Court Opinion

ID: 857038
Source: CourtListenerOpinion
Date Created: 2013-04-02 20:47:10.699834+00
Date Added: 2024-06-11T12:59:57.876978
License: Public Domain

Filed 4/2/13 May v. Bank of America CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

DONNA MAY et al.,

     Plaintiffs and Appellants,                                        G046893

         v.                                                            (Super. Ct. No. 30-2011-00484717)

BANK OF AMERICA,                                                       OPINION

     Defendant and Respondent.

                   Appeal from a judgment of the Superior Court of Orange County, Robert J.
Moss, Judge. Affirmed.
                   Jeffrey S. Benice for Plaintiffs and Appellants.
                   Severson & Werson, Jan T. Chilton and Jonathan D. Dykstra for Defendant
and Respondent.
                                             INTRODUTION
                 Appellants Donna May and Shellie May appeal from a judgment of
dismissal in favor of Bank of America (BofA) after the trial court sustained BofA’s
demurrer without leave to amend. Appellants accused BofA of negligence after they
were defrauded in a real estate scheme.
                 We affirm. BofA owed no duty of care to appellants, who were not BofA
customers. The special circumstances that might create a duty of care are not present
here. The trial court properly sustained BofA’s demurrer and dismissed it from the case.
                                                    FACTS
                 According to the first amended complaint, the only document other than the
notice of appeal they included in their appendix, appellants fell victim to a real estate
scam perpetrated by defendants other than BofA. These defendants persuaded appellants
to wire $130,000 to a BofA escrow account in the name of Golden Gate Escrow as the
purchase price of a house in San Bernardino. Golden Gate Escrow allegedly does not
exist, and the people behind the scam absconded with appellants’ money.
                 Appellants sued 14 defendants, including BofA. The other defendants were
sued for several causes of action based on fraud. BofA was sued only for negligence.
The negligence theory was that BofA should have checked out Golden Gate Escrow’s
legitimacy, and its failure to do so breached a duty of care to appellants.
                 BofA evidently demurred to the first amended complaint.1 The trial court
sustained BofA’s demurrer and dismissed BofA from the lawsuit.2 The grounds for
dismissal were that appellants were not BofA’s customers and BofA therefore owed no
duty to them.

         1       The moving, opposition, and reply papers are not part of the record on appeal.
         2       The appellants’ appendix included neither the order sustaining the demurrer nor the judgment of
dismissal for BofA. We had to issue two orders to appellants to get a copy of the judgment.

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                                      DISCUSSION
              At the risk of sounding like a broken record (an allusion that may escape
our younger readers), we repeat that an order sustaining a demurrer is not an appealable
order. (City of Morgan Hill v. Bay Area Air Quality Management Dist. (2004) 118
Cal.App.4th 861, 867, fn. 3; Hood v. Hacienda La Puente Unified School Dist. (1998) 65
Cal.App.4th 435, 437, fn. 1; see also 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, §
154, pp. 230-231.) The appeal is taken from the judgment of dismissal. (Leader v.
Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 611.)
              On appeal from the judgment of dismissal after a demurrer has been
sustained, we review a complaint de novo to determine whether any facts have been
alleged that would constitute a cause of action under any theory, regardless of labels.
(Lee Newman, M.D., Inc. v. Wells Fargo Bank (2001) 87 Cal.App.4th 73, 79.) In a
multiparty lawsuit, a final judgment against one defendant leaving no issue to be
determined as to that defendant is appealable. (Nguyen v. Calhoun (2003) 105
Cal.App.4th 428, 437.) Because appellants’ sole claim against BofA was for negligence,
we can review the judgment dismissing the bank.
              The trial court sustained BofA’s demurrer because BofA owed appellants
no duty of care. Whether a duty of care exists is a question of law. (Bily v. Arthur Young
& Co. (1992) 3 Cal.4th 370, 397.)
              Two cases directly on point dispose of appellants’ contentions on appeal.
Software Design & Application, Ltd. v. Hoefer & Arnett, Inc. (1996) 49 Cal.App.4th 472
(Software Design) recounts a virtually identical fact pattern. The plaintiff in Software
Design entrusted a portfolio of investments to a financial consultant, who then opened
accounts under fake limited partnership names in two brokerage houses. He looted the
two accounts over the course of about two years, by transferring plaintiff’s funds from

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the brokerage houses to two bank accounts, also in fake names. He then withdrew the
money from the banks and disappeared from view. (Id. at pp. 476-478.)
              The plaintiff sued the banks and the brokerage houses for negligence, on
the theory they owed him a duty to investigate the entity opening the accounts and then
monitor account transactions. (Software Design, supra, 49 Cal.App.4th at p. 478.) Both
the trial and the appellate courts held the banks had no such duty. A bank’s duty of care
derives from its contract with its customer, and plaintiff was not the bank’s customer. In
the absence of suspicious instruments, a bank has no duty to supervise transactions such
as deposits and withdrawals. (Id. at pp. 479, 481.)
              Rodriguez v. Bank of the West (2008) 162 Cal.App.4th 454 (Rodriguez)
follows Software Design in a set of similar circumstances. This time the thief was the
office manager of a law firm, who opened an account at a bank in her boss’s name,
deposited client funds in the account, and then made off with the money. The lawyer
sued the bank for negligence. (Id. at p. 460.) As in Software Design, the holding was
that the bank owed plaintiff no duty of care, because he was not its customer. He had no
contract with the bank; the contract was with the faithless office manager. (Id. at p. 466.)
              Appellants stand in the same relationship to BofA as the plaintiffs in
Software Design and Rodriguez to the banks they sued, which is to say no relationship at
all. They were not BofA customers, and BofA owed no duty of care to them. Without a
duty of care, no cause of action for negligence can survive a demurrer. (Bily v. Arthur
Young & Co., supra, 3 Cal.4th at p. 397 [existence of duty of care “essential prerequisite”
of negligence cause of action].)
              Appellants argue they have stated a cause of action under Sun ‘n Sand, Inc.
v. United California Bank (1978) 21 Cal.3d 671 (Sun ‘n Sand). In that case, the
plaintiff’s employee caused legitimate company checks to be made out to UCB for small
amounts, which she altered to much larger amounts. She then somehow persuaded UCB
to deposit these checks, payable to the bank, in her personal account. (Id. at p. 678.)

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                 The defrauded company sued UCB for negligence, among other theories;
the trial court sustained the bank’s demurrers and dismissed the action. The Supreme
Court reversed as to negligence, finding that UCB did in fact have a “narrowly
circumscribed” duty of care: “it is activated only when checks, not insignificant in
amount, are drawn payable to the order of a bank and are presented to the payee bank by
a third party seeking to negotiate the checks for his own benefit.” (Sun ‘n Sand, supra,
21 Cal.3d 671.)3 Under these circumstances, injury from such an irregular transaction is
reasonably foreseeable; indeed, it is glaringly obvious. (Id. at pp. 695-696.) Watching
out for such transactions imposes no undue burdens on banks. (Ibid.)
                 Obviously, appellants’ case is quite dissimilar to the facts presented in Sun
‘n Sand. Their wire transfer was made to Golden Gate Escrow, not BofA. And no one
made any attempt to divert an instrument made payable to BofA into his personal
account. Even if Sun ‘n Sand still supports a common-law negligence claim against
banks, it does not support appellants’ claim.
                 Appellants argue BofA was at fault for not determining whether Golden
Gate Escrow actually existed, as it could have done with “‘minimal’ inquiry.” But
appellants too could have made a “minimal inquiry” to find out who or what they were
dealing with before they parted with $130,000. For instance, a visit to the California
Department of Corporations website provides a link whereby licenses for persons and
companies regulated by the Department of Corporations, the Department of Real Estate,
the Office of Real Estate Appraisers, and the Department of Financial Institutions can be
checked in one go. If there was something wrong with Golden Gate Escrow in this
transaction, it was appellants’ responsibility to discover it, not BofA’s.

         3        Sun ‘n Sand is no longer good law on the specific facts alleged in the case. In 1993, the
Legislature enacted Commercial Code section 3405, dealing with checks presented by employees trying to defraud
their employers. (See Lee Newman, M.D., Inc. v. Wells Fargo Bank , supra, 87 Cal.App.4th at pp. 79-83.)

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                                   DISPOSITION
             The judgment dismissing BofA is affirmed. Respondent is to recover its
costs on appeal.

                                              BEDSWORTH, J.

WE CONCUR:

O’LEARY, P. J.

MOORE, J.

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