Pinkston-Poling v. Advia Credit Union

Filing 107

OPINION REGARDING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; signed by Judge Gordon J. Quist (Judge Gordon J. Quist, jmt)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
__________________________

BECKY PINGSTON-POLING, individually
and on behalf of all others similarly situated,
Plaintiff,
v.

Case No. 1:15-CV-1208

ADVIA CREDIT UNION,

HON. GORDON J. QUIST

Defendant.
___________________________________/
OPINION REGARDING DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT
Defendant, Advia Credit Union, moves for summary judgment on Plaintiff Becky PingstonPoling’s1 claims for violation of the Electronic Fund Transfer Act (EFTA), 15 U.S.C. § 1693, et seq.
and breach of contract on the grounds that the claims are barred by the applicable statutes of
limitation. Advia further argues that, in the absence of Pingston-Poling’s EFTA claim, the Court
lacks jurisdiction under the Class Action Fairness Act to entertain Pingston-Poling’s state-law
breach of contract claim.
For the reasons explained below, the Court concludes that neither claim is time-barred.
Therefore, the Court will deny Advia’s motion.
I. BACKGROUND
In her First Amended Class Action Complaint, Pingston-Poling alleges that Advia violated
Regulation E of the EFTA by using an Opt-in Agreement that failed to adequately describe Advia’s
overdraft service, as required by 12 C.F.R. § 1005.17(d)(1). More specifically, Pingston-Poling

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Throughout this litigation, the Court and the parties, including Pingston-Poling’s own counsel, have
erroneously referred to the plaintiff as Becky Pinkston-Poling. The Court will direct the Clerk to change the caption to
reflect the plaintiff’s true name, Becky Pingston-Poling.

claims that the Opt-in Agreement failed to notify members that Advia used the available balance as
the basis for imposing overdraft fees, instead of the actual/ledger balance in the member’s account.2
Pingston-Poling further claims that Advia breached the Member Account Agreement and the Opt-in
Agreement by charging her an overdraft fee based on her available account balance, instead of her
actual/ledger balance.
The Court’s December 29, 2016, Opinion regarding Advia’s motion to dismiss set forth the
pertinent facts supporting the claims. The facts herein are thus limited to those pertaining to Advia’s
statute of limitations argument.
Pingston-Poling became a member of Advia on or around May 21, 2009, when it was known
as First Community Federal Credit Union (First Community/Advia).3

(ECF No. 103-1 at

PageID.3574, 3577.) The terms of the First Community/Advia Account Agreement in effect when
Pingston-Poling became a member pertaining to when a member’s account will be overdrawn and
when funds will be available for a member to use have remained unchanged over the years. (ECF
No. 103-3 at PageID.2664; ECF No. 103-7 at PageID.3739.)
In November 2009, the Board of Governors of the Federal Reserve System amended
Regulation E to limit the ability of a financial institution to assess an overdraft fee for paying an
ATM or one-time debit card transaction that overdraws a consumer’s account, unless the consumer
consented or affirmatively opted into the institution’s overdraft program. See 74 Fed. Reg. 59033
(Nov. 17, 2009). The affirmative consent requirement became effective for accounts opened prior

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The actual/ledger balance is the amount of money in the member’s bank account without any reduction for
anticipated future debits. The available balance, on the other hand, is an internal calculation that subtracts anticipated
future debits from the actual balance. (ECF No. 38 at PageID.849–50.)
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Pingston-Poling’s husband, Adam Poling, was a member of First Community/Advia at that time. Thereafter,
they were and remain joint account holders at First Community/Advia.

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to July 1, 2010, on August 15, 2010. 12 C.F.R. § 1005.17(c)(1). Pingston-Poling opted in to
Advia’s overdraft protection program on June 22, 2010. (ECF No. 103-1 at PageID.3574.)
Pingston-Poling first overdrew her Advia checking account on May 29, 2009. (ECF No.
103-1 at PageID.3574; ECF No. 103-9 at PageID.3775.) Following her opt-in consent to Advia’s
“Courtesy Pay” overdraft program, Advia assessed Pingston-Poling an overdraft fee in connection
with a one-time debit card transaction on August 30, 2010. (ECF No. 103-1 at PageID.3575; ECF
No. 103-10 at PageID.3783.)
II. DISCUSSION
In its instant motion, Advia argues that both claims are barred by the applicable limitations
period—EFTA, one year, and breach of contract, six years—because Pingston-Poling incurred her
first overdraft fee after opting-in to Advia’s overdraft program on August 30, 2010, and she first
overdrew her account and incurred an overdraft charge on May 29, 2009.
A.

EFTA Claim
A plaintiff may bring an EFTA claim “in any United States district court, or any other court

of competent jurisdiction, within one year from the date of the occurrence of the violation.” 15
U.S.C. § 1693m(g). In Wike v. Vertrue, Inc., 566 F.3d 590 (6th Cir. 2009), the Sixth Circuit
addressed the issue of when the plaintiff’s claim—that the defendant violated the EFTA’s
requirement for written preauthorization for recurring electronic fund transfers from a consumer’s
account, see 15 U.S.C. § 1693e(a)—accrued for purposes of § 1693m(g). The court held that a
cause of action accrues when the transfer occurs, rather than at the time the transfers were arranged,
as the defendant had argued. Id. at 593. The court found that its conclusion was consistent with the
pertinent statutory provisions, the “‘standard rule’” that “the statute of limitations begins to run
‘when the plaintiff has a complete and present cause of action’ and thus ‘can file suit and obtain

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relief,’” and the practicalities of recurring future transfers. Id. (quoting Bay Area Laundry & Dry
Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S. 192, 201, 118 S. Ct. 542, 549
(1997)). The court noted, “[a] consumer is injured only if, and only when, funds are withdrawn
from her account.” Id. Because the first transfer occurred within the one-year period, the plaintiff’s
claim was timely. Id. at 596.
The Wike court did not consider whether a new limitations period begins each time a transfer
occurs in recurring transactions. However, several district judges, including the undersigned, have
addressed the issue. As Advia notes, in Wheeler v. Native Commerce Studios, LLC, No. 2:17-CV51, 2018 WL 447716 (W.D. Mich. Jan. 17, 2018), this Court noted that “a majority of district courts
have held that the statute starts to run on all recurring payments upon completion of the first
payment,” id. at *1 (citing Harvey v. Google Inc., No. 15-cv-03590-EMC, 2015 WL 9268125, at *3
(N.D. Cal. Dec. 21, 2015)), and held that the plaintiff’s EFTA claim was time-barred because he
filed his complaint more than a year after the first recurring transfer. Id. at *2. Courts applying this
rule have reasoned that “the EFTA does not require that the payee obtain a separate written
authorization for each transfer,” but instead requires only “a single written authorization for the
entire series of transfers.” Repay v. Bank of Am., N.A., No. 12 CV 10228, 2013 WL 6224641, at *4
(N.D. Ill. Nov. 27, 2013.) Thus, in recurring transfer cases, “rather than alleging a series of
wrongful acts, [a plaintiff] alleges a wrongful omission: failing to obtain written authorization for
the series of transfers that were agreed upon and to provide a copy to the consumer.” Id.; see also
Camacho v. JPMorgan Chase Bank, No. 5:14-cv-04048-EJD, 2015 WL 5262022, at *4 (N.D. Cal.
Sept. 9, 2015) (noting that “[i]n cases involving unauthorized transfers, courts interpret § 1693m(g)
to require that EFTA claims be filed within one year of the date of the first recurring transfer”). As
this Court noted in Wheeler, at least one court has held that each subsequent transfer following the
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initial transfer in a recurring transfer transaction is independently actionable because “[e]ach transfer
constitutes a new harm above and beyond the prior harm of a prior transfer and it amounts to an
independent violation of section 1693c.” Diviacchi v. Affinion Grp., Inc., No. 14-10283-IT, 2015
WL 3631605, at *10 (D. Mass. Mar. 11, 2015) report and recommendation adopted, 2015 WL
3633522 (D. Mass. June 4, 2015).
In contrast to Wike, Wheeler, and the other cases cited above, the instant case does not
involve a “preauthorized electronic fund transfer” because it was not “an electronic fund transfer
authorized in advance to recur at substantially regular intervals.”

15 U.S.C. § 1693a(10).

Nonetheless, Advia urges the same rule—the limitations period for all overdraft fees commenced
when Advia charged Pingston-Poling the first overdraft fee after Pingston-Poling opted-in to
Advia’s overdraft program. Advia cites Walbridge v. Northeast Credit Union, 299 F. Supp. 3d 338
(D.N.H. 2018), and Whittington v. Mobiloil Federal Credit Union, No. 1:16-CV-482, 2017 WL
6988193 (E.D. Tex. Sept. 14, 2017), both of which applied the “first transfer” rule in overdraft fee
cases which, like this one, did not involve recurring transfers.
Pingston-Poling counters that this case does not involve recurring transfers, but instead, nonrecurring charges which do not merit the same rule. She notes that the charges she incurred were
not pursuant to a single directive that more or less authorized a single transaction involving a course
of payments over a period of time. Rather, Pingston-Poling argues, the fees she incurred were
separate fees, each of which required an independent assessment that an overdraft occurred and
whether or not an overdraft fee should be assessed. Pingston-Poling contends that this Court should
adopt the reasoning in Smith v. Bank of Hawaii, No. 16-00513 JMS-RLP, 2018 WL 1662107 (D.
Haw. Apr. 5, 2018), an overdraft fee case in which the court held that each overdraft fee debited
from the plaintiff’s account constitutes a separate violation of Regulation E. The court in Smith
observed:
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[the reasoning of] Wike cannot logically be extended to the facts of this case, which
involves allegedly unauthorized overdraft fees.
The difference between
preauthorizing a series of transfers and opting in to an overdraft service is both
significant an meaningful. In the first instances, a consumer gives express
permission for a series of recurring transfers from his or her account. But in the
second instance a consumer merely opts in to a service, perhaps with no intention of
ever using it, and he or she does not agree to any specific fee of charge, let alone a
series of them.
Id. at *5 (italics in original and footnote omitted). The court also reasoned that unlike a recurring
transfer case, which involves a singular omission—the failure of the payee to obtain the required
written authorization—an assessment of overdraft fees violates Regulation E each time the fee is
imposed. Id. The Smith court analogized overdraft fees to the circumstances in O’Brien v. Landers,
No. 1:10-cv-02765, 2011 WL 221865 (N.D. Ill. Jan. 24, 2011)—in which the plaintiff alleged that
the defendant violated Regulation E by twice debiting the plaintiff’s account for one-time charges
that were beyond the scope of the plaintiff’s preauthorization for recurring transfers for monthly
membership fees. The O’Brien court concluded that the plaintiff stated a claim under the EFTA,
in spite of his preauthorization, because the one-time charge was not covered by the preauthorization
and the defendant never notified the plaintiff that his account would be debited for such charges or
explained to him the reason for the charge. 2011 WL 221865, at *2. The Smith court noted that
while O’Brien did not address a statute of limitations issue, it illustrated the difference between an
overdraft fee and a recurring transfer. 2018 WL 1662107, at *5.
This Court agrees with the reasoning in Smith, which acknowledges and explains why
overdraft fees constitute discrete harms that do not constitute a single transaction providing for
recurring transfers. The Court does not find Walbridge, which cited Wheeler, or Whittington
persuasive because neither case considered the differences between preauthorized recurring transfers
and non-recurring overdraft fees. Rather, both cases simply apply the rule for recurring transactions

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to non-recurring overdraft charge without analysis.4 See Smith, 2018 WL 1662107, at *5 n.3 (noting
that Whittington applied “Wike without analyzing its differing factual circumstances”).
B.

Breach of Contract
In Michigan, a breach of contract claim is subject to a six-year statute of limitations. M.C.L.

§ 600.5807(8); see Rowry v. Univ. of Mich., 441 Mich. 1, 10, 490 N.W.2d 305, 308 (1992). “[I]n
a breach of contract action, the statutory period generally begins to run on the date that the breach
occurs.” Seyburn, Kahn, Ginn, Bess, Deitch & Serlin, P.C. v. Bakshi, 483 Mich. 345, 358, 771
N.W.2d 411, 418 (2009).
Similar to the EFTA claim, Advia argues that Pingston-Poling’s claim accrued on May 29,
2009, when Advia first assessed an overdraft fee against Pinkston-Poling’s account. Advia cites
Commercial Coin Laundry Systems v. McGraw, No. 256026, 2005 WL 3481459 (Mich. Ct. App.
Dec. 20, 2005) (per curiam) as support for its argument. The contract at issue in Commercial Coin
Laundry granted the plaintiff exclusive rights to maintain laundry machines in the defendant’s
apartment complex. At the commencement of the contract, the defendant had approximately 125
washer/dryer units of its own in the complex, which constituted a breach. The plaintiff argued that
because the contract prohibited the defendant from allowing washer/dryer units other than those
owned by the plaintiff in the complex, a separate breach occurred each time one of the defendant’s
machines was operated. The court rejected the plaintiff’s argument that the contract was akin to an
installment contract:
The present case involves neither a pension agreement nor a contract
resembling an installment contract. The parties’ lease contract simply does not
contemplate separate installment payments where a breach could arise from a failed
performance or payment on a separate installment. The parties (sic) contract was a

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Because the Court concludes that Pingston-Poling’s EFTA claim is not time-barred, the Court need not address
Pingston-Poling’s discovery rule argument.

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simple lease agreement with rent coming from a percentage of revenue generated by
the machines. . . . In this case, there was not separate acceptance or separate
installment procedures within the parties (sic) lease agreement. Therefore, we find
that plaintiff’s breach of contract accrued on the date defendant admitted it first
breached the agreement: April 23, 1992.
Id. at *2. Advia argues Commercial Coin Laundry applies in this case because Pingston-Poling
alleges that the Account Agreement and the Opt-in Agreement both preclude Advia from assessing
fees to her account so long as she has sufficient funds to cover her transactions. Advia contends
Pingston-Poling’s claim first accrued when Advia assessed the first overdraft fee, and because
neither agreement is in the nature of an installment contract, there was no separate breach each time
thereafter that Advia assessed an overdraft fee.
Pingston-Poling argues that this case is more analogous to H. J. Tucker & Associates, Inc.
v. Allied Chucker and Engineering Co., 234 Mich. App. 550, 595 N.W.2d 176 (1999), and Harris
v. City of Allen Park, 193 Mich. App. 103, 107, 483 N.W.2d 434 (1992), both of which Commercial
Coin Laundry distinguished. H. J. Tucker concerned the defendant’s failure to pay the full amount
of commissions, which were separately computed and paid to the plaintiff monthly. 234 Mich. App.
at 562–63, 595 N.W.2d at 183. Harris involved claims for monthly pension benefits. 193 Mich.
App. at 107, 483 N.W.2d at 436. The courts in both cases concluded that the contracts were similar
to installment contracts. Pingston-Poling argues that, as in H. J. Tucker and Harris, Advia’s
imposition of each overdraft fee constituted a separate breach because each fee was imposed in
connection with a separate transaction.
Although the agreements at issue cannot be considered analogous to installment
contracts—because they do not call for periodic payments or performances—the Court also
concludes that Commercial Coin Laundry is not applicable. In contrast to Commercial Coin
Laundry, Advia breached the agreements each time it imposed an overdraft fee based on a separate
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transaction. Thus, in this regard, the instant case is closer to H. J. Tucker and Harris. Moreover,
in Blazer Foods, Inc. v. Restaurant Properties, Inc., 259 Mich. App. 241, 673 N.W.2d 805
(2003)—which rejected the “continuing wrong” doctrine in breach of contract claims—the court
noted that the plaintiffs were not necessarily precluded from recovering. Id. at 251, 673 N.W.2d at
812. The court observed:
When one party to a contract materially breaches the contract by failing to perform
duties under it, the other party can either consider the contract terminated and sue for
total breach, or he can continue his performance and sue for partial breach. Thus,
when one elects to continue performance and a second breach occurs, it should give
rise to a separate claim for specific damages arising from the second breach, whether
or not the contract is deemed an installment contract.
Id. at 241 n.7, 673 N.W.2d at 812 n.7.
Accordingly, Pingston-Poling’s breach of contract claim is timely.
III. CONCLUSION
For the foregoing reasons, the Court will deny Advia’s motion for summary judgment.
A separate order will enter.

Dated: August 8, 2018

/s/ Gordon J. Quist
GORDON J. QUIST
UNITED STATES DISTRICT JUDGE

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