JUNG MIN LEE v. FORIS DAX, INC., et al.
Case No. 24-cv-06194-WHO
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
September 5, 2025
Document 115; Re: Dkt. Nos. 89, 91, 92
Plaintiff Jung Min Lee (“Lee“) alleges that defendant Foris DAX, Inc. (d/b/a and hereafter, “Crypto.com“) enabled unknown internet cryptocurrency scammers to take advantage of her “elderly” husband, Patz, who is over the age of 65, by soliciting him to withdraw fiat currency that was their community property from various accounts that he held at First Republic Bank and to invest those funds in fraudulent cryptocurrency schemes, ultimately resulting in close to $1 million in losses. She alleges that Crypto.com, together with defendant First Republic Bank (Receiver, FDIC) (hereafter, “FDIC-R“) and individual defendant First Republic Bank employee Catherine Evans, aided and abetted the scammers in their fraudulent actions, unlawfully received stolen property, and violated the unlawful prong of California‘s Unfair Competition Law (“UCL“).
Lee‘s claims against the FDIC-R and Evans are dismissed for lack of jurisdiction pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA“). Lee filed her administrative claim too late, the FDIC-R disallowed it, and the narrow statutory exception for late-filed claims does not apply. The FDIC-R and Evans’ motions to dismiss Lee‘s claims are GRANTED, and her claims against those parties are dismissed with prejudice. Her claims against Crypto.com for aiding and abetting fraud and receipt of stolen property are implausible. She has not shown that Crypto.com had “actual knowledge” of the underlying torts,
BACKGROUND
I assume familiarity with the facts of this case given the extensive motion practice that has preceded this Order. The facts alleged in the SAC are largely the same as prior iterations of the complaint, except the SAC adds new potential predicate violations for the unlawful UCL claim (arising from the same facts), and a new claim for receiving stolen property in violation of
On November 25, 2024, I denied Lee‘s motion to remand this case back to state court and dismissed her claims with leave to amend because she had not administratively exhausted them as to defendant First Republic Bank (Receiver, FDIC) and it appeared that Lee lacked standing to assert them. At that point, she had not pleaded facts from which I could infer that she had been injured by conduct that solely affected her husband. See Order Denying Motion to Remand, Staying Claims in Part, and Granting Motions to Dismiss [Dkt. No. 59]. I stayed the case for the FDIC-R and Evans so that Lee could attempt to administratively exhaust her claims.
Lee amended her complaint. Crypto.com moved once again to dismiss the First Amended Complaint (“FAC“). I dismissed most of Lee‘s claims against Crypto.com after the FAC, finding that while she had now pleaded facts to show Article III standing because she plausibly alleged injury arising from her husband‘s being scammed out of property that belonged to the marital community, she lacked standing to prosecute an Elder Abuse Act claim or a UCL claim under the unfair and fraudulent prongs. I also dismissed her negligence claim with prejudice because she was a stranger to Crypto.com. I granted leave to amend the aiding and abetting theory of liability (to specify the underlying tort that the defendants purportedly aided and abetted), and her unlawful UCL claim. Order Granting Motion to Dismiss FAC (“the last Order“) [Dkt. No. 79].
LEGAL STANDARD
A. Rule 12(b)(6)
A motion to dismiss under
In considering a motion to dismiss, the court accepts factual allegations in the complaint as true and construes the pleadings in the light most favorable to the nonmoving party. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).; Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). However, “the tenet that a court must accept a complaint‘s allegations as true is inapplicable to threadbare recitals of a cause of action‘s elements, supported by mere conclusory statements.” Iqbal, 556 U.S. at 678.
If a Rule 12(b)(6) motion is granted, the “court should grant leave to amend even if no
B. Rule 12(b)(1)
A court evaluating a Rule 12(b)(1) motion may consider any evidence outside the pleadings to resolve factual disputes regarding jurisdiction. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (“the district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.“). “Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly brought before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction.” Savage v. Glendale Union High Sch., Dist. No. 205, 343 F.3d 1036, 1039 n.2 (9th Cir. 2003).
DISCUSSION
I. CRYPTO.COM‘S MOTION TO DISMISS
In the last Order, I granted Crypto.com‘s motion to dismiss with prejudice for all of Lee‘s
Crypto.com‘s first argument in favor of dismissal is that Lee lacks constitutional and prudential standing to bring her claims; I rejected that argument in the last Order. See Dkt. No. 79 at 7 - 10. Crypto.com‘s Motion to Dismiss the SAC (“Crypto.com Mot.“) [Dkt. No. 89] 4-6. Lee alleges that the money her husband lost because of the scam was community property. I again assume, without deciding, that Lee has Article III standing to bring these claims. I address Crypto.com‘s remaining arguments in favor of dismissal below.
A. Aiding and Abetting an Intentional Tort
It is uncontested that Crypto.com, as a cryptocurrency exchange, is not held to the same high fiduciary standard to its users as a bank would be. That distinguishes this case from most of those that Lee invokes to support her aiding and abetting claim. But for the purposes of evaluating Lee‘s claim, the extent of the duty that Crypto.com owed Patz is not, by itself, determinative. The dispositive question is whether the complaint set forth allegations that, if true, would show that Crypto.com “must have known” from the circumstances that Patz was being victimized by scammers. The answer is no.
1. The law
“Liability may ... be imposed on one who aids and abets the commission of an intentional tort if [1] the person ... knows the other‘s conduct constitutes a breach of a duty and [2] gives substantial assistance or encouragement to the other to so act.” In re First All. Mortg. Co., 471 F.3d 977, 993 (9th Cir. 2006) (quoting Casey v. U.S. Bank National Assn., 127 Cal. App. 4th 1138
“California courts have long held that liability for aiding and abetting depends on proof the defendant had actual knowledge of the specific primary wrong the defendant substantially assisted.” Casey, 127 Cal. App. 4th 1145; see also In re First All. Mortg. Co., 471 F.3d 977, 999, n.4 (9th Cir. 2006) (“We note that as it has been applied, the actual knowledge standard does require more than a vague suspicion of wrongdoing.“). The parties clash over whether Lee has sufficiently alleged that Crypto.com had “actual knowledge” of the underlying torts such that she can assert an aiding and abetting claim. Her claim rises and falls on this issue because the second element of aiding and abetting liability (that the purported aider and abettor “substantially assisted” in the tort) also requires that plaintiff demonstrate actual knowledge.
2. Factual allegations underlying aiding and abetting claim
Across three complaints, Lee‘s theory has been that cryptocurrency exchanges like Crypto.com are equipped with “revolutionary blockchain technology,” which should make financial transactions on their platforms safe, but that Crypto.com negates that benefit by shirking its responsibility to utilize the tools at its disposal. As set forth in the SAC, “[e]xchanges like Crypto.com possess mountains of transaction data which, if used competently and under commercially reasonable standards, would provide unparalleled transaction risk monitoring and
Lee alleges that before the scam against her husband started, “[d]efendants were each inundated with a plethora of red flags tied expressly to the financial regulatory frameworks with which Defendants purported to comply.” Id. ¶ 9. “Moreover,” she claims, “[d]efendants each possessed the professional experience, industry knowledge, and technological know-how to know that Plaintiff‘s husband‘s transmittal orders would send the married couple‘s hard-earned savings right into the hands of criminals.” Id.2 Specifically as to Crypto.com, she states that it “had actual knowledge that the destination cryptocurrency wallets had been already flagged or associated with known scammers.” Id. ¶ 9. Lee also points to the prevalence of so-called “pig butchering scams,” financial fraud aimed at particularly elderly individuals, and says that “Crypto.com knew, by no later than October 2021, that its users were being targeted by pig butchering scams.” Id. ¶ 66.
3. The SAC does not set forth facts from which I can infer that Crypto.com had “actual knowledge” of the underlying torts
“A defendant‘s actual knowledge may be shown, not only by direct evidence, but also by circumstantial evidence. ... However, actual knowledge can be inferred from the circumstances only if, in the light of the evidence, such inference is not based on speculation or conjecture. Only where the circumstances are such that the defendant ‘must have known’ and not ‘should have
a. Lee relies upon circumstantial evidence of actual knowledge
I find that Lee relies upon circumstantial rather than direct evidence. Lee disagrees, halfheartedly. She argues that the SAC outlines the direct evidence that Crypto.com had of the scam. But Lee‘s allegations of “direct evidence” of actual knowledge are too conclusory to support her claim. She alleges that “Defendants had actual knowledge” either that “Mr. Patz was a victim of a financial elder abuse scam,” SAC ¶¶ 308, 310 or that “they would give assistance in accomplishing the fraud,” id. ¶ 281. And she alleges that “[w]hen Crypto.com made conversions [of fiat currency into Tether] it knew that Mr. Patz was in fact a victim of fraud.” Id. ¶ 165. But Lee never alleges that Crypto.com knew that the recipient of Patz‘s funds was a fraudulent actor at the time it processed his transactions or that it knew that the recipient intended to wrongfully take his money in any way. Crypto.com Mot. 10 (citing Casey, 127 Cal. App. 4th at 1152 (“[B]ecause the banks were ignorant of the source of the funds deposited into those accounts, they did not know that allowing [third parties] to withdraw money from the accounts was assisting a diversion of corporate funds—the primary violation.“)).
The SAC alleges at one point that Crypto.com knew that the wallets to which Patz directed the funds had been flagged as being associated with scammers, but that still constitutes circumstantial evidence of actual knowledge. Contradicting that same allegation, Lee also alleges that Crypto.com failed to conduct due diligence before “whitelisting” addresses, meaning that it “has no way of screening for potential red flag indicators of investment scams and other common vehicles of crypto theft.” SAC ¶¶ 91-92. As I have pointed out in prior orders, Lee‘s allegations across her various amended complaints have conceded that “Crypto.com perhaps did not know the entire scheme or its intricacies, i.e., the true identifying information of the Doe Defendants that Crypto.com was aiding and abetting....” SAC at ¶ 165; see also id. at ¶ 278 (suggesting that
The nature of these allegations do not show that Crypto.com had direct evidence of specific torts being committed such that it could have “aided and abetted” in their commission. Lee‘s aiding and abetting claim would have to rely on circumstantial evidence to survive. But, as I explain below, the circumstantial evidence Crypto.com allegedly had of the underlying fraud does not rise to the level of “must have known.”
b. The facts alleged do not show that Crypto.com “must have known” of the underlying scheme
Where actual knowledge is to be shown via circumstantial evidence, the “distinction between what a defendant must have known and what a defendant should have known is crucial.” ConAgra, 17 Cal. App. 5th at 84; see also Cf. In re A.L., 38 Cal. App. 5th 15, 24-25 (2019) (“We note that while actual knowledge is a higher standard than criminal negligence, both standards are proven in much the same way: Circumstantial evidence tending to show that a reasonable person would have known [a fact] will likewise tend to show that a particular defendant was aware of that fact.“)).3 Lee relies on Lin v. JP Morgan Chase Bank to argue that Crypto.com, like Chase Bank in Lin, had sufficient circumstantial evidence of fraud that it “must have known” Patz was being victimized. Crypto.com agrees that Lin is instructive but disagrees about what it instructs.
In Lin, the plaintiff, a seventy-nine-year-old-woman, alleged that her bank, Chase, through its employees, aided and abetted fraudsters in scamming her out of $721,500 of her retirement savings. Lin sued Chase and a Chase branch manager under California‘s Financial Elder Abuse Law and California‘s Unfair Competition Law for processing her transfers rather than flagging and reporting them as suspicious, speaking with her about the nature of the transactions, and/or calling her daughter, who was a joint accountholder. See Lin, at *1. “Based on the unique factual
To reach that conclusion, the court relied upon allegations concerning the “series of high-amount, quick-succession transfers” that had the “hallmark signs of financial elder abuse” as indicated by the “Interagency Guidance on Privacy Laws and Reporting Financial Elder Abuse of Older Adults,” guidance that Lin invoked her complaint and that Lee cites in the SAC.4 The Lin court pointed out that that guidance identifies as a “possible sign of abuse” “erratic or unusual banking transactions,” such as “[u]ncharacteristic attempts to wire large sums of money.” Id. at *7-8. Lin alleged that both of those things occurred and that her bank ignored them.
Lin supports Crypto.com‘s arguments. First, and most importantly, the Lin court identified that Lin was a “long-time Chase customer [who] prior to the events at issue in this action, [] had not sent a wire transfer for at least seven years” and whose “banking behavior dramatically changed” when the alleged scheme began. Lin, at *8. Here, in contrast, Lee admits that Patz had no prior history with Crypto.com before the fraud started. See SAC ¶ 272 (noting that “Mr. Patz had no history or background in using or exchanging or otherwise interacting with virtual currency“). This means that Crypto.com could not identify whether Patz‘s transactions were “erratic,” “unusual,” or “uncharacteristic,” regardless of whether the cryptocurrency exchange was (rightly, wrongly, or otherwise) considering the CFPB‘s issued guidance with respect to identifying so-called “pig butchering” schemes.
According to the SAC, the alleged fraud unfolded over a series of about five weeks in early 2023. On January 14, 2023, the scammer “guided Mr. Patz into setting up an account at Crypto.com.” SAC ¶ 112. On January 20, 2023, the scammer instructed Patz to “physically go into the bank to do a $200,000 wire transfer to Crypto.com,” SAC ¶ 126, and on January 23, 2023,
While the size and frequency of these transactions may look comparable to those that the Lin court found rose to the level of circumstantial evidence from which Chase “must have known” that fraud was afoot, the rest of the situation does not mirror Lin. Crypto.com is not a bank, meaning that it is subject to a less stringent duty of care toward its customers. It also was unfamiliar with Patz up until January 14, 2023, when his account was opened. He was not a “long-time customer” whose habits Crypto.com could have (let alone should have) noted and flagged as odd or suspicious when they varied from the norm—there was no norm from which to depart, suspiciously or otherwise.
The court in Lin also noted that Chase did not question Lin about the nature of her transactions. Lin, at *1 (noting bank‘s failure to “speak[] with Plaintiff about the nature of the transactions and/or call[] Plaintiff‘s daughter, who is a joint accountholder“). In contrast, Crypto.com did contemporaneously ask Patz questions about his account activity. See SAC at ¶¶ 184-189 (describing how “Crypto.com contacted Mr. Patz” to ask him questions “about his account activity” in addition to “questions ascertaining whether Mr. Patz was a victim of an investment scam or not.“). Patz responded that “he was taking part in an investing opportunity.”
Lee makes a lot out of the transparency-enabling tools at Crypto.com‘s disposal to argue that it must have known about the fraud. She claims, among other things, that Crypto.com, as a “money services business,” “would have maintained a risk-based anti-money laundering program reasonably designed to prevent money laundering on its platform.” SAC ¶ 38. She speculates that “[i]f Crypto.com were a duly compliant MSB, the AML program must have contained written policies, procedures and internal controls; a designated individual responsible for BSA compliance; provision of training, including on how to detect suspicious transactions; and the provision of an independent review of the AML program.” Id. (citing statutes). She points out that Crypto.com “represents that its financial systems are secure,” offering various cutting-edge security infrastructure, SAC ¶¶ 45-50, and that it knew that its users were “being targeted by pig butchering scams.” Id. ¶¶ 60-65. These arguments may be credible in a vacuum, but general allegations about Crypto.com‘s security offerings and knowledge of its users’ general vulnerability to scams does not constitute circumstantial evidence of fraud underlying Lee‘s aiding and abetting claim that would meet the high standard of “must have known.” These same arguments are better suited to Lee‘s unlawful UCL claim, insofar as it proceeds under a theory of liability arising from the Bank Secrecy Act and related statutes.6
Because Lee has shown neither direct evidence that Crypto.com had actual knowledge of the underlying fraud it purportedly assisted, nor circumstantial evidence that satisfies the applicable high standard, her aiding and abetting claim is implausible. Crypto.com‘s motion to dismiss this claim is GRANTED. As I have already granted Lee leave to amend her claim twice, to no avail, it is now dismissed with prejudice.
B. UCL
The UCL prohibits unfair competition, which includes any “unlawful, unfair, or fraudulent
I dismissed with prejudice Lee‘s unfair and fraudulent UCL claims because she lacked the standing to assert them. See Dkt. No. 79. I dismissed Lee‘s unlawful UCL claim with leave to amend, explaining that if she could plausibly allege her aiding and abetting claim, I would reevaluate its plausibility. As laid out above, supra Section I(B), Lee has not plausibly alleged aiding and abetting, so that tort cannot serve as the basis for her unlawful UCL claim. That fact does not end up mattering because Lee no longer asserts a UCL claim based on aiding and abetting (but states in a footnote that she does assert that Crypto.com is liable under the UCL for common law violations “including aiding and abetting.“). Oppo. to Crypto.com Mot. 16, n.34. Instead, she offers several new statutes that she says serve as the basis for an unlawful UCL claim. Defendants encourage me to ignore these newly added potential bases for UCL liability as impermissibly added or otherwise find that they are implausible as alleged.7
“The unlawful prong of the UCL borrows violations from other statutes or common-law causes of action and means anything that can properly be called a business practice and that at the same time is forbidden by law.” Anderson v. PHH Mortg., No. SACV 12-01192-CJC-(RNBx), 2012 WL 4496341, at *4 (C.D. Cal. Sept. 28, 2012) (internal quotation marks and citations omitted). To assert a claim under the unlawful prong of the UCL, a plaintiff must sufficiently plead some separate unlawful offense. See Smith v. Intel Corp., 745 F. Supp. 3d 853, 868 (N.D. Cal. 2024) (dismissing UCL claim under the unlawful prong and noting that such claim can only
Lee‘s new potential bases for liability under the unlawful prong of the UCL are: “a) Assisting Financial Elder Abuse against Mr. Patz (
As a preliminary matter, the reliance requirement articulated by the California Supreme Court in Kwikset knocks out several of Lee‘s proposed theories of liability that involve “misrepresentations and consumer deception” for the unlawful UCL claim. She cannot make a showing of reliance regarding Crypto.com. She never had an account and never used her husband‘s, so she never relied on any representations by Crypto.com, misleading or otherwise. See Dkt. No. 79 at 13-14. Subsequently, the unlawful UCL claim cannot proceed under a theory
With respect to the Elder Abuse Act, putting aside the standing issues, and assuming, arguendo, that Lee could assert a claim under the unlawful prong of the UCL for alleged Elder Abuse Act violations committed against her husband, after three complaints it is clear to me that any Elder Abuse Act claim against Crypto.com would not succeed for the same reason that Lee‘s aiding and abetting fraud claim cannot succeed: The facts alleged do not show that Crypto.com had “actual knowledge” of the alleged elder abuse. See discussion supra, Section I(B)(3); see also Das v. Bank of America, 186 Cal. App. 4th 727, 744 (2010) (holding that assister liability for elder abuse uses the same knowledge standard as common law aiding and abetting, and both require a showing that the defendant had “actual knowledge” of the underlying crime/tort).
As for Lee‘s claim for violation of
Barrett v. Apple Inc., No. 20-cv-04812, 2022 WL 2119131, at *5 (N.D. Cal. June 13, 2022), is on point. There, plaintiffs alleged that Apple was liable for receipt of stolen property where scammers misled victims into purchasing gift cards. The Hon. Edward J. Davila held that the plaintiffs failed to plead that the property was stolen before defendant Apple received the funds because the theft was “not complete until the scammers obtain[ed] the redemption codes and redeem[ed] the funds for their own purposes.” Barrett, at *5. Moreover, the actual knowledge requirement plagues this claim as did the others—the SAC does not set forth facts from which I can infer Crypto.com “knew the property was stolen or so obtained.” Switzer, 35 Cal. App. at 126; see People v. Tessman, 223 Cal. App. 4th 1293, 1302 (2014) (“A necessary element of [§ 496] is actual knowledge that the property received or sold was stolen“).
That leaves one possible predicate for the unlawful UCL claim: violations of the Bank Secrecy Act (“BSA“) and related anti-money laundering provisions. See SAC ¶¶ 372-411. Lee says that “under
Lee argues that “under the BSA, Defendant Crypto.com was required as a ‘money services business’ under
Crypto.com‘s arguments in favor of dismissal of the unlawful UCL claim center on the issue of reliance, but the BSA theory does not rest on misrepresentations or consumer deception, so reliance is not necessarily required. Crypto.com also points to Kenney v. Bank of Am., N.A., No. 25-cv-02726, 2025 WL 1489549 (C.D. Cal. May 23, 2025) to argue that BSA violations cannot serve as the predicate for an unlawful UCL claim. Kenney is largely inapposite. There, the court dismissed a free-standing BSA claim because the BSA lacks a private right of action. See Kenney, at *3. It later dismissed without discussion the plaintiff‘s unlawful UCL claim because plaintiff had failed to plausibly allege any predicate unlawful act. See id., at *8-9.
Here, unlike in Kenney, Lee is not trying to assert a free-standing BSA claim and there is no requirement that the statute that serves as the predicate for an unlawful UCL claim also confers a private right of action. California courts have held that where a statute “absolutely bar[s]” a private right of action, a litigant “may not rely on the proscriptions of [that] law as the basis of a UCL claim.” Newton v. American Debt Serv., 75 F. Supp. 3d 1048, 1058 (N.D. Cal. Dec. 16, 2014); see Zhang v. Superior Ct., 57 Cal. 4th 364, 379-80 (2013) (“[i]n Stop Youth Addiction and Cel-Tech, we explained that to bar a UCL action, another statute must absolutely preclude private causes of action or clearly permit the defendant‘s conduct.“); see also Cel-Tech Communications, Inc. v. L.A. Cellular Telephone Co., 20 Cal. 4th 163, 182 (1999)). The BSA does not explicitly bar a private right of action.
The SAC alleges that Crypto.com violated
In the absence of any authority precluding Lee from advancing under this theory of liability, I conclude that her unlawful UCL claim predicated on violations of the BSA by Crypto.com. is plausible. Crypto.com‘s motion to dismiss that claim is DENIED.
II. FDIC-R AND EVANS’ MOTIONS TO DISMISS
Defendant FDIC-R has moved to dismiss Lee‘s complaint for lack of subject matter jurisdiction under
A. Rule 12(b)(1)
On a motion to dismiss under
B. Discussion
1. The FIRREA claims process is jurisdictional
“‘Federal courts are courts of limited jurisdiction;’ we have subject matter jurisdiction only to the extent that it is conferred by statute or the Constitution. See Gunn v. Minton, 568 U.S. 251, 133 S. Ct. 1059, 185 L. Ed. 2d 72 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994)). Here, Lee sues the FDIC pursuant to
When liquidating a failed bank‘s assets, the FDIC must “promptly publish a notice to the depository institution‘s creditors to present their claims ... [to the FDIC] by a date specified in the notice“—i.e. the “Claims Bar Date.”
FIRREA provides for de novo judicial review of the FDIC‘s determinations of administrative claims.
Except as otherwise provided in this subsection, no court shall have jurisdiction over—
(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any depository institution for which the Corporation has been appointed receiver, including assets which the Corporation may acquire from itself as such receiver; or
(ii) any claim relating to any act or omission of such institution or the Corporation as receiver.
Courts across different circuits have interpreted FIRREA as making the administrative claims process jurisdictional. See e.g., Intercontinental Travel Mktg., Inc. v. F.D.I.C., 45 F.3d 1278, 1282 (9th Cir. 1994); Westberg v. FDIC, 741 F.3d 1301, 1303 (D.C. Cir. 2014). Put another way, the FDIC‘s administrative claims review process is mandatory, and judicial review in this court is unavailable unless Lee first routed her claim through that process.
It is undisputed that Lee has now filed an administrative claim with the FDIC. But it is also undisputed that she filed it late—over a year after the Claims Bar Date. At the start of this case, I determined that Lee had filed her complaint prematurely; she came to court before she exhausted her administrative remedies under FIRREA. When she moved to remand, she did not contest that she had failed to exhaust administrative remedies but instead argued that she did not
On September 6, 2024, FDIC-R filed a Motion to Dismiss for lack of subject matter jurisdiction because the plaintiff had not completed FIRREA‘s mandatory administrative claims process. Dkt. No. 7. Despite her insistence that she did not have to exhaust her administrative remedies, Lee filed an administrative claim with the FDIC on September 18, 2024, two days before she filed her opposition to the FDIC-R‘s first Motion to Dismiss. See Dkt. No. 39-1.
I dismissed Lee‘s claims against FDIC-R and Evans without prejudice and stayed those claims for either 180 days or until the FDIC-R issued a formal determination with respect to her claims, whichever happened first. The latter did. On February 28, 2025, FDIC-R issued a notice to Lee disallowing her claim because under
Then, Lee filed the Second Amended Complaint (“SAC“) on May 23, 2025, which is within the 60-day time limit allowed by statute to seek judicial review. See SAC [Dkt. No. 84]; see also
FIRREA provides that late claims “shall be disallowed and such disallowance shall be final.”
2. The late-filed claims exception does not apply in Lee‘s case
The FDIC-R contends that Lee has failed to show that she qualifies for the late-filed claims
With respect to the Claims Bar Date, that argument is immaterial. As the Ninth Circuit and its sister appellate courts have held, any failure by the FDIC to mail the notice required under
Regarding the FDIC‘s appointment as Receiver, that argument would be legally material if it were credible, but Lee‘s declarations and arguments do not support her position. Nowhere in the SAC does Lee allege when she first learned of the FDIC‘s appointment as receiver for First Republic Bank. See generally SAC. This information is conspicuously missing from her opposition to FDIC-R‘s Motion to Dismiss. See generally Oppo. to FDIC-R Mot. She states in her Opposition that “Plaintiff‘s sworn declarations state she never received any notice of any kind from FDIC prior to this litigation and thus had no idea about the receivership.” Oppo. to FDIC-R Mot. 4. She presumably references her declaration at Dkt. No. 101, where she states that “I have never received any notice from the [FDIC] regarding the matters at issue in this case,” and “I only learned about the FDIC notice and referenced exhibits during the course of this case, after the litigation had commenced.” Declaration of J. Lee (“Lee Decl.“) [Dkt. No. 101]. But she acknowledges (as the FDIC-R points out) that allegations in the SAC (and the original complaint in this action) refer to the appointment of the FDIC-R as receiver, meaning that at least as early as August 30, 2024, Lee knew that the FDIC was the Receiver for First Republic Bank. See Initial Complaint [Dkt. No. 1-1] ¶ 24 (On May 1, 2023, the [FDIC] seized control of First Republic following a collapse of the bank“); SAC ¶ 24 (same).
The court in Alkasabi v. Washington Mutual Bank, F.A. considered a very similar situation,
Dispositively, Lee received adequate notice of the FDIC as receiver through publication notice. The FDIC published notice of its appointment in various newspapers of general circulation in May, June, and July 2023. Stamelman Decl. ¶ 5 (stating that on May 8, 2023, June 9, 2023, and July 7, 2023, the FDIC-R published a notice in the San Francisco Chronicle, the Los Angeles Times, the New York Times, the Wall Street Journal and the Boston Globe stating that First Republic Bank was closed and that claims against First Republic, if any existed, were to be administratively filed on or before the Bar Date); see also id. Ex. D (example of notice published on May 8, 2023, by the FDIC-R in the San Francisco Chronicle). The Fourth Circuit has held that publication in local newspapers precludes a claimant‘s defense of lack of notice of the receivership, Tillman v. Resolution Trust Corp., 37 F.3d 1032, 1036 (4th Cir. 1994), as have district courts across the country, see e.g. Alkasabi, 31 F. Supp. 3d 101.
The failure of First Republic Bank and its receivership did not fly under the radar in 2023—the FDIC-R‘s takeover of First Republic Bank was widely reported across mainstream media. See Stamelman Decl. Exs. E-I. This suggests that at the very least, Lee was on inquiry notice of the FDIC-R‘s status as Receiver and the administrative claims process. See Elmco Props., Inc. v. Second Nat‘l Fed. Sav. Assoc., 94 F.3d 914, 921-22 (4th Cir. 1996) (a claimant “may not complain of its lack of formal notice if it actually knew enough about the situation to place it on ‘inquiry notice’ as to the details of the administrative process,” and “a claimant‘s
For that reason, the motion of individual defendant Catherine Evans is also granted. According to the SAC, Evans “was a Senior Managing Director and Wealth Manager and employee at First Republic.” SAC ¶ 26. Evans “was the financial planner and investment manager of [Lee] and Mr. Patz,” and was “acutely aware that [Lee‘s] family investment strategy was conservative.” Id. ¶ 147. At various points, Lee alleges that Patz told Evans that “he needed her to sweep his investment account and checking account, and to wire ... money to Crypto.com, because he was ‘investing’ in cryptocurrency.” SAC ¶¶ 88, 132. She alleges that Evans “failed to act on this red flag.” Id. ¶ 132. California courts have held that the “FIRREA jurisdictional bar applied to claims against employees of the failed institution where plaintiffs’ claims are based on the wrongdoing alleged to have been committed by the individual as an employee of the failed institution.” Saffer v. JP Morgan Chase Bank, N.A., 225 Cal. App. 4th 1239, 1262 (2014); see also Dixon v. JPMorgan Chase Bank, No. 222CV01726JLSJEM, 2022 WL 16859661, at *2 (C.D. Cal. Sept. 7, 2022) (citing Saffer). For these reasons, Lee‘s claims against Evans are also barred.
CONCLUSION
For the foregoing reasons, the FDIC-R and Evans’ motions to dismiss are GRANTED, and Lee‘s claims against those defendants are dismissed, with prejudice. Crypto.com‘s motion to dismiss is GRANTED for all of Lee‘s claims except the unlawful UCL claim based on violations of the BSA. The Case Management Conference remains set for September 30, 2025 at 1:30 p.m.
IT IS SO ORDERED.
Dated: September 5, 2025
William H. Orrick
United States District Judge