Meisner v. JP Morgan Chase Bank, N.A. ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 Jeffrey Meisner, Esq., No. 2:20-cv-01766-KJM-CKD 12 Plaintiff, ORDER 13 Vv. 14 JPMorgan Chase Bank, N.A., 15 Defendant. 16 17 Jeffrey Meisner, an attorney, alleges his former bank, JPMorgan Chase, persuaded him to 18 | open an account by promising to protect him from fraud, but then overlooked a fraudulent check 19 | scheme that resulted in a $135,000 loss. The court previously dismissed his complaint but 20 | permitted him leave to amend. Chase moves again to dismiss. The court held a hearing by 21 | videoconference on February 5, 2021. Jeffrey Meisner appeared on his own behalf with his 22 | colleague William McLaughlin. Arjun Rao appeared for Chase. 23 The amended complaint does not cure the deficiencies identified in this court’s previous 24 | order, and Meisner’s factual allegations often contradict the documents attached to his complaint, 25 | including the express terms of the contract that governed his banking relationship with Chase. 26 | The motion to dismiss is granted without leave to amend. 27 | 1 I. ALLEGATIONS 2 Meisner started his law practice in February 2018 after working in-house. First. Am. 3 Compl. (FAC) ¶ 9, ECF No. 15. He opened an Interest on Lawyers’ Trust Account (IOLTA) at 4 Chase. Id. ¶ 10. He also opened a Chase personal checking account, personal savings account, 5 business operating account, and a retirement account using rollover funds. Id. This earned him 6 “Private Client” status. Id. “Private Client” is a brand name for Chase’s premium banking and 7 investment offerings. See, e.g., “Deposit Products & Services,” id. Ex. A at 79; “Chase Private 8 Client” (Nov. 2017), id. Ex. A at 84.1 Private Clients enjoy a number of benefits not available to 9 other account holders, such as a dedicated phone number, a personal banker, and advisory 10 services. See “Chase Private Client” (Nov. 2017), id. Ex. A at 80–98. 11 About a year after Meisner began banking with Chase, he deposited a $135,000 cashier’s 12 check into the client trust account. Id. ¶ 13. His amended complaint does not say where the 13 check came from or why he received it, and he did not attach a copy. Chase, however, has filed a 14 copy of a cashier’s check for $135,000 that was deposited by ATM into Meisner’s account on the 15 day in question, and Meisner’s signature is on the back. See Req. J. Not. Ex. A, ECF No. 17-1. 16 The check was issued by “The Toronto-Dominion Bank,” identifies “Gavin Brokerage LLC” in 17 the “re” line, and names “Wells Fargo Bank, N.A.” in the “to” line. Id. Meisner does not dispute 18 the authenticity of this copy. The court may therefore consider it here without converting Chase’s 19 motion into a motion for summary judgment. See, e.g., Knievel v. ESPN, 393 F.3d 1068, 1076 20 (9th Cir. 2005). 21 Chase placed a hold on the $135,000 deposit. FAC ¶ 14. It sent a notice of that hold to 22 Meisner and explained that it believed the check was potentially altered or fraudulent. Id. 23 Meisner called Chase to ask about the hold and the notice. Id. ¶ 15. A “business banker” said 24 Chase would need time to investigate and asked for more information about the check, which 25 Meisner provided. Id. Chase removed the hold the next day. Id. ¶ 17. An unnamed employee 26 told Meisner the check was not altered or fraudulent; according to that employee, Chase had 1 To avoid confusion, this order cites Exhibit A to the amended complaint using the page numbers applied by the court’s CM/ECF system to the top right of each page. 1 “verified” the check with Wells Fargo. Id. ¶ 16. After Chase removed the hold, Meisner wired 2 more than $100,000 from the trust account to a third party. Id. ¶ 17. 3 The next business day, Chase deducted $135,000 from the client trust account, leaving it 4 with a negative balance. See id. ¶¶ 19, 52.1.2 It had discovered the check was not valid after all. 5 Id. ¶ 19. Meisner was forced to take money from his other accounts to cover the loss, including 6 by making early withdrawals from his individual retirement account. See id. ¶ 52.2. As a result, 7 he incurred tax penalties, lost financial gains and other benefits of the withdrawn funds, and spent 8 money finding a new bank. See id. He was also forced to defend his state bar license in an 9 investigation3 and has spent money on litigation. See id. 10 Meisner sued Chase and twenty unnamed Doe defendants in Sacramento County Superior 11 Court. See Compl., Not. Removal Ex. A, ECF No. 1-1. Chase removed the action to this court 12 and moved to dismiss. See Not. Removal, ECF No. 1; Mot. Dismiss, ECF No. 5. The court 13 granted that motion with leave to amend. See Prev. Order, ECF No. 14. The case is now 14 proceeding on Meisner’s amended complaint, which asserts the following claims, all under 15 California law: 16  A contract claim based on alleged breaches of express and implied contract terms, 17 including the implied covenant of good faith and fair dealing, FAC ¶¶ 21–36; 18  A tort claim for negligence based on common law and assumed duties of care, see 19 id. ¶¶ 42–56; 20  Tort claims for fraud based on allegations of negligent misrepresentation and false 21 promise, id. ¶¶ 57–66; 22  An equitable claim for promissory estoppel, id. ¶¶ 37–41; and 23  Statutory claims for unfair and fraudulent business practices in violation of 24 California Business & Professions Code section 17200, id. ¶¶ 67–79. 2 The complaint includes two paragraphs labeled “52.” This order cites the first as paragraph 52.1 and the second as paragraph 52.2. 3 The court takes judicial notice of Meisner’s California Bar profile, which currently shows he is a member in good standing. See White v. Martel, 601 F.3d 882, 885 (9th Cir. 2010) (taking judicial notice of membership information reported on the California State Bar website). 1 Meisner also attached several documents to his amended complaint. See id. Ex. A. The 2 first is his “Deposit Account Agreement” with Chase. See id. at 17–46. It includes several 3 provisions about Chase’s rights and obligations when an account holder deposits a check: 4  The agreement permits Chase to “refuse a deposit, or part of a deposit, at any 5 time,” even after “initially accepting it.” Id. at 21. 6  The agreement warns that “[i]f funds from a deposit become available” and can be 7 withdrawn, “that does not mean the check . . . is ‘good,’ has ‘cleared,’ or has been 8 paid by the paying bank.” Id. at 22. A check may “be returned unpaid” long after 9 Chase has made funds available and the account holder has withdrawn them, even 10 months later. Id. And “[n]o one, including [Chase] employees, can guarantee” to 11 an account holder “that a check will not be returned.” Id. 12  Chase accepted a “responsibility . . . to exercise reasonable care” when sending a 13 deposited check for collection. Id. It also acknowledged that it “attempt[s] to 14 identify and prevent fraudulent transactions.” Id. But it disclaimed any duty “to 15 determine whether any check” is “forged, counterfeit, altered, improperly endorsed 16 or otherwise improper.” Id. 17  Chase preserved its right to “subtract” money from the accountholder’s balance in 18 several circumstances, including, for example, if a paying bank demands 19 repayment because a check was forged or unauthorized. See id. The agreement 20 also makes clear that this warning applied to attorney trust accounts: if account 21 holders deposit a check “in [their] trust account (including any attorney trust 22 account) and it is returned, [Chase] may charge [the] trust account or [another] 23 account,” even if the attorney has “already withdrawn the funds.” Id. 24 Chase changed some terms of the Deposit Account Agreement after Meisner opened his accounts, 25 but none of those changes are relevant here. See Deposit Account Agreement—Change in Terms 26 (Mar. 2018), id. Ex. A at 64. 27 The amended complaint also attaches several documents related to business accounts and 28 Chase’s Private Client brand. Among these documents is a booklet of contract terms that is a part 1 of the Deposit Account Agreement for Private Clients; other parts of these documents relate to 2 business accounts. See id. at 19, 47–59, 65–66, 69–79. The documents provide details about 3 various products and services, such as checking and savings accounts, certificates of deposit, and 4 overdraft services. See, e.g., “Deposit Products and Services,” id. Ex. A at 69–79. The amended 5 complaint’s attachments also include what appear to be promotional pamphlets about Private 6 Client offerings. See id. at 80–134. For the most part, these pamphlets do not include detailed 7 terms or conditions, and they often refer to the Deposit Account Agreement and other agreements 8 for more information or details. See, e.g., id. at 85, 115, 120, 122, 123. There are exceptions, but 9 those exceptions are not relevant to Meisner’s claims here. See, e.g., id. at 134 (explaining fees, 10 penalties, and interest terms). 11 Chase moved again to dismiss under Rule 12(b)(6), and briefing is complete. See Mot., 12 ECF No. 16; Opp’n, ECF No. 20; Reply, ECF No. 21. The court held a combined hearing and 13 status (pretrial scheduling) conference on February 5, 2021. See Minutes, ECF No. 22. 14 II. LEGAL STANDARD 15 A party may move to dismiss for “failure to state a claim upon which relief can be 16 granted.” Fed. R. Civ. P. 12(b)(6). The motion may be granted only if the complaint lacks a 17 “cognizable legal theory” or if its factual allegations do not support a cognizable legal theory. 18 Hartmann v. Cal. Dep’t of Corr. & Rehab., 707 F.3d 1114, 1122 (9th Cir. 2013). The court 19 assumes these factual allegations are true and draws reasonable inferences from them. Ashcroft v. 20 Iqbal, 556 U.S. 662, 678 (2009). If the complaint’s allegations do not “plausibly give rise to an 21 entitlement to relief,” the motion must be granted. Id. at 679. 22 A complaint need contain only a “short and plain statement of the claim showing that the 23 pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), not “detailed factual allegations,” Bell Atl. 24 Corp. v. Twombly, 550 U.S. 544, 555 (2007). But this rule demands more than unadorned 25 accusations; “sufficient factual matter” must make the claim at least plausible. Iqbal, 556 U.S. at 26 678. In the same vein, conclusory or formulaic recitations of elements do not alone suffice. Id. 27 This evaluation of plausibility is a context-specific task drawing on “judicial experience and 28 common sense.” Id. at 679. 1 III. DISCUSSION 2 A. Contract Claims 3 Meisner advances three contract claims: breach of an express contract term, breach of an 4 implied contract term, and breach of the implied covenant of good faith and fair dealing. See 5 FAC ¶¶ 21–36. The court previously dismissed Meisner’s contract claims in light of the 6 unambiguous terms in the Deposit Account Agreement. See Prev. Order at 2. Here, again, the 7 amended complaint does not plead a viable theory for recovery under California contract law. 8 Breach is an essential element of every contract claim. See Green Valley Landowners 9 Ass’n v. City of Vallejo, 241 Cal. App. 4th 425, 433 (2015). Meisner’s allegations do not permit a 10 plausible inference of breach. Although Chase’s Deposit Account Agreement acknowledges the 11 bank’s duty to use “reasonable care” when sending checks for collection, and although Chase 12 agreed it would “attempt to identify and prevent fraudulent transactions,” it expressly disclaimed 13 any duty to determine whether a check is forged or improper. FAC Ex. A at 22. The agreement 14 also warned Meisner unambiguously (1) that a check might turn out to be a fraud even if money 15 could be withdrawn, (2) that no one, not even Chase’s own employees, can guarantee a check will 16 not be returned, (3) that Chase can refuse a deposit even after accepting it, and (4) that Chase can 17 subtract funds from an attorney’s trust account if a deposited check turns out to be forged or 18 unauthorized. See id. at 21–22. 19 Meisner also alleges Chase “expressly” agreed to place a hold on deposits until it 20 determined they were “valid and not fraudulent.” See id. ¶ 23. But the documents attached to the 21 amended complaint do not include such an agreement. As he conceded at hearing, those 22 documents permit Chase to place holds; they do not require it to do so. See id. Ex. A at 20 23 (defining a hold and warning that “[a] hold may be placed for more than your balance”); id. at 22 24 (“[W]e may place a hold on the funds . . . .”); id. at 23 (“[W]e may place a hold on your account 25 for the check amount.”). In addition, as summarized above, the Deposit Account Agreement 26 states clearly that Chase has no duty to determine whether a check is a fraud or “otherwise 27 improper.” Id. at 22 § 11. Because Meisner’s allegation contradicts a document he attached to 28 ///// 1 his amended complaint, that allegation is not assumed to be true. Sprewell v. Golden State 2 Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 3 For the same reasons, Meisner cannot succeed by alleging Chase broke a contractual 4 promise to use reasonable care in detecting fraudulent checks. See FAC ¶¶ 22–23. Chase did not 5 agree to detect fraud, and it warned account holders that Chase employees could not guarantee 6 that deposited checks would not be returned. See id. Ex. A at 21–22. But even if Chase had 7 agreed to determine, using reasonable care, whether deposited checks were fraudulent, Meisner’s 8 allegations would not permit a plausible inference that Chase breached that promise. He does not 9 allege facts that, if true, might show that Chase did not exercise due care. He alleges simply that 10 Chase did not detect the fraud, then advocates a conclusion: this was a failure to use reasonable 11 care. See FAC ¶ 23. The court does not assume legal conclusions such as this are true in 12 response to a motion under Rule 12(b)(6). Iqbal, 556 U.S. at 678. 13 Contrary to Meisner’s arguments at hearing, the booklets and pamphlets about Chase’s 14 Private Client services do not include any contrary contract terms. For example, Meisner quotes 15 language describing Private Client products as offering “premium banking from Chase combined 16 with the expertise and investment capability of J.P. Morgan” and inviting readers to “explore the 17 special privileges and services” offered to “Chase Private Clients.” See Opp’n at 2 (quoting FAC 18 Ex. A at 128). Another page cited in his brief describes the “dedicated team” of “specially trained 19 professionals” available to Private Clients, including a “Private Client Banker.” See id.; FAC Ex. 20 A at 83. This Private Client Banker “seamlessly connects” customers “with other experts,” such 21 as home lending advisors and business relationship managers. Id. at 85. But these vaguely 22 worded offerings do not impose a duty to investigate deposits, enforce holds, detect check fraud, 23 or preserve funds in trust accounts if deposits are rejected. None of the amended complaint’s 24 attachments describe any fraud-detection expertise or services related to check deposits. The only 25 two fraud-prevention services they describe would not have prevented the check fraud here. See 26 id. at 49 (describing a complimentary service for monitoring outgoing checks signed by the 27 ///// 28 ///// 1 account holder); id. at 85–86 & n.6 (advertising “Real time fraud monitoring,” which relates to 2 debit card transactions that are “out of character”).4 3 Meisner argues similarly that the Deposit Account Agreement is ambiguous in light of the 4 premium service Chase promises to its Private Clients. See Opp’n at 4–6. But “[a]n agreement is 5 not ambiguous merely because the parties (or judges) disagree about its meaning.” Abers v. 6 Rounsavell, 189 Cal. App. 4th 348, 356 (2010). “[W]ritten agreements whose language appears 7 clear in the context of the parties’ dispute are not open to claims of ‘latent’ ambiguity.” Id. 8 (quoting Dore v. Arnold Worldwide, Inc., 39 Cal. 4th 384, 391 (2006)). If the contract is not 9 “‘reasonably susceptible’ to the interpretation urged,” then “the case is over.” S. Cal. Edison Co. 10 v. Superior Court, 37 Cal. App. 4th 839, 847–48 (1995) (quoting Consol. World Invs., Inc. v. Lido 11 Preferred Ltd., 9 Cal. App. 4th 373, 379 (1992)). Any extrinsic evidence a party offers to prove 12 an ambiguity—such as the Private Client documents Meisner attached to his amended 13 complaint—must also be tethered to specific contract language. See Alameda Cty. Flood Control 14 v. Dep’t of Water Res., 213 Cal. App. 4th 1163, 1188–89 (2013). This is “essential.” Id. at 1188 15 (emphasis omitted). Here, the relevant terms of the Deposit Account Agreement are clear and 16 unambiguous on their face, as discussed above. Meisner does not explain what terms in the 17 Deposit Account Agreement are ambiguous. He does not tie his extrinsic evidence to specific 18 terms. And contrary to his argument in opposition, see Opp’n at 6, the existence of an ambiguity 19 is a question of law, not fact. See WYDA Assocs. v. Merner, 42 Cal. App. 4th 1702, 1710 (1996). 20 It may be resolved “on a motion to dismiss if the evidence can properly be considered under Rule 21 12(b)(6),” as it can here. Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1017–18 (9th Cir. 22 2012). 23 Meisner’s claim for breach of an express contract term is therefore not viable. The same 24 is true of his two remaining contract claims, implied contract and breach of the implied covenant 25 of good faith and fair dealing. Neither an implied contractual term nor the implied covenant of 4 Meisner also alleges Chase agreed to exercise its discretion to his benefit. See FAC ¶ 22; Opp’n at 7. At hearing, he clarified that Chase did not agree to exercise “discretion” in his favor, but rather that such a term may be implied. As discussed below, an implied term may not contradict an express term, so his discretion allegation cannot support his claims. 1 good faith and fair dealing can be enforced in contradiction of an express contract term. See 2 Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal. 4th 342, 374 (1992); Series 3 AGI W. Linn of Appian Grp. Inv’rs DE, LLC v. Eves, 217 Cal. App. 4th 156, 168–69 (2013). 4 Here, both of Meisner’s implied contract claims would in practice require Chase to maintain a 5 hold until it determined that every check was not a fraud despite the express contract term 6 disclaiming those duties. Compare FAC ¶¶ 28, 34 with id. Ex. A at 21–22. Both claims would 7 also make Chase accountable if its employees incorrectly told an account holder that a check was 8 “good” or “valid,” but the Deposit Account Agreement provides expressly that its employees 9 cannot make that guarantee. Compare FAC ¶¶ 28, 34 with id. Ex. A at 21–22. 10 Check scams like the fraud that befell Meisner are disappointingly common, as Chase 11 points out. See Mot. at 5–6. Courts both inside and outside California have been asked to decide 12 whether a bank can reclaim withdrawals from an account holder who unknowingly deposited a 13 fake check, including attorneys. One example is the California Court of Appeal’s unpublished 14 decision in Mechanics Bank v. Methven, No. A136403, 2014 WL 4479741 (Cal. Ct. App. 15 Sept. 12, 2014).5 In that case, an attorney had fallen victim “to an email scam in which a ‘client’ 16 soliciting his services persuaded him to accept a counterfeit cashier’s check, . . . deposit that 17 check in his account . . . , and wire the money overseas, where it was never to be seen again.” Id. 18 at *1. After the bank learned the check was counterfeited, it charged back the amount from the 19 attorney’s trust account and took money from his other accounts to offset the resulting overdraft. 20 See id. Even with these offsets, however, the bank was not whole, so it pursued claims against 21 the attorney and eventually prevailed in obtaining the unpaid balance under a contract theory. See 22 id. at *3–4, 13–17. This was so despite the attorney’s cross-complaint for negligence, negligent 23 misrepresentation, breach of contract, and unfair business practices. See id. 24 ///// 5 Although the California Rules of Court would prohibit the citation of this unpublished decision in a state court, those rules do not apply in federal courts, which may review and consider unpublished appellate decisions for their persuasive, but not precedential, value. See Nunez by Nunez v. City of San Diego, 114 F.3d 935, 942 n.4 (9th Cir. 1997); Inland Concrete Enters., Inc. v. Kraft, 318 F.R.D. 383, 405–06 (C.D. Cal. 2016). 1 Although the Court of Appeal’s decision in Mechanics Bank is not precedent, it explains 2 why deposit agreements are enforceable against attorney account holders in circumstances such 3 as those alleged here. It also mirrors decisions in other courts. One federal district court has even 4 described the legal theory Meisner advances here as the “heartland” of unsuccessful contract 5 claims against banks. See Taylor Anderson. LLP, v. U.S. Bank Nat’l Ass’n, No. 13-1336, 2014 6 WL 1292804 at *4 & n.2 (D. Colo. Mar. 31, 2014). In these cases, a bank tells an account holder 7 that a large check has cleared, the account holder believes incorrectly that the check was not a 8 fraud but a fraud is then discovered, the bank reclaims the funds, and the account holder pursues 9 unsuccessful legal claims in an attempt to recover the loss in the face of an unambiguous and 10 contrary deposit agreement. See id. 11 Meisner’s contract claims are not viable. The motion to dismiss those claims is granted. 12 B. Negligence 13 Meisner also asserts negligence claims. As this court held in its previous order, California 14 law bars tort recoveries “‘for purely economic losses that may be recovered in a contract action,’ 15 such as those Meisner requests here.” Prev. Order at 2 (quoting Margaretha Natalia Widjaja v. 16 JPMorgan Chase Bank, N.A., No. 19-7825, 2019 WL 8108716, at *7 (C.D. Cal. Nov. 19, 2019)). 17 “Multiple courts have applied the economic loss rule to bar a plaintiff’s claim against a bank 18 arising from fraudulent activity.” Id. (quoting Widjaja, 2019 WL 8108716, at *7). This 19 reasoning applies equally to the claims in Meisner’s amended complaint despite his three 20 arguments to the contrary. 21 He first argues that because he requests some forms of relief that are not available in a 22 contract case, he should be permitted to pursue tort claims to obtain those remedies. See Opp’n at 23 14–15. He cites his requests for travel costs as well as tax and financial losses he incurred after 24 using tax-deferred retirement savings to fund his client trust account. See id. These harms are, 25 however, “purely economic”; that is, they represent a “pecuniary or commercial loss that does not 26 arise from actionable physical, emotional or reputational injury to persons or physical injury to 27 property.” S. Cal. Gas Leak Cases, 7 Cal. 5th 391, 398 (2019) (citation omitted). These harms 28 are also among the intended target of damages in California contract law, which attempts to “put 1 the plaintiff ‘in as good a position as he or she would have occupied’ if the defendant had not 2 breached the contract.” Lewis Jorge Constr. Mgmt., Inc. v. Pomona Unified Sch. Dist., 34 Cal. 3 4th 960, 967 (2004) (quoting 24 Williston on Contracts § 64:1 at 7 (4th ed. 2002)). In pursuit of 4 that goal, contract damages include a “special” component. See id. at 968. Special damages take 5 account of any “secondary or derivative losses arising from circumstances that are particular to 6 the contract or to the parties” if the breaching party knew or should have known about those 7 circumstances. Id. A sophisticated consumer bank in Chase’s position—holding, as it did, all of 8 Meisner’s personal, business, and retirement accounts—could be expected to know that 9 subtracting a large sum from one of his accounts would force him to pull funds from the other 10 accounts to cover that loss, depriving him of tax and financial benefits in the process. Meisner 11 could obtain all of the relief he seeks in a contract action, meaning his requests for relief do not 12 justify his tort claims. 13 Second, Meisner argues the economic loss doctrine is no bar to his negligence claims 14 because those claims fall within an exception to that doctrine for parties who share a “special 15 relationship.” Opp’n at 15–16. Although courts developed the exception he relies on for 16 litigation between those who do not share a contractual relationship, see S. Cal. Gas Leaks, 7 Cal. 17 5th at 400, this court and others have entertained special-relationship claims by plaintiffs who had 18 contracted with the defendants, see, e.g., NuCal Foods, Inc. v. Quality Egg LLC, 918 F. Supp. 2d 19 1023, 1030 (E.D. Cal. 2013); McMillan v. Connected Corp., No. 10-03297, 2011 WL 13213945, 20 at *7–8 (C.D. Cal. May 18, 2011). Banks, however, “are not fiduciaries of their depositors,” and 21 at least one California court has held that “the bank-depositor relationship is not a ‘special 22 relationship’” that can give rise to tort damages. Copesky v. Superior Court, 229 Cal. App. 3d 23 678, 694 (1991). But that holding appears not to be universal, at least when it comes to claims for 24 negligence and negligent misrepresentation. See Wells Fargo Bank, N.A. v. FSI, Fin. Sols., Inc., 25 196 Cal. App. 4th 1559, 1572–73 (2011) (citing Holcomb v. Wells Fargo Bank, N.A., 155 Cal. 26 App. 4th 490, 496 (2007), in turn distinguishing Copesky). The court therefore assumes without 27 deciding that the California Supreme Court could recognize the necessary “special relationship” 28 between a bank and a depositor in the right circumstances. 1 California courts have considered six factors when deciding whether two parties share the 2 necessary special relationship: 3 1. The extent to which the transaction was intended to affect the plaintiff, 4 2. The foreseeability of harm to the plaintiff, 5 3. The degree of certainty that the plaintiff suffered injury, 6 4. The closeness of the connection between the defendant’s conduct and the injury 7 suffered, 8 5. The moral blame attached to the defendant’s conduct, and 9 6. The policy of preventing future harm. 10 J’Aire Corp. v. Gregory, 24 Cal. 3d 799, 804 (1979); Biakanja v. Irving, 49 Cal. 2d 647, 650 11 (1958). 12 At most, two of these factors weigh in Meisner’s favor. Under the second factor, the 13 harms he suffered were likely foreseeable to Chase, as discussed above. And under the third 14 factor, he alleges injury with a high degree of certainty. 15 The remaining factors—one, four, five, and six—weigh against him. Under the first 16 factor, nothing in the amended complaint suggests Chase’s relationship with Meisner was 17 different from its relationship with other account holders in similar situations. See NuCal, 18 918 F. Supp. 2d at 1031 (declining to find a “special relationship” despite the defendant’s alleged 19 knowledge about what the plaintiff would do with its product); McMillan, 2011 WL 13213945 at 20 *8 (finding no special relationship because the plaintiffs did not “plead facts suggesting that 21 defendants’ service was intended to affect them differently than others who purchased the 22 service”). Under the fourth factor, Chase’s alleged conduct is not “close” to Meisner’s injury. If 23 Chase had done nothing at all—no hold, no investigation, no discussions with any other bank— 24 Meisner would likely have suffered the same injury because Chase had a contractual right to 25 recover the proceeds of the fraudulent check. Under the fifth factor, the amended complaint does 26 not suggest Chase’s conduct was blameworthy. If Meisner’s allegations are true, then Chase was 27 relying on reassurances it received from another large, sophisticated financial institution. It was 28 likely in no better position to unmask the fraudster than Meisner. Chase also warned Meisner 1 unambiguously that its employees could not guarantee that any check was valid. Finally, under 2 the sixth factor, the policy against preventing future harms does not favor Meisner. A bank has 3 no incentive to play unwitting accomplice to a check fraud. When a fraudster vanishes with the 4 proceeds of a fake check, a bank stands to lose money as well. Meisner’s argument based on a 5 “special relationship” does not exempt him from the economic loss doctrine. 6 Meisner’s third argument against the economic loss rule relies on Erlich v. Menezes, 7 21 Cal. 4th 543 (1999). See Opp’n at 16. In that case, the California Supreme Court held that 8 homeowners “may not recover damages for emotional distress based upon breach of contract to 9 build a house.” Id. at 548. It reaffirmed the distinction between contracts and torts and between 10 contract and tort damages. See id. at 551. It also made clear that the “mere negligent breach of a 11 contract” does not permit tort liability. Id. at 552. Rather, “a breach of contract is tortious only 12 when some independent duty arising from tort law is violated.” Id. at 554. Outside the insurance 13 context, that may be true only if (1) a “breach is accompanied by a traditional common law tort, 14 such as fraud or conversion,” (2) the breach involved “deceit or undue coercion,” or (3) the 15 breach was intentional and the defendant knew it would cause “severe, unmitigable harm.” Id. at 16 553–54 (citation omitted). Here, Meisner’s allegations do not permit the inference that Chase 17 intentionally deceived him, converted his assets, defrauded him, coerced him, or even breached 18 its contractual obligations. Erlich is inapplicable. The economic loss doctrine bars Meisner’s 19 negligence claims. 20 Even if the economic loss doctrine did not bar Meisner’s negligence claims, his amended 21 complaint would not permit the court to infer that Chase was negligent. As noted above, Meisner 22 alleges only that Chase did not discover the fraud. See, e.g., FAC ¶ 48. No factual allegations 23 suggest Chase’s decision to remove the hold on the $135,000 check was negligently or 24 wrongfully derived; rather it was allegedly only incorrect. Meisner does not claim the check bore 25 any characteristic markers of fraud, and he does not identify any action that Chase could have but 26 did not undertake to discover the fraud. 27 The two California appellate decisions Meisner relies on most heavily support this 28 conclusion. The first decision is the Court of Appeal’s unpublished decision in Merchants Bank, 1 discussed above. See Opp’n at 9. In that case, as here, the plaintiff asserted a negligence claim 2 based on his allegation that a bank negligently overlooked a check fraud. See 2014 WL 4479741, 3 at *2–3. The bank’s demurrer was sustained, and that decision was undisturbed on appeal. See 4 id. The second decision is Holcomb, 155 Cal. App. 4th 490. In Holcomb, the plaintiff alleged 5 that a bank’s branch manager told him a deposit had cleared, but in reality, the manager knew or 6 should have known that another bank had already rejected the payment. See id. at 499–500. 7 Meisner makes no similar allegation. He alleges the opposite: that Wells Fargo told Chase the 8 check was valid. See FAC ¶ 16. 9 The reasoning in this section applies equally to both of Meisner’s negligence claims. Both 10 are dismissed. 11 C. Fraud 12 Meisner also asserts two claims for fraud or deceit. The first is based on his allegation 13 that Chase misrepresented the validity of the $135,000 check. See FAC ¶¶ 58–59. California 14 courts have permitted misrepresentation claims against banks based on the banks’ false 15 statements about deposited checks. See, e.g., Wells Fargo, 196 Cal. App. 4th at 1572–73; 16 Holcomb, 155 Cal. App. 4th at 496–97; cf. Mechanics Bank, 2014 WL 4479741, at *5 (“The 17 [California Uniform Commercial Code] does not preempt a common law claim for negligent 18 misrepresentation based on a customer’s detrimental reliance upon a bank employee’s incorrect 19 statements in connection with a deposit.”). The elements of such a claim are the same as those a 20 plaintiff must prove in any action for negligent misrepresentation: (1) the defendant 21 misrepresented a material fact, (2) the defendant had no reasonable ground to believe that 22 representation, (3) the defendant intended to induce the plaintiff’s reliance on the misrepresented 23 fact, (4) the plaintiff was justified in relying on the misrepresentation, and (5) as a result, the 24 plaintiff was damaged. Wells Fargo, 196 Cal. App. 4th at 1573. 25 Meisner’s amended complaint does not include factual allegations that, if true, would 26 make out a plausible case of negligent misrepresentation based on Chase’s statement that the 27 check was valid. For two reasons, his allegations support the opposite conclusion. First, he 28 alleges that Wells Fargo told Chase the check was valid, which forecloses an inference that Chase 1 had no reasonable ground to believe the check was valid. Second, the Deposit Account 2 Agreement states unambiguously that Chase has no duty to determine whether a check is a fraud. 3 It warns clearly that Chase employees cannot guarantee that a check is not a fraud. Meisner 4 cannot plausibly allege he was justified in relying on Chase’s alleged assurance that the check 5 was valid or verified. 6 This case includes no allegations akin to the evidence that supported the viable claims in 7 Mechanics Bank, Wells Fargo and Holcomb, the three cases Meisner relies on most heavily in 8 defending his fraud claims. See Opp’n at 9–10, 16. In Mechanics Bank, the negligent 9 misrepresentation claim went to trial based on evidence that bank employees had glanced only 10 briefly at an unusually large check, ignored clear signs that the check was a counterfeit (such as 11 misspellings and incorrect formatting), violated bank policies without reason, placed no hold on 12 the funds at all, and reassured the account holder misleadingly that the check would “clear right 13 away.” See 2014 WL 4479741, at *2, 11–12. In Holcomb, as described above, a bank employee 14 told the plaintiff account holder that the check had cleared, but he knew the opposite was true. 15 See 155 Cal. App. 4th at 499–500. In Wells Fargo, it was undisputed on appeal that the bank had 16 mispresented the status of the dishonored check in question; only the calculation of damages was 17 in dispute. See 196 Cal. App. 4th at 1568 & n.6. Meisner’s amended complaint includes no 18 similar factual allegations. His first deceit claim, negligent misrepresentation, is dismissed. 19 In Meisner’s second deceit claim, he alleges Chase persuaded him to open a Private Client 20 account by promising him “rights and benefits” beyond those offered to “ordinary customers.” 21 FAC ¶ 63; Opp’n at 17. According to his amended complaint, Chase promised to employ its 22 “expertise and resources to protect [him] from fraudulent transactions.” FAC ¶ 63. California 23 law recognizes false promise claims based on the allegation that “a defendant fraudulently 24 induce[d] the plaintiff to enter into a contract.” Lazar v. Superior Court, 12 Cal. 4th 631, 638 25 (1996). Deceit claims based on false promises have the same elements as misrepresentation 26 claims more generally. See Cal. Civ. Code § 1710(4); Lazar, 12 Cal. 4th at 638. 27 Applying those elements here, Meisner could succeed only if his allegations permitted the 28 plausible inference that Chase said it would protect him from fraud but had no such intention. 1 Although he alleges this was so, the documents attached to his amended complaint show 2 otherwise. As summarized above, the booklets and pamphlets about Chase’s Private Client 3 services describe “premium banking,” “expertise and investment capability,” and “special 4 privileges and services,” FAC Ex. A at 128, but they do not describe any fraud-detection 5 expertise or services related to check deposits. See supra section III.A at 6. Meisner does not 6 allege he learned any contrary information before opening his accounts, for example in a 7 conversation with some Chase employee. He does not allege that Chase withheld the contracts, 8 booklets, and pamphlets attached to his amended complaint until he had already become an 9 account holder. No allegations suggest he could prevail in a false promise claim. Both fraud 10 claims are dismissed. 11 D. Promissory Estoppel 12 Meisner’s promissory estoppel claims are based on the same factual allegations as his 13 misrepresentation claim, i.e., that Chase promised to use reasonable care to detect fraudulent 14 checks and breached that promise. See FAC ¶ 38. A promissory estoppel claim must rest on 15 allegations of the plaintiff’s reasonable reliance on a promise. See Graham-Sult v. Clainos, 16 756 F.3d 724, 749 (9th Cir. 2014) (citing U.S. Ecology, Inc. v. State, 129 Cal. App. 4th 887 at 901 17 (2005)). As explained in the previous section, Meisner’s allegations do not permit the inference 18 that Chase promised to detect fraudulent checks. Nor do his allegations show he would have been 19 justified in relying on that promise given the expressly contrary terms in the Deposit Account 20 Agreement. This claim is dismissed as well. 21 E. Unfair and Fraudulent Business Practices 22 California law permits plaintiffs to seek injunctions against and restitution for “any 23 unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading 24 advertising.” Cal. Bus. & Prof. Code § 17200; Korea Supply Co. v. Lockheed Martin Corp., 25 29 Cal. 4th 1134, 1144 (2003). Meisner’s theory of Chase’s liability under section 17200 is the 26 same as the theory underlying his misrepresentation and false promise claims. See FAC ¶¶ 68– 27 74, 78. As explained above, that theory is not supported by plausible factual allegations. This 28 claim is dismissed. 1] IV. CONCLUSION 2 The amended complaint is dismissed in total. Under Rule 15 of the Federal Rules of Civil 3 | Procedure, leave to amend should be “freely given when justice so requires.” Fed. R. Civ. P. 4 | 15(a). Leave to amend may be denied if an amendment would be futile or if the plaintiff has 5 | already been permitted to amend the complaint. Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 6 | 522, 532 (9th Cir. 2008); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1161 (9th Cir. 7 | 1989). The shortcomings described in this order are unlikely to be cured by amendment. The 8 | terms of the relevant contracts clearly and unambiguously contradict Meisner’s factual 9 | allegations, the economic loss rules bars his tort claims, and the court has already permitted 10 | Meisner to amend his original complaint to address these shortcomings. At hearing, he did not 11 | explain what additional relevant facts he might allege in an amended complaint. The complaint is 12 | thus dismissed without leave to amend. 13 This order resolves ECF No. 16. 14 The Clerk’s Office is instructed to close this case. 15 IT IS SO ORDERED. 16 | DATED: March 18, 2022. 17 CHIEF ED STATES DISTRICT JUDGE