Feyen v. Spokane Teachers Credit Union

515 P.3d 996

Karissa FEYEN, on behalf of herself and all others similarly situated, Appellant,

v.SPOKANE TEACHERS CREDIT UNION, Respondent

No. 38346-6-III

Court of Appeals of Washington, Division 3.

Filed August 18, 2022

Roger Scott Davidheiser, Friedman Rubin, 1109 1st Ave., Ste. 501, Seattle, WA, 98101-2988, Howard Mark Goodfriend, Jonathan Collins, Smith Goodfriend PS, 1619 8th Ave., N, Seattle, WA, 98109-3007, Jeffrey Kaliel, Kaliel Gold, PLLC, 1100 15th St. Nw 4th Floor, Washington, DC, 20005, Taras Kick, The Kick Law Firm, APC, 815 Moraga Drive, Los Angeles, CA, 90049, for Appellant.

Kimberley Hanks McGair, Farleigh Wada Witt, 121 Sw Morrison St. Ste. 600, Portland, OR, 97204-3136, Sean Darke, James Branit, Litchfield Cavo LLP, 303 West Madison St. Suite 300, Chicago, IL, 60606, for Respondent.

PUBLISHED OPINION

Fearing, J.

¶1 Karissa Feyen appeals the dismissal of her complaint for failing to plead a cause of action. Her complaint alleges that her credit union, Spokane Teachers Credit Union (STCU or the credit union), engaged in an unfair or deceptive act or practice when imposing overdraft user fees on use of her debit card. Because misleading and ambiguous language in STCU's documents could sustain Feyen's causes of action, we reverse dismissal of Feyen's complaint. The language renders even the best of lawyers dizzy when reading.

FACTS

¶2 Because the trial court dismissed this action pursuant to CR 12(b)(6), we glean the facts from Karissa Feyen's amended complaint. STCU is one of the largest credit unions in Washington State, with branches throughout the state and with assets exceeding $3 billion. Feyen, a member of STCU, complains that the credit union imposed overdraft fees on her despite her not overdrawing her account. She further finds fault with confusing and unfair language in the credit union's membership account documents. Feyen focuses on overdraft fees imposed as a result of debit card transactions.

¶3 STCU foists on each member at least three distinct documents that control the relationship between the member and the credit union: a membership and account agreement (membership agreement), a privilege pay agreement, and an overdraft disclosure. STCU does not explain why it needs three separate documents to govern its compact with members. Karissa Feyen attaches all three agreements to the amended complaint. STCU drafted the documents and retains the right to change the language in the documents whenever convenient for it. We quote relevant provisions from all three governing documents. When quoting the pertinent language, we also parse the prose in an attempt to understand it.

¶4 Section 12(a) of the membership agreement, which section is entitled "Your Overdraft Liability," explains that STCU's payment on a transaction, which payment causes a negative available balance in a credit union member's account, causes an overdraft. The section also explains when the credit union deems the member to hold a negative available balance:

If on any day the available funds in your checking account are not sufficient to cover checks and other items posted to your account, those checks and items will be handled in accordance with our overdraft procedures and the terms of this Agreement. The Credit Union's determination of an insufficient balance is made at the time the check or item is presented to us [the credit union ], which may be later than the time you conduct your transaction. The Credit Union processes checks and items as follows: (i) checks are paid based upon the number of the check with the lowest numbered check paid first, (ii) for ACH [Automated Clearing House] items, credits are processed first and ACH debits processed second with the lowest items paid first, and (iii) debit card transactions are paid in the chronological order they are received . The Credit Union has no duty to notify you of a check or item that will overdraw your account. If we pay an item that overdraws your account, you are liable for and agree to pay the overdraft amount and any fees immediately. You will be subject to a charge for the item whether paid or returned as set forth in the Rate and Fee Schedule. We reserve the right to pursue collection of previously dishonored items at any time, including giving a payer bank extra time beyond any midnight deadline limits.

Clerk's Papers (CP) at 44-45 (emphases added). The second sentence of this section references determination of the account balance when an "item is presented to us." We assume an "item" includes a debit card transaction, although the membership agreement does not define the word. The third sentence reads that the credit union pays debit card transactions "in the chronological order they are received." The section does not inform the member whether the act and timing of an item being presented is the same as the act and timing of the credit union first receiving notice of the debit card transaction. The sentence states that the "time the ... item is presented to us" "may be later" than the transaction. Since this time may be later, conceivably the time "may" also be the time of the transaction.

¶5 The overdraft disclosure defines "available balance":

Your available balance is the money in your account after deducting all outstanding debits , ATM [automated teller machine] withdrawals, and other pending electronic charges. It does not include outstanding checks, online bill payments, or pre-authorized debits such as health club dues or auto insurance premiums.

Available balance is a gauge of how much money is in your account at any moment in time. It can fluctuate throughout the day as debit card purchases, direct deposits, transfers, and so on are posted to your account.

CP at 38 (emphases added). Note that Section 12(a) of the membership agreement, quoted on the previous page, utilizes the term "available funds." The overdraft disclosure employs the phrase "available balance." The documents do not divulge whether STCU intended the two expressions to be synonymous. A transactional attorney learns at a fresh age to employ the same word or phrase throughout all governing documents when conveying the same concept, and the attorney shreds his or her thesaurus in order to thwart confusion in the reader.

¶6 We assume that a debit charge falls within the classification of "outstanding debits," "pending electronic charges," or both as written in the overdraft disclosure. Later in this second governing document, the disclosure declares that "an overdraft can occur at any hour that your ‘available balance’ drops below zero." CP at 37.

¶7 The overdraft disclosure elucidates that a credit union member may experience an overdraft, despite having a positive balance:

Yes, it's possible to overdraft even when your account seems to have enough to cover the charge. That's because merchants—not STCU—control the timing of when debits are settled , so it is possible to overdraft by mistake when a merchant waits to settle your debit transaction.

For example, if you bought $200 in groceries Saturday with your debit card, but the supermarket did not collect the money from your account until Tuesday, your available balance would appear to be $200 higher than the money you actually have to spend. During that time, you could overspend and experience an overdraft.

CP at 38 (emphasis added). The phrase "debits are settled" returns us to language in section 12(a) of the membership agreement. The second sentence of section 12(a) mentions the determination of the account balance when an "item is presented to us." CP at 44. The third sentence of section 12(a) reads that the credit union pays debit card transactions "in the chronological order they are received." CP at 45. We do not know whether "the timing of when debits are settled" is synonymous with "the time the ... item is presented to us," "in the chronological order they are received," or both. CP at 45.

¶8 According to STCU's third document, the privilege pay agreement, the credit union authorizes and pays overdrafts at its discretion. If STCU does "not authorize and pay an overdraft, [the] transaction will be declined." CP at 40. If the credit union authorizes and pays an overdraft, it charges the credit union member an overdraft fee of $29.

¶9 According to the amended complaint of Karissa Feyen, debit card transactions occur in two steps. The first step transpires when a credit union member swipes his or her debit card when making a purchase. Following a swipe, the merchant's card reader transmits a request for preauthorization from STCU. Step one is completed if STCU preauthorizes the transaction. The credit union then immediately reduces the member's checking account for the amount of the purchase. Stated differently, STCU sets aside funds in the member's account to cover that transaction. The member's displayed "available balance" reflects the subtracted amount. Nevertheless, despite this sequester at the time of sufficient funds, the member may need to pay an overdraft fee on that purchase. Feyen labels this practice as "Authorize Positive, Purportedly Settle Negative Transactions." CP at 24. Despite STCU withholding a specific sum from the account to pay for a debit transaction and the account having sufficient funds, the member can be charged an overdraft fee.

¶10 When STCU sequesters the funds from the member's account, the credit union does not immediately wire the funds to the merchant. During the second and later step, STCU actually transfers the authorized funds to the merchant. This latter step, referred to as settlement, may occur up to three days after STCU preauthorized the transaction. Other transactions may take place between steps one and two, further reducing a credit union member's available account balance. But STCU still charges an overdraft fee on the initial transaction, for which it segregated funds, even if, at the time of the transaction, sufficient funds lay in the account. Karissa Feyen asserts that the account...