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FILED NOVEMBER 1, 2022 In the Office of the Clerk of Court WA State Court of Appeals Division III
COURT OF APPEALS, DIVISION III, STATE OF WASHINGTON
BARBARA SILVEY, on behalf of herself ) No. 38047-5-III and all others similarly situated, ) ) Appellants, ) ) ORDER GRANTING MOTION v. ) TO PUBLISH OPINION ) NUMERICA CREDIT UNION, ) ) Respondent. )
THE COURT has considered the Respondent’s motion to publish the court’s
opinion of August 9, 2022, and the answer and reply thereto, and is of the opinion the
motion should be granted. Therefore,
IT IS ORDERED, the motion to publish is granted.
PANEL: Judges Siddoway, Fearing, Pennell
FOR THE COURT:
___________________________________ LAUREL H. SIDDOWAY Chief Judge For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
FILED AUGUST 9, 2022 In the Office of the Clerk of Court WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE
BARBARA SILVEY, on behalf of herself ) and all others similarly situated, ) No. 38047-5-III ) Appellants, ) ) v. ) ) UNPUBLISHED OPINION NUMERICA CREDIT UNION, ) ) Respondent. )
SIDDOWAY, C.J. — Barbara Silvey brought a putative class action against
Numerica Credit Union for breach of contract and related claims, contending that
contrary to its contracts with members, Numerica used her “available” checking account
balance rather than her larger “ledger” or “actual” balance to determine her liability for
overdraft fees. Concluding that Numerica’s agreements could not reasonably be read to
support Ms. Silvey’s construction, the trial court granted Numerica’s CR 12(b)(6) motion
to dismiss her contract-related claims.1 We agree and affirm.
1 Ms. Silvey had also alleged that Numerica violated its agreement to charge insufficient fund (NSF) fees on only a merchant’s first presentation of an item for payment that is returned unpaid, not on any additional presentations of the same item. This claim, which survived Numerica’s motion to dismiss, was later settled and voluntarily dismissed with prejudice. For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
No. 38047-5-III Silvey v. Numerica Credit Union
BACKGROUND ON OVERDRAFT FEE PRACTICE, REGULATION, AND RELATED CLASS ACTION LITIGATION
We begin with an overview of the Federal Reserve Board’s (Board’s) 2009
amendment of regulation E, implementing the Electronic Fund Transfer Act of 1978,
15 U.S.C. § 1693. Not only did the amendment identify when financial institutions can
assess overdraft fees for paying one-time automated teller machine (ATM) and one-time
debit card transactions that overdraw a consumer’s account, but it also provides a helpful
historical background of overdraft services. As explained by the Board:
Historically, if a consumer tried to make a payment using a check that would overdraw his or her deposit account, the consumer’s financial institution used its discretion on an ad hoc basis to determine whether to pay the overdraft. If an overdraft was paid, the institution usually imposed a fee on the consumer’s account. . . . .... In the past, institutions generally provided overdraft coverage only for check transactions. In recent years, however, the service has been extended to cover overdrafts resulting from non-check transactions, including ATM withdrawals, debit transactions at POS [point of sale], on- line transactions, preauthorized transfers, and ACH [automated clearing house network] transactions.
See Electronic Fund Transfers, Final Rule, 74 Fed. Reg. 59,033, 59,033 (Nov. 17, 2009).
As the Board’s release publishing the rule explains, “From the industry’s perspective,
automated overdraft services enable institutions to reduce the cost of manually reviewing
individual items, and also ensure that all consumers are treated consistently with respect
to overdraft payment decisions.” Id. at 59,034.
2 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
The reason for the amendment to Regulation E was the strongly contrasting view
of consumer advocates. According to the Board’s release, “consumer advocates assert
that overdraft transactions are a high-cost form of lending that trap low- and moderate-
income consumers into paying high fees.” Id. An urban legend at the time was the $39
latte, accounted for by a $35 overdraft fee because the consumer swiped a debit card for a
$4 latte with only $2 in her account.2 Most overdraft fees are paid by a small fraction of
bank customers: as of 2014, 8 percent of customers incurred nearly 75 percent of all
overdraft fees.3 “Because of these costs, consumer advocates contend that most
consumers would prefer that their bank decline ATM or debit card transactions if the
transactions would overdraw their account.” Id. at 59,034.
After publication of proposed rulemaking, public comment, and consumer testing,
the Board’s final rule adopted a requirement that customers affirmatively opt-in to
overdraft protection for their ATM withdrawals or one-time debit card transactions.
Institutions are required to provide consumers with a notice explaining its overdraft
2 Ed Mierzwinski, Today, CFPB to Announce Overdraft Fee Investigation, Unveil “Penalty Box” Disclosure, Possibly End $39 Lattes, U.S. PIRG (Feb. 22, 2012), https://uspirg.org/blogs/eds-blog/usp/today-cfpb-announce-overdraft-fee-investigation- unveil-penalty-box-disclosure [https://perma.cc/N4M4-F84H]. 3 CONSUMER FIN. PROT. BUREAU, DATA POINT: CHECKING ACCOUNT OVERDRAFT (July 2014), https://files.consumerfinance.gov/f/201407_cfpb_report_data-point _overdrafts.pdf [https://perma.cc/5N76-C3AZ].
3 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
service and give the consumer a reasonable opportunity to affirmatively consent. Id. at
59,040.
The 2009 amendments, which became effective in 2010, protect consumers from
these overdraft fees as long as the consumer does not opt in to the additional overdraft
protection. For consumers who have nevertheless opted in, a spate of class action
lawsuits has followed based on consumers’ claims that charges for the overdraft
protection have been imposed more frequently than permitted by the agreement signed by
the consumer. These consumers allege they were promised that in determining their
overdraft status, their bank would look only at settled transactions (the “ledger” or
“actual” balance of their account) without discounting that balance for funds that were
not available to the customer (their “available balance”) either because there was a partial
hold on a large deposit or because the consumer had used their debit card for a charge
that was approved and pending, but had not yet been charged against their balance.
As described by the Consumer Financial Protection Bureau (CFPB),
[a] ledger-balance method factors in only settled transactions in calculating an account’s balance; an available-balance method calculates an account’s balance based on electronic transactions that the institutions have authorized (and therefore are obligated to pay) but not yet settled, along with settled transactions. An available balance also reflects holds on deposits that have not yet cleared.
CFPB, Supervisory Highlights, Winter 2015, at 8, https://files.consumerfinance.gov
/f/201503_cfpb_supervisory-highlights-winter-2015.pdf [https://perma.cc/2PK6-MFGA].
4 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
Ms. Silvey filed her action against Numerica alleging that she and other class
members were led by Numerica to believe that it would rely on their ledger balance in
assessing overdraft fees. Whether an institution uses a ledger or available balance is a
matter of contract between the parties, so the viability of Ms. Silvey’s suit turns on the
meaning of her contract with Numerica.
THE PRESENT ACTION
Barbara Silvey, a resident of Spokane, has a personal checking account with
Numerica. She alleges that Numerica breached its contract by charging fees between
December 17, 2017, and April 4, 2018, on five items that did not overdraw her account.
The payments on which she alleges she was assessed fees ranged in amount from $12
to $50.
As evidence of her contract with Numerica, Ms. Silvey attaches three documents
to her complaint. The first, attached as exhibit A, is entitled Membership and Account
Agreement (Account Agreement). The second, attached to Ms. Silvey’s complaint as
exhibit B, is a several-page personal fee schedule showing changes in terms effective
September 1, 2017 (Fee Schedule). The document and its attachments predate all of her
complained-of transactions. Finally, attached to her complaint as exhibit C is what Ms.
Silvey describes as “another contract document,” entitled Member Overdraft Protection
(Overdraft Protection). Clerk’s Papers (CP) at 24-34, 12.
5 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
Ms. Silvey’s Account Agreement describes a handful of other documents to whose
terms and conditions she agreed to by opening an on-line account or by signing an
account card: an “Account Card, if applicable, the Funds Availability Policy Disclosure,
Truth-in-Savings Disclosure, Electronic Funds Transfer Agreement and Disclosure,
Privacy Notice Disclosure and any Account Receipt accompanying this Agreement, and
the Credit Union’s Bylaws and policies, and any amendments to these documents from
time to time which collectively govern your Membership and Accounts.” CP at 24.
None of these is attached to her complaint.
In granting Numerica’s motion to dismiss Ms. Silvey’s claim, the trial court relied
in part on provisions of the Account Agreement that disclose delays that apply before
funds will be fully available in her account. It also relied on provisions disclosing that
payments and transfers from her account may not be made unless the funds in her
account are both sufficient and available.
The trial court relied on section 8, subsection (d) of the Account Agreement,
captioned “Deposit of Funds Requirements; Final Payment,” which provides in part:
All Items or Automated Clearing House (ACH) transfers credited to your account are provisional until we receive final payment.
CP at 538.
It relied on section 10 of the Account Agreement, captioned “ACH & Wire
Transfers,” which provides in part:
6 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
We are not obligated to execute any order to transfer funds out of your account if the amount of the requested transfer plus applicable fees exceeds the available funds in your account.
Id.
It relied on section 12, subsection (a) of the Account Agreement, captioned
“Transaction Limitations; Withdrawal Restrictions,” which provides in part:
We will pay checks or drafts, permit withdrawals, and make transfers from available funds in your account. The availability of funds in your account may be delayed as described in our Funds Availability Policy Disclosure. We may also pay checks of drafts, permit withdrawals, and make transfers from your account from insufficient available funds if you have established an overdraft protection plan or, if you do not have such a plan with us, according to our overdraft policy.
It relied on section 14, subsection (a) of the Account Agreement, captioned
“Overdrafts; Payment of Overdrafts,” which provides in part:
If, on any day, the available funds in your share or deposit account are not sufficient to pay the full amount of a check, draft, item, transaction or other item posted to your account plus any applicable fee (“Overdraft”), we may pay or return the Overdraft. The Credit Union’s determination of an insufficient available account balance may be made at any time between presentation and the Credit Union’s midnight deadline with only one review of the account required. We do not have to notify you if your account does not have sufficient available funds to pay an Overdraft.
The trial court identified the other agreements incorporated by the Account
Agreement including the Funds Availability Policy Disclosure and quoted the Overdraft
Protection document’s explanation of events that affect the availability of funds:
7 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
An insufficient available balance can result from several events, such as (1) the payment of checks, electronic funds transfers or other withdrawal requests; (2) payments authorized by you; (3) the return of unpaid items deposited by you; (4) credit union service charges; or (5) the deposit of items which according to the credit union’s Funds Availability Policy are treated as not yet available or finally paid. We are not obligated to pay any item presented for payment if your account does not contain sufficient available funds.
CP at 539.
From these provisions, the trial court concluded that Numerica’s contracts
consistently made clear that the available balance of an account is used, not the settled
ledger or actual balance, in determining whether an overdraft occurs. Finding no
reasonable basis for a consumer to construe “available funds” and “available balance” as
meaning ledger or actual balance, the trial court granted the motion to dismiss. Ms.
Silvey appeals.
ANALYSIS
A motion to dismiss under CR 12(b)(6) for failure to state a claim turns on the
“sufficiency of the complaint, not its merits.” Fed. Nat’l Title Ins. Co. v. Intercounty
Nat’l Title Ins. Co., 161 F. Supp. 2d 876, 881 (2001). Dismissal under CR 12(b)(6) is
proper only where it appears beyond a reasonable doubt that no facts exist that would
justify recovery. Cutler v. Phillips Petroleum Co., 124 Wn.2d 749, 755, 881 P.2d 216
(1994) (citing Hoffer v. State, 110 Wn.2d 415, 420, 755 P.2d 781 (1988)). Therefore, a
plaintiff’s complaint will survive a CR 12(b)(6) motion so long as any statement of facts
8 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
exists under which the court could sustain the claim for relief. Haberman v. Wash. Pub.
Power Supply Sys., 109 Wn.2d 107, 120, 744 P.2d 1032, 750 P.2d 254 (1987).
I. THE CONTRACT DOCUMENTS SUBMITTED CANNOT REASONABLY BE CONSTRUED TO PROMISE THAT NUMERICA WILL ASSESS OVERDRAFT AND NSF FEES ON THE BASIS OF A MEMBER’S LEDGER BALANCE, NOT THEIR AVAILABLE BALANCE
To establish a claim for breach of contract, a plaintiff must show (1) a valid
contract, (2) a breach of duty arising under that contract and (3) the resulting damage.
Nw. Indep. Forest Mfrs. v. Dep’t of Labor & Indus., 78 Wn. App 707, 712, 899 P.2d 6
(1995). At issue on appeal is Ms. Silvey’s allegation that Numerica breached what she
contends was its promise to assess overdraft and NSF fees on the basis of a member’s
ledger balance, not their available balance.
A contract may be attached as an exhibit to the plaintiff’s complaint and when it
is, it becomes part of the pleading for purposes of a motion under CR 12(b)(6). P.E. Sys.,
LLC v. CPI Corp., 176 Wn.2d 198, 205, 289 P.3d 638 (2012). The mere fact that a
contract is attached to the complaint and is considered by the court does not convert a CR
12(b)(6) motion to dismiss to a summary judgment motion. Id. at 205-06.
“The primary objective in contract interpretation is to ascertain the mutual intent
of the parties at the time they executed the contract.” Viking Bank v. Firgrove
Commons 3, LLC, 183 Wn. App. 706, 712, 334 P.3d 116 (2014) (citing Int’l Marine
Underwriters v. ABCD Marine, LLC, 179 Wn.2d 274, 282, 313 P.3d 395 (2013)).
Washington follows the “objective manifestation theory” of contract interpretation, under
9 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
which the focus is on the reasonable meaning of the contract language to determine the
parties’ intent. Hearst Commc’ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115
P.3d 262 (2005). “We generally give words in a contract their ordinary, usual, and
popular meaning unless the entirety of the agreement clearly demonstrates a contrary
intent.” Id. at 504. And we view the contract as a whole, interpreting particular language
in the context of other contract provisions. See Weyerhaeuser Co. v. Com. Union Ins.
Co., 142 Wn.2d 654, 669-70, 15 P.3d 115 (2000).
We interpret clear and unambiguous terms as a question of law. Paradise
Orchards Gen. P’ship v. Fearing, 122 Wn. App. 507, 517, 94 P.3d 372 (2004). An
ambiguous provision is one fairly susceptible to two different, reasonable interpretations.
McDonald v. State Farm Fire & Cas. Co., 119 Wn.2d 724, 733, 837 P.2d 1000 (1992).
A contract is not ambiguous simply because the parties suggest opposing meanings. Wm.
Dickson Co. v. Pierce County, 128 Wn. App. 488, 493-94, 116 P.3d 409 (2005).
The parties’ contracts provide no textual support for Ms. Silvey’s contention that Numerica promised to assess overdraft and NSF fees on the basis of a member’s ledger balance
Ms. Silvey repeatedly alleges in her complaint that her agreements with Numerica
provided that she would only be charged an overdraft fee on an item that would cause her
account to have a “negative . . . balance” or “would place the account in the negative,”
and, she contends, her account “never went negative.” See CP at 5-6, 14-15. None of the
expressions “negative balance,” “place the account in the negative,” or “go negative”
10 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
appear in the agreements on which she relies, however. Even the word “negative”
appears only once, in a provision stating that Numerica can report negative information
about her deposit accounts to credit bureaus. CP at 28 (Account Agreement § 33).
The terms “ledger balance” and “actual balance” likewise do not appear in the
agreements on which she relies. Ms. Silvey can point to no direct textual support in
Numerica’s agreements for the promise she claims was made.
The agreements unambiguously disclose that there are policies under which the availability of deposits credited to a customer’s Numerica account will be delayed
Subsection 8(d) of the Account Agreement unambiguously states that “[a]ll items
or Automated Clearing House (ACH) transfers credited to your account are provisional
until we receive final payment.” CP at 25. The ordinary, usual, and popular meaning of
“provisional” is “1 : provided for a temporary need : suitable or acceptable in the existing
situation but subject to change or nullification : TENTATIVE, CONDITIONAL.” WEBSTER’S
THIRD NEW INTERNATIONAL DICTIONARY 1827 (1993).
Subsection 12(a) of the agreement unambiguously states that “[w]e will pay
checks or drafts, permit withdrawals and make transfers from available funds in your
account. The availability of funds in your account may be delayed as described in our
Funds Availability Policy Disclosure.” CP at 25.
Numerica’s member overdraft protection agreement states that an insufficient
available balance
11 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
can result from several events, such as (1) the payment of checks, electronic fund transfers or other withdrawal requests; (2) payments authorized by you; (3) the return of unpaid items deposited by you; (4) credit union service charges; or (5) the deposit of items which according to the credit union’s Funds Availability Policy, are treated as not yet available or finally paid.
CP at 34.4
The parties’ contracts disclose that both sufficiency and availability of funds are conditions to Numerica’s obligation to make transfers
Having unambiguously disclosed that there are policies under which availability of
funds can be delayed, Numerica’s agreements unambiguously treat both the sufficiency
and availability of funds as conditions to its obligation to make payments or transfers.
Unlike Ms. Silvey’s key terms, “negative,” “actual balance,” and “ledger balance,” which
never appear in the agreements on which she relies, the concept of sufficient and
“available” funds and account balance is mentioned repeatedly. The ordinary, usual and
popular meaning of “available” is “3 : such as may be availed of : capable of use for the
4 At oral argument of the appeal, Numerica’s counsel asked us to assume that the disclosures made to Ms. Silvey in the Overdraft Protection document had not been made at the time of the transactions about which she complains. He pointed out that the bottom of the member overdraft protection document bears a “Revision” date of “03.20.19.” Wash. Court of Appeals oral argument, Silvey v. Numerica Credit Union, No. 38047-5-III (Jan. 25, 2022) at 1 min., 38 sec. to 2 min., 38 sec. (available from court); see CP at 34. “Revised” suggests there was an earlier member overdraft protection document; Ms. Silvey’s lawyer was asked about any such agreement and didn’t know if one had existed but stated that if it had, it was not in the record. Id. At Ms. Silvey’s request, we rely on this as a hypothetical fact. It does not make a difference in the outcome.
12 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
accomplishment of a purpose : immediately utilizable.” WEBSTER’S THIRD NEW
INTERNATIONAL DICTIONARY 150 (1993).
Paragraph 10 of the Account Agreement states, “We are not obligated to execute
any order to transfer funds out of your account if the amount of the requested transfer
plus applicable fees exceeds the available funds in your account.” CP at 25 (emphasis
added).
Paragraph 12 of the agreement states, “We will pay checks or drafts, permit
withdrawals and make transfers from available funds in your account. The availability of
funds in your account may be delayed as described in our Funds Availability Policy
Disclosure. We may also pay checks or drafts, permit withdrawals and make transfers
from your account from insufficient available funds if you have established an overdraft
protection plan or, if you do not have such a plan with us, according to our overdraft
policy.” CP at 25 (emphasis added).
Paragraph 14(a) of the agreement states, “If, on any day, the available funds in
your share or deposit account are not sufficient to pay the full amount of a check, draft,
item, transaction or other item posted to your account plus any applicable fee
(“Overdraft”), we may pay or return the Overdraft,” “The Credit Union’s determination
of an insufficient available account balance may be made at any time between
presentation and the Credit Union’s midnight deadline with only one review of the
13 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
account required,” and, “We do not have to notify you if your account does not have
sufficient available funds to pay an Overdraft.” CP at 26 (emphasis added).
Ms. Silvey has not identified a meaning of “available” that would make these
disclosures consistent with her construction of the parties’ agreements. She tries to
deflect attention from these extensive disclosures by simply asserting, repeatedly, that a
reasonable consumer would expect the ledger balance to be used, and suggesting that the
word “available” is surplusage, to be ignored.
Ms. Silvey offers no reason why, despite all this language to the contrary, a
reasonable consumer would expect the ledger balance to be used. Washington law
provides that where possible, we must construe a contract to give meaning and effect to
every word. Stokes v. Polley, 145 Wn.2d 341, 346-47, 37 P.3d 1211 (2001); Diamond
“B” Constructors, Inc. v. Granite Falls Sch. Dist., 117 Wn. App. 157, 165, 70 P.3d 966
(2003) (citing City of Seattle v. State, 136 Wn.2d 693, 698, 965 P.2d 619 (1998)). “An
interpretation of a writing which gives effect to all of its provisions is favored over one
which renders some of the language meaningless or ineffective.” Wagner v. Wagner,
95 Wn.2d 94, 101, 621 P.2d 1279 (1980). “[E]very word and phrase must be presumed
to have been employed with a purpose and must be given a meaning and effect whenever
reasonably possible.” Ball v. Stokely Foods, Inc., 37 Wn.2d 79, 83, 221 P.2d 832 (1950).
Finally, Ms. Silvey argues that because the provisions of Numerica’s agreements
did not clearly explain that debts that are not yet settled will reduce available funds, the
14 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
agreements are ambiguous. Numerica disagrees.5 It also labels this argument a red
herring, and we agree. Ms. Silvey does not prove a breach of contract by showing that
Numerica’s explanation of its calculation of available funds could have been more
complete.6 She must show that Numerica’s agreements can reasonably be construed as
promising to assess overdraft and NSF fees on the basis of a member’s ledger balance,
and this she has clearly failed to do.
5 It points to subsection 12(a) of the Account Agreement, which explains that withdrawal may not be allowed if “the account secures any obligations to us,” and the statement in the member overdraft protection disclosure that an insufficient available balance can result from, among other things, “payments authorized by you.” CP at 26, 34. 6 Numerica also responds that any argument that its disclosures are insufficiently detailed as opposed to false or misleading is preempted by the National Credit Union Administration’s regulations implementing the Federal Credit Union Act and Truth in Savings Act (TISA). The TISA implementing regulations require federal credit unions to provide disclosures regarding “[t]he amount of any fee that may be imposed in connection with the account . . . and the conditions under which the fee may be imposed.” 12 CFR § 707.4(b)(4). They expressly preempt any “[s]tate law requirements that are inconsistent with the requirements of the TISA and [its implementing regulations].” 12 CFR § 707.1(d). More specifically, 12 CFR § 701.35(c) provides that a federal credit union may, consistent with the implementing regulations, federal law, and its contractual obligations, “determine the types of fees or charges and other matters affecting the opening, maintaining and closing of a share, share draft or share certificate account,” and, “State laws regulating such activities are not applicable to federal credit unions.” While true breach of contract and affirmative misrepresentation claims under state law are not federally preempted, “it is well established that state law claims regarding a federal credit union’s failure to disclose certain fee practices or any perceived unfairness in the fee practices themselves are preempted.” Lambert v. Navy Fed. Credit Union, No. 1:19-CV-103-LO-MSN, 2019 WL 3843064, at *2 (E.D. Va. Aug. 14, 2019) (court order) (citing Gutierrez v. Wells Fargo Bank, NA, 704 F.3d 712, 725 (9th Cir. 2012); Whittington v. Mobiloil Fed. Credit Union, No. 1:16-CV-482, 2017 WL 6988193, at *9 (E.D. Tex. Sept. 14, 2017) (court order).
15 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
By repeatedly providing that a member’s account balance must be both sufficient
and available, the Numerica agreements unambiguously made the “availability” of
account funds a condition to avoiding an overdraft.
Better-reasoned cases from other jurisdictions having similar fact patterns support our analysis
Below and on appeal, both parties have cited many out-of-state, mostly
unpublished, mostly trial court rulings in which similar lawsuits have or have not been
dismissed for failure to state a claim. The decisions are unhelpful, not only because they
are not precedential, but also because each case turns on the specific language of the
parties’ agreements. Few involve customer agreements that repeatedly disclose that to
avoid an overdraft fee, an accountholder not only needs to have “enough” or “sufficient”
funds in her account, but those funds also need to be “available.” We briefly address the
several decisions that the parties argue present the most similar facts.
Numerica points to Chambers v. NASA Federal Credit Union, 222 F. Supp. 3d 1
(D.D.C. 2016), in which the putative class action was dismissed under Fed. R. Civ. P.
12(b)(6). The opening paragraph of the credit union’s opt-in agreement gave examples of
when a customer might find herself without enough money to cover a transaction, such as
when she “‘inadvertently miscalculate[s her] ‘available balance’” or “‘when funds from
a recent transaction are not available.’” Id. at 10 (emphasis added) (alterations in
original) (internal quotation marks omitted). The district court observed that “[b]y
16 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
specifically invoking the phrase ‘available balance,’ the opt-in agreement makes clear
that balance will be used in calculating overdrafts and imposing fees. There is no
competing reference to an actual or ledger balance.” Id.
The district court in Chambers observed that the credit union’s account agreement
also established the connection between the customer’s “available balance” and
overdrafts. It included a provision captioned “Available Balances to Make
Transactions,” which read, “You authorize us to charge the account you designate for
each Transaction and you will have sufficient collected funds available in the account for
that purpose.” Id. The same section continued “If, on the other hand, ‘any Transaction
you request exceeds the balance of available collected funds in the account either at the
time you request the transaction or at any later time that your account is scheduled to be
debited, we need not make such Transaction and will not be liable to you if we don’t.’”
Id. at 10-11.
Chambers had argued that the court was reading too much into the repeated
requirement that funds be “available,” suggesting maybe all account funds were
available, in which case the word “available” added nothing. Like us, the court found
this argument unpersuasive, explaining,
When the account agreement refers to “available” funds, it must be referring to a subset of funds unencumbered by . . . restrictions—exactly the type of restrictions that can create a divergence between the actual and available balances in the first place.
17 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
Id. at 11.
Finally, Chambers complained that even if the credit union’s agreement disclosed
that some account funds could be unavailable and why, it did not disclose that funds
earmarked for pending debit transactions would be unavailable. The district court
observed that even if true, that argument “brings Chambers no closer to identifying a
promise by the Credit Union to impose overdraft fees only on debit transactions that
overdrew her actual balance—a necessary element of her claim.” Id.
Numerica also relies on Domann v. Summit Credit Union, No. 18-CV-167-SLC,
2018 WL 4374076 (W.D. Wis. Sept. 13, 2018) (court order)—an unpublished decision,
but one in which the language in the credit union’s agreements mirrors the exact language
used in paragraphs 10, 12(a), and 14(a) of Numerica’s Account Agreement. See id. at *6.
Observing that the term “available” is used to modify the term “funds” or “account
balance” several times throughout the account agreement, including three times in the
Overdrafts section, the district court reasoned:
If this term meant “all of the funds” in the member’s account, as Domann urges, then the adjective “available” would be meaningless and unnecessary. Such a construction would violate the rule that “a construction which gives effect to every word of a contract should be preferred to one which results in surplusage.” McCullough v. Brandt, 34 Wis. 2d 102, 106, 148 N.W. 2d 718 (1967) (citation omitted). The word “available” has meaning only if it denotes something other than “all of the funds” or “actual balance.”
18 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
Id. The court also observed that the funds availability policy—by informing members
that the entirety of funds deposited in the account will not necessarily be available on the
day the deposit is received, “conveys clearly that there may be a difference between the
actual balance on a member’s account and the amount of funds that are ‘available’ for the
member to use.” Id.
Ms. Silvey places her principal reliance on Tims v. LGE Community Credit Union,
935 F.3d 1228 (11th Cir. 2019). The Eleventh Circuit in Tims rejected the plaintiff’s
argument that her contract with the credit union unambiguously provided that it would
use the ledger balance method in imposing overdraft fees. It held that the contract was
ambiguous, and the parties’ intent would become a question for the jury should neither
party be granted summary judgment. Id. at 1242.
Unlike the repeated references to “available” funds and balances in Ms. Silvey’s
account agreement, Ms. Tims’s account agreement was described as using the term
“available” infrequently, and tending to use “sufficient” and “available” interchangeably,
not together. The Eleventh Circuit court characterized the credit union as “assum[ing]
too much” when it assumed a consumer would read the word “available” in only two
separate sections, spanning a 12-page account agreement, and conclude her financial
institution would use the available balance calculation method in addressing overdrafts.
Id. at 1239.
19 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
Urged by the credit union to dismiss Ms. Tims’s claim as the D.C. district court
had dismissed the proposed class action complaint in Chambers, the Eleventh Circuit did
not criticize Chambers’ analysis, instead explaining that “[s]everal significant details
distinguish Chambers from this case.” Id. at 1242. “Importantly,” the Tims court
observed, the agreements in Chambers, unlike in Ms. Tims’s agreement, “use[d] the
phrase ‘available balance.’” Id. Like the agreement in Chambers, Numerica’s Account
Agreement speaks not only of available funds, but also of an available account balance.
CP at 26 (§ 14(a)).
The Tims court next observed that the account agreement in Chambers “linked the
concept of available balance to the mechanics of when and how the bank would assess
overdrafts,” something not present in Ms. Tims’s case. Id. Section 14(a) of Numerica’s
account agreement does that as well.
Finally, the Tims court observed that unlike the credit union agreement before it,
the agreements in Chambers provided examples of when an account would not have
“‘enough money’” and thus be subject to an overdraft. 935 F.3d at 1242 (quoting
Chambers, 222 F. Supp. 3d at 11; Numerica’s Account Agreement states that availability
of funds may be delayed as described in the Funds Availability Policy Disclosure, CP at
25; the Overdraft Protection document also provides examples. CP at 34. The Eleventh
Circuit’s reasoning therefore supports the dismissal of Ms. Silvey’s complaint.
20 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
II. MS. SILVEY FAILS TO STATE A CONSUMER PROTECTION ACT CLAIM
In addition to alleging breach of contract, Ms. Silvey’s complaint had asserted a
claim for violation of the Washington Consumer Protection Act (CPA), chapter 19.86
RCW. Ms. Silvey argues that even if we affirm dismissal of her breach of contract claim,
we should hold that Numerica failed to demonstrate that there are no facts under which
the trial court could find that the credit union’s practices are unfair and deceptive under
the CPA.
To establish a CPA claim, a plaintiff must show five elements: (1) an unfair or
deceptive act or practice, (2) occurring in trade or commerce, (3) that affects the public
interest, (4) injury to the plaintiff in his or her business or property, and (5) a causal link
between the unfair or deceptive act complained of and the injury suffered. Klem v. Wash.
Mut. Bank, 176 Wn.2d 771, 782, 295 P.3d 1179 (2013) (quoting Hangman Ridge
Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986)).
A finding that any element is missing is fatal to a claim. Hangman Ridge, 105 Wn.2d at
793.
Whether an alleged act or practice constitutes an unfair or deceptive act or practice
in violation of the CPA is generally a question of law, which this court reviews de novo.
See Columbia Physical Therapy, Inc. v. Benton Franklin Orthopedic Assocs., PLLC, 168
Wn.2d 421, 442, 228 P.3d 1260 (2010).
21 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
Ms. Silvey’s complaint alleges that the unfair and deceptive conduct on which she
relies for her CPA claim are “Numerica’s common courses of conduct alleged above.”
CP at 19. Aside from her now-settled-and-dismissed allegations that Numerica charged
more than one NSF fee per presented and rejected item, Ms. Silvey alleged only that
Numerica breached what she contends was its contractual promise to assess overdraft and
NSF fees on the basis of a member’s ledger balance, not their available balance. See CP
at 14-17.
As the changes to Numerica’s Fee Schedule explain, if a member opts into
Numerica’s Courtesy Pay protection, then,
in addition to our Standard [Overdraft] Protection, we will cover ATM transactions and everyday debit card transactions. Again, there is a fee of $30 for each item paid, up to five fees ($150) per day. If you don’t use it, there’s no fee.
CP at 31. When a member chooses to opt into this additional overdraft protection and
relies on it to make an ATM withdrawal or debit card transaction that could contribute to
an overdraft, Ms. Silvey does not demonstrate why it is unreasonable or deceptive for
Numerica to protect itself and other members from risk by treating those approved,
pending but unsettled transactions as reducing the available funds in the member’s
account.
Ms. Silvey invokes a report in the CFPB’s Winter 2015 Supervisory Highlights
publication about supervisory action the CFPB took at that time against institutions that
22 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
made changes from a ledger balance to an available balance method that “were not
disclosed at all, or were not sufficiently disclosed,” with materially misleading results to
customers. CFPB, Supervisory Highlights, supra, at 8. That is not conduct alleged
against Numerica.
Ms. Silvey finally argues that Numerica may be liable for deceptive conduct by
imposing overdraft fees without disclosing a customer’s available account balance, citing
Indoor Billboard/Washington, Inc. v. Integra Telecom of Wasington, Inc., 162 Wn.2d 59,
74-75, 170 P.3d 10 (2007). Br. of Appellant at 33. In Indoor Billboard, the Supreme
Court found an unfair or deceptive act or practice as a matter of law where Integra
Telecom assessed a surcharge it imposed on local business service customers as a
“presubscribed interexchange carrier charge” or “PICC.” The Federal Communication
Commission (FCC) regulations authorize some carriers to impose PICCs on some other
carriers, but those regulations did not authorize Integra to impose a PICC on Indoor
Billboard or other customers. The court held that Integra’s use of the term had the
capacity to deceive a substantial portion of the public into thinking the surcharge was
FCC regulated and required. Indoor Billboard, 162 Wn.2d at 78. For Numerica to
impose an overdraft fee where it discloses that payments and fees are based on a
member’s available balance, but without real-time reporting of that balance, bears no
relation to the deceptive conduct found in Indoor Billboard.
23 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
III. MS. SILVEY LIKEWISE FAILS TO STATE A CLAIM THAT NUMERICA BREACHED THE IMPLIED DUTY OF GOOD FAITH AND FAIR DEALING
Finally, Ms. Silvey’s complaint alleged a breach of the covenant of good faith and
fair dealing that she argues can survive the dismissal of her breach of contract claim.
Under Washington law, “[t]here is in every contract an implied duty of good faith
and fair dealing” that “obligates the parties to cooperate with each other so that each may
obtain the full benefit of performance.” Badgett v. Sec. State Bank, 116 Wn.2d 563, 569,
807 P.2d 356 (1991). The implied covenant of good faith and fair dealing cannot add or
contradict express contract terms and does not impose a free-floating obligation of good
faith on the parties. Rekhter v. Dep’t of Soc. & Health Servs., 180 Wn.2d 102, 112-13,
323 P.3d 1036 (2014). Instead, “the duty [of good faith and fair dealing] arises only in
connection with terms agreed to by the parties.” Id. at 113 (alteration in original).
One circumstance in which the duty applies is when “one party has discretionary
authority to determine a contract term.” Id. (citing Goodyear Tire & Rubber Co. v.
Whiteman Tire, Inc., 86 Wn. App. 732, 738, 935 P.2d 628 (1997)). “‘The covenant may
be relied upon only when the manner of performance under a specific contract term
allows for discretion on the part of either party. . . . However, it will not contradict terms
or conditions for which a party has bargained.’” Goodyear Tire, 86 Wn. App. at 739
(quoting Amoco Oil Co. v. Ervin, 908 P.2d 493, 498 (Colo. 1995)).
24 For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.
Ms. Silvey argues she can challenge Numerica’s good faith in exercising its
discretion whether to pay overdrafts and assess an NSF or overdraft fee—but her
challenge is not to the overdraft decision, it is to Numerica’s alleged bad faith in
employing the available balance method. We have already held that the available balance
method is the method contractually provided by Numerica’s agreements.
Numerica’s agreement does not give it “discretion” to apply the available balance
or ledger balance method. Its agreement calls for using the available balance method. Its
agreement gives it discretion, when applying the available balance method, whether to
pay an overdraft and assess a fee. Ms. Silvey has not articulated any respect in which
Numerica has abused that discretion. No claim for breach of the covenant is stated.
Affirmed.
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to RCW
2.06.040.
Siddoway, C.J.
WE CONCUR:
Fearing, J. Pennell, J.