Veronica Gardner v. Flagstar Bank, FSB

• Court: Court of Appeals for the Sixth Circuit
• Decided: June 20, 2025
• Docket: 24-1436
• Status: Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 25a0310n.06

No. 24-1436

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED Jun 20, 2025 VERONICA GARDNER; CALVIN MORGAN, ) KELLY L. STEPHENS, Clerk on behalf of themselves and all others similarly ) ) situated, ) ON APPEAL FROM THE Plaintiffs-Appellants, ) UNITED STATES DISTRICT ) COURT FOR THE EASTERN v. ) DISTRICT OF MICHIGAN ) FLAGSTAR BANK, FSB, nka Flagstar Bank, N.A., ) OPINION Defendant-Appellee. ) )

Before: COLE, READLER, and RITZ, Circuit Judges.

CHAD A. READLER, Circuit Judge. Veronica Gardner had a checking account with

Flagstar Bank, FSB for several years. At issue here are two types of charges Flagstar billed

Gardner during that period: (1) an overdraft fee for completed transactions that exceeded her

available balance upon the transaction’s settlement, but not authorization; and (2) a nonsufficient

funds fee assessed each time a merchant unsuccessfully tried to reprocess a transaction that had

already been denied.

These charges purportedly caught Gardner off guard. When her complaints to the bank

went unresolved, she sued in federal court. Relevant here is her breach of contract claim against

Flagstar, on which the district court granted summary judgment to the bank. Because a rational

factfinder could conclude that Flagstar breached its contractual terms and conditions, we reverse

and remand for further proceedings. No. 24-1436, Gardner v. Flagstar Bank, FSB

I.

A. In 2016, Gardner and her husband opened a joint checking account with a Flagstar

branch in southeast Michigan. As part of the account acquisition process, Gardner signed an

agreement indicating that she “agree[d] to . . . and acknowledge[d] receipt of,” among other

documents, Flagstar’s Terms and Conditions (the “T&C”). Acct. Agreement, R. 105-18,

PageID#2498. According to her deposition testimony, Gardner “skimmed and briefly read” the

T&C. Gardner Dep. Tr., R. 105-3, PageID#2243. Despite those efforts, Gardner would later incur

two types of account fees that she purportedly did not believe Flagstar was authorized to impose.

Authorize Positive, Settle Negative Transactions. One fee is tied to Flagstar’s “Bounce

Protection Overdraft Privilege Program,” in which Gardner was automatically enrolled and did not

opt out. Under the program, Flagstar could approve payments exceeding an accountholder’s

deposit balance, otherwise known as “overdrafts.” See Overdraft, Black’s Law Dictionary 1328

(12th ed. 2024) (“A withdrawal of money from a bank in excess of the balance on deposit.”). If

the bank approved the transaction, it would also charge a $36 overdraft fee to the account.

In some respects, overdraft fees allegedly came as no surprise to Gardner, based upon her

understanding of the T&C. What she claims to have been unaware of was a particular

manifestation of Flagstar’s overdraft fees for “authorize positive, settle negative” (“APSN”)

transactions.

By way of background, when a depositor makes a purchase from a merchant with the

depositor’s debit card, the merchant may request a “temporary debit authorization hold.” Original

T&C, R. 97-1, PageID#1965; Am. T&C, R. 113-5, PageID#3193. That hold is placed on the

depositor’s bank account, usually in an amount equal to the purchase’s exact value, until the

transaction “settles” (typically several days later) and funds are transferred from the depositor’s

2 No. 24-1436, Gardner v. Flagstar Bank, FSB

account to the merchant. In between a transaction’s authorization and settlement, the depositor

can authorize further intervening debits to his account. If she does so to such an extent that her

“available balance” (i.e., the amount of money that can be spent or withdrawn) no longer covers

an already-authorized transaction upon its settlement, that transaction is deemed APSN, thereby

triggering the $36 fee.

For example, suppose a depositor with a balance of $100 in her bank account swipes her

debit card to buy a $50 ticket to a baseball game between her hometown Detroit Tigers and the

Minnesota Twins. The merchant, here a ticket seller, requests Flagstar create a temporary debit

authorization hold equal to that amount, reducing the depositor’s available balance to $50. Next,

suppose a $75 check the same depositor wrote to her father is presented to Flagstar for payment.

Even though this check now exceeds the depositor’s available balance, Flagstar exercises its

discretion to pay the instrument, overdrawing the account by $25, plus a $36 overdraft fee. (In

other words, the account is now overdrawn by $51.) The next day, the merchant submits its $50

debit card transaction for payment. As before, Flagstar honors the debit-card transaction,

disbursing $50 in cash. But as the account remains overdrawn, the bank also charges another $36

overdraft fee. This second overdraft fee qualifies as APSN—that is, the depositor’s available

balance sufficed for the initial transaction (purchasing baseball tickets) upon its authorization, but

not its settlement. By that point, as explained, the account was overdrawn.

Gardner alleges to have incurred these types of overdraft fees numerous times. For today’s

purposes, only two transactions are relevant: a $26.01 charge to Leo’s Coney Island and a $10.04

charge to McDonald’s, both of which settled in September 2016, and each of which incurred $36

fees.

3 No. 24-1436, Gardner v. Flagstar Bank, FSB

Re-Presentment Fees. Re-presentment fees are tied to nonsufficient funds (or NSF)

transactions, that is, when a bank denies its depositor’s attempt to authorize a payment exceeding

her available balance. See Not Sufficient Funds, Black’s Law Dictionary, supra, at 1277 (“The

notation of dishonor . . . indicating that the drawer’s account does not contain enough money to

cover payment.”). Unlike an overdraft, where a depositor’s debit to her account is authorized and

paid by the bank despite an absence of funds in her account to cover the transaction, an NSF

transaction means the requested payment has been rejected due to such a shortfall.

Flagstar similarly charged a $36 fee for each declined payment. And that fee, too, had the

potential to multiply, sometimes rapidly. When a bank denies an NSF transaction, the presenting

merchant can “re-present” the returned transaction (i.e., try again to receive payment) in the hopes

of receiving money. See FDIC, Supervisory Guidance on Multiple Re-Presentment NSF Fees 1,

https://perma.cc/7LTR-8FXH (Aug. 2022). If the merchant did so, Flagstar would charge an NSF

fee for each presentment concerning the single denied transaction.

Depositors like Gardner enrolled in the “Bounce Protection Overdraft Privilege Program”

could still incur an NSF charge (and, in turn, a re-presentment fee) either because Flagstar

exercised its contractual discretion to decline an overdraft (e.g., for an account in bad standing),

or because the depositor had exceeded her overdraft limit. As with overdraft fees, Gardner

purports to have known the basics of NSF fees when she opened her account. Yet she says she

was unaware that re-presentment fees could be incurred in the recurring manner just described,

something she only later learned when her account was overdrawn. For example, in December

2019, a leasing company presented a payment of $86.13 to Gardner’s account. Because her

balance at the time (−$600.93) could not cover the payment, Flagstar rejected it, charging

Gardner’s account a $36 NSF fee in the process. Over the next two weeks, the leasing company

4 No. 24-1436, Gardner v. Flagstar Bank, FSB

re-presented that very same transaction twice more, each time causing Flagstar to charge a $36 fee

to Gardner’s account. All told, Gardner incurred $108 in NSF fees for one transaction costing

$86.13 (which, again, was never paid).

B. Unable to resolve these charges with Flagstar, Gardner turned to federal court, filing a

putative class action against the bank. She alleged that the bank’s handling of APSN transactions

and re-presented payments breached the T&C, including the implied covenant of good faith and

fair dealing, and converted her funds for personal gain.

Flagstar moved to dismiss the claims. The district court granted the motion as to the

conversion claim but denied it for the breach of contract claim, explaining that the T&C did not

unambiguously support Flagstar’s contractual reading. Gardner v. Flagstar Bank, FSB (Gardner

I), No. 20-12061, 2021 WL 3772866, at *6, *8 (E.D. Mich. Aug. 23, 2021). At summary

judgment, however, the district court granted judgment to Flagstar on the breach of contract claim.

Gardner v. Flagstar Bank, N.A. (Gardner II), No. 20-12061, 2024 WL 1641223, at *12 (E.D.

Mich. Apr. 16, 2024). In its view, because portions of Gardner’s deposition indicated she did not

read the T&C upon signing, she could not advance her own interpretation of the contract. Id. at

*10. Thus, while reaffirming that key language in the T&C remained ambiguous, the district court

granted Flagstar summary judgment. Id. (referring to the “ambiguity in the Agreement” regarding

APSN fees and “the existing ambiguity regarding” re-presentment fees). Gardner appeals that

decision.

II.

We review a district court’s grant of summary judgment de novo, viewing the evidence

and drawing all reasonable inferences in favor of the nonmovant—here, Gardner. See Hall v.

Navarre, 118 F.4th 749, 756 (6th Cir. 2024). Summary judgment is warranted only if “the record

5 No. 24-1436, Gardner v. Flagstar Bank, FSB

taken as a whole could not lead a rational trier of fact to find for the non-moving party.” Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); see Fed. R. Civ. P. 56(a).

We also review de novo a district court’s interpretation of state law. Hinman v. ValleyCrest

Landscaping Dev., Inc., 89 F.4th 572, 574 (6th Cir. 2024). The parties agree that Michigan law

governs our reading of the T&C. See Wesco Ins. Co. v. Roderick Linton Belfance, LLP, 39 F.4th

326, 335 (6th Cir. 2022).

Michigan courts consider a contract ambiguous when “two provisions of the same contract

irreconcilably conflict with each other” or when a provision “is equally susceptible to more than a

single meaning.” Kendzierski v. Macomb County, 931 N.W.2d 604, 612 (Mich. 2019) (quotation

marks and citations omitted). If a contract is ambiguous, its interpretation is ordinarily “a question

of fact that must be decided by the jury.” Klapp v. United Ins. Grp. Agency, Inc., 663 N.W.2d 447,

453–54 (Mich. 2003) (citation omitted). Even with an ambiguous contract, however, “summary

judgment is proper so long as the extrinsic evidence presented to the court supports only one of

the conflicting interpretations.” United Rentals (N. Am.), Inc. v. Keizer, 355 F.3d 399, 406 (6th

Cir. 2004) (quotation marks and citation omitted) (applying Michigan contract law).

A. Start with the APSN transactions. Examining the version of the T&C agreed to by

Gardner when she opened her account, the district court deemed the agreement ambiguous with

respect to whether Flagstar would charge overdraft fees for these transactions. Gardner I, 2021

WL 3772866, at *6 (“[T]he instant matter presents ambiguities about when [overdraft fees] may

be assessed in [APSN] [t]ransactions under the existing contractual language.”); Gardner II, 2024

WL 1641223, at *10 (referring to “the ambiguity in the [original] [a]greement” regarding APSN

transactions). On appeal, Flagstar does not contest the point.

6 No. 24-1436, Gardner v. Flagstar Bank, FSB

With all parties now agreeing on the ambiguity of the agreement’s APSN language, there

seemingly is little left for us to do on this issue, short of remanding the case back to district court.

See, e.g., Madej v. Maiden, 951 F.3d 364, 374 (6th Cir. 2020) (opting to not address merits of

district court holding uncontested on appeal). After all, “[w]here a written contract is ambiguous,

a factual question is presented as to the meaning of its provisions, requiring a factual determination

as to the intent of the parties in entering the contract.” Klapp, 663 N.W.2d at 454 (quoting 11

Richard A. Lord, Williston on Contracts § 30:7 (4th ed. 1990)). Such factfinding, of course,

ordinarily lies in the domain of a district court or jury, not this Court sitting in review of a summary

judgment. Id.

1. Resisting a return to district court, Flagstar asserts that the conceded textual ambiguity

is unimportant because we have looked to the wrong document. Rather than consulting the original

T&C—the version in effect at the time Gardner opened her account—Flagstar instead points to a

“disclosure guide” update mailed to Gardner in December 2017. (The parties quarrel over the

precise date at which this update took legal effect, a debate we need not resolve here.)

Summarizing recent and forthcoming changes to the T&C, the disclosure guide added an express

clarification that Flagstar would charge overdraft fees for APSN transactions. At least at the point

the update issued, that fact seemingly is significant. After all, Gardner largely does not argue that

the T&C, as modified, are ambiguous or invalid regarding Flagstar’s handling of APSN

But what about the Leo’s Coney Island and McDonald’s transactions, both of which

occurred before the contractual update? Flagstar believes we should not consider them, primarily

for procedural reasons. In her complaint, the bank emphasizes, Gardner references as examples

only APSN transactions that occurred after the T&C was updated. The two September 2016 fees,

7 No. 24-1436, Gardner v. Flagstar Bank, FSB

Flagstar adds, first surfaced in a declaration prepared by a purported expert witness, which was

attached to Gardner’s summary judgment response brief. That renders the testimony untimely,

and thus unable to support Gardner’s position, says the bank, because it was submitted “long after

the close of plaintiff-specific discovery.” Appellee Br. 34.

We agree with Flagstar that district courts enjoy “discretion to refuse the filing of untimely

affidavits.” Moore, Owen, Thomas & Co. v. Coffey, 992 F.2d 1439, 1446 (6th Cir. 1993); see

generally Fed. R. Civ. P. 16. But Flagstar never moved to strike the declaration at issue on

timeliness grounds. Nor, it bears adding, did the district court refuse Gardner’s filing of the

expert’s declaration; rather, it implicitly honored that testimony when it clarified that its holding

applied equally “[t]o the extent that Gardner assert[ed] claims for [APSN] fees charged against her

account before the updated disclosure guide became effective.” Gardner II, 2024 WL 1641223,

at *10 (emphasis added). That conclusion makes particular sense when, again, Flagstar did not

raise a timeliness issue with the district court, instead opting for solely merits-based challenges to

the testimony. It is too late to do so now. Novus Grp., LLC v. Prudential Fin., Inc., 74 F.4th 424,

428 (6th Cir. 2023) (“[A]rguments raised for the first time on appeal are forfeited.”). Nor can

Flagstar challenge the admission of the account statement upon which Gardner’s expert testimony

is based, as Flagstar itself introduced that very statement. Cf. United States v. Demmler, 655 F.3d

451, 459 (6th Cir. 2011).

To the extent Flagstar alleges this testimony does not raise a genuine issue of fact due to it

being “inconclusive[],” Appellee Br. 33, we disagree. Citing one of Gardner’s account statements,

her expert witness pointed out a check that had posted two days before the posting of the at-issue

September 2016 transactions. That check triggered an overdraft fee even though Gardner’s ledger

balance was $35.31 (i.e., positive) after the check’s posting. Why? Well, according to the expert

8 No. 24-1436, Gardner v. Flagstar Bank, FSB

retained by Gardner, Gardner’s available balance must have been negative at the time of the check,

meaning “there had to have been at least $35.32 in pending holds on previously authorized

transactions.” Olsen Decl., R. 112-6, PageID#2997. And because the Leo’s Coney Island and

McDonald’s transactions were the only charges that posted shortly after the check, Gardner’s

expert concluded that these transactions were the “likely” culprits—rendering them APSN. Id. At

this stage of litigation, we ask only whether a “rational” factfinder “could” find for Gardner.

Matsushita, 475 U.S. at 587. On that score, while not conclusive, this reasonable inference suffices

to defeat summary judgment.

2. Echoing a theme in the district court’s opinion, Flagstar next argues that, even if the

relevant contractual terms are ambiguous, we should nonetheless affirm the award of summary

judgment to Flagstar because extrinsic evidence supports only the bank’s interpretation. See

United Rentals, 355 F.3d at 406. Yet Flagstar’s extrinsic evidence leaves much to be desired. It

largely addresses Flagstar’s view that Gardner did not read material provisions of the original T&C

upon signing, which, according to the district court and Flagstar, forecloses any argument on her

part about the contract’s meaning. Gardner II, 2024 WL 1641223, at *10. Whether Gardner read

the relevant terms, however, makes no difference here.

That is the case because the general practice in Michigan is to deem probative a contracting

party’s failure to read an agreement only when that party tries to advance an interpretation running

counter to the contract’s unambiguous text. See, e.g., Komraus Plumbing & Heating, Inc. v.

Cadillac Sands Motel, Inc., 195 N.W.2d 865, 867–68 (Mich. 1972); Pritts v. J.I. Case Co., 310

N.W.2d 261, 265 (Mich. Ct. App. 1981). While Flagstar reads these decisions in a different light,

our best understanding of Michigan law is that this rule is cabined to unambiguous contractual

language. See Nat’l Sur. Corp. v. Hartford Cas. Ins., 493 F.3d 752, 755 (6th Cir. 2007) (reciting

9 No. 24-1436, Gardner v. Flagstar Bank, FSB

how we “resolv[e] an issue of state law in a diversity case” by “mak[ing] [the] best prediction . . .

of what the [state high court] would do” (third alteration in original) (quotation marks and citation

omitted)). Nor, it bears adding, does Flagstar cite a compelling basis justifying an extension of

this case law to ambiguous contracts, let alone persuasively explain why Michigan courts would

do so if given the chance. Intuition, in fact, suggests otherwise. The cited cases derive from the

principle that “parties who contract in writing are conclusively presumed to have intended what

they have written.” Komraus, 195 N.W.2d at 868 (emphasis added); see also Montgomery v. Fid.

& Guar. Life Ins., 713 N.W.2d 801, 805 (Mich. Ct. App. 2005) (per curiam) (“A contracting party

has a duty to examine a contract and know what the party has signed . . . .” (emphasis added)

(citing Komraus, 195 N.W.2d at 865)). Yet when the writing, as here, is itself ambiguous, the

nonreading party’s signature seemingly indicates very little about her subjective understanding of

the contract. See, e.g., Wells v. ABC Warehouse, No. 242746, 2004 WL 136389, at *2 (Mich. Ct.

App. Jan. 27, 2004) (per curiam) (“Because the language at issue was clear, plaintiff cannot seek

to disclaim the [signed] contract on the ground that she failed to understand its terms.” (emphasis

added)); Fabatz v. Auto-Owners Ins. Co., No. 350209, 2020 WL 7413823, at *1, *3 (Mich. Ct.

App. Dec. 17, 2020) (per curiam) (determining whether insurance policy was ambiguous after

observing that plaintiffs did not read it).

Flagstar also invokes depositions of bank officials as purported extrinsic evidence of its

contractual intent. Flagstar, however, fails to explain how the material supports its position

regarding ambiguity. “Where issues are adverted to in a perfunctory manner, unaccompanied by

some effort at developed argumentation, we consider them forfeited.” Buetenmiller v. Macomb

Cnty. Jail, 53 F.4th 939, 946 (6th Cir. 2022) (citation modified).

10 No. 24-1436, Gardner v. Flagstar Bank, FSB

Failing on these fronts, Flagstar turns to Gardner’s litigation choices, emphasizing her

inability to cite extrinsic evidence supporting her position. Yet that flips the burden. Again,

summary judgment is appropriate in this setting only when “extrinsic evidence presented to the

court supports only one” side. United Rentals, 355 F.3d at 406 (emphasis added) (citation

omitted). The absence of countervailing evidence from the nonmovant, without more, does not

suffice.

B. Turn now to re-presentment fees. Unlike APSN fees, Flagstar argues here that the

applicable text in the T&C unambiguously supports its side. To our minds, however, that text

instead “yields to conflicting reasonable interpretations.” Fresard v. Mich. Millers Mut. Ins. Co.,

327 N.W.2d 286, 293 (Mich. 1982).

Consult, as do Michigan courts, the “plain meaning” of “the words and phrases used by the

parties.” Meemic Ins. Co. v. Jones, 984 N.W.2d 57, 63 (Mich. 2022). At the crux of the

disagreement here is the meaning of the term “Item.” The T&C provides that NSF fees may be

assessed whenever a depositor’s available balance is insufficient “to pay an Item.” Original T&C,

R. 97-1, PageID#1968; Am. T&C, R. 113-5, PageID#3197. The original T&C “intended” “Items

. . . to refer to any debits against [the depositor’s] account and include, but are not limited to,

withdrawal tickets, checks, transfers, electronic debits, imaged debits, wire transfers, ATM debits,

ACH debits, bill pay debits, photo copy debits, bank generated debits, and debit card point of sale

transactions,” as well as both posted and pending transactions. Original T&C, R. 97-1,

PageID#1963–64. The amended T&C, for its part, retained much of this definition and added that

“‘Item’ means any order, instruction or authorization to pay, transfer or withdraw funds or money

from your account.” Am. T&C, R. 113-5, PageID#3193. According to Flagstar, this language, at

11 No. 24-1436, Gardner v. Flagstar Bank, FSB

least as amended, shows that each presentment constitutes an “Item” and that re-presentment may

therefore result in multiple NSF fees for one underlying transaction.

Perhaps. Consider the contract’s inclusion of the term “any.” Its use generally “asserts

concerning a being or thing of the sort named, without limitation as to which, and thus

constructively of every one of them.” Any, 1 Oxford English Dictionary 539 (2d ed. 1989); see

also Fremont Ins. v. Izenbaard, 820 N.W.2d 902, 903 (Mich. 2012) (order) (consulting dictionary

definitions to interpret undefined term in contract). This broad term debatably suggests the parties

intended each merchant’s request for payment to count as individual “Item[s],” even those deriving

from the same transaction.

But perhaps not. Implicit in Flagstar’s reading is that a merchant can itself “order,

instruct[], or authoriz[e]” payment—in this case by re-presenting a transaction. That is not how a

bank account normally works. Rather, the depositor generally tells his bank to pay the merchant,

often through the act of swiping a card. See Townsel v. DISH Network L.L.C., 668 F.3d 967, 968

(7th Cir. 2012) (“Use of a debit card instructs a bank to transfer money to the merchant from a

particular checking account.”); DBI Architects, P.C. v. Am. Express Travel-Related Servs. Co.,

388 F.3d 886, 894 (D.C. Cir. 2004) (referring to “cardholder [who] authorizes its bank to pay its

credit card bills automatically each month”); Hal S. Scott, Corporate Wire Transfers and the

Uniform New Payments Code, 83 Colum. L. Rev. 1664, 1680 (1983) (“The drawer of a pay order

is the customer that orders its bank . . . to pay a specified payee.”). Context supports the point.

See Wilkie v. Auto-Owners Ins. Co., 664 N.W.2d 776, 781 n.11 (Mich. 2003) (“We read contracts

as a whole . . . .”). Beyond defining “Item,” the T&C states that an NSF fee may be assessed after

“an Item is presented to” Flagstar. Original T&C, R. 97-1, PageID#1968; Am. T&C, R. 113-5,

PageID#3197. Yet if each presentment itself forms an “Item,” this language becomes arguably

12 No. 24-1436, Gardner v. Flagstar Bank, FSB

redundant. Under Michigan law, we should “avoid an interpretation that would render any part of

the contract surplusage.” Klapp, 663 N.W.2d at 453.

With these considerations in mind, the district court deemed both parties’ interpretations

reasonable. See Gardner I, 2021 WL 3772866, at *8 (“[T]he [T&C’s] language in the instant case

lends itself to two reasonable interpretations of ‘item’ . . . .”); Gardner II, 2024 WL 1641223, at

*10 (discussing “the existing ambiguity regarding Item Presentment Fees”). A host of other

district courts have done the same, analyzing similar contractual text using similar principles of

interpretation. E.g., Perks v. TD Bank, N.A., 444 F. Supp. 3d 635, 640 (S.D.N.Y. 2020) (deeming

“item” ambiguous in a contract stating “[a]n ‘item’ includes a[n] . . . ACH transaction . . . and any

other instruction or order for the payment, transfer, deposit or withdrawal of funds” (omissions

and second alteration in original) (emphasis omitted)); see also Encarnacion v. Workers Credit

Union, No. 21-cv-40077, 2022 WL 16574051, at *3 (D. Mass. Apr. 14, 2022) (collecting cases);

Lewis v. Pendleton Cmty. Bank, No. 22-CV-12, 2024 WL 897848, at *4 (N.D. W. Va. Mar. 1,

2024) (collecting more cases). Indeed, the case law in this setting feels entirely lopsided.

Flagstar’s cited cases, by comparison, do not even concern re-presentment fees. See Boone v. MB

Fin. Bank, N.A., 375 F. Supp. 3d 987, 992–95 (N.D. Ill. 2019) (analyzing exclusively overdraft

fees); McCollam v. Sunflower Bank, N.A., 598 F. Supp. 3d 1104, 1109–13 (D. Colo. 2022) (same);

Brown v. Dep’t of Com. Fed. Credit Union, No. 2021-CA-000554-B, 2021 WL 9476637, at *2–5

(D.C. Super. Ct. Nov. 12, 2021) (order) (same).

In sum, whereas Flagstar could have fairly interpreted the T&C to permit multiple NSF

fees for each transaction, Gardner could just have fairly interpreted the T&C to permit just one fee

per transaction. That means the T&C’s “words may reasonably be understood in different ways,”

rendering the contract “ambiguous.” Raska v. Farm Bureau Mut. Ins. Co., 314 N.W.2d 440, 441

13 No. 24-1436, Gardner v. Flagstar Bank, FSB

(Mich. 1982). As before, the resolution of that ambiguity raises a factual question generally ill-

fitting for summary judgment. See Klapp, 663 N.W.2d at 454.

Here too, Flagstar tries to square away the ambiguity by emphasizing Gardner’s purported

failure to read the T&C and her inability to cite any extrinsic evidence. For the same reasons

addressed in our discussion of APSN transactions, those observations alone fall short of justifying

summary judgment.

Flagstar also contests our understanding of the district court’s holding, asserting that the

district court deemed the amended T&C unambiguous regarding the bank’s ability to charge re-

presentment fees. We acknowledge (as did Flagstar at oral argument) the possible ambiguity in

the nature of the district court’s “ambiguity” conclusion. But the best reading of that decision is

that the district court’s use of the term “existing”—in describing “the existing ambiguity regarding

Item Presentment Fees,” Gardner II, 2024 WL 1641223, at *10—referred to the amended T&C.

Flagstar’s quotation to the district court’s explanation of how the bank’s contractual changes

“clarifie[d]” the use of temporary debit authorization is unavailing, as that clarification pertains

only to APSN transactions, not re-presentment fees. See Appellee Br. 28 (“Flagstar’s updated

definition ‘clarifies that a transaction which creates a temporary debit authorization hold is an

“item” that does not become “posted” to the account until after it is paid from the account.’”

(quoting Gardner II, 2024 WL 1641223, at *7)).

C. One last point. Recall that Gardner’s breach of contract claim also alleges that Flagstar

breached the implied covenant of good faith and fair dealing. This covenant, at a high level,

describes “a promise that neither party shall do anything which will have the effect of destroying

or injuring the right of the other party to receive the fruits of the contract.” Kircher v. Boyne USA,

14 No. 24-1436, Gardner v. Flagstar Bank, FSB

Inc., --- N.W.3d ----, No. 166459, 2025 WL 938147, at *3 (Mich. Mar. 27, 2025) (per curiam)

(quotation marks and citation omitted).

In Michigan, “there is no independent cause of action for breach of the implied covenant

of good faith and fair dealing.” Id. Accordingly, after the district court determined that Flagstar

did not breach the T&C, it necessarily concluded Flagstar likewise did not breach the implied

covenant of good faith and fair dealing. Gardner II, 2024 WL 1641223, at *10–11. On appeal,

Flagstar defends this conclusion on the same basis, adding that its purported “lack of good faith

cannot override an express contract provision.” Appellee Br. 47.

Because we deem the T&C ambiguous and potentially breached by Flagstar, it follows that

Gardner, as part of her breach of contract claim, can argue the bank breached the implied covenant

of good faith and fair dealing. This inference comports with the dispositions of Michigan courts

in identical postures. See, e.g., PTN-NRS, LLC v. County of Wayne, No. 332135, 2017 WL

4447016, at *3 (Mich. Ct. App. Oct. 5, 2017) (per curiam) (reversing summary judgment because

plaintiff alleged “specific provisions in the parties’ contract were breached” and “also sufficiently

alleged a breach of contract based upon bad faith or unfair dealing”); Hall v. El-Bathy, No. 362063,

2023 WL 3563021, at *4 (Mich. Ct. App. May 18, 2023) (per curiam) (effectively same).

* * * * *

We reverse and remand for further proceedings.