Lewis v. Pendleton Cmty. Bank

1

PENNY LEWIS, on behalf of Herself and all other Similarly situated, Plaintiff, v. PENDLETON COMMUNITY BANK, Defendants.

Civil Action No. 2:22-CV-12 (KLEEH)

United States District Court, N.D. West Virginia

March 1, 2024

MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS [ECF NO. 12]

THOMAS S. KLEEH, CHIEF JUDGE.

Pending before the Court is Defendant Pendleton Community Bank Inc.'s Motion to Dismiss [ECF No. 12]. For the reasons discussed herein, Pendleton Community Bank Inc.'s motion to dismiss is DENIED.

I. BACKGROUND

Plaintiff Penny Lewis (“Plaintiff” or “Ms. Lewis”) maintained a checking account with Pendleton Community Bank (“Defendant” or “PCB”). Compl. at ¶ 5, ECF No. 1. Plaintiff's use of her checking account was governed by a standardized form contract for deposit accounts (“Contract”). Id. at ¶¶ 15-16.^[1] The Contract was drafted by PCB and governs the use of all deposit accounts. Id. at ¶ 16.

Ms. Lewis alleges the Defendant breached the Contract in two ways: (1) charging overdraft fees on “Authorize Positive, Settle Negative Transactions” (“ASPN Transactions”)^[2] [Id. at ¶ 17] and (2) charging multiple insufficient funds fees (“NSF”), or an NSF fee followed by an overdraft fee, on the same item [Id. at ¶ 70]. The Contract does not define “item” in a way to permit multiple fees. See Id. at ¶¶ 80-87. Furthermore, Plaintiff contends that the fees were intentionally charged as part of PCB's standard practices, even though they were not permitted by the Contract. Id. at ¶ 105.

Regarding Plaintiff's first claim, the Contract provides that “[i]f a check, item or transaction (other than an ATM or everyday debit card transaction) is presented without sufficient funds in your account to pay it, we may, at our discretion, pay the item (creating an overdraft) or return the item for insufficient funds (NSF).” Id. at ¶ 35; Ex. A at 25. According to Plaintiff, this language means that transactions are only “overdraft transactions when there is not enough money to cover the transaction at the time the customer swipes his or her debit card to pay for an item.” Id. at ¶ 38. However, Plaintiff contends that PCB breaches this incorporated into the complaint by reference and those attached to the complaint as exhibits” without converting it to a motion for summary judgment. Goldfarb v. Mayor & City Council of Baltimore, 791 F.3d 500, 508 (4th Cir. 2015). promise by charging overdraft fees on debit card transactions when there were sufficient funds set aside at the time of authorization to cover the transaction. Id. at ¶¶ 39-41. The Contract does not permit PCB to charge overdraft fees on ASPN Transactions, and as a result, PCB's practices caused Plaintiff to incur more fees than permitted under the Contract. Id. at 40-42. Specifically, Plaintiff alleges she was assessed $35 overdraft fees on or around January 19, 2018, October 12, 2018, March 19, 2020, June 10, 2021, July 26, 2021, and February 22, 2022, on debit card transactions which had been previously authorized on sufficient funds. Id. at ¶ 68.

Second, Plaintiff claims that PCB assesses two or more fees on the same item returned for insufficient funds, which is a “deceptive and contractually-prohibited practice.” Id. at ¶ 70. Plaintiff contends that the Contract allows PCB to pay the item and charge a $35 fee or reject the item and charge a $35 fee. Id. at ¶ 78. Instead, PCB is alleged to breach the Contract's promise of one $35 fee per item by assessing multiple fees per item, up to $105. Id. at ¶¶ 80-82. For example, Plaintiff claims that on August 20, 2018, Plaintiff attempted a single payment, which was rejected for insufficient funds and thus she was charged a $35 fee. Id. at ¶¶ 95-96. However, without Plaintiff's permission, Defendant reprocessed the same item on August 24, 2018; this time paying the item into overdraft and charging Plaintiff a second $35 fee. Id. at ¶ 97. Thus, PCB charged Plaintiff $70 in fees on the same item. Id. at ¶ 98. Similar multiple charges were also assessed on February 7, 2019, February 12, 2019, February 13, 2019, and February 15, 2019. Id. at ¶ 102. Plaintiff understood the fees related to the same items because the re-presentment of the original item was labeled as “RETRY PYMT” on the bank statements. Id. at ¶ 104.

In contrast, PCB contends that the contractual documents “explicitly state that such fees are charged based upon the account balance at the time that checks and other items are presented for payment and that an item may be presented multiple times, resulting in multiple fees for the same item.” ECF No. 32, Motion to Dismiss at 1. Defendant specifically relies upon its “Bounce Protection” disclosure brochure to support that its practices are permitted and that the Contract is clear and unambiguous. See ECF No. 32-1, Memorandum in Support of Motion to Dismiss. The Bounce Protection Brochure went into effect in December 2019. ECF No. 17, Plaintiff's Response in Opposition. PCB also contends that the Plaintiff's claims are untimely because she did not inform PCB of any errors on her account within 60 days of receiving a statement, as required under the Contract.^[3] ECF No. 13, at pp. 18-19.

II. PROCEDURAL HISTORY

On August 5, 2022, Plaintiff Penny Lewis, on behalf of herself and all persons similarly situated filed a class action complaint alleging two counts of Breach of Contract and one count for Unjust Enrichment relating to PCB's overdraft fee practices. On October 10, 2022, PCB moved to dismiss Plaintiff's Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. ECF No. 12. On December 2, 2022, PCB filed its response in opposition to Plaintiff's motion. ECF No. 17. Subsequently, PCB replied in support of its motion to dismiss. ECF No. 19. The motion to dismiss is thus fully briefed and ripe for review.

III. STANDARD OF REVIEW

Rule 12(b)(6) allows a defendant to move for dismissal upon the ground that a complaint does not “state a claim upon which relief can be granted.” In ruling on a 12(b)(6) motion to dismiss, a court “must accept as true all of the factual allegations contained in the complaint.” Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007) (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007)). A court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986).

A court should dismiss a complaint if it does not contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plausibility exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A motion to dismiss “does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. MA.R.T.in, 980 F.2d 942, 952 (4th Cir. 1992). Dismissal is appropriate only if “it appears to be a certainty that the plaintiff would be entitled to no relief under any state of facts which could be proven in support of its claim.” Johnson v. Mueller, 415 F.2d 354, 355 (4th Cir. 1969).

IV. APPLICABLE LAW

In West Virginia, the elements of breach of contract are (1) a contract exists between the parties; (2) a defendant failed to comply with a term in the contract, and (3) damage arose from the breach. Patrick v. PHH Mortgage Corp., 937 F.Supp.2d 773, 792 (N.D. W.Va. 2013).

A contract of adhesion is one drafted and imposed by a party of superior strength that leaves the subscribing party little or no opportunity to alter the substantive terms, and only the opportunity to adhere to the contract or reject it. A contract of adhesion should receive greater scrutiny than a contract with bargained-for terms to determine if it imposes terms that are . . . beyond the reasonable expectations of an ordinary person.

State ex rel. Ocwen Loan Servicing, LLC v. Webster, 2 32 W.Va. 341, 357, 752 S.E.2d 372, 388 (2013) (internal citations omitted).

“A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent.” Wickland v. Am. Mountaineer Energy, Inc., No. 1:17-CV-205, 2019 WL 1590590, at *6 (N.D. W.Va. Apr. 12, 2019) (quoting Syl. Pt. 2, Toppings v. Rainbow Homes, Inc., 490 S.E.2d 817 ( W.Va. 1997)). “Uncertainties in an intricate and involved contract should be resolved against the party who prepared it.” Id. (quoting Syl. Pt. 8, Estate of Tawney v. Columbia Nat. Res., LLC, 633 S.E.2d 22 (W.Va. 2006)).

“The mere fact that parties do not agree to the construction of a contract does not render it ambiguous.” Id. (quoting syl. Pt. 2, CONSOL Energy, Inc. v. Hummel, 792 S.E.2d 613 (W.Va. 2016)). Where contractual language is ambiguous, however, it must be construed before it can be applied. Haynes v. Daimler Chrysler Corp., 720 S.E.2d 564, 569 (W.Va. 2011). “A writing is considered ambiguous if a contract's terms are inconsistent on their face or the agreement is reasonably susceptible to more than one meaning.” Baker v. Baker, 793 Fed.Appx. 181, 187 (4th Cir. 2019). See also, Paterno v. Wells Fargo Ins. Servs., Inc., No. 2:12-CV-04692, 2013 WL 1187932, at *4 (S.D. W.Va. Mar. 21, 2013) (“Contract language usually is considered ambiguous where an agreement's terms are inconsistent on their face or where the phraseology can support reasonable differences of opinion as to the meaning of words employed and obligations undertaken.”)(quoting State ex rel. Frazier & Oxley, L.C. v. Cummings, 569 S.E.2d 796, 803-04 (W.Va. 2002)).

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