WINECOFF v. Compass Bank

• Decision Date: 10 October 2003
• Citation: 876 So.2d 1145
• Parties: Richard WINECOFF and Sandy Winecoff v. COMPASS BANK.
• Court: Alabama Court of Civil Appeals

876 So.2d 1145

Richard WINECOFF and Sandy Winecoff v. COMPASS BANK.

2020636.

Court of Civil Appeals of Alabama.

October 10, 2003.

J. Wilson Mitchell of Mitchell, Bernauer & Winborn, Florence, for appellants.

J. Michael Tanner of Ashe, Tanner & Wright, P.C., Tuscumbia, for appellee.

THOMPSON, Judge.

This is the second appeal involving this matter. In considering the first appeal, this court set forth the procedural history and facts of the case as follows:

"Richard Winecoff and Sandy Winecoff sued Compass Bank. Compass Bank answered and counterclaimed. Compass Bank moved for a summary judgment on the Winecoffs' claims against it. The Winecoffs opposed that motion. On June 20, 2002, the trial court entered a summary judgment on the Winecoffs' claims. In its June 20, 2002, order, the trial court noted that Compass Bank's counterclaim against the Winecoffs was still pending, and it purported to certify, pursuant to Rule 54(b), Ala. R. Civ. P., the order as final. The Winecoffs appealed.

"The record indicates that the Winecoffs had a joint checking account at Compass Bank. On May 1, 2001, Sandy Winecoff redeemed two United States Savings Bonds at Compass Bank. Compass Bank later determined that it had paid Sandy Winecoff $2,425.60 in excess of the amount actually due on those savings bonds. Therefore, Compass Bank `set off,' or deducted, $1,272.59 from the Winecoffs' joint checking account as a partial repayment of the amount it had allegedly overpaid. Compass Bank contended that the terms of the account agreement between it and the Winecoffs allowed it to effect that setoff. The Winecoffs argued that the setoff was not authorized by the account agreement or by applicable caselaw. The Winecoffs claimed that the allegedly improper setoff caused checks written on their joint checking account, which they believed had funds sufficient to cover those checks, to be returned to Compass Bank for insufficient funds.

"In their complaint against Compass Bank, the Winecoffs alleged conversion, breach of contract, breach of fiduciary duty, defamation, suppression, negligence and wantonness, wrongful seizure of funds, and the tort of outrage. The Winecoffs' claims were based on their allegation that they had been injured by Compass Bank's allegedly improper setoff of the $1,272.59 from their joint checking account. In its counterclaim, Compass Bank sought to recover the remaining $1,153.01 it claimed it had overpaid Sandy Winecoff when she redeemed the savings bonds.

"In its motion for a summary judgment on the Winecoffs' claims, Compass Bank argued only that it had the authority, under both its agreement with the Winecoffs and applicable caselaw, to set off the Winecoffs' joint account for the amount it claimed it had overpaid with regard to the savings bonds. The Winecoffs opposed that motion, arguing a lack of mutuality in their joint-checking-account agreement with Compass Bank."

Winecoff v. Compass Bank, 854 So.2d 611, 612-13 (Ala.Civ.App.2003) ("Winecoff I").

In Winecoff I, this court held that the trial court's certification of its June 20, 2002, summary-judgment order as final pursuant to Rule 54(b), Ala. R. Civ. P., was not effective. This court based its holding on its conclusion that the Winecoffs' claims and Compass Bank's counterclaim were so intertwined as to make a Rule 54(b) certification inappropriate because of the risk of inconsistent results. Winecoff I, 854 So.2d at 614 (citing Branch v. SouthTrust Bank of Dothan, N.A., 514 So.2d 1373 (Ala.1987), and Clarke-Mobile Counties Gas Dist. v. Prior Energy Corp., 834 So.2d 88 (Ala.2002)). Therefore, this court dismissed the appeal as taken from a nonfinal judgment. Winecoff I, 854 So.2d at 614.

On January 17, 2003, after this court's dismissal of the appeal in Winecoff I, Compass Bank moved the trial court for a summary judgment on its counterclaim against the Winecoffs. The Winecoffs did not oppose the January 17, 2003, motion for a summary judgment. On March 11, 2003, the trial court entered a summary judgment in favor of Compass Bank on its counterclaim against the Winecoffs. In the March 11, 2003, judgment, the trial court also noted that because it had previously entered a partial summary judgment in favor of Compass Bank on the Winecoffs' claims, the judgment disposed of all pending claims between the parties, and, therefore, it constituted a final judgment. The Winecoffs appeal, arguing only that the trial court erred in entering a summary judgment in favor of Compass Bank on their claims against Compass Bank; the Winecoffs make no argument pertaining to the summary judgment entered in favor of Compass Bank on its counterclaim against them.

A motion for a summary judgment is properly granted where no genuine issue of material fact exists and the moving party is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. In reviewing a summary judgment, this court applies the same standard as the trial court. All evidence must be viewed in a light most favorable to the nonmoving party, and all reasonable doubts concerning the existence of a genuine issue of material fact must be resolved in favor of the nonmovant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990). After the moving party makes its prima facie showing, the burden shifts to the nonmoving party to demonstrate the existence of a genuine issue of material fact. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794 (Ala.1989). The nonmoving party is required to present "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).

In considering the current appeal, this court, ex mero motu, incorporated the record from the appeal in Winecoff I. In addition to the facts and history discussed above, the record also indicates the following relevant facts. The Winecoffs opened a "multiple-party account with right of survivorship" at Compass Bank. Both of the Winecoffs signed the account agreement, which, among other things, indicated their acknowledgment that they had received a copy of the "Disclosure for Deposit Accounts" ("the disclosure document"). Among other things, the disclosure document contains a provision stating:

"10. Set off

"You acknowledge that, except as otherwise prohibited by law, we have the right to set off against your account any indebtedness or other obligations which you owe us, at any time, without any further notice to or demand on you, whether the indebtedness or other obligations are now existing or hereafter arise. The indebtedness includes, without limitation, all charges and overdrafts incurred on any account you hold with us. You agree that we may set off against the account any claim which we have against you without regard to the source or ownership of the funds on deposit in the account and without [the] requirement that the claim be owed to us by all of the account owners rather than only some of them."

(Emphasis added.)

The Winecoffs have not contended that Compass Bank was not due a setoff because it paid Sandy Winecoff the correct amount for the savings bonds. Additionally, the Winecoffs have not challenged the trial court's determination that Compass Bank was entitled to recover on its claim seeking payment for that part of the amount it overpaid Sandy Winecoff that was not offset against the Winecoffs' bank account. The Winecoffs have also not disputed the amount of damages awarded by the trial court, which equaled the amount of the overpayment that was not recovered from the Winecoffs' bank account.

We interpret the Winecoffs' arguments on appeal to be that the setoff provision was unconscionable¹ and that Compass Bank could not validly deduct the overpayment from their account because of an alleged lack of mutuality of obligation between the parties.

As to the argument that the setoff provision contained in the disclosure document was unconscionable, we note that our supreme court has affirmed a summary judgment in favor of a bank on a plaintiff's claim that the bank's assessment of a $15 service charge on checks returned for insufficient funds was unconscionable. Sanders v. Colonial Bank of Alabama, 551 So.2d 1045 (Ala.1989). In so holding, our supreme court cited with approval a number of cases holding that the doctrine of unconscionability is available only as a defense and not as a method of obtaining affirmative relief. See Sanders, 551 So.2d at 1045-46

.

Sanders and the cases cited therein, however, "concerned the application of the Uniform Commercial Code unconscionability provision, adopted in Alabama as Ala.Code 1975, § 7-2-302." Williams v. E.F. Hutton Mortgage Corp., 555 So.2d 158, 161 (Ala.1989). This case involves a consumer-finance transaction that falls under Title 5 of the Alabama Code, which governs banks and financial institutions. Section 5-19-16, Ala.Code 1975, a part of the article in Title 5 that governs consumer-finance transactions, applies to the facts of this case. As our supreme court has stated, § 5-19-16 provides a statutory defense of unconscionability in certain contract actions. AmSouth Bank v. Dees, 847 So.2d 923 (Ala.2002).

In Williams v. E.F. Hutton Mortgage Corp., supra, our supreme court cited Sanders with approval in holding that the doctrine of unconscionability did not provide affirmative relief under the language of § 5-19-16. In so holding, the court stated:

"The operative language in [§ 7-2-302, which the holding in Sanders v. Colonial Bank of Alabama, 551 So.2d 1045 (Ala.1989), addressed] is almost identical to the operative language in § 5-19-16. Both of those sections allow the court to refuse to enforce an agreement, to enforce the agreement without the unconscionable provision, or to modify the provision to avoid an unconscionable result. Each of those remedies obviously contemplates

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