444 F.Supp.3d 635
S.D.N.Y.2020Background:
- Plaintiffs (Perks and Navarro-Reyes) are TD Bank checking-account customers who were charged $35 NSF fees after ACH transfers (PayPal-originated) were rejected for insufficient funds and then resubmitted and rejected again.
- The parties’ relationship is governed by a Deposit Account Agreement and a Personal Fee Schedule authorizing a $35 fee for each “item.”
- The Agreement defines “item” to include an “ACH transaction” and “any other instruction or order for the payment, transfer, deposit or withdrawal of funds.”
- Plaintiffs contend an original ACH submission and its resubmissions constitute a single “item,” so only one NSF fee may be charged; TD Bank contends each submission/resubmission is a separate “item” and may be separately charged.
- TD Bank moved to dismiss under Rule 12(b)(6). The court denied dismissal of the breach-of-contract claim (finding an ambiguity to resolve in plaintiffs’ favor) and dismissed claims for breach of the implied covenant, GBL § 349, and unjust enrichment.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TD may charge separate NSF fees for resubmitted ACH transactions (breach of contract) | Resubmissions are part of the same ‘item’; only one fee permitted | Agreement authorizes a fee for each submitted/returned ‘item’ including resubmissions | Denied dismissal: definition of “item” is ambiguous; plaintiffs’ reading is reasonable at this stage |
| Breach of implied covenant of good faith | TD acted in bad faith by repeatedly charging fees under an ambiguous contract | Claim duplicates breach-of-contract theory | Dismissed as duplicative |
| GBL § 349 consumer-fraud claim | Charging multiple fees was a misleading, consumer-oriented practice | Claim is duplicative of contract dispute (and TD asserted preemption defenses) | Dismissed as duplicative (court did not decide preemption) |
| Unjust enrichment | TD was unjustly enriched by charging multiple fees | A binding contract governs the dispute; unjust enrichment barred when contract exists | Dismissed because an enforceable contract governs the relationship |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (establishes plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards; courts need not accept legal conclusions)
- Orchard Hill Master Fund Ltd. v. SBA Commc’ns Corp., 830 F.3d 152 (contract language can defeat a breach claim at dismissal)
- Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884 (contractual ambiguity standard)
- Aetna Cas. & Surety Co. v. Aniero Concrete Co., Inc., 404 F.3d 566 (contract interpretation; plain meaning limits strained readings)
- Olin Corp. v. OneBeacon Am. Ins. Co., 864 F.3d 130 (contract construction should give effect to all provisions)
- Fishoff v. Coty Inc., 634 F.3d 647 (implied covenant of good faith under New York law)
- Spagnola v. Chubb Corp., 574 F.3d 64 (elements of a GBL § 349 claim)