Montgomery v. Bank of America Corp.

Decision Date24 September 2007
Docket NumberNo. CV 07-1204 CASAJWX.,CV 07-1204 CASAJWX.
Citation515 F.Supp.2d 1106
CourtU.S. District Court — Central District of California
PartiesNicole MONTGOMERY, individually and on behalf of others similarly situated, v. BANK OF AMERICA CORP, and Bank of America N.A.

Amber S. Healy, Michael A. Gold, Mitch Kalcheim, Kalcheim Salah, Los Angeles, CA, for Plaintiff.

Laurence Hutt, James Jacob Finsten, Gregory Andrew Ellis, Arnold & Porter, Los Angeles, CA, Howard N. Cayne, Arnold & Porter, Washington, DC, for Defendants.


CHRISTINA A. SNYDER, District Judge.


On January 25, 2007, plaintiff Nicole Montgomery, on behalf of herself and others similarly situated, filed the instant complaint against defendant Bank of America Corporation ("BAC") in the Superior Court of the State of California for the County of Los Angeles. In her complaint, plaintiff alleges the following claims: (1) fraudulent and unfair business practices in violation of the California Unfair Competition Law, California Business & Professions Code § 17200 et seq. ("UCL"); (2) unlawful business practices in violation of the UCL; and (3) violation of the Consumer Legal Remedies Act, California Civil Code § 1750 et seq. ("CLRA"). The gravamen of plaintiff's complaint is that BAC failed to disclose adequately the Nonsufficient Funds/Overdraft Fees policy ("NSF/OD fees policy") which it imposes on its customers when they incur an overdraft on their account.

The action was removed to this Court by defendant BAC on February 22, 2007, pursuant to 28 U.S.C. § 1332(d)(2) and 28 U.S.C. § 1453(b), also known as the Class Action Fairness Act of 2005. On May 7, 2007, BAC filed a motion for judgment on the pleadings. On June 22, 2007, the Court took BAC's motion for judgment on the pleadings off calendar after plaintiff agreed to amend her complaint. Plaintiff filed the First Amended Complaint ("FAC") on July 12, 2007, adding Bank of America, N.A. as a defendant.

On July 27, 2007, defendants filed the present motion to dismiss the FAC. Plaintiff filed her opposition to defendants' motion to dismiss on August 6, 2007. Defendants filed a reply thereto on August 13, 2007. A hearing on was held on September 24, 2007. After carefully considering the arguments set forth by the parties, the Court finds and concludes as follows:


A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a complaint. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the `grounds' of his `entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, ___ U.S. ___, ___-___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007). "[F]actual allegations must be enough to raise a right to relief above the speculative level." Id. at 1965.

In considering a motion pursuant to Fed.R.Civ.P. 12(b)(6), a court must accept as true all material allegations in the complaint, as well as all reasonable inferences to be drawn from them. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir.1998). The complaint must be read in the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001); Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). However, a court need not accept as true unreasonable inferences or conclusory legal allegations cast in the form of factual allegations. Sprewell, 266 F.3d at 988; W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.1981).

Dismissal pursuant to Rule 12(b)(6) is proper only where there is either a "lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988).

Furthermore, unless a court converts a Rule 12(b)(6) motion into a motion for summary judgment, a court cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits, or discovery materials). In re American Cont'l Corp./Lincoln Say. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir.1996), rev'd on other grounds sub nom Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 118 S.Ct. 956, 140 L.Ed.2d 62 (1998). A court may, however, consider exhibits submitted with or alleged in the complaint and matters that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir.2001).

For all of these reasons, it is only under extraordinary circumstances that dismissal is proper under Rule 12(b)(6). United States v. City of Redwood City, 640 F.2d 963, 966 (9th Cir.1981).

As a general rule, leave to amend a complaint which has been dismissed should be freely granted. Fed.R.Civ.P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir.1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.2000).


The gist of defendants' attack on the FAC is that it violates Federal Rule of Civil Procedure Rule 8, in that it fails to provide a short and plain statement of plaintiff's claim. Defendants note that plaintiff appears to assert three claims. First, defendants note plaintiff's assertion that defendants fail to provide customers with a schedule of their NSF/OD fees at the time they open their accounts. Defendants argue that to the extent that this claim is made, plaintiff lacks standing, because she has admitted that she was apprised of both the possibility and the amount of defendants' NSF/OD fees. Second, to the extent that plaintiff challenges defendants' alleged failure to disclose their fees to other customers, defendants argue that plaintiff has failed to allege that any such nondisclosure deceived or injured her, such that plaintiff lacks standing to pursue this claim in a representative capacity. Finally, defendants argue that plaintiff's claims are in any event preempted by regulations promulgated by the Office of the Comptroller of the Currency ("OCC") pursuant to the National Bank Act ("NBA"), 12 U.S.C. § 1 et seq. Because the Court finds that plaintiff's claims are preempted by the NBA, as detailed below, the Court does not address defendants' other challenges to the FAC.

Whether a state law is preempted by federal law and regulations is determined by looking to the intent of Congress. Cal. Fed. Say. & Loan Ass'n v. Guerra, 479 U.S. 272, 280, 107 S.Ct. 683, 93 L.Ed.2d 613 (1987). Congress may preempt state law with federal law and regulations in three ways. Bank of America v. City & County of S.F., 309 F.3d 551, 558 (9th Cir.2002). First, Congress may preempt state law by so stating in express terms. Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 51 L.Ed.2d 604 (1977). There appears to be no authority to suggest that the NBA expressly preempts state law. Second, the court may infer that Congress intended to preempt state law where federal regulation in a particular field is "so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it." Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947). In cases where "field preemption" applies, "the `mere volume and complexity' of federal regulations demonstrate an implicit congressional intent to displace all state law." Bank of Am., 309 F.3d at 558 (quoting Geier v. Am. Honda Motor Co., 529 U.S. 861, 884, 120 S.Ct. 1913, 146 L.Ed.2d 914 (2000) (internal quotations and citation omitted)). Finally, the court may imply preemption "when state law actually conflicts with federal law," Fidelity Fed. Say. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982), such that "`compliance with both federal and state regulations is a physical impossibility,' Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963), or when state law `stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,' Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941)." Bank of Am., 309 F.3d at 558.

Banks are "instrumentalities of the federal government, created for a public purpose, and ... subject to the paramount authority of the United States." Marquette Nat'l Bank v. First of Omaha Serv. Corp., 439 U.S. 299, 308, 99 S.Ct. 540, 58 L.Ed.2d 534 (1978) (citation and internal quotations omitted). "The National Bank Act of 1864 was enacted to protect national banks against intrusive regulation by the States." Bank of America v. City & County of S.F., 309 F.3d 551, 561 (9th Cir.2002) (citing Cong. Globe, 38th. Cong., 1st Sess., 1451 (1864) (noting that the "object" of the National Bank Act was to "establish a national banking system" free from intrusive state regulation); Marquette Nat'l Bank, 439 U.S. at 314-15, 99 S.Ct. 540 ("Close examination of the National Bank Act of 1864, its legislative history, and its historical context makes clear that Congress intended to facilitate ... a national banking system.") (internal quotations and citations omitted)). In accordance with the Congressional purpose of protecting national banks against instrusive state regulation, the Supreme Court has interpreted "grants of both enumerated and incidental `powers' to national banks as grants of authority not normally limited by, but rather ordinarily preempting, contrary state law." Barnett Bank, 517 U.S. at 32, 116 S.Ct. 1103 (citations omitted). The NBA, 12 U.S.C. § 24 (Seventh), grants to national...

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