Fong v. East West Bank
A146028
| Cal. Ct. App. | Jan 9, 2018Background
- Plaintiff Sheldon Fong, an elderly real-estate investor, had multiple accounts and loans with East West Bank (Bank) and provided collateral/guaranties for loans to a startup, United Three Groups, Inc. (UTGI).
- Fong signed promissory notes and pledge/guaranty documents for two personal loans and UTGI loans; some proceeds from UTGI loans were paid to Fong or routed through his accounts.
- In January 2012 the Bank closed Fong’s CDARS account and credited/debited his money market account; Fong contends documents authorizing payoff of a UTGI loan that routed funds through his account are forged.
- Bank records show automatic loan payments deducted from Fong’s money market account and a January 31, 2012 CDARS closure; Bank personnel produced emails and short typewritten letters purportedly bearing Fong’s signature authorizing the transfers.
- Fong sued for conversion and elder financial abuse; the trial court granted the Bank summary judgment and awarded fees; the Court of Appeal reviewed de novo.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a depositor sue its bank for conversion of deposited funds? | Fong contends the Bank converted his funds and may be liable. | Bank argues deposited funds become bank property and thus cannot be converted by depository bank. | Court: Depositor can bring conversion claim against bank; no special rule bars such suits. |
| Procedural defects in opposition — warrant affirmance? | Fong admits some procedural lapses but urges merits review. | Bank argues Fong’s failure to file a complete separate statement and timely opposition justifies affirmance. | Court: Although Fong had procedural defects, appellate court declines to affirm on that ground and decides the motion on the merits. |
| Were the challenged transfers authorized (forgery dispute)? | Fong asserts key authorizing documents are forged and thus transfers wrongful. | Bank produced manager declaration, emails, and documents purporting to show Fong’s authorization. | Court: Triable issue exists as to authenticity of signatures/documents for the January 2012 CDARS closure/repayment — summary judgment improper as to that transfer. |
| Prevailing party fees award validity after reversal | Fong seeks reversal of fee award to Bank. | Bank argues it was prevailing party below and entitled to fees. | Court: Reverses summary judgment; Bank no longer prevailing, so award of attorneys’ fees and costs reversed. |
Key Cases Cited
- O’Riordan v. Federal Kemper Life Assurance Co., 36 Cal.4th 281 (de novo review of summary judgment standard and evidence view)
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (burden-shifting framework for summary judgment)
- Cooper v. Union Bank, 9 Cal.3d 371 (bank liability for paying on forged indorsement; collecting/depository bank liability)
- Los Angeles Fed. Credit Union v. Madatyan, 209 Cal.App.4th 1383 (conversion is strict liability tort applicable to financial/intangible interests)
- Welco Electronics, Inc. v. Mora, 223 Cal.App.4th 202 (money may be subject of conversion when specific, identifiable sum or accounts)
- Metropolitan Life Ins. Co. v. San Francisco Bank, 58 Cal.App.2d 528 (discussed limits of liability in interbank forgery/presentment context)
- Kremen v. Cohen, 337 F.3d 1024 (transfer of intangible property on forged instrument can support conversion)