2013-00142667-CU-BT

Isabel Manwaring vs. Golden 1 Credit Union

Nature of Proceeding: Hearing on Demurrer

Filed By: Fleener, Janlynn R.

Defendant Golden 1 Credit Union’s Demurrer to the Complaint is ruled on as follows:

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 four $26 overdraft fees even though her
account was only overdrawn as the 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 One allegedly fails to disclose the nature of its overdraft protection program
and how it operates. Moreover, since 2010, federal law requires prior consent to be
enrolled in the Courtesy Pay service and Golden One allegedly does not obtain such
consent from the account holders before assessing the fees.

Plaintiff alleges two subclasses: The “No Opt In Class” is composed of all California
residents with accounts with Golden 1 Credit Union who incurred overdraft fees for
debit/check card transactions during the Class Period despite the fact that they did not
affirmatively consent to participation in Golden 1’s Courtesy Pay overdraft service.
The Class Period begins on July 1, 2010 for new account holders, whose accounts
were opened on or after July 1, 2010. The class period begins on August 15, 2010 for
holders of accounts which existed prior to July 1, 2010.

The “sufficient funds class” is composed of: “All California Residents with accounts at
Golden 1 Credit Union who incurred overdraft fees for debit/check card transactions
when there were sufficient funds in their checking accounts to cover the transactions.

Plaintiff alleges causes of action for unfair business practices, breach of contract,
negligent misrepresentation, fraud, unjust enrichment/restitution, and money had and
received. The Court is ruling on the demurrer as to plaintiff.

The demurrer to the “sufficient funds class” designation is sustained with leave to
amend. The Plaintiff has defined this class as: All California residents with accounts
with Golden 1 Credit Union who incurred overdraft fees for debit/check card
transactions when there were sufficient funds in their checking accounts to cover the
transactions.” (Complaint ¶ 27) Although the Court normally does not address the
sufficiency of the class allegations at the demurrer stage, this definition of the class is
clearly overbroad as having no limit in time. Plaintiff admits in opposition that she has
no intent of pursuing claims that go back to “time immemorial.” As an efficiency, the
defect should be cured at the pleading stage.

1st cause of action Unfair Competition: Overruled. There is no statute of limitations
problem on the face of the complaint, as plaintiff alleges an unfair business transaction
in 2012, within the 4 year statute of limitations for this cause of action. An action to
enforce any cause of action for unfair competition under Business and Professions
Code Section 17200 et seq. must be commenced within four years after the cause of
action accrued. Plaintiff is not alleging a claim for violation of Regulation E (15 USC §
1693m(g). The UCL does not require that fraud be pleaded with the same specificity
as a common law fraud claim.

2nd cause of action Breach of Contract: Overruled. The moving points and
authorities do not address the breach of contract claim.

3rd cause of action Negligent Misrepresentation, 4th cause of action Fraud:
Sustained with leave to amend for failure to state facts sufficient to constitute a cause
of action. Plaintiff has failed to allege fraud and negligent misrepresentation with the
required specificity. Contrary to the opposition statements, the complaint alleges
more than nondisclosure, such as the various representations made through the on-
line account service that led plaintiff to believe she had more funds available than she
actually had. Fraud “must be pled specifically; general and conclusory allegations do not suffice.”
Morgan v. AT&T Wireless Services. Inc.(2009) 177 Cal.App.4th 1235, 1261-62.
Accordingly, “the policy of liberal construction of the pleadings . .. will not ordinarily be
invoked to sustain a pleading defective in any material respect.” Id. To satisfy this
heightened pleading requirement. Plaintiff must allege “[e]very element of [her] cause
of action for fraud . . . in the proper manner, and the facts constituting the fraud must
be alleged with sufficient specificity to allow defendant to understand fully the nature of
the charge made.” Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73; Cadlo v.
Owens-Illinois (2004) 125 Cal. App.4th 513, 519. The rationale for this “strict
requirement of pleading” goes beyond the issue of notice to the defendant, however.
“[A]llegations of fraud involve a serious attack on character, and fairness to the
defendant demands that he should receive the fullest possible details of the charge in
order to prepare his defense.” Stansfield, supra, at 73. Thus, the “particularity
requirement necessitates pleading facts which ‘show how, when, where, to whom, and
by what means the representations were tendered.'” Id. (citation omitted) (italics in
original); see also Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.

5th cause of action Unjust Enrichment: 6th cause of action Money had and
Received: Overruled. The moving papers do not address these causes of action.

Plaintiff may file and serve an Amended Complaint on or before November 4, 2013.
Response to be filed and served within 10 days of service of the amended compliant,
15 days if served by mail.

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