Livingston v. Trustco Bank
1:20-cv-01030
N.D.N.Y.Mar 16, 2022Background
- Plaintiffs (Livingston and two others) sued Trustco Bank alleging it: failed to comply with Regulation E opt-in requirements, charged overdraft (OD) fees on Authorized Positive, Purportedly Settle Negative (APPSN) debit transactions, charged multiple $36 NSF fees on the same re-presented items, and botched a mobile-banking software upgrade that caused additional fees.
- Plaintiffs pleaded six claims: breach of contract; breach of the implied covenant of good faith and fair dealing; unjust enrichment/restitution; money had and received; EFTA (Regulation E) violation; and New York GBL § 349 violation.
- Trustco moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing among other things that the account documents unambiguously authorized the challenged fees, Regulation E opt-in was not alleged, and plaintiffs lacked standing for GBL § 349.
- The court treated certain bank account documents as integral and considered them on the motion, but declined to convert to summary judgment where fact-intensive disputes remained.
- Ruling summary: the court DENIED dismissal as to breach-of-contract claims based on OD fees on APPSN transactions and multiple NSF fees on the same item (found contract language ambiguous); the court GRANTED dismissal with prejudice for breach of implied covenant, unjust enrichment/restitution, money had and received, and the EFTA (Regulation E) claim; the court GRANTED dismissal without prejudice as to the breach claim based on the mobile upgrade and the GBL § 349 claim, and allowed 30 days to seek leave to amend those two claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OD fees on APPSN/debit-authorized transactions breached the account agreement | Trustco promised holds at authorization that reduce available balance, so assessing OD fees when the authorization hold remained violates the contract | Fees are assessed when transactions post/settle; disclosures permit releasing holds and charging fees on posting | Denied dismissal; contract language ambiguous — reasonable interpretations on both sides so breach-of-contract claim survives |
| Whether charging multiple NSF fees on a re-presented item breaches the contract | Fee Schedule says NSF fee is "per item" meaning one fee per original item regardless of re-presentment; industry practice and Nacha/UCC support single fee | Disclosures state bank will charge a fee each time it pays or returns an overdraft and Nacha treats re-presentment as a new entry | Denied dismissal; term "item" is ambiguous and reasonable competing interpretations preclude dismissal |
| Whether Plaintiffs stated a breach-of-contract claim based on the mobile banking software upgrade | Plaintiffs allege the upgrade prevented account access causing fees | Trustco gave notice per online disclaimers and no contract provision was identified as breached | Dismissed without prejudice: plaintiffs failed to identify specific contractual provision breached; may seek leave to amend |
| Breach of implied covenant of good faith and fair dealing (independent claim) | Plaintiffs say bank undermined contract purpose by charging contrary to holds and reprocessing items | Claim duplicates breach-of-contract because no independent facts alleged | Dismissed with prejudice as duplicative and not separately pled with independent facts |
| Unjust enrichment / Money had and received | Alternative pleading that bank was unjustly enriched by improper fees | Existence of a valid contract governing fees defeats quasi-contract recovery | Dismissed with prejudice; quasi-contract claims barred where enforceable contract governs |
| Regulation E (EFTA) claim | Plaintiffs contend bank failed to satisfy Regulation E opt-in disclosure requirements and used opt-in as marketing | Plaintiffs did not allege they actually entered into an Opt-In contract; claim is time-barred and inadequately pled | Dismissed with prejudice for failure to allege opt-in and failure to cure earlier amendment opportunity |
| New York GBL § 349 claim (standing/nexus) | Plaintiffs assert consumer-oriented deceptive conduct by Trustco headquartered in NY and many class members are NY residents | Trustco argues mere NY headquarters or internal acts are insufficient; need a strong New York nexus to the deceptive transaction | Dismissed without prejudice for lack of allegations showing the transactions had a sufficient New York connection; plaintiffs may amend |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (established the plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (facial plausibility and that courts need not accept legal conclusions)
- Cruz v. FXDirectDealer, LLC, 720 F.3d 115 (2d Cir. 2013) (test for GBL § 349 standing focuses on location and strength of New York nexus to the transaction)
- DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104 (2d Cir. 2010) (when courts may consider documents outside the complaint that are integral or incorporated)
- Rothman v. Gregor, 220 F.3d 81 (2d Cir. 2000) (documents plaintiffs relied upon may be considered on a 12(b)(6) motion)
- Chambers v. Time Warner, Inc., 282 F.3d 147 (2d Cir. 2002) (complaint deemed to include written instruments attached or incorporated by reference)
- Roberts v. Capital One, N.A., [citation="719 F. App'x 33"] (2d Cir. 2017) (reasonableness of consumer expectations about when a debit purchase is "paid")