Court Retains Most of a Deceptive Business Practices Putative Class Action Against a Bank for Overdraft Fees – White v. Wachovia Bank

A federal court allowed most causes to proceed in a putative class action against a bank for allegedly fraudulent overdraft fees. White, et al v. Wachovia Bank, N.A., No. 1:08-cv-1007, order (N.D. Ga., Jul. 2, 2008). The plaintiffs, who alleged that the bank had recorded transactions out of chronological order to maximize overdraft fee liability, claimed violations of state deceptive trade practice laws and several claims related to breach of contract. The court denied the defendant bank’s motion to dismiss as to all but two of the plaintiffs’ claims.

The two lead plaintiffs opened a joint checking account with Wachovia Bank in 2007. They signed a Deposit Agreement that stated that the bank could pay checks and other items in any order it chose, even if it resulted in an overdraft. It also stated that the bank could impose overdraft charges if payment of any single item exceeded the balance in the account. The plaintiffs alleged in their lawsuit that Wachovia ordered its posting of transactions in a way that would cause their account to incur overdraft fees, even when they had sufficient funds to pay the items. They also alleged that the bank imposed overdraft fees when no overdraft had occurred.

The lawsuit, originally filed in a Georgia state court in February 2008, asserted violations of the Georgia Fair Business Practices Act (FBPA), O.C.G.A. §§ 10-1-390 et seq., and breach of the duty of good faith. The plaintiffs also claimed that the clause of the Agreement related to the ordering of transaction was unconscionable, that the bank had engaged in trover and conversion, and that it had been unjustly enriched. The defendant removed the case to federal court under the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2), which allows defendants to remove certain class actions to federal court. It then moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6), which allows a court to dismiss a lawsuit that “fail[s] to state a claim upon which relief can be granted.” To defeat such a motion, a plaintiff must show a plausible factual basis for their claims.

The court found that the plaintiffs raised a plausible claim for breach of the duty of good faith. The bank argued that it only did what the Agreement allowed it to do, while the plaintiffs argued that its performance under the Agreement, left entirely to the bank’s discretion, mandated the exercise of good faith. The court also found the plaintiffs’ claims for FBPA violations and trover and conversion plausible. It rejected the bank’s claim that federal laws and regulations preempted the plaintiffs’ claims.

The court dismissed the plaintiffs’ claims for unconscionability and unjust enrichment. It found the claims of unconscionability inconsistent with the plaintiffs’ breach of duty of good faith claims. It also found that the clause of the Agreement in question was consistent with Georgia banking law. The issue was therefore not the clause itself, but the bank’s application of the clause. The court held that unjust enrichment only applies in the absence of an actual contract, and therefore did not apply to this case.

Lubin Austermuehle’s team of consumer rights attorneys defend the rights of victims of bank fee fraud and other violations of consumer protection laws. We practice throughout the Chicagoland area including Cook, DuPage, Kane, Lake, McHenry and Will Counties, and in the Mid-West region, including Indiana, Wisconsin and Iowa. To schedule a confidential consultation with one of our attorneys, please contact us online, at (630) 333-0333.

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