Set off under California's one action rule

this case may be interesting.
Note that bank of America did take money out of its borrowers account.

However, it looks like that could be a pretty expensive set off in this case.

Our Supreme Court, however, has long since put this issue to rest. McKean v. German-Am. Savings Bank (1897) 118 Cal. 334, 50 P. 656 held a bank setoff against a general deposit account 5 is an "action" within the meaning of section 22 for the purpose of applying the one-form-of-action rule of section 726. (Id., at pp. 340-341, 50 P. 656, accord, Gnarini v. Swiss American Bank (1912) 162 Cal. 181, 184, 121 P. 726; Woodruff v. California Republic Bank (1977) 75 Cal.App.3d 108, 110, 141 Cal.Rptr. 915.) It is now established law that where "the obligation of the depositor is represented by a note secured by a mortgage [or deed of trust], C.C.P. 726 prevents the bank from satisfying it by exercising its setoff; it must exhaust the security. [Citations.]" (2 Witkin, Summary of Cal. Law (8th ed. 1973) Negotiable Instruments, § 129, p. 1387.) "Where a bank has security for the indebtedness of a depositor, the reason for the rule which gives a bank the right to appropriate deposits for the payment of the depositor's matured indebtedness does not apply, and the [152 Cal.App.3d 772] ordinary presumption that it is the depositor's intent to have his indebtedness discharged from his deposit does not exist. The rule is, therefore, that a mortgagee [or beneficiary] bank must first look to the mortgaged [or encumbered] premises as constituting a primary fund out of which the debt secured by the mortgage [or deed of trust] must be paid, and that mortgage [or deed of trust] security must be exhausted before it can apply in reduction or cancellation of the debt any money on deposit with it belonging to the debtor." (9 Cal.Jur.3d, Banks and Other Financial Institutions, § 132, pp. 346-347, fns. omitted.)

Bank of America v. Daily, 152 Cal.App.3d 767, 199 Cal.Rptr. 557 (Cal.App. 4 Dist., 1984)