The one-year statute of limitations which applies to a lawsuit brought “by a depositor against a bank for the payment of a forged or raised check,” did not apply to an action by a homeowner against a bank that allegedly paid a forged check drawn on the homeowner’s home equity line of credit. The Court concluded the homeowner was not a “depositor” within the meaning of the statute. (Fayroyan-Mezhlumyan v. Wells Fargo Bank (— Cal.Rptr.3d —-, Cal.App. 2 Dist., December 21, 2011)).
Meri Fayroyan-Mezhlumyan (“Homeowner”) filed a lawsuit against Wells Fargo Bank, N.A. (“Wells Fargo”) asserting a cause of action for identity theft. Homeowner alleged that someone forged her signature on two checks that were drawn on her home equity line of credit (“HELOC”) with Wells Fargo. Both checks were made out to “Lord of the Rings Jewelry” (“LORJ”). The first check was written for $45,000 and the second check was written for $54,000.
Homeowner claimed Wells Fargo allowed a third person to access or obtain checks from her HELOC and then allowed those checks to be negotiated through LORJ. She alleged causes of action against Wells Fargo for identity theft, negligence, and breach of contract, among others. Homeowner claimed she notified Wells Fargo in writing that the checks had been lost and stolen along with her identity and that the checks were forged. Homeowner also alleged causes of action against LORJ.
Wells Fargo asserted Homeowner’s claims for identity theft, negligence, and breach of contract were barred by the one-year statute of limitations found in Code of Civil Procedure section 340, subdivision (c), which applies to a lawsuit brought “by a depositor against a bank for the payment of a forged or raised check.” In response, Homeowner asserted the four-year statute of limitations applicable to identity theft should apply to her claims against Wells Fargo. The trial court concluded the one-year statute of limitations applied and dismissed Wells Fargo from the lawsuit.
The Court of Appeal held the trial court erred when it concluded Homeowner’s claims against Wells Fargo were barred by the one-year statute of limitations found in section 340, subdivision (c) because Homeowner was not a depositor within the meaning of that statute. The only bank account involved in Homeowner’s action against Wells Fargo was her HELOC account. The HELOC account is a loan account not a deposit account. To open the account, Homeowner had to secure a line of credit which she could borrow against. She did not deposit money into the account. If a check was written on the HELOC account and paid by Wells Fargo, Homeowner’s loan balance increased. In regard to the HELOC account, Wells Fargo was the creditor and Homeowner was the borrower.
The plain language of section 340, subdivision (c) indicates it only applies to a “depositor.” If the Legislature had intended for subdivision (c) to apply to all bank customers who maintain any type of account with a bank, including a credit account, the Legislature could have amended the statute to state that it applies to all accounts. The Legislature did not do so. Subdivision (c) does not apply to Homeowner because she is not a “depositor” and the one-year statute of limitations does not bar her lawsuit against Wells Fargo.
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