Fleet Bank, Nat. Ass'n v. Burke

• Decision Date: 30 September 1998
• Docket Number: No. 3:97CV133 (JBA).,3:97CV133 (JBA).
• Parties: FLEET BANK, NATIONAL ASSOCIATION, Plaintiff, v. The Honorable John P. BURKE, Banking Commissioner and Connecticut Department of Banking, A State Agency, Defendants.
• Court: U.S. District Court — District of Connecticut

23 F.Supp.2d 196

FLEET BANK, NATIONAL ASSOCIATION, Plaintiff, v. The Honorable John P. BURKE, Banking Commissioner and Connecticut Department of Banking, A State Agency, Defendants.

No. 3:97CV133 (JBA).

United States District Court, D. Connecticut.

September 30, 1998.

Daniel L. Fitzmaurice, Day, Berry & Howard, Hartford, CT, for Plaintiff.

William J. Prensky, Attorney General's Office, Finance & Public Utilities, Hartford John G. Haines, Attorney General's Office, Hartford, CT, for Defendants.

RULING ON CROSS SUMMARY JUDGMENT MOTIONS [DOCS. # 24 & # 28]

ARTERTON, District Judge.

INTRODUCTION

Fleet Bank ("Fleet") seeks by way of declaratory judgment a determination that John P. Burke, the State Banking Commissioner ("Commissioner") acting on behalf of the Connecticut Department of Banking is incorrect in his interpretation of Connecticut statutes, specifically C.G.S. § 36a-156, as precluding Fleet from imposing a transaction fee ("surcharge fee") on non-depositors who access their bank accounts via Fleet's Automatic Teller Machines ("ATMs").

Pending before the Court are the parties cross-motions for summary judgment. The Court has previously determined that Pullman abstention was not appropriate. See Ruling on Defendant's Motion to Dismiss dated Aug. 10, 1997 (doc. # 21).

BACKGROUND

Fleet is a nationally-chartered bank that operates branches and ATMs in the State of Connecticut and in other states. (Joint Stipl. ¶ 2). The defendants are the Commissioner and the Connecticut Department of Banking, ("Banking Department") who are responsible for the general administration and implementation of the banking laws of the State of Connecticut pursuant to C.G.S. §§ 36a-1 to 36a-810.

Currently, Fleet owns and operates approximately 365 ATMs throughout the state of Connecticut as well as over 2,000 ATMs throughout Massachusetts, Maine, New Hampshire, Rhode Island, New York, New Jersey. (See Def. Memorandum of Law in support of Motion for Summary Judgment, App. A). Fleet is also a member of three ATM networks: CIRRUS, NYCE and PLUS. (Joint Stipl. ¶ 4) Through these networks, member banks like Fleet enable their depositors to access their accounts and transact business using another network bank's ATM. (Joint Stipl. ¶ 4). The advantage of these arrangements to the banks and to their depositors is that they increase the number of potential outlets where banking transactions may be conducted. As part of these networks, Fleet permits non-depositors who hold ATM cards issued by other network banks access to its ATMs. In return, Fleet depositors may access their accounts via ATMs maintained by any other bank within the network. Under these network arrangements, the member banks agree to uniform policies and rights including the type of charges permitted for using and accessing another member bank's ATM. (Joint Stipl. ¶ 4).

Under the current network arrangements, a host member bank potentially has three methods for defraying or recovering its costs of installing and operating its ATMs and of sharing them with other banks and their depositors. First, the host bank could impose an "interchange fee" on the network bank whose depositor accesses the host bank's ATM. (Joint Stipl. ¶ 6). Second, the host bank could impose a direct charge or "surcharge fee" on the non-depositor that accesses its ATM. (Id.) Finally, any network bank could impose a "transaction fee" on its own depositor for his or her use of any ATM in the network, including its own. Therefore, a single ATM transaction at a network bank could result in imposition of at least two different charges on the ATM user and one "interchange fee" on the user's bank. It is the second host bank fee, the "surcharge fee" on non-depositor users that is in dispute in this case.

On September 14, 1995, Fleet sought an opinion from the Commissioner "seeking confirmation ... that a state chartered bank permissively may charge a direct transaction fee for the use of such bank's ATM by a person who does not otherwise maintain a banking relationship with the bank ... to recoup a portion of the expenses incurred by the bank to establish and maintain the ATM" and "that the Connecticut statutes governing the use of ATMs in Connecticut would not place any restriction on the ability of a federally chartered bank in Connecticut to impose similar fees ...." (Joint Stipl. Ex. B) In his September 14, 1995 letter in response, the Commissioner reiterated his predecessor's position adopted in 1988 (Joint Stipl. Ex. A) that "surcharge fees" were not permissible under Connecticut state banking laws. (Joint Stipl. Ex. B). The Commissioner, rejecting Fleet's position, opined as follows:

The Connecticut statutes governing the establishment and use of ATMs do not authorize banks to impose the transaction fees described [...]. Moreover, Section 36a-156 of the Connecticut General Statutes specifically authorizes a bank that has established an ATM to impose a usage fee on other banks whose customers use the ATM to cover a reasonably proportionate share of all acquisition, installation and operating costs. It is an established rule of statutory construction that a statute which provides that a thing done in a certain way carries with it an implied prohibition against doing that thing in another way. See State ex rel. Barlow v. Kaminsky, 144 Conn. 612, 136 A.2d 792 (1957). Therefore, Section 36a-156, which provides a bank may charge another bank that uses its ATM a fee for its use, carries with it an implied prohibition against the bank imposing a fee on the customers of the other bank for such use.... A state-chartered or federally-chartered bank in Connecticut that wishes to recoup the expenses incurred in establishing and maintaining an ATM may do so by imposing the usage fee permitted under Section 36a-156 on other banks whose customers use the ATM.

(Joint Stipl. Ex. B).

The Commissioner interprets Connecticut's ATM statute as containing an implicit prohibition on Fleet's ability to charge non-depositors a surcharge fee for their use of Fleets ATMs. (Id.) It is the propriety of this interpretation of the Connecticut banking laws that is challenged by Fleet.

Connecticut banking laws include several provisions specifically related to the establishment and operation of ATMs in the state, C.G.S. §§ 36a-155 et seq. ("ATM statute"). These statutes address the following areas: 1) banks' and credit unions' establishment of ATMs and the banking commissioner authority to adopt regulations (C.G.S. § 36a-155(a)); 2) banks' access to others' ATMs for a fee (C.G.S. § 36a-156); 3) satellite devices and point of sale terminals not branch offices (C.G.S. § 36a-157); 4) use of ATMs by out of state banks and credit unions (C.G.S. § 36a-158); and 5) rights of banks and credit unions to establish and use point of sale terminals vis-a-vis national banks (C.G.S. § 36a-159).

The Commissioner has also applied the Depositor's Account Contract Act or ("DACA"), C.G.S. § 36a-316 through 329, to the use of ATMs by depositors. Although DACA does not explicitly refer to ATMs, it regulates the information and manner in which a bank must disclose to its depositors the amount of charges relating to their deposit accounts. Under the Commissioner's interpretation of DACA's definition section, C.G.S. § 36a-316(6)(D), a bank is permitted to charge its own depositors an ATM transaction fee, based on his construction that an ATM is "a device or method that may be used to withdraw money from a deposit account." (Joint Stipl. Ex. A). However, under the Commissioner's interpretation, DACA is inapplicable if the ATM user is not a depositor and thus, in the Commissioner's view, DACA provides no authority for the disputed "surcharge fee" for nondepositors' use of Fleet's ATMs.

SUMMARY JUDGMENT STANDARD

When faced with cross-motions for summary judgment, a district court is not required to grant judgment as a matter of law for one side or the other. "Rather the court must evaluate each party's motion on its merits, taking care in each instance to draw all inferences against the party whose motion is under consideration." Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993).

In this case, the parties have filed a joint stipulation of facts and neither side has identified any unresolved factual issues. (See Joint Stipl.) Furthermore, the Court has independently reviewed the record and concluded that there are no disputed facts and the dispositive issue is purely a question of statutory interpretation particularly appropriate for resolution by summary judgment. Heublein, Inc., 996 F.2d at 1461.

DISCUSSION

I. Relation of state banking laws to federally chartered banks

In Connecticut, there exist two types of banks, state-chartered and federally-chartered banks. Both types lack inherent power beyond those powers enumerated or incidentally conferred under the relevant federal (12 U.S.C. § 24) or state (C.G.S. § 36a-250) banking law. Fleet contends its authority to impose a "surcharge" fee on non-depositors who access its ATMs is found in the "incidental" powers granted under the National Banking Act, 12 U.S.C. § 24 (Seventh). (Complaint ¶¶ 10, 19). This provision of the National Banking Act authorizes a bank to:

Exercise by its board of directors or duly authorized officers or agents, subject to the law all such incidental powers as shall be necessary to carry on the business of banking.

12 U.S.C. § 24(Seventh).

Furthermore, under 12 C.F.R. § 7.4002, Fleet claims that a national bank is expressly permitted to charge its customers non-interest charges and fees for the services the bank performs. Fleet claims that non-depositor ATM users qualify as "customers" and therefore may be assessed a surcharge fee.

A national bank's enumerated and incidental powers are not normally limited by, but rather ordinarily pre-empt contrary state law. Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 116 S.Ct. 1103, 134 L.Ed.2d...