Hisamatsu v. Niroula et al

Filing 106

ORDER by Judge Jeffrey S. White GRANTING 87 Motion to Dismiss and DENYING 91 Motion for Summary Judgment. (jswlc2, COURT STAFF) (Filed on 3/31/2009)

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1 2 3 4 5 6 7 8 9 10 NOT FOR PUBLICATION IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA MEGUMI HISAMATSU, Plaintiff, v. KAUSHAL NIROULA, et al. Defendants. / No. C 07-04371 JSW ORDER GRANTING DEFENDANT BANK OF HAWAII'S MOTION TO DISMISS SECOND AMENDED COMPLAINT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION This matter comes before the Court upon consideration of the Motion to Dismiss Plaintiff's Second Amended Complaint filed by Defendant, Bank of Hawaii ("BOH"), and the Motion for Summary Judgment filed by Plaintiff, Megumi Hisamatsu ("Ms. Hisamatsu"). Having considered the parties' papers, relevant legal authority, and the record in this case, the Court HEREBY GRANTS BOH's motion to dismiss, without leave to amend. The Court HEREBY DENIES Ms. Hisamatsu's motion for summary judgment. II. BACKGROUND A. Procedural History. On August 13, 2007, Ms. Hisamatsu filed a complaint in the Superior Court of the State of California for the County of San Francisco against Kaushal Niroula ("Mr. Niroula") and BOH.1 On August 20, 2007, she filed her First Amended Complaint ("FAC"). On August 23, 2007, BOH removed the action to this Court and moved to dismiss the action. On January 10, Mr. Niroula has been served but has not yet answered the SAC. (See Docket No. 80.) Ms. Hisamatsu has not yet moved for entry of default against Mr. Niroula. 1 1 2 3 4 5 6 7 8 9 10 2008, the Court granted in part and denied in part BOH's motion to dismiss or for a more definite statement. (Docket No. 66 ("Jan. 10 Order").) On April 9, 2008, Ms. Hisamatsu filed the Second Amended Complaint ("SAC"). In the SAC, Ms. Hisamatsu asserts claims for relief against BOH for: (1) Violations of California Business and Professions Code 17200 ("Section 17200"); (2) Rescission2; (3) Tort in Essence; (4) Civil Conspiracy; (5) Fraud in the Inducement; (6) Intentional Infliction of Emotional Distress; (7) Declaratory Relief; (8) Wrongful Withholding of Funds; (9) Unfair or Deceptive Trade Practices in Violation of HRS 480-1, et seq.; (10) Fraud With No Intention to Perform; (11) Negligent Misrepresentation; (12) Conversion; (13) Equitable Lien; (14) Constructive Trust; (15) Gross Negligence; (16) Negligence; (17) Negligent Infliction of Emotional Distress; and (18) Negligence Per Se. B. Factual Background. This lawsuit arises out of a confidence scheme allegedly perpetrated by Mr. Niroula on Ms. Hisamatsu, which she alleges occurred with the assistance and cooperation of BOH. The following facts, taken from the SAC, are accepted as true solely for the purposes of evaluating BOH's motion to dismiss. Unless otherwise noted, the facts are undisputed and are viewed in the light most favorable to BOH for purposes of evaluating Ms. Hisamatsu's motion for summary judgment. On or about July 27, 2006, while on vacation in Hawaii, Ms. Hisamatsu met Mr. Niroula. (SAC 6.) According to Ms. Hisamatsu, who is a Japanese citizen, Mr. Niroula convinced her that he "headed an international consulting company," "that his mother ... was a Nepalese diplomat," that his family was "very rich," and that he was a friend of the Nepalese royal family. (Id. 7.) Mr. Niroula was, however, "a criminal from San Francisco," who intended to victimize Ms. Hisamatsu through a combination of criminal hoaxes well known to" United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Ms. Hisamatsu asserts eleven claims for relief for rescission, which are based on separate legal theories. 2 2 1 2 3 4 5 6 7 8 9 10 BOH. (Id. 8-12.)3 Ms. Hisamatsu was not aware of Mr. Niroula's true identity. (Id. 8, 14.) Mr. Niroula convinced Ms. Hisamatsu that he could assist her in obtaining an investment visa so that she and her family could spend more time in the United States. (Id. 7, 10, 15-16.) As part of the visa process, Mr. Niroula advised Ms. Hisamatsu to open a bank account at an American bank. (Id. 16-17.) On August 16, 2006, she did so at BOH's Honolulu branch, with the "help" of Mr. Niroula and BOH staff. (Id. 18-19.) Ms. Hisamatsu alleges that Mr. Niroula introduced her to a BOH employee, Lynn Bronios, "who seemed to be extremely friendly with" Mr. Niroula. Mr. Niroula also represented that "he had several other friends at BOH who would help with transfers of funds, and eventual verification for American immigration officials." (Id. 18.) Ms. Hisamatsu executed a signature card, in which she stated: "I ... agree to all of the terms and conditions of the deposit account agreement and disclosure statement, ... a copy of which I acknowledge [BOH] has furnished to me." (Docket No. 13 (Declaration of Scott I. Takahashi ("Takahashi Decl."), Ex. 2).) The deposit account agreement and disclosure statement provide, in turn and in part, that: If you discover a check forgery, alteration or other unauthorized transaction involving your account, you must promptly notify your branch of account in writing of the relevant facts. ... You are in the best position to discover and report any unauthorized debit to your account. If you fail to notify us within a reasonable time (not exceeding 21) days of an unauthorized signature, alteration, forgery, counterfeit check or other unauthorized debit to your account, we will not be responsible for subsequent unauthorized transactions by the same wrongdoer. Without regard to care or lack of care of either you or us, if you do not discover and report any such unauthorized transaction within 60 days after your statement, transaction information or the item is made available to you, you are precluded from asserting the unauthorized transaction against us. If you claim a credit or refund because of an unauthorized transaction, you agree to provide us with a declaration containing whatever reasonable information we require regarding your account, the transaction and the circumstances surrounding the claimed loss. You also agree to make a report to the police and to provide us with a copy of the report, upon request. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 hoaxes. There are no facts alleged that demonstrate how BOH knew about these 3 1 2 3 4 5 6 7 8 9 10 (Takahashi Decl., Ex. 1, Consumer Deposit Account Agreement and Disclosure Statement and Bankoh Consumer Electronic Financial Services Agreement and Disclosure Statement ("the Deposit Agreement") at 18 (emphasis added).) On August 22, 2006 and September 5, 2006, Ms. Hisamatsu wired $256,179.29 and $299,988.00, respectively, to her BOH account and contends she did so in part because she was "relying on the apparent confidence BOH employees had in Niroula." (SAC 21, 25.) On the day Ms. Hisamatsu opened the account, Mr. Niroula stole three temporary checks, forged them, and deposited the funds into his own account at BOH. (Id. 20-24.) Mr. Niroula also convinced Ms. Hisamatsu to send him additional checks "so that immigration could verify that she had both the contacts with the United States and the banking relationship Niroula misrepresented was required for the visa application." (Id. 27.) Mr. Niroula used one of these checks to draw funds from Ms. Hisamatsu's account on September 18, 2006. (Id. 28.) Ms. Hisamatsu contends that BOH neither verified her signature on any of the checks before debiting them from her account nor contacted her about the transactions. (Id. 24, 28.) On or about October 2, 2006, Ms. Hisamatsu learned of the forgeries, notified BOH, and executed three affidavits (the "Claim Forms") swearing that the checks were forged. (Id. 29, 31, Ex. A.) In the Claim Forms, BOH states "the Bank will investigate your Claim," and states that "[p]ayment is contingent upon the results of the Bank's investigation." (Id., Ex. A.) BOH also advises its customer that, by submitting a claim to BOH, he or she agrees to cooperate with the Bank and law enforcement agencies with any investigation. (Id.) Ms. Hisamatsu contends that BOH employees refused to contact the police or take any action to recover the funds, required her to return to Hawaii if she wanted to pursue the matter and, at the time she signed the Claim Forms, BOH "had decided not to pay the claim, but to deny it." (Id. 30-32.) BOH did, however, subsequently freeze the account in which Mr. Niroula had deposited the funds. (Id. 33.) Ms. Hisamatsu alleges that, as of October 3, 2006, although "BOH had enough information to retransfer all of Niroula's account balance to [her] account," which was slightly over $250,000, it did not do so and did not adequately investigate her claims. (Id. 33, 36.) United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 1 2 3 4 5 6 7 8 9 10 Ms. Hisamatsu contends that on or about October 4, 2006, Mr. Niroula informed BOH employees that he would return Ms. Hisamatsu's money and assured her that he had sufficient funds in San Francisco to return her money. (SAC 34.) Ms. Hisamatsu also contends that Chester Dods, a BOH employee, told her Mr. Niroula was not a bad person, that Mr. Niroula would return her money, and that there was a reasonable delay in wire transfers due to a bank holiday in Nepal. (Id. 35.) On or about October 17, 2006, Mr. Niroula contacted Ms. Hisamatsu and represented to her that "his family had been placed in a very dangerous situation due to their planned departure from Nepal, and the only way to save them from harm was to `borrow'" her money. (Id. 37.) Ms. Hisamatsu contends that Mr. Niroula made various other representations regarding the delay in being able to reimburse her, including a representation that his sister had been kidnapped. (Id. 37-38.) Mr. Niroula also convinced Ms. Hisamatsu that she needed to come to San Francisco, California to complete the financial transactions. (Id. 37.) "On October 20, 2006, as a direct result of BOH's statements in its claim forms and its indulgent conciliatory attitude toward [Mr. Niroula, Ms. Hisamatsu] flew to San Francisco to recover her money." (Id. 39.) Ms. Hisamatsu contends that, "[i]n the event ... Niroula returned her family savings, [she] intended to withdraw her claims to BOH. ... If not, [she] reasonably believed that she was still protected by her pending claims at BOH and the bank's assurance of an investigation in its claim forms." (Id. 39.) Ms. Hisamatsu opened an account with Citibank, into which Mr. Niroula deposited a check in the amount of $899,000. Ms. Hisamatsu was advised that the check would not clear for three days. (Id. 39-40.) Ms. Hisamatsu also opened another account with Wells Fargo bank, and "as a further direct result of Plaintiff's pending claims with BOH, Kashal Niroula's control and representations, BOH's statements in the claim form, and BOH's vouching for [Mr. Niroula, Ms. Hisamatsu] acted promptly to help" Mr. Niroula. (Id. 42-43.) As part of this effort to help Mr. Niroula, Ms. Hisamatsu "called her BOH branch and asked the manager to wire $41,000 to her San Francisco Wells Fargo account. From those funds," Ms. Hisamatsu loaned United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 1 2 3 4 5 6 7 8 9 10 Mr. Niroula the ransom payment for his sister. (Id. 43.) Ms. Hisamatsu contends that during this time, Mr. Niroula convinced her that her life had been threatened. (Id. 41.) Before BOH released its hold on the frozen funds, it drafted a form entitled "Indemnification of Liability" ("the Indemnification Agreement"), which it gave to one of Ms. Hisamatsu's friends in Honolulu, who then sent the form to California. (Id. 44-45, Ex. B.) Ms. Hisamatsu contends that she "reasonably believed ... that her claims to BOH were not affected by this unofficial looking form, ... that BOH was still investigating," and that the Indemnification Agreement merely was a "temporary formality to facilitate the transfer of Niroula's family funds from Nepal ... ." (Id. 45-46.) Ms. Hisamatsu contends that no one from BOH explained the Indemnification Agreement to her or offered to translate it for her, even though BOH knew she had difficulty with English. (Id. 46.) Ms. Hisamatsu does not allege facts to show how BOH knew she had difficulty with English. The Indemnification Agreement provides that, "for reasons known best to myself," Ms. Hisamatsu wished "to withdraw [her] forgery dispute regarding" the three checks allegedly forged by Mr. Niroula. She also agreed "that funds ($257,546.25) held in suspense from Bank of Hawaii account #0002-933063, belonging to Kaushal Niroula, as a result of the forgery dispute shall be released to Kaushal Niroula, upon signing this agreement." (Id., Ex. B.) The Indemnification Agreement also provides that Ms. Hisamatsu agreed "to indemnify and hold harmless [BOH,] ... from and against any and all losses, damages, costs and reasonable attorney fees resulting from or related to claims, liabilities, suits, actions, or proceedings arising out of [BOH] having paid the funds to Kaushal Niroula at" Ms. Hisamatsu's request. (Id.) On October 31, 2006, Ms. Hisamatsu learned that the check deposited in the Citibank account had not cleared and that Mr. Niroula had not reimbursed the funds as promised. "Nonetheless, [Ms. Hisamatsu] reasonably believed that BOH would still keep its promise of 10-3-06 to pay the claims since the investigation, by now, was complete." (Id. 47.) Ms. Hisamatsu called BOH during November 2006 to "specifically alert it that she wanted BOH to pay her claims for the unauthorized transactions." She alleges that Chester Dods refused to do so. (Id. 48.) 6 United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 C. The January 10 Order. In its January 10 Order, the Court determined that, if the Indemnification Agreement could be enforced against Ms. Hisamatsu, any claims premised upon asserting the forgeries against BOH would be precluded, under Uniform Commercial Code Section 4-406(f), as untimely ("the UCC Preclusion Argument"). (Jan 10 Order at 8:7-17.) The Court therefore dismissed Ms. Hisamatsu's claims for Conversion, Tort in Essence, Constructive Trust, Equitable Lien, Wrongful Withholding of Funds, Gross Negligence, Negligence, Negligence Per Se, Violations of Section 17200, Declaratory Relief, and Rescission with leave to amend to address the validity of the Indemnification Agreement. (Id. at 9:11-11:16, 13:17-14:17.) The Court also dismissed without leave to amend Ms. Hisamatsu's claims that she was fraudulently induced to sign the Indemnification Agreement based on BOH"s alleged failure to disclose the legal consequences of signing that document and her claims for breach of fiduciary duty. (Id. at 10:3-7, 13:9-15, 15:12-28, 18:23-19:16.) The Court also dismissed, with leave to amend, Ms. Hisamatsu's claims for conspiracy, violations of Hawaii's unfair competition law, negligent misrepresentation, intentional infliction of emotional distress and denied BOH's motion to dismiss claims premised upon promissory fraud. (See id. at 11:18-13:7, 14:19-18:21.) III. ANALYSIS The Court prefaces this Order with the statement that it appears evident from the face of the SAC, that Ms. Hisamatsu was the unwitting, and unwilling, victim of Mr. Niroula's confidence schemes. The issue before this Court is whether BOH also is liable to Ms. Hisamatsu. For the reasons set forth herein, the Court concludes that Ms. Hisamatsu has not set alleged enough facts to state claims for relief that are plausible on their face. Because she has had ample opportunities to set forth facts supporting her claims against BOH, the Court concludes that it would be futile to grant her leave to amend. Accordingly, all claims against BOH are hereby dismissed with prejudice. // // // 7 United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 A. Applicable Legal Standards. 1. Motion to Dismiss For Failure to State a Claim. A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. The complaint is construed in the light most favorable to the non-moving party and all material allegations in the complaint are taken to be true. Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1986). The court, however, is not required to accept legal conclusions cast in the form of factual allegations, if those conclusions cannot reasonably be drawn from the facts alleged. Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). Conclusory allegations without more are insufficient to defeat a motion to dismiss for failure to state a claim upon which relief may be granted. McGlinchy v. Shell Chemical Co., 845 F.2d 802, 810 (9th Cir. 1988). Even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), a plaintiff must do more than recite the elements of the claim and must "provide the grounds of [its] entitlement to relief." Bell Atlantic Corporation v. Twombly, 127 S. Ct. 1955, 1959 (2007) (citations omitted). The pleading must not merely allege conduct that is conceivable. Rather, plaintiffs must allege "enough facts to state a claim to relief that is plausible on its face." Id. at 1974. Documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss. Such consideration does not convert the motion to dismiss into a motion for summary judgment. See United States v. Ritchie, 343 F.3d 903, 908 (9th Cir. 2003); Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). 2. Motion for Summary Judgment or Adjudication of Issues. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A principal purpose of the summary judgment procedure is to identify and dispose of factually unsupported claims. Celotex Corp. v. Cattrett, 477 U.S. 317, 323-24 (1986). Summary judgment is proper when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. 8 1 2 3 4 5 6 7 8 9 10 Civ. P. 56(c). An issue is "genuine" only if there is sufficient evidence for a reasonable fact finder to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). A fact is "material," if the fact may affect the outcome of the case. Id. at 248. "In considering a motion for summary judgment, the court may not weigh the evidence or make credibility determinations, and is required to draw all inferences in a light most favorable to the non-moving party." Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). The party moving for summary judgment bears the initial burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Where the moving party will have the burden of proof on an issue at trial, it must demonstrate affirmatively that no reasonable trier of fact could find other than for the moving party. Id.; see also Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). If the non-moving party meets its initial burden, the party opposing summary judgment must go beyond the pleadings and, by its own evidence, "set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). Further, the non-moving party must "identify with reasonable particularity the evidence that precludes summary judgment." Keenan v. Allen, 91 F.3d 1275, 1279 (9th 1996) (stating that it is not a district court's task to "scour the record in search of a genuine issue of triable fact"). If the non-moving party fails to make this showing, the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323. B. Choice of Law. In its January 10 Order, the Court ruled that it would apply Hawaii law to claims relating to the Deposit Agreement, to the Claim Forms signed in Hawaii, and to Ms. Hisamatsu's negligence based claims and would apply California law to Ms. Hisamatsu's independent tort claims against BOH. (Jan. 10 Order at 6:28-7:3.) The Court also applied California law to interpret the Indemnification Agreement. BOH argues that the Court should apply the law of Hawaii both to the interpretation of the Indemnification Agreement and to determine whether it can be rescinded on the basis that the parties intended the Indemnification Agreement to be performed there. See Cal. Civ. Code 1646. The Court need not determine 9 United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 whether California or Hawaii law applies, because BOH relies exclusively on California law to uphold the validity of the Indemnification Agreement and has not shown there is a conflict between the laws of these two jurisdictions. Accordingly, the Court again applies California law to interpret the Indemnification Agreement and to determine its validity. C. The UCC Preclusion Argument. BOH renews the UCC Preclusion Argument in support of its motion to dismiss the SAC. UCC 4-406(f) provides that: [w]ithout regard to care or lack of care of either the customer or the bank, a customer who does not within one year4 after the statement or items are made available to the customer (subsection (a)) discover and report the customer's unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration. If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under Section 4-208 with respect to the unauthorized signature or alteration to which the preclusion applies.5 Section 4-406(f) operates as an issue preclusion statute. Thus, if a customer does not notify a bank of an alleged unauthorized signature within one year, or in this case, sixty days, "if a customer must prove a forgery in order to establish a claim [against the bank] then the customer will not be able to establish the claim because he or she is precluded from proving the forgery. On the other hand, any claim that is not dependent upon proof of the forgery will not be precluded, ... although the customer will still be precluded from asserting the forgery in pursuing that claim." Roy Supply v. Wells Fargo, 39 Cal. App. 4th 1051, 1066 & n.16 (1995); see also id., 39 Cal. App. 4th at 1072. It is undisputed that Ms. Hisamatsu initially notified BOH of the alleged forgeries within the sixty days required by the Deposit Agreement. BOH argues, however, that when she signed the Indemnification Agreement, she withdrew her contention that Mr. Niroula forged the three The parties agree that, in this case, the one year time frame contemplated by section 4-406(f) has been shortened to sixty days because of the terms of the Deposit Agreement. Haw. Rev. Stat. 490:4-103(a); see also Cal. Comm. Code 4103. 4 5 Both Hawaii and California have adopted this provision of the UCC. See Haw. Rev. Stat. 490:4-406(f); Cal. Comm. Code 4406(f). Once again, the Court could not locate any Hawaiian cases applying or interpreting this provision of the UCC and the parties have not cited any such cases. Accordingly, the Court again looks to California law for guidance. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 1 2 3 4 5 6 7 8 9 10 temporary checks. Thus, BOH argues that the first clause of the Indemnification Agreement precludes any claims against BOH that are premised on the alleged forgeries. Ms. Hisamatsu seeks to rescind the Indemnification Agreement on a number of legal theories. Therefore, resolution of the UCC Preclusion Argument depends whether Ms. Hisamatsu can avoid the effect of the Indemnification Agreement. The Court now turns to that question. D. The Indemnification Agreement Is Enforceable. Ms. Hisamatsu alleges that the Indemnification Agreement should be rescinded on the basis that: (1) it was procured by undue influence, absent a confidential relationship (Count 9); (2) it was procured by the improper conduct of Mr. Niroula (Count 10); (3) it is the product of mutual mistake (Count 11); (4) there is a failure of consideration (Count 12); (5) there is a failure of consideration through the fault of BOH (Count 13); (6) it is an unlawful agreement in violation of California Civil Code 1668 (Count 14); (7) the consideration for the agreement is void (Count 15); (8) it was procured by undue influence based on a known vulnerability (Count 16); (9) it is the product of a unilateral mistake on Ms. Hisamatsu's part through the fault of BOH (Count 17); (10) it is the product of a unilateral mistake on Ms. Hisamatsu's part (Count 18); and (11) Ms. Hisamatsu was fraudulently induced to sign it (Count 19). (SAC 96-146.) BOH moves to dismiss each of these claims for failure to state a claim. Ms. Hisamatsu, in turn, moves for summary judgment on Counts 9-10, 12, and 13-18. 1. Counts 9, 10 and 16 Are Dismissed. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "A party to a contract may rescind the contract ... [i]f the consent of the party rescinding ... was ... obtained through ... undue influence, exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party." Cal. Civ. Code 1689(b)(1). "Undue influence consists ... [of] taking an unfair advantage of another's weakness of mind; or ... [of] taking a grossly oppressive and unfair advantage of another's necessities or distress." Id. 1575. Ms. Hisamatsu alleges that the Indemnification Agreement should be rescinded on this basis because "BOH knew [she] would be `assisted' by a party interested in, and conniving in the execution of the agreement," that is Mr. Niroula, and that she "had no time to retain 11 1 2 3 4 5 6 7 8 9 10 competent, trusted advisors." (SAC 99.) Ms. Hisamatsu further alleges that her signature on the Indemnification Agreement was procured by Mr. Niroula's undue influence and that BOH knew of this fact. (Id. 105-110.) Ms. Hisamatsu also that she "suffered from lack of full vigor due to physical exhaustion and emotional anguish as a crime victim ... [and] [a]s such, she had a lessened capacity to make a free contract with BOH," and that BOH "applied its excessive strength to her to secure her agreement, and took unfair advantage of [her] known vulnerability." (Id. 125-126) "[U]ndue influence occurs whenever there results `that kind of influence or supremacy of one mind over another by which that other is prevented from acting according to his own wish or judgment, and whereby the will of the person is overborne and he is induced to do or forbear to do an act which he would not do, or would do, if left to act freely.'" Odorizzi v. Bloomfield Sch. Dist., 246 Cal. App. 2d 123, 132 (1966) (quoting Webb v. Saunders, 79 Cal. App. 2d 863, 871 (1947)). In Odorizzi, the court set forth several factors that are indicative of excessive pressure: "(1) discussion of the transaction at an unusual or inappropriate time, (2) consummation of the transaction in an unusual place, (3) insistent demand that the business be finished at once, (4) extreme emphasis on untoward consequences of delay, (5) the use of multiple persuaders by the dominant side against a single servient party, (6) absence of thirdparty advisers to the servient party, [and] (7) statements that there is no time to consult financial advisers or attorneys." Id. at 133. Applying those factors, the court concluded that the plaintiff had alleged sufficient facts to state a claim that his resignation had been procured by undue influence, where he alleged that the defendants approached him after he had just completed "the process of arrest, questioning, booking and release on bail and had been without sleep for forty hours." Id. at 131. In contrast, in this case, although Ms. Hisamatsu contends that "she suffered from lack of full vigor due to physical exhaustion," she alleges no facts to support this statement. Moreover, although she alleges in a conclusory fashion that BOH knew that Mr. Niroula had threatened her, she does not allege facts to show how BOH had knowledge of this fact. Nor do the facts alleged suggest that the circumstances surrounding the execution of the 12 United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 Indemnification Agreement took place in an unusual place or at an inappropriate time. Further, the friend who routed the Indemnification Agreement to Ms. Hisamatsu was an attorney. (SAC 44.) Even if he did not represent her, it is not reasonable to infer that she had no time to consult him about the consequences of her actions and Ms. Hisamatsu does not allege that BOH denied her additional time to consider the Indemnification Agreement. Finally, Ms. Hisamatsu alleges that she withdrew her forgery dispute and requested that BOH release freeze on the account, because she believed Mr. Niroula was going to pay her $890,000, a sum that exceeded the funds he allegedly stole from her. (SAC 37-40.) These allegations cannot be reasonably inferred to support a conclusion that BOH procured her signature on the Indemnification Agreement by way of undue influence. In sum, Ms. Hisamatsu fails to allege facts that suggest BOH applied any, let alone excessive, pressure to obtain her signature on the Indemnification Agreement. BOH's motion to dismiss these claims is granted, and Ms. Hisamatsu's motion for summary judgment on these claims is denied. 2. Counts 11, 17 and 18 Are Dismissed. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "A contract may be rescinded ... [i]f the consent of the party rescinding, or of any party jointly contracting with him, was given by mistake[.]" Cal. Civ. Code 1689(b)(1). "Mistake of fact is a mistake, not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting [of] ... [a]n unconscious ignorance or forgetfulness of a fact past or present, material to the contract; or, [b]elief in the presence of a thing material to the contract, which does not exist ... ." Id. 1577. "Ordinary negligence does not constitute the neglect of a legal duty as that term is used in section 1577." Architects & Contractors Estimating Servs., Inc. v. Smith, 164 Cal. App. 3d 1001, 1008 (1985). In Count 11, Ms. Hisamatsu alleges that she and BOH "made basically the same mistake as to a material part of the contract; that is, they mistakenly believed that" Mr. Niroula would repay Ms. Hisamatsu "upon BOH's receipt of her signature on BOH's release form." (SAC 111-112). However, Ms. Hisamatsu does not allege that Mr. Niroula's payment to Ms. 13 1 2 3 4 5 6 7 8 9 10 Hisamatsu was material to BOH's decision to enter into the Indemnification Agreement or to release the freeze on his account. Accordingly, this claim is dismissed. In Counts 17 and 18, Ms. Hisamatsu alleges that the Indemnification Agreement should be rescinded, because: (1) she did not know that Mr. Niroula did not intend to reimburse her for the money he is alleged to have stolen; (2) she did not know that "the object of the agreement was to exempt BOH of all liability to [her];" (3) she did not know BOH "had no intention to pay her claims."6 (Id. 128, 133.) To the extent Ms. Hisamatsu contends that BOH had a duty to explain the legal consequences of the Indemnification Agreement, that claim fails for the reasons previously stated by the Court. (Jan. 10 Order at 8:18-9:10.) Ms. Hisamatsu also has failed to allege facts to support an inference that BOH knew Mr. Niroula did not intend to reimburse her. The Court concludes that facts alleged do not show that BOH had reason to know that Mr. Niroula's failed to reimburse Ms. Hisamatsu. It also cannot reasonably be inferred that BOH caused that event. Thus, in order to rescind the Indemnification Agreement on the basis of unilateral mistake of fact, Ms. Hisamatsu must demonstrate that: (1) she made a mistake regarding a basic assumption upon which she entered the Indemnification Agreement; (2) that the mistake had a material effect upon the agreed exchange of performances that is adverse to her; (3) that she does not bear the risk of the mistake; and (4) that the effect of the mistake is such that enforcement of the Indemnification Agreement would be unconscionable. Donovan v. RJL Corp., 26 Cal. 4th 261, 282 (2001). If the Court accepts as true the facts that Ms. Hisamatsu entered into the Indemnification Agreement because she believed that Mr. Niroula had paid her $890,000 when he had not, those facts would be sufficient to state facts supporting the first two elements. However, the Court concludes that Ms. Hisamatsu has not alleged facts to demonstrate that she does not bear the risk of this mistake. As the Donovan court stated, "`[a] party bears the risk of a mistake when ... he is aware at the time the contract is made, that he has only limited knowledge with respect United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 This last allegation is more properly addressed in the context of whether BOH fraudulently induced Ms. Hisamatsu to enter into the Indemnification Agreement and shall be addressed in the Court's analysis of those claims. 6 14 1 2 3 4 5 6 7 8 9 10 to the facts to which the mistake relates but treats his limited knowledge as sufficient.'" Donovan, 26 Cal. 4th at 283. Ms. Hisamatsu parrots this language from Donovan, when she alleges that "she did not have limited knowledge of the facts," and that she "was not aware that her knowledge was, or could be, limited with respect to the facts to which the mistake related." (SAC 134-135.) Those conclusory allegations, however, are contradicted by her factual allegations that she was informed by Citibank that the proceeds from Mr. Niroula's check would not be available for three days. (SAC 40.) Thus, at the time she signed the Indemnification Agreement, Ms. Hisamatsu was operating with limited knowledge of the facts, i.e. she knew a check had been deposited but she did not know with certainty that Mr. Niroula's check had cleared. The Court concludes that Ms. Hisamatsu has not alleged facts sufficient to establish that she did not bear the risk of her mistake, and she cannot avoid the effect of the Indemnification Agreement on this basis. BOH's motion to dismiss Counts 17 and 18 is granted, and Ms. Hisamatsu's motion for summary judgment on these claims is denied. 3. Counts 12 and 13 Are Dismissed. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "A party to a contract may rescind the contract ... [i]f the consideration for the obligation of the rescinding party fails, in whole or in part, through the fault of the party as to whom he rescinds[,] [i]f the consideration of the obligation of the rescinding party becomes entirely void from any cause[, or,] [i]f the consideration for the obligation of the rescinding party, before it is rendered to him, fails in a material respect from any cause." Cal. Civ. Code 1689(b)(2), (4). In Count 12, Ms. Hisamatsu alleges that she did not receive what was promised and the consideration for the Indemnification Agreement "failed on a material matter; that is, payment by a third party to [her] of over $508,000, in exchange for BOH's release of funds to that thirdparty, Mr. Niroula." (SAC 115.) However, there are no facts alleged to suggest the payment from Mr. Niroula was the consideration for the Indemnification Agreement.7 7 In addition, Ms. Hisamatsu's opposition to BOH's motion suggests that she is attempting to premise this claim upon a theory that BOH failed to disclose to her the legal consequences of the Indemnification Agreement. (See Opp. Br. at 21:5-20.) This Court has determined that theory cannot support a claim for relief. 15 1 2 3 4 5 6 7 8 9 10 In Count 13, Ms. Hisamatsu alleges that "[a]t the time ... BOH offered the agreement to [her], BOH had reason to know that the consideration-to [sic] pay a third-party funds `belonging' to him had failed, and that the funds actually belonged to" Ms. Hisamatsu. (Id. 118.) Again, there are no facts to suggest that the payment from Ms. Niroula was consideration for the Indemnification Agreement, and the Court concludes that it cannot reasonably be interpreted to imply that BOH was releasing funds "belonging to" Mr. Niroula. See Section III.D.5, infra. Rather, a reading of the Indemnification Agreement demonstrates that in return for releasing its hold on funds that Ms. Hisamatsu claimed Mr. Niroula had stolen from her, Ms. Hisamatsu would agree to hold BOH harmless from any third-party claims that might arise. That Mr. Niroula did not live up to his promises does not equate to a failure of consideration between BOH and Ms. Hisamatsu. BOH's motion to dismiss Counts 12 and 13 is granted, and Ms. Hisamatsu's motion for summary judgment is denied. 4. Counts 14 and 15 Are Dismissed. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law." Cal. Civ. Code 1668. "An agreement to indemnify a person against an act thereafter to be done, is void, if the act be known by such person at the time of doing it to be unlawful." Id. 2773. In Counts 14 and 15, Ms. Hisamatsu alleges that the Indemnification Agreement should not be enforced, because it violates Sections 1668 and 2773. The Indemnification Agreement contains three clauses. In the first clause, Ms. Hisamatsu states that "for reasons best known to [herself]," she "wish[ed] to withdraw [her] forgery dispute regarding the following checks[.]" (SAC, Ex. B.) Nothing in this clause purports to exonerate BOH from any wrongful conduct. Moreover, this language clearly states that Ms. Hisamatsu advised BOH that "for reasons known best to herself," she was withdrawing 16 1 2 3 4 5 6 7 8 9 10 the forgery dispute she had lodged with BOH over the three unauthorized checks.8 In the second clause, Ms. Hisamatsu stated that she also "agreed that funds ($257,546.25) held in suspense from Bank of Hawaii account ..., belonging to Kaushal Niroula, as a result of the forgery dispute shall be released to Kaushal Niroula[.]" (SAC, Ex. B.) This clause also does not purport to exonerate BOH from any wrongful conduct. In the third clause, Ms. Hisamatsu "agree[d] to indemnify and hold harmless [BOH] ... from and against any and all losses, damages, costs and reasonable attorneys fees resulting from or related to claims, liabilities, suits, actions, or proceedings arising out of [BOH] having paid the funds to Kaushal Niroula at" Ms. Hisamatsu's request. (SAC, Ex. B.) Ms. Hisamatsu argues that this clause amounts to a release of liability for "an event to be done by BOH in the future; that is the release of money `belonging to Kaushal Niroula' to Mr. Niroula." (MSJ at 20:1-2.) BOH counters that it is not asserting this section against Ms. Hisamatsu "at this time," and that the section cannot be interpreted to be "a release of liability nor a release of BOH's willful misconduct." (Mot. at 28:24-25.) The Court concurs with BOH. First, BOH has not asserted the third section of the Indemnification Agreement against Ms. Hisamatsu. Further, as noted, BOH relies on the first clause to argue that Ms. Hisamatsu withdrew her claims regarding the unauthorized signatures and, thus, interposes that clause as a defense to her negligence based claims. Second, the third section is a general indemnification provision and cannot be construed to exculpate BOH from liability to Ms. Hisamatsu for future wrongs. See, e.g., Varco-Pruden, Inc. v. Hampshire Const. Co., 50 Cal. App. 3d 654, 660 (1975). Accordingly, BOH's motion to dismiss these claims is granted, without leave to amend, and Ms. Hisamatsu's motion for summary judgment is denied. 5. Count 19 Is Dismissed Without Leave to Amend. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In Count 19, Ms. Hisamatsu alleges that she was fraudulently induced to sign the Indemnification Agreement because BOH misrepresented that the funds it was releasing belonged to Mr. Niroula. Ms. Hisamatsu has alleged that the $ 267,546.25 was her money. In The Court's opinion in this regard pertains solely to BOH's liability to Ms. Hisamatsu and is not intended to extend to any liability Mr. Niroula may have to her. 8 17 1 2 3 4 5 6 7 8 9 10 light of the context surrounding the execution of this document, the Court finds that her interpretation of second clause of the Indemnification Agreement is not reasonable and cannot be read to suggest that BOH was releasing "funds ... belonging to Mr. Niroula." Ms. Hisamatsu also contends that she was fraudulently induced to sign the Indemnification Agreement, because she signed it "under the misapprehension that it was something other than a release; and, that it was merely to allow a transfer of Mr. Niroula's money back to him." (SAC 145.) This allegation is a variation on Ms. Hisamatsu's argument that BOH should have apprised her of the consequences of signing the document. However, the Court previously rejected that argument. (Jan. 10 Order at 8:18-9:10.) As set forth earlier in this Order, Ms. Hisamatsu also appears to contend that she was fraudulently induced to sign this document on the basis that BOH never intended to pay her claims. However, Ms. Hisamatsu expressly alleges that she signed the document because she believed that Mr. Niroula had paid her $890,000, a sum well in excess of the amount allegedly stolen in the first instance. Accordingly, BOH's motion to dismiss this claim is granted. 6. The Declaratory Relief Claim (Count 24) Is Dismissed Without Leave to Amend. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Ms. Hisamatsu's Declaratory Relief claim is premised upon the dispute over whether the Indemnification Agreement can be enforced against her. (SAC 185-190.) Having determined that it can be enforced, this claim is dismissed, and Ms. Hisamatsu's motion for summary judgment is denied. E. The Remaining Claims. 1. The Section 17200 Claim (Count 8) Is Dismissed, Without Leave to Amend. Pursuant Section 17200, "there are three varieties of unfair competition: practices which are unlawful, unfair or fraudulent." See Daugherty v. American Honda Motor Co., Inc., 144 Cal. App. 4th 824, 837 (2006); Albillo v. Intermodal Container Services, Inc., 114 Cal. App. 4th 190, 206 (2003) (to state a UCL claim, a "plaintiff must establish that the practice is either unlawful (i.e., is forbidden by law), unfair (i.e., harm to victim outweighs any benefit) or 18 1 2 3 4 5 6 7 8 9 10 fraudulent (i.e., is likely to deceive members of the public)"). Ms. Hisamatsu premises her Section 17200 claim on all three prongs. (See id. at 86-95.) In Count 8, Ms. Hisamatsu alleges that BOH crafted the Indemnification Agreement for "[t]he sole, undisclosed purpose" of destroying her claims against BOH. (SAC 81.) Ms. Hisamatsu also alleges that BOH "knew [she] was in San Francisco ... and, with the assistance, encouragement and delay by BOH ... was under the control of a criminal," and "refused to pay a valid unauthorized transaction claim; and instead maneuvered [Ms. Hisamatsu] into a sham investigation which included direct contact with a known forger and thief." (Id. 82, 89.) Ms. Hisamatsu also argues that the Indemnification Agreement is unlawful in that it purports to exculpate BOH from its own tortious acts. (SAC 95.) BOH argues that Ms. Hisamatsu fails to allege facts sufficient to state a claim under Section 17200.9 Ms. Hisamatsu moves for summary judgment on this claim on the basis that the undisputed facts demonstrate that BOH's use of the Indemnification Agreement violated all three prongs of Section 17200. In its January 10 Order, the Court dismissed this claim with leave to amend to permit Ms. Hisamatsu to allege facts to support a showing that "BOH and Mr. Niroula worked in concert to defraud, or otherwise, injure" her and to state more clearly the bases on which she contended BOH's use of the Indemnification Agreement violated Section 17200. The Court has carefully reviewed the SAC and concludes that the allegations are not sufficient to infer that BOH schemed with Mr. Niroula to steal Ms. Hisamatsu savings. Further, for the reasons set forth in Section III.D, the Court concludes that the Indemnification Agreement is not unlawful and does not violate public policy and also concludes that it cannot be interpreted to suggest that BOH was releasing funds that belonged to Mr. Niroula. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 BOH moves to dismiss this claim because "section 17200 does not support claims by non-California residents where none of the alleged misconduct or injuries occurred in California." Churchill Village, LLC v. General Elec Co., 169 F. Supp. 2d 1119, 1126 (N.D. Cal. 2000) (citing Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214, 222 (1999)), aff'd on other grounds, 361 F.3d 566 (9th Cir. 2004)). In light of the Court's ruling on this claim, it does not reach this argument. 9 19 1 2 3 4 5 6 7 8 9 10 The Court concludes that Ms. Hisamatsu has not alleged facts sufficient to state a claim, and because it previously provided her with an opportunity to amend her claims, grants BOH's motion to dismiss without leave to amend. Ms. Hisamatsu's motion for summary judgment is denied. 2. The Tort In Essence and Negligence Per Se Claims (Counts 20 and 35) Are Dismissed, Without Leave to Amend. A claim for "tort in essence" essentially is a claim for negligence per se, which in turn is a claim for negligence in which a plaintiff relies on a violation of a statute or regulation to establish either a duty of care or the requisite standard of care. See, e.g., Elsner v. Uveges, 34 Cal. 4th 915, 927 & ns. 7, 8 (2004); South Bay Bldg. Enters., Inc. v. Riviera Lend-Lease, Inc., 72 Cal. App. 4th 1111, 1123 (1999) (concluding that plaintiff had established a "tort in essence" based on proof that defendants had engaged in conduct that, pursuant to statute in question, could give rise to criminal liability); see also Ono v. Applegate, 62 Haw. 131, 137 (1980) (standard of conduct in negligence case may be determined by statute). In Count 20, Ms. Hisamatsu alleges that BOH "tortiously violated" California Civil Code 1572, 1668, 2773, and 3513. These claims are based in part upon Ms. Hisamatsu's allegations that the Indemnification Agreement "has as its object to exempt BOH from responsibility for `its own fraud or willful injury" to her, and that the statements therein were fraudulent. (Id. 153, 157, 241.) For the reasons set forth above, those allegations fail to state a claim against BOH. Ms. Hisamatsu also alleges that BOH "tortiously violated" several criminal statutes including California Penal Code 470, 476a, and 518, and 18 U.S.C. 371, 1343. (SAC 149.) In Count 35, Ms. Hisamatsu claims that BOH violated standards of care by violating the foregoing statutes, as well as California Uniform Commercial Code 4101, Hawaii Revised Statutes 490:4-401(a), and 18 U.S.C. 1344, 1956(a)(2)(A). (Id. 240.) These claims are premised upon Ms. Hisamatsu's allegations that BOH aided and abetted Mr. Niroula in "the criminal deposit" of the $890,000 check into Ms. Hisamatsu's Citibank account and aided and abetted him between October 20, 2006 and October 29, 2006, when Mr. Niroula allegedly was 20 United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 threatening Ms. Hisamatsu. (Id. 155-156, 241) However, the Court concludes that Ms. Hisamatsu has not alleged facts sufficient to show that BOH acted in concert with Mr. Niroula and there are no allegations that it forged any checks or engaged in bank fraud or money laundering. Finally, in Count 35, Ms. Hisamatsu also premises this claim on allegations that BOH "failed to conform to the standard of care required in handling claims for unauthorized transactions based on forgery." (Id. 241.) Because the Indemnification Agreement can be enforced, this claim is precluded. Because Ms. Hisamatsu has had ample opportunity to set forth facts supporting her claims, these claims are dismissed without leave to amend. 3. The Civil Conspiracy Claim (Count 21) Is Dismissed, Without Leave to Amend. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration." Applied Equipment Corp. v. Litton Saudi Arabia, Inc., 7 Cal. 4th 503, 510-11 (1994). As the California Supreme Court explained in Applied Equipment, "[b]y participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy. [Citation] In this way, a coconspirator incurs tort liability co-equal with the immediate tortfeasors." Id. at 511. In order to plead a claim for civil conspiracy, a plaintiff must plead facts that show the formation and operation of the conspiracy and damage done to the plaintiff from an act or acts done in furtherance of the common design. Id. at 511. Ms. Hisamatsu alleges that BOH conspired with Mr. Niroula to release Ms. Hisamatsu's stolen funds, which BOH had frozen in Mr. Niroula's account, to Mr. Niroula. (See SAC 163.) Ms. Hisamatsu also contends that BOH knew Mr. Niroula wanted its help to get these funds released, however she does not allege how BOH knew of this fact. (Id. 162.) At best, the new allegations set forth in the SAC demonstrate that BOH knew Mr. Niroula and BOH staff were "friendly" with him. However, there are no facts alleged that suggest that BOH knew 21 1 2 3 4 5 6 7 8 9 10 Mr. Niroula was, as Ms. Hisamatsu alleges, a dangerous criminal or that it agreed with him to steal her funds. Accordingly, the Court concludes that Ms. Hisamatsu has failed to allege facts sufficient to state a claim for conspiracy against BOH. Because Ms. Hisamatsu has had ample opportunity to set forth facts to show an agreement, this claim is dismissed without leave to amend. 4. The Claim for Fraud in the Inducement (Count 22) Is Dismissed, Without Leave to Amend. In Count 22, Ms. Hisamatsu alleges that BOH fraudulently induced her to sign the Indemnification Agreement by misrepresenting that the funds held in the account belonged to Mr. Niroula and "that BOH was merely seeking indemnification from releasing the funds to Mr. Niroula." (SAC 168 & Ex. B.) With respect to the first alleged misrepresentation, as set forth above in Section III.D.5, those facts are insufficient to state a claim. With respect to the second alleged misrepresentation, the Court previously held BOH was not obligated to explain to Ms. Hisamatsu all of the legal consequences that would have been associated with signing the Indemnification Agreement. (Order at 8:18-9:10.) Because Ms. Hisamatsu has had ample opportunity to amend her claims, this claim is dismissed without leave to amend. 5. The Claims for Intentional Infliction of Emotional Distress (Count 23) and Negligent Infliction of Emotional Distress (Count 34) Are Dismissed, Without Leave to Amend. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The elements of a claim for intentional infliction of emotional distress are: "(1) outrageous conduct by the defendant, (2) intention to cause or reckless disregard of the probability of causing emotional distress, (3) severe emotional suffering and (4) actual and proximate causation of the emotional distress." Cole v. Fair Oaks Fire Dept., 43 Cal. 3d 148, 155 n.7 (1987); see also Lee v. Aiu, 85 Haw. 19, 34 & n.12 (1997). As the court noted in Cole, this tort imposes liability for "conduct exceeding all bounds usually tolerated by a decent society, of a nature which is especially calculated to cause, and does cause, mental distress." Id. In contrast, "[t]he law of negligent infliction of emotional distress in California is typically analyzed ... by reference to two `theories' of recovery: the `bystander' theory and the `direct victim' theory." Burgess v. Superior Court, 2 Cal. 4th 1064, 1071 (1992). In this case, it 22 1 2 3 4 5 6 7 8 9 10 is clear that Ms. Hisamatsu is a direct victim, as she alleges that BOH's conduct was directed at her. In such cases, California courts view negligent infliction of emotional distress not as an independent tort but, rather, as the tort of negligence to which the traditional elements of a negligence claim apply. Id. at 1072 (citing Marlene F. v. Affiliated Psychiatric Medical Clinic, Inc., 48 Cal. 3d 583, 588 (1989)). BOH moves to dismiss these claims for relief on the ground that the facts alleged do not state a claim. Ms. Hisamatsu premises these claims, in part, on the theory that BOH conspired with Mr. Niroula to obtain access to the stolen funds. For the reasons set forth above in Section III.E.3, these claims are dismissed, without leave to amend. 6. The Claims for Wrongful Withholding of Funds, Equitable Lien, Constructive Trust, Negligence and Gross Negligence (Counts 25, 30, 31, 32 and 33) Are Dismissed, Without Leave to Amend. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 These claims all pertain to Mr. Hisamatsu's argument that BOH failed to exercise an appropriate standard of care when it debited the allegedly forged checks in the first instance and thereafter failed to reimburse her. Because the Court has determined that the Indemnification Agreement can be enforced, these claims are precluded on the basis of BOH's UCC Preclusion Argument. Accordingly, they are dismissed, without leave to amend. 7. The Claim for Violations of HRS 480-1 (Count 26), et seq., is Dismissed Without Leave to Amend. BOH argues that Ms. Hisamatsu fails to allege facts sufficient to state a claim. Assuming arguendo that Ms. Hisamatsu has standing to assert this claim,10 it is premised upon the allegations in the previous 193 paragraphs and contends that "the foregoing [unspecified] practices" were "unfair or deceptive acts or practices." (SAC 197.) Because the Court has concluded that none of the facts alleged or claims asserted in those paragraphs are sufficient to state a claim against BOH, the Court concludes Ms. Hisamatsu has not alleged facts sufficient to state a claim for violations of Hawaii's unfair competition law. Because Ms. Hisamatsu has BOH also argues that Ms. Hisamatsu lacks standing to assert this claim. However, in light of the Court's ruling on the merits of the claim, the Court does not reach this issue. 10 23 1 2 3 4 5 6 7 8 9 10 had ample opportunity to set forth the facts supporting each of her claims, this claim is dismissed without leave to amend. 8. The Claim for Promissory Fraud (Count 27) is Dismissed, Without Leave to Amend. Under Hawaii law a promise made without the intent to perform is considered actionable fraud. See Touche Ross Ltd. v. Filipek, 7 Haw. App. 473, 480 (1989); Eastern Star Inc. v. Union Building Materials Corp., 6 Haw. App. 125, 140 (1985). In Count 27, Ms. Hisamatsu alleges that BOH, in its Claim Forms, represented that it would investigate her claims and that the decision about whether or not to pay the claims was contingent upon the results of that investigation. (SAC 202.) Ms. Hisamatsu alleges that when BOH made those promises "it had no intention of performing them, and had already decided to deny the claims," and that it made these promises with the intent to induce Ms. Hisamatsu to take no action against BOH to recover the funds Mr. Niroula had taken without her authorization. (Id. 203-209.) Upon further consideration of this claim, and considering the allegations in the SAC, the Court concludes that Ms. Hisamatsu has not alleged facts to show that she reasonably relied on the promises set forth in the Claim Forms to her detriment. Rather, in the hopes of obtaining a premium from Mr. Niroula, she withdrew the forgery claims. Accordingly, this claim is dismissed without leave to amend. 9. The Claim for Negligent Misrepresentation (Count 28) is Dismissed Without Leave to Amend. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In Count 28, Ms. Hisamatsu contends that "[f]alse information was supplied to [her] as alleged in Counts 19, 22, and 26, as incorporated by reference." (SAC 211.) For the reasons the Court has dismissed those claims, this claim is dismissed with prejudice as well. CONCLUSION For the foregoing reasons, BOH's motion is GRANTED, and Ms. Hisamatsu's motion for summary judgment is DENIED. Because the Court concludes that there is no just reason for // 24 1 2 3 4 5 6 7 8 9 10 delay under Federal Rule of Civil Procedure 54(b), the Court shall enter a separate final judgment against BOH. IT IS SO ORDERED. Dated: March 31, 2009 JEFFREY S. WHITE UNITED STATES DISTRICT JUDGE United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25

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