ARON v. JPMorgan Chase Bank

Background

Plaintiffs Andrew Aron and Mary Aron allege that on November 4, 2025, approximately 39 transactions — each in the same amount — transferred a total of $74,061 from their personal Chase savings account to a Chime Financial, Inc. account opened in Mr. Aron's name without their authorization. The Arons say they have never held a Chime account and assert the transfers were fraudulent. They allege they immediately notified Chime it was holding stolen funds and demanded the funds be returned. They also filed an identity theft report with the Federal Trade Commission and a police report with the San Jose Police Department, and provided the police report to Chase. According to the complaint, Chase directed them to seek their funds from Chime, and Chime directed them to seek their funds from Chase. Neither defendant returned the money.

The Arons originally filed suit in Santa Clara County Superior Court on March 2, 2026, asserting two claims: (1) a claim against Chase under the Electronic Fund Transfer Act (EFTA), 15 U.S.C. § 1693 et seq., a federal consumer banking statute governing electronic money transfers; and (2) a claim against Chime under California Penal Code § 496, which creates a civil remedy for victims of theft against anyone who knowingly receives, withholds, or conceals stolen property. Chase removed the case to federal court on April 9, 2026, invoking federal question jurisdiction over the EFTA claim and supplemental jurisdiction over the state-law section 496 claim. Both defendants answered the complaint.

Chime's Motion

Chime moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) — a motion that tests the legal sufficiency of claims after the pleadings are closed, applying the same standard as a motion to dismiss for failure to state a claim under Rule 12(b)(6). Under that standard, the court accepts all factual allegations as true and construes them in the light most favorable to the non-moving party, but need not accept conclusory statements. Judgment on the pleadings is appropriate only if the complaint fails to plead enough facts to state a plausible claim for relief.

Chime's sole argument was that the Arons failed to adequately plead the second element of a section 496 claim: that Chime had "actual knowledge" the property was stolen. Chime did not contest that the funds were stolen by a third party (first element) or that Chime withheld the funds (third element). Chime argued that the Arons' allegation that they notified Chime it was holding stolen funds established, at most, notice of a disputed transfer — not actual knowledge of theft.

The Court's Analysis

Elements of a Section 496 Claim

California Penal Code § 496(a) prohibits receiving, concealing, selling, or withholding property that a person knows to have been stolen. Section 496(c) provides a civil remedy including treble damages and attorney's fees. The three elements are: (i) the property was stolen or obtained by theft; (ii) the defendant knew the property was so stolen; and (iii) the defendant received or withheld the stolen property. While receiving and withholding stolen property are legally distinct offenses, the elements are the same for each.

The court noted an important distinction the Arons make in their complaint: they do not allege Chime itself stole the funds; they allege that a third party stole the funds, that the Arons notified Chime of the theft, and that Chime then continued to withhold the funds. Chime conceded at oral argument that section 496 can cover this fact pattern.

The Knowledge Element and the LA Tech Precedent

The parties agreed that "actual knowledge" that the property was stolen is a necessary element, citing LA Tech & Consulting, LLC v. American Express Co., No. 22-56221, 2023 WL 8166780 (9th Cir. Nov. 24, 2023) (unpublished). In that case — involving nearly identical facts — a third party transferred funds from the plaintiff's account to an American Express account. The plaintiff sent American Express a letter notifying it that the funds were stolen and demanding return. The district court dismissed both the receiving stolen property and withholding stolen property claims for lack of adequately pled actual knowledge. The Ninth Circuit affirmed the dismissal of the receiving stolen property claim (because the plaintiff had not alleged American Express knew the property was stolen at the time of receipt), but reversed the dismissal of the withholding claim. The Ninth Circuit held that the plaintiff's letter gave American Express notice the funds were stolen, and that notice was sufficient to plausibly allege actual knowledge at the time of withholding. The Ninth Circuit called dismissal at that stage "premature."

Application to This Case

The Arons' allegations mirror those in LA Tech: they allege they immediately notified Chime it was holding their stolen funds and demanded return, but Chime did not comply. Although the complaint does not specify the exact contents of the notice or the precise date it was given, the court found — characterizing the question as "close" — that the allegations "just barely" satisfy the pleading standard under Federal Rule of Civil Procedure 8. Because the Arons are pursuing a withholding claim (not a receiving claim), and because their factual allegations must be accepted as true, Chime is not entitled to judgment as a matter of law.

The court also observed that Chime has already answered the complaint and specifically denied the allegations that notice was given and that it was sufficient — a factual dispute to be resolved in later proceedings, not on a motion for judgment on the pleadings.

Disposition

Chime's motion for judgment on the pleadings (Dkt. No. 20) was denied.