Court Opinion

ID: 4635507
Source: CourtListenerOpinion
Date Created: 2020-11-23 21:00:31.577118+00
Date Added: 2024-06-11T07:58:23.830263
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                              NOV 23 2020
                    UNITED STATES COURT OF APPEALS                         MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

VENTURE GENERAL AGENCY, LLC;                     No.   19-17315
OLD AMERICAN COUNTY MUTUAL
FIRE INSURANCE CO.,                              D.C. No. 3:19-cv-02778-TSH

              Plaintiffs-Appellants,
                                                 MEMORANDUM*
 v.

WELLS FARGO BANK, N.A.,

              Defendant-Appellee.

                   Appeal from the United States District Court
                     for the Northern District of California
                  Thomas S. Hixson, Magistrate Judge, Presiding

                          Submitted November 18, 2020**
                             San Francisco, California

Before: THOMAS, Chief Judge, and SCHROEDER and BERZON, Circuit
Judges.

      Venture General Agency, LLC (“Venture General”) and Old American

County Mutual Fire Insurance Co. (“Old American”) (together “Appellants”)

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
appeal the district court’s dismissal of their diversity action against Wells Fargo

Bank, N.A. (“Wells Fargo”) alleging negligence under California law. Appellants

alleged that Venture General, while acting as managing general agent for Old

American, was induced by an unknown fraudster into transferring over 1.7 million

dollars of Old American’s funds into an account opened at Wells Fargo by the

fraudster under Old American’s name.

      Because Wells Fargo raised an initial question as to whether diversity had

been adequately pleaded, we issued an order pursuant to 28 U.S.C. § 1653 asking

for a proposed amended complaint. Appellants responded and properly alleged

diversity of citizenship: Wells Fargo is a citizen of South Dakota, and all plaintiffs

are citizens of Texas. The district court had subject matter jurisdiction, and we

have jurisdiction to review. 28 U.S.C. §§ 1291, 1332.

      In order for Appellants to establish negligence under California law on the

part of the bank, the bank would have to owe Appellants a duty of care to

investigate possible fraud related to Venture General’s deposits in the fraudulent

account. See Ladd v. Cty. of San Mateo, 12 Cal. 4th 913, 917 (1996). No such

duty arises from any contractual relationship because Venture General is not a

depositor at Wells Fargo, and Old American’s two premium trust accounts with

Wells Fargo are not connected to the transactions in this case. A recent California

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case illustrates the limited nature of banks’ duty of care to depositors, a duty that is

contractual and not fiduciary in nature. Kurtz-Ahlers, LLC v. Bank of Am., N.A., 48

Cal. App. 5th 952 (2020). A bank’s duties to a depositor do not include “a duty to

investigate and disclose possible fraudulent activity in another depositor’s

account.” Id. at 956. General tort principles do not recognize a duty beyond

“narrowly circumscribed” factual circumstances not present in this situation. See

Sun ‘n Sand v. United Cal. Bank, 21 Cal. 3d 671, 695 (1978). No reason or

authority supports Appellants’ suggestion that notifying the bank more than a

month after the fraud occurred created a duty that was retroactive.

      The district court did not abuse its discretion in limiting Appellants’

discovery of agreements covering customer accounts unrelated to this litigation.

Appellants allege no claims hinging on actual knowledge. Finally, the district

court’s dismissal did not rely on any novel legal defense. The limited nature of a

bank’s duties toward depositors appears firmly established in California law. See

Kurtz-Ahlers, 48 Cal. App. 5th 952.

      AFFIRMED.

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