Cao v. Bank of America, N.A.

Background

Kai Cao sued Bank of America, N.A. (BANA) after BANA attempted to collect a credit-card charge that Cao alleged was fraudulently incurred on his account. The case had been removed from Alameda County Superior Court. After earlier motions to dismiss and amended complaints, Cao filed a third amended complaint.

The third amended complaint asserted claims under the California Identity Theft Act (Count I), the California Unfair Competition Law (UCL) (Count II), the Fair Credit Reporting Act (FCRA) (Counts VI through VIII), and the California Credit Reporting Agencies Act (CCRAA) (Count IX). It also asserted claims for negligent infliction of emotional distress, negligence, and intentional infliction of emotional distress (Counts III through V). BANA’s motion sought dismissal of the UCL and tort claims and the request for punitive damages.

UCL Claim

The court dismissed Count II. Cao sought restitution and injunctive relief under the UCL but did not allege that he lacked an adequate remedy at law. The court also noted that Cao sought damages under the California Identity Theft Act for substantially the same conduct. BANA conceded that the relevant amounts would be available under that statute if Cao proved the claim, and the court stated that BANA would be held to that concession.

Negligence-Based Claims

The court dismissed Counts III and V, which alleged negligent infliction of emotional distress and negligence. Under California law, negligent infliction of emotional distress is not a separate tort; it is a negligence claim requiring duty, breach, causation, and damages.

Cao alleged that BANA had a duty under Article 4A of the Uniform Commercial Code to maintain commercially reasonable fraud protections. The court concluded that this theory did not plausibly establish a duty because Article 4A concerns wholesale wire transfers and California courts distinguish those transactions from credit-card payments.

The complaint also referred to BANA’s general duties of care. The court inferred from the allegations that Cao was a customer of BANA’s credit-card services and that some contractual relationship existed. But it concluded that the negligence claim was barred by California’s economic-loss rule because the claim was, at bottom, an attempt to recover in tort for an alleged breach of contractual terms. The court also rejected Cao’s argument that alleged emotional injuries avoided that problem, explaining that California law generally does not impose on banks a common-law duty to supervise account activity or investigate how funds are used. Cao cited no authority showing that this rule did not apply to the alleged fraudulent credit-card transaction.

Intentional Infliction of Emotional Distress

The court dismissed Count IV. An intentional-infliction-of-emotional-distress claim requires extreme and outrageous conduct, severe or extreme emotional distress, and causation. Cao alleged anxiety, stress, fear, loss of sleep, headaches, loss of productive time, and other physical symptoms. The court found those allegations cursory and lacking factual detail about the severity of the symptoms, and concluded that they did not plausibly allege the required level of emotional distress.

Because these defects supported dismissal of the tort claims, the court did not address BANA’s alternative argument that the claims were time-barred.

Punitive Damages

The court dismissed Cao’s request for punitive and exemplary damages under California Civil Code section 3294. For a corporate employer, the statute requires allegations involving an officer, director, or managing agent concerning advance knowledge and conscious disregard, authorization, ratification, oppression, fraud, or malice. The complaint made no such allegations, and Cao effectively conceded the point.

Leave to Amend and Disposition

The court noted that Cao had already amended the complaint three times. BANA had raised essentially the same challenges to the UCL and tort claims and punitive-damages request in its earlier motion to dismiss, and Cao had previously identified additional facts he said he could add if given leave. After receiving leave to file the third amended complaint, however, he did not add those allegations. The court concluded that another opportunity to amend was not warranted.

The order states that Counts II through V were dismissed and that the request for punitive and exemplary damages under section 3294 was dismissed. The opinion does not state an operative disposition for the other claims in the third amended complaint.