2013-00142667-CU-BT
Isabel Manwaring vs. Golden 1 Credit Union
Nature of Proceeding:
Filed By:
Hearing on Demurrer
Baker, Meghan M.

Defendant Golden 1 Credit Union’s (“Golden 1”) demurrer to Plaintiff Isabel
Manwaring’s First Amended Complaint (“FAC”) is overruled.

Plaintiff brings this representative action alleging that Golden 1’s Overdraft Protection
Program charges members overdraft fees on transactions even though the account
has sufficient funds to cover them. She alleges that customers are signed up for this
“Courtesy Pay” service without giving prior consent. Plaintiff alleges that on
September 22 and 23, 2012, she was charged overdraft fees even though her account
was only overdrawn as a result of a single transaction by $13.40. Plaintiff alleges that
when she checked her available balance information online it did not provide the
necessary information to put plaintiff on notice of the overdraft fees. Golden 1
allegedly fails to disclose the nature of its overdraft protection program and how it
operates. Moreover, since 2010, federal law requires prior written consent to be
enrolled in the Courtesy Pay service and Golden 1 allegedly does not obtain such
consent from the account holders before assessing fees.

The Court previously overruled, in part, and sustained with leave to amend, in part,
Golden 1’s demurrer to the original complaint. Golden 1 now demurs to the third
cause of action for fraud in the FAC. The Court sustained the demurrer to Plaintiff’s
negligent misrepresentation and fraud claims in the original complaint on the basis that
Plaintiff failed to plead those claims, with the requisite specificity. Indeed, the Court
noted that the complaint as originally pled, alleged more than simply nondisclosures,
specifically it alleged various representations and as a result, Plaintiff was required to
allege facts showing “how, when, where, to whom, and by what means the
representations were tendered.” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)In the FAC, Plaintiff removed the negligent misrepresentation cause of action and has
amended her fraud cause of action to reflect a fraudulent concealment theory. Indeed,
she alleges that the manner in which Golden 1 processes hold payments for debit card
transactions which can result in assessment of overdraft fees when the account has
sufficient funds, is “a hidden practice that is concealed from customers and is in the
exclusive knowledge of Defendant, as it is not disclosed in any materials provided to
customers.” (FAC ¶ 58.) Plaintiff further alleges that Golden 1 “failed to provide
material information regarding this practice in its disclosure materials, which in fact
provide information entirely to the contrary of this practice.” (FAC ¶ 61.)

Golden 1 first argues that “Plaintiff’s misrepresentation theory has not been alleged
with specificity.” However, as seen from the FAC, and Plaintiff’s opposition, Plaintiff
maintains that the fraud cause of action is no longer based on a misrepresentation
theory. The Court notes that the fraud cause of action contains an allegation that
Golden 1 “misrepresented, concealed and/or failed to disclose this fact” thereby
suggesting that a misrepresentation theory is still at issue. (FAC ¶ 61.) Plaintiff
expressly concedes that the cause of action is no longer based on an affirmative
representation theory, and even agrees to strike the term “misrepresentation.” In any
event, even if the cause of action was based on both misrepresentation and
concealment, the Court finds, as explained below, that a cause of action based on
fraudulent concealment has been adequately pled even if one for fraudulent
misrepresentation has not. Indeed, Golden 1 demurred to the First Cause of Action in
its entirety on the basis that it failed to state facts sufficient to constitute a cause of
action. (Notice 2:1-3.) So long as the First Cause of Action states any cause of action
(e.g. fraudulent concealment), the demurrer must be overruled in its entirety. The
Court cannot sustain a demurrer to a part of a cause of action. Campbell v. Genshlea
(1919) 180 Cal. 213, 217.

Golden 1 next argues that Plaintiff’s non-disclosure/concealment theory fails because
it is conclusory, specifically because Plaintiff failed to allege facts demonstrating either
that Golden 1 owed Plaintiff a fiduciary duty or actively concealed material facts. A
duty to disclose may arise when (1) a fiduciary relationship exists between the parties;
(2) when the defendant has exclusive knowledge of material facts not known to the
plaintiff; (3) when the defendant actively conceals a material fact not known to the
plaintiff; and (4) when the defendant makes a partial representation to the plaintiff
while suppressing other facts. (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.)
Plaintiff sufficiently alleged facts showing a duty to disclose. As discussed above, she
alleged that the manner in which Golden 1 processes hold payments for debit card
transactions which can result in assessment of overdraft fees when the account has
sufficient funds is “a hidden practice that is concealed from customers and is in the
exclusive knowledge of Defendant, as it is not disclosed in any materials provided to
customers.” (FAC ¶ 58.) Plaintiff further alleges that Golden 1 “failed to provide
material information regarding this practice in its disclosure materials, which in fact
provide information entirely to the contrary of this practice.” (FAC ¶ 61.) Thus, she
alleged that Golden 1 had exclusive knowledge of the practice at issue and that it is
not disclosed in any materials and in fact that the information actually provided is
contrary to the concealed practice. These allegations demonstrate, for pleading
purposes, that Plaintiff could not have discovered the practice. These allegations are
sufficient and not impermissibly conclusory as Golden 1 contends. Further, to the
extent that Golden 1 argues that the concealment theory lacks specificity, the Court
disagrees. Indeed, a plaintiff asserting such a theory will “not be able to specify the time, place, and specific content of an omission as precisely as would a plaintiff in a
false representation claim.” (Falk v. General Motors Corporation (N.D.Cal. 2007) 496
F.Supp.2d 1088, 1098-99.) Such a claim “can succeed without the same level of
specificity required by a normal fraud claim.” (Id.); see, also Tarmann v. State Farm
Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.

The demurrer to the third cause of action in the FAC is overruled.

No later than March 14, 2014, Golden 1 shall file and serve its answer to the FAC.

The minute order is effective immediately. No formal order pursuant to CRC Rule

2013-00142667-CU-BT
Isabel Manwaring vs. Golden 1 Credit Union
Nature of Proceeding:
Filed By:
Motion to Strike
Fleener, Janlynn R.

Defendant Golden 1 Credit Union’s (“Golden 1”) motion to strike portions of Plaintiff
Isabel Manwaring’s First Amended Complaint (“FAC”) is denied.

The parties’ respective requests for judicial notice are granted.

Golden 1 seeks to strike certain allegations in the FAC related to overdraft fees and
banks in general on the basis that they are irrelevant, false, and improper. The Court
starts its analysis with the observation that use of a motion to strike should be
“cautious and sparing”; it should not be a procedural “line item veto” for the civil
defendant. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683.)
Golden 1 first moves to strike an allegation in paragraph 14 of the FAC which it
contends is a “false and misleading” characterization of the Bureau of Consumer
Financial Protection’s Official Interpretation of the overdraft opt-in regulation. The
motion is denied. The specific allegation is as follows:

“The Official Interpretation to the Opt In Rule explains that financial
institutions seeking the opt-in or affirmative consent of their customers
must present customers with a blank signature line or check box. Official
Interpretation 17(b)(6). Further, the Official Interpretation to the Opt In
Rule explains that: “If the customer does not check any box or provide a
signature, the institution must assume that the customer does not opt in.”
Official Interpretation 17(b)(5).” (FAC ¶ 14.)

Golden 1 argues that Plaintiff inaccurately alleges that the Official Interpretation 17(b)
(6) explains that financial institutions seeking the opt-in or affirmative consent of their
customers “must” present them with a “blank” signature line/check box and if they do
not check the box or provide a signature, the institution must assume the customer
does not opt in. Golden 1 argues that the statements are false because the
interpretation actually states that an institution “may obtain a consumer’s affirmative
consent by providing a blank signature line or check box that the consumer could sign
or select to affirmatively consent.”. (Golden 1’s RJN Exh. A.) Here, the Court finds that the allegation is not, demonstrably false as Golden 1 argues. Indeed, while the
Official Interpretation uses the word “may” it is not entirely inaccurate to allege that
when seeking consent of the customer, it must do so through a blank signature lone or
check box. The Court does not see, as Golden 1 apparently does, that Plaintiff has
alleged that the Interpretation only allows an institution to seek consent through use of
a blank signature line/check box but that if it chooses to use a signature line/check box
that it must be blank as opposed to presigned/prechecked as indicated in the
Interpretation. In any event, such resolution is beyond the scope of the instant motion
and it is enough to say that the allegation is not so clearly false that it should be
stricken.

Further, Plaintiff’s allegation regarding Official Interpretation 17(b)(5) in not false as
that is a direct quote. Golden 1 argues that it is misleading because it is taken from a
portion of the Interpretation regarding opt ins when a customer opens an account as
opposed to affirmative consent for a preexisting customer and thus does not support
Plaintiff’s claim that a customer’s failure to check a box or provide a signature requires
the institution to assume the customer did not opt in. However, the instant complaint is
a class action complaint and includes in the class definition, customers who opened
accounts. (Comp. ¶ 27.) Thus, the citation to 17(b)(5) is not misleading or irrelevant
as at a minimum it is implicated by the class action allegations. In any event it
provides context for the overdraft fee process in general. The motion is denied.
Golden 1 next seeks to strike various allegations regarding overdraft fees in general
and lawsuits regarding such fees as irrelevant and improper. The motion is denied.
As seen from the opposition, the allegations were set forth to demonstrate the profit
motive for financial institutions to generate overdraft fees and at a minimum provide
context for the instant action. The Court declines to strike the allegations as irrelevant
and improper. Again, a motion to strike should not be used as a procedural “line item
veto.” (PH II, Inc., surpa, 33 Cal.App.4th at 1683.)

Finally, Golden 1 moves to strike allegations that its overdraft fees are “expensive.”
The motion is denied. Golden 1 argues that the allegation is inflammatory and
irrelevant as Plaintiff does not challenge any amount of the overdraft fees, rather only
the manner in which they are assessed. This point merits little, if any discussion.
While Golden 1 may not agree its fees are “expensive”, it is not inflammatory and
Plaintiff is free to describe the fee is such a way to provide context to the manner in
which Golden 1 allegedly imposed the fees. Yet again, a motion to strike should not
be used as a procedural “line item veto.” (PH II, Inc., supra, 33 Cal.App.4th at 1683.)

The motion is denied in its entirety.

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or other notice is required.

3.1312 or other notice is required.