White v. Wachovia Bank, N.A.

• Decision Date: 02 July 2008
• Docket Number: Civil Action No. 1:08-CV-1007-BBM.
• Parties: Casey WHITE and Emily White, individually and on behalf of others similarly situated, Plaintiffs, v. WACHOVIA BANK, N.A., Defendant.
• Court: U.S. District Court — Northern District of Georgia

563 F.Supp.2d 1358

Casey WHITE and Emily White, individually and on behalf of others similarly situated, Plaintiffs, v. WACHOVIA BANK, N.A., Defendant.

Civil Action No. 1:08-CV-1007-BBM.

United States District Court, N.D. Georgia, Atlanta Division.

July 2, 2008.

COPYRIGHT MATERIAL OMITTED

Edward Adam Webb, G. Franklin Lemond, Jr., The Webb Law Group, LLC, Atlanta, GA, for Plaintiffs.

Lynette Eaddy Smith, Stephen William Riddell, Troutman Sanders, Atlanta, GA, for Defendant.

ORDER

BEVERLY B. MARTIN, District Judge.

This putative class action alleging deceptive business practices is before the court on the Motion to Dismiss [Doc. Nd. 4], filed by Defendant Wachovia Bank, N.A. ("Wachovia").

I. Background

On a motion to dismiss, the court accepts as true all factual allegations set out in the Plaintiffs' Complaint. See Lotierzo v. Woman's World Med. Ctr., Inc., 278 F.3d 1180, 1182 (11th Cir.2002). The court may also consider facts from certain undisputed documents integral to the Plaintiffs' Complaint and attached to the Motion to Dismiss.¹ Fin. Sec. Assurance, Inc. v. Stephens, Inc., 500 F.3d 1276, 1284 (11th Cir. 2007). Except as otherwise noted, the following facts are taken from Plaintiffs' February 8, 2008 Class Action Complaint (the "Complaint"). Therefore, the following account does not constitute findings of fact by the court.

Plaintiffs Casey White and Emily White opened a joint checking account with Wachovia on April 5, 2007 after having maintained at least one other checking account with Wachovia for several years.² They executed a standard Deposit Agreement that reads, in part:

We [Wachovia] may pay checks or other items drawn upon your account ... in any order determined by us, even if (1) paying a particular check or item results in an insufficient balance in your account to pay one or more other checks or other items that otherwise could have been paid out of your account; or (2) using a particular order results in the payment of fewer checks or other items or the imposition of additional fees. Although we generally pay larger items first, we are not obligated to do so and, without prior notice to you, we may change the order in which we generally pay items.

(Deposit Agreement, Ex. A to Mot. to Dismiss ¶ I.D.12.) It further states that Wachovia may choose not to honor a transaction that would overdraw the account, or "[alternatively, ... may honor the [transaction] and create an overdraft and impose a service charge for paying the overdraft." (Id ¶ I.D.13.)

Plaintiffs generally claim that Wachovia delays, reorders, or otherwise manipulates posting transactions to an account and imposes overdraft fees even where the account contains sufficient funds to pay a draft. According to Plaintiffs, Wachovia "routinely enforces a policy whereby charges incurred are posted to consumers' accounts in order of largest to smallest amounts, even where larger charges are received days after smaller charges." (Compl.¶ 9.) Plaintiffs contend that as a result, overdraft fees are imposed even where there are sufficient funds in the account to cover the transaction. As an example, Plaintiffs describe the six charges posted to their account between November 2, 2007 and November 8, 2007. On November 2, 2007, when Plaintiffs' account had a balance of $52.54, three check card transactions totaling $16.06 were posted from transactions that took place on October 31, 2007 and November 1, 2007.³ This left a positive balance of $36.48. Despite the positive balance, Wachovia levied three Overdraft/Unavailable Funds Fees ("Overdraft Fees") totaling $105.00 on November 2, 2007, which resulted in a balance of -$68.52.⁴ On November 5, 2007, Wachovia posted two charges from transactions that took place on November 2, 2007 that totaled $36.72⁵ and two additional Overdraft Fees totaling $70.00. After these items were posted, Plaintiffs' account had a balance of -$175.24⁶ On November 8, 2007, Wachovia posted a charge of $21.36 from a transaction that took place on November 1, 2007, and a corresponding Overdraft Fee of $35.00. As a result, Plaintiffs' account balance on November 8, 2007 was -$231.60. On November 19, 2007, Wachovia transferred $231.60 from another of Plaintiffs' accounts to satisfy this amount.⁷ Plaintiffs point out that the two largest transactions during this period were in the amounts of $21.36 and $27.00, which equals $48.36, less than Plaintiffs' account balance of $52.54. Even if Wachovia posted the transactions from largest to smallest over this period, no overdraft would have resulted until the third largest transaction was posted. Nonetheless, each transaction resulted in a separate Overdraft Fee.

Plaintiffs originally filed this lawsuit as a class action in the Superior Court of Fulton County on February 8, 2008. Wachovia removed it to this court on March 14, 2008 under the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2) and 28 U.S.C. § 1453(b). In their Complaint, Plaintiffs allege that Wachovia has engaged in unfair or deceptive business practices with the potential to harm the consumer public in violation of the Georgia Fair Business Practices Act, O.C.G.A. §§ 10-1-390 et seq. (the "FBPA"). They seek individual relief for FBPA violations, in the form of an injunction and treble damages. Plaintiffs also raise several claims on behalf of themselves and those similarly situated. First, they allege, that Wachovia has breached its contract with its accountholders by failing to perform its contractual duties in good faith in violation of the common law and O.C.G.A. § 13-4-20.⁸ Second, they contend that paragraph I.D.13 of the Deposit Agreement is unconscionable under O.C.G.A. § 11-2-302. Third, Plaintiffs assert a claim of trover and conversion. Fourth and finally, Plaintiffs assert a claim for unjust enrichment and money had and received. Wachovia moved to dismiss all claims on March 20, 2008.

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a court may grant a motion to dismiss when a complaint fails to state a claim upon which relief can be granted. To withstand a motion to dismiss, a complaint need not contain "detailed factual allegations," but must "`give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (quoting Donley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Here, the court must determine whether Plaintiffs "ha[ve] alleged enough facts to suggest, raise a reasonable expectation of, and render plausible" their claims. Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1296 (11th Cir. 2007). The court construes the Complaint in Plaintiffs' favor, and accepts the facts they allege as true. M.T.V. v. DeKalb County Sch. Dist, 446 F.3d 1153, 1156 (11th Cir.2006). However, "a formulaic recitation of the elements of a cause of action will not do." Twombly, 127 S.Ct. at 1965. Thus, a wholly conclusory statement of a claim cannot, without more, survive a motion to dismiss. See Weissman v. Nat'l Ass'n of Sec. Dealers, Inc., 500 F.3d 1293, 1303 (11th Cir.2007) (citing Twombly, 127 S.Ct at 1968).

III. Analysis

A. Breach of Contract Claim

Wachovia first moves to dismiss Plaintiffs' breach of contract claim, based on the implied covenant of good faith. According to the Georgia Supreme Court, "[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement." Brack v. Brownlee, 246 Ga. 818, 820, 273 S.E.2d 390, 392 (1980). A Georgia statute provides that "to be effectual," performance of a contract "must be substantially in compliance with the spirit and the letter of the contract and completed within a reasonable time." O.C.G.A. § 13-4-20. Wachovia argues, however, that "[t]here can be no breach of an implied covenant of good faith where a party to a contract has done what the provisions of the contract expressly give him the right to do." Automatic Sprinkler Corp. of Am. v. Anderson, 243 Ga. 867, 868, 257 S.E.2d 283, 284 (1979); Marathon U.S. Realties, Inc. v. Kalb, 244 Ga. 390, 392, 260 S.E.2d 85, 87 (1979) (citation and internal quotations omitted). Wachovia contends that Paragraphs I.D.12 and I.D.13 of the Deposit Agreement explicitly allow Wachovia to: (1) pay items drawn on an account in any order; and (2) honor transactions on an overdrawn account and impose a fee on the accountholder.

Plaintiffs counter that Wachovia has not exercised its implied duty of good faith in performing those contractual obligations. "[W]here the manner of performance is left more or less to the discretion of one of the parties to the contract, he is bound to the exercise of good faith." Hunting Aircraft, Inc. v. Peachtfee City Airport Autk, 281 Ga.App. 450, 452, 636 S.E.2d 139, 141 (2006) (citation/internal quotations, and emphasis omitted); Camp v. Peetluk, 262 Ga.App. 345, 350, 585 S.E.2d 704, 708 (2003) (citation and internal quotations omitted). They contend that Wachovia has failed to exercise good faith when exercising its discretion to determine the order in which transactions are paid, and as such has breached the contract provisions de facto even if it maintained performance de jure. See Stuart Enters. Intl, Inc. v. Peykan, Inc., 252 Ga.App. 231, 233-34, 555 S.E.2d 881, 884 (2001) ("The `covenant' to perform in good faith ... is a doctrine that modifies the meaning of all explicit terms in a contract, preventing a breach of those explicit terms de facto when performance is maintained de jure.") (citation and internal quotations omitted). Plaintiffs also contend that imposing Overdraft Fees when an account contains sufficient funds contravenes the Deposit Agreement as modified by the implied duty of good faith.

Plaintiffs' allegations state a plausible claim for breach of the implied covenant of good faith in connection with Paragraphs I.D.12 and I.D.13 of the Deposit Agreement.⁹ Although...