Leon v. Wells Fargo Bank

Filing 25

ORDER GRANTING 9 MOTION TO DISMISS WITH LEAVE TO AMEND; VACATING HEARING ON MOTION TO DISMISS; AND CONFIRMING INITIAL CASE MANAGEMENT DATE OF NOVEMBER 30, 2017. Amended Pleading due by 12/12/2017. Signed by Judge Beth Labson Freeman on 11/21/2017. (blflc1S, COURT STAFF) (Filed on 11/21/2017)

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1 UNITED STATES DISTRICT COURT 2 NORTHERN DISTRICT OF CALIFORNIA 3 SAN JOSE DIVISION 4 5 VENTURA DIAZ LEON, Plaintiff, 6 v. 7 8 WELLS FARGO BANK, N.A., Defendant. 9 Case No. 17-cv-03371-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND; VACATING HEARING ON MOTION TO DISMISS; AND CONFIRMING INITIAL CASE MANAGEMENT DATE OF NOVEMBER 30, 2017 [Re: ECF 9] 10 United States District Court Northern District of California 11 Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) moves to dismiss the complaint filed 12 13 by Plaintiff Ventura Diaz Leon (“Leon”) under Federal Rule of Civil Procedure 12(b)(6), asserting 14 that all claims are time-barred. The Court VACATES the hearing set for November 30, 2017 and 15 GRANTS the motion with leave to amend. The Initial Case Management Conference set for 16 November 30, 2017 at 11:00 a.m. remains on calendar. 17 I. BACKGROUND 18 Leon was employed by Wells Fargo Bank for approximately thirty-six years, from June 19 1976 until his termination in October 2012. Compl. ¶¶ 3-5, ECF 1. At the time of termination, 20 Leon was a bank manager. Id. ¶ 3. The reason given for termination was Leon’s failure to meet 21 performance goals. Id. ¶¶ 5-6. However, Leon alleges that the performance goals in question 22 would have required him to open an arbitrary number of new accounts. Id. ¶ 6. Wells Fargo 23 required its employees to open accounts in addition to its customers’ primary accounts. Id. ¶ 7. 24 Leon contacted Wells Fargo’s ethics hotline to advise that customers were complaining about 25 receiving credit cards and new accounts which they had not requested. Id. Leon also “refused to 26 abuse his customers.” Id. ¶ 13. “He would not open unasked for accounts for his customers”; 27 “[h]e did not push express send accounts”; and “[h]e did not obtain credit cards for customers who 28 he knew would not be able to make the high interest-rate payments.” Id. 1 Leon filed suit against Wells Fargo in the Santa Cruz County Superior Court on April 20, 2 2017, asserting claims for (1) breach of employment contract, (2) breach of the implied covenant 3 of good faith and fair dealing, and (3) wrongful termination in violation of public policy. Compl., 4 ECF 1. Wells Fargo removed the action to federal district court on the basis of diversity of 5 citizenship. Notice of Removal, ECF 1. 6 II. LEGAL STANDARD “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a 7 8 claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation 9 Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). While a complaint need not contain detailed factual allegations, it 11 United States District Court Northern District of California 10 “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible 12 on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 13 550 U.S. 544, 570 (2007)). Where it is apparent on the face of the complaint that the limitations 14 period has run, the defendant may raise a statute of limitations defense in a Rule 12(b)(6) motion. 15 See Von Saher v. Norton Simon Museum of Art, 592 F.3d 954, 969 (9th Cir. 2010). “This is true 16 even though expiration of the limitations period is an affirmative defense.” Belete v. Oaks Corner, 17 No. 16-CV-04850-JCS, 2016 WL 6393510, at *4 (N.D. Cal. Oct. 28, 2016). 18 III. DISCUSSION 19 Wells Fargo argues that all of Leon’s claims are time-barred under the applicable 20 limitations periods. A federal court sitting in diversity must apply the forum state’s choice of law 21 rules to determine the controlling substantive law, including the applicable statute of limitations. 22 Johnson v. Lucent Techs. Inc., 653 F.3d 1000, 1008 (9th Cir. 2011). “Where, as here, parties do 23 not address choice-of-law issues, California courts presumptively apply California law.” Id. 24 Under California law, Leon’s claims for breach of contract (Claim 1) and breach of the implied 25 covenant of good faith and fair dealing (Claim 2) are subject to a four-year limitations period to 26 the extent they are based on a written contract, see Cal. Civ. P. Code § 337, or a two-year 27 limitations period to the extent they are based on an oral contract, see Cal. Civ. P. Code § 339. 28 His claim for wrongful termination (Claim 3) is subject to a two-year limitations period. See Cal. 2 1 Civ. P. Code § 335.1; Nehrlich v. JLW-TW Corp., No. 15-CV-00521-BAS(BLM), 2016 WL 2 127584, at *5 (S.D. Cal. Jan. 11, 2016) (“[C]ourts now apply California Code of Civil Procedure 3 section 335.1, which provides for a two year statute of limitations, to actions for wrongful 4 termination against public policy.”). 5 In employment cases, claims for breach of contract, breach of the implied covenant, and 6 wrongful termination in violation of public policy generally accrue on the date of termination. 7 See Romano v. Rockwell Internat., Inc., 14 Cal. 4th 479, 490, 503 (1996). Leon alleges that he 8 was terminated on October 9, 2012, and he did not file suit until four and a half years later, on 9 April 20, 2017. Accordingly, it appears on the face of the complaint that all applicable limitations periods expired before he filed suit. Leon argues that his claims are timely under the following 11 United States District Court Northern District of California 10 doctrines: (1) the delayed discovery rule; (2) equitable estoppel; (3) equitable tolling; and (4) 12 fraudulent concealment. 13 Delayed Discovery 14 “An important exception to the general rule of accrual is the ‘discovery rule,’ which 15 postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the 16 cause of action.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 807 (2005). “In order to 17 adequately allege facts supporting a theory of delayed discovery, the plaintiff must plead that, 18 despite diligent investigation of the circumstances of the injury, he or she could not have 19 reasonably discovered facts supporting the cause of action within the applicable statute of 20 limitations period.” Id. at 809. Leon alleges that he did not understand that he had been 21 terminated as part of a larger, unlawful scheme until August and September 2016 when the scope 22 of Wells Fargo’s malfeasance was made public. Compl. ¶¶ 10-12. 23 Leon’s allegations regarding the August and September 2016 revelations are insufficient to 24 implicate the delayed discovery rule in light of his allegations showing that he knew he had been 25 fired for refusing to “abuse” his customers. Compl. ¶ 13. The fact that he later learned that the 26 pressure brought to bear on him to engage in unethical behavior was part of a broader scheme does 27 not render his knowledge at the time of termination insufficient to trigger accrual of his claims. 28 See Barton v. New United Motor Mfg., Inc., 43 Cal. App. 4th 1200, 1209 (1996) (refusing to apply 3 1 delayed discovery rule where plaintiff knew that he had “suffered actual and appreciable harm 2 when he was terminated” and asserted only that he “did not fully understand ‘the dimensions’ of 3 his wrongful termination” until years later). The Court notes that the August and September 2016 4 revelations occurred within the four-year limitations period and thus could not support delayed 5 accrual as to his claims based on breach of written contract in any event. 6 Equitable Estoppel 7 “Equitable estoppel . . . comes into play only after the limitations period has run and addresses . . . the circumstances in which a party will be estopped from asserting the statute of 9 limitations as a defense to an admittedly untimely action because his conduct has induced another 10 into forbearing suit within the applicable limitations period.” Lantzy v. Centex Homes, 31 Cal. 4th 11 United States District Court Northern District of California 8 363, 383 (2003). Leon has not alleged any facts showing that Wells Fargo induced him into 12 forbearing suit within the applicable limitations periods. Indeed, it appears from the complaint 13 and exhibits attached thereto that Leon first informed Wells Fargo of his intent to sue only after all 14 applicable limitations periods expired. See November 2016 Letter, Exh. A to Compl., ECF 1. 15 Equitable Tolling 16 The doctrine of equitable tolling “applies when an injured person has several legal 17 remedies and, reasonably and in good faith, pursues one.” McDonald v. Antelope Valley Cmty. 18 Coll. Dist., 45 Cal. 4th 88, 100 (2008) (internal quotation marks, citations, and brackets omitted). 19 Leon has not alleged that he pursued an alternate legal remedy to bringing this lawsuit. 20 Fraudulent Concealment 21 Under the fraudulent concealment doctrine, “the defendant, having by fraud or deceit 22 concealed material facts and by misrepresentations hindered the plaintiff from bringing an action 23 within the statutory period, is estopped from taking advantage of his own wrong.” Britton v. 24 Girardi, 235 Cal. App. 4th 721, 734 (2015) (internal quotation marks and citation omitted). “To 25 take advantage of this doctrine the plaintiff must show the substantive elements of fraud and an 26 excuse for late discovery of the facts.” Id. (internal quotation marks, citation, and alterations 27 omitted). Leon has alleged neither fraud nor an excuse for late discovery given his allegations 28 showing that he knew he was fired for refusing to engage in unethical conduct. 4 1 Conclusion 2 Leon has not alleged facts showing application of any of the doctrines which he asserts 3 render his claims timely. To the contrary, he alleges that “[i]n refusing to act in violation of his 4 ethical obligations to customers, LEON could not meet the arbitrary and inflated performance 5 goals, and as a result he was terminated from employment.” Compl. ¶ 13, ECF 1. He alleges 6 further that “[h]e was fired for trying to do the right thing,” and that he was terminated “despite 7 the fact that, acting as bank manager, LEON’s branches suffered no losses, great audits, and great 8 consumer satisfaction.” Id. Given those allegations as well as the allegations discussed above, it 9 appears that Leon possessed all facts necessary to assert his claims at the time of termination. However, the Court will grant him one opportunity to amend his pleading to allege facts showing 11 United States District Court Northern District of California 10 that his claims are timely under one or more of the doctrines discussed above. 12 IV. ORDER 13 (1) Wells Fargo’s motion to dismiss is GRANTED WITH LEAVE TO AMEND; 14 (2) The hearing on the motion to dismiss set for November 30, 2017 is VACATED; 15 (3) Any amended pleading shall be filed on or before December 12, 2017; 16 (4) Leave to amend is granted only as to the defects alleged herein – Leon may not add new claims or parties without express leave of the Court; and 17 18 19 (5) The Initial Case Management Conference set for November 30, 2017 remains on calendar. 20 21 22 23 Dated: November 21, 2017 ______________________________________ BETH LABSON FREEMAN United States District Judge 24 25 26 27 28 5

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