Stephen Lee v. Citibank, N.A.

This is an action brought by self-represented plaintiff Stephen Lee (Lee) against defendant Citibank, N.A. (Citibank).

The original and still operative complaint was filed in January 2023. The complaint alleges Lee was an account holder with Citibank. He was allegedly defrauded by an unidentified third party who posed as a Citibank employee and convinced Lee to provide information, including a confirmation code, that allowed the third party to wire transfer the funds in Lee’s Citibank account to the third party. The complaint alleges two causes of action against Citibank and Doe defendants: (1) breach of contract, a Citibank Client Manual, which the complaint quotes but does not attach; and (2) elder abuse. While the complaint references aiding and abetting and conspiracy, those are separate causes of action that are not alleged in the complaint. (See complaint at ¶¶ 11-13.) There are no exhibits attached to the complaint. Citibank filed an answer to the complaint in August 2023.

Citibank now moves for summary judgment, with Lee opposing. The matter is set for trial on August 24, 2026.

LEGAL STANDARDS—SUMMARY JUDGMENT OR ADJUDICATION

The pleadings limit the issues presented for summary judgment or summary adjudication and such a motion may not be granted or denied based on issues not raised by the pleadings. (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258 (Laabs); Nieto v. Blue Shield of Calif. Life & Health Ins. (2010) 181 Cal.App.4th 60, 73 (Nieto).) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).)

A motion for summary judgment or adjudication shall be granted only if it completely disposes of an entire cause of action, an affirmative defense, a claim for damages, or an “issue of duty.” (See Code Civ. Proc., § 437c, subd. (f)(1); McCaskey v. California State Auto. Ass’n (2010) 189 Cal.App.4th 947, 975 (McCaskey); Palm Spring Villas II Homeowners Association, Inc. v. Parth (2016) 248 Cal.App.4th 268, 288.)

“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action.” The moving party is not required to go beyond the allegations of the pleading to address unpled theories. (Jacobs v. Coldwell Banker Residential Brokerage Co. (2017) 14 Cal.App.5th 438, 444 (Jacobs).) “The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R.

Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; internal citations omitted.) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable finder of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, supra, 25 Cal.4th at p. 850.) While the same standards of admissibility govern both sides’ supporting evidence, the opposition evidence is liberally construed while the moving party’s evidence is strictly construed. (Saelzler v.

Advanced Group 400 (2001) 25 Cal.4th 763, 768.) The evidence must be liberally construed in support of the opposing party, resolving any doubts in favor of that party. (Yanowitz v. L'Oreal USA, 5

Inc. (2005) 36 Cal.4th 1028, 1037 (Yanowitz).) However, declarations in opposition to a motion for summary judgment or adjudication are not a substitute for amending the pleading and cannot raise additional theories of liability. (Nativi v. Deutsche Bank National Trust Co. (2014) 223 Cal.App.4th 261, 290; California Bank & Trust v. Lawlor (2013) 222 Cal.App.4th 625, 637, fn. 3 (Lawlor) [“[e]vidence offered on an unpleaded claim, theory, or defense is irrelevant because it is outside the scope of the pleadings”].)

A reply “shall not include any new evidentiary matter, additional material facts, or separate statement submitted with the reply and not presented in the moving papers or opposing papers.” (Code Civ. Proc., § 437c, subd. (b)(4); Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-38; Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 252.) The court has not considered Lee’s unauthorized sur-reply filed on May 12, 2026.

DISCUSSION OF CITIBANK’S MOTION FOR SUMMARY JUDGMENT

Citibank moves for summary judgment or adjudication of both causes of action on separate grounds. Citibank asserts that the first cause of action fails because it is “displaced” by Commercial Code section 11101 et seq., and because Lee cannot show that it did in fact breach the Client Manual. Citibank asserts that the second cause of action fails because Citibank did not know of the wrongful conduct directed against Lee, and because Citibank contends an elder abuse claim is not an independently viable cause of action. (See Citibank’s Notice of Motion.)

First Cause of Action

The first cause of action is preempted or displaced by Article 4A of the Uniform Commercial Code (UCC). The UCC was codified in California in 1990 as Commercial Code section 11101 et seq. (See Prima Donna Development Corp. v. Wells Fargo Bank, N.A. (2019) 42 Cal.App.5th 22, 38-40 (Prima Donna); Zengen, Inc. v. Comerica Bank (2007) 41 Cal.4th 239, 247-255 (Zengen).) “Under [Commercial Code] section 11202, subdivision (b), if a bank accepts an unauthorized payment order in good faith, it is not liable if a commercially reasonable security procedure was in place, and the bank followed it and any other applicable written agreement or instruction of the customer.” (Zengen, supra, 41 Cal.4th at p. 250.)

The Zengen court determined that the Commercial Code preempts common law causes of action, such as breach of contract or negligence based on the alleged improper payment of a wire transfer by a financial institution. The court found that common law causes of action are incompatible with the statutory scheme. (Zengen, supra, 41 Cal.4th at p. 253 [“ ‘[D]ivision 11 provides that common law causes of action based on allegedly unauthorized funds transfers are preempted in two specific areas: (1) where the common law claims would create rights, duties, or liabilities inconsistent with division 11; and (2) where the circumstances giving rise to the common law claims are specifically covered by the provisions of division 11.’ ”])

Lee cannot proceed with a common law breach of contract claim against Citibank. And the first cause of action cannot reasonably be interpreted as alleging a violation of the Commercial Code. Statutory causes of action must be pleaded with particularity. (Lopez v. Southern California Rapid Transit District (1985) 40 Cal.3d 780, 795; Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.) When a statutory cause of action is alleged, “the plaintiff must set forth facts in his complaint sufficiently detailed and specific to support an

inference that each of the statutory elements of liability is satisfied. General allegations are regarded as inadequate.” (Mittenhuber v. City of Redondo Beach (1983) 142 Cal.App.3d. 1, 5.)

Even if the first cause of action were not displaced by the Commercial Code, the specific breach of contract alleged in the complaint is that Citibank “never called Plaintiff to directly verify the source of the wire transfer instructions.” (Complaint at ¶ 19.) Citibank has shown through admissible evidence that Lee admitted at deposition that the Client Agreement did not require Citibank to telephone Lee, and that this was one of several actions that Citibank “may” take in such situations. (See Citibank exhibit 8 at pp. 38-40.)

Citibank has also shown through admissible evidence, the declaration of Citibank Fraud Policy Group Officer Eustacio Valfre IV, that Lee’s online banking was not governed by the Client Agreement (the only contract alleged in the complaint) but was instead governed by an Online Banking User Agreement. Citibank complied with this agreement by both sending emails to Lee’s email of record and calling his phone number of record after receiving online instructions for both of the wire transfers that took place, requesting verification of the requests.

The phone calls went unanswered, but Citibank received responses to the emails (apparently because the third party scammer had taken control of Lee’s email accounts), and it then processed the wire transfers. (See Valfre decl. at ¶¶ 3-7 and attached exhibits 1 and 2.)

Citibank’s evidence is sufficient to show that the complaint’s first cause of action for common law breach of contract is preempted by the Commercial Code. Even if a claim under the Commercial Code had been brought, the evidence would also be sufficient to meet Citibank’s initial burden to show that Citibank had in place and followed a commercially reasonable security procedure.

When the burden shifts, Lee is unable to raise a triable issue of material fact as to the first cause of action. Lee’s opposition memorandum appears to acknowledge that Commercial Code section 11101 et seq. bars the first cause of action. However, Lee also argues that Citibank violated the statute or was negligent because its security procedures were unreasonable. This fails to raise any triable issue, as a motion for summary judgment or adjudication cannot be denied based on issues outside the pleading. (Jacobs, supra, 14 Cal.App.5th at p. 444 and Lawlor, supra, 222 Cal.App.4th at p. 637, fn. 3.) The complaint cannot reasonably be construed as alleging a violation of Commercial Code section 11101 et seq. The complaint also does not state a cause of action for negligence. And even if it did, negligence is also a common law claim, which was preempted by the Commercial Code.

Lee’s separate statement also acknowledges that his online banking with Citibank was governed by the Online Banking User Agreement. Lee does not dispute that he consented to the Online Banking User Agreement. (See Lee’s response to Citibank undisputed material fact no. 3.) The breach of contract cause of action alleged in the complaint based on the Client Agreement thus necessarily fails because the Client Agreement was not the contract applicable to Lee’s online banking activity when the wire transfers were made.

Citibank’s motion for summary adjudication is granted as to the first cause of action for breach of contract on the basis that it is preempted by Commercial Code section 11101 et seq.

Second Cause of Action

Because the second cause of action does not allege any physical abuse of Lee, it is properly understood as a claim for financial elder abuse. Financial elder abuse is defined by Welfare and Institutions Code section 15610.30, subdivision (a), as follows: “‘Financial abuse’ of an elder or dependent adult occurs when a person or entity does any of the following: [¶] (1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. [¶] (2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. [¶] (3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.”

Because it is a statutory cause of action, the second cause of action is not preempted by the Commercial Code as interpreted in the Zengen decision. Statutory causes of action must be pleaded with particularity. (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.) “Accordingly, [the] ‘[u]se of such terminology [as fraudulently and recklessly] cannot cure [the] failure to point out exactly how or in what manner the [respondent] transgressed.’ [Citation.]” (Carter v. Prime Healthcare Paradise Valley LLC (2011) 198 Cal.App.4th 396, 410.)

The second cause of action alleges that Citibank’s “acts in breaching the manual and in denying [Lee] the use of accounts” were acts of elder abuse. (See complaint at ¶ 31, and also ¶¶ 3 and 22.)

Citibank argues the financial elder abuse claim does not create a private right of action and is therefore dependent on the viability of another cause of action. (MPA at 16:1-10, citing Berkley v. Dowds (2007) 152 Cal.App.4th 518, 529.) But later appellate decisions have called Berkley into question. (See Perlin v. Fountain View Management, Inc. (2008) 163 Cal.App.4th 657, 665.) Reviewing cases, Perlin concluded the elder abuse statute “creates an independent cause of action.” (Perlin, at p. 666.) The court finds Perlin persuasive. Elder abuse is a freestanding statutory cause of action that can be pleaded alone, and the second cause of action in Lee’s complaint does not entirely depend upon the first cause of action.

Citibank’s argument that it “did not know of the wrongful conduct being perpetuated against Plaintiff by a scammer” does not wholly dispose of the second cause of action. (See Notice of Motion at p. 2:13-14.) Citibank’s supporting memorandum and separate statement fail to address the allegation that cutting Lee off from his Citibank accounts, and those of his elderly parents, was itself an act of financial elder abuse. (See Parsons v. Estenson Logistics, LLC (2022) 86 Cal.App.5th 1260, 1265, fn. 5 [“‘[A]ll material facts must be set forth in the separate statement.’”])

A motion for summary judgment or adjudication can only be granted if it completely disposes of an entire cause of action, an affirmative defense, a claim for damages, or an “issue of duty.” (Code Civ. Proc., § 437c, subd. (f)(1); McCaskey, supra, 189 Cal.App.4th at p. 975.)

Citibank’s motion for summary adjudication is denied as to the second cause of action for financial elder abuse for failure to meet the initial burden.

CONCLUSION 8

Citibank’s motion for summary judgment is DENIED. Citibank’s alternative motion for summary adjudication is GRANTED as to the first cause of action and DENIED for failure to meet the initial burden as to the second cause of action.

The court will prepare the order.

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