Walbridge ex rel. Situated v. Doe

• Decision Date: 07 March 2018
• Docket Number: Civil No. 17–cv–434–JD
• Citation: 299 F.Supp.3d 338
• Parties: Joseph WALBRIDGE, Individually and on Behalf of All Others Similarly Situated v. NORTHEAST CREDIT UNION and Does 1 through 100
• Court: U.S. District Court — District of New Hampshire

299 F.Supp.3d 338

Joseph WALBRIDGE, Individually and on Behalf of All Others Similarly Situated

v.NORTHEAST CREDIT UNION and Does 1 through 100

Civil No. 17–cv–434–JD

United States District Court, D. New Hampshire.

Signed March 7, 2018

Sean T. O'Connell, Christine M. Craig, Shaheen & Gordon PA, Dover, NH, Jae K. Kim, Pro Hac Vice, Richard D. McCune, Pro Hac Vice, McCune Wright Arevalo LLP, Ontario, CA, Taras Kick, Pro Hac Vice, Kick Law Firm APC, Los Angeles, CA, for Plaintiff.

Andrew J. Demko, Pro Hac Vice, Stuart M. Richter, Pro Hac Vice, Katten Muchin Rosenman LLP, Los Angeles, CA, Russell F. Hilliard, Brooke Lois Lovett Shilo, Upton & Hatfield LLP, Concord, NH, for Defendant.

ORDER

Joseph A. DiClerico, Jr., United States District Judge

Joseph Walbridge brings a putative class action to challenge the practices of Northeast Credit Union to charge overdraft fees when customers' accounts held funds to cover the transactions. He alleges claims for breach of contract, breach of the implied duty of good faith and fair dealing, unjust enrichment, money had and received, and violation of Regulation E, 12 C.F.R. § 1005.17, of the Electronic Fund Transfers Act ("EFTA"), 15 U.S.C. §§ 1693, et seq. Northeast moves to dismiss all claims.

Standard of Review

In considering a motion to dismiss, the court accepts all well-pleaded facts as true, disregarding legal conclusions, and resolves reasonable inferences in the plaintiff's favor. Galvin v. U.S. Bank, N.A., 852 F.3d 146, 155 (1st Cir. 2017). To avoid dismissal, the complaint must state sufficient facts to support a plausible claim for relief. In re Curran, 855 F.3d 19, 25 (1st Cir. 2017). The plausibility standard is satisfied if the factual allegations in the complaint, along with reasonable inferences, show more than a mere possibility of liability. Germanowski v. Harris, 854 F.3d 68, 71 (1st Cir. 2017).

Background

Walbridge had a checking account and a debit card with Northeast Credit Union that was originated by the Share Account Agreement ("Account Agreement"). Walbridge also completed the Opt In Form for overdraft transactions ("Opt In Agreement"). His claims in this case arise from overdraft fees charged by Northeast based on the "available balance" in his account rather than the balance shown on the account, called the "ledger balance" or "actual balance."

The difference between the available balance and the actual balance results from the way Northeast credits deposits made to an account and reduces the balance by debits that are pending but not yet paid. As a result, the available balance can be less, and even considerably less, than the actual balance, depending on the delay in crediting deposits and the anticipatory deductions of pending debits. Northeast then assesses an overdraft fee when the available balance is insufficient to cover a transaction, even though the actual balance shows enough money to cover the transaction.¹

Walbridge alleges that on March 15, 2016, he had an actual balance in his Northeast checking account of $111.09. He made a debit card payment of $32.43, which left a balance of $78.66. Northeast, however, determined that he had insufficient funds and charged an overdraft fee of $32.00. Northeast then assessed additional overdraft fees of $32.00 on March 29 and March 30, 2016. Walbridge believes that subsequent improper overdraft fees were charged but provides no allegations in support.

Walbridge alleges that Northeast breached the Account and Opt In Agreements and the implied duty of good faith and fair dealing by charging him overdraft fees when the actual balance showed there was money in his account to cover the transactions. He also brings equitable claims for unjust enrichment and money had and received. In addition, Walbridge alleges that Northeast violated Regulation E of EFTA by failing to disclose its overdraft policy.

Discussion

Northeast moves to dismiss Walbridge's breach of contract claims and EFTA claim on the grounds that it did not promise to use the actual balance for its overdraft service and instead properly explained its overdraft policy based on the available balance. Northeast moves to dismiss the EFTA claim on the merits and asserts that the claim is barred by the statute of limitations and the "safe harbor" provision. Northeast moves to dismiss the equitable claims because valid contracts control the issues raised. Walbridge objects to the motion to dismiss.

A. Breach of Contract

Walbridge contends that Northeast breached the Opt In Agreement by assessing overdraft fees when there was enough money in his account to cover the transaction. He contends that Northeast breached the Account Agreement because it promised to assess overdraft fees only when there were insufficient funds in the account to cover a transaction but instead assessed overdraft fees based on the available balance. Northeast asserts that no breach occurred.

Under New Hampshire law, "[a] breach of contract occurs when there is a failure without legal excuse to perform any promise which forms the whole or part of a contract." Audette v. Cummings, 165 N.H. 763, 767, 82 A.3d 1269 (2013) (internal quotation marks omitted). The meaning of a written contract is a question of law for the court. Holloway Auto. Gr. v. Giacalone, 169 N.H. 623, 628, 154 A.3d 1246 (2017). "When interpreting a written agreement, [the court gives] the language used by the parties its reasonable meaning, reading the document as a whole, and considering the circumstances and the context in which the agreement was negotiated." Id.

"The language of a contract is ambiguous if the parties to the contract could reasonably disagree as to the meaning of that language." Found. for Seacoast Health v. Hosp. Corp. of Am., 165 N.H. 168, 172, 71 A.3d 736 (2013) (internal quotation marks omitted). To determine whether an ambiguity exists, the "court should examine the contract as a whole, the circumstances surrounding execution and the object intended by the agreement, while keeping in mind the goal of giving effect to the intentions of the parties." Id. The process of applying that standard generally involves factual issues although in some cases an ambiguity may be resolved as a matter of law. Sunapee Difference, LLC v. State, 164 N.H. 778, 790, 66 A.3d 138 (2013).

1. Opt In Agreement

The Opt In Agreement is a one-page form through which a Northeast customer chooses to have certain overdrafts paid by Northeast and to incur a fee for that service.² The Agreement states: "An overdraft occurs when you do not have enough money in your account to cover a transaction, but we pay it anyway." The Agreement continues on to explain that there are two kinds of protection: standard practices for protection as part of the Northeast account and other overdraft protection plans that would link with another account. The Opt In Agreement pertains to the standard practices. The Agreement does not define or explain what is meant by the phrase: "when you do not have enough money in your account to cover a transaction."

Walbridge argues that the plain meaning of the promise in the Opt In Agreement is that an overdraft would occur only when there was not enough money in the account, as shown by the actual balance, to cover the transaction. Northeast argues that the Opt In Agreement is part of the Account Agreement and must be read in conjunction with that Agreement. Based on reading the Agreements together, Northeast contends that the plain meaning of "enough money" is the available balance.

Standing alone, the Opt In Agreement does not sufficiently define or explain the term "enough money" to put account holders on notice that "enough money" means the available balance. Cf. Chambers v. NASA Fed. Credit Union, 222 F.Supp.3d 1, 10 (D.D.C. 2016) (opt in agreement provided examples to show what "not enough money in your account" meant). The Opt In Agreement also does not specifically reference the Account Agreement.

On the other hand, there would be no need for overdraft protection, provided in the Opt In Agreement, in the absence of an account at Northeast that is established through an Account Agreement. The Account Agreement refers to the Opt In Agreement as the source for certain overdraft protections.³ Although the Agreements are separate, they are arguably linked with respect to an account holder's overdraft protection. See Smith, 2017 WL 3597522, at *5. For purposes of the current motion to dismiss, the court will consider the promise made in the Opt In Agreement in the context of the Account Agreement.

2. Account Agreement

The Account Agreement includes several sections pertaining to available funds and overdrafts. Section 3.7 explains that Northeast can refuse to allow a withdrawal "if the amount requested is not yet available for withdrawal." Doc. 8–4 at 3. Section 3.10, titled "Nonsufficient Funds," states: "If you write a check for more money than you have in your account, you will be deemed to be overdrawn and [Northeast] may refuse to honor the check and return it as unpaid for reason of nonsufficient funds (NSF)." Id. at 4. Neither section defines "available for withdrawal" or "more money than you have in your account."

More specific to overdrafts, section 3.35, titled "Paying of Overdrafts," states that "at its sole discretion, [Northeast] may honor items presented for payment or authorization against your account even if there are insufficient funds in your account."Id. at 6. The provision explains what items may and may not be honored and that a fee will be charged when payments are made. The remainder of the provision provides the process of notification, consequences for failure to correct a "negative balance," and the procedures for collecting amounts owed. The term "insufficient funds" is not defined.

Appended to the Account Agreement is another document titled "Northeast Credit Union Combined Disclosure Agreement." One of the six parts of the Disclosure Agreement is titled "Truth-in-Savings Disclosure...