First District Affirms Dismissal of Qui Tam Action for Failure to Identify a “Liquidated and Certain Obligation”

SAN FRANCISCO - JANUARY 20:  A Bank of America...
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The First District Court of Appeal affirmed the dismissal of a qui tam action without leave to amend, holding that plaintiffs failed to identify a “liquidated and certain obligation” owed by Bank of America.  State of California ex rel. Joseph McCann v. Bank of America, N.A., No. A126494, — Cal.Rptr.3d —-, 2011 WL 72177 (Cal. Ct. App. 1st Dist. Jan. 11, 2011).  Joseph McCann and Douglas Valdetero (Plaintiffs or Appellants) brought a qui tam action against Bank of America (BOA) in the name of the State of California under the California False Claims Act (CFCA; Govt. Code, s 12650 et seq.).  Id. *1.  Plaintiffs alleged that BOA defrauded the State by failing to pay over to the State amounts that they contend should escheat as abandoned or unclaimed property under the California Unclaimed Property Law (UPL; Code of Civ. Proc. s 1500 et seq.).  Id. The trial court sustained BOA’s demurrer to Appellants’ first amended complaint (FAC) without leave to amend on the basis that it failed to plead a CFCA claim with the required specificity and failed to establish a violation of the UPL.  Id.

Background

Plaintiffs alleged that as a check clearing bank, BOA diligently researched errors which could result in debits (i.e., money due) to BOA, but pursued errors which would result in credits (i.e., money payable) to the presenting banks “much less regularly.” Id. *2.  They contended that, as a result of a policy decision by BOA not to research credits due at the end of each processing date to presenting banks, they became “unidentified credits” which could not be traced to their rightful owners. Id. They allege that BOA’s practice was to transfer these monies to a suspense account for a short period of time, and to then appropriate them into income.  Id. Plaintiffs contended that these unidentified credits are subject to escheat to the State as unclaimed property subject to the UPL. Read the rest of this entry »

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