Matthew Kenney v. Bank of America, N.A.
2:25-cv-02726
| C.D. Cal. | May 23, 2025Background
- Plaintiff, a California business owner, alleges his former employee embezzled millions from his Bank of America (BoFA) accounts, partially due to allegedly deficient internal controls and failures by BoFA to address reported fraud.
- Plaintiff operated over thirty BoFA accounts for various business and personal purposes.
- Plaintiff claims BoFA facilitated or failed to stop fraudulent transactions despite being notified, leading to substantial business losses.
- Plaintiff sued BoFA in state court on fourteen causes of action, both federal and state.
- Defendant removed the case to federal court based on diversity and federal question jurisdiction.
- BoFA moved to dismiss; Plaintiff moved to remand to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Federal jurisdiction/remand | BoFA is a California citizen so diversity fails | BoFA's main office is in NC, not CA, under § 1348 | BoFA not a CA citizen; remand denied |
| Sufficiency of statutory federal claims | Cited various federal statutes for private relief | No private right of action for most statutes asserted | Dismissed Counts 10-13 with prejudice |
| Negligence/breach of duty | BoFA had duty under user agreement and public assertions | Banks owe only limited duties; duty is contract-based and economic loss rule applies | Dismissed claim; contract-based, economic loss rule applies |
| Sufficiency of fraud and UCL allegations | Alleged repeated fraudulent/fraud-facilitating acts | Allegations too vague, not pled with specificity | Dismissed for lack of specificity |
| Breach of contract and implied covenants | Contract existed or implied-in-fact obligations | No specific contract terms pleaded, no meeting of minds | Dismissed, leave to amend granted |
Key Cases Cited
- Gunn v. Minton, 568 U.S. 251 (federal courts are courts of limited jurisdiction)
- Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303 (national bank citizenship determined by main office location)
- Ashcroft v. Iqbal, 556 U.S. 662 (facial plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility requirement for stating claim)
- Merrill v. Navegar, Inc., 28 P.3d 116 (elements of negligence in California)
- Sheen v. Wells Fargo Bank, N.A., 12 Cal. 5th 905 (economic loss rule for tort claims in contractual context)
- Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th 979 (exception to economic loss rule for independent torts)
- Sun 'n Sand, Inc. v. United Cal. Bank, 21 Cal. 3d 671 (bank duty to investigate upon notice of fraud)
- Coles v. Glaser, 2 Cal. App. 5th 384 (breach of contract elements in CA)
- L.A. Fed. Credit Union v. Madatyan, 209 Cal. App. 4th 1383 (elements of conversion under CA law)
- Melchior v. New Line Products, Inc., 106 Cal. App. 4th 779 (unjust enrichment not standalone cause of action)
- S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 72 Cal. App. 4th 861 (UCL has three prongs: unlawful, unfair, and fraudulent)