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Mechanics Bank v. Citibank Delaware

United States District Court, N.D. California

December 6, 2019




         On September 5, 2019, Plaintiff Mechanics Bank filed the instant action against Defendant Citibank Delaware, asserting a single cause of action under California Commercial Code § 4302. (Compl. ¶¶ 14-20, Dkt. No. 1.) Pending before the Court is Defendant's motion to dismiss. (Def.'s Mot. to Dismiss, Dkt. No. 10.) The Court finds the matter suitable for disposition without hearing pursuant to Civil Local Rule 7-1(b), and VACATES the hearing. Having considered the parties' filings and the relevant legal authorities, the Court GRANTS Defendant's motion to dismiss with prejudice.

         I. BACKGROUND

         On February 11, 2019, Malcom Leader-Picone brought a Citibank cashier's check in the amount of $195, 720 to Plaintiff's Oakland branch. (Compl. ¶ 10.) On February 12, 2019, Plaintiff presented the check to Defendant. (Compl. ¶ 11.) On February 13, 2019 at 5:13 p.m., after Plaintiff was closed, Defendant issued a notice of dishonor with respect to the check via the Electronic Advance Return Notification System (“EARNS notice”). (Compl. ¶ 12.) On February 15, 2019, Plaintiff received the check back, which was marked as counterfeit. (Compl. ¶13.)

         Plaintiff then filed this case against Defendant, alleging that Defendant was strictly liable to Plaintiff for the amount of the check per California Commercial Code § 4302. (Compl. ¶¶ 14- 20.) On October 10, 2019, Defendant filed the instant motion to dismiss. On October 24, 2019, Plaintiff filed its opposition. (Pl.'s Opp'n, Dkt. No. 17.) On October 31, 2019, Defendant filed its reply. (Def.'s Reply, Dkt. No. 18.)


         Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss based on the failure to state a claim upon which relief may be granted. A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).

         In considering such a motion, a court must “accept as true all of the factual allegations contained in the complaint, ” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (citation omitted), and may dismiss the case or a claim “only where there is no cognizable legal theory” or there is an absence of “sufficient factual matter to state a facially plausible claim to relief.” Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); Navarro, 250 F.3d at 732) (internal quotation marks omitted).

         A claim is plausible on its face when a plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citation omitted). In other words, the facts alleged must demonstrate “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         “Threadbare recitals of the elements of a cause of action” and “conclusory statements” are inadequate. Iqbal, 556 U.S. at 678; see also Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996) (“[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim.”). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully . . . . When a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557) (internal citations omitted).

         If the court grants a motion to dismiss, it should grant leave to amend even if no request to amend is made “unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (citations omitted).


         Plaintiff asserts Defendant is liable per California Commercial Code § 4302. Per § 4302(a):

If an item is presented to and received by a payor bank, the bank is accountable for the amount of either: (1) a demand item, other than a documentary draft, whether properly payable or not, if the bank . . . retains the item beyond midnight of the banking day of receipt without settling for it or . . . does not pay ...

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