Filed 1/9/18
                           CERTIFIED FOR PUBLICATION

               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FIRST APPELLATE DISTRICT

                                     DIVISION TWO

SHELDON FONG,
        Plaintiff and Appellant,
                                                  A146028 & A147048
v.
EAST WEST BANK,                                   (San Francisco City and County
                                                  Super. Ct. No. CGC-13-527706)
        Defendant and Respondent.


        Plaintiff Sheldon Fong is an octogenarian real estate investor who sought to help
some younger friends establish a real estate business. He borrowed money in his own
name and stood behind two loans that he helped the new business procure from defendant
East West Bank (Bank). When some of these transactions ended badly, Fong brought
this action, alleging conversion and financial abuse of an elder under Welfare and
Institutions Code section 15610.30 (Elder Abuse Act). The trial court granted the Bank’s
motion for summary judgment. We find a triable issue of material fact as to one of the
challenged conversions and therefore reverse the grant of summary judgment.
                   FACTS AND PROCEDURAL BACKGROUND
        Except as otherwise noted, the following facts are undisputed.
        Fong was born in China in 1931, and moved to San Francisco as a young man. He
never received a degree, but learned various construction and building trades, operated
his own building maintenance company, and invested profitably in San Francisco real
estate. By 2010, he owned more than 20 properties, encumbered by mortgages from
various banks but representing close to $20 million in equity.
        Fong had a banking relationship with the Bank, where he had over $3.5 million
dollars on deposit. The Bank had acquired certain assets and liabilities of United


                                             1
Commercial Bank (UCB) in November 2009, when the Federal Deposit Insurance
Corporation placed UCB into receivership. Among these were Fong’s money market
account, his certificate of deposit account registry service (CDARS) account, and a
loan—evidenced by a promissory note in the original principal amount of $989,250—that
Fong had taken out in September 2009 (first Fong loan). The collateral for the first Fong
loan was Fong’s CD account in the amount of $1,000,000.
       Fong asserts that he did not understand the papers he signed to obtain the first
Fong loan, and that he neither needed nor wanted a bank loan from UCB. But Fong does
not explain what he thought he was doing when he signed a three-page document entitled
“Promissory Note,” with a heading that included a “Loan Date” and a “Loan No.,” and
that prominently identified “Borrower: Sheldon Fong” and “Lender: United Commercial
Bank.” English is not his first language, but Fong has learned English over the years and
chose to testify without an interpreter at his deposition. Fong’s papers assert that he
“suffers from age-related comprehension problems,” but the evidentiary support for this
statement is simply Fong’s declaration that he found the Bank managers’ “advice on
investment options . . . confusing.”
       On August 26, 2010, as the first Fong loan was coming due, Fong signed
documents changing its terms to extend the loan’s maturity date and require monthly
interest payments. Fong executed a single-page “Change in Terms Agreement” that
clearly and repeatedly identifies him as the “Borrower.” He also executed a single-page
“Disbursement Request and Authorization” form, which again clearly and repeatedly
identifies him as the “Borrower,” to establish automatic monthly interest payments on the
loan from his money market account. Fong would later stop these automatic payments
and default on the loan.
       Also in August 2010, just two weeks before the parties changed the terms on the
first Fong loan, Fong signed documents taking a second loan, for $1.5 million (second
Fong loan). For this second loan, too, Fong signed a document authorizing automatic
monthly interest payments to be deducted from his money market account. When the
second Fong loan came due in August 2011, it was paid off with the proceeds of a loan


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that the Bank extended to a California corporation called United Three Groups, Inc.
(UTGI).
       UTGI was a company formed by a group of young investors who were family
friends of Fong, and whom Fong was seeking to assist in establishing a real estate
investment business. In January 2011, Fong loaned UTGI $1.5 million of his own funds,
which documents show that UTGI repaid in August 2011, by taking out its own $1.5
million loan from the Bank (first UTGI loan) and using the proceeds to pay off the
second Fong loan. Fong assisted UTGI in getting the first UTGI loan by providing
collateral for and guaranteeing the loan. He signed an “Assignment of Deposit Account”
and a “Commercial Pledge Agreement” pledging his money market account and his
CDARS account as collateral, and he signed a commercial guaranty that obligated him to
pay, on an ongoing basis, any loan obligations that UTGI did not. These documents were
all executed as part of the initial loan transaction, and a couple of weeks later Fong
signed a single-page form also authorizing automatic payments on the first UTGI loan
directly from his own money market account.
       In October 2011, Fong helped UTGI get a second loan from the Bank for $1.5
million, a line of credit that in December 2011, was modified and extended to $2 million
(second UTGI loan). The collateral for this loan was several deeds of trust covering
parcels of San Francisco real estate that Fong had conveyed to UTGI. Fong also
executed a commercial guaranty as part of the second UTGI loan transaction, and a one-
paragraph “Guarantor Consent” reaffirming that obligation during the December 2011
loan modification. The first $1.5 million in proceeds from the second UTGI loan went
directly to Fong, payable through a cashier’s check on November 16, 2011. Also in
December 2011, UTGI directed the Bank that Fong was to become the only authorized
signer on UTGI’s checking account. Asked what his role at UTGI was, Fong explained,
“I am like a banker to support them. When they are in trouble, they come to me.”
       In January 2012, the Bank says it received instructions from Fong to close his
CDARS account and use the proceeds to pay off the $1.5 million first UTGI loan. A
bank manager states that in her presence, Fong signed a type-written letter authorizing the


                                              3
Bank to close his CDARS account, and on January 31, 2012, she emailed two of Fong’s
business associates to report that Fong had given “written and verbal instruction on
Friday, 1/27/2012” that the CDARS account be closed and the first UTGI loan paid off.
The email went to Irene Wong, the chief executive officer of UTGI, and Douglas Kwan,
who worked with UTGI in another capacity. Both had accompanied Fong when he came
into the Bank to sign many of the papers relating to the transactions at issue in this case.
The email was not addressed to Fong himself, but Fong neither types nor uses a
computer. In response to her email, the bank manager received another short type-
written letter that appears to bear Fong’s signature and to authorize the Bank to take
$1,503,162.50 from his money market account (where the proceeds of Fong’s CDARS
account would go on closing) to pay off the first UTGI loan. She also received a “Loan
Advance/Repayment Request” form, appearing to bear Fong’s and Irene Wong’s
signatures and to authorize the same transaction. These documents are dated January 31,
2012, and January 27, 2012, respectively.
       Fong insists that the three documents purporting to authorize repayment of the first
UTGI loan are forgeries, and that the first time he saw the letters appearing to bear his
signature was when they showed up as attachments to the Bank manager’s declaration in
support of summary judgment. But he does not dispute the authenticity of, or otherwise
attempt to explain, the email exchange among officers of the Bank, Irene Wong, and
Douglas Kwan in which the Bank lays out the particulars of the transaction (including
that the money will move through Fong’s money market account), and Wong then
responds with “Attached is my authorization to pay off the [loan] as per Sheldon’s
instructions.” Nor did Fong immediately register concern when he received the January
2012 statement for his money market account, which recorded for January 31, 2012, both
a “Credit Memo” of $1,532,897.78 for “CDARS Early Close” and a “Debit Memo” of
$1,503,162.50 with a specified loan number.
       This same money market account statement also records three automatic loan
payments for dates in January 2012, in amounts that add up to $17,826.85. The money
market account statement does not list the loan numbers, but other bank records make it


                                              4
possible to tie these payments to three different loans. Statements show that the largest
payment, for $10,166.67, was the monthly payment on the second UTGI loan. Another
payment, for $4,262.50, was for the first UTGI loan. And a third payment, for $3,397.68,
was for the first Fong loan. The February 2012 money market account statement had
comparable deductions for the first UTGI loan and first Fong loan.
       A few months later, Fong stopped making payments on the first Fong loan. On
May 7, 2012, the Bank sent him a letter stating that the April payment was delinquent and
that failure promptly to pay delinquent amounts would result in a default. On May 25,
2012, the Bank followed up with a “final opportunity to repay” letter, warning that a
failure to pay by June 5, 2012, would cause the Bank “to liquidate the hold amount of
$1,000,000 under the CD account” pledged as collateral. In response to the first of these
letters, Fong attempted to get an explanation from the Bank and then hired a lawyer. The
Bank proceeded with the threatened liquidation.
       On January 4, 2013, Fong filed a complaint against the Bank, UTGI, his own
lawyer, and related defendants, alleging a total of 13 causes of action. An amended
complaint followed, as did, after successive demurrers, a second and a third amended
complaint. On October 1, 2013, the trial court sustained without leave to amend a
demurrer to all but two counts of the operative pleading, the third amended complaint.
Causes of action for conversion and for financial abuse of an elder, both against the Bank
only, remained.
       The cause of action for conversion alleges several wrongful transfers. First, it
alleges that on November 16, 2011, the Bank transferred $1.5 million “from [p]laintiff’s
CD account 8619001525 without his direction, authorization, or consent.” In fact, this
account belonged to UTGI , and, as Fong admits, UTGI authorized the withdrawal of this
sum for the purpose of issuing a cashier’s check made payable to Fong. The “Second
Wrongful Transfer” alleged is a combination of transfers. Fong challenges the Bank’s
June 19, 2012 liquidation of his “CD account 18792815” containing more than $1
million, ostensibly to pay off a non-existent promissory note held by Wachovia Bank,
although Bank documents show it was liquidated because Fong defaulted on the first


                                             5
Fong loan, for which it had been pledged as collateral. Fong also challenges as part of
the second wrongful transfer, four of the loan payments made from his money market
account that were recorded in the January and February 2012 account statements.
Finally, Fong’s “Third Wrongful Transfer” challenges the Bank’s January 31, 2012
liquidation of his CDARS account containing more than $1.5 million.
       The cause of action for elder abuse relies primarily on these same allegedly
wrongful transfers, but also includes the interest Fong paid the Bank on both the first and
second Fong loans.
       The Bank moved on February 18, 2015, for summary judgment. Fong opposed
the motion, at first by filing only some of the required documents. On April 22, 2015, he
filed a “Declaration of Sheldon Fong in Opposition to Motion for Summary Judgment,”
which explained that English was not his first language, that he “was not experienced in
banking transactions of the type presented to me,” that the meaning of the documents he
had signed “was not explained to me in a way that I could understand fully,” and that he
had never before seen the letters purporting to bear his signature and directing the Bank
to close his CDARS account and pay off the first UTGI loan. At the same time, Fong
filed a “Plaintiff’s Response to Separate Statement of Undisputed Material Facts in
Opposition to Motion for Summary Judgment,” responding to some but not all of the
facts in the separate statement accompanying the motion for summary judgment. Later,
after hearing on the summary judgment motion was continued, Fong filed a brief
opposing the motion, and the Bank had another opportunity to reply.
       On June 1, 2015, the trial court entered an order granting the Bank’s motion for
summary judgment. The trial court found that the Bank’s evidence shifted the burden,
and that Fong “failed to submit competent and admissible evidence to create a triable
issue of fact.” The trial court also determined that as the “prevailing party” the Bank was
“entitled to its reasonable attorneys’ fees and costs,” which it set on October 8, 2015, at
$202,069.75 and $6,290.05, respectively. Judgment in the Bank’s favor was entered
originally on June 12, 2015, and modified on November 23, 2015, to add the award of
fees and costs.


                                              6
       Fong timely appealed the original judgment entered on the order granting
summary judgment (case No. A146028), and the amended judgment adding fees and
costs (case No. A147048), and this court consolidated the two appeals.
                                       DISCUSSION
       Because Fong appeals a grant of summary judgment, “we must ‘independently
examine the record in order to determine whether triable issues of fact exist to reinstate
the action.’ ” (O’Riordan v. Federal Kemper Life Assurance Co. (2005) 36 Cal.4th 281,
284.) This is de novo review, in which we must “ ‘view the evidence in the light most
favorable to the plaintiff,’ ” liberally construing Fong’s evidence and strictly scrutinizing
the Bank’s. (Ibid.)
       As the moving party, the Bank “bears the burden of persuasion that there is no
triable issue of material fact and that [it] is entitled to judgment as a matter of law.”
(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 845.) The Bank also bears the
initial burden of production, but if it makes “a prima facie showing of the nonexistence of
any triable issue of material fact” then the burden shifts to Fong to produce contrary
evidence. (Id. at p. 850.) A triable issue of material fact is one that “would allow a
reasonable trier of fact to find the underlying fact in favor of the party opposing the
motion in accordance with the applicable standard of proof.” (Id. at pp. 845, 850.)
       “ ‘Conversion’ is the wrongful exercise of dominion over the property of another.”
(Los Angeles Federal Credit Union v. Madatyan (2012) 209 Cal.App.4th 1383, 1387
(Madatyan).) To prove conversion, a plaintiff must establish three elements: (1)
“plaintiff’s ownership or right to possession of property,” (2) “defendant’s wrongful act
toward or disposition of the property, interfering with plaintiff’s possession,” and (3)
damages. (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1491; see
also Madatyan, at p. 1387 [“Conversion is a strict liability tort,” where issues of the
defendant’s good or bad faith are usually immaterial]; see also Welco Electronics, Inc. v.
Mora (2014) 223 Cal.App.4th 202, 208, 209 (Welco) [“Money may be the subject of
conversion if the claim involves a specific, identifiable sum”].)



                                               7
       The Bank makes three arguments on the conversion claims in support of its
summary judgment. First, the Bank argues that as a matter of law it cannot be liable for
conversion in a claim brought by its own depositor. Second, it argues that Fong’s failure
to comply with the law’s procedural requirements for summary judgment constitutes
sufficient grounds to affirm the trial court. And third, the Bank argues that because the
challenged transfers were all authorized by the relevant account holders, they are not
actionable. We disagree with the Bank on all three points and accordingly reverse the
summary judgment.
   A. A Bank Can Be Liable for Converting Its Depositor’s Funds
       The Bank argues that Fong’s conversion claim stumbles on the first element—that
a bank cannot convert its depositor’s funds because deposited funds are the property of
the bank, not the depositor. The Bank relies on three old cases for this proposition. The
oldest does indeed articulate this principle, although in the anomalous context of
explaining that a bank has no fiduciary relationship with an ordinary depositor. (See
Smith’s Cash Store v. First Nat’l Bank (1906) 149 Cal. 32, 35.) The second case does not
stand for this proposition but for a much narrower one, that where a bank has no notice of
the fact that funds a customer has deposited with it are being held in trust for a third
party, the bank does not become liable to the beneficial owner of those funds when it sets
them off against a debt the depositor previously accrued. (Arnold v. San Ramon Valley
Bank (1921) 184 Cal. 632, 636-637.) The Bank’s third case, Metropolitan Life Ins. Co. v.
San Francisco Bank (1943) 58 Cal.App.2d. 528, 534 (Metropolitan Life), likewise does
not establish the proposition for which the Bank cites it, although for reasons that take
some explaining.
       Plaintiff Metropolitan Life Insurance Company had an account with The Bank of
California (depository bank), and through a rogue employee wrote a series of checks off
this account to fictitious persons, which checks the employee cashed at The San
Francisco Bank (collecting bank). (Metropolitan Life, supra, 58 Cal.App.2d. at pp. 529-
530.) The San Francisco Bank then presented the checks to The Bank of California for
payment, and the corresponding funds were debited from the insurance company’s


                                              8
account. (Id. at p. 530.) The insurance company sued both banks to recover the sums
paid out on the forged checks, and both banks interposed demurrers. The Bank of San
Francisco’s demurrer was sustained, and plaintiff appealed. (Ibid.) This court affirmed.
As to the claim that the collecting bank had converted plaintiff’s money, we said,
“[p]laintiff, after depositing its money with The Bank of California, was no longer the
owner or entitled to the possession of any specific money which was the subject of
conversion and when The Bank of California paid the amount appearing on the face of
the checks to The San Francisco Bank, it paid out its own money and not that of
plaintiff.” (Id. at p. 534.) But this explanation—and our holding—were specific to the
collecting bank. We also “assumed for the purposes of this discussion that plaintiff, as
drawer, was entitled to recover against The Bank of California, as drawee” in a timely
filed action. (Id. at p. 532.) And indeed, the Bank of California’s demurrer had been
overruled, except as to those causes of action barred by the statute of limitations, and that
decision was not appealed. (Id. at pp. 530-531.) Thus, the Bank is simply wrong that
Metropolitan Life “rejected the notion that deposited funds can be tortiously converted by
the depository bank.” (Italics added.) In fact, Metropolitan Life assumes the opposite.
       Cases since Metropolitan Life, supra, 58 Cal.App.2d 528, make clear that there is
no special rule preventing a depositor from pursuing a conversion action against the bank
that holds his or her money. Cooper v. Union Bank (1973) 9 Cal.3d 371 addresses a
factual pattern similar to that in Metropolitan Life. Plaintiff law partnership had filed a
conversion action against depository and collecting banks when its bookkeeper forged
endorsements on, and cashed, a series of checks intended for the firm. (Cooper, at
p. 375.) The Supreme Court held that a depository (also called payor) bank is “strictly
liable to the true owner if it pays an instrument on a forged indorsement,” unless the
depository bank has a valid defense (id. at pp. 381, 384-386), and that collecting banks,
too, are “liable for conversion unless they can establish a defense.” (Id. at p. 376.) (See
also Gil v. Bank of America, N.A. (2006) 138 Cal.App. 1371, 1378 (same).) The former
section of the California Uniform Commercial Code relied upon in Cooper, now updated
as section 3420, expressly states, “The law applicable to conversion of personal property


                                              9
applies to instruments,” which includes certificates of deposit. (Cal. U. Com. Code
§§ 3420, 3104.)
       In other contexts, too, courts have found an action for conversion proper when the
property at issue was some form of financial interest. For example, an equitable lien in
insurance proceeds “is a property interest that can be converted. (Madatyan, supra, 209
Cal.App.4th at p. 1388.) Amounts charged against another’s credit card without
authorization can give rise to a cause of action for conversion. (Welco, supra, 223
Cal.App.4th at pp. 215-216.) Monies a broker collected on behalf of an apartment house
owner but failed to account for may be a conversion. (Haigler v. Donnelly (1941) 18
Cal.2d 674.) Even misappropriation of a net operating loss without compensation has
been held to constitute a conversion. (Fremont Indemnity Co. v. Fremont General Corp.
(2007) 148 Cal.App.4th 97, 124-125.) In general, “conversion has been held to apply to
the taking of intangible property rights when ‘represented by documents, such as bonds,
notes,’ ” and “accounts showing amounts owed.” (Welco, at p. 209; see also Fremont
Indemnity Co., at p. 125; Kremen v. Cohen (9th Cir. 2003) 337 F.3d 1024, 1033.)
       In sum, the Bank fails to establish that Fong’s conversion claims fail simply
because he brings this action against the bank where he kept accounts and borrowed
money.
   B. Like the Trial Court, We Decide This Motion on its Merits
       The Bank is correct that Fong failed to comply with the law’s procedural
requirements for summary judgment, but unavailing in its argument that we affirm the
judgment on this basis.
       True, Fong did not fully comply with the requirement that a party opposing a
motion for summary judgment file “a separate statement that responds to each of the
material facts contended by the moving party to be undisputed, indicating whether the
opposing party agrees or disagrees that those facts are undisputed.” (Code Civ. Proc.,
§ 437c, subd. (b)(3).) His response to the separate statement set forth his agreement or
disagreement with only some, not all, of the Bank’s enumerated facts. Also true, Fong



                                            10
failed initially to comply with rule 3.1350 of the California Rules of Court because he did
not timely file his memorandum in opposition to the motion for summary judgment.
       But the trial court decided this case on the merits. After granting a continuance to
allow for complete briefing, the trial court decided that the Bank had “shifted its burden”
and Fong had “failed to submit competent and admissible evidence to create a triable
issue of fact,” also noting Fong’s failure to comply with the California Rules of Court.
The Bank cites no case where an appellate court has affirmed summary judgment on the
basis of such procedural defects after the trial court reached the merits of a summary
judgment motion. Instead, the Bank relies on the text of Code of Civil Procedure section
437c, subdivision (b)(3), which states that failure to comply with the separate statement
requirement “may constitute a sufficient ground, in the court’s discretion, for granting the
motion.” (Ibid.) Assuming we have the discretion to affirm the trial court’s grant of
summary judgment on that ground, we decline to exercise it. Fong’s response to the
separate statement fails to admit or deny few of the enumerated facts that turn out to be
material to disposition of this motion, and we see no reason not to decide it on its merits.
   C. As to the “Third Wrongful Transfer” There is a Triable Issue of
      Material Fact
       Fong alleges that several transfers are wrongful acts of conversion. The Bank
argues that all were authorized by the account holders, so the Bank did nothing wrong.
We do not consider the transactions that Fong denominates the first and second wrongful
transfers, because we find as to the third allegedly wrongful transfer that a triable issue of
material fact remains.
       The Bank has produced evidence making out a prima facie case that the “Third
Wrongful Transfer” was not wrongful and that no conversion occurred, but Fong’s
evidence raises a triable issue of material fact as to the genuineness of documents on
which the Bank relies. The Bank’s evidence tends to establish that it received
instructions from Fong at the end of January 2012 to close his CDARS account and use
the proceeds, routing them through his money market account, to pay off the $1.5 million
first UTGI loan. In addition to a manager’s declaration and corroborating email to this


                                             11
effect, the Bank offers two short, type-written letters appearing to bear Fong’s signature
and a loan advance/repayment request form appearing to bear both Fong’s and Irene
Wong’s signatures, all authorizing aspects of the transaction. Fong disputes the
authenticity of his signature on all three documents, declaring that he had never seen
them before they appeared as evidence in this case. He also points out that of the three
documents, the only one the bank manager claims to have witnessed him signing is a
letter that authorizes closing the CDARS account but does not mention using the
proceeds to pay off the first UTGI loan. Apparently in response to the Bank’s follow-up
email communications, to which Fong was not a party, the Bank received the other two
documents that further authorize repayment of the second UTGI loan from Fong’s
personal accounts.
       The genuineness of Fong’s signature on the documents authorizing repayment of
the loan is a material issue of fact. “Conversion is a strict liability tort,” so the Bank
cannot defeat the claim on the grounds that it accepted a forged signature in good faith.
(Madatyan, supra, 209 Cal.App.4th at p. 1387.) Financial institutions can be liable to
their depositors for transferring money out of their accounts on forged instruments. (See,
e.g., Cooper v. Union Bank, supra, 9 Cal.3d at p. 375; Metropolitan Life, supra, 58
Cal.App.2d at p. 532.) In other contexts, too, a party that transfers plaintiff’s intangible
property on the basis of a forged letter can be held liable for conversion. (Kremen v.
Cohen, supra, 337 F.3d at p. 1035 (domain name transferred).)
       Because a dispositive fact remains in dispute, summary judgment is not proper.
(See O’Riordan v. Federal Kemper Life Assurance Co., supra, 36 Cal.4th at p. 289.) The
Bank did not move for summary adjudication, so we need not consider whether any
triable issue of material fact has been raised as to the other allegedly wrongful transfers
or to the Elder Abuse Act cause of action.
       Also, because the Bank is no longer the “prevailing party” in this action, we must
reverse the award of fees and costs in its favor.




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                                     DISPOSITION
       The amended judgment in favor of the Bank granting summary judgment,
attorneys’ fees, and costs, is reversed and Fong is awarded costs on appeal.




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                                              _________________________
                                              Tucher, J.*


We concur:


_________________________
Stewart, Acting P.J.


_________________________
Miller, J.




Fong v. East West Bank (A146028 & A147048)


      * Judge of the Alameda County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.



                                         14
Trial Court:                San Francisco County Super. Ct.

Trial Judge:                Hon. Ronald E. Quidachay


Attorneys for Appellant:    Law Offices of Ruben P. Ruiz
                            Ruben P. Ruiz
                            Lesley E. Williams

Attorneys for Respondent:   French & Lyon
                            Patricia H. Lyon
                            Mary Ellmann Tang
                            Michael C. Starkey
                            French Lyon Tang




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