 9, 2021, on the grounds 1 that this Court has original jurisdiction pursuant to the Edge Act, 12 U.S.C. § 632.2. (See 2 generally id.) Defendants moved to dismiss on April 26, 2021, (see generally ECF No. 5), 3 and this action was transferred to the undersigned on September 30, 2021. (See generally 4 ECF No. 11.) 5 The Court granted Defendant’s motion and dismissed without prejudice Plaintiffs’ 6 complaint on October 15, 2021. (See ECF No. 12.) Specifically, the Court dismissed 7 Plaintiffs’ financial elder abuse claim for failure adequately to plead that Defendants had 8 actual knowledge of the scam pursuant to California Welfare and Institutions Code 9 § 15610.30(a)(2), (see id. at 7–8), and dismissed without prejudice Plaintiffs’ negligence 10 claim because Plaintiffs did not oppose dismissal but requested leave to amend to allege a 11 new cause of action for breach of contract. (See id. at 9–10.) The Court granted leave to 12 amend, (see id. at 10–11), and the operative First Amended Complaint followed on 13 November 12, 2021. (See generally ECF No. 15.) 14 Plaintiffs’ First Amended Complaint alleges three causes of action: (1) financial 15 elder abuse under subsections (a)(1) and (a)(2) of the California Elder Abuse Law; 16 (2) unlawful, unfair, and/or fraudulent practices pursuant to California Business & 17 Professions Code § 17200 (the “Unfair Competition Law” or “UCL”); and (3) breach of 18 the implied covenant of good faith and fair dealing. (See generally id.) Defendants filed 19 the instant Motion on December 3, 2021. (See generally ECF No. 16.) 20 LEGAL STANDARD 21 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to 22 state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” 23 Conservation Force v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting Navarro 24 v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). “A district court’s dismissal for failure to 25 state a claim under Federal Rule of Civil Procedure 12(b)(6) is proper if there is a ‘lack of 26 a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal 27 theory.’” Id. at 1242 (quoting Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th 28 Cir. 1988)). 1 “Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short and 2 plain statement of the claim showing that the pleader is entitled to relief.’” Ashcroft v. 3 Iqbal, 556 U.S. 662, 677–78 (2009) (quoting Fed. R. Civ. P. 8(a)(2)). “[T]he pleading 4 standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands 5 more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 678 6 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “[a] 7 pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a 8 cause of action will not do.’” Id. (quoting Twombly, 550 U.S. at 555). 9 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 10 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting 11 Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads 12 factual content that allows the court to draw the reasonable inference that the defendant is 13 liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “[W]here the 14 well-pleaded facts do not permit the court to infer more than the mere possibility of 15 misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is 16 entitled to relief.’” Id. at 679 (second alteration in original) (quoting Fed. R. Civ. P. 17 8(a)(2)). 18 “Rule 9(b) requires that, when fraud is alleged, ‘a party must state with particularity 19 the circumstances constituting fraud.’” Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 20 (9th Cir. 2009) (quoting Fed. R. Civ. P. 9(b)). “Rule 9(b) demands that the circumstances 21 constituting the alleged fraud be specific enough to give defendants notice of the particular 22 misconduct. . . so that they can defend against the charge and not just deny that they have 23 done anything wrong.” Id. (alteration in original) (internal quotation marks omitted) 24 (quoting Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)). “Averments of 25 fraud must be accompanied by the who, what, when, where, and how of the misconduct 26 charged.” Id. (internal quotation marks omitted) (quoting Vess v. Ciba-Geigy Corp. USA, 27 317 F.3d 1097, 1106 (9th Cir. 2003)). 28 / / / 1 “If a complaint is dismissed for failure to state a claim, leave to amend should be 2 granted ‘unless the court determines that the allegation of other facts consistent with the 3 challenged pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight 4 Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well 5 Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). “A district court does not err in 6 denying leave to amend where the amendment would be futile.” Id. (citing Reddy v. Litton 7 Indus., 912 F.2d 291, 296 (9th Cir. 1990), cert. denied, 502 U.S. 921 (1991)). 8 ANALYSIS 9 Defendants seek dismissal of each of Plaintiffs’ causes of action with prejudice. (See 10 ECF No. 16-1 (“Mem.”) at 10, 28.) The Court addresses each in turn. 11 I. First Cause of Action: Financial Elder Abuse 12 Financial abuse of an elder, defined as “any person residing in this state, 65 years of 13 age or older,” see Cal. Welf. & Inst. Code § 15610.27, occurs in three circumstances: 14 (1) when a person or entity “[t]akes, secretes, appropriates, obtains, or retains real or 15 personal property of an elder . . . for a wrongful use or with intent to defraud, or both,” Cal. 16 Welf. & Inst. Code § 15610.30(a)(1); (2) when a person or entity “[a]ssists” in the 17 aforementioned conduct “for a wrongful use or with intent to defraud, or both,” Cal. Welf. 18 & Inst. Code § 15610.30(a)(2); or (3) when a person or entity commits either of the above 19 actions “by undue influence.” Cal. Welf. & Inst. Code § 15610.30(a)(3). “[W]rongful use” 20 encompasses when a person or entity “knew or should have known that [its] conduct is 21 likely to be harmful to the elder,” Cal. Welf. & Inst. Code § 15610.30(b), and “undue 22 influence” is defined as “excessive persuasion that causes another person to act or refrain 23 from acting by overcoming that person’s free will and results in inequity,” which entails 24 consideration of “[t]he vulnerability of the victim,” “[t]he influencer’s apparent authority,” 25 “[t]he actions or tactics used by the influencer,” and “[t]he equity of the result.” See Cal. 26 Welf. & Inst. Code § 15610.70(a). 27 In their first cause of action, Plaintiffs’ First Amended Complaint alleges violations 28 of subsections (a)(1) and (a)(2) of the California Elder Abuse Law. (See FAC ¶¶ 39–50.) 1 Plaintiffs also argued at the hearing that Defendants violated subsection (a)(3) of the 2 California Elder Abuse Law. (See Apr. 6, 2022 Hr’g Tr. at 17:6–9.) Consequently, 3 Plaintiffs contend that Defendants committed financial abuse (1) pursuant to subsection 4 (a)(1) by (a) “directly taking” a $50 service fee in conjunction with each of the four wire 5 transfers, (see FAC ¶¶ 26–29, 47), and (b) taking with the intent to defraud or for a 6 wrongful use Plaintiffs’ wire transfers totaling $690,500, (see Apr. 6, 2022 Hr’g Tr. at 7 16:9–17:9); (2) pursuant to subsection (a)(2) by assisting the scammers in processing the 8 four wire transfers, (see FAC ¶¶ 15–16, 18, 20, 22, 26–29, 35–36, 42–43, 45–47); and 9 (3) pursuant to subsection (a)(3) by taking by undue influence Plaintiffs’ $690,500. (See 10 Apr. 6, 2022 Hr’g Tr. at 17:6–9.) 11 A. § 15610.30(a)(1) 12 1. The Service Fees 13 Plaintiffs allege that Chase’s collection of a $50 processing fee per wire transfer 14 deprived Plaintiffs of their property pursuant to subsection (a)(1). (See FAC ¶¶ 26–29, 47; 15 see also Opp’n at 10.) Defendants contend that the “fully-disclosed,” “customary 16 processing fee . . . to which Plaintiffs agreed in writing . . . does not support a claim of 17 direct elder abuse” because Plaintiffs do not allege that Chase collected the fees with the 18 “intent to defraud” or for “wrongful use,” as is required by the statute. (See Mem. at 17.) 19 “[U]nder subdivision (b) of § 15610.30, wrongful conduct occurs only when the 20 [defendant] . . . actually knows that it is engaging in a harmful breach, or reasonably should 21 be aware of the harmful breach.” Paslay v. State Farm Gen. Ins. Co., 248 Cal. App. 4th 22 639, 658 (2016). Although Plaintiffs allege in a conclusory fashion that Chase’s collection 23 of processing fees constituted wrongful use because “Chase Bank openly shirked their 24 professional responsibilities to their elderly customers,”2 (see FAC ¶ 35), Plaintiffs provide 25 no factual allegations in support. (See generally id.; see also generally Opp’n.) Rather, to 26
27 2 In drawing this conclusion, Plaintiffs appear to quote (without citing) Barrett v. Apple Inc., 523 F. Supp. 28 3d 1132 (N.D. Cal. 2021), which Defendants rely on heavily. (See Mem. at 12, 18, 20–21; Reply at 3–4, 1 the extent that Plaintiffs plead wrongful use, they conflate the reasonably discernible harm 2 that resulted from the depletion of Plaintiffs’ “life savings,” (see FAC ¶ 15); see also 3 Paslay, 248 Cal. App. 4th at 658, and the alleged harm relevant to this claim—the 4 collection of $200 in processing fees. (Cf. FAC ¶ 46 (“Defendants committed financial 5 abuse of Plaintiffs by directly taking and retaining wire fees from Plaintiff[s] each time in 6 the process[,]” without specifying what, if any, harm resulted from the processing fees).) 7 Instead, Plaintiffs plead that Defendants “knew or should have known their conduct would 8 be harmful to Plaintiffs” because of the “significant risks involved” and “the outrageous 9 pillaging of [Plaintiffs’] financial security” when “they lost almost $700,000.00.” (See id. 10 ¶¶ 46–48.) Consequently, Plaintiffs fail to plead that the collection of the processing fees— 11 as opposed to the wire transfers themselves—imposed a harm. See Kearns, 567 F.3d at 12 1124 (recognizing that plaintiffs who aver fraud must meet Rule 9(b)’s heightened pleading 13 standard and “state with particularity the circumstances constituting fraud”) (internal 14 citations omitted). 15 Further, although Plaintiffs plead this cause of action against all Defendants (see 16 FAC ¶¶ 46–47), Plaintiffs allege that “Defendant Chase” (not the individual defendants) 17 took the processing fees. (See id. ¶¶ 26–29 (“[T]o effectuate the scam, Chase Bank charged 18 Plaintiff $50 for a wire transfer fee[,] which was directly taken from Plaintiffs’ account by 19 Chase Bank.”).) “Rule 9(b) does not allow a complaint to . . . lump multiple defendants 20 together but require[s] plaintiffs to differentiate their allegations when suing more than one 21 defendant.” Destfino v. Reiswig, 630 F.3d 952, 958 (9th Cir. 2011) (alteration in original) 22 (internal quotation marks omitted) (quoting Cisneros v. Instant Cap. Funding Grp., Inc., 23 263 F.R.D. 595, 606–07 (E.D. Cal. 2009)). Here, although Plaintiffs appear to attribute 24 the actual taking of service fees to Defendant Chase only, the First Amended Complaint 25 fails to meet the pleading standard because it lumps Defendants together in a conclusory 26 fashion, (see FAC ¶¶ 46–47 (“Defendants, and each of them, [] committed financial abuse 27 of Plaintiffs by directly taking and retaining wire fees”)), without pleading with any 28 / / / 1 particularity each individual Defendant’s involvement. See Destfino, 630 F.3d at 958; see 2 also Fed. R. Civ. P. 9(b). 3 Despite Plaintiffs’ allegation that Defendants “effectuate[d] the scam” through the 4 collection of processing fees, (see FAC ¶¶ 26–29, 46–47), the Court concludes that the $50 5 processing fees do not constitute direct takings under § 15610.30(a)(1) because Plaintiffs 6 fail to plead with any particularity that Defendants actually knew that taking $50 fees was 7 likely to be harmful to Plaintiffs or that Defendants did so with the intent to defraud 8 Plaintiffs. See Das v. Bank of Am., N.A., 186 Cal. App. 4th 727, 745 (2010); see also Cal. 9 Welf. & Inst. §§ 15610.30(a)(1), (b). 10 2. The Wire Transfers 11 Plaintiffs also argued at the hearing that the wire transfers constituted a direct taking. 12 (See Apr. 6, 2022 Hr’g Tr. at 16:9–17:9; see generally FAC ¶¶ 16, 26–29, 35, 43, 45–47) 13 (“[Plaintiffs], with the substantial assistance and knowledge of [Defendants], sent an 14 extraordinarily large wire transfer;” “[Defendants were] assisting financial abuse . . . 15 execut[ing] [four] extraordinarily large wire transfers of money to bank accounts in China;” 16 “[Defendants] knowingly assisted the scammers’ financial abuse of William and Ave by 17 executing four [] wire transfers totaling $690,500.00;” “Defendants assisted in taking 18 Plaintiffs’ property . . . at the time of the transfers”) (emphasis added). Plaintiffs, however, 19 fail to allege that Defendants “[took], secrete[d], appropriate[d], obtain[ed], or retain[ed]” 20 Plaintiffs’ wire transfers. See Cal. Welf. & Inst. § 15610.30(a)(1). 21 Plaintiffs argue that because Chase held Plaintiffs’ funds in their personal account 22 and processed transactions on their behalf, that Defendants, (see Apr. 6, 2022 Hr’g Tr. at 23 24:15–24 (lumping Defendants together without differentiating allegations)), committed a 24 direct taking. (See id. at 16:16–17:2.) By contrast, Plaintiffs’ factual allegations show that 25 Mr. Bortz initiated the transfers, the third-party scammers obtained the funds, and Chase 26 merely processed the transactions. (See, e.g., FAC ¶ 25 (“William began sending William 27 and Ave’s money to the . . . scammers. . . . Chase Bank processed those [four] wire 28 transfers through William and Ave’s JP Morgan Chase Bank accounts to China.”) Despite 1 Plaintiffs’ emphasis of Chase’s “custodial relationship” with the accountholders, (see Apr. 2 6, 2022 Hr’g Tr. at 16:21–17:2), it is the taking of property, not the account’s maintenance 3 or processes, that is at issue. See Cal. Welf. & Inst. § 15610.30(a)(1). Because it was the 4 third-party scammers who actually took, secreted, appropriated, obtained, or retained the 5 alleged $690,500 from the four wire transfers, while Defendants merely processed the 6 transactions, (see FAC ¶¶ 25–29), Defendants did not commit a direct taking. 7 Because the Court concludes that Plaintiffs have failed to allege that Defendant 8 “[took], secrete[d], appropriate[d], obtain[ed], or retain[ed]” either the $50 processing fees 9 or Plaintiffs’ wire transfers “for a wrongful use or with intent to defraud,” the Court 10 GRANTS Defendants’ Motion and DISMISSES Plaintiffs’ first cause of action under 11 § 15610.30(a)(1). 12 B. § 15610.30(a)(2) 13 Plaintiffs also claim that Defendants assisted in the third-party scammers’ financial 14 elder abuse pursuant to subsection (a)(2) when Defendants processed four substantial wire 15 transfers to foreign accounts. (See FAC ¶¶ 15–16, 18, 20, 22, 26–29, 35–36, 42–43, 16 45–47.) Defendants argue that Plaintiffs’ First Amended Complaint—which adds only one 17 new factual allegation, namely, that Defendants were “mandated reporters,” (see id. ¶¶ 12, 18 19)—fails to allege that Defendants had actual knowledge of the scam. (See Mem. at 19 18–20.) Plaintiffs counter that the legislative intent regarding § 15610.30(a)(2) “does not 20 require the ‘assister’ have actual knowledge of the third[-]party scammer’s wrongful 21 conduct.” (See Opp’n at 12–16 (emphasis in original).) 22 In its Order dismissing Plaintiffs’ original Complaint, (see ECF No. 12 at 6 (quoting 23 Das, 186 Cal. App. 4th at 744–45)), the Court explained that California law uses an aiding 24 and abetting standard to determine liability for assisting financial elder abuse. That 25 standard requires Plaintiffs to plead Defendants’ actual knowledge of the third-party’s 26 wrongful conduct. See Das, 186 Cal. App. 4th at 744–45; see also Paskenta Band of 27 Nomalki Indians v. Umpqua Bank, 846 F. App’x 589, 590 (9th Cir. 2021) (“[A]ctual 28 knowledge is required to establish an aiding and abetting claim.” (first citing Das, 186 Cal. 1 App. 4th at 745; then citing Chavez v. United States, 683 F.3d 1102, 1108–10 (9th Cir. 2 2012))). In other words, constructive knowledge of the underlying fraud does not suffice 3 to establish the requisite actual knowledge. See, e.g., Mackintosh v. JPMorgan Chase 4 Bank, No. 18-cv-03348-SK, 2018 WL 3913791, at *3 (N.D. Cal. July 13, 2018). 5 “Generally, constructive knowledge, means knowledge that one . . . should have . . . 6 ranging from one who is deliberately indifferent . . . to one who merely should know of a 7 dangerous condition.” Paslay, 248 Cal. App. 4th at 657 (internal quotation marks and 8 citations omitted) (emphasis added). Here, Plaintiffs allege that Defendants had actual 9 knowledge that Plaintiffs were elders and that their multiple, substantial transfers to foreign 10 countries “constituted a profound change in their banking pattern,” (see FAC ¶¶ 34–35, 11 43), which together should have cued Defendants to the “well[-]known problem” of 12 financial elder abuse that is (1) documented in the U.S. Department of Treasury’s 2011 13 advisory regarding “signs of abuse,” (see id.), and the Board of Governors of the Federal 14 Reserve System’s “Interagency Guidance on Privacy Laws and Reporting Financial Abuse 15 of Older Adults,” (see id. ¶¶ 12–14); (2) guided by national reporting requirements that call 16 for higher scrutiny of transactions exceeding $10,000, (see id. ¶¶ 16, 36); and (3) embedded 17 in a bank employee’s role as a mandatory reporter of financial exploitation under California 18 law. (See id. ¶¶ 12, 19) (citing Cal. Welf. & Inst. Code § 15630.1).) These are textbook 19 allegations of constructive knowledge, which does not suffice to establish liability. See, 20 e.g., Mackintosh, 2018 WL 3913791, at *3. 21 Because Plaintiffs’ allegations that Defendants should have known about the 22 underlying scam fall short of the requisite actual knowledge, the Court GRANTS 23 Defendants’ Motion and DISMISSES Plaintiffs’ first cause of action under 24 § 15610.30(a)(2). 25 C. § 15610.30(a)(3) 26 Plaintiffs argued for the first time at the hearing that Defendants took “by undue 27 influence” Plaintiffs’ $690,500 in wire transfers pursuant to subsection (a)(3). (See Apr. 6, 28 2022 Hr’g Tr. at 17:6–9.) Plaintiffs, however, fail to plead “undue influence” as defined 1 in § 15610.70 with any particularity. (See generally FAC.) In any event, because Plaintiffs 2 fail to allege that Defendants directly “[took], secrete[d], appropriate[d], obtain[ed], or 3 retain[ed], or assist[ed] in taking, secreting, appropriating, obtaining, or retaining,” the wire 4 transfers, see supra Sections I.A.2, I.B, Defendants’ processing of the transactions also 5 does not constitute a taking under § 15610.30(a)(3). See Cal. Welf. & Inst. 6 § 15610.30(a)(3). The Court therefore DISMISSES Plaintiffs’ first cause of action under 7 subsection (a)(3) of the California Elder Abuse Law. 8 II. Second Cause of Action: Unfair Competition Law 9 Plaintiffs’ second cause of action alleges that Defendants violated California’s UCL 10 because (1) their “taking” and “assisting” was unlawful in violation of the California Elder 11 Abuse Law, and (2) their “fail[ure] to credit Plaintiffs’ accounts the amount of the money 12 . . . [,] which may have been acquired by unfair, unlawful, and/or fraudulent business 13 practices,” violated California Welfare & Institutions Code § 15657.6. (See FAC 14 ¶¶ 51–58.) 15 First, although Plaintiffs contend that a cause of action under California Welfare & 16 Institutions Code § 15657.5 “indisputably may serve as a predicate violation for a UCL 17 claim,” (see Opp’n at 18 (citing Rand v. Am. Nat’l. Ins. Co., No. CV 09-0639-SI, 2009 U.S. 18 Dist. LEXIS 64781, at *12 (N.D. Cal. July 27, 2009))), they concede that their UCL cause 19 of action is dependent on the financial elder abuse cause of action. (See id. at 19.) Because 20 Plaintiffs fail to plead sufficiently a violation of the California Elder Abuse statute, see 21 supra Section I, their UCL cause of action must also fail. 22 Second, to the extent that Plaintiffs plead a UCL cause of action predicated on 23 Defendants’ allegedly fraudulent business practices, they fail to “state with particularity 24 the circumstances constituting fraud” in support of their claim. See Kearns, 567 F.3d at 25 1124 (quoting Fed. R. Civ. P. 9(b)). Not only are Plaintiffs’ allegations of fraudulent 26 business practices conclusory, (see FAC ¶ 57), but Plaintiffs also abandon the “fraudulent” 27 claim in their Opposition. (See generally Opp’n at 18–20; see also Reply at 9.) 28 / / / 1 Ultimately, because Plaintiffs’ second cause of action is predicated on their first 2 cause of action for financial elder abuse, their UCL causes of action necessarily fail. 3 Plaintiffs also fail to plead sufficient facts to support their abandoned “fraudulent” claim 4 under the UCL. The Court therefore GRANTS Defendants’ Motion and DISMISSES 5 Plaintiffs’ second cause of action under the UCL. 6 III. Third Cause of Action: Breach of the Implied Covenant of Good Faith and Fair Dealing 7
8 Plaintiffs’ third cause of action is for breach of the implied covenant of good faith 9 and fair dealing. (See FAC ¶¶ 59–65.) Specifically, Plaintiffs allege that Defendants’ 10 failure to “fulfill [their] obligations . . . under the account agreement” constitutes breach. 11 (See id. ¶ 64.) Plaintiffs allege that Defendants’ own fraud monitoring policies and their 12 reporting requirements pursuant to California Welfare and Institutions Code § 15630.1 13 required them to protect Plaintiffs and prevent financial elder abuse. (See id.) 14 Defendants respond that, because Plaintiffs allege an “improperly accepted and 15 executed [] funds transfer,” the claim for breach of the implied covenant is displaced by 16 California’s Uniform Commercial Code (“UCC”). (See Mem. at 24–25 (citing Zengen, 17 Inc. v. Comerica Bank, 41 Cal. 4th 239, 244 (2007).) Though the Court agrees that the 18 UCC displaces common law claims where “the UCC’s provisions squarely cover the 19 transactions at issue,” see Venture Gen. Agency, LLC v. Wells Fargo Bank, N.A., No. 19- 20 CV-02778-TSH, 2019 WL 3503109, at *3 (N.D. Cal. Aug. 1, 2019) (citing Zengen, 41 Cal. 21 4th at 253–54), the Court also recognizes that the UCC does not preempt claims based on 22 “misconduct outside the wire transfer process.” See Barrett v. JP Morgan Chase Bank, 23 No. 14-CV-2976-DMS WVG, 2015 WL 631652, at *3–4 n.3 (S.D. Cal. Feb. 13, 2015). 24 Plaintiffs’ failure to address Defendants’ arguments on this point, however, 25 “constitutes abandonment of the claim,” see Moore v. Apple, Inc., 73 F. Supp. 3d 1191, 26 1205 (N.D. Cal. 2014), permitting the Court to grant Defendants’ Motion as to Plaintiffs’ 27 third cause of action without reaching the merits. “In instances where a plaintiff simply 28 fails to address a particular claim in its opposition to a motion to dismiss that claim, courts 1 generally dismiss it with prejudice.” Homsy v. Bank of Am., N.A., No. C 13-01608 LB, 2 2013 WL 2422781, at *5 (N.D. Cal. June 3, 2013) (citing In re Hulu Privacy Litig., No. C 3 11-03764 LB, 2012 WL 2119193, at *3 (N.D. Cal. June 11, 2012)); see also Shull v. Ocwen 4 Loan Servicing, LLC, No. 13-CV-2999-BEN WVG, 2014 WL 1404877, at *2 (S.D. Cal. 5 Apr. 10, 2014) (“Where a party fails to address arguments against a claim raised in a motion 6 to dismiss, the claims are abandoned and dismissal is appropriate.” (citing Silva v. U.S. 7 Bancorp, No. 5:10-cv-1854, 2011 WL 7096576, at *3 (C.D. Cal. Oct.6, 2011))); cf. Jenkins 8 v. Cnty. of Riverside, 398 F.3d 1093, 1095 n.4 (9th Cir. 2005) (per curiam) (noting that the 9 plaintiff had abandoned claims below by failing to raise them in her opposition to the 10 defendant’s motion for summary judgment). 11 At the motion hearing on April 6, 2022, Mr. Steele, on behalf of Plaintiffs, submitted 12 that although Plaintiffs had “not intend[ed] to abandon the claim,” they had made a tactical 13 decision not to respond to Defendants’ arguments in their Motion regarding the third cause 14 of action. (See Apr. 6, 2022 Hr’g Tr. at 2:16–3:11.) Conceding that their UCL and breach 15 of the implied covenant claims “need[ed] that [financial elder abuse violation] predicate in 16 order for them to be valid,” Mr. Steele explained that he was “limited in the amount of 17 pages that [he] must address, so it’s tactical to the point that [he] had to spend [his] time 18 and [his] page limitations on what [he] thought was the more critical issue.” (See id. at 19 2:23–3:2.) Mr. Steele, however, used only sixteen of the twenty-five pages afforded to him 20 for his Opposition pursuant to Civil Local Rule 7.1(h). (See generally Opp’n.) This belies 21 Mr. Steele’s contention that Plaintiffs did not intend to abandon their third cause of action. 22 The Court therefore concludes that Plaintiffs abandoned the third cause of action. 23 Accordingly, the Court GRANTS Defendants’ Motion and DISMISSES Plaintiffs’ third 24 cause of action. 25 IV. Leave to Amend
26 Plaintiffs do not request leave to amend, (see generally FAC; Opp’n), and 27 Defendants claim that amendment would be futile. (See Mem. at 27–28; Reply at 11.) 28 Though the standard for granting leave to amend is generous, see United States v. 1 Corinthian Colls., 655 F.3d 984, 995 (9th Cir. 2011) (internal citations omitted); see also 2 Fed. R. Civ. P. 15(a)(2) (“The court should freely give leave [to amend] when justice so 3 requires.”), “leave to amend is not to be granted automatically.” Jackson v. Bank of Haw., 4 902 F.2d 1385, 1387 (9th Cir. 1990). 5 Courts are to consider five factors in assessing the appropriateness of leave to amend: 6 bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether 7 the plaintiff has previously amended the complaint. See Johnson v. Buckley, 356 F.3d 8 1067, 1077 (9th Cir. 2004). Here, there is no evidence of delay, prejudice, or bad faith, so 9 whether leave to amend should be granted turns entirely on Plaintiffs’ previous 10 amendments and whether further amendment would be futile. See id. Amendment is futile 11 when “the allegation of other facts consistent with the challenged pleading could not 12 possibly cure the deficiency.” See DeSoto, 957 F.2d at 658 (quoting Schreiber, 806 F.2d at 13 1401). 14 Although Plaintiffs amended their complaint to allege that Chase’s service fees 15 constituted a taking under the California Elder Abuse Law, they failed to plead with 16 particularity that Chase collected the $200 in fees with the “intent to defraud” or for 17 “wrongful use.” See Cal. Welf. & Inst. §§ 15610.30(a)(1), (b); see also Kearns, 567 F.3d 18 at 1124 (citing Fed. R. Civ. P. 9(b)). For the same reasons, Plaintiffs’ new claims—alleged 19 for the first time at oral argument—that Defendants took the $690,500 in wire transfers 20 with the “intent to defraud,” for a “wrongful use,” or by “undue influence” also fail to meet 21 the pleading standards. See Cal. Welf. & Inst. §§ 15610.30(a)(1), (a)(3), (b); see also Fed. 22 R. Civ. P. 9(b). Though given the opportunity to plead additional facts, Plaintiffs failed to 23 add allegations in line with the Court’s previous Order, which explained that “assisting” 24 under the California Elder Abuse Law requires Plaintiffs to plead actual knowledge. (See 25 ECF No. 12 at 6 (citing Das, 186 Cal. App. 4th at 744–450). Consequently, amendment 26 of the financial elder abuse claim would be futile. See Simpson v. AOL Time Warner Inc., 27 452 F.3d 1040, 1054 (9th Cir. 2006) (“Futility of amendment may be shown by [p]laintiff’s 28 failure to plead additional facts when given the opportunity.”). Because Plaintiffs do not— 1 it appears, cannot—allege additional facts to cure the deficiency, leave to amend is 2 ||inappropriate. See DeSoto, 957 F.2d at 658 (quoting Schreiber, 806 F.2d at 1401). 3 Given that Plaintiffs can plead no additional facts to cure the underlying claim’s 4 ||defects, amendment as to the remaining causes of action, which are predicated on the 5 || financial elder abuse claim, is likewise futile. Finally, Plaintiffs abandoned both the second 6 || cause of action under the fraudulent prong of the UCL and third cause of action for breach 7 the implied covenant of good faith and fair dealing. (See generally Opp’n.) 8 || Accordingly, dismissal with prejudice 1s appropriate as to both remaining claims. See, e.g., 9 || Homsy, 2013 WL 2422781, at *5 (internal citation omitted). The Court therefore DENIES 10 || Plaintiffs leave to amend. 1] CONCLUSION 12 In light of the foregoing, the Court GRANTS Defendants’ Motion (ECF No. 16) and 13 || DISMISSES WITH PREJUDICE the First Amended Complaint in its entirety. The 14 || Clerk of the Court SHALL CLOSE the file. 15 IT IS SO ORDERED. 16 || Dated: May 10, 2022 . | 59) (2 (re Honorable Todd W. Robinson 18 United States District Court 19 20 21 22 23 24 25 26 27 28