Alexander v. Wells Fargo Bank, N.A. et al, No. 3:2023cv00617 - Document 8 (S.D. Cal. 2023)
Court Description: ORDER granting in part and denying in part 4 Defendant's Motion to Dismiss. Signed by Chief District Judge Dana M. Sabraw on 8/09/2023. (jpp)
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Alexander v. Wells Fargo Bank, N.A. et al Doc. 8 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ARMANDO J. ALEXANDER, Case No.: 23-cv-617-DMS-BLM Plaintiff, 12 13 v. 14 WELLS FARGO BANK, N.A.; and DOES 1 through 10, inclusive, 15 16 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS Defendant. 17 18 Pending before the Court is Defendant’s motion to dismiss Plaintiff’s Complaint for 19 failure to state a claim (ECF No. 4). Plaintiff filed an opposition, (ECF No. 5), and 20 Defendant filed a reply (ECF No. 6). For the following reasons, Defendant’s motion to 21 dismiss is GRANTED in part and DENIED in part. 22 23 I. BACKGROUND 24 Plaintiff was a 29-year customer of Wells Fargo. (Compl. ¶ 5.) On or about 25 December 15, 2022, Plaintiff and his son went to a Wells Fargo location in San Diego 26 County with the intention of depositing funds in Plaintiff’s account. (Id. ¶¶ 6-7.) Upon 27 arrival, Plaintiff was “shocked to discover his accounts were practically depleted.” (Id. ¶ 28 8.) Plaintiff alleges he had close to $35,000 in his account, but “the Wells Fargo 1 23-cv-617-DMS-BLM Dockets.Justia.com 1 representative unilaterally closed his accounts and provided him with two checks totaling 2 around $200 that did not reflect the money that he had deposited there.” (Id.) Plaintiff 3 informed Wells Fargo that he did not authorize the activity which depleted his accounts, 4 and Wells Fargo representatives told Plaintiff to return in two weeks so it could investigate 5 the issue. (Id. ¶ 10.) Plaintiff did not use any online or mobile banking applications. (Id. 6 ¶ 9.) 7 Plaintiff returned, as instructed, and spent nearly an entire day at Wells Fargo. (Id. 8 ¶ 11.) While at Wells Fargo, “Plaintiff was informed that an unknown individual accessed 9 his accounts and switched Plaintiff’s contact information, such as his email address, and 10 changed his account pin numbers as well.” (Id. ¶ 12.) The “unauthorized person(s) also 11 obtained new account cards to make purchases without Plaintiff’s knowledge, consent, or 12 benefit.” (Id.) After this interaction, Wells Fargo returned approximately $5,738 to 13 Plaintiff following his complaint. (Id. ¶ 14.) As a result, Plaintiff filed suit. Plaintiff 14 asserts four causes of action: (1) violation of the California Customer Records Act 15 (“CCRA”); (2) violation of the California Consumer Privacy Act (“CCPA”); (3) 16 negligence; and (4) elder abuse. 17 18 II. LEGAL STANDARD 19 Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss 20 on the grounds that a complaint “fail[s] to state a claim upon which relief can be granted.” 21 Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) “tests the legal 22 sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To survive 23 a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, 24 to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 25 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim 26 has facial plausibility when the plaintiff pleads factual content that allows the court to draw 27 the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 28 “Determining whether a complaint states a plausible claim for relief will . . . be a context2 23-cv-617-DMS-BLM 1 specific task that requires the reviewing court to draw on its judicial experience and 2 common sense.” Id. at 679. “Factual allegations must be enough to raise a right to relief 3 above the speculative level.” Twombly, 550 U.S. at 555. If Plaintiff “ha[s] not nudged 4 [his] claims across the line from conceivable to plausible,” the complaint “must be 5 dismissed.” Id. at 570. 6 In reviewing the plausibility of a complaint on a motion to dismiss, a court must 7 “accept factual allegations in the complaint as true and construe the pleadings in the light 8 most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 9 519 F.3d 1025, 1031 (9th Cir. 2008). But courts are not “required to accept as true 10 allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable 11 inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (quoting 12 Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). If dismissal is 13 warranted, leave to amend “shall be freely given when justice so requires,” Fed. R. Civ. P. 14 15(a), and “this policy is to be applied with extreme liberality.” Morongo Band of Mission 15 Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). 16 17 III. DISCUSSION 18 A. California Consumer Records Act Claim 19 Plaintiff alleges Defendant violated the CCRA under Cal. Civ. Code § 1798.81.5(b) 20 by failing to implement reasonable measures to protect Plaintiff’s personal data, and § 21 1798.82 by not timely notifying Plaintiff that his account was breached. 22 institutions, as defined under Fin. Code § 4052, are exempt from Cal. Civ. Code § 23 1798.81.5(b). Id. § 1798.81.5(e)(2). “‘Financial institution’ means any institution the 24 business of which is engaging in financial activities as described in [12 U.S.C. § 1843k].” 25 Fin. Code § 4052(c). Under 12 U.S.C. § 1843(k)(4)(A), financial activities include 26 “[l]ending, exchanging, transferring, investing for others, or safeguarding money or 27 securities.” This case arises from Wells Fargo’s “safeguarding [of] money.” Wells Fargo 28 is therefore a financial institution and is exempt from Cal. Civ. Code § 1798.81.5(b). Financial 3 23-cv-617-DMS-BLM 1 Plaintiff’s allegation that Defendant violated the CCRA by failing to implement reasonable 2 measures to protect Plaintiff’s personal data in violation of § 1798.81.5(b) is therefore 3 DISMISSED with prejudice. 4 As to Plaintiff’s allegation that Defendant violated § 1798.82, it is insufficiently 5 pled. 6 unreasonable delay’ after the business ‘discovers’ or is ‘notified’ of the breach.” In re 7 Bank of America California Unemployment Benefits Litigation, No. 21-md-2992, 2023 WL 8 3668535, at *16 (S.D. Cal. May 25, 2023). Plaintiff fails to allege facts stating when 9 Defendant discovered, or was notified of, the alleged breach. In addition, Plaintiff does 10 not allege how his personal information was subject to a data breach. Accordingly, 11 Plaintiff fails to allege a violation of § 1798.82. 12 GRANTED as to the CCRA claim and DISMISSED without prejudice, with leave to 13 amend. The CCRA “requires businesses to notify customers of a breach ‘without Defendant’s motion is therefore 14 B. California Consumer Privacy Act Claim 15 Plaintiff alleges that Defendant violated the CCPA, Cal. Civil Code § 1798.100 et 16 seq., by breaching its “duty to implement and maintain reasonable security procedures and 17 practices appropriate to the nature of Plaintiff’s personal information.” (Compl. ¶ 32.) As 18 a result, Plaintiff alleges he “suffered unauthorized access and disclosure of [his] personal 19 information” and “was injured and lost money and privacy interests.” (Id. ¶¶ 33-34.) 20 Defendant cites Cal. Civil Code § 1798.82 for the proposition that Plaintiff must 21 allege a data breach occurred in order to state a CCPA violation. However, § 1798.82 is a 22 provision of the CCRA, not the CCPA. Defendant argues that Plaintiff “does not allege 23 that his information (username, password, etc.) was part of a breach of data maintained by 24 Defendant.” (Def. Mot. at 5.) The Court disagrees. Plaintiff alleges he “was informed 25 that an unknown individual accessed his accounts and switched Plaintiff’s contact 26 information, such as his email address, and changed his account pin numbers as well; the 27 unauthorized person(s) also obtained new account cards to make purchases without 28 Plaintiff’s knowledge, consent, or benefit.” (Compl. ¶ 12.) Plaintiff also alleges that due 4 23-cv-617-DMS-BLM 1 to Defendant’s “failure to implement and maintain reasonable security procedures and 2 practices . . . Plaintiff suffered unauthorized access and disclosure of their personal 3 information.” (Id. ¶ 33.) Plaintiff has sufficiently alleged a violation of the CCPA. 4 Defendant’s motion is therefore DENIED as to the CCPA claim. 5 C. Negligence Claim 6 To state a claim of negligence, Plaintiff must allege “(1) the defendant’s legal duty 7 of care to the plaintiff; (2) breach of that duty; (3) causation; and (4) resulting injury to the 8 plaintiff.” Merrill v. Navegar, Inc., 26 Cal.4th 465, 500 (2001). Defendant argues that 9 Plaintiff’s negligence claim is barred by California’s economic loss doctrine. (Def. Mot. 10 at 6-7.) In California, “liability in negligence for purely economic losses . . . is the 11 exception, not the rule.” S. Cal. Gas Leak Cases, 7 Cal.5th 391, 400 (2019). The economic 12 loss doctrine precludes recovery for purely economic losses in tort actions. NuCal Foods, 13 Inc. v. Quality Egg LLC, 918 F.Supp.2d 1023, 1028 (E.D. Cal. 2013). But “[n]ot all tort 14 claims for monetary losses between contractual parties are barred by the economic loss 15 rule.” Sheen v. Wells Fargo Bank, N.A., 12 Cal.5th 905, 923 (2022). “[S]uch claims are 16 barred when they arise from–or are not independent of–the parties’ underlying contracts.” 17 Id. 18 “In actions for negligence in California, recovery of purely economic loss is 19 foreclosed in the absence of (1) personal injury, (2) physical damage to property, (3) a 20 ‘special relationship’ existing between the parties, or (4) some other common law 21 exception to the rule.” Kalitta Air, LLC v. Cent. Tex. Airborne Sys., Inc., 315 Fed.App’x 22 603, 605 (9th Cir. 2008). Plaintiff argues the special relationship exception applies. (Pl. 23 Oppo. at 8-9) (citing J’Aire Corp. v. Gregory, 24 Cal.3d 799, 804 (1979)). J’Aire requires 24 a fact-intensive inquiry. However, Plaintiff has not pled sufficient facts for the Court to 25 determine whether the special relationship exception applies. See Johnson v. Marker 26 Ecosystem Growth Holdings, Inc., No. 20-cv-2569, 2023 WL 2191214, at *6 (N.D. Cal. 27 Feb. 22, 2023) (dismissing negligence claim because Plaintiff failed to allege sufficient 28 facts to apply the J’Aire factors). To the extent Plaintiff’s negligence claim is based on 5 23-cv-617-DMS-BLM 1 damages for his economic losses, it is DISMISSED without prejudice, with leave to 2 amend. 3 Plaintiff argues his loss of time and emotional distress preclude application of the 4 economic loss doctrine. (Pl. Oppo. at 9.) Plaintiff alleges Defendant owed him a duty to 5 protect his funds and personal private information, that it breached this duty by permitting 6 unauthorized transactions, and as a result one of his injuries is lost time. (Compl. ¶¶ 11- 7 12, 19, 36-39.) “[T]ime spent responding to a data breach is a non-economic injury, that 8 when alleged to support a negligence claim, defeats an economic loss doctrine argument.” 9 Stasi v. Immediata Health Group Corp., 501 F.Supp.3d 898, 913 (S.D. Cal. 2020). Plaintiff 10 alleges he spent nearly an entire business day at Wells Fargo in an attempt to learn how his 11 bank accounts were allegedly depleted. (Compl. ¶¶ 11, 19.) His claim for negligence based 12 upon an injury of lost time is therefore sufficiently pled, and Defendant’s motion is 13 DENIED in this respect. 14 The same is not true for Plaintiff’s allegation of “emotional distress” and “shock” as 15 a basis for his injury. Plaintiff alleges he “suffered emotional distress” as a result of Wells 16 Fargo’s actions. (Compl. ¶ 19.) This allegation is conclusory and insufficient to support 17 an injury under this claim. It is therefore DISMISSED without prejudice. 18 D. Elder Abuse Claim 19 Plaintiff’s final claim is that Defendant violated the Elder Abuse Act, codified at 20 Cal. Welf. & Isnt. Code § 15610.30(a)(2). 21 15610.30(a)(2) “by taking, secreting, appropriating, obtaining, or retaining personal 22 property of an elder, or assisting in those activities for a wrongful use or with intent to 23 defraud, or both.” (Compl. ¶ 41.) Financial abuse of an elder occurs “when a person or 24 entity . . . [t]akes, secretes, appropriates, obtains, or retains . . . [or] [a]ssits in taking, 25 secreting, appropriating, obtaining, or retaining real or personal property of an elder . . . for 26 a wrongful use or with intent to defraud, or both.” Id. §§ 15610.30(a)(1)-(2). An elder is 27 a person, residing in California, 65 years of age or older. Id. § 15610.27. Plaintiff is over 28 65 years old. (Compl. ¶ 42.) Plaintiff alleges Defendant violated § 6 23-cv-617-DMS-BLM 1 Liability may be imposed for assisting in financial elder abuse under an aiding and 2 abetting standard. Das v. Bank of Am., N.A., 186 Cal.App.4th 727, 744-45 (2010). To state 3 such a claim, the plaintiff must plead that the defendant “knows the other’s conduct 4 constitutes a breach of duty and gives substantial assistance or encouragement to the other 5 to so act.” Id. at 744. When “a bank provides ordinary services that effectuate financial 6 abuse by a third party, the bank may be found to have ‘assisted’ in the financial abuse only 7 if it knew of the third party’s wrongful conduct.” Id. at 745. To be liable for elder abuse, 8 there must be actual knowledge, not constructive knowledge. Bortz v. JPMorgan Chase 9 Bank, N.A., No. 21-cv-618, 2021 WL 4819575, at *5 (S.D. Cal. Oct. 15, 2021). Actual 10 knowledge goes beyond “constructive knowledge of—i.e., they should have known 11 about—the underlying fraud based on their unusual account activity.” Id. Here, Plaintiff 12 alleges Wells Fargo informed him “that an unknown individual accessed his accounts and 13 switched Plaintiff’s contact information.” (Compl. ¶ 12.) But Plaintiff fails to allege Wells 14 Fargo knew that this unknown individual lacked authorization to Plaintiff’s account. It is 15 not clear whether Wells Fargo “gave substantial assistance or encouragement” to the 16 alleged unknown individual who accessed Plaintiff’s account. Plaintiff maintains that 17 “Wells Fargo had its wrongful conduct authorized and/or ratified as Plaintiff disputed the 18 unauthorized transactions which were not reversed,” (Pl. Oppo. at 10), therefore his elder 19 abuse claim is sufficiently pled. However, the Court disagrees as the allegation is 20 conclusory and insufficiently pled. 21 15610.30(a)(2) is therefore DISMISSED without prejudice, with leave to amend. 22 IV. 23 CONCLUSION AND ORDER 24 25 26 27 Plaintiff’s allegation that Defendant violated § Based on the foregoing, the Court HEREBY ORDERS the following: 1. Plaintiff’s California Records Act Claim. Plaintiff’s allegation that Defendant violated the CCRA by failing to implement reasonable measures to protect Plaintiff’s personal data in violation of Cal. Civ. Code § 1798.81.5(b) is 28 7 23-cv-617-DMS-BLM 1 DISMISSED with prejudice. Plaintiff’s allegation that Defendant violated Cal. 2 Civ. Code § 1798.82 is DISMISSED without prejudice, with leave to amend 3 2. 4 5 Plaintiff’s California Consumer Privacy Claim. Defendant’s motion is DENIED as to the CCPA claim. 3. Plaintiff’s Negligence Claim. Plaintiff’s negligence claim, to the extent it is 6 based on injuries of economic losses, or emotional distress and shock, is 7 DISMISSED without prejudice, with leave to amend. Plaintiff’s negligence 8 claim, to the extent it is based on the injury of lost time, is sufficiently pled and 9 Defendant’s motion is DENIED. 10 4. Plaintiff’s Elder Abuse Claim. Plaintiff’s allegation that Defendant violated 11 Cal. Welf. & Isnt. Code § 15610.30(a)(2) is DISMISSED without prejudice, 12 with leave to amend. 13 14 15 16 17 18 5. Plaintiff may file an amended complaint, curing the deficiencies noted, within fourteen (14) days of this Order. IT IS SO ORDERED. Dated: August 9, 2023 ____________________________ Hon. Dana M. Sabraw, Chief Judge United States District Court 19 20 21 22 23 24 25 26 27 28 8 23-cv-617-DMS-BLM
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