Ng Chie v. Citigroup, Inc.

Background

Michael Ng Chie and his parents, Hellen Lee Chie and Xi S. Zhu, sued Citigroup, Citibank, CitiMortgage, and CitiGroup Global Markets, which the complaint collectively called Citi. The parents had a home-equity line of credit with Citibank. Mr. Ng Chie alleged that he sent Citi two $40,000 checks to apply to that line of credit. Citi allegedly cashed both checks but credited only $40,000 and neither credited nor returned the other $40,000.

The complaint asserted claims under the federal Fair Debt Collection Practices Act, the federal Real Estate Settlement Procedures Act, and California’s Rosenthal Fair Debt Collection Practices Act. It also asserted claims for declaratory relief, negligence, conversion, money had and received, breach of contract, financial elder abuse, and violation of California’s Unfair Competition Law. The plaintiffs sought declaratory and monetary relief.

The plaintiffs withdrew the federal Fair Debt Collection Practices Act, Rosenthal Act, and Real Estate Settlement Procedures Act claims. Citi moved to dismiss the remaining claims under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. Citi also argued that the elder-abuse claim did not satisfy Rule 9(b), which requires fraud allegations to be stated with particularity.

Jurisdiction

After the federal claims were withdrawn, federal-question jurisdiction was no longer available. The court nevertheless held that diversity jurisdiction existed because the parties were completely diverse and the court could not conclude to a legal certainty that the amount in controversy was below $75,000. The court noted that this conclusion could change after a future motion addressing an amended complaint.

Analysis

Declaratory relief. The court dismissed the declaratory-relief claim because it concerned alleged past conduct that the plaintiffs’ other claims could address. The court dismissed this claim without prejudice.

Negligence. The court dismissed the negligence claim because the plaintiffs did not plausibly allege that Citi owed them a duty of care. The allegations described Citi’s conduct in its conventional role as a lender and servicer. The court did not decide Citi’s separate argument that the economic-loss rule barred the negligence claim because Citi raised that argument in its reply, leaving the plaintiffs no opportunity to respond.

Conversion. The court dismissed the conversion claim. Under the court’s analysis, when a person gives money to a bank to be credited to a loan, the person no longer retains a possessory interest in the money. Without ownership of or a right to possess the money when the alleged conversion occurred, the plaintiffs could not state a conversion claim. The court did not reach Citi’s argument that the Uniform Commercial Code preempted the claim.

Money had and received. The court dismissed the common-count claim for money had and received because it depended on underlying claims that the court had dismissed. The court dismissed this claim without prejudice.

Breach of contract. The plaintiffs conceded that the complaint did not identify the contract term that Citi allegedly breached and asked to amend the claim. The court dismissed the claim because the complaint did not identify the breached contract provision.

Financial elder abuse. The court dismissed the financial elder-abuse claim because the plaintiffs did not plead Citi’s wrongful intent or wrongful use with the particularity required by Rule 9(b). The parties did not dispute that this heightened pleading standard applied.

Unfair Competition Law. The court dismissed the Unfair Competition Law claim because it lacked adequately pleaded underlying claims supporting the unlawful prong, did not plead fraud with particularity for the fraudulent prong, and any unfair-prong theory completely overlapped with the fraudulent prong.

Disposition

The court granted Citi’s motion to dismiss. It dismissed the Fair Debt Collection Practices Act, Rosenthal Act, and Real Estate Settlement Procedures Act claims with prejudice. It dismissed the other claims without prejudice and granted leave to amend within 21 days after the April 14, 2021 case-management conference. The order disposed of ECF No. 15.