Churchill v. Bangor Savings

STATE OF MAINE BUSINESS & CONSUMER COURT
CUMBERLAND, ss. Location: Portland
Docket No. BCD-CIV-2021-00027

ETHAN A. CHURCHILL,. )
ELISSA TRACEY, et al., )
)
Plaintiffs, )
v. ) ORDER DENYING DEFENDANT'S
) MbTION TO DISMISS
BANGOR SAVINGS BANK,. )
)
Defendant. )

On January 29, 2021 Plaintiff Ethan Churchill ("Churchill") filed a Class Action Complaint

against Defendant Bangor Savings Bank ("Bangor Savings") on behalf of himself and all persons

simi!Jirly situated. An Amended Complaint was filed on March 1, 2021, adding Plaintiff Elissa

Tracey ("Tracey'') on behalfofherself and all persons similarly situated. The Amended Complaint

alleges that Bangor Savings (1) wrongfully charges two or more non-sufficient fund fees ("NSF

Fee") on a single item; and (2) ·wrongfully charges overdraft fees ("OD Fees") on accounts that

were not actually overdrawn at the time the charge was authorized. (Pl.'s Amend. Compl. 11.) 1

On April 12, 2021, Bangor Savings filed a Motion to Dismiss (the "Motion") on the grounds that

Churchill and Tracey (hereinafter referred to collectively as "P.laintiffs") have failed to state a

claim upon which relief can be granted. 2 • On May 3, 2021, Plaintiffs filed their Opposition to the_

1 The Amended Complaint was filed with a copy of a Bangor Savings document entitled "Important Information
About Your Account." The document purports to contain the terms that control the Class members' accounts (the
document and its contents are hereinafter referred to as the "Account Terms"). The Court considers the Account Tenns
in deciding the Motion because the document was filed with the Amended Complaint, is central to Plaintiffs' claims,
Plaintiffs repeatedly reference the Account Terms throughout the Amended Complaint, and all parties refer to the
Account Terms in their briefs. See Moody v. State Liquor & Lottery Comm'n, 2004 ME 20, ,r 13 843 A.2d 43. Further,
as this is a breach of contract case, the Court requires the Account Terms for its analysis of ambiguous terms. \
2 Many of Bangor Savings' arguments are premised on the National Automated Clearing House Asso~iation
(NACHA) Rules. However, as discussed at the oral argument, the Court does not consider the NACHA Rules on this
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Motion, and on May 17, 2021 Bangor Savings filed its Reply. On June 29, 2021, the Court held

oral argument. For the following reasons, the Motion is DENIED.

STANDARD OF REVIEW

A motion to dismiss "tests the legal sufficiency ofthe complaint." Livonia v. Town ofRome,

1998 ME 39, ,r 5, 707 A.2d 83, 85. In reviewing a motion to dismiss under Rule 12(b)(6), the

failure to state a claim in which ·relief may be granted, the Court "consider[s] the facts in the

complaint as if they were admitted." Bonney v. Stephens Mem. Hosp., 2011 ME 46, ,r 16, 17 A.3d

123. The complaint is viewed "in the light most favorable to the plaintiff to determine whe.ther it

sets forth elements oJ a cause of action or alleges facts that would entitle the plaintiff to relief

pursuant to some legal theory." Id. (quoting Saunders v. Tisher, 2006 ME 94, ,r 8, 902 A.2d 830).

"Dismissal is warranted when it appears beyond a doubt that the plaintiff is not entitled to relief

under any set of facts that he might prove in support of his claim." Id. The legal sufficiency of a

complaint challenged pursuant to M.R. Civ. P. 12(b)(~) is a question oflaw. Marshall v. Town of

Dexter, 2015 ME 135, ,r 2, 125 A.~d 1141. /

FACTS

According to the Amended Complaint, Churchill is a citizen and resident of the City of

Bangor, Maine. (Pl. 's Amend. Compl. ,r 12.) Tracey is a citizen ofRandolph, Maine. (Pl. 's Amend.

Compl. ,r 13.) Bangor Savings is a c01yoration duly organized and existing under the laws of the

State of Maine and is one of Maine's largest banks; it maintains its principal place of business in

Bangor, Maine. (Pl.'s Amend Compl. ,r 14.) parsed

I. · Multiple NSD Fees on the Same Item

Motion because Bangor Savings did include a copy ofthe NACHA Rules with its Motion and the NACHA Rules are.
behind a paywall. Therefore, Bangor Saving's arguments premised on the NACHA Rules are not addressed here.

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On June 3, 2020 Plaintiff Churchill attempted to make a $55 payment via an American

Clearing House (ACH) transaction to United Financial Casualty Company. (Pl. 's Amend. Compl.

t 19.) Bangor Savings rejected the payment request due to insufficient funds and charged
Churchill a $32 Return Item Fee. (Pl.'s Amend. Compl. ,r 20.) Unbeknownst to Churchill and

without asking Bangor Savings to retry the transaction, six days later, on June 9, 2020, Bangor

Savings again attempted to process the payment request. (Pl.'s Amend. Compl. ,r 21.) Bangor

Savings again rejected the payment for insufficient funds and charged Churchill another $32

Return Item Fee. Id. Bangor Savings ~ew the second attempt stemmed from the same payment

authorization as the first, as it was labeled a "RETRY PYMT" on Churchill's statement. Id. As a

result, Bangor Savings charged Churchill $64 in fees to attempt to process one $55 ACH

authorized payment. (Pl.'s Amend. Compl. ,r 22.)

Churchill understood his one-time ACH authorization for a $55 payment to be a single

transaction based upon his understanding of the Account Terms, capable at most of receiving a

single NSF Fee (if Bangor Savings returned the "item") or OD Fee (if Bangor Savings paid the

payment request). (Pl.' s Amend. Comp1. ,r 23.) The same pattern occurred again on August 4 and

10, 2020 with respect to a different attempted payment from Churchill to United Financial Casualty

Company. (PL's Amend. Compl. if 24.)

Attached at the end of the Account Terms is a Fee Schedule. The Fee Schedule contains a

section entitled "OVERDRAFT/RETURNED." The section contains several entries, one ofwhich

is for ''NSF, Returned, Uncollected." A footnote is attached to the entry. The footnote states:

"Includes any withdrawal, check, ATM, or AGH." The Fee Schedule indicates that the fee for

"NSF, Returned, Uncollected" is "$32.00 per item."

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The term "item" is used occasionally in the body of the Account Terms, but it is not

defined. The term "item" does not appear in the section of the Account Terms labeled "Electronic

Funds Transfers Your Rights and Responsibilities," nor in the subsection that specifically

discusses the "Autorr~ated Clearinghouse (ACH) or other payments network."

II. OD Fees on Transactions That Were Authorized When the Account Was Not Overdrawn

On June 30, 2020, Plaintiff Tracey was charged an overdraft fee on a debit card transaction

that settled June 30, 2020. (Pl.'s Amend. Compl. ,r 111.) At the time the charge had been

authorized on a prior day, the account had contained sufficient funds. (See PL' s Amend. Compl. ,r

111.) A debit hold for the transaction amount was placed on the account at the time oftransaction

was authorized. Id.

It can reasonably be inferred from the Amended Complaint that it was Tracey's

understanding that her account would only be assessed for sufficient funds at the time the deb!t1

card transaction was authorized-and that the debit holds placed on her account for each transaction

sequestered funds to pay for the corresponding authorized transactions. Since Tracey believed the

·transaction was subject to a fee assessment at the time of authorization, Tracey did not understand

the transaction would be assessed again for fees at the time of settlement or that debit hold funds

could be used to cover other transactions .

. In reference to ATM and everyday debit card transactions, the Account Tenns state:

"[w]e (Bangor Savings) do not authorize andpay overdrafts for the following types
of transactions unless you ask us to (see consent form below)[]. We pay overdrafts
at our discretion, which means we do not guarantee that we will always authorize
and pay any type of transaction. If we do not authorize and pay an overdraft, your
transaction will be declined.

(Account Terms 26.) The Account Terms also include a clause indicating the processing order of •

transactions. In reference to fees during processing, the processing order says, "payment of items

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may create multiple overdrafts during a single banking day for which you will be charged'-our

standard NSF fee as noted in our common fee schedule for each overdraft whether paid or

returned." (Account Terms 6.) However, notably absent from the Account Terms is the term

"settlement" or notice that settlement may not occur for several days after transactions are

authorized and debit holds are placed on an account. The Account Terms also fail to mention debit

holds, explain how debit holds work, or indicate that debit hold-funds may be used to settle funds

for transactions that are settled before the transaction for which the debit hold was initially created

- is settled.

ANALYSIS

~laintiffs do not dispute Bangor Savings' right to either (a) reject a transaction and charge

a single NSF fee, or (b) l?ay a transaction and charge a single OD Fee on a transaction, but Plaintiffs

contend that Bangor Savings unlawfully maximizes its already profitable account fees with

practices that violate the Account Terms. (Amend. Compl. ,i 3.) The issue before the Court on this

Motion to Dismiss is whether Plaintiffs have alleged facts sufficient to state a claim for breach of

contract. That issue in tum depends on whether the Account Terms are clear or ambiguous.

I. Language ofthe Agreement is Ambiguous and Cannot Foreclose Plaintiffs' Claims
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Bangor Savings argues that the Plaintiffs' claims are foreclosed by the express language of

the Account Terms, which Bangor Savings argues is unambiguous.- (Def.'s Mot. Dismiss 3.)

However, the language Bangor Savings believes precludes Plaintiffs from raising their claims is

the same 'language Plaintiffs argue Bangor Savings breached and challenge as ambiguous.

"[T]he interpretation of a contract, including whether or not its terms are ambiguous, is a

question of law []." Scott v. Fall Line Condo. Ass'n, 2019 ME 50, ,i 6, 206 A.3d 307; see also

Champagne v. Victory Homes, Inc., 2006 ME 58, ,i 8, 897 A.2d 803. Contracts are construed "in

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accordance with the intention of the parties, which is to be ascertained from an examination ofthe

whole instrument. All parts and clauses must be considered together that it may be seen if and how

one clause is explained, modified, limited or controlled by the others." Dow v. Billing, 2020 ME

10, ,i 14, 224 A.3d 244 (quoting Am. Prat. Ins. Co. v. Acadia Ins. Co., 2003 ME 6, ,i 11, 814 A.2d

989.)

Document language is ambiguous if it is reasonably susceptible to different interpretations

Champagne, 2006 ME 58, if 8, 897 A.2d 803. The mere fact that the parties have different views

of what an agreement means does not automatically render the agreement ambiguous. Id. at ,i 10.

Ultimately, if a court must attempt to reverse-engineer the parties' intent from the four comers of ·

the contract, the contract is ambiguous, and its true meaning is a question oflaw to be resolved by

the trier of fact on the basis of evidence presented to it at the time of trial. See Info Bridge, LLC v.

Chimani, Inc., 2020 ME 41, ,i 15, 228 A.3d 721; Devine v. Roche- Biomedical Labs., 63 7 A.2d 441,

445 (Me. 1994); Dow, 2020 ME 10, ,i 14,224 A.3d 244.

a. "Item" is Ambiguous.

The term "item" is not defined in the Account Terms. Bangor Savings argues that the term

"item" is defined by footnote 1 in the Fee Schedule. Footnote 1 tersely states: "Inclupes any

withdrawal, check, ATM and_ACH." Footnote 1, however, is attached to the phrase ''NSF,

Returned, Uncollected," not to the term "item.'' Bangor· Savings nevertheless argues that Footnote

1 defines "item" to mean any presentation, including representation,,is a new "item." Bangor

Savings' construction of the term may be plausible, but it is not the only plausible interpretation.

Plaintiffs argue that a single authorization for payment is a single order for payment and thus a

single "item" regardless of how many times the request for payment is made. That interpretation

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is also plausible. 3 According to the Complaint, that is how Churchill understood the Account

Terms. Since the term "item" is reasonably susceptible to different interpretations, on the record

currently before the Court the language of the Account Terms is ambiguous and cannot be resolved

at the Motion to Dismiss·stage of the proceeding.

b. "Authorize and Pay" is Ambiguous.

Given the absence of clarification on debit holds and settlement in the Account Terms, the

phrase "authorize and pay" is ambiguous because the Account Terms are unclear on when debit.

card transactions are assessed for fees. Bangor Savings argues the transaction is accessed for fees

twice. First when Bangor Savings authorizes and agrees to pay it and again when Bangor Saving

settles the charge and transfers the funds. Bangor Savings argues that due to the delay in settling

and the order in which all transactions are processed, by the time the funds are transferred to the
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merchant to settle a prior authorized transaction, the account may no longer have funds sufficient

to cover it because debit holds do not truly sequester funds when a transaction is authorized. When

that happens, Bangor Savings covers the cost o(the transaction and believes under the Account

Terms, it is entitled to charge a fee. This is a reasonable interpretation of the contract as written,

but it is not the only.one. Plaintiffs argue "authorize and pay" means that the transaction is assessed

for fees when Bangor Savings authorizes and agrees to pay the amount ofthe tr~saction. Plaintiffs

assert this is the correct interpretation because after a transaction is authorized, it can no longer be .

declined. Since the transaction can no longer be declined, Bangor Savings must pay it and should

pay it with the funds allotted to the transaction in the corresponding debit hold. This is also a

reasonable understanding of the Account Terms. Since the· contractual relationship between

3 Maine's Uniform Commercial Code ("U.C.C.") defines an "item" as" an instrument, promise orwder to pay
money handled by a bank for collection or payment." M.R.S.A.tit. 11, § 4-I04(g). However, this does not clarify·
the issue at stake here.

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"aushorize and pay" and the assessment of ~ransaction fees is reasonably susceptible to different

· interpretations, on the record currently before the Court the Account Terms are ambiguous and

cannot be resolved at the Motion to Dismis~ stage of the proceeding.

· II. Failure to Dispute the Fees with the Bank

Bangor Savings' argument that the Plaintiffs' claims · should· be · dismissed because

Plaintiffs faileq to object to the fees within a timely manner is unpersuasive. Plaintiffs' obligation
' '

to timely object to fees is limited to objecting to alleged errors on their account statements.

Plaintiffs are not arguing that fees were charged in error. Rather, Plaintiffs allege the fees were

charged purposely in conformity with Bangor Savings' fee charging practice and that Bangor

Savings' fee charging practices violate the Account Terms. Correctly understood, Plaintiffs'

claims are not subject to the Account Terms internal error remediation provisions. Therefore,

Plaintiffs' failure to use the col)tract's error remediation clause does not bar their claim that Bangor

Savings' practices constitute a breach of contract.

III. Good Faith and Fair Dealing

Count I of Plaintiffs one count complaint is (unhelpfully) entitled "Breach of Contract and

Breach of the Covenant of Good Faith and Fair Dealing." Bangor Savings objects on the grounds

that Maine law does not recognize an implied duty of good faith and Jair dealing in_ the common

law of contracts. Fitzpatrick v. Teleflex, Inc., 630 F. Supp. 2d 91, 105 (D. Me. 2009). Plaintiffs

counter that they are not pursuing breach of the covenant of good faith as an independent cause of

action, but rather as a constituent part of their breach of contract claim. Plaintiffs argue that the

Account Terms are governed by Maine's U.C.C. and Maine's U.C.C imposes an obligation of

good faith. Chartier v. Farm Family Life Ins. Co., 2015 ME 29, ,-i 7, 113 A.3d 234. When a

contract governed by Maine's U.C.C is involved, in contrast to a common law contract, the good

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faith inquiry may be a part ofthe \overall breach of contract analysis. Id On the record before the

Court Bangor Savings' Motion must be denied.

CONCLUSION

For the foregoing reasons, Bangor Savings' Motion to Dismiss is DENIED.

The Clerk is instructed to enter this Order on the docket for this case by incorporating it by

reference. M.R. Civ. P. 79(a).

So Ordered.

Dated: ~ ... (Z - 'ZJr) 2 [
Michael Duddy
Judge, Business and

Entered on the docket: 08/12/2021

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