State ex rel. McCann v. Bank of America, N.A.

Joseph McCann and Douglas Valdetero (Appellants) brought a qui tarn action against Bank of America, N.A. (BOA), in the name of the State of California under California’s False Claims Act (CFCA; Gov. Code, § 12650 et seq.). The complaint alleged that BOA defrauded the state by failing to pay over to the state amounts that Appellants contend should escheat as abandoned or unclaimed property under California’s Unclaimed Property Law (UPL; Code Civ. Proc., § 1500 et seq.). 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. We agree and affirm.

I. Background

The Check Clearing Process

BOA serves as a “clearing” bank for checking transactions between other banks, as authorized by the Federal Reserve. The process of check clearing involves “the transfer of funds between banks when a check written [on an account at] one bank is deposited in [an account at] another bank.” BOA functions as the check clearing bank for numerous “presenting banks” in California through BOA’s check clearing houses…