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Patricia Arreola, Alfredo Parra, Lillian A. Ramirez, Javier A. v. Bank of America

October 5, 2012


The opinion of the court was delivered by: Dean D. Pregerson United States District Judge



Presently before the court is Defendant Bank of America ("the bank" or "Defendant")'s Motion to Dismiss. Having considered the submissions of the parties and heard oral argument, the court denies the motion and adopts the following order.

I. Background

Plaintiffs invested money in nonparty Financial Plus Investments, Inc. ("Financial Plus"), a "massive Ponzi scheme," run by nonparty Juan Rangel ("Rangel"). (Complaint ¶¶ 1, 14-22.) Certain Plaintiffs also refinanced their homes with the assistance of Financial Plus, which arranged for straw buyers to purchase the homes, then deposited loan proceeds into Financial Plus accounts. (Id. ¶¶ 20-22.) Rangel and his associates encouraged working class, Spanish-speaking families to invest in by fraudulently promising unrealistically high rates of return and offering to save the homes of victims who were behind on their mortgage payments, but had equity in their homes. (Id. ¶¶ 1-2, 27.) All Plaintiffs lost some or all of their investments in Financial Plus. (Id. ¶¶ 14-22.)

Rangel was eventually convicted of several crimes related to his Ponzi and mortgage fraud schemes, including bribery of a bank official. (Id. ¶¶ 4,9,10.) Dony Gonzalez ("Gonzalez"), a branch manager at Bank of America, pleaded guilty to receipt of bribes by a bank official in connection with Rangel's scheme. (Id. ¶ 5.)

Rangel conducted banking activities on behalf of Financial Plus and related entities at two Bank of America branches managed by Gonzalez. (Id. ¶ 55.) Gonzalez accepted bribes from Rangel, and in return released holds on funds before the expiration of required waiting periods, authorized the deposit of funds into the account of entities not listed as payees, failed to file reports for large cash transactions, and falsified Verification of Deposit forms. (Id. ¶ 56.) Gonzalez's activities raised several internal "red flags" at the bank related to money laundering and fraudulent activities. (Id. ¶ 66, 67.) Nevertheless, the bank, including employees other than Gonazalez, continued to provide suspicious banking services to Rangel, including wiring large sums of money to Rangel's personal accounts in Mexico. (Id. ¶68.)

Plaintiffs filed this purported class action, alleging four causes of action against the bank for aiding and abetting breach of fiduciary duty, aiding and abetting fraud, aiding and abetting intentional misrepresentation, and aiding and abetting negligent misrepresentation. The bank now moves to dismiss the complaint.

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations," it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions," a "formulaic recitation of the elements," or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

III. Discussion

A. Fiduciary Duty Defendant first argues that Plaintiffs' first cause of action should be dismissed because Plaintiffs have not alleged that the bank owed them a fiduciary duty. As Defendant acknowledges, courts in this district have held that a plaintiff need not show that an aider and abettor independently owed plaintiff a fiduciary duty. Neilson v. Union Bank of California, N.A., 290 F. Supp. 2d 1101, 1137 (C.D. Cal 2003).

The bank next argues that Plaintiffs have failed to plead facts sufficient to show that Rangel owed Plaintiffs a fiduciary duty. (Mot. at 8.) The existence of a fiduciary relationship is a factual question, which depends on the particular characteristics of the relationship at issue. In re Daisy Systems Corp., 97 F.3d 1171, 1178 (9th Cir. 1996). A fiduciary relationship may exist where one party voluntarily accepts the trust and confidence of another and enjoys a superior position of influence over the trusting party. Id. at 1177. Here, Rangel specifically targeted vulnerable, distressed homeowners who were facing the loss of their homes. (Complaint ΒΆΒΆ 36, 38.) By assuring his victims that they would be able to continue living in their homes, Rangel earned their confidence, which he then exploited to transfer title or divert loan proceeds to ...

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