State ex rel. McCann v. Bank of America, N.A.
120 Cal. Rptr. 3d 204
Cal. Ct. App.2011Background
- Appellants McCann and Valdetero filed a qui tam CFCA action against Bank of America, N.A. (BOA) alleging BOA failed to report and deliver unidentified credits to the California Controller under the Unclaimed Property Law (UPL).
- BOA serves as the check-clearing bank for many California banks; BOA processes millions of checks daily and maintains suspense accounts for unidentified credits.
- Appellants contend these unidentified credits are unclaimed property subject to escheat under the UPL.
- CFCA permits private relators to pursue false-claim actions on behalf of the state, with potential penalties and treble damages; success yields a percentage of recovery.
- The trial court sustained BOA’s demurrer to the FAC without leave to amend for lack of CFCA specificity and failure to show escheatable property under the UPL; on appeal, the court reviews de novo and considers whether amendment could cure the pleading defects.
- The court emphasizes heightened pleading for CFCA fraud claims, the need to identify a liquidated and certain obligation, and the requirement that the alleged escheatable property be proper under the UPL.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CFCA pleading specificity required for CFCA claim | McCann argues heightened fraud pleading applies but should identify specifics | BOA contends FAC lacks time, place, contents, and claimant specifics | Demurrer affirmed for lack of specificity. |
| Whether unidentified credits are escheatable property under the UPL | McCann asserts unidentified credits fall within UPL catch-all | BOA argues no identifiable, liquidated obligation owed to any owner | Unidentified credits not escheatable property; UPL not satisfied. |
| CFCA requirement of liquidated and certain obligation | McCann claims BOA had statutory obligation to escheat/pay | BOA had no liquidated, certain obligation to pay to state | CFCA claim fails for lack of liquidated, certain obligation. |
| Domicile and location considerations under UPL/FCA | McCann contends domicile issues irrelevant | BOA argues domicile affects escheat rights under UPL | Domicile/owner location cannot salvage claim; rights belong to unidentified presenting banks. |
| Overall viability of CFCA/Upl claims against BOA | McCann seeks to use UPL to impose reverse false claims liability | BOA argues no escheatable property or liquidated obligation exists | CFCA and UPL claims not stated; demurrer affirmed. |
Key Cases Cited
- Rothschild v. Tyco Int’l (US), Inc., 83 Cal.App.4th 488 (Cal. App. Dist. 2nd Div. 2000) (CFCA framing and private relators in California context)
- Pacific Bell v. California, 142 Cal.App.4th 741 (Cal. App. 2006) (CFCA; illustrative on pleading and intervention)
- Bowen v. Bank of America Corp., 126 Cal.App.4th 225 (Cal. App. 2005) (CFCA/UPL interplay; liquidated obligation requirement)
- Cory v. Public Utilities Com., 33 Cal.3d 522 (Cal. 1983) (UPL escheatment; domicile considerations)
- Douglas Aircraft Co. v. Cranston, 58 Cal.2d 462 (Cal. 1962) (Historical basis of escheat and state custody)
- Texas v. New Jersey, 379 U.S. 674 (U.S. 1965) (Mobilia sequitur personam; domicile-related escheat)
- Pennsylvania v. New York, 407 U.S. 206 (U.S. 1972) (Supreme Court territorial rights in escheat)
- Ludgate Ins. Co. v. Lockheed Martin Corp., 82 Cal.App.4th 592 (Cal. App. 2000) (Fraud pleading; heightened specificity considerations)
- Bowen, State ex rel. v. Bank of America Corp., 126 Cal.App.4th 225 (Cal. App. 2005) (Combination CFCA and UPL analysis; liquidated obligation)
- Bly-Magee v. California, 236 F.3d 1014 (9th Cir. 2001) (Insider fraud pleading requirements; heightened standard)