Clay, B. v. First National Bank

• Court: Superior Court of Pennsylvania
• Decided: January 21, 2025
• Docket: 279 WDA 2024
• Status: Unpublished

Opinion

J-A26005-24

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

BARBARA CLAY, ON BEHALF OF : IN THE SUPERIOR COURT OF HERSELF AND ALL OTHERS : PENNSYLVANIA SIMILARLY SITUATED : : : v. : : : FIRST NATIONAL BANK : No. 279 WDA 2024 : Appellant :

Appeal from the Order Entered March 1, 2024 In the Court of Common Pleas of Allegheny County Civil Division at No(s): GD-23-8768

BEFORE: BOWES, J., MURRAY, J., and BENDER, P.J.E.

MEMORANDUM BY BOWES, J.: FILED: January 21, 2025

First National Bank of Pennsylvania (“FNB”) appeals from the order

overruling its preliminary objection to compel arbitration in defense of the

class action suit brought against it by Barbara Clay. We reverse and remand

for the case to proceed to arbitration.

This litigation challenges overdraft and insufficient fund fees imposed by

FNB upon certain FNB checking accounts. Ms. Clay, who filed the purported

class action suit, opened a checking account at 1st Mariner Bank in 1997. Since

then, ownership of the account has changed twice. In 2018, Howard Bank

acquired 1st Mariner Bank, and in 2022, FNB acquired Howard Bank. Ms. Clay

continued to operate the checking account throughout these changes.

Notably, in January of 2022, FNB sent to then-Howard Bank customers,

including Ms. Clay, a welcome packet composed of, inter alia, the 2022 FNB J-A26005-24

Deposit Account Agreement (“FNB Agreement”), a fee schedule, and an

overdraft notification.

Ms. Clay filed the instant class action lawsuit against FNB based upon

certain fees FNB allegedly imposed on her checking account. She explained

that her account was “governed by [FNB’s] written, standardized account

documents.” Complaint, 7/19/23, at 9 (capitalization altered). She did not

attach any documentation to her complaint, averring that such was only

available to FNB. Nonetheless, Ms. Clay opined that the FNB account

documents contained certain “promises” that were broken by FNB’s practices,

and thus FNB’s “account documents misrepresent[ed its] true debit card

processing and overdraft practices.” Id. at 9-10 (capitalization altered).

Therefore, she defined the class as “all [FNB] checking account holders in

Pennsylvania who, during the applicable statute of limitations, were charged

[overdraft] fees on debit card transactions that were authorized into a positive

available balance” or “were charged multiple fees on the same item[.]” Id.

at 21 (capitalization altered).

Ms. Clay cited two examples “[i]n support of her claim[:]” (1) an

overdraft fee imposed on April 8, 2021, and (2) an insufficient funds fee levied

on September 15, 2021. Id. at 12-13. Notably, Howard Bank imposed the

offending fees. Ms. Clay did not attribute fault to Howard Bank for the alleged

2021 malfeasance, nor did she contend that FNB assumed the liabilities of

Howard Bank upon acquisition for those charges. Rather, she claimed that

FNB itself violated the covenant of good faith and fair dealing when FNB

-2- J-A26005-24

“breached promises made to [Ms. Clay] and all members of the proposed

class” by charging overdraft fees when the transactions did not deplete the

account and in “charg[ing] multiple fees on a single item[,]” and used the

2021 transactions as examples of her “[e]xperiences[.]” Id. at 12-13, 25-26.

FNB filed a motion to compel arbitration, as well as preliminary

objections pursuant to Pa.R.Civ.P. 1028(a)(6) (regarding agreements for

alternative dispute resolution), based upon the arbitration clause within the

FNB Agreement.1 Ms. Clay submitted a brief in opposition to FNB’s request to

compel arbitration. Specifically, she averred that: (1) she lacked notice of

the arbitration provision; (2) FNB’s arbitration clause did not apply

retroactively to her claims against Howard Bank under Howard Bank’s deposit

agreement; and (3) retroactive application of the arbitration agreement

without providing her an opportunity to opt out would violate the implied

covenant of good faith and fair dealing. See Brief in Opposition, 11/17/23, at

1-2. FNB countered with a reply brief, rebuffing her arguments based upon

the allegations within her initial complaint. The court denied FNB’s motion to

compel arbitration on March 1, 2024. In so doing, it concluded that the

arbitration provision in the FNB Agreement did not apply to the 2021 fees

imposed on Ms. Clay’s account by Howard Bank. See Trial Court Opinion,

4/29/24, at 3. ____________________________________________

1 FNB also sought, inter alia, to dismiss the complaint on its merits. Since the refusal to send this case to arbitration is the only decision over which we have jurisdiction in this appeal, we do not consider any substantive challenges to Ms. Clay’s suit.

-3- J-A26005-24

This timely appeal followed.2 Both the trial court and FNB complied with

the dictates of Pa.R.A.P. 1925. FNB presents the following issues for our

consideration:

1. Did the trial court err and/or abuse its discretion by failing to enforce the arbitration provision in the [FNB Agreement]?

2. Did the trial court err and/or abuse its discretion by failing to accept the facts and averments contained in FNB’s motion as uncontroverted and undisputed because [Ms. Clay] did not file any response to the motion other than her brief?

FNB’s brief at 4 (capitalization altered). We consider these issues in light of

our well-settled framework:

Our standard of review of a claim that the trial court improperly overruled preliminary objections in the nature of a petition to compel arbitration is clear. Our review is limited to determining whether the trial court’s findings are supported by substantial evidence and whether the trial court abused its discretion in denying the petition.

In doing so, we employ a two-part test to determine whether the trial court should have compelled arbitration. First, we examine whether a valid agreement to arbitrate exists. Second, we must determine whether the dispute is within the scope of the agreement.

Whether a claim is within the scope of an arbitration provision is a matter of contract, and as with all questions of law, our review of the trial court’s conclusion is plenary.

Further, we are guided by the following principles:

____________________________________________

2 The denial of a petition to compel arbitration is an interlocutory order appealable as of right pursuant to Pa.R.A.P. 311(a)(8) (appealable by statute) and 42 Pa.C.S. § 7320(a)(1) (providing that an appeal may be taken from an order denying a motion to compel arbitration).

-4- J-A26005-24

(1) arbitration agreements are to be strictly construed and not extended by implication; and (2) when parties have agreed to arbitrate in a clear and unmistakable manner, every reasonable effort should be made to favor the agreement unless it may be said with positive assurance that the arbitration clause involved is not susceptible to an interpretation that covers the asserted dispute.

Fineman, Krekstein & Harris, P.C. v. Perr, 278 A.3d 385, 389 (Pa.Super.

2022) (cleaned up). In light of this two-part inquiry, we first consider whether

a valid arbitration agreement exists between the parties, and then whether it

covers the dispute.

FNB avers that the FNB Agreement governs the relationship between

FNB and Ms. Clay and contains the relevant arbitration provision.3 See FNB’s

brief at 23. By way of background, Ms. Clay signed a signature card with 1st

Mariner Bank when she opened her account in 1997. The card granted 1st

Mariner Bank the ability to amend the terms of its agreement with Ms. Clay,

but it did not explicitly extend that right to successor banks. The record is

silent as to whether Howard Bank and Ms. Clay signed any agreement. When

FNB merged with Howard Bank, the record reveals that FNB sent to Ms. Clay

3 Our review of the record demonstrates that neither the trial court nor Ms.

Clay squarely answers the first question. Rather, they conflate the two by focusing upon whether the agreement is valid as applied to the dispute, i.e., whether it can be applied retroactively to the 2021 Howard Bank fees. Ms. Clay does not otherwise challenge the validity of the FNB Agreement, to which she attempts to hold FNB accountable. Rather, she contests the applicability of the arbitration clause to fees imposed by Howard Bank in 2021. See Ms. Clay’s brief at 8, 17. Given the interrelated nature of this framework in the underlying matter, we deem it appropriate to address both questions. We consider Ms. Clay’s specific contention in turn when we reach the second aspect of the arbitrability test.

-5- J-A26005-24

a welcome packet, which included the FNB Agreement. However, FNB did not

ask her to sign anything.

Since Ms. Clay did not sign the FNB Agreement, she was not

automatically bound by the arbitration clause contained therein. See Elwyn

v. DeLuca, 48 A.3d 457, 461 (Pa.Super. 2012) (“In general, only parties to

an arbitration agreement are subject to arbitration.” (cleaned up)).

Nonetheless, we find that the doctrine of equitable estoppel prevents her from

avoiding the terms of the arbitration clause. Our Supreme Court explained

the doctrine thusly:

Equitable estoppel is a doctrine that prevents one from doing an act differently than the manner in which another was induced by word or deed to expect. A doctrine sounding in equity, equitable estoppel recognizes that an informal promise implied by one’s words, deeds or representations which leads another to rely justifiably thereon to his own injury or detriment may be enforced in equity.

Kreutzer v. Monterey Cnty. Herald Co., 747 A.2d 358, 361 (Pa. 2000)

(cleaned up).

Here, Ms. Clay continued to use her checking account after FNB sent her

the welcome packet, which explained how her account would change under

FNB’s ownership and included the terms of the FNB Agreement. If Ms. Clay

did not find these changes satisfactory, she could have followed the

procedures outlined within the agreement to close her account and conduct

her checking business elsewhere. See Affidavit of Karen Crosetto in Support

of Defendant’s Preliminary Objections to Plaintiff’s Complaint, 10/16/23, at

-6- J-A26005-24

Exhibit B-5 (FNB Agreement, 1/23/22, at 23). She instead chose to continue

using her FNB checking account, and, indeed, filed the instant suit based upon

FNB’s alleged violations of the terms of the FNB Agreement. Since Ms. Clay

seeks to enforce the portions of the agreement that benefit her, she is

equitably estopped from attempting to avoid its burdens. See Bouriez v.

Carnegie Mellon Univ., 359 F.3d 292, 295 (3d Cir. 2004) (explaining that

equitable estoppel prohibits an individual “from challenging an agreement that

includes an arbitration clause when that person embraces the agreement and

directly benefits from it” (cleaned up)). Accordingly, we conclude that the

FNB Agreement properly governs the relationship between FNB and Ms. Clay.

We now turn to the arbitration provision contained therein to ascertain

whether it applies to the instant dispute. To begin, we set forth the relevant

language of the arbitration clause:

ARBITRATION AND WAIVER OF CLASS ACTION

We (as in you and us) agree that, at the request of either party, any and all claims, disputes or controversies between you and us, and any claim by either of us against the other (or the employees, officers, directors, agents or assignees of the other) and any claim arising from or relating to your Account, this Agreement, any other agreements you may enter into with us for services related to your Account, the transactions on your Account, or any other account you previously, now or may later have with us, this agreement to arbitrate all disputes, your agreement not to bring, join or participate in any purported class action, or representative proceeding, regarding, including, but not limited to, collection of sums overdrawn on the Account, alleging fraud or misrepresentation, whether under common law or pursuant to Federal, state or local statute, regulation or ordinance, including disputes as to the matters subject to arbitration, or otherwise shall be resolved by binding individual (and not joint) arbitration by the

-7- J-A26005-24

American Arbitration Association (AAA). The arbitrator(s) will decide if any inconsistency exists between the AAA rules and these arbitration provisions contained herein. If any such inconsistency exists, the arbitration provisions contained herein will control and supersede the AAA rules.

Id. at Exhibit B-5 (FNB Agreement, 1/23/22, at 25).

Plainly, the clause mandates that the parties arbitrate “any and all

claims” between them, as well as any disputes arising from or relating to the

checking account or the FNB Agreement. Id. Given this broad language, it is

apparent that the parties agreed to arbitrate disputes between them, as well

as any claims that pertained to Ms. Clay’s checking account or the agreement.

It is well-settled that “a complaint’s substance, not its styling, is to

control whether the complainant party must proceed to arbitration or may file

in the court of common pleas.” Fineman, Krekstein & Harris, P.C., 278

A.3d at 390 (cleaned up). In her complaint, Ms. Clay averred that FNB’s

practices violated the express and implied terms of the FNB Agreement by

assessing certain fees upon her checking account activities. She claimed that

FNB itself committed such violations, and additionally cited as examples the

2021 fees. Although Howard Bank was the account operator in 2021, Ms. Clay

only cited those fees as examples and instead generally filed a complaint

against FNB based on the FNB Agreement and FNB’s practices, not upon any

Howard Bank agreement in place at the time the 2021 fees were imposed.

Insofar as she attempts to hold FNB accountable for the 2021 fees imposed

by Howard Bank, we discern no reason why that would remove the suit from

the arbitration clause’s scope. First, the clause is not limited to prospective

-8- J-A26005-24

application. Second, and more importantly, Ms. Clay framed any such claim

as between herself and FNB in the complaint. Since it is a dispute between

the parties, it falls within the FNB Agreement’s arbitration clause.

Moreover, we observe that Ms. Clay could have asserted a successor

liability claim against FNB based upon the Howard Bank fees and any Howard

Bank agreement in place at that time, but she did not. That the complaint

may have been unartfully pled does not render the arbitration clause

contained within the contract under which Ms. Clay is suing inapplicable.

Rather, the matter unequivocally concerns a dispute between Ms. Clay and

FNB and is related to the FNB Agreement and FNB’s adherence to the terms

thereof. Clearly, the suit falls squarely within the scope of the FNB

Agreement’s arbitration clause.

Based on the foregoing, we conclude the trial court erred in denying

FNB’s motion to compel arbitration. Therefore, we reverse the trial court’s

order denying FNB’s motion and remand for the parties to engage in

arbitration.4 In light of our disposition, we agree with FNB that the trial court

4 We observe that FNB implores us to require Ms. Clay to proceed to arbitration

on an individual basis because the arbitration clause also operated to waive her right to participate in certain class actions. See FNB’s brief at 48-50. In its Rule 1925(b) statement, FNB focused solely on whether the court erred in denying its motion to compel arbitration, not the manner in which arbitration should be conducted if compelled. At no point did FNB put the trial court on notice that it intended to challenge in this appeal the class-action nature of the suit. Since FNB waived this claim for purposes of this appeal, we decline its invitation to address it. See Pa.R.A.P. 1925(b)(4)(vii) (“Issues not included in the Statement and/or not raised in accordance with the provisions of this paragraph (b)(4) are waived.”).

-9- J-A26005-24

should stay the case pending completion of arbitration proceedings. See

FNB’s brief at 50-51. Accordingly, we direct that, upon remand, the court

grant FNB’s motion to compel arbitration and stay the proceedings until

arbitration is completed.5 See 42 Pa.C.S. § 7321.8(f) (“An action or

proceeding allegedly involving an issue subject to arbitration shall be stayed

if a court order to proceed with arbitration has been made[.]”).

Order reversed. Case remanded with instructions. Jurisdiction

relinquished.

DATE: 01/21/2025

5 In light of our disposition, we need not address FNB’s second issue.

- 10 -