Skerlec v. Wells Fargo Bank

Opinion

DEVINE, P.J.

Plaintiffs appeal from judgment of dismissal following the sustaining of a demurrer to their complaint without leave to amend. Plaintiffs allege that they were injured in a vehicle by the negligence of Nancy Lee Bourguignon, driver of another vehicle. The only defendant present in this appeal is respondent Wells Fargo Bank, National Association, which as lender financed the sale to Nancy Lee Bourguignon by an automobile dealer of the vehicle which she was driving. The action is on two theories—vicarious liability of the lender and negligent entrustment. The two theories somewhat overlap, but may be discussed separately.

Theory of Lender’s Liability

Appellants’ proposition is that respondent bank assumed a business relationship with an automobile dealer (also a defendant, but not an appellant) whereby, through making individual loans for purchase of vehicles, the bank places automobiles in the hands of persons regardless of their ability to respond in damages “as required by the California Financial Responsibility Law (section 16000 et seq. of the California Vehicle Code)”; that the bank did finance the purchase of the Bourguignon vehicle and that the bank knew that Nancy Lee Bourguignon “was financially incapable of complying with the financial responsibility laws.” Appellants do not rely on any statute directly compelling the vehicle owner to carry public liability insurance or, what would be farther removed, compelling the lender to see to it that the borrowing purchaser has such insurance, because there is no such statute in this state. They contend, however, that there is a common law liability of a lender who knows that the borrower is unable to comply with section 16000 et seq. of the Vehicle Code.

In considering appellants’ proffered amalgam of common with statutory law, we take note first of the common law aspect. Appellants cite

Connor

v.

Great Western Sav. & Loan Assn., 69

Cal.2d 850 [73 Cal.Rptr. 369, 447 P.2d 609]. In that case, a financial institution was held potentially re

[1006]