Chavers v. FLEET BANK (RI), NA

• Decision Date: 11 February 2004
• Docket Number: No. 2002-201-Appeal.,2002-201-Appeal.
• Citation: 844 A.2d 666
• Parties: Tyler V. CHAVERS et al. v. FLEET BANK (RI), N.A. et al.
• Court: Rhode Island Supreme Court

844 A.2d 666

Tyler V. CHAVERS et al. v. FLEET BANK (RI), N.A. et al.

No. 2002-201-Appeal.

Supreme Court of Rhode Island.

February 11, 2004.

Lauren E. Jones, Providence, for Plaintiff.

Steven E. Snow, Providence, for Defendant.

Present: WILLIAMS, C.J., FLANDERS, GOLDBERG, FLAHERTY and SUTTELL, JJ.

OPINION

WILLIAMS, Chief Justice.

Lured by the promise of low, fixed annual percentage rates (APR) and other favorable terms, the named plaintiffs, Tyler V. Chavers, Alexandra H. Lossini and Daniece A. Owsley Burns, opened credit-card accounts with Fleet Bank (RI), N.A. Upon learning that the APR on their accounts would be raised, the plaintiffs initiated this class action suit¹ against the defendants, Fleet Bank (RI), N.A., Fleet Credit Card Services, L.P., Fleet Credit Card Holdings, Inc., FleetBoston Financial Corporation, and Does 1-10 (collectively referred to as Fleet). The plaintiffs sought damages and equitable relief for violations of Rhode Island's Deceptive Trade Practices Act (DTPA), G.L. 1956 chapter 13.1 of title 6, and breach of contract. Fleet was granted summary judgment on both counts. The plaintiffs' appeal is now before this Court.

For the reasons explained below, we affirm the judgment as it pertains to the DTPA claim. We, however, vacate the portion of the judgment pertaining to plaintiffs' breach of contract claim and remand for further proceedings on that claim.

I Facts and Travel

During 1999 and 2000, Fleet engaged in a nationwide advertising campaign, urging individuals to open credit-card accounts with Fleet. As part of the campaign, Fleet sent solicitation letters to presumably thousands of people asking them to transfer balances from other credit cards and to make purchases using their Fleet credit cards. The solicitations offered a non-introductory, fixed APR of 8.5 percent or lower applicable to balance transfers that "starts low and can stay low." The solicitation further promised there would be no annual fees.

The plaintiffs received those solicitations. Based on the advertised terms, plaintiffs opened accounts, began making purchases with their new credit cards, and transferred balances from other accounts. In April 2000, Fleet informed plaintiffs that the "fixed" APR would be increasing because of a rise in the interest rates set by the Federal Reserve Board. Fleet gave some cardholders the option of either switching to a 9.5 percent variable APR or to a 10.5 percent fixed APR. Other cardholders were told that their APRs would increase to a fixed rate of 11.5 percent. In some instances, Fleet imposed annual membership fees.

Upset about the increased APR, at least one Fleet customer, Darlene AuCoin (AuCoin), wrote to the Office of the Comptroller of the Currency (OCC), which is the primary regulator of national banks, to complain about Fleet's "bait and switch tactics." The OCC replied to AuCoin, informing her that a case had been opened and the OCC would be contacting Fleet.² Thereafter, AuCoin received a second letter from the OCC concluding that, after reviewing her complaint, Fleet was not violating any federal rules or regulations. Therefore, the OCC wrote, it could offer AuCoin no further guidance and she would have to seek legal representation if she wanted to pursue the matter.

The plaintiffs filed a complaint in Superior Court against Fleet alleging violations of the DTPA and breach of contract. Fleet filed a motion to dismiss, arguing that Fleet was exempt from the DTPA because it was subject to regulation by the OCC. Fleet also argued that the Superior Court lacked subject matter jurisdiction to hear the breach of contract claim because plaintiffs were unable to meet the amount-in-controversy requirement set forth in G.L.1956 § 8-2-14.³ The motion justice denied Fleet's motion, concluding that although the OCC has general authority over Fleet, there were no applicable regulations regarding deceptive credit-card solicitations. Fleet's motion to dismiss the breach of contract claim was also denied because plaintiffs requested equitable relief as well as monetary damages and therefore, pursuant to § § 8-2-13 and 14,⁴ the court had subject matter jurisdiction to hear both claims. Upon Fleet's motion to reconsider, the motion justice reaffirmed her decision.

Thereafter, the case was transferred to the business calendar of the Superior Court, with a different Superior Court justice (second motion justice) presiding. Fleet then filed a motion for summary judgment presenting the same arguments set forth in its motion to dismiss. The plaintiffs countered that, because another motion justice had already rejected Fleet's arguments, the law of the case doctrine precluded summary judgment on both counts. The second motion justice, however, opined that the need for a national policy for banking issues constituted "special circumstances" that justified departure from the law of the case. Concluding that the OCC does have authority over Fleet's credit-card solicitations, thereby excepting plaintiff's claim from the DTPA, he granted Fleet's motion for summary judgment. Based on the disposition of the DTPA claim, the second motion justice also granted summary judgment in favor of Fleet on plaintiffs' breach of contract claim because it was not a proper case for equitable relief and, therefore, the court lacked jurisdiction pursuant to § 8-2-13.

The plaintiffs timely appealed. The OCC has filed an amicus brief in support of Fleet's position with respect to the OCC's power to take enforcement action against Fleet.

II Summary Judgment

This Court reviews the grant of summary judgment on a de novo basis, applying the same standards as the motion justice. Rubery v. Downing Corp., 760 A.2d 945, 946 (R.I.2000) (per curiam). Specifically, this Court reviews the evidence and draws all reasonable inferences in the light most favorable to the nonmoving party. Id. Summary judgment is appropriate if it is apparent that no material issues of fact exist and the moving party is entitled to judgment as a matter of law. Id. A party opposing a motion for summary judgment "`carries the burden of proving by competent evidence the existence of a disputed material issue of fact and cannot rest on allegations or denials in the pleadings or on conclusions or legal opinions.'" United Lending Corp. v. City of Providence, 827 A.2d 626, 631 (R.I. 2003).

A Deceptive Trade Practices Act

The General Assembly, through the DTPA, has declared that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are * * * unlawful." Section 6-13.1-2. The DTPA provides a private right of action to recover actual and punitive damages and equitable relief for violations of its provisions. Section 6-13.1-5.2. Private actions, however, are precluded when the complained of activity is subject to regulation by a government agency. Specifically, the exemption contained in § 6-13.1-4 of the DTPA provides: "Nothing in this chapter shall apply to actions or transactions permitted under laws administered by the department of business regulation or other regulatory body or officer acting under statutory authority of this state or the United States."

The analytical framework for the above exception is set forth in State v. Piedmont Funding Corp., 119 R.I. 695, 382 A.2d 819 (1978). In that case, the state brought an action against Piedmont Funding under the DTPA for allegedly employing deceptive practices to sell insurance and mutual funds. In applying the exception, this Court first considered whether the activities at issue were subject to the monitoring and regulation of regulatory agencies or officers. We noted that the sale of insurance is permitted only under the authority of an agency of this state and must not violate G.L. 1956 chapter 29 of title 27, which prohibits the use of deceptive trade practices in the sale of insurance. Piedmont Funding Corp., 119 R.I. at 699-700, 382 A.2d at 822. The sale of securities in Rhode Island must comport with G.L. 1956 chapter 11 of title 7 and with federal rules and regulations. Piedmont Funding Corp., 119 R.I. at 700, 382 A.2d at 822. "After the seller obtains permission or registers to engage in the activity of selling insurance or mutual funds in Rhode Island, he is subject to monitoring and regulation by the appropriate regulatory agency or officer. Therefore, * * * because the conduct at issue was clearly subject to the control of governmental agencies * * * it is within the exemption provision and not subject to the mandates of the [DTPA]." Id.

This Court then went on to say "[w]hen the party claiming exemption from the [DTPA] shows that the general activity in question is regulated by a `regulatory body or officer' * * * the opposing party * * * then has the burden of showing that the specific acts at issue are not covered by the exemption." Id. Because the sale of insurance and mutual funds was subject to agency regulation, and noncompliance with applicable rules and regulations would result in revocation of a license to sell those products, the state did not meet "its burden of showing that the specific actions or transactions involved do not fall within the statutory exemption." Id.

This Court reapplied the exception outlined in Piedmont Funding one year later in Perron v. Treasurer of Woonsocket, 121 R.I. 781, 403 A.2d 252 (1979). The plaintiffs in Perron brought suit against the City of Woonsocket (city) under the DTPA after the municipal water department allegedly breached a contract with them. Under the contract, the water department, for a fee, agreed to tie into a privately owned water main to provide water to plaintiffs. Unsuccessful in its tie-in attempt, the city returned the plaintiffs' money "and told them to look elsewhere for relief." Id. at 783, 403 A.2d at 253-54. We held that, although the water department's distribution and sale of water was subject to extensive supervision by the Public...