Durkee v. Bank of America, N.A.

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 ANDREA F. DURKEE, on behalf of Case No.: 20-cv-00347-DMS-LL herself and all others similarly situated, [12] ORDER GRANTING MOTION TO Plaintiffs, 13 DISMISS v. [14] BANK OF AMERICA, N.A., and DOES [15] 1-100, inclusive, [16] Defendant. [18] 19 Pending before the Court is Defendant Bank of America’s motion to dismiss Plaintiff 20 Andera F. Durkee’s First Amended Complaint (“FAC”). Plaintiff filed a response in 21 opposition, and Defendant filed a reply. For the following reasons, the Court grants 22 Defendant’s motion to dismiss. 23 I. 24 BACKGROUND 25 On November 25, 2019, Plaintiff was traveling in Cabo San Lucas, Mexico and 26 withdrew $100.00 pesos, or $5.32 U.S. dollars, from an ATM. (FAC ¶ 21). The ATM 27 machine assessed her a $50.00 pesos Value Added Tax (“VAT”) and a $8.00 pesos 28 withdrawal fee. (Id.). Plaintiff refers to these as “Usage Fees.” (Id. at ¶ 2). Plaintiff was 1 assessed additional fees by Defendant, including a $5.00 U.S. dollar Non-Bank of 2 || America ATM Fee and a $0.25 U.S. dollar International Transaction Fee (“ITF”). (/d.). 3 sum, Plaintiff was charged $8.11 U.S. dollars in fees for her withdrawal of $5. 32 U.S. 4 || dollars’ worth of pesos. (/d. at § 22). 5 Plaintiff alleges that Defendant “unlawfully inflated the amount of the ITF” and 6 || violated the applicable terms of the Deposit Agreement and Disclosures and Personal 7 Schedule of Fees. (/d. at Jf 2, 11). Specifically, Plaintiff alleges that the ITF “is supposed 8 ||to be .. . 3% of the dollar amount that was withdrawn at a foreign ATM.” (dd. at □ 21). 9 || Instead, Defendant assessed the ITF on the amount withdrawn plus the amount of Usage 10 ||Fees. (Ud. at J 23). As a result, the ITF was $0.25, instead of $0.16. (Ud. at □□□□ The 11 || applicable provisions of the Personal Schedule of Fees states: [12] International Transaction Fee 3% of the U.S. dollar *Fee applies if you use your card to purchase goods or services in a foreign currency or in 13 amount of the transaction U.S. dollars with @ foreign merchant (a “Foreign Transaction”). Foreign Transactions include □□ orig oaune made in the U.S. but with a merchant who processes the transaction 14 *Fee also applies if you use your card to obtain foreign currency from an ATM. Visa® or Mastercard® converts the transaction into a ULS. dollar amount, and the Intemational 15 a Ocoee U5. dollar anvount. ATM fees may also apply to * See disclosure information that accompanied your card for more information about this fee. [16] 17 tee ps Based on these alleged facts, Plaintiff filed suit against Defendant, on behalf of [18] herself and all others similarly situated. In her FAC, Plaintiff alleges (1) breach of contract; [19] (2) breach of the implied covenant of good faith and fair dealing; and (3) conversion. [20] Plaintiff seeks declaratory relief, actual damages, punitive damages, attorney’s fees and [21] costs. Defendant now moves to dismiss Plaintiff’s FAC for failure to state a claim. [22] II. [23] LEGAL STANDARD [24] A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the [25] legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro [26] v. Block, 250 F.3d 729, 731 (9th Cir. 2001). In deciding a motion to dismiss, all material [27] factual allegations of the complaint are accepted as true, as well as all reasonable inferences [28] 1 to be drawn from them. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 338 (9th Cir. 1996). 2 A court, however, need not accept all conclusory allegations as true. Rather it must 3 “examine whether conclusory allegations follow from the description of facts as alleged by 4 the plaintiff.” Holden v. Hagopian, 978 F.3d 1115, 1121 (9th Cir. 1992) (citation omitted). 5 A motion to dismiss should be granted if a plaintiff’s complaint fails to contain “enough 6 facts to state a claim to relief that is plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544 , 7 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that 8 allows the court to draw the reasonable inference that the defendant is liable for the 9 misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 10 U.S. at 556). 11 III. 12 DISCUSSION 13 The parties agree that the relevant language in the contract imposes an ITF of “3% 14 of the U.S. dollar amount of the transaction.” (FAC, Ex. 1 at 13). The primary issue that 15 divides the parties is whether a ‘transaction’ constitutes the amount of money Plaintiff 16 withdrew from the ATM or whether it includes both the amount of money withdrawn and 17 the Usage Fees the foreign ATM applied. Defendant argues the latter, whereas Plaintiff 18 argues the former. Defendant further contends Plaintiff’s claim for breach of implied 19 covenant of good faith and fair dealing fails because the contract expressly permitted 20 Defendant’s actions and Plaintiff’s claim for conversion is defective as a matter of law. 21 The Court considers these arguments in turn. 22 A. Breach Of Contract 23 In California, “[t]he essential elements of a breach of contract claim are: ‘(1) the 24 contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, 25 and (4) the resulting damages to plaintiff.’ ” Hamilton v. Greenwich Investors XXVI, LLC, 26 126 Cal. Rptr. 4th 1602, 1614 (Cal. Ct. App. 2011) (quoting Reichert v. Gen. Ins. Co., 442 27 P.2d 377, 381 (Cal. 1968)). In interpreting a contract, “courts look first to the plain and 28 ordinary meaning of the agreement.” Tri-Union Seafoods, LLC v. Starr Surplus Lines Ins. 1 Co., 88 F. Supp. 3d 1156, 1162 (S.D. Cal. 2015) (citing Perez-Encinas v. AmerUS Life Ins. 2 Co., 468 F. Supp. 2d 1127, 1133 (N.D. Cal. 2006)). “If contractual language is clear and 3 explicit, it governs.” Bank of the W. v. Superior Court, 833 P.2d 1254, 1264 (Cal. 1992) 4 (citing Cal Civ. Code § 1638)). If the contractual language is ambiguous, “it must be 5 interpreted in the sense in which the promisor believed, at the time of making it, that the 6 promisee understood it.” Id. at 1264–65 (internal quotation omitted). “A contract is 7 ambiguous where, upon examining the contract as a whole, it is capable of two or more 8 reasonable meanings.” Tri-Union Seafoods, 88 F. Supp. 3d at 1162 . The Court, therefore, 9 must look to the language of the agreement to determine whether it is unambiguous. 10 The applicable provision of the contract states: the ITF’s ‘Fee Amount’ is “3% of 11 the U.S. dollar amount of the transaction. (FAC, Ex. 1, at 13). Under the header ‘Other 12 Important Information About This Fee’, the contract reads: “fee applies if you use your 13 card to purchase goods or services in a foreign currency or in U.S. dollars with a foreign 14 merchant (a ‘Foreign Transaction’).” (Id.). The contract further states: “Fee also applies 15 if you use your card to obtain foreign currency from an ATM. Visa or Mastercard converts 16 the transaction into a U.S. dollar amount, and the [ITF] applies to that converted U.S. dollar 17 amount. ATM fees may also apply to the ATM transactions.” (Id.). The contract then 18 refers the reader to the ‘ATM Fees section’, which discusses the Defendant-imposed ATM 19 fees, including the $5.00 Non-Bank of America Teller Withdrawal Fee that was assessed 20 on Plaintiff’s foreign ATM withdrawal. 21 Plaintiff argues that the “commonsense meaning” of the term ‘transaction’ 22 “encompass[es] an accountholder’s withdrawal amount, not additional Usage Fees added 23 on by the ATM owner.” (ECF No. 15 at 9). Plaintiff contends that the term ‘transaction’ 24 frequently appears alongside ‘withdrawals and transfers’ in the contract. (Id. at 11–12 25 (citing FAC, Ex. 1 at 10, 11, 13)). Used in this context, Plaintiff argues, ‘transaction’ 26 necessarily means the withdrawal of money, not the fees imposed on the withdrawal. 27 Plaintiff also argues that the order of the relevant contractual provisions demonstrates that 28 “first foreign currency is obtained, then Visa/Mastercard converts the transaction, then 1 [Defendant] applies the ITF to that amount, and finally, ‘ATM fees may also apply to the 2 ATM transactions.’ ” (Id. at 10 (quoting FAC, Ex. 1. at 13)). Plaintiff emphasizes that the 3 mention of ATM fees comes after the application of the ITF, which shows Defendant does 4 not consider ‘fees’ to be encompassed within an ‘ATM transaction’. Furthermore, Plaintiff 5 argues, it would be reasonable for Defendant’s customers to assume that the ITF is not 6 assessed on the foreign ATM’s fees because the fee is not assessed on the ATM fees 7 imposed by Defendant. Lastly, Plaintiff cites the Merriam-Webster Dictionary’s definition 8 of ‘transaction’: “something transacted; especially: an exchange or transfer of goods, 9 services, or funds.” (FAC ¶ 27). Plaintiff argues that this definition supports her 10 interpretation because Usage Fees are “a precursor or corollary to the actual ‘transaction’— 11 the foreign currency cash withdrawal.” (Id.). 12 In the alternative, Plaintiff argues that the contract’s language is at best ambiguous— 13 ‘transaction’ can be reasonably read to support either party’s interpretation. Plaintiff 14 contends that given this ambiguity, the Court must deny Defendant’s motion to dismiss for 15 failure to state a claim. See Monaco v. Bear Stearns Residential Mortg. Corp., 554 F. Supp. 16 2d 1034, 1040 (C.D. Cal. 2008) (“Where the language leaves doubt as to the parties’ intent, 17 the motion to dismiss must be denied.”) (internal citation omitted). 18 Defendant disagrees with Plaintiff’s interpretation. Defendant contends that the ITF 19 is clearly assessed on the amount withdrawn plus the Usage Fees because the contract states 20 “VISA or Mastercard converts the transaction into a U.S. dollar amount, and the [ITF] 21 applies to that converted U.S. dollar amount.” (Mot. at 10 (citing FAC, Ex. 1 at 13)). 22 Defendant argues that because the Usage Fees are “necessarily and undisputedly converted 23 to U.S. dollars[,]” the Usage Fees are included in the transactional amount on which the 24 ITF is assessed. (Id.). Defendant further argues that the dictionary definition of 25 ‘transaction’ supports its interpretation: a foreign ATM’s Usage Fees are assessed in 26 ‘exchange’ for, or are involved in the ‘transfer’ of, the withdrawal of money. (Id. at 11). 27 Finally, Defendant notes that the language stating “ATM Fees may also apply” clearly 28 refers to the ATM Fees imposed by Defendant, not Usage Fees imposed by foreign ATMs. 1 Defendant argues this language also supports its interpretation: the ITF is not assessed on 2 Defendant-imposed ATM Fees because those fees are not assessed in foreign currency, 3 whereas the ITF is assessed on the Usage Fees because those fees are assessed in foreign 4 currency. (Id. at 12–13). 5 Defendant’s interpretation of the contract is the sole reasonable interpretation. The 6 contract unambiguously states: “[The ITF] also applies if you use your card to obtain 7 foreign currency from an ATM. Visa or Mastercard converts the transaction into a U.S. 8 dollar amount, and the [ITF] applies to that converted U.S. dollar amount.” (FAC, Ex.1 at 9 13). Contrary to Plaintiff’s assertion and conclusory allegations, it is not the commonsense 10 meaning of transaction to refer only to the withdrawal of money. As Defendant notes, the 11 dictionary definition Plaintiff provides proves quite the opposite: a ‘transaction’ is an 12 exchange or transfer. Here, the foreign ATM gives its user her money in exchange for 13 Usage Fees. Furthermore, the Usage Fees are assessed in the foreign currency and must 14 be converted to U.S. dollars. Since the ITF applies to the converted U.S. dollar amount, it 15 is only reasonable to assume the ITF applies to the entire converted transaction—the 16 amount withdrawn plus the Usage Fees. The phrase ‘ATM fees may also apply’ does not 17 change the Court’s conclusion. The very next sentence refers the reader to Defendant’s 18 ATM fee section, suggesting the language concerns only the ATM fees imposed by 19 Defendant. (Id.). It would be unreasonable to assume that just because the ITF is not 20 assessed on Defendant’s ATM fees, it is not assessed on the foreign ATM fees, specifically 21 when the contract explicitly states otherwise. The Court, therefore, finds no ambiguity in 22 the contract’s meaning. See Schertzer v. Bank of Am., --- F. Supp. 3d ----, 2020 WL 23 1046890, at *14 (S.D. Cal. 2020) (“[O]nly one interpretation of the fee disclosure 24 reasonably makes sense.”) (citing Castandea v. Dura-Vent Corp., 648 F.2d 612 , 619 (9th 25 Cir. 1981)). 26 Furthermore, implicit in Plaintiff’s argument is the proposition that the contract must 27 state, in exact words, ‘the ITF is assessed on the amount withdrawn plus the fees imposed 28 by the foreign ATM.’ This argument asks too much. See La Jolla Beach & Tennis Club, 1 Inc. v. Indus. Indem. Co., 884 P.2d 1048, 1053 (Cal. 1994) (“Courts will not adopt a 2 strained or absurd interpretation in order to create an ambiguity where no exists.”); Am. 3 Alt. Ins. Corp. v. Superior Court, 37 Cal. Rptr. 3d 918, 923 (Cal. Ct. App. 2006) (“If 4 contractual language is clear and explicit and does not an involve an absurdity, the plain 5 meaning governs.”). It is enough that the contract’s language has only one reasonable 6 interpretation: the ITF applies to the transaction—the amount withdrawn plus the Usage 7 Fees—converted into U.S. dollars. Defendant’s motion to dismiss Plaintiff’s breach of 8 contract claim is accordingly granted. 9 B. Breach Of Implied Covenant Of Good Faith And Fair Dealing 10 The implied covenant of good faith and fair dealing is present in all contracts. See 11 Marsu B.V. v. Walt Disney Co., 185 F.3d 932, 937 (9th Cir. 1999). “In essence, the 12 covenant is implied as a supplement to the express contractual covenants, to prevent a 13 contracting party from engaging in conduct which (while not technically transgressing the 14 express covenants) frustrates the other party's rights to the benefits of the contract.” Love 15 v. Fire Ins. Exch., 271 Cal. Rptr. 246, 256 (Cal. Ct. App. 1990) (emphasis in original). A 16 breach of the implied covenant claim must “stand independently” and cannot be based “on 17 essentially the same allegations as [a] breach of contract claim.” Schertzer, 2020 WL 18 1046890, at *14. 19 Here, Plaintiff does not sufficiently plead a breach of the implied covenant of good 20 faith and fair dealing. Like the plaintiff in Schertzer, Plaintiff has based her implied 21 covenant claim on the same allegations as her breach of contract claim. Plaintiff does not 22 provide any additional factual allegations pertaining to Defendant engaging in conduct that 23 frustrates her contractual rights, other than Defendant’s allegedly unlawful inflation of the 24 ITF. (FAC ¶¶ 55–62). Therefore, Plaintiff’s claim fails for the same reason her breach of 25 contract claim fails: Defendant’s assessment of the ITF did not violate the contract’s terms. 26 See Barkan v. Health Net. of Cal., Inc., No. CV 18-6691, 2019 WL 1771653 , at *5 (C.D. 27 Cal. Feb. 7, 2019) (dismissing plaintiff’s breach of implied covenant clam that was [28] 1 ||“premised on the same allegations” as plaintiff's breach of contract claim). Defendant’s 2 || motion to dismiss Plaintiffs breach of implied covenant claim is accordingly granted. 3 C. Conversion 4 Plaintiff's sole remaining claim alleges conversion. California law provides that 5 || “conversion is the wrongful exercise of dominion over the property of another.” Farmers 6 || Ins. Exch. v. Zerin, 61 Cal. Rptr. 2d 707, 709 (Cal. Ct. App. 1997) (quoting Oakdale Village 7 || Grp. v. Fong, 50 Cal. Rptr. 2d 810, 812 (Cal. Ct. App. 1996)). “The elements of a claim 8 conversion are: (1) the plaintiff's ownership or right to possession of the property at the 9 || time of the conversion, (2) the defendant's conversion by a wrongful act or disposition of 10 || property rights, and (3) damages.” Prakashpalan v. Engstrom, Lipscomb & Lack, 167 Cal. 11 |/Rptr. 3d 832, 857 (Cal. Ct. App. 2014) (internal quotations omitted). 12 Plaintiff's conversion claim relies on the same factual allegations as her breach of 13 |/contract claim. Plaintiff alleges Defendant “has wrongfully collected inflated ITFs from 14 || Plaintiff and the Class members” and “continues to retain these funds unlawfully without 15 || Plaintiff?s or Class members’ consent.” (FAC 99 66, 68). Given the Court’s conclusion 16 Defendant’s assessment of the ITF was within the terms of the contract, □□□□□□□□□□□ 17 ||conversion claim fails. Plaintiff cannot allege Defendant assessed the fee ‘by a wrongful 18 || act.’ As such, Defendant’s motion to dismiss Plaintiff's conversion claim is granted. 19 IV. 20 CONCLUSION AND ORDER 21 For the reasons set out above, Defendant’s motion to dismiss Plaintiff’s FAC is 22 || granted with prejudice. 23 IT IS SO ORDERED. 24 ||Dated: August 5, 2020 25 ns my. L4\ Hon. Dana M. Sabraw 26 United States District Judge