Coleman v. Alaska USA Fed. Credit Union

• Decision Date: 14 April 2020
• Docket Number: No. 3:19-cv-0229-HRH,3:19-cv-0229-HRH
• Parties: CHRISTINE COLEMAN, on behalf of herself and all others similarly situated, Plaintiff, v. ALASKA USA FEDERAL CREDIT UNION, Defendant.
• Court: U.S. District Court — District of Alaska

CHRISTINE COLEMAN,on behalf of herself and all others similarly situated, Plaintiff, v. ALASKA USA FEDERAL CREDIT UNION, Defendant.

No. 3:19-cv-0229-HRH

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ALASKA

April 14, 2020

ORDER

Motion to Dismiss

Defendant moves to dismiss plaintiff's complaint.¹ This motion is opposed.² Oral argument was requested by defendant and the court had granted that request pending its review of the briefing on the instant motion.³ Having now completed that review, the court deems oral argument unnecessary.

Background

Plaintiff is Christine Coleman. Defendant is Alaska USA Federal Credit Union. Plaintiff has a checking account with defendant.⁴

Plaintiff alleges that "[o]n November 15, 2018, [she] attempted a small payment to Safeway in the amount of $61.57."⁵ This was apparently an Automated Clearing House ("ACH") transaction.⁶ "ACH transactions are electronic payments made from one bank account to another and involve one party providing their account number and routing number. Common ACH transactions include online bill pay. . . ." Lossia v. Flagstar Bancorp, Inc., 895 F.3d 423, 426 (6th Cir. 2018).

Plaintiff alleges that "Alaska USA rejected" the Safeway payment "due to insufficient funds in [her] account and charged her a $25 NSF Fee for doing so."⁷ "Plaintiff does not dispute this initial fee, as it is allowed by Alaska USA's Account Documents."⁸ Plaintiff alleges however that without her knowledge and not at her request, "eleven days later, on November 26, 2018, Alaska USA processed the same item yet again, and again rejected thetransaction due to insufficient funds and charged [her] another $25 NSF Fee."⁹ Plaintiff alleges that she was thus "charged . . . $50 in NSF Fees [in an] attempt to process a single payment."¹⁰ Plaintiff alleges that this breached her agreement with defendant because "Alaska USA's Account Documents state that it will charge $25 per item that is returned due to insufficient funds."¹¹

Plaintiff commenced this putative class action on August 21, 2019. She asserts breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and Alaska Unfair Trade Practices Act ("UTPA") claims against defendant.

Defendant now moves to dismiss all of plaintiff's claims.

Discussion

"To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "A claim is facially plausible 'when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Id. (quoting Iqbal, 556 U.S. at 678). "The plausibility standard requires more than the sheer possibility or conceivability that a defendant has actedunlawfully." Id. "'Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (quoting Iqbal, 556 U.S. at 678). "[T]he complaint must provide 'more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.'" In re Rigel Pharmaceuticals, Inc. Securities Litig., 697 F.3d 869, 875 (9th Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "In evaluating a Rule 12(b)(6) motion, the court accepts the complaint's well-pleaded factual allegations as true and draws all reasonable inferences in the light most favorable to the plaintiff." Adams v. U.S. Forest Srvc., 671 F.3d 1138, 1142-43 (9th Cir. 2012). "However, the trial court does not have to accept as true conclusory allegations in a complaint or legal claims asserted in the form of factual allegations." In re Tracht Gut, LLC, 836 F.3d 1146, 1150 (9th Cir. 2016). "When ruling on a Rule 12(b)(6) motion to dismiss, if a district court considers evidence outside the pleadings, it must normally convert the 12(b)(6) motion into a Rule 56 motion for summary judgment[.]" United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003).

breach of contract claim

"In order to assert a claim for breach of contract, a plaintiff must generally allege: (1) existence of a contract; (2) breach; (3) causation; and (4) damages." Nicdao v. Chase Home Finance, 839 F. Supp. 2d 1051, 1068 (D. Alaska 2012). Defendant argues that plaintiff hasnot stated a plausible breach of contract claim because there has been no breach of the contract.

Plaintiff attached a Share Account Disclosure Statement to her complaint.¹² This was, however, a Share Account Disclosure Statement for business organizations. The Share Account Disclosure Statement that governed plaintiff's personal account is the one for "Member" accounts.¹³ The Member Share Account Disclosure Statement (referred to hereafter as the "Account Agreement") defines a "debit" as a "withdrawal" and includes "ACH Payments" in its list of "debits".¹⁴ The Account Agreement provides that defendant

pays debits based on the account's available funds. If available funds are not in the account when a debit is presented for payment, the Credit Union will attempt to pay the item using any or all of the applicable overdraft programs for which the member has enrolled or is qualified to receive.

The fee for account overdrafts are listed on the 'Schedule of Share Account Service Fees and Charges' page of this disclosure.[¹⁵]

The Account Agreement further provides:

Nonsufficient Funds (NSF) Activity: If available funds are not in the account when a debit is presented for payment, and Overdraft Protection or Courtesy Pay are not available, the item will be returned unpaid. A fee will be assessed for each returned item.[¹⁶]

The Schedule of Share Account Service Fees and Charges provides that the NSF fee for a "[c]heck or other debit returned unpaid for lack of sufficient funds" is "$25.00 per item[.]"¹⁷

Defendant's argument that plaintiff has not alleged a plausible breach of contract claim raises a question of contract interpretation. "The goal of contract interpretation 'is to give effect to the reasonable expectations of the parties.'" Graham v. Municipality of Anchorage, 446 P.3d 349, 352 (Alaska 2019) (quoting Stepanov v. Homer Elec. Ass'n., 814 P.2d 731, 734 (Alaska 1991)). The court "determine[s] 'the parties' reasonable intentions by looking to the language of the disputed provision and other provisions, relevant extrinsic evidence, and case law interpreting similar provisions.'" Id. (quoting Flint Hills Res. Alaska, LLC v. Williams Alaska Petroleum, Inc., 377 P.3d 959, 975 (Alaska 2016)). The court "look[s] to the language of the contract as a whole, the objects sought to be accomplished by the contract, the circumstances surrounding its adoption, and case law interpreting its provisions to ascertain the reasonable expectations of the parties." Monzingo v. Alaska Air Group, Inc., 112 P.3d 655, 660 (Alaska 2005).

"If the contract language is not ambiguous," the court "'decide[s] the meaning of the contract as a matter of law.'" Thomson v. Thomson, 394 P.3d 604, 607 (Alaska 2017) (quoting Krushensky v. Farinas, 189 P.3d 1056, 1060 (Alaska 2008)). "'An ambiguity exists only where the disputed terms are reasonably subject to differing interpretation after viewing the contract as a whole and the extrinsic evidence surrounding the disputed terms.'" Id. at 607-08 (quoting Villars v. Villars, 277 P.3d 763, 768-69 (Alaska 2012)). Contract "interpretation becomes a task for the trier of fact when the parties present extrinsic evidence to clarify a contract's meaning, when this evidence points toward conflicting interpretations of the contract, and when the contract itself is reasonably susceptible of either meaning." Little Susitna Const. Co. v. Soil Processing, Inc., 944 P.2d 20, 23 (Alaska 1997).

The parties focus on the portion of the Account Agreement that provides:

Nonsufficient Funds (NSF) Activity. If available funds are not in the account when a debit is presented for payment, and Overdraft Protection or Courtesy Pay are not available, the item will be returned unpaid. A fee will be assessed for each item.[¹⁸]

Defendant argues that a "debit" includes an ACH transaction and a reasonable interpretation of the above provision is that when an ACH payment is "presented for payment" and "returned unpaid", it has a right to impose an NSF fee for "each" such item. Defendant argues that even if the court were to consider the word "item" in isolation, as plaintiff suggests, the result would be the same. Defendant argues that the ordinary meaning of"item" is "'an individual thing . . . singled out from an aggregate of individual things (as those being enumerated in a bill of inventory or similar list.'"¹⁹ Defendant contends that each time Safeway submitted plaintiff's authorized ACH transaction to be paid, it presented a unique trace number, which was processed individually. In other words, defendant argues that each submission of plaintiff's Safeway ACH transaction was a separate "item." As such, defendant contends that the Account Agreement allows it to charge a $25.00 fee each time an ACH transaction is presented for payment and there are insufficient funds in the member's account.

Plaintiff contends that the first sentence in the above provision merely states that defendant has the ability to return items unpaid. And, plaintiff contends that the second sentence says that defendant can assess "a fee" for each "item." But, this sentence does not say, according to plaintiff, that defendant can assess "a fee each time an item is returned," which is what defendant is arguing. Plaintiff argues that assessing "a fee" for "each item" is not the same thing as assessing "a fee" for "each item returned." Plaintiff argues that a reasonable interpretation of the Account Agreement is that it does not authorize defendant to...