935 F.3d 1228
11th Cir.2019Background
- Plaintiff Carol Tims opened an account with LGE Community Credit Union, signed an Opt‑In Agreement and Account Agreement, and was charged $30 overdraft fees on two transactions she alleges should not have triggered fees.
- Tims alleges LGE promised to assess overdrafts based on the ledger balance (settled transactions only), but LGE used the available balance (including pending debits/holds), causing additional fees.
- Opt‑In Agreement copied Model Form A‑9 language stating an overdraft occurs when “you do not have enough money in your account to cover a transaction, but we pay it anyway.”
- Account Agreement included a Payment Order clause (LGE may pay items at its discretion if funds are insufficient) and a separate Funds Availability Disclosure describing when deposits become "available" for withdrawal.
- District court granted LGE’s Rule 12(b)(6) motion, finding the agreements unambiguous and permitting use of the available balance; Eleventh Circuit reversed, holding the agreements ambiguous and that dismissal was improper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Opt‑In and Account Agreements unambiguously authorize use of available balance (vs. ledger) to assess overdrafts | Opt‑In/Account language (e.g., “enough money,” “sufficient funds”) should be read to require ledger‑balance treatment for unsettled debits | Contract language (use of “available,” “sufficient,” and Funds Availability Disclosure) unambiguously permits available‑balance method | Agreements are ambiguous as to which balance method applies; remand for fact development |
| Whether ambiguity can be resolved by applying Georgia canons of contract construction | Ambiguity should be construed for the consumer (and could support ledger interpretation) | Proximity and repeated use of “available” indicate available‑balance meaning | Georgia canons did not resolve the ambiguity; issue is for factfinder if not resolved at summary judgment |
| Whether plaintiff stated a claim for breach of implied covenant of good faith and fair dealing under Georgia law | Alleged breach of express contract term (balance method) supports implied‑covenant claim | Covenant cannot provide independent liability apart from contract terms | Claim survives because it depends on the same contract term alleged breached |
| Whether Opt‑In disclosure violated Regulation E (EFTA) and if LGE is protected by the Model Form safe harbor | Notice was not “clear and readily understandable” about which balance method would be used, so consent may not have been informed | Opt‑In copied CFPB Model Form A‑9, invoking EFTA safe harbor for disclosures made "in proper form" | Safe harbor does not protect disclosures that are procedurally correct but substantively inadequate; EFTA claim survives at pleading stage |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6) pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard; draw reasonable inferences for plaintiff)
- Frulla v. CRA Holdings, Inc., 543 F.3d 1247 (11th Cir. contract‑ambiguity review de novo)
- Maiz v. Virani, 253 F.3d 641 (cardinal rule of contract construction: ascertain parties’ intent)
- BedRoc Ltd., LLC v. United States, 541 U.S. 176 (statutory interpretation starts with text)