Hirsch

The second amended complaints (SAC) in these consolidated appeals alleged that defendant banks engaged with title insurance and escrow companies (hereafter, title companies) in an elaborate and illegal kickback scheme: In exchange for substantial escrow funds deposited with defendants in demand deposit accounts, the banks pursued a series of illegal practices resulting in disguised interest payments to the title companies. These practices violated federal prohibitions against paying interest on demand deposit accounts. Through these practices the banks assisted the title companies in converting such interest to their corporate accounts instead of paying it over to plaintiffs, the depositing parties to the escrows, as required by California law.

Sustaining demurrers to plaintiffs’ complaints without leave to amend, the trial court concluded that assuming the banks violated federal law, interest should never have been paid on demand deposits maintained by the title companies in the first place. However, the banks’ conduct did not amount to aiding and abetting the title companies in keeping anything from plaintiffs to which they were entitled. Accordingly, the court ordered…