Judge: Lee W. Tsao, Case: 21WNCV00285, Date: 2023-01-17 Tentative Ruling

Case Number: 21WNCV00285    Hearing Date: January 17, 2023    Dept: C

DIAZ, et al. v. OWENS, et al.

CASE NO.:  21NWCV00285

HEARING:  1/17/23 @ 9:30 AM

 

#1

TENTATIVE RULING

 

I.             Defendants Escrow Today, Inc. and Godinez’s demurrer to second amended complaint is OVERRULED.  Defendants are ORDERED to file and serve their Answers within 10 days.  Plaintiffs to give NOTICE.

 

II.            Defendant Wells Fargo Bank, N.A.’s demurrer is SUSTAINED with 10 days leave to amend.  Defendant to give NOTICE.

 

 

The operative Second Amended Complaint (“SAC”) alleges that Plaintiff Lazaro W. Diaz opened escrow with Escrow Today, Inc. (“ETI”) on August 3, 2020, for the purchase of real property (“The Property”) described as:  919 Grace Street, Bakersfield, CA 93305.  (SAC, ¶ 16.)  “On August 5, 2020, Dalia Godinez (hereafter ‘Dalia’), ETI’s escrow officer in charge of the purchase transaction for The Property, sent Lazaro wire instructions for the initial five-thousand-dollar ($5,000.00) deposit. Lazaro subsequently wired five-thousand-dollars ($5,000.00) to ETI’s trust account. Thereafter, between August 5, 2020 and November 18, 2020 Lazaro was subjected to the standard mortgage process.” (SAC, ¶ 17.)  “On November 19, 2020, at 7:23am, Dalia sent Lazaro an email message with the following statement: ‘I will send wire instructions.’” (SAC, ¶ 18.)  “On November 19, 2020, Minutes after sending his last message to Dalia, Lazaro received wire instructions for $84,000.00 from an email (escrowtitleagentt@gmail.com) which contained, within the body of the email, ETI’s logo, name and address. The email also introduced Tiffany M. Owens as the attorney for ETI.”  (SAC, ¶ 20.)  “In accordance with the instructions listed in the ‘Wire Fraud and Electronic Funds Transfer Advisory’ section within the Purchase Agreement, that same day, at approximately 12:37pm, after receiving the email with the wire instructions, Dalia called and spoke to Jessica to confirm the amount of closing funds and the wire instructions; Dalia confirmed the amount was $84,000.00 and stated that the actual wire instructions had been emailed to Lazaro earlier that morning.”  (SAC ¶ 21.) “While at the Wells Fargo bank branch, Jessica called and spoke to Dalia five times between 3:03pm and 3:28pm to verify information provided earlier that morning within the wiring email.  Information such as the account number to where the wired funds would be going. Based on Dalia’s representations, made by phone, to Jessica, Jessica followed the emailed wire instructions, to the letter.  The Wells Fargo Bank teller ultimately executed the $84,000.00 wire to the account provided within the wire instructions from the Fake Escrow Attorney to the teller.”  (SAC, ¶ 23.)  “On November 25, 2020, Jessica called ETI to confirm receipt of the $84,000.00 which was wired November 19, 2020 from Lazaro and Jessica via Wells Fargo Bank to ETI, however, an ETI representative informed Jessica that ETI had not received the funds. Shortly thereafter that same day, Jessica received an email from ETI’s CEO, Genienne Gastelum, confirming that ETI had not received the funds.”  (SAC, ¶ 24.)  “Lazaro and Jessica Filed a complaint with the Department of Financial Protection and Innovation (DFPI).  ETI responded to the complaint with false and deceiving information.  Specifically stating that, upon the opening of escrow, Lazaro and Jessica received and signed a wire alert document that mentioned that the original wire instructions were the ONLY instructions they would receive.  However, said document was presented to Lazaro and Jessica only after the $84,000.00 were wired on November 23, 2020.  In addition, they claimed that Lazaro and Jessica failed to contact Dalia to confirm the information in the wire instructions which is FALSE.” (SAC, ¶ 26.)  “Plaintiffs allege that defendant Dalia, through her position at ETI, initiated the scheme by creating confusion and chaos to induce the Plaintiffs to follow the fraudulent instructions and send their hard earned funds to a fake attorney’s (defendant Tiffany) Wells Fargo account).”  (SAC, ¶ 27.)  “After providing information/proof about the circumstances that led them to visit their branch, a banker at [the Wells Fargo branch located in Arizona] provided Lazaro and Jessica with a copy of the account activity from the account where the 84,000.00 was credited to, which happened to be Tiffany’s account.”  (SAC, ¶ 30.)  Based thereon, the SAC asserts causes of action for:

 

1.        Conversion (v. Owens and Dalia)

2.        Breach of Contract (v. ETI and Dalia)

3.        Breach of Implied Covenant of Good Faith and Fair Dealing

4.        Fraud and Fraudulent Misrepresentation

5.        Negligence (v. Escrow Today, Godinez)

6.        Negligence (v. Wells Fargo Bank)

7.        Negligent Misrepresentation

8.        Intentional Interference with Economic Advantage

9.        Negligent Interference with Economic Advantage

10.    Tortious Interference with Contract

11.    Breach of Fiduciary Duty

12.    Unjust Enrichment

13.    Specific Recovery of Property

14.    Vicarious Liability

 

I.             Escrow Today and Dalia Godinez’s Demurrer

 

Defendants Escrow Today, Inc. (“ETI”) and Godinez (collectively, “Escrow Defendants”) demur to the 2nd, 3rd, and 12th - 14th causes of action on the grounds that they fail to state facts sufficient to constitute a cause of action and are uncertain.

 

2nd CAUSE OF ACTION

 

BREACH OF CONTRACT:  Whether it is written, oral, or implied, the elements of a cause of action for breach of contract are as follows: (1) the existence of a contract; (2) Plaintiff’s performance or excused non-performance; (3) Defendants’ breach; and (4) resulting damage to Plaintiff. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.) “If an action is based on a breach of written contract, the terms must be set forth verbatim in the body of the complaint or a copy of the contract must be attached and incorporated by reference.” (Id. at 459.)  Alternatively, if the claim is based on a written contract, then “a plaintiff may plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co., (2002) 29 Cal.4th 189, 198-199.)

 

Defendants contend that the contract is not attached to the SAC.  However, attached to Exhibit B is the Residential Income Property Purchase Agreement and Joint Escrow Instructions, which includes the Addendum that is issued by Escrow Today, Inc.  At a minimum, Plaintiffs have adequately alleged an implied by conduct contract at ¶ 17 wherein Plaintiffs wired a deposit of $5,000.00 into ETI’s escrow account, and ETI acknowledged the opening of escrow with Escrow Today.  (SAC, Ex. H.)

 

The demurrer is OVERRULED.  Any questions relating to the formation of contract can be cleared up during discovery.

 

3rd CAUSE OF ACTION

 

BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING:  Any claim for breach of the implied covenant of good faith and fair dealing must be tied to alleged breaches of express contractual provisions. (Pasadena Live v. City of Pasadena (2004) 114 Cal. App. 4th 1089, 1094.)  

 

Defendants contend that the contract is not attached to the SAC.  However, for the same reasons described above, the court finds that the SAC adequately alleged the existence of a contract.

 

Demurrer is OVERRULED.

 

12th CAUSE OF ACTION

 

UNJUST ENRICHMENT:  Under the law of restitution, an individual may be required to make restitution if he is unjustly enriched at the expense of another. A person is enriched if he receives a benefit at another's expense. (Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51.)

 

There is a split of authority across the appellate courts regarding whether unjust enrichment is a cause of action or a principle of law.  (Jogani v. Superior Court (2008) 165 Cal.App.4th 901, 911 and Melchior v. New Line Prods., Inc. (2003) 106 Cal.App.4th 779, 794 hold that unjust enrichment is a principle underlying various doctrines and remedies, including quasi-contract. On the other hand, Hirsch v. Bank of America (2003) 107 Cal.App.4th 708, First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, and Lectrodryer v. Seoul Bank (2000) 77 Cal.App.4th 723 view it as a separate cause of action.)

 

This court follows the Jogani line of cases and finds that Unjust Enrichment is not a cause of action.  However, Plaintiffs may still allege it as a theory supporting the remedy of rescission.  A complaint may state multiple legal theories upon which recovery might be predicated for one claim for relief. (Newhall Land & Farming Co. v. Superior Court (1993) 19 Cal.App. 4th 334, 351.)

 

Accordingly, the Clerk is ORDERED to strike the title, “Twelfth cause of action for Unjust Enrichment and ¶ 106” (23:24 – 24:2) by interlineation, but the allegations at ¶¶ 107-111 may remain. 

 

As amended, demurrer is OVERRULED.

 

13TH CAUSE OF ACTION

 

SPECIFIC RECOVERY OF PROPERTY: 

 

“Specific Recovery” is not a cause of action.  However, if Plaintiffs are alleging Specific Performance, then such is a remedy for Breach of Contract, which has already been pled in the 2nd cause of action. 

 

Plaintiffs may pray for the relief, but Specific Performance is not a cause of action.  The Clerk is ordered to strike the title, “Thirteenth cause of action for Specific Recovery of Property” and ¶ 112 at 24:17-22 by interlineation, and the allegations at ¶ 113-114 regarding the request for relief may remain.  

 

As amended, demurrer is OVERRULED.

 

14th CAUSE OF ACTION

 

VICARIOUS LIABILITY:

 

Vicarious Liability is not a cause of action.  However, the court will allow Plaintiffs to allege vicarious liability of ETI for Dalia’s alleged initiation of “the scheme by creating confusion and chaos to induce the Plaintiffs to follow the fraudulent instructions and send their hard earned funds to a fake attorney’s (defendant Tiffany) Wells Fargo account).”  (SAC, ¶¶ 27, 115-119.) 

 

The Clerk is ordered to strike the title, “Fourteenth cause of action for Vicarious Liability” and ¶ 115 at 25:3-8 by interlineation, and the allegations at ¶ 113-114 regarding the request for relief may remain.  

 

As amended, demurrer is OVERRULED.

 

II.            Wells Fargo’s Demurrer

 

Defendant Wells Fargo demurs to the 4th, 6th, and 7th causes of action on the ground that they fail to state facts sufficient to constitute a cause of action.

 

4th CAUSE OF ACTION

 

FRAUD:  The elements are:  1) misrepresentation (false representation, concealment, or nondisclosure); 2) knowledge of falsity (scienter); 3) intent to defraud or induce reliance; 4) justifiable reliance; and 5) damages.  (See CC § 1709.)  Fraud actions are subject to strict requirements of particularity in pleading.  (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197, 216.)  A plaintiff must allege what was said, by whom, in what manner (i.e. oral or in writing), when, and, in the case of a corporate defendant, under what authority to bind the corporation.  (See Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.)

 

The SAC does not allege any misrepresentation made by Wells Fargo, and further, fails for lack of specificity.

 

Accordingly, the demurrer is SUSTAINED with 10 days leave to amend.

 

6th CAUSE OF ACTION

 

NEGLIGENCE: To prevail on a negligence claim, Plaintiffs must plead facts establishing “duty, breach, causation, and damages.”  (Ortega v. Kmart Corp. (2001) 26 Cal.4th 1200, 1205.)  

 

While a bank has a duty to act with reasonable care in its transactions with its depositors, the bank is not a fiduciary and owes no duty to supervise account activity.  (Kurtz-Ahlers, LLC v. Bank of America, N.A. (2020) 48 Cal.App.5th 952, 956 (citations omitted).) The bank’s duties to its depositor under the account agreement are narrow in scope, including wrongful dishonor of checks, duty to dishonor checks lacking required signatures, and rendering accurate account statements.  (Kurtz-Ahlers, 48 Cal.App.5th at 956.)  There is no duty “to supervise account activity or to inquire into the purpose for which the funds are being used.” (Ibid. quoting Chazen v. Centennial Bank (1998) 61 Cal.App.4th 532, 537); see Software Design and Application, Ltd. (1996) 49 Cal.App.4th 472, 481 - a bank has no duty to “supervise account activity or otherwise track frequent and/or large dollar transactions”; Keeney v. Bank of Italy (1917) 33 Cal.App. 515, 518 - Nor does a bank have a duty to “inquire into the purpose for which the funds are being used”; Copesky v. Superior Court (1991) 229 Cal.App.3d 678, 694 - “banks, in general and in this case, are not fiduciaries for their depositors; and that the bank-depositor relationship is not a ‘special relationship’ ”.)

 

Plaintiffs’ wire transfer is governed by the principles and rules set forth in Article 4A of the Uniform Commercial Code. (Zengen, Inc. v. Comerica Bank (2007) 41 Cal.4th 239, 251-252 - “[The UCC] provide[s] a detailed scheme for analyzing the rights, duties and liabilities of banks and their customers in connection with the authorization and verification of payment orders.  Analysis of a funds transfer under these sections results in a determination of whether or not the funds transfer was ‘authorized,’ and provides a very specific scheme for allocation of loss.”)  “[N]othing in [UCC] Article 4A makes a receiving bank liable for its negligence in accepting a duly authorized and error-free wire transfer.” (Chino Commercial Bank, N.A. v. Peters (2010) 190 Cal.App.4th 1163, 1174.)


Rather, the customer is exclusively liable for the loss of an authorized payment order.  (Cal. U. Comm. Code § 11202(a).) An order is authorized if either of the following occurs: (1) the person placing the payment order was actually authorized by the customer to do so, or (2) the customer is bound by the payment order under the law of agency. (Id.)

 

The court finds Plaintiffs have failed to allege facts supporting the existence of a duty in this scenario.  Plaintiffs allege that they went to a Wells Fargo branch, presented the escrow instructions to a teller, and authorized the completion of the wire transfer.  (SAC, ¶¶ 18-30.)  Thus, Plaintiffs failed to allege any duty or wrongdoing alleged against Wells Fargo.

 

Demurrer is SUSTAINED with 10 days leave to amend.

 

7th CAUSE OF ACTION

 

NEGLIGENT MISREPRESENTATION:  The elements are: (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant made the representation without reasonable ground for believing it to be true; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages.  (Majd v. Bank of Am, N.A. (2015) 243 Cal.App. 4th 1293, 1307 citing West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal. App.4th 780, 792.)   Like fraud claims, negligent misrepresentation claims must be pleaded with specificity.  (See Charnary v. Cobert (2006) 145 Cal.App.4th 170, 185 fn. 14.)

 

The SAC does not allege any negligent misrepresentation made by Wells Fargo, and further, fails for lack of specificity.

 

Accordingly, the demurrer is SUSTAINED with 10 days leave to amend.