Video Trax, Inc. v. Nationsbank, N.A., No. 97-1586-CIV.

• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
• Writing for the Court: Gold
• Citation: 33 F.Supp.2d 1041
• Parties: VIDEO TRAX, INC., a Florida corporation on behalf of itself and all other persons and entities similarly situated, Plaintiff, v. NATIONSBANK, N.A., a national banking association, Defendant.
• Decision Date: 10 December 1998
• Docket Number: No. 97-1586-CIV.

33 F.Supp.2d 1041 VIDEO TRAX, INC., a Florida corporation on behalf of itself and all other persons and entities similarly situated, Plaintiff,
v.
NATIONSBANK, N.A., a national banking association, Defendant. No. 97-1586-CIV. United States District Court, S.D. Florida. December 10, 1998.

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COPYRIGHT MATERIAL OMITTED

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Scott Alan Silver, Miami, FL, for plaintiff.

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Bradford Swing, Miami, FL, for defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

GOLD, District Judge.

THIS CAUSE is before the Court upon cross motions for summary judgment by Plaintiff, Video Trax, Inc. ("Plaintiff"), and Defendant NationsBank, N.A. ("Defendant"). Plaintiff brought this class action pursuant to the National Bank Act, 12 U.S.C. §§ 85 and 86 (the "Bank Act"). Plaintiff alleges that the Overdraft Item Fee (the "OD fee") on checking accounts charged by Defendant, a national banking association, was actually a subterfuge to exact a usurious rate of interest in violation of the Bank Act. Defendant avers that the OD fee was an administrative cost to cover the processing of checks drawn in excess of the collected balance in a depositor's account, and was not interest as contemplated by the Bank Act and Florida's usury statute, §§ 687.01, et seq., Fla.Stat. Therefore, according to Defendant, since the OD fee is not "interest," it is not usurious.

The parties request the Court to determine, as a matter of law, whether the OD fee is really interest, based on an extension of credit to cover checks in excess of Plaintiff's uncollected balance in its business checking account. Jurisdiction of the Court is invoked pursuant to 28 U.S.C. § 1331, as arising under federal law. After careful consideration of the parties' arguments, the relevant case law and the record as a whole, and being otherwise advised in the premises, the Court concludes that the contested charges do not constitute interest, and thus, the transaction was not usurious.

I. Factual and Procedural Background

The parties concede that no disputed issues of fact exist to preclude judgment as a matter of law. The undisputed facts in the record reveal that Defendant is a nationally chartered banking institution, organized and existing under the laws of the United States.¹ At all relevant times, Defendant was authorized to transact, and was transacting, business in branch offices located in the State of Florida.

Plaintiff is a corporation organized under the laws of the State of Florida.² At all times relevant to this cause, Plaintiff was authorized to do business, and was conducting business, in Dade County, Florida.

On June 10, 1992, Plaintiff opened a Simple Analysis Business Checking account at NCNB National Bank of Florida, N.A., Defendant's predecessor. The obligations of the parties were governed by the signature cards, deposit agreements, and schedules of fees in effect from the inception of the account until the account was terminated on February 18, 1997.

As evidenced by the account agreement, Plaintiff agreed in writing to pay a flat fee when a check presented to Defendant for payment exceeded the collected balance in Plaintiff's account. In addition, Defendant

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charged interest on overdraft sums to the extent those sums exceeded collected balances in Plaintiff's account.³ The rate of interest charged was Defendant's prime rate plus 3%, and was subject to the maximum rate permissible by law.

Throughout the history of the parties' banking relationship, several checks were presented for payment against Plaintiff's account when the account contained insufficient funds to cover the checks. Pursuant to the deposit agreements and the bank's policies, which policies were incorporated into the deposit agreement between the parties, Defendant exercised its option to either honor or dishonor the checks. If a check was honored, an overdraft was permitted to exist in Plaintiff's account. If Defendant chose not to honor the check, it was returned unpaid. Plaintiff's account history reflects that, pursuant to this practice, out of a total of 212 checks presented when insufficient funds existed in Plaintiff's account, ninety-two checks were honored, while 120 checks were returned.

According to Defendant's schedule of fees, a flat, per item fee was charged against Plaintiff's account whether the check was honored or returned. From January 1, 1995 through June 31, 1995, checking account customers, including Plaintiff, were charged a flat fee of $25 for all overdrafts or checks returned for insufficient funds. That fee increased to $27 from July 1, 1995 through the duration of Plaintiff's relationship at Defendant's institution. There was no relation between the flat fee charged and the amount of the check, overdraft, or period of time the overdraft existed in the account. The interest charged against the account for overdrafts was calculated on the basis of the average daily overdrawn account balance.

Plaintiff alleges that the periodic charges for interest, when aggregated with the overdraft fees, constitute "interest" in excess of the lawful amount allowed under the Bank Act. According to Plaintiff, Defendant assessed "interest" in excess of $18,000 on an average annual overdraft balance of approximately $6,000, a total of over 300% in interest.

Upon Plaintiff's demand for the "excess interest," Defendant refused to refund any monies, on the basis that the "not sufficient fund fee" (the "NSF fee") and the OD fee were administrative charges, commonly utilized in the banking industry to cover processing charges and to deter depositors from overdrawing their accounts. Defendant contends that NSF and OD fees do not constitute "interest" within the meaning of the usury provisions of the Bank Act, and therefore, Plaintiff cannot avoid its contractual obligations by claiming protection under the usury laws.

II. Standard for Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure authorizes entry of summary judgment where the pleadings and supporting materials demonstrate there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A material fact is one that might affect the outcome of the suit under the governing law. Id. A plaintiff cannot defeat a defendant's properly supported motion for summary judgment without an affirmative presentation of specific facts showing a genuine issue, and may not merely rely on the general allegations of the pleadings. Id. A mere scintilla of evidence is insufficient to defeat a motion for summary judgment:

[I]n every case, before the evidence is left to the jury, there is a preliminary question for the judge, not whether there is literally no evidence, but whether there is any upon which a jury could properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed.

Id. at 251, 106 S.Ct. 2505. In reviewing a motion for summary judgment the court focuses on "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that

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one party must prevail as a matter of law." Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.1997) (quoting Anderson, supra).

In Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), the Supreme Court established a two-prong framework of shifting burdens which must be employed by federal courts in determining whether there exists a genuine issue precluding summary judgment. This framework places the initial burden on the moving party to establish the absence of a genuine issue as to any material fact. Tyson Foods, Inc., 121 F.3d at 646 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970)). The moving party may discharge this burden by "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. at 2554. In deciding whether the burden has been satisfied, the Court must view the evidence and all reasonable inferences arising from it in the light most favorable to the nonmoving party. Tyson Foods, Inc., 121 F.3d at 646 (citing Adickes, 398 U.S. at 157, 90 S.Ct. at 1608).

Once the movant has satisfied its burden, the burden shifts to the nonmoving party to present evidence sufficient to make a "showing that the jury could reasonably find for that party." Allen, 121 F.3d at 646 (citations omitted). Facts asserted by the party opposing a summary judgment must be regarded as true if supported by affidavit or other evidentiary material. Coke v. General Adjustment Bureau, Inc., 640 F.2d 584, 595 (5th Cir.1981). However, where the nonmoving party bears the burden of proof of an essential element to that party's case, summary judgment is warranted when the party fails to make a showing sufficient to establish the essential element. Celotex, 477 U.S. at 323, 106 S .Ct. at 2552. "In such a situation, there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. The Eleventh Circuit commented on the nonmovant's burden:

For issues on which the non-movant would bear the burden of proof at trial, the means of rebuttal available to the nonmovant vary depending on whether the movant put on evidence affirmatively negating the material fact or instead demonstrating an absence of evidence on the issue. Where the movant did the former, then the non-movant must respond with evidence sufficient to withstand a directed verdict motion at trial on the material fact sought to be negated. Where the movant did the latter, the non-movant must...