Case Name: LINNA YE v. BANK OF THE WEST, ET AL.
Case No.: 16CV297247

This is an action alleging that Defendant Bank of the West (“Defendant”) allowed funds totaling $230,000.00 to be drawn from the account of Plaintiff Linna Ye (“Plaintiff”) based on four checks with forged and/or unauthorized signatures. The funds were drawn in July 2014, August 2014, December 2014 and April 2015. (See Complaint at 9.) Plaintiff’s Complaint filed July 5, 2016 states claims for 1) “Funds Improperly Charged against a Forged Drawer’s Signature”; 2) Negligence; 3) Conversion, and; 4) Imposition of Constructive Trust. Currently before the Court is Defendant’s demurrer to the Complaint’s first and second causes of action (the only causes of action alleged against it) on the sole ground that they both fail to state sufficient facts. (See Notice of Demurrer and Demurrer at 1:27-2:2.)

Request for Judicial Notice
A precondition to judicial notice in either its permissive or mandatory form is that the matter to be noticed be relevant to the material issue before the Court. (Silverado Modjeska Recreation and Park Dist. v. County of Orange (2011) 197 Cal.App.4th 282, 307, citing People v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422 fn. 2.)

In support of its demurrer Defendant has submitted a request for judicial notice of two purported “facts” and one document (ex. A to the request) pursuant to Evidence Code §§ 451(f), 452(d) and 452(f). (See Request at 1:21.) Section 452(d) (court records) provides no support for the request as the document submitted (ex. A) is not a court record. Section 452(f), which applies to “[t]he law of an organization of nations and of foreign nations and public entities in foreign nations,” also does not support the request. Section 451(f), providing for notice of “[f]acts and propositions of generalized knowledge that are so universally known that they cannot reasonably be the subject of dispute,” only supports the request for judicial notice of “fact” no.1, that the custom of sending bank statements is sufficiently established to be judicially noticed. That request is GRANTED. The request for judicial notice of “fact” no. 2 is DENIED as it is not a fact but a legal argument (an inference) based on the custom of sending bank statements, making judicial notice (a substitute for proof) inappropriate.

Judicial Notice of exhibit A, a document entitled “Deposit Account Disclosure” that does not reference Plaintiff and is not a signed agreement, would be denied but for the fact that Plaintiff does not oppose the request and apparently concedes that it is part of the agreement governing her account. (See Opp. at 5:11-15.) The existence and terms of a contract between private parties is normally not an appropriate subject of judicial notice. (See Gould v. Maryland Sound Industries, Inc., et al. (1995) 31 Cal.App.4th 1137 [in wrongful termination action, trial court erred in sustaining employer’s demurrer by taking judicial notice of existence of written employment agreement between the parties.]) Where a contract is incorporated by reference into a pleading but not attached to it, a court may take judicial notice of the contract at the request of the demurring party. (See Ingram v. Flippo (1999) 71 Cal.App.4th 1280, 1285 n.3 [taking judicial notice of a letter and media release that formed the basis of the allegations in the complaint].) However the only contract referenced in the Complaint (at 5) is a “contract of deposit and signature card” and Defendant has not established that the “Deposit Account Disclosure” is part of that contract. Again, the request would be denied but for the fact that Plaintiff does not contest it. Accordingly it is GRANTED pursuant to Evidence Code § 452(h) as § 451(f) is clearly inapplicable.

Demurrer to Complaint
In ruling on a demurrer the Court treats it “as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Piccinini v. Cal. Emergency Management Agency (2014) 226 Cal.App.4th 685, 688, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214.)

Allegations are not accepted as true on demurrer if they contradict or are inconsistent with facts judicially noticed. (See Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1474 [rejecting allegation contradicted by judicially noticed facts].) However, a demurrer cannot be turned into an evidentiary hearing through attempts to have the Court take judicial notice of contents of documents. “For a court to take judicial notice of the meaning of a document submitted by a demurring party based on the document alone, without allowing the parties an opportunity to present extrinsic evidence of the meaning of the document, would be improper. A court ruling on a demurrer therefore cannot take judicial notice of the proper interpretation of a document submitted in support of the demurrer. In short, a court cannot by means of judicial notice convert a demurrer into an incomplete evidentiary hearing in which the demurring party can present documentary evidence and the opposing party is bound by what that evidence appears to show.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 114-115, internal citations omitted.)

Defendant’s demurrer to the first cause of action is OVERRULED as follows.

“Both the statute of limitations and the notification period provided in the Commercial Code require that a statement of account or the cancelled check itself be furnished to the account holder.” (Mac v. Bank of America (1999) 76 Cal.App.4th 562,566.) Defendant argues that the first cause of action is essentially time-barred by either the one-year notice requirement in Cal. Commercial Code § 4406(f) or by language in its “Deposit Account Disclosure,” increasing the “substantial benefit of the preclusion of claims after one year even if they have acted negligently,” (Id. at 568) that Defendant already enjoys under § 4406(f) by shortening the notice period to 30 days. This argument (even if it is assumed that Defendant’s Ex. A is part of the parties’ agreement) is contradicted by the Complaint’s factual allegations at 7-8, accepted as true on demurrer, that “[a]t all times mentioned herein [Plaintiff] was unable to inspect monthly bank statements . . . as [Defendant] did not make available said monthly statements to [Plaintiff]. At all times herein [Defendant] failed to mail monthly bank statements to [Plaintiff] at her address in California. At no time did Defendants make available to [Plaintiff] the requisite bank statements allowing [Plaintiff] sufficient opportunity to discover and report the payment of unauthorized drawn on her account. In addition, because bank statements were not made available to [Plaintiff], she was unable to reasonably discover and promptly report unauthorized activity involving her account.” As the Complaint plainly alleges that statements were not mailed to Plaintiff or otherwise made available to her, and this is not contradicted by the material offered for judicial notice, Defendant has not established at this stage that either Commercial Code § 4406(f) or its “Deposit Account Disclosure” bars Plaintiff’s first cause of action. The Complaint does not have to allege the date on which Plaintiff provided notice to Defendant in order to survive a demurrer.

Defendant’s demurrer to the second cause of action for General Negligence on the ground that it fails to state sufficient facts is SUSTAINED WITHOUT LEAVE TO AMEND. Plaintiff has offered no opposition to the demurrer to this claim, apparently conceding that the only claim she has against Defendant Bank is the first cause of action.