Rodrigues v. Alliant Credit Union

Background

Joanne Rodrigues alleged that she entered a written membership and account agreement with Alliant Credit Union and maintained three accounts containing deposits totaling $57,000. She alleged that she opened a $55,000 certificate of deposit in her name alone. After Rodrigues began marriage-dissolution proceedings, her spouse’s divorce attorney sent Alliant a letter asserting that a Standard Family Law Restraining Order prohibited withdrawals from Rodrigues’s accounts without the parties’ consent or a court order. Alliant froze the accounts after receiving the letter.

Rodrigues alleged that the restraining order allowed withdrawals for the necessities of life and that she needed the funds for food and shelter for herself and her two minor children. She asserted claims for breach of contract, negligence, conversion, violation of California Financial Code section 1450, violation of California’s Unfair Competition Law based on the Truth in Savings Act and its regulations, and related relief. After her attorney withdrew, Rodrigues represented herself.

Jurisdiction

Alliant argued that the federal court lacked subject-matter jurisdiction because the dispute arose from Rodrigues’s divorce proceedings and belonged in family court. The court rejected that argument and denied the motion on that basis. It concluded that Rodrigues was challenging Alliant’s alleged breach of the account agreement and was not trying to collect a family-law judgment or relitigate the divorce case. The court also noted that the restraining order expressly permitted transfers for the necessities of life.

Evidentiary rulings

On the motion to dismiss, the court generally could not consider material outside the pleadings unless it was incorporated into the complaint or judicially noticeable. The court incorporated section 12 of the 2017 account agreement because Rodrigues’s contract claim relied on that provision, but denied incorporation of the entire agreement and later versions of it. The court also denied incorporation of account statements that Alliant used to support its joint-ownership argument. It incorporated the letters concerning the restraining order because their contents formed the basis of allegations in the amended complaint. The court took judicial notice of the existence of the state marriage-dissolution case and the language of the restraining order, but declined to take judicial notice of disputed hearing transcripts and other irrelevant material.

Claims that remained

The court denied dismissal of the breach-of-contract claim. Rodrigues plausibly alleged a contract, her performance, Alliant’s breach by freezing the accounts and denying access, and resulting damages. The court declined to decide at the pleading stage whether the restraining order was “legal process” under section 12 of the agreement because the full agreement was not before it. It also noted that, even if the restraining order qualified as legal process, the order allowed use of funds for the necessities of life. The court further rejected Alliant’s joint-ownership and damages arguments because they relied on materials outside the pleadings or raised factual questions unsuitable for resolution on a motion to dismiss.

The court also denied dismissal of the negligence claim because Alliant’s argument depended on the alleged failure of the contract claim, and the court had found that Rodrigues stated a cognizable breach-of-contract claim.

The court denied dismissal of the California Financial Code section 1450 claim. Rodrigues alleged that the divorce attorney’s letter was a notice of an adverse claim that Alliant was required to disregard. The court found that Alliant’s arguments about joint ownership and compliance with the statute raised factual issues that could not be resolved at the pleading stage. The court did not decide whether section 1450 creates a private right of action, noting that Alliant had not raised that issue in the motion.

Claims dismissed

The court dismissed the conversion claim with prejudice. Under the authorities discussed by the court, title to deposited funds passes to the bank, so Rodrigues could not claim ownership rights in the deposited funds for purposes of conversion against Alliant.

The court dismissed the Truth in Savings Act and Unfair Competition Law claims with prejudice. Rodrigues conceded that she was not asserting a standalone Truth in Savings Act claim and instead relied on an alleged Truth in Savings Act violation as the basis for the Unfair Competition Law claim. The court concluded that the Truth in Savings Act and Regulation DD provisions cited by Rodrigues concern disclosures about interest rates, fees, automatic renewal, and grace periods. Because Rodrigues did not allege that Alliant failed to provide the required disclosures, she did not state a plausible underlying Truth in Savings Act violation supporting an “unlawful” Unfair Competition Law claim.

Disposition

Judge Donna Ryu denied Alliant’s motion to dismiss for lack of subject-matter jurisdiction. She also denied the motion to dismiss the breach-of-contract, negligence, and California Financial Code section 1450 claims. The conversion, Truth in Savings Act, and Unfair Competition Law claims were dismissed with prejudice. The court scheduled a case-management conference for July 14, 2022, together with a hearing on Rodrigues’s pending motion to compel.