Perks v. T.D. Bank, N.A.
- Valerie Caproni
- 1:18-cv-11176
- U.S. District Court · Southern District of New York
- 8
In Perks v. T.D. Bank, Judge Caproni allowed the contract claim to proceed but dismissed three other claims over repeated ACH overdraft fees.
The ruling affects the proposed class representatives, other similarly situated TD Bank checking-account customers, and TD Bank. The contract-based claims concerning multiple NSF fees on resubmitted ACH transactions may proceed, while the plaintiffs’ three other claims were dismissed.
What happened
Perks v. T.D. Bank, N.A. is a proposed class action by checking-account customers who alleged that TD Bank improperly charged multiple $35 non-sufficient-funds fees when rejected Automated Clearing House transfers were resubmitted.
The plaintiffs claimed breach of contract, breach of the implied promise of good faith and fair dealing, consumer fraud under New York law, and unjust enrichment. TD Bank argued that the account agreement allowed it to charge a fee for each submission and resubmission.
Judge Valerie Caproni held that the agreement was ambiguous about whether a resubmitted transfer was a separate transaction and therefore allowed the breach-of-contract claim to proceed, while dismissing the other three claims. The court granted in part and denied in part TD Bank’s motion to dismiss.
The detailed version
- Perks v. T.D. Bank, N.A. · No. 1:18-cv-11176
- Valerie Caproni
- Mar. 17, 2020
Background
This proposed class action concerns overdraft and non-sufficient-funds fees on Automated Clearing House (ACH) transactions. The plaintiffs, Mary Jennifer Perks and Maria Navarro-Reyes, alleged that TD Bank charged additional $35 fees when previously rejected ACH transactions were resubmitted for payment.
The Deposit Account Agreement and Personal Fee Schedule governed the accounts. The fee schedule authorized a $35 fee per “item” when an account lacked sufficient funds. The agreement defined “item” to include an ACH transaction and “any other instruction or order” for the payment, transfer, deposit, or withdrawal of funds.
Perks alleged that three PayPal ACH transfers were rejected and charged fees, then resubmitted about a week later and rejected again, resulting in another round of fees. Navarro-Reyes alleged a similar experience involving three ACH transactions.
Claims and Motion
The plaintiffs alleged breach of contract, breach of the implied covenant of good faith and fair dealing, consumer fraud under New York General Business Law § 349, and unjust enrichment. TD Bank moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not plausibly state a legal claim. TD Bank primarily argued that the account agreement expressly authorized fees on each submission and resubmission.
Breach-of-Contract Claim
The court denied the motion to dismiss the breach-of-contract claim. It held that the agreement’s definition of “item” was ambiguous as applied to resubmitted ACH transactions.
The plaintiffs’ interpretation was that the original submission and later resubmissions of one ACH transaction constituted a single “item,” allowing only one fee. TD Bank’s interpretation was that each submission or resubmission could be treated as a separate “item.” The court found both interpretations reasonable. Because contractual ambiguity must be resolved in the plaintiffs’ favor at the motion-to-dismiss stage, the plaintiffs plausibly alleged that TD Bank breached the agreement by imposing multiple fees on resubmissions of a single ACH transaction.
Other Claims
The court dismissed the implied-covenant claim because it was duplicative of the contract claim. Both claims relied on the same alleged conduct: charging fees on resubmitted ACH transactions. The court also rejected the plaintiffs’ argument that TD Bank acted in bad faith by interpreting an ambiguous contract, explaining that a disagreement over contract interpretation belongs in the express breach-of-contract claim.
The court dismissed the New York General Business Law § 349 claim because the plaintiffs did not allege a materially misleading consumer-oriented practice separate from the alleged contract breach. The court said the reference to deceptive advertising was conclusory and appeared to involve only publicizing the contract’s terms. It did not decide whether federal banking law preempted that claim.
The court dismissed the unjust-enrichment claim because the parties had a contract governing the subject matter, and the plaintiffs did not allege that the contract was invalid or unenforceable.
Disposition
Judge Valerie Caproni granted in part and denied in part TD Bank’s motion to dismiss. The breach-of-contract claim remained, while the claims for breach of the implied covenant, violation of New York General Business Law § 349, and unjust enrichment were dismissed. The court ordered the parties to meet and confer and submit a joint case-management letter and proposed scheduling order by April 16, 2020, or alternatively request a settlement conference.
Read the full 8-page opinion on CourtListener, the free public archive maintained by the Free Law Project.