This case was last updated from Los Angeles County Superior Courts on 04/06/2021 at 08:48:56 (UTC).

JOHN ARMOUR VS WELLS FARGO BANK, N.A.

Case Summary

On 08/12/2020 JOHN ARMOUR filed a Contract - Business lawsuit against WELLS FARGO BANK, N A. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is MONICA BACHNER. The case status is Other.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******0555

  • Filing Date:

    08/12/2020

  • Case Status:

    Other

  • Case Type:

    Contract - Business

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

MONICA BACHNER

 

Party Details

Plaintiff

ARMOUR JOHN

Defendant

WELLS FARGO BANK N.A.

Attorney/Law Firm Details

Plaintiff Attorney

LINDBORG PETER

Defendant Attorney

CAMPELL J. OWEN

 

Court Documents

Request for Dismissal

4/5/2021: Request for Dismissal

Minute Order - MINUTE ORDER (DEMURRER OF DEFENDANT, WELLS FARGO BANK, N.A., TO FIRST AMEND...)

3/26/2021: Minute Order - MINUTE ORDER (DEMURRER OF DEFENDANT, WELLS FARGO BANK, N.A., TO FIRST AMEND...)

Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 03/09/2021

3/9/2021: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 03/09/2021

Minute Order - MINUTE ORDER (COURT ORDER)

3/9/2021: Minute Order - MINUTE ORDER (COURT ORDER)

Minute Order - MINUTE ORDER (COURT ORDER)

3/17/2021: Minute Order - MINUTE ORDER (COURT ORDER)

Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 03/17/2021

3/17/2021: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 03/17/2021

Opposition - OPPOSITION TO DEMURRER

2/25/2021: Opposition - OPPOSITION TO DEMURRER

Reply - REPLY BRIEF IN SUPPORT OF DEMURRER TO FIRST AMENDED COMPLAINT

3/3/2021: Reply - REPLY BRIEF IN SUPPORT OF DEMURRER TO FIRST AMENDED COMPLAINT

Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE)

12/9/2020: Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE)

Case Management Statement

11/25/2020: Case Management Statement

Case Management Statement

11/17/2020: Case Management Statement

Demurrer - without Motion to Strike

9/24/2020: Demurrer - without Motion to Strike

Notice of Case Management Conference

8/17/2020: Notice of Case Management Conference

Civil Case Cover Sheet

8/12/2020: Civil Case Cover Sheet

Civil Case Cover Sheet

8/12/2020: Civil Case Cover Sheet

Notice of Case Assignment - Unlimited Civil Case

8/12/2020: Notice of Case Assignment - Unlimited Civil Case

Summons - SUMMONS ON COMPLAINT

8/12/2020: Summons - SUMMONS ON COMPLAINT

Complaint

8/12/2020: Complaint

9 More Documents Available

 

Docket Entries

  • 04/05/2021
  • DocketRequest for Dismissal; Filed by John Armour (Plaintiff)

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  • 03/26/2021
  • Docketat 09:30 AM in Department 71, Monica Bachner, Presiding; Hearing on Demurrer - without Motion to Strike - Not Held - Advanced and Continued - by Court

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  • 03/26/2021
  • Docketat 08:30 AM in Department 71, Monica Bachner, Presiding; Hearing on Demurrer - without Motion to Strike - Held - Continued

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  • 03/26/2021
  • DocketMinute Order ( (Demurrer of Defendant, Wells Fargo Bank, N.A., to First Amend...)); Filed by Clerk

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  • 03/17/2021
  • Docketat 4:09 PM in Department 71, Monica Bachner, Presiding; Court Order

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  • 03/17/2021
  • DocketCertificate of Mailing for ((Court Order) of 03/17/2021); Filed by Clerk

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  • 03/17/2021
  • DocketMinute Order ( (Court Order)); Filed by Clerk

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  • 03/10/2021
  • Docketat 09:30 AM in Department 71, Monica Bachner, Presiding; Hearing on Demurrer - without Motion to Strike - Not Held - Advanced and Continued - by Court

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  • 03/09/2021
  • Docketat 11:07 AM in Department 71, Monica Bachner, Presiding; Court Order

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  • 03/09/2021
  • DocketCertificate of Mailing for ((Court Order) of 03/09/2021); Filed by Clerk

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8 More Docket Entries
  • 11/03/2020
  • DocketDemurrer - without Motion to Strike; Filed by Wells Fargo Bank, N.A. (Defendant)

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  • 10/02/2020
  • DocketAmended Complaint ( (1st)); Filed by John Armour (Plaintiff)

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  • 10/02/2020
  • DocketNotice (NOTICE OF CASE MANAGEMENT CONFERENCE); Filed by John Armour (Plaintiff)

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  • 09/24/2020
  • DocketDemurrer - without Motion to Strike; Filed by Wells Fargo Bank, N.A. (Defendant)

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  • 08/17/2020
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 08/12/2020
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by Clerk

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  • 08/12/2020
  • DocketSummons (on Complaint); Filed by John Armour (Plaintiff)

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  • 08/12/2020
  • DocketCivil Case Cover Sheet; Filed by John Armour (Plaintiff)

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  • 08/12/2020
  • DocketComplaint; Filed by John Armour (Plaintiff)

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  • 08/12/2020
  • DocketCivil Case Cover Sheet; Filed by John Armour (Plaintiff)

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Tentative Rulings

Case Number: 20STCV30555    Hearing Date: March 26, 2021    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

JOHN ARMOUR,

vs.

WELLS FARGO BANK, N.A., et al.

Case No.: 20STCV30555

Hearing Date: March 26, 2021

Defendant Wells Fargo Bank, N.A.’s demurrer to the first amended complaint of Plaintiff John Amour is sustained without leave to amend.

Defendant Wells Fargo Bank, N.A. (“Defendant”) demurs to the 1st (negligence) and 2nd (strict liability) causes of action in the first amended complaint (“FAC”) of Plaintiff John Armour (“Plaintiff”). (Notice of Demurrer, pgs. 1-3.) Defendant demurs on the grounds that Plaintiff fails to allege sufficient facts to constitute the causes of action.

Background of Allegations

On August 12, 2020, Plaintiff filed his initial complaint in the instant action against Defendant alleging causes of action for negligence and strict liability and on October 2, 2020, Plaintiff filed his FAC alleging the same causes of action.

Plaintiff alleges he is the assignee of a claim from Baker Mills LLC (“BMLLC”), which at the time of said assignment was the successor by merger of Baker Mills, Inc. (“BMI”) (collectively, with BMLLC, “Baker Mills”), and Plaintiff was the sole shareholder of BMI and the sole member of BMLLC. (FAC ¶¶1-2.) Plaintiff alleges in 2019, Baker Mills engaged the printing services of Francis Emory Fitch, Inc. dba Fitch Group (“Fitch”), and after completion of the job, on March 8, 2019, Fitch invoiced Baker Mills in the amount of $41,974. (FAC ¶¶7-8.) Plaintiff alleges on March 11, 2019, Fitch advised Plaintiff by email sent by Mickey Padilla (“Padilla”) at Fitch that the money should be paid into Fitch’s corporate account at Defendant in the name of Francis Emory Fitch, Inc. (FAC ¶8.) On March 11, 2019, Plaintiff effected a payment in the due amount from an account in Baker Mills’s name at Bank of America (“BofA”) to the designated Fitch account (“Account”) at Defendant. (FAC ¶9.) While the email came from Fitch’s email system, no Fitch employee had sent it and the Fitch email system had been hacked by an unknown fraudster who caused the email to be sent and who fraudulently opened the Account into which the funds had been deposited. (FAC ¶10.) Plaintiff alleges Defendant allowed the Account to be opened because it failed to follow regulations and procedures of the Bank Secrecy Act (“BSA”), which require Plaintiff to identify and verify ultimate beneficial owners and a controlling person of a legal entity customer prior to approving the opening of a new account. (FAC ¶11.) Plaintiff alleges Defendant’s failure to check the name of the intended recipient of the funds with the name of the Account on its records, which would have been a mismatch and would have triggered Defendant’s transaction monitoring system to not post the funds. (FAC ¶12.) Plaintiff alleges BofA and Plaintiff have attempted to recover the deposited funds; however, they have been unable to do so. (FAC ¶13.)

Negligence (1st COA)

To establish a cause of action for negligence against an insurance broker, Plaintiff must plead and prove the following elements: (1) a duty of care to plaintiff; (2) the broker’s breach of that duty; (3) injury to plaintiff as a proximate result of the breach; and (4) damage to plaintiff. (Wallman v. Suddock (2011) 200 Cal.App.4th 1288, 1308.)

In addition to the above general allegations, Plaintiff’s negligence cause of action is based on the following: (1) Defendant owed Baker Mills a duty of care by extension as a third party dealing with Defendant given provisions of the BSA impose obligations on Defendant relating to confirming the identity of persons opening accounts, and such obligations are designed to protect the interests of third parties; (2) even absent a specific statutory obligation to screen a funds transfer made to a nominated account number and nominated account name, there is a federal statutory duty under the BSA to undertake due diligence to establish the identity of the person who opened the Account; (3) Defendant failed to comply with that federal statutory duty and therefore cannot rely on the California Commercial Code, which would exculpate such conduct since, otherwise, protections of the BSA are rendered ineffective; (4) Defendant has a duty of care to all persons who transact with it to have procedures in place to screen incoming transfers by reference to both the nominated account number and nominated account name; (5) Defendant breached its duty to Baker Mills by failing to follow BSA regulations concerning the opening of the Account and/or by not having procedures in place to screen incoming transfers by reference to both the nominated number and name, which would have prevented the transfer; (6) the loss to Baker Mills was a foreseeable consequence of Defendant’s breaches; and (7) Plaintiff has been damaged as a result. (FAC ¶¶15-20.)

Defendant argues Plaintiff fails to plead facts establishing the elements of duty given Defendant’s duty was limited, Plaintiff failed to allege Defendant held itself out as an expert, and Defendant did not misrepresent the Policy terms or fail to obtain a policy with provision requested by Plaintiff. (Demurrer, pgs. 2-6.)

Plaintiff failed to allege sufficient facts to constitute his negligence cause of action against Defendant. Plaintiff failed to allege facts suggesting Defendant owed Plaintiff, a third-party non-customer, a duty of care. As a preliminary matter, to the extent Plaintiff relies on any duties created by Defendant’s alleged failure to comply with the BSA, these allegations are insufficient to establish the existence of a duty since the BSA does not afford a private right of action, and is instead only enforceable by the U.S. government, and Plaintiff cites to no authority to the contrary. (Demurrer, pgs. 7-9; see 31 U.S.C. §§5320-23; see Venture Gen. Agency, LLC v. Wells Fargo Bank, N.A. (N.D. Cal. 2019) 2019 U.S. Dist. LEXIS 129032, at *19-21.) Plaintiff’s argument in opposition that new Customer Due Diligence (“CDD”) regulations enacted in 2016 established further requirements for institutions in confirming the identity of individuals opening accounts fails to address how such regulations create a private right of action when they, along with the BSA, exist for government enforcement not private citizens. (See Reply, pgs. 2-3.)

In addition, Plaintiff’s negligence cause of action is precluded by the Uniform Commercial Code (“UCC”) since it constitutes a common law claim that creates liabilities inconsistent with Article 4A given the circumstances giving rise to the claim are specifically covered by provisions of Article 4A. Relevant portions of the UCC were adopted by California’s Commercial Code. Specifically, UCC Art. 4A (adopted as Cal. Com. Code, Division 11 (Cal. Com. Code §11102)) applies to a fund transfers, transactions initiated by an originator’s order to its bank and ending with the beneficiary’s bank’s acceptance and crediting of the sum to the beneficiary’s account, the purpose of which are to transfer money from the originator to the beneficiary. (Demurrer, pg. 2; Cal. Com. Code §§11102, 11104.) Plaintiff’s negligence cause of action is based in part on an allegation Defendant’s failure to confirm the nominated account name was associated with the nominated account number before approving the transfer. (FAC ¶¶12, 15, 18.) However, under Article 4A and accordingly Cal. Com. Code §11207, a beneficiary bank applies the funds by account number, not by account name, and the beneficiary bank has no obligation to determine whether the name and number refer to the same person. (See Cal. Com. Code §11207(b)(1), cmt. 2.) Given Plaintiff’s negligence cause of action is based in part on allegations Defendant did not confirm the Account number, which is not a responsibility of the beneficiary bank (Defendant) under the UCC, the cause of action is precluded on the face of the pleading. (Chino Commercial Bank, N.A. v. Peters (2010) 190 Cal.App.4th 1163, 1174.)

To the extent the negligence cause of action is based on Defendant’s alleged failure to confirm the identity of the party that opened the Account, these allegations rely on duties set forth in the BSA, as to which there is no private right of action, and Plaintiff fails to cite authority suggesting a private right of action for a bank’s failure to comply with the BSA (or the recent CDD) exists. Moreover, Plaintiff failed to allege facts suggesting Defendant owed Plaintiff a duty of care to Plaintiff, a third-party non-customer. (Demurrer, pgs. 5-7; Software Design & Application, Ltd. (1996) 49 Cal.App.4th, 472, 479.) In opposition, Plaintiff argues that the CDD regulations presents a specific situation in which a bank’s duty to a non-customer could arise since the regulations were adopted to specifically prevent the types of illicit financial activity alleged by Plaintiff which could have been prevented had Defendant complied with the regulations. (Opposition, pg. 3.) However, this argument is premised on Plaintiff’s entitlement to bring an action against Defendant for its failure to comply with the CDD regulations within the BSA, for which no private right of action exists. Plaintiff fails to cite authority suggesting Defendant owes Plaintiff, a non-customer third-party, a duty of care based on the CDD regulations. Accordingly, Plaintiff has failed to allege sufficient facts to establish the existence of a duty.

Plaintiff has the burden of proving there is a reasonable possibility of amendment to cure the defects in the pleading. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In opposition, Plaintiff does not address how the issues raised in Defendant’s demurrer can be cured via amendment. As such, Plaintiff does not meet this burden.

Based on the foregoing, Defendant’s demurrer to the 1st cause of action is sustained without leave to amend.

Strict Liability (2nd COA)

Plaintiff’s strict liability cause of action is based on allegations that the categories of strict liability “evolve” and that it may be inferred that Defendant failed to conduct no due diligence verification of the person who opened the account which amounted to dangerous conduct creating the possibility that third parties whom the fraudster intended to harm, would be harmed, as in the instant case. (FAC ¶22.) Plaintiff alleges the doctrine of strict liability should be applied here because of the high level of community expectations that financial institutions will conduct their business in compliance with the law and there by in a manner which does not cause damage to innocent third parties. (FAC ¶23.) Specifically, Plaintiff alleges that in violating the terms of the BSA, regulations designed to protect Baker Mills, one of a class of persons for whom the regulation was adopted, Defendant is strictly liable for a failure to follow the BSA. (FAC ¶¶24-26.) [The Court notes it appears Plaintiff is alleging a cause of action for negligence per se based on Defendant’s violation of the BSA; however, Plaintiff has captioned the cause of action as one for strict liability. Strict liability is recognized in the realm of products liability and certain ultrahazardous activities; however, Plaintiff fails to cite to authority in which strict liability applies to claims involving banking transactions.]

Plaintiff failed to allege sufficient facts to constitute a cause of action for “strict liability.” Here, Plaintiff seeks to hold Defendant strictly liable for its alleged violations of the BSA, which Plaintiff alleges contributed to his damages. However, Plaintiff fails to cite to authority suggesting a cause of action for strict liability exists in this context. Moreover, given the BSA does not provide a private right of action, Plaintiff cannot allege the existence of a duty of care based on an alleged violation of the BSA for the purposes of stating the cause of action. (See Venture Gen. Agency, LLC v. Wells Fargo Bank, N.A. (N.D. Cal. 2019) 2019 U.S. Dist. LEXIS 129032, at *19-21, 2019 WL 3503109 [“as there is no private right of action, there can be no duty of care arising out of the BSA’s monitoring requirements”; rejecting negligence per se claim].) In addition, as discussed above, Plaintiff failed to allege facts suggesting Defendant owed Plaintiff a duty for the purposes of holding Defendant strictly liable for certain conduct, here, Defendant’s alleged failure to comply with the BSA. In opposition, Plaintiff fails to address how the deficiency in the pleading can be cured via amendment.

Based on the foregoing, Defendant’s demurrer to the 2nd cause of action is sustained without leave to amend.

Dated: March _____, 2021

Hon. Monica Bachner

Judge of the Superior Court

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