Boone v. MB Fin. Bank, N.A.

375 F.Supp.3d 987

Rhonda BOONE, on behalf of herself and all others similarly situated, Plaintiff,

v.MB FINANCIAL BANK, N.A., Defendants.

18-cv-1771

United States District Court, N.D. Illinois, Eastern Division.

Signed April 12, 2019

Jeffrey D. Kaliel, Kaliel PLLC, Washington, DC, Katrina Carroll, Kyle Alan Shamberg, Lite DePalma Greenberg LLC, Chicago, IL, Robert R. Ahdoot, Theodore Walter Maya, Pro Hac Vice, Ahdoot & Wolfson, PC, Los Angeles, CA, for Plaintiff.

Lucia Nale, Jed Wolf Glickstein, Thomas Vangel Panoff, Mayer Brown LLP, Chicago, IL, for Defendant.

MEMORANDUM OPINION

Charles P. Kocoras, United States District Judge

Before the Court is Defendant MB Financial Bank, N.A.'s ("MB Financial") Motion to Dismiss Plaintiff Rhonda Boone's ("Boone") Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court grants the motion.

FACTUAL BACKGROUND

The following facts are taken from Boone's complaint and are assumed to be true for purposes of this motion. Murphy v. Walker , 51 F.3d 714, 717 (7th Cir. 1995). The Court draws all reasonable inferences in Boone's favor. Tamayo v. Blagojevich , 526 F.3d 1074, 1081 (7th Cir. 2008).

MB Financial is a national bank with its United States headquarters and principal place of business in Chicago, Illinois. MB Financial's banking services include the issuance of debit cards associated with its customers' checking accounts. The debit cards allow MB Financial's customers to have electronic access to their checking accounts for purchases, payments, withdrawals, and other electronic debit transactions. Boone is an Illinois citizen who has an account and debit card with MB Financial.

A. MB Financial's Debit Card Transaction Procedure

Boone alleges that MB Financial maintains a running account balance in real time, tracking funds consumers have for immediate use. This running account balance is adjusted, in real-time, to account for debit card transactions at the precise instant they are made. When a customer makes a purchase with a debit card, MB Financial sequesters the funds needed to pay the transaction, subtracting the dollar amount of the transaction from the customer's account balance. The sequestered funds are not available for any other use by the customer. At a later point, which can be several days after the transaction, the sequestered funds are transferred from the customer's account to the merchant's account, a process known as settling.

B. The Underlying Action

Boone's alleges that from 2015 to 2017, MB Financial assessed her overdraft ("OD") fees in purported violation of its checking agreement and Illinois law. In asserting her claim, Boone relies on the "Overdraft Disclosure" and "Fee Schedule" (collectively, the "Checking Agreements"). The Overdraft Disclosure states:

An overdraft occurs when you do not have enough money available in your account to cover a transaction, but we pay it anyway.

Our standard overdraft practice comes with your account and allows us to use our discretion when paying items that will overdraw your account.

ATM or everyday debit card transactions that overdraw your account may be declined, unless you sign up for Guard My Card, a service that, at our discretion, pays these types of transactions (overdraft related fees apply). If your transaction is declined, no fee is charged.

* * *

The Fee Schedule states:

Insufficient Funds and Overdraft Related Fees Overdraft Fee (PD NSF/OD or Paid UCF/DR) $ 37 per time.

Returned Item Fee (Ret NSF/OD or Ret UCF/DR) $ 37 per item.

These fees are not charged unless your account is negative by more than $ 10 and will be deducted from the account the business day following the overdraft. A combined maximum of 5 overdraft and returned item fees are charged per day. The overdraft fee does not apply to ATM and everyday debit card transactions unless you have requested Guard My Card authorizing MB to pay these types of transactions.

To determine your available balance, subtract (1) deposits that are not yet available for withdrawal under our Funds Availability Policy, (2) debit card or other transactions that we are legally obligated to pay or have already paid out in cash, (3) other pending transactions such as ACH transactions, and (4) any holds on your balance, such as holds on funds to comply with court orders or other legal requirements.

Boone challenges three aspects of MB Financial's OD fees. Boone's first challenge is predicated on MB Financial's assessment of OD fees on certain debit-card related transactions. Specifically, she alleges that when a customer makes a purchase using a debit card, MB Financial tentatively approves the transaction and purportedly "sequesters" an amount of funds from the customer's account to cover the transaction while it remains pending. If the customer's account has a negative balance on the date of settling due to intervening charges that settle sooner than the challenged transaction, MB Financial charges an OD fee on the challenged transaction ("Authorize Positive, Purportedly Settle Negative," or "APPSN"). Boone alleges that because MB Financial "sequesters" funds in the checking account at the time of purchase for the debit card transactions, an assessment of an OD fee on an APPSN transaction violates MB Financial's contractual obligations.

Boone's second claim challenges MB Financial's assessment of the Continuous Daily Overdraft fee ("CDOF"). A CDOF "is charged beginning on the second consecutive calendar day the account is negative by more than $ 10." Boone claims this language prevents MB Financial from assessing CDOF "until two full calendar days after the day an account goes negative."

Boone's third claim challenges MB Financial's discretion over whether to pay an overdraft fee. Boone argues that MB Financial has abused its discretion by charging too many overdraft fees, in effect maximizing its profits.

On March 12, 2018, Boone filed her three-count putative class action complaint against MB Financial, alleging: (1) breach of contract stemming from her APPSN and CDOF claims; (2) breach of implied covenant of good faith and fair dealing; and (3) Illinois Consumer Fraud and Deceptive Business Practice Act. On July 13, 2018, MB Financial filed the instant motion under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. MB Financial seeks dismissal of all three counts.

LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)"tests the sufficiency of the complaint, not the merits of the case." McReynolds v. Merrill Lynch & Co. , 694 F.3d 873, 878 (7th Cir. 2012). The allegations in the complaint must set forth a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Plaintiffs need not provide detailed factual allegations, but must provide enough factual support to raise their right to relief above a speculative level. Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

A claim must be facially plausible, meaning that the pleadings must "allow...the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The claim must be described "in sufficient detail to give the defendant ‘fair notice of what the...claim is and the grounds upon which it rests.’ " E.E.O.C. v. Concentra Health Servs., Inc. , 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements," are insufficient to withstand a 12(b)(6) motion to dismiss. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

DISCUSSION

I. Illinois Law Applies

As an initial matter, the parties agree that Illinois law applies in this case and there is no reason for the Court to conclude otherwise. Therefore, the Court will apply Illinois law in the underlying dispute.

II. Breach of Contract Claims

In Count I, Boone alleges that MB Financial breached the Checking Agreements by improperly charging OD fees on APPSN transactions and CDOF on the day after an account incurs an overdraft fee. To adequately plead a breach of contract claim under Illinois law, Boone must establish: "(1) the existence of a valid and enforceable contract; (2) performance by the plaintiff; (3) breach of contract by the defendant; and (4) resulting injury to the plaintiff." Applied Indus. Materials Corp. v. Mallinckrodt, Inc. , 102 F.Supp.2d 934, 937 (N.D. Ill. 2000) (citing Gallagher Corp. v. Russ , 309 Ill. App. 3d 192, 242 Ill.Dec. 326, 721 N.E.2d 605 (1999) ).

A valid and enforceable contract requires definite and certain meanings of the essential terms. Midland Hotel Corp. v. Reuben H. Donnelley Corp. , 118 Ill.2d 306, 113 Ill.Dec. 252, 515 N.E.2d 61, 65 (Ill. 1987). A contract is definite and certain if the parties' intent is readily ascertainable from the agreement. Id. The contractual language itself determines the parties' intent, and the entire contract must be viewed as a whole. Gallagher v. Lenart , 226 Ill.2d 208, 232, 314 Ill.Dec. 133, 874 N.E.2d 43 (Ill. 2007). When a contract is clear and unambiguous, the words "must be given their plain, ordinary and popular meaning." Thompson v. Gordon , 241 Ill.2d 428, 349 Ill.Dec. 936, 948 N.E.2d 39 (2011). However, when "the words in a contract are reasonably susceptible to more than one meaning, they are ambiguous." Id. If a contract is ambiguous, its interpretation is a question of fact and survives a motion to dismiss. Quake Const., Inc. v. American Airlines, Inc. , 141 Ill.2d 281, 152 Ill.Dec. 308, 565 N.E.2d 990 (1990). However, if a contract unambiguously answers the issue raised by a party, the court gives effect to the written contract. Id.

Before diving into Boone's breach of contract claims, the Court notes that for purposes of this motion, Boone has sufficiently...