Minkowski v. BMO Bank N.A.

Background

Yuval Olivier Minkowski and Julia Minkowski established a joint home-equity line of credit with Bank of the West in 2014. BMO later became Bank of the West’s successor in interest, and Dovenmeuhle Mortgage, Inc. performed mortgage-servicing and account-administration functions for BMO concerning the credit line.

During the couple’s divorce proceedings, Minkowski obtained a Santa Clara County Superior Court restraining order that restricted Julia Minkowski from transferring, borrowing against, selling, hiding, or destroying property, except in the usual course of business or for necessities of life. Minkowski alleged that he gave the order to Bank of the West and asked the bank to prevent Julia Minkowski from accessing the credit line.

According to the second amended complaint, a mortgage specialist promised Minkowski that the credit line was frozen and would remain frozen, that the bank would give him written notice before allowing Julia Minkowski to access it, and that withdrawals could not be made without both borrowers’ approval. Minkowski alleged that he relied on those assurances and took no further action concerning the credit line. In February 2024, a BMO credit agent allegedly repeated that no additional steps were needed to prevent access.

Julia Minkowski later obtained an advance from the credit line. BMO approved reinstatement of the line for $500,000, and Julia Minkowski withdrew $400,000 and transferred the money to another account in her own name. Minkowski alleged that he later paid $490,840.07 to cover the outstanding amount and closed the credit line. The opinion states that a state court ordered Julia Minkowski to return the $400,000 and associated costs, but that she had not complied as of the filing of the second amended complaint.

Procedural history and arguments

In an earlier order, the court dismissed several claims, including breach of contract, breach of the implied covenant, negligence, a claim under section 11101 et seq. of the California Commercial Code, a California unfair-competition claim, and common-law fraud. The court allowed some of those claims to be amended, but Minkowski did not amend them. The promissory-estoppel claim remained.

Minkowski added DMI as a defendant in the second amended complaint and alleged that DMI acted as BMO’s agent concerning the credit line. BMO and DMI jointly moved to dismiss the remaining promissory-estoppel claim under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. Defendants argued that the parties’ written credit agreement governed their relationship and therefore barred promissory estoppel.

The court also considered whether BMO could raise that argument in a second motion to dismiss. It concluded that DMI was entitled to raise the argument because DMI had not previously been a party, and that judicial efficiency supported considering BMO’s identical argument as well.

Court’s analysis

Under California law, promissory estoppel requires a clear promise, reliance, substantial detriment, and damages measured by the obligation assumed and not performed. Defendants argued that promissory estoppel generally cannot apply when the parties’ relationship is governed by a written agreement. The credit agreement included provisions stating that one borrower could request and receive advances and that borrowers could not give the bank conflicting instructions, along with a change-in-terms provision and an integration clause.

The court rejected Defendants’ proposed categorical rule. It explained that California law recognizes a narrower limitation when the promised performance was requested and bargained for as part of the original agreement. Here, the alleged promises to freeze the credit line, require both borrowers’ signatures before unfreezing it, and notify Minkowski before allowing an advance were allegedly made later, gratuitously, and without consideration. The court therefore found that the allegations did not describe a party seeking a second chance to prove a breach of the original contract.

The court also relied on California cases allowing promissory-estoppel claims against financial institutions based on later promises to borrowers, even when written loan agreements existed. The court found the alleged promises and reliance sufficiently similar to those cases at the pleading stage.

Ruling

The court denied Defendants’ motion to dismiss the second amended complaint. The remaining promissory-estoppel claim against BMO and DMI therefore was not dismissed at this stage. The court ordered Defendants to answer the second amended complaint by September 24, 2026.