Moore v. MB Financial Bank, N.A.
ORDER: Court grants MB Financial's motion to dismiss with prejudice #22 . It is so ordered. Civil case terminated. Signed by the Honorable Charles P. Kocoras on 11/16/2017. Mailed notice(vcf, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
MB FINANCIAL BANK, N.A.,
17 C 4716
Judge Charles P. Kocoras
Before the Court is Defendant MB Financial Bank, N.A.’s (“MB Financial”)
Rule 12(b)(6) motion to dismiss Plaintiff LaTanya Moore’s (“Moore”) amended
complaint. For the following reasons, the Court grants the motion.
Moore brings this lawsuit against MB Financial under the National Bank Act
(“NBA”). 12 U.S.C. §§ 85, 86. According to Moore, MB Financial violated the NBA
by charging her a continuous daily overdraft fee (“CDOF”) for maintaining a
continued negative overdrawn balance on her checking account.
Like many banks, MB Financial charges customers a CDOF for each day that a
checking account has a negative balance, beginning on the second consecutive
calendar day and continuing until the sixteenth consecutive calendar day. The amount
of the CDOF, set forth on the Personal Banking Customer Fee Schedule, is $6.50 per
day. Moore alleges that MB Financial charged her the CDOF five times in May 2017,
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) “tests
the sufficiency of the complaint, not the merits of the case.” McReynolds v. Merrill
Lynch & Co., 694 F.3d 873, 878 (7th Cir. 2012). To survive a motion to dismiss under
Rule 12(b)(6), a complaint must allege facts that, taken as true, “plausibly suggest that
the plaintiff has a right to relief.” Cochran v. Ill. State Toll Highway Auth., 828 F.3d 597,
599-600 (7th Cir. 2016). The Court must accept all well-pleaded facts as true and draw
all reasonable inferences in favor of the non-moving party, id., but “the tenet that a court
must accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
MB Financial contends that Moore’s single claim for a usurious interest charge
under the NBA should be dismissed because the “CDOF is a service fee, not interest
under the NBA.”
Specifically, MB Financial argues that Moore incurred pre-
determined flat fees for failing to remedy the status of her checking account as
overdrawn. We agree, and dismiss Moore’s amended complaint.
While the NBA does not expressly define “interest,” it is “understood to
include any compensation allowed by law or fixed by the parties for the use or
forbearance of money, or the price which is fixed for the use of money.” Shaw v.
BOKF, Nat. Ass’n, 2015 WL 6142903, at *2 (N.D. Okla. Oct. 19, 2015). The Office
of the Comptroller of the Currency1 (“OCC”), the primary regulator of national banks,
has defined interest “as used in 12 U.S.C. § 85” of the NBA to include:
any payment compensating a creditor or prospective creditor for an extension
of credit, making available of a line of credit, or any default or breach by a
borrower of a condition upon which credit was extended. It includes, among
other things, the following fees connected with credit extension or availability:
numerical periodic rates, late fees, creditor-imposed not sufficient funds (NSF)
fees charged when a borrower tenders payment on a debt with a check drawn
on insufficient funds, over limit fees, annual fees, cash advance fees, and
membership fees. It does not ordinarily include appraisal fees, premiums and
commissions attributable to insurance guaranteeing repayment of any extension
of credit, finders' fees, fees for document preparation or notarization, or fees
incurred to obtain credit reports.
12 C.F.R. § 7.4001(a).
Section 7.4002 incorporates the definition of “interest” from § 7.4001(a) to
distinguish between “interest” and “non-interest” charges, and charges and fees that
constitute “interest” are expressly governed by § 7.4001. 12 C.F.R. § 7.4002(c). In
2007, the OCC issued an interpretive letter in which it expressly described overdraft
fees as “non-interest charges . . . part of or incidental to the business of receiving
deposits.” Interpretative Letter No. 1082, 2007 WL 5393636, at *2 (May 17, 2007).
The OCC further stated that such fees were authorized under 12 C.F.R. § 7.4002(a),
the “non-interest” provision. Id.
In accordance with the OCC regulations, all district courts, except for one2, to
consider this issue have held that a CDOF is not interest. Additionally, the Eleventh
The OCC is entitled to substantial deference regarding interpretation of its regulations under the NBA. Smiley v.
CitiBank, N.A., 517 U.S. 735, 739 (1996).
Farrell v. Bank of Am., N.A., 224 F. Supp. 3d 1016 (S.D. Cal. 2016).
Circuit, the only federal appellate court to have considered the question, concluded
that CDOFs are not interest. See McGee v. Bank of Am., N.A., 674 F. App’x 958 (11th
Cir. 2017), aff’g, 2015 WL 4594582 (S.D. Fla. July 30, 2015); In re TD Bank, N.A.
Debit Card Overdraft Fee Litig., 150 F. Supp. 3d 593 (D.S.C. 2015); Shaw v. BOKF,
N.A., 2015 WL 6142903 (N.D. Okla. Oct. 19, 2015); Cargile v. JP Morgan Chase &
Co., 2011 WL 17608 (E.D. Mich. Jan. 4, 2011). While none of these cases are
binding on this Court, we join the majority of federal courts that have considered this
issue and find that overdraft charges on a deposit account do not come within the
OCC’s definition of interest.
The CDOF charges at issue here, like the overdraft fees in McGee, are not
interest under the ordinary meaning of the term, or under the NBA. Instead, the
charges are “flat fees contingent upon a customer’s failure to remedy an overdrawn
account, rather than a payment for the use of money.” McGee, 2015 WL 4594582 at
*3. In addition, because the extended overdraft charges were incurred as part of
maintaining a deposit account, not a credit transaction, the extended overdraft charges
cannot be considered interest under the NBA. Id. Similar to the court in McGee, we
find that the CDOF is a non-interest charge under § 7.4002, rather than “interest”
under § 7.4001. Id. at *3–4. Because the charges here are not “interest,” they cannot
support Moore’s claim for usurious interest under the NBA. Cargile v. JP Morgan
Chase & Co., 2011 WL 17608 at *5. Thus, we dismiss her amended complaint.
In the interest of completeness, we also find that even if the CDOF were
“interest,” Moore still would not have a claim under Illinois law. Moore does not
dispute that the NBA permits national banks to charge whatever rate of interest state
banks can charge under state law. See 12 C.F.R. 7.4001(b); Giannangeli v. Target
Nat’l Bank, N.A., 543 F. App’x 785, 787-88 (10th Cir. 2013). Section 4 of the Illinois
Interest Act states that “[i]t is lawful for a state bank . . . to receive . . . and collect
interest and charges at any rate or rates agreed upon by the bank or branch and the
borrower.” 815 ILCS 205/4(1). Moore argues that MB Financial has not satisfied
Section 4 because MB Financial “never identified the CDOF as an interest rate,”
making it “impossible” for Moore to agree to pay the stated rate. However, when
Moore opened her account she agreed to “the terms of this account and the schedule
of charges,” which included the CDOF. Accordingly, it was lawful for MB Financial
to assess the CDOF “charge” as agreed upon between MB Financial and Moore in her
For the aforementioned reasons, the Court grants MB Financial’s motion to
dismiss with prejudice. It is so ordered.
Dated: 11/16 /2017
Charles P. Kocoras
United States District Judge
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