Barnes v. Fleet Nat. Bank, N.A.

• Decision Date: 02 June 2004
• Docket Number: No. 03-1027.,03-1027.
• Citation: 370 F.3d 164
• Parties: Deborah J. BARNES, Plaintiff, Appellant, v. FLEET NATIONAL BANK, N.A.; Fleetboston Financial Corporation, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 164

370 F.3d 164

Deborah J. BARNES, Plaintiff, Appellant, v. FLEET NATIONAL BANK, N.A.; Fleetboston Financial Corporation, Defendants, Appellees.

No. 03-1027.

United States Court of Appeals, First Circuit.

Heard December 3, 2003.

Decided June 2, 2004.

COPYRIGHT MATERIAL OMITTED

Yvonne W. Rosmarin, with whom Daniel A. Edelman, Cathleen M. Combs, James O. Latturner, Anne M. Burton, and Edelman, Combs & Latturner were on brief, for appellant.

Joseph L. Kociubes, with whom Rheba Rutkowski, Terry Klein, Alan S. Kaplinsky, and Jon E. Hayden were on brief, for appellees.

Before TORRUELLA, Circuit Judge, CYR, Senior Circuit Judge, and LIPEZ, Circuit Judge.

LIPEZ, Circuit Judge.

In this putative class action, Appellant Deborah Barnes alleges that Fleet Bank did not properly disclose the effective date of changes to fees and minimum balance requirements on her bank accounts, and engaged in other inaccurate or misleading announcements of such changes. She argues that these failures constitute violations of the Truth in Savings Act, 12 U.S.C. §§ 4301-4313, its implementing regulations, 12 C.F.R. § 230, and the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A, § 2. The district court granted summary judgment for Fleet. For the reasons given below, we reverse and remand for further proceedings.

I.

We set forth the undisputed facts from the summary judgment record or, where appropriate, note the contentions of the parties about those facts. In October 1999, Fleet National Bank acquired another commercial bank, BankBoston. As a result of the merger, Fleet had to convert the accounts of BankBoston customers into Fleet accounts. According to Fleet, it tried to match each BankBoston account with the Fleet account that provided the most similar terms (e.g., minimum balances and fees). Because the two banks had offered different types of accounts with different terms, these matches were not exact. Thus, at least some BankBoston customers experienced changes in account terms as a result of the merger with Fleet.

Prior to the merger, Deborah Barnes was a customer of BankBoston, where she maintained "Premium Value" checking, reserve credit, and money market savings accounts. On March 28, 2000, Fleet sent a "Change in Terms" package to Barnes describing upcoming changes to her accounts.¹ Barnes received the package on April 6, 2000. It contained a welcome letter, a personalized "summary of accounts" letter, and a variety of other information about Fleet banking products and services. The welcome letter, dated "March, 2000," stated:

I'm writing to tell you about the transition of your BankBoston deposit accounts to Fleet accounts on May 12.... On May 12, 2000, your accounts will transfer to the Fleet accounts that are most similar to your existing BankBoston accounts. Everything will happen automatically, so you won't have to do a thing.

Bullet points on the side of the letter listed a phone number that customers could call with questions about the transition, and restated the points in the letter that "[y]our deposit accounts will become Fleet accounts on May 12, 2000" and that "[t]here is nothing you need to do. We will take care of everything to assure a smooth transition."

The summary of accounts letter provided more specific information about Barnes's accounts. It stated:

Changes in monthly fees and balance requirements, if any, will take effect on April 12, 2000, and will be reflected on your first statement following May 12, 2000. All other account changes and enhancements will take effect on May 12, 2000.

The letter went on to state that Barnes's "Premium Value" accounts would be converted into "FleetOne Gold" accounts. Despite Fleet's statement that it would convert Barnes's BankBoston accounts into the Fleet accounts it deemed to be most similar, the terms of the new "FleetOne Gold" accounts differed significantly from those of Barnes's existing BankBoston accounts. While BankBoston had required Barnes to maintain only a $5,000 combined minimum balance to avoid a $10 fee, the new Fleet accounts required a combined minimum average monthly balance of $10,000 to avoid an $18 monthly fee.

Based on the statement in the summary of accounts letter that "[c]hanges in monthly fees and balance requirements, if any, will take effect on April 12, 2000," Barnes believed that she had only until April 12 — six days after she received the "Change in Terms" package from Fleet — before Fleet would begin to calculate the average balance on her new checking account. Thus, she believed that if she wanted to avoid the $18 monthly fee, she would have to raise her average balance to more than $10,000 starting on April 12. Rather than increase her balance, Barnes acted quickly to change her existing BankBoston accounts before what she believed was an April 12 deadline. Within a week of receiving the "Change in Terms" package, Barnes converted her Premium Value Checking account to a Classic Value account, which required only a $2,500 minimum balance to avoid monthly fees. According to Fleet, this Classic Value account was most similar to the Fleet Classic account, which required only a $4,000 minimum average monthly balance to avoid fees. When the conversion from BankBoston to Fleet finally took place, Barnes's Classic Value account became a Fleet Classic account.

Fleet contends that Barnes misinterpreted the summary of accounts letter and that she did not have to change her BankBoston accounts before April 12 to avoid paying fees on her new Fleet accounts. According to Fleet, it had planned to charge new monthly service fees on each customer's first statement after the May 12 conversion. Barnes's first statement after May 12 was scheduled to be mailed on May 27. That statement would have reflected for the first time charges for any new fees based on her monthly balance. Because Fleet calculates average balances retrospectively for one month periods, the May 27 statement would have reflected monthly service charges based on the average balance in Barnes's accounts during the period from April 28 to May 26. Thus, according to Fleet, Barnes had until April 28, not April 12, to make any changes necessary to avoid paying monthly fees on her Fleet checking account.

Barnes, however, was not the only customer confused by Fleet's communication to BankBoston customers, and Fleet attempted to remedy customer concerns by delaying the imposition of new fees. In a "postcard" dated May 8, 2000, Fleet notified BankBoston customers that it would not impose monthly service charges for the first billing period following the May 12 conversion.² It stated:

Recently, we sent you information about the transition of your BankBoston accounts to Fleet, which will take effect on May 12, 2000. We recognize that any changes in your banking services may feel unsettling. That is why we are pleased to announce that regular monthly service fees will not be charged on your first Fleet statement following the transition of your accounts.

Because of this postponement of new fees, Barnes would not have been charged any fees even if she had failed to comply with Fleet's minimum balance requirements during the period of April 28 to May 26. Thus, after the additional delay, Barnes did not have to maintain a minimum balance until the period of May 27 to June 28.³

Barnes brought a class action complaint against Fleet, alleging that Fleet had violated the Truth in Savings Act (TISA), 12 U.S.C. §§ 4301-4313, and Mass. Gen. Laws ch. 93A.⁴ Specifically, Barnes argued that Fleet's "Change in Terms" package did not satisfy 12 U.S.C. § 4305(c)⁵ and 12 C.F.R. § 230.5(a)(1)⁶ because it did not properly disclose the effective date of changes to Barnes's accounts. She further argued that the "Change in Terms" package was misleading in violation of 12 U.S.C. § 4302(e).⁷ Finally, she argued that these violations of TISA constituted a per se violation of Chapter 93A, § 2(a).⁸

Barnes filed a motion for class certification, and Fleet responded with a motion to stay certification. After an initial scheduling conference, the district court entered an order staying Barnes's motion for class certification in anticipation of summary judgment filings.⁹ Both parties then moved for summary judgment on the TISA and 93A claims.

The district court held that "the second, more detailed letter of March 28, 2000, [the personalized summary of accounts letter] satisfied Fleet's TISA disclosure obligations." The court recognized that "[t]he letter seems initially to announce an effective date of April 12." Nevertheless, it reasoned that

closer attention to the letter reveals that the effective date conveyed in the letters, was the beginning of each recipient's monthly statement period that ended after May 12. In Barnes's case, for example, the effective date was April 28: Barnes's first statement after the May 12 cutoff would issue on May 26. As Fleet explains in its papers, the changes would first apply in the statement period preceding that date, to be reflected in that statement. April 28 was the first date on which the changes to account terms would apply to Barnes.

The district court then concluded that Fleet's correspondence to Barnes sufficiently announced that April 28 was the effective date of changes to Barnes's accounts.

It is my view that, while less than ideal, the language of the March 28 letter adequately conveys a "date" of changes to Barnes' accounts. It is indeed problematic that the letter states that "[c]hanges in monthly fees and balance requirements, if any, will take effect on April 12, 2000." Standing alone, that clause announces an inaccurate effective date. But the context is curative: the second clause in the sentence explains that the pertinent changes will be reflected on the first statement the client receives after May 12.... The letter instructs that Fleet will review account balances and assess fees on a monthly basis, and that the first...