Filed 1/20/16 WMC Mortg. V. JPMorgan Chase Bank CA3
                                           NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.




              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                      THIRD APPELLATE DISTRICT
                                                    (San Joaquin)
                                                            ----




WMC MORTGAGE, LLC,                                                                           C076768

                   Plaintiff and Appellant,                                          (Super. Ct. No.
                                                                               39201300298192CUNPSTK)
         v.

JPMORGAN CHASE BANK, N.A.,

                   Defendant and Respondent.




         This case arises out of appellant WMC Mortgage, LLC’s unsuccessful effort to
retrieve a mortgage-payoff payment made to respondent JPMorgan Chase Bank, N.A.
after homeowners, who had been approved for a loan, chose not to refinance with WMC.
WMC appeals from a judgment in favor of Chase dismissing the first amended complaint
as time-barred. WMC contends it has adequately alleged that: (1) its causes of action
fall within the open limitation provisions of Code of Civil Procedure section 348; and
(2) Chase is equitably estopped from raising a statute of limitations defense. We
conclude that the open limitation period is inapplicable because WMC’s action to recover
the payment to Chase was not an “action[] brought to recover money or other property


                                                             1
deposited with [a] bank.” (Code Civ. Proc., § 348, italics added.) WMC waited more
than seven years to file an action and has not pled facts sufficient to estop Chase from
raising a limitations defense. We affirm the trial court’s judgment.
                                   I. BACKGROUND
       In an appeal from a judgment of dismissal following an order sustaining a
demurrer, “we take the facts from plaintiff’s complaint, the allegations of which are
deemed true for the limited purpose of determining whether the plaintiff has stated a
viable cause of action.” (Stevenson v. Superior Court (1997) 16 Cal.4th 880, 885.)
       In 2004, Sergio Montoya, Jr. and Joaquina Montoya executed a deed of trust
securing a $373,500 loan in favor of New Century Mortgage Corporation. The loan was
subsequently acquired or assigned to Chase. In 2005, the Montoyas took out a second
loan in favor of Beneficial California, Inc.
       In January 2006, the Montoyas applied and were approved for two refinance loans
from WMC totaling $508,000. An escrow was opened to implement the terms of the
refinance loan agreement between the Montoyas and WMC. In response to a request
from WMC’s escrow agent, Chase issued a payoff demand statement specifying that the
total amount to satisfy its loan was $389,449.31. The statement from Chase also
provided:
       “You understand and agree that if [Chase] received and processed a payoff and
subsequently is requested to return such payoff funds, due to loan rescission or for any
other reason, unless prohibited by law, [Chase] will deduct a re-load fee of $750.00 from
the payoff funds that are returned to compensate [Chase] for its time and costs incurred in
re-loading such loan into the system.”
       Escrow closed on March 6, 2006, and payment was wired to and deposited with
Chase. “Shortly prior to the close of escrow,” the Montoyas notified WMC, but not
WMC’s escrow agent, that they wanted to cancel the refinance loans. WMC “notified its
escrow agent to cancel the transaction, but due to the last minute notification by the

                                               2
MONTOYAS all payments had been sent and all documents had been sent to the San
Joaquin County Recorder’s Office for recording.” The deeds of trust that were intended
to secure WMC’s refinance loans were recorded the same day, and a reconveyance of the
Chase deed of trust was sent to the county recorder’s office on March 6, 2006, and
recorded on March 31, 2006.
       “After the close of escrow, plaintiff and its escrow agent took steps to unwind the
transaction, recover all payments and restore title to the state that existed before March 6,
2006.” Specifically, WMC’s escrow agent informed Chase that the payment that was
wired to it was not to be used toward payoff of the Chase loan. The escrow agent also
“demanded the return of [WMC’s] $388,890.17 payment.”
       In response, on March 31, 2006, Chase sent a letter stating that it “would agree to
reinstate the loan only upon receipt of the following items within the timeframe
referenced below.
       “1. $750 reinstatement fee[.]
       “2. Signed reinstatement request letters from both the borrower and the remitter of
the payoff check[.]
       “3. Signed and notarized indemnification letter (to follow in separate
correspondence)[.]
       “4. All additional payments required to bring the loan current at the amount of
$4418.42 total[.]
       “5. Funds to replace escrow refund check in the amount of $2282.83, if cashed[.]
       “6. Reinstate Chase’s lien and provide proof that Chase is the first priority lien
holder, according to the state and county requirements for the property address (all
documents must be approved by Chase prior to filing/recording)[.]
       “7. Title endorsement or new title policy in favor of Chase Home Finance LLC.”
       Items 1, 2, 3, 5, a draft of item 6, and a title commitment for item 7 were to be
submitted to Chase within 20 days of receipt of the letter. WMC alleges that it complied

                                              3
with all the terms and conditions set forth in Chase’s letter, but Chase never returned the
funds.
         WMC alleges it “learned for the first time on April 13, 2013[,] that the
$388,890.17 that plaintiff’s [sic] deposited with CHASE was used, without plaintiffs
[sic] consent or authorization, toward satisfaction of CHASE’s loan to the
MONTOYAS.”
         In June 2013, WMC filed an action against Chase and the Montoyas asserting
numerous causes of action, including conversion, breach of contract, implied
contract/unjust enrichment, recovery of money deposited with a bank, and intentional
misrepresentation against Chase. After the trial court sustained Chase’s first demurrer,
WMC filed its first amended complaint, which is the pleading at issue here. In response,
Chase again demurred to all of WMC’s alleged causes of action against Chase. WMC
dismissed the Montoyas from the action.
         Ruling on the demurrer to the first amended complaint, the trial court concluded
WMC had failed to allege facts establishing that Code of Civil Procedure section 348
applied. Additionally, the trial court ruled that WMC’s complaint “alleges no facts
indicating Defendant did anything to prevent Plaintiff from commencing this lawsuit
within the proscribed statutes of limitations. Therefore, Plaintiff has not pled facts
sufficient to invoke estoppel.” The trial court held that WMC did not plead sufficient
facts to invoke the delayed discovery rule, and WMC’s claims against Chase were
otherwise time-barred. The trial court entered a judgment dismissing the first amended
complaint with prejudice. WMC filed a timely notice of appeal.
                                      II. DISCUSSION
A. Standard of Review
         “It is well established that a demurrer tests the legal sufficiency of the complaint.
[Citations.] On appeal from a dismissal entered after an order sustaining a demurrer, we
review the order de novo, exercising our independent judgment about whether the

                                                4
complaint states a cause of action as a matter of law. [Citations.] We give the
[complaint] a reasonable interpretation, reading it as a whole and viewing its parts in
context. [Citations.] We deem to be true all material facts that were properly pled.
[Citation.] We must also accept as true those facts that may be implied or inferred from
those expressly alleged. [Citation.] We may also consider matters that may be judicially
noticed, but do not accept contentions, deductions or conclusions of fact or law.
[Citation.]” (City of Morgan Hill v. Bay Area Air Quality Management Dist. (2004) 118
Cal.App.4th 861, 869-870; see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “If the
allegations in the complaint conflict with the exhibits, we rely on and accept as true the
contents of the exhibits. However, in doing so, if the exhibits are ambiguous and can be
construed in the manner suggested by plaintiff, then we must accept the construction
offered by plaintiff.” (SC Manufactured Homes, Inc. v. Liebert (2008) 162 Cal.App.4th
68, 83.)
B. Code of Civil Procedure Section 348
       WMC asserts the trial court erred in holding Code of Civil Procedure section 348
does not apply in this case. The statute provides, “To actions brought to recover money
or other property deposited with any bank, banker, trust company, building and loan
association, or savings and loan society or evidenced by a certificate issued by an
industrial loan company or credit union there is no limitation.” (Code Civ. Proc., § 348.)
WMC’s argues the open limitations period should apply because “deposit” as it is used in
section 348 should be construed broadly to include more than a general deposit.
       In contrast to WMC’s argument, case law construing section 348 has limited its
application to situations in which the deposit in question was a general deposit. A
general deposit is essentially a loan to the bank, and when the depositor demands it, the
bank is obligated to pay the debt reflected by the balance of the deposited funds. (Morse
v. Crocker Nat’l. Bank (1983) 142 Cal.App.3d 228, 232 (Morse).) “It is axiomatic that
the relationship between a bank and its depositor arising out of a general deposit is that of

                                              5
a debtor and creditor. [Citations.]” (Ibid.) The Morse court held that section 348 “does
not apply to actions in which the underlying debtor-creditor relationship is absent.” (Id.
at p. 233; see also id. at p. 231 [“In construing the subject statute, we first analyze the
nature of the relationship between a commercial depositor and bank depository to which,
we conclude, the statute unmistakably is directed”].) WMC asserts that this language is
dicta and that the plain language of the statute applies to all types of deposits, including
bailments. We disagree, as this case appears to fit squarely within Morse’s holding.
Even before Morse was decided, courts had suggested that section 348 did not apply to
every conceivable definition of a deposit. (See Bank of America Nat’l. Trust & Savings
Asso. v. Cranston (1967) 252 Cal.App.2d 208, 218 [“[I]t appears that banking practice
generally has customarily given to ‘deposit’ a meaning much broader than that given by
the act”].) Morse summarized decisions applying section 348 and noted that they all
shared the distinguishing feature of an established debtor-creditor relationship through a
general deposit of funds. (Morse, supra, at pp. 232-233; see, e.g., Bullis v. Security Pac.
Nat’l. Bank (1978) 21 Cal.3d 801, 806 [estate checking account]; Far West Citrus, Inc. v.
Bank of America (1979) 91 Cal.App.3d 913, 915 [checking account]; Bank of America
Nat’l. Trust & Sav. Asso. v. Cranston, supra, at pp. 215-216 [unclaimed deposits for
cashier’s, certified and Christmas Club checks, bank drafts and money orders]; King v.
Mortimer (1948) 83 Cal.App.2d 153, 156 [savings deposits with building and loan
association].) WMC does not identify any authority applying section 348 outside of a
general deposit of funds.
       Even if we assume for discussion that section 348 applies to more than traditional
deposits, a conclusion we do not accept, WMC has failed to establish that the mortgage
payoff payment qualifies as any type of deposit under California law. WMC asserts that
its payment qualifies as a deposit because it was either originally or later became a




                                               6
deposit for a special purpose/special deposit,1 an involuntary bailment, or a voluntary
bailment.2
       Significantly, the authorities relied on by WMC to suggest that the payment to
Chase was a special deposit do not involve funds that had been transferred out of escrow.
WMC relies upon a passage from Bank of America National Trust & Savings Asso. v.
California Savings & Commercial Bank, supra, 218 Cal. at p. 274, which discussed
money deposited into escrow, to claim that money paid to a bank to discharge a mortgage
is a deposit for a special purpose. “Where money is delivered to a bank to be paid over to
a third party upon his fulfilment of a contract with the depositor; where the purchase
price of land or other property, or money with which to discharge a mortgage, is
delivered to a bank in escrow; where a deposit is made to await the outcome of litigation,
or, as in the case herein, as security for performance of an obligation of the depositor to a
third person, the deposit is held to be a deposit for a special purpose, and the bank has no
right to use the amount thereof in its general business.” (Ibid.) As the trial court
correctly noted, this quote describes the appropriate characterization of money that is
paid into escrow to be used to discharge a mortgage. (see Burket v. Bank of Hollywood
(1937) 9 Cal.2d 113, 116 [“[T]he money on deposit in the escrow account at the time the
bank closed its doors . . . had been intrusted to it for distribution in accordance with an
escrow agreement. Under such circumstances it was a special deposit”].) These cases do
not suggest that money that has been released from escrow, in accordance with the




1 These terms are interchangeable. (See Bank of America Nat’l. Trust & Savings Asso. v.
California Savings & Commercial Bank (1933) 218 Cal. 261, 273-274; Engleman v.
Bank of America Nat’l. Trust & Savings Asso. (1950) 98 Cal.App.2d 327, 330-331.)
2 A bailment is called a deposit in our Civil Code. (13 Witkin, Summary of Cal. Law
(10th ed. 2005) Personal Property, § 156, p. 168; see also Civ. Code, §§ 1814-1815.)

                                              7
escrow instructions, can still be characterized as a special deposit. For the reasons
explained below, we conclude it cannot.
       A review of the differences between a general deposit, a special deposit and a
bailment demonstrates why money paid out of escrow does not qualify as any type of
deposit. “The generic term [‘deposit’] is commonly employed to describe a personal
object ‘which is placed . . . for safekeeping [or] entrusted to the care of another.’
(Webster’s New Internat. Dict.; see Black’s Law Dict. (4th ed.) stating a similar
definition in transitive form; see also Civ. Code, § 1814 (voluntary deposit).)” (Morse v.
Crocker Nat’l. Bank, supra, 142 Cal.App.3d at p. 231, fn. 6.) “The definitions given of
general and special deposits do not differ materially. In Butcher v. Butler, 134 Mo. App.
61, [114 S. W. 564], the court said: ‘A general deposit is where the bank is given custody
of the money deposited with the intention expressed or implied that the bank is not
required to return the identical money, but only its equivalent; the legal title to the money
in such cases passing to the bank. A special deposit is one where the bank merely
assumes charge or custody of the property without authority to use it, the depositor being
entitled to receive back the identical thing deposited in which case the title remains with
the depositor, and if the subject be money, the bank has no right to mingle it with other
funds.’ ” (People v. California Safe Deposit & Trust Co. (1914) 23 Cal.App. 199, 204.)
Likewise, “[a] bailment (called deposit in the Civil Code) is the deposit of personal
property with another, usually for a particular purpose, under an express or implied
contract. The purpose may be to use or repair, keep, transport, sell, or exchange it, etc.”
(13 Witkin, Summary of Cal. Law (10th ed. 2005) Personal Property, § 156, p. 168; see
also Civ. Code, § 1814 [“A voluntary deposit is made by one giving to another, with his
consent, the possession of personal property to keep for the benefit of the former, or of a
third party”].) In the facts presented here, the money paid to Chase does not fit within
any of these definitions.



                                              8
       WMC’s allegation that its payment to Chase “was initially intended as a special
deposit for use in paying-off the CHASE loan” is a legal and factual conclusion we need
not accept. (See City of Morgan Hill v. Bay Area Air Quality Management Dist., supra,
118 Cal.App.4th at pp. 869-870.) So is the argument that Chase “did not have any right
to commingle it with other fund[s] or use it for its general purposes.” As the above
definitions reveal, the sine qua non of any deposit is an understanding between the parties
that the money (either the identical funds or the equivalent, depending on the type of
deposit) will be returned upon the depositor’s request. Here, the release of the funds does
not satisfy this essential requirement. The loan payoff was not intended to be returned,
but to satisfy Chase’s loan. (See Civ. Code, § 2943, subd. (a)(5) [payoff demand
statement “set[s] forth the amounts required as of the date of preparation by the
beneficiary, to fully satisfy all obligations secured by the loan that is the subject of the
payoff demand statement”].) Additionally, a transaction does not create a bailment when
the parties intend it to be something different, such as a sale: “No bailment can be
implied where it appears it was the intention of the parties, as derived from their
relationship to each other and from the circumstances of the case, that the property was to
be held by the party in possession in some capacity other than as bailee. [Citation.] A
transaction is a sale, not a bailment, and title to the property is changed when the
receiving party is under no obligation to return the property or to account for it.
[Citation.]” (H. S. Crocker Co. v. McFaddin (1957) 148 Cal.App.2d 639, 644.) “If there
is a transfer of ownership the transaction is a sale.” (Ibid.) Here, the transaction was a
sale of a security interest and not a deposit or bailment.
       At the time escrow closed, WMC had completed its purchase of Chase’s
ownership interest and there was no agreement the transferred funds would ever be
returned. The only colorable question is whether, when WMC’s escrow agent demanded
return of the payment, the fact that Chase agreed to reinstate the loan under certain
conditions changed the character of the payment it had already received to be a deposit of

                                               9
any type. We do not think so, and WMC cites no authority that persuades otherwise.
While it is true that whether a deposit is considered general or special may change by
agreement of the parties (see Van de Kamp v. Bank of America (1988) 204 Cal.App.3d
819, 859), WMC cites no authority suggesting that a simple payment can transform into a
deposit or a bailment. Moreover, Chase’s offer to reinstate the loan does not explicitly
mention returning the payment at all—let alone the exact funds that were originally
transferred—and thus cannot be considered an agreement to transform the payment into a
special deposit or voluntary bailment. Rather, just as the original transaction is more
properly construed as a sale, the communications between Chase and WMC regarding the
reinstatement of the loan are more properly construed as reversing the original
transaction—not an effort to change the existing relationship between the parties. There
was no special deposit or voluntary bailment.
       WMC also alleges that its escrow agent’s statements to Chase, demanding return
of the payment and informing Chase that the payment that was wired to it was not to be
used toward payoff of the Chase loan, created an involuntary bailment. Again, we need
not accept WMC’s conclusions of fact or law. (City of Morgan Hill v. Bay Area Air
Quality Management Dist., supra, 118 Cal.App.4th at pp. 869-870.) An essential
element of an involuntary bailment is that the property was transferred by mistake. An
involuntary bailment “is made: [¶] (a) By the accidental leaving or placing of personal
property in the possession of any person, without negligence on the part of its owner.”
(Civ. Code, § 1815.) WMC alleges that when it notified the escrow agent, the funds had
already been transferred and the documents had been sent for recording. The escrow had
already closed and the transfer of the payment and security interest was intentional at the
time. The fact that WMC later informed Chase that the money was to be returned and not
used to pay off the Montoyas’ loan cannot retroactively transform an intentional transfer
into an accidental one. Moreover, “[a]n involuntary bailment is gratuitous, the depositary
being entitled to no reward.” (Civ. Code, § 1845.) WMC concedes that the alleged

                                            10
bailment was “not a ‘gratuitous bailment’ ” because WMC paid Chase a $750
reinstatement fee.
       Even under WMC’s broad reading of Code of Civil Procedure section 348, its
action to recover the payment to Chase was not an “action[] brought to recover money or
other property deposited with [a] bank.” (Code Civ. Proc., § 348, italics added.) WMC’s
complaint is not preserved by the open limitation provisions of section 348.
C. Estoppel
       WMC also contends that even if section 348 does not apply to its claims, Chase
should be estopped from raising a statute of limitations defense. “An estoppel to set up
the defense of the statute of limitations arises as a result of some conduct by the
defendant, relied upon by the plaintiff, that induces the belated filing of the action.”
(3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 762, p. 993, italics added.) It is based
on the principle that “ ‘[o]ne cannot justly or equitably lull his adversary into a false
sense of security, and thereby cause his adversary to subject his claim to the bar of the
statute of limitations, and then be permitted to plead the very delay caused by his course
of conduct as a defense to the action when brought.’ ” (Carruth v. Fritch (1950) 36
Cal.2d 426, 433.) Estoppel requires that: “ ‘(1) the party to be estopped must be apprised
of the facts; (2) he must intend that his conduct be acted upon, or must so act that the
party asserting the estoppel had a right to believe it was so intended; (3) the other party
must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his
injury. [Citations.]’ ” (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 655.)
       WMC contends estoppel is warranted because Chase “falsely represented to
Appellant that its payment would be returned,” and the complaint “does not allege any
facts suggesting that Appellant knew in 2006 that Respondent would not return the
money.” And yet the complaint alleges repeatedly that Chase “refused” to return the
funds. WMC has always known the true fact that Chase has not returned the payment,
which is the basis for this litigation. And a mere belief that Chase would return the funds

                                              11
based on its March 2006 letter regarding loan reinstatement is not sufficient to that show
that WMC was induced to postpone the filing of a lawsuit. (See Lundeen Coatings Corp.
v. Department of Water & Power (1991) 232 Cal.App.3d 816, 829 [“Mere allegations
that plaintiff believed that ‘the check was in the mail’ do not establish either ignorance of
the true state of facts, or reasonable reliance by plaintiff to his detriment”].) The
complaint contains no allegations suggesting it would have been reasonable for WMC to
believe that Chase would still return the funds years after it sent the March 2006 letter
that required most of its conditions to be met within 20 days. (See ibid. [“Plaintiff
provides no indication as to why it was reasonable to continue to believe that promise for
more than two years following the expiration of the forty-five-day period when plaintiff's
claim was deemed rejected by operation of law”].) “Significantly, plaintiff does not
allege that it was encouraged to forestall filing suit on this claim.” (Ibid.) WMC
attempts to justify the late filing of its complaint by alleging that it “learned for the first
time on April 13, 2013[,] that the $388,890.17 that plaintiff’s [sic] deposited with
CHASE was used, without plaintiffs [sic] consent or authorization, toward satisfaction of
CHASE’s loan to the MONTOYAS.” This allegation is without relevance to this appeal
because the payment was not a special deposit or bailment. Regardless of what Chase
used the funds for, it never returned them. The trial court correctly noted that the
complaint “alleges no facts indicating Defendant did anything to prevent Plaintiff from
commencing this lawsuit within the proscribed statutes of limitations. Therefore,
Plaintiff has not pled facts sufficient to invoke estoppel.”




                                               12
                                     III. DISPOSITION
       The judgment is affirmed. Chase shall recover its costs on appeal. (Cal. Rules of
Court, rule 8.278(a)(1) & (2).)




                                                        /S/

                                                RENNER, J.


We concur:



       /S/

RAYE, P. J.



       /S/

ROBIE, J.




                                           13
