Opinion
NOT TO BE PUBLISHED
San Benito County Super. Ct. No. CU0700035
Bamattre-Manoukian, ACTING P.J.
Plaintiffs Billie Keith Wolf and Lisa Wolf (the Wolfs) had an account with defendant World Savings Bank (the Bank). The Wolfs filed a first amended complaint against the Bank and three bank employees, Jennifer Perry, Denise Garner, and Geneva Olano, seeking tort damages under various causes of action. The Bank, Garner, and Olano (collectively, the defendants) filed a general demurrer to the complaint and a motion for sanctions due to the Wolfs’ alleged failure to obey the trial court’s order compelling discovery. The court sustained the demurrer without leave to amend. (See Code Civ. Proc., § 472a.) The court also granted the motion for sanctions, ordering in part that the Wolfs “are precluded from introducing any evidence regarding their alleged damages or mental incapacity during the relevant time period.”
Geneva Olano was sued as Geneva Shirey, her former name. World Savings Bank is now Wachovia Bank. The complaint also includes Does 1 to 100 as defendants in its caption.
Further unspecified statutory references are to the Code of Civil Procedure.
The Wolfs appeal from the resulting judgment of dismissal (see § 581, subd. (f)(1)), contending that the court erred in sustaining the demurrer to their entire complaint, and erred in ordering the “evidence preclusion” discovery sanction. As we find that the Wolfs have not carried their burden of showing that the trial court abused its discretion, we will affirm the judgment.
BACKGROUND
Factual Background
In reviewing the propriety of an order sustaining a demurrer without leave to amend, we accept as true all factual allegations properly pleaded in the complaint. (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 193.) Therefore, we take the underlying facts from the first amended complaint and documents subject to judicial notice. (City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 734, fn. 2.)
Defendant Jennifer Perry, Lisa Wolf’s niece, was an employee of the Bank at its Hollister branch. Garner was Perry’s direct supervisor and the Hollister branch manager. Garner knew of Perry’s relationship to the Wolfs. The Wolfs, who live in Monterey County, had an account at the Salinas branch of the Bank. Olano was the Salinas branch manager.
In 2002, Keith Wolf suffered an industrial injury which caused permanent brain damage and permanent disability. Thereafter, Lisa Wolf became his primary caregiver while herself suffering from bouts of depression.
As of December 2002, the Wolfs’ bank account held over $200,000. Using a computer terminal at the Bank, beginning in 2003, Perry repeatedly transferred money from the Wolfs’ account into Perry’s personal account without the Wolfs’ consent. Although the Bank regularly sent the Wolfs statements showing all of Perry’s transactions on the Wolfs’ account, the Wolfs did not examine their statements.
By May 2005, Garner had discovered Perry’s transactions. Perry called Lisa Wolf and told her that she had been caught by the Bank’s management depositing money into the Wolfs’ account. Perry said that bank personnel would soon be calling the Wolfs to ask them to approve Perry’s deposits and that, if the Wolfs did approve the deposits, Perry would not get into trouble with the Bank. That same day, Garner called Lisa Wolf and asked her to come to the Hollister branch to sign authorizations for the transactions executed by Perry on the Wolfs’ account. Garner told Lisa Wolf that if she did not authorize the transactions, Perry would be punished. Lisa Wolf asked that the authorization documents be sent to the Bank’s Salinas branch.
Lisa Wolf went to the Salinas branch, where Olano presented her with the authorization documents. The documents were physically arranged so that words indicating they were withdrawal slips were not visible to Lisa Wolf. Lisa Wolf signed the documents thinking they were deposit slips. When Lisa Wolf returned home, she examined her bank statements for the first time. The statements showed that Perry’s transactions were withdrawals, not deposits. Several days later, the Wolfs informed the Bank for the first time that all of Perry’s transactions were unauthorized.
At a hearing on December 19, 2007, Lisa Wolf stated that their loss amounted to approximately $65,000.
Procedural Background
In March 2007, the Wolfs filed an unverified complaint for damages for fraud and conspiracy against the Bank, Perry, Garner, and Olano. The complaint alleged that the Wolfs thought that they were retroactively authorizing deposits into their account, that they were not told that they were being asked to retroactively authorize withdrawals, and that, had they been aware that they were being asked to retroactively authorize withdrawals, they would not have done so. In May 2007, the defendants filed an amended answer generally denying all allegations in the complaint and stating various defenses.
By August 12, 2007, the defendants had provided over 300 pages of documents, including copies of the Wolfs’ bank statements, to the Wolfs in response to their discovery requests. They had also served the Wolfs with requests for admission, special interrogatories, form interrogatories, and requests for production. The Wolfs’ counsel withdrew on September 5, 2007, and they proceeded in propria persona. On October 8, 2007, the Wolfs supplied answers to the defendants’ form interrogatories, but stated that they had not seen the defendants’ requests for admissions. The defendants’ counsel emailed the Wolfs a copy of the requests for admissions. On October 16, 2007, the defendants sent the Wolfs a meet-and-confer letter. On October 18, 2007, the Wolfs provided defendants with their responses to the requests for admissions. The defendants felt that the Wolfs’ responses to their form interrogatories and requests for admissions were incomplete. The Wolfs did not respond to the defendants’ special interrogatories and requests for production.
On November 14, 2007, the Wolfs responded to the defendants’ meet-and-confer letter with an email stating in part that they would “provide revised discovery to you within 15 days.” The same day, the defendants filed a motion to compel with respect to the special and form interrogatories, requests for production, and requests for admissions, and requested attorney fees. On November 26, 2007, the Wolfs filed opposition to the motion to compel. On December 4, 2007, the defendants filed a supplemental declaration in support of their motion to compel, requesting over $4,000 in attorney fees. Attached to the declaration was the Wolfs’ email.
At the December 12, 2007 hearing on the motion, the court stated that it found the Wolfs’ email response to the defendants’ meet-and-confer letter to include “sarcastic and unnecessary” language warranting sanctions. However, the court stated that it would give the Wolfs an additional period of time to respond to the discovery requests. It ordered the Wolfs to submit “further responses without objections” and to produce the requested documents within 21 days. It reserved jurisdiction to award sanctions “partly as an inducement to [the Wolfs] to file and serve answers and responses that resolve the dispute.”
In the meantime, on November 20, 2007, the defendants filed a motion for judgment on the pleadings, arguing that the Wolfs had failed to state a cause of action against the defendants. The Wolfs filed opposition to the motion on December 10, 2007, requesting leave to amend the complaint. At the December 19, 2007 hearing on the motion, the defendants argued that their motion should be granted without leave to amend because the Wolfs’ unwarranted delay had prejudiced defendants, and because any amendment would be futile. The court granted the defendants’ motion for judgment on the pleadings, but granted the Wolfs leave to amend. The court vacated the trial date and told the Wolfs to file the amended complaint by January 4, 2008.
The Wolfs filed their unverified first amended complaint on January 2, 2008. The complaint alleged causes of action for unfair business practices, extortion, conversion, acceptance of an unauthorized payment order, fraud, intentional misrepresentation, concealment, active concealment of known facts, intentional infliction of emotional distress, breach of contract, breach of the implied covenant of good faith and fair dealing, breach of an implied-in-fact contract, negligent failure to supervise, negligence, intentional interference with contractual relations, violation of the Americans with Disabilities Act of 1990, violation of the Unruh Civil Rights Act, and declaratory relief. With the exception of the causes of action for acceptance of an unauthorized payment order, breach of contract, breach of an implied-in-fact contract, and negligent failure to supervise, which were all alleged solely against the Bank, and the cause of action for intentional interference with contractual relations, which was alleged against the individual defendants only, all causes of action were alleged against all four defendants. In their prayer for relief, the Wolfs sought damages according to proof, punitive damages, injunctive relief, and attorney fees.
On January 30, 2008, the defendants filed a demurrer to the first amended complaint and a motion for sanctions due to the Wolfs’ failure to obey the court’s December 12, 2007 order. In the demurrer, the defendants argued in part as to all 18 causes of action in the complaint that it “fails to state facts sufficient to constitute a cause of action.” (See § 430.10, subd. (f).) In the motion for sanctions, the defendants argued that the Wolfs did not produce documents in response to several of the defendants’ requests for production and they did not answer some of the interrogatories. The defendants requested attorney fees of over $6,600. The defendants also requested that the court issue an order precluding the Wolfs “from introducing any evidence regarding their alleged damages or alleged mental incapacity during the relevant time period.” The hearing on the demurrer and motion for sanctions was set for March 12, 2008.
The defendants also filed a special motion to strike (§ 425.16).
On Wednesday, March 5, 2008, the Wolfs filed an application for an ex parte order continuing the hearing on the demurrer and the motion for sanctions. The Wolfs informed the court that they were unable to file opposition to the defendants’ papers by the extended due date, which was the previous week. The court ordered the Wolfs to file their opposition papers by Friday, March 7, 2008, and allowed the defendants leave to file any reply by Tuesday, March 11, 2008. The court also reserved jurisdiction to award sanctions for the late filing, which could include disregarding the late opposition papers.
The Wolfs filed their opposition papers on March 7, 2008. As to the demurrer, the Wolfs argued that the defendants’ arguments had “gone wild.” As to the motion for sanctions, the Wolfs argued that they produced all responsive documents and answered all interrogatories. The defendants filed their replies on March 11, 2008.
The hearing was held on March 12, 2008, as scheduled. Regarding the demurrer, the defendants argued that the Wolfs’ amended complaint fell “woefully short of stating any cause of action.” “[The Wolfs] admit that they received monthly statements as required by the Electronic Funds Transfer Act of 1978. They admit that they failed to review those statements and report any unauthorized activity within 90 days [sic].... [T]hat is a bar to [the] causes of action they bring now. It also shows that [the Wolfs] are imputed with knowledge of everything that was contained in those bank statements. So [the Wolfs] have had knowledge of these alleged fraudulent withdrawals since 2003.” “[The Wolfs] argue for an exception to this policy. They say that under these facts, it would be unjust to apply the law. But [they] cite no statutory law, no case law.” Regarding the motion for sanctions, the defendants argued that they still did not know what transactions the Wolfs were disputing, and that the Wolfs had refused to produce any documents relating to their alleged disabilities. The defendants also requested sanctions due to the Wolfs’ failure to file opposition papers in a timely fashion.
The Wolfs argued that the Bank was liable to them for the embezzlement by Perry, and for the fraudulent inducement by Garner and Olano, under the doctrine of respondeat superior. They further argued that it was the defendants’ burden to bring to the attention of the court any statute or case law that suggests that the “general law” “applies even if a bank employee targets someone on the basis of knowing darn well that they don’t read their statements. Especially where there are disabilities involved.” Regarding the motion for sanctions, the Wolfs argued that they provided all documents with the exception of those that were in the possession of third parties.
The court stated that it was going to sustain the defendants’ demurrer on all counts without leave to amend and grant the motion for discovery sanctions. “I’ve heard nothing that causes me to believe that this action under the first amended complaint is any different.” “I’m swayed by [the defendants’] argument that there is a statute of limitation that is applicable to all this conduct. I’m not swayed by Ms. Wolf’s comments that she’s disabled and thereby relieved from the responsibility of checking her statements, and I don’t believe that she is relieved by that.... She still has the causes of action against her niece, and she’s entitled to pursue those to the extent there’s some criminal conduct that’s been investigated....” “I’m going to grant the request for sanctions for failure to comply with the Court-ordered discovery orders. I’m frustrated by Ms. Wolf’s repeated failures to respond to discovery requests that are clearly relevant to either the proceeding itself or to the possibility that the requested information will lead to relevant information.” “And I’m granting the request for sanctions, which includes that... there shall be no production of evidence on those points for which discovery was not issued.” The court also granted the defendants’ request for attorney fees.
An order granting the defendants’ demurrer without leave to amend and an order granting the defendants’ motion for sanctions were filed on April 18, 2008. The order sustaining the demurrer states in part: “Plaintiff’s First Amended Complaint fails to state facts upon which relief may be granted and leave to amend would be futile.” The order granting the motion for discovery sanctions states in part: “Plaintiffs are precluded from introducing any evidence regarding their alleged damages or mental incapacity during the relevant time period.” The judgment of dismissal, which included an order to pay $2,970 in attorney fees, was filed July 28, 2008. We have deemed the notice of appeal filed June 26, 2008, as having been filed immediately after entry of judgment. (See Cal. Rules of Court, rule 8.104(e)(2).)
DISCUSSION
The Demurrer
Our analysis of the Wolfs’ contentions on appeal begins with the applicable standard of review. When reviewing a judgment dismissing a complaint after a successful demurrer, “our standard of review is de novo, i.e., we exercise our independent judgment about whether the complaint states a cause of action as a matter of law.” (Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal.App.4th 784, 790.) “[W]e assume the complaint’s properly pleaded or implied factual allegations are true, and we give the complaint a reasonable interpretation, reading it in context. [Citation.] We also consider judicially noticeable matters. [Citation.] If we see a reasonable possibility that the plaintiff could cure the defect by amendment, then we conclude that the trial court abused its discretion in denying leave to amend. If we determine otherwise, then we conclude it did not. [Citation.] The plaintiff has the burden of proving that an amendment would cure the defect. [Citation.]” (Campbell v. Regents of University of California (2005) 35 Cal.4th 311, 320.) “To show abuse of discretion, plaintiff must show in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. [Citations.] This showing may be made either in the trial court or on appeal. [Citation.]” (Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 992 (Buller).)
A demurrer to a complaint may be taken to the whole complaint. (§ 430.50, subd. (a).) When a general demurrer has been filed jointly by several defendants, such as the one at issue here, the demurrer must be overruled if the complaint is good against one of the defendants. (See Majestic Realty Co. v. Pacific Lighting Corp. (1974) 37 Cal.App.3d 641, 642-643.) A general demurrer should be sustained and leave to amend denied only “ ‘where the facts are not in dispute, and the nature of the plaintiff’s claim is clear, but, under the substantive law, no liability exists. Obviously no amendment would change the result.’ [Citations.]” (Buller, supra, 160 Cal.App.4th at p. 992.)
The Wolfs contend that the trial court should not have sustained the defendants’ general demurrer because material facts were and are at issue, and because the arguments advanced by the defendants “DID NOT HOLD WATER.” They contend that the defendants’ arguments have “gone wild” because, “[u]nder the facts recounted herein, Defendant [Bank] is liable to [them] for the actions of its employees... under the principles of vicarious liability, conspiracy, implied conduct of the parties or otherwise, ratification, adoption, and otherwise, including for direct actions, tortious or criminal, against [them]....” They contend that “[a]ny abstract, generalized statutes or cases as may be cited by Defendants are distinguishable on the facts and face.” Lastly, they contend that the court abused its discretion in not granting leave to amend as “the pleading did not show on its face that it was incapable of amendment.”
We disagree with the Wolfs that any material facts are in dispute. Rather, we find that there is no dispute as to the material facts, only as to the legal effect as to various facts. The ultimate issue we address is whether, as a matter of law, the Wolfs’ failure to report “within sixty days... any unauthorized electronic fund transfer or account error which appear[ed] on the periodic statement” beginning in 2003 barred them from recovering any damages from the defendants for the losses incurred as a result of Perry’s unauthorized transactions. (15 U.S.C. § 1693g(a).) We agree with the trial court here that the defendants were entitled to have their demurrer sustained without leave to amend because the Wolfs have not alleged, and cannot allege, that they reported any unauthorized withdrawals within the statutory time limit of 60 days for reporting the first unauthorized fund transfers that appeared on the periodic bank statements provided to them by the Bank (Kruser v. Bank of America (1991) 230 Cal.App.3d 741 (Kruser); 15 U.S.C. § 1693g(a)), and they have not shown how they can amend the complaint to otherwise state viable causes of action.
Although the Wolfs prosecuted their case in propria persona in the trial court after their attorney of record withdrew, another attorney made court appearances with them and argued on their behalf. The trial court repeatedly informed the attorney that he needed to file paperwork showing he was substituting in, and counsel agreed to do so, but he did not. That same counsel is representing the Wolfs on appeal. Counsel’s brief continues the sarcastic and unnecessary comments that the trial court found in the Wolfs’ email and the personal attacks, hyperbole, and rhetoric that appear in other of the Wolfs’ papers in the record. Thus, rather than dealing with the legal issues presented through effective analysis and persuasive argument, counsel has attacked defendants and has not countered defendants’ arguments with citation to the record or to appropriate supporting authority.
Section 909 of the federal Electronic Fund Transfer Act (EFTA) states in relevant part: “[R]eimbursement need not be made to the consumer for losses the financial institution establishes would not have occurred but for the failure of the consumer to report within sixty days of transmittal of the statement (or in extenuating circumstances such as extended travel or hospitalization, within a reasonable time under the circumstances) any unauthorized electronic fund transfer or account error which appears on the periodic statement provided to the consumer....” (15 U.S.C. § 1693g(a).)
In Kruser, the appellate court interpreted the language of section 909 of the EFTA (15 U.S.C. §1693g) and section 205.6 of regulation E (12 C.F.R. § 205.6), one of the federal regulations promulgated to carry out the purposes of the federal act. (Kruser, supra, 230 Cal.App.3d at p. 745.) The court held that, under the notice and reporting requirements of the law, the bank was not required to credit their customers’ account for over $9,000 in unauthorized withdrawals because the customers had failed to notify the bank within 60 days of receiving the bank statement showing the first of the unauthorized withdrawals. (Id. at p. 744.) In so holding, the court found that the customers need not have acquired actual knowledge of the unauthorized withdrawal from the bank statement. “Such a construction of the law would reward consumers who choose to remain ignorant of the nature of transactions on their account by purposely failing to review periodic statements. Consumers must play an active and responsible role in protecting against losses which might result from unauthorized transfers. A banking institution cannot know of an unauthorized electronic transfer unless the consumer reports it.” (Id. at p. 750.)
“A consumer must report an unauthorized electronic fund transfer that appears on a periodic statement within 60 days of the financial institution’s transmittal of the statement to avoid liability for subsequent transfers. If the consumer fails to do so, the consumer's liability shall not exceed the amount of the unauthorized transfers that occur after the close of the 60 days and before notice to the institution, and that the institution establishes would not have occurred had the consumer notified the institution within the 60-day period.” (12 C.F.R. § 205.6(b)(3).)
The Kruser court further found that the claim by one of the customers that she was ill and was also caring for a terminally ill relative when the withdrawals began did not entitle the customers to an extension of time to notify their bank. The evidence established that the customer admitted she received and reviewed bank statements during the eight or nine months between when the first withdrawal occurred and when the withdrawal was reported as unauthorized. (Kruser, supra, 230 Cal.App.3d at p. 748.)
Here, it is undisputed that Perry began transferring money from the Wolfs’ bank account into her personal account in 2003. The Wolfs regularly received statements from the bank which listed these transfers. Even though the Wolfs allege that they did not regularly review their bank statements when they received the statements, bank customers are required by federal law to review their periodic bank statements in order to protect themselves against any losses which might result from unauthorized transfers. (Kruser, supra, 230 Cal.App.3d at p. 750; 15 U.S.C. § 1693g.) The Wolfs did not review their bank statements and did not inform the defendants that Perry’s money transfers were unauthorized until at least May 2005. By that time, the defendants had already informed Perry and the Wolfs that Perry would be punished for any unauthorized transfers. Therefore, the defendants could have and would have timely prevented and/or reimbursed the Wolfs for the unauthorized transfers had the Wolfs notified the defendants of the first transfers within 60 days from the date they received the bank statements showing the transfers. (15 U.S.C. § 1693g(a); 12 C.F.R. § 205.6(b)(3).) Although the Wolfs may be able to obtain damages from Perry, the remaining defendant, for her unauthorized withdrawals from their bank account, they cannot seek damages from the defendants here as a result of those withdrawals.
The fact that Perry was an employee of the Bank when she made the unauthorized transfers does not assist the Wolfs. An employee’s intentional tort gives rise to respondeat superior liability “only if it was engendered by the employment.” (Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, 298.) “The fundamental issue is whether the wrongful act was committed ‘in the course of’ a series of acts of the agent which were authorized by the principal. Of course, where the agent, for however brief a space of time, has ceased to serve his [or her] principal, he [or she] alone is responsible for his [or her] acts during the period of such cessation.’ [Citation.]” (Alma W. v. Oakland Unified School Dist. (1981) 123 Cal.App.3d 133, 141.) The determination whether an employee has acted within the scope of employment is a question of law “ ‘when “the facts are undisputed and no conflicting inferences are possible.” ’ [Citation.]” (Lisa M., supra, 12 Cal.4th at p. 299.) Here, there is no factual dispute that Perry transferred to her personal account money the Wolfs had entrusted to the Bank. As the Bank would have been liable to reimburse the Wolfs for the amount of the transferred funds had the Wolfs timely informed the defendants of their loss, the Bank was also a potential victim of Perry’s actions and, as a matter of law, Perry was not acting within the scope of her employment when she transferred the funds.
All of the Wolfs’ causes of action are based on the facts set forth above and, other than requesting damages according to proof at trial and punitive damages in the complaint’s prayer for relief, the Wolfs do not claim any damages other than the losses they sustained as a result of Perry’s unauthorized transfers. The unauthorized transfers occurred more than 60 days before May 2005, when the complained-of conduct by Garner and Olano occurred. Accordingly, the Wolfs have not shown how they can amend their complaint to state viable causes of action against Garner and Olano.
We conclude that, because Perry was not acting within the scope of her employment when she repeatedly transferred funds from the Wolfs’ account to her personal account, and because the Wolfs did not timely notify the defendants of the repeated unauthorized withdrawals from the Wolfs’ account, the defendants cannot be held liable. (Kruser, supra, 230 Cal.App.3d at pp. 748-750; 15 U.S.C. § 1693g(a).) Further, the Wolfs have not shown how their complaint can be amended to present a viable cause of action. Accordingly, the Wolfs have not carried their burden of showing that the trial court abused its discretion in sustaining the defendants’ general demurrer without leave to amend. (Buller, supra, 160 Cal.App.4th at p. 992.)
Discovery Sanctions
When granting the defendants’ motion for discovery sanctions, and in the judgment entered on behalf of the defendants, the court precluded the Wolfs “from introducing any evidence regarding their alleged damages or mental incapacity during the relevant time period.” In view of our conclusions that the demurrer was properly granted without leave to amend, and that the order and judgment do not apply to Perry, the remaining defendant, we need not reach the issue of whether the trial court properly ordered this “evidentiary sanction” as to the defendants before us. (Cf. Philippine Export & Foreign Loan Guarantee Corp. v. Chuidian (1990) 218 Cal.App.3d 1058, 1085.)
DISPOSITION
The judgment is affirmed.
I CONCUR: Duffy, J.
I CONCUR IN THE JUDGMENT ONLY: McAdams, J.