Petrey v. Visions Fed. Credit Union

MICHELLE PETREY, on behalf of herself and others similarly situated, Plaintiff, v. VISIONS FEDERAL CREDIT UNION, Defendant.

3:20-CV-1147 (MAD/ML)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

June 9, 2021

APPEARANCES:

OF COUNSEL:

KALIEL GOLD PLLC

1100 15th Street NW - 4th Floor

Washington, DC 20005

Attorneys for Plaintiff

JEFFREY D. KALIEL, ESQ.

SOPHIA GOREN GOLD, ESQ.

WILENTZ GOLDMAN & SPITZER PA

90 Woodbridge Center Drive, Suite 900

Woodbridge, New Jersey 07095

Attorneys for Plaintiff

KEVIN P. RODDY, ESQ.

THE KICK LAW FIRM

815 Moraga Drive

Los Angeles, California 90049

Attorneys for Plaintiff

TARAS KICK, ESQ.

JEFFREY BILS, ESQ.

LITCHFIELD, CAVO LAW FIRM -

NEW YORK OFFICE

420 Lexington Avenue, Suite 2104

New York, New York 10170

Attorneys for Defendant

BRIAN GITNIK, ESQ.

Mae A. D'Agostino, U.S. District Judge:

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiff, an account holder with Defendant, commenced this putative class action alleging various violations of state law. See Dkt. No. 1. The complaint alleges the following causes of action: breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. See id. at ¶¶ 11-14. On January 11, 2021, Defendant filed a motion to dismiss the complaint in its entirety. See Dkt. No. 37. Plaintiff opposes the motion. See Dkt. No. 38. For the following reasons, Defendant's motion is granted in part and denied in part.

II. BACKGROUND

Plaintiff's claims stem from Defendant's policy regarding the assessment of insufficient funds fees ("NSF fees"). See Dkt. No. 1. The parties' relationship is governed by the "Share Accounts, Checking Account and Electronic Fund Transfer Agreements and Disclosure Statements" (the "Agreement). See id. at ¶¶ 19-20; Dkt. No. 37-3. With respect to NSF fees on automated clearing house ("ACH") payments, the Agreement provides the following:

If ... a debit item is presented without sufficient funds in your checking account to pay it, we may, at our discretion, pay the item (creating overdraft) or return the item for insufficient funds (NSF). The fee amounts for the payment of an overdraft or returning the item are indicated in the separate Service Charge Schedule.

Dkt. No. 37-3 at 5.¹

Plaintiff claims that the Agreement allows Defendant to charge a single $25 NSF fee when an item is returned for insufficient funds but that Defendant breached that agreement by charging more than one NSF fee on the same item. See Dkt. No. 1 at ¶¶ 9-10. For example, on October 6, 2014, Plaintiff attempted to make an ACH payment. See id. at ¶ 14. Defendant rejected the payment due to insufficient funds and charged Plaintiff a $25 NSF fee. See id. at ¶ 15. Plaintiffdoes not dispute that the initial NSF fee is permitted by the Agreement. See id. However, on October 10, 2014, the ACH item was processed again and Plaintiff was assessed another $25 NSF fee. See id. at ¶ 16. Plaintiff claims that she was charged multiple NSF fees on a single item on multiple occasions. See id. at ¶ 18.

III. DISCUSSION

A. Legal Standard

A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the party's claim for relief. See Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir. 2007) (citation omitted). In considering the legal sufficiency, a court must accept as true all well-pleaded facts in the pleading and draw all reasonable inferences in the pleader's favor. See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (citation omitted). This presumption of truth, however, does not extend to legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). Although a court's review of a motion to dismiss is generally limited to the facts presented in the pleading, the court may consider documents that are "integral" to that pleading, even if they are neither physically attached to, nor incorporated by reference into, the pleading. See Mangiafico, 471 F.3d at 398 (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002)).

To survive a motion to dismiss, a party need only plead "a short and plain statement of the claim," see Fed. R. Civ. P. 8(a)(2), with sufficient factual "heft to 'sho[w] that the pleader is entitled to relief[,]'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (quotation omitted). Under this standard, the pleading's "[f]actual allegations must be enough to raise a right of relief above the speculative level," see id. at 555 (citation omitted), and present claims that are "plausible on [their] face," id. at 570. "The plausibility standard is not akin to a 'probabilityrequirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (citation omitted). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of "entitlement to relief."'" Id. (quoting [Twombly, 550 U.S.] at 557, 127 S. Ct. 1955). Ultimately, "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief," Twombly, 550 U.S. at 558, or where a plaintiff has "not nudged [its] claims across the line from conceivable to plausible, the[ ] complaint must be dismissed[,]" id. at 570.

B. Breach of Contract

"To state a claim for breach of contract under New York law, 'the complaint must allege: [(1)] the formation of a contract between the parties; [(2)] performance by the plaintiff; [(3)] failure of defendant to perform; and [(4)] damages.'" Nick's Garage, Inc. v. Progressive Cas. Ins. Co., 875 F.3d 107, 114 (2d Cir. 2017) (quotation omitted). "Under New York law, the initial interpretation of a contract 'is a matter of law for the court to decide'" and where the contract is unambiguous, a court is "'required to give effect to the contract as written.'" K. Bell & Assocs., Inc. v. Lloyd's Underwriters, 97 F.3d 632, 637 (2d Cir. 1996) (citations omitted). "In reviewing a motion to dismiss for a breach of contract claim pursuant to Rule 12(b)(6) [of the Federal Rules of Civil Procedure] the Court may interpret a contract properly before it and should 'strive to resolve any contractual ambiguities in the non-moving party's favor.'" Gerdau Ameristeel US Inc. v. Ameron Int'l Corp., No. 13-CV-7169, 2014 WL 3639176, *3 (S.D.N.Y. July 22, 2014) (quoting Int'l Audiotext Network, Inc. v. Am. Tel. and Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995)). "However, the court is 'not constrained to accept the allegations of the pleading in respect to the construction of the contract.'" Id.

"When the meaning of a contract is litigated, a reviewing court ordinarily looks only at the words used by the drafter, who presumably understood what they intended." Seiden Assocs. v. ANC Holdings, Inc., 959 F.2d 425, 426 (2d Cir. 1992). It is well-accepted that courts should construe contracts according to the parties' intent as derived from the contracts' unambiguous terms. The parties' intent is derived "from the plain meaning of the language employed in the agreements," Crane Co. v. Coltec Indus., Inc., 171 F.3d 733, 737 (2d Cir. 1999) (quotation and citation omitted), when the agreements are "read as a whole." W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990). Divining the parties' intent requires a court to "give full meaning and effect to all of [the contract's] provisions." Katel Ltd. Liab. Co. v. AT & T Corp., 607 F.3d 60, 64 (2d Cir. 2010) (quotation and citation omitted). Courts must avoid "interpretations that render contract provisions meaningless or superfluous." Manley v. AmBase Corp., 337 F.3d 237, 250 (2d Cir. 2003) (citations omitted). When the parties' intent is clear - i.e., unambiguous - the contract "must be enforced according to the plain meaning of its terms." Lockheed Martin Corp. v. Retail Holdings, N.V., 639 F.3d 63, 69 (2d Cir. 2011) (citing South Rd. Assocs., LLC v. IBM, 4 N.Y.3d 272, 277 (2005)). A contract is unambiguous where the contract's terms have "a definite and precise meaning, as to which there is no reasonable basis for a difference of opinion." Lockheed Martin, 639 F.3d at 69 (citing White v. Cont'l Cas. Co., 9 N.Y.3d 264, 267 (2007)).

If reasonable minds could differ about the meaning of contractual language, however, such language is ambiguous. Id. (describing contractual language as ambiguous when it "is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement"). The Court must then turn to extrinsic evidence to determine the parties' intent. See State v. Home Indem. Co., 66 N.Y.2d 669,671 (1985) (per curium). While extrinsic evidence generally may not vary or contradict the terms of a fully integrated document, it may be used to interpret facially ambiguous language in the contract. See Topps Co., Inc. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 69 (2d Cir. 2008).

The Agreement here provides the following:

If ... a debit item is presented without sufficient funds in your checking account to pay it, we may, at our discretion, pay the item (creating overdraft) or return the item for insufficient funds (NSF). The fee amounts for the payment of an overdraft or returning the item are indicated in the separate Service Charge Schedule.

Dkt. No. 37-3 at 5. The Agreement does not define "debit item" or "item."² See id. Plaintiff argues that the phrase "item" refers to both the original submission of an ACH transaction as well as any subsequent resubmissions, thereby allowing only one NSF fee per ACH transaction regardless of how many times the item is resubmitted. See Dkt. No. 38 at 9-11. Defendant argues that the Agreement expressly authorizes it to assess multiple NSF fees if an ACH transaction is submitted for payment by the merchant multiple times. See Dkt. No. 37-2 at 8-9. Specifically, Defendant argues that the Agreement allows it to assess an...