Morris v. Bank of America, N.A.

Filing 42

ORDER adopting in part and denying in party Magistrate Judge's 38 Memorandum and Recommendations.; granting in part and denying in part 22 Motion to Dismiss for Failure to State a Claim. Specifically, the Motion is GRANTED as to Plaintiffs claims for conversion (Count 3); unjust enrichment (Count 4); breach of implied covenant of good faith and fair dealing (Count 2); violation of the OCPA (Count 6); and violation of the GFBPA (Count 9). The Motion is DENIED a s to Plaintiffs breach of contract claim (Count 1) and NCUDTPA claim (Count 5); and Plaintiff Buis California consumer protection act claim (Counts 7, 8). The remaining claims may proceed through discovery.Signed by District Judge Robert J. Conrad, Jr on 3/29/2019. (brl)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:18-cv-00157-RJC-DSC
LISA MORRIS, MICHAEL BUI, and
TUMIKA WILLIAMS, on behalf of
themselves and all others similarly
situated,

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Plaintiffs,
v.
BANK OF AMERICA, N.A.,
Defendant.

ORDER

THIS MATTER comes before the Court on Defendant’s Motion to Dismiss
Plaintiffs’ Second Amended Complaint (“the Motion”), (Doc. No. 22), and the parties’
associated briefs and exhibits; the Memorandum and Recommendation (“M&R”) of
the United States Magistrate Judge, (Doc. No. 38), recommending that the Court
grant Defendant’s Motion in part and deny Defendant’s Motion in part; Defendant’s
Partial Objection to the M&R, (Doc. No. 39); and Plaintiffs’ Response in Opposition
to Defendant’s Partial Objection, (Doc. Nos. 40–41). The Motion is ripe for
adjudication.

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I.

BACKGROUND
Neither party has objected to the Magistrate Judge's statement of the factual

and procedural background of this case. Therefore, the Court adopts the facts as set
forth in the M&R.
II.

STANDARD OF REVIEW
A district court may assign dispositive pretrial matters, including motions to

dismiss, to a magistrate judge for “proposed findings of fact and recommendations.”
28 U.S.C. § 636(b)(1)(A) and (B). The Federal Magistrate Act provides that “a district
court shall make a de novo determination of those portions of the report or specific
proposed findings or recommendations to which objection is made.”

Id. at §

636(b)(1)(C); Fed. R. Civ. P. 72(b)(3); Camby v. Davis, 718 F.2d 198, 200 (4th Cir.
1983).
III.

DISCUSSION
Defendant partially objects to the M&R, asking the Court to reject the

portion of the M&R recommending that the Court allow Plaintiffs’ claims based on
the Oklahoma, Georgia, and North Carolina consumer protection statutes to
proceed based on choice of law concerns. Defendant makes two specific arguments:
(1) the Oklahoma and Georgia consumer protection acts contain exemptions for
alleged conduct in regulated industries, and therefore, no choice-of-law analysis is
needed on these claims, and (2) Plaintiffs’ North Carolina Unfair and Deceptive
Trade Practices Act claim should be dismissed on choice of law grounds. The Court
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agrees with Defendant’s first argument but disagrees with its second. The Court
addresses each in turn.
A.
The exemption provisions of the consumer protection laws of
Oklahoma and Georgia apply to Defendant’s alleged conduct.
Plaintiffs pled claims under North Carolina law, but also pled claims under
the consumer protection statutes of the states in which they reside in the
alternative. Defendant contends that the Court need not even engage in a choice-oflaw inquiry regarding the consumer protection claims under Oklahoma and Georgia
law because both statutes “exempt from coverage the subject matter of Plaintiffs’
allegations—rules related to the application and collection of bank fees for overdraft
protection.” (Doc. No. 39 at 5). The Court agrees.
Regarding the claim arising under Oklahoma law, the Oklahoma Consumer
Protection Act (“OCPA”), 15 Okla. Stat. § 751 et seq., exempts from coverage
“[a]ctions or transactions regulated under laws administered by . . . regulatory
bod[ies] or officer[s] acting under statutory authority of this state or the United
States.” Okla. Stat. tit. 15, § 754(2). Plaintiff contends that, for this exemption to
apply, the specific conduct at issue must be regulated by state or federal law. Here,
Plaintiff claims that Defendant engages in four distinct practices to increase fee
revenue at the expense of its customers:
1. BANA charges multiple $35 insufficient funds fees (“NSF Fees”) and $35
overdraft (“OD Fees”) (collectively NSF and OD Fees are referred to herein as
“Fees”) on the same transactions when it repeatedly re-processes them, even
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though the Bank’s agreements authorize only one fee (and only one type of
fee) per charge;
2. BANA assesses Fees on payments or attempted payments to itself, even
when it knows such transaction attempts will be futile and its contracts do
not authorize such fees;
3. BANA deducts Fees prematurely and from already-empty accounts, and prior
to the time promised (after deposits) in its contractual agreements to ensure
that even more Fees are assessed on accounts; and
4. BANA charges monthly savings account service fees (“MSAS Fees”), despite a
contractual promise to waive to waive such fees for accountholders who make
certain account transfers into their savings accounts.
(Doc. No. 19 ¶ 1; Doc. No. 26 at 7).
The Court finds Parrish v. Bank, 2016 WL 3906814, at *1 (W.D. Okla. July
14, 2016), instructive here. In Parrish, the plaintiff, who maintained banking
accounts with defendant, brought a claim against her bank on behalf of herself and
all other similarly situated, alleging that the bank had “deliberately sequence[d] its
transaction processing to maximize the bank’s collection of fees for overdraft service
or non-sufficient funds, to the detriment of its customers.” Parrish, 2016 WL
3906814, at *1. This is strikingly similar to the allegations in the case at hand.
The plaintiff brought various claims against the bank, including a claim that the
bank had violated the OCPA. At the motion-to-dismiss stage, the Western District
of Oklahoma dismissed the OCPA claim, finding that exemption applied:
The alleged activity at issue here is part of the business of banking, an
activity that is heavily regulated by the Board of Governors of the
Federal Reserve System, see 15 U.S.C. § 1693c (Electronic Fund
Transfer Act); see also 12 C.F.R. § 205.7 (Regulation E), the FDIC, and
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state banking authorities. The statute’s “regulated activity” exemption
is therefore applicable and bars plaintiff’s OCPA claim.
Id. at *3. Consistent with the Western District of Oklahoma’s decision in Parrish,
the Court sees no need to allow the OCPA claim to proceed through discovery (when
conflict of law issues will be parsed) only to dispose of the claim later on at the
summary-judgment stage because it finds that OCPA’s exemption provision applies
to Plaintiffs’ OCPA claim. The Court can make this determination now as a matter
of law. Accordingly, because the conduct at issue here—the assessment of banking
fees—is governed by multiple regulatory bodies,1 the Court dismisses the OCPA
claim on exemption grounds.
Turning to Georgia’s Fair Business Practices Act (“GFBPA”), it also includes
an exemption provision: the GFBPA shall not apply to “[a]ctions or transactions
specifically authorized under laws administered by or rules and regulations
promulgated by any regulatory agency of this state or the United States.” Ga. Code
Ann. § 10-1-396(1). The Court of Appeals of Georgia has concluded that “[t]he

These regulatory bodies include, among others, the Consumer Financial Protection
Bureau, the Office of the Comptroller of the Currency, and the Federal Deposit
Insurance Corporation. See 15 U.S.C § 1693 et seq. (explaining that the purpose of
the Electronic Funds Transfer Act is to “provide a basic framework establishing the
rights, liabilities, and responsibilities of participants in electronic fund and
remittance transfer systems.”); see also 12 C.F.R. § 7.4002(a) ( “A national bank
may charge its customers non-interest charges and fees, including deposit account
service charges.”); 12 C.F.R. § 205.17 (prohibiting the charging of overdraft fees for
ATM/debit card transactions unless customer opts into overdraft program); 12
C.F.R. § 1005.17 (regulating, in part, the content and format of overdraft opt-in
provisions in account agreements)
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General Assembly intended that the Georgia FBPA have a restricted application
only to the unregulated consumer marketplace and that [G]FBPA not apply in
regulated areas of activity, because regulatory agencies provide protection or the
ability to protect against the known evils in the area of the agency’s expertise.”
Chancellor v. Gateway Lincoln-Mercury, Inc., 502 S.E.2d 799, 805 (Ga. Ct. App.
1998). The Northern District of Georgia has held that “[t]he [G]FBPA does not
apply in extensively regulated areas of the marketplace such as consumer banking.”
Deotare v. Wells Fargo Bank, N.A., No. 1:17-CV-699-WSD, 2018 WL 1470897, at *9
(N.D. Ga. Mar. 26, 2018) (footnote omitted). This is consistent with other holdings.2

See, e.g., Strickland v. Deutsche Bank Tr. Co. Americas, No. 5:18-CV-3 (CAR),
2018 WL 715408, at *6 (M.D. Ga. Feb. 5, 2018) (“The FBPA does not apply to
transactions that occur in regulated areas of activity, such as loan lending and
services.” (footnote omitted)); Bitterfield v. PHH Mortg. Corp., No. 1:17-CV-1060MHC, 2017 WL 6996373, at *3 (N.D. Ga. Oct. 26, 2017) (“Because the practice of
making and servicing residential mortgages are heavily regulated by federal and
state law, the FBPA does not cover loan servicing or modification practices.”);
Turner v. Wells Fargo Dealer Servs., Inc., No. 1:17-CV-0125, 2017 WL 8220605, at
*8 (N.D. Ga. Oct. 23, 2017), report and recommendation adopted, No. 1:17-CV-1257TCB, 2017 WL 8222344 (N.D. Ga. Nov. 13, 2017) (“Here, the alleged conduct
pertains to assignments of installment agreements from auto dealers, which are
subject to regulation via the Truth in Lending Act . . . and Regulation Z . . . .
Accordingly, the FBPA does not apply.”); Kareem v. J.P. Morgan Chase Bank, N.A.,
No. 2:14-CV-252, 2015 WL 4351750, at *3 (S.D. Ohio July 15, 2015), aff'd sub
nom. Kareem v. JPMorgan Chase Bank, N.A., No. 15-4387, 2016 WL 9405838 (6th
Cir. Nov. 21, 2016) (“Georgia courts have held that the GFBPA does not apply to
claims based on wrongful foreclosure–an area of the law that is heavily regulated by
other state and federal agencies and statutes.”).
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“[W]here the action or transaction at issue is authorized or regulated by a state or
federal regulatory agency, the [G]FBPA does not apply.” Stewart v. Suntrust
Mortgage, Inc., 770 S.E.2d 892, 897–98 (Ga. Ct. App. 2015). Here, because the
conduct Plaintiffs complain of—the assessment of banking fees—is regulated by
multiple regulatory agencies, the GFBPA exemption provision applies. Therefore,
Plaintiffs’ GFBPA claim must be dismissed as well.
C.
The M&R correctly concluded that Plaintiffs’ North Carolina Unfair
and Deceptive Trade Practices Act claim should be allowed to proceed.
Defendant also objects to allowing Plaintiffs’ North Carolina Unfair and
Deceptive Trade Practices Act (“NCUDTPA”) claim to proceed. Specifically, it
argues that no choice-of-law inquiry is necessary here because Plaintiffs have no
connection to North Carolina and contend that, therefore, the NCUDTPA cannot
apply. But, as Plaintiffs pled, North Carolina is the “nerve center” of Defendant’s
business activities—“the place where its high-level officers direct, control, and
coordinate the corporation’s activities, including account and major policy, financial,
and legal decisions related to BofA Account fees.” (Doc. No. 19 ¶ 158). Accordingly,
the policies, decisions, and business practices that Plaintiffs complain of could have
occurred in North Carolina. Therefore, it is plausible that, if Plaintiffs’ allegations
are true, Plaintiffs could have suffered injury in North Carolina. This question,
which hangs on choice-of-law analysis, is more appropriately addressed after
discovery. Therefore, the Court agrees with the M&R that “[a] choice of law inquiry
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may be very fact intensive and more appropriately undertaken after the record is
developed.”3 (Doc. No. 38 at 6).
The only case Defendant cites in support of its objection on this ground,
Clemons v. E.S.A. Mgmt., 2018 WL 1594721 (W.D.N.C. Apr. 2, 2018), is inapposite.
In Clemons, the plaintiff brought a claim against Extended Stay America (“ESA”)
arising out of the plaintiff’s stay at one of ESA’s Virginia properties. 2018 WL
1594721, at *1. During his stay, the plaintiff alleged that an intruder broke into his
room and stole several items. Id. Among other claims, the plaintiff filed a
NCUDTPA claim against ESA in the Western District of North Carolina. Id. at *2.
After ESA moved to dismiss the NCUDTPA claim, the Court dismissed the claim,
holding that “because [the] [p]laintiff fail[ed] to allege that he was injured in North
Carolina, North Carolina’s UDTPA does not govern this claim.” Id. at *4.

Terry v. Swift Transportation, No. 1:16-cv-256, 2017 WL 1013074, at *7 (M.D.N.C.
March 14, 2017) (citing Graboff v. The Collern Firm, Civ. Action No. 10–1710, 2010
WL 4456923, at *8 (E.D. Pa. Nov. 8, 2010) (explaining that, “[d]ue to the complexity
of this analysis, when confronted with a choice of law issue at the motion to dismiss
stage, courts . . . have concluded that it is more appropriate to address the issue at a
later stage in the proceedings,” and that, “[h]ere, a choice of law analysis is
premature because the record lacks necessary facts for the [c]ourt to conduct the
fact-intensive, context-specific analysis required”); see also Beritelli v. Wells Fargo
Bank, N.A., No. 1:11-CV-000179-MR, 2013 WL 5460179, at *13 (W.D.N.C. Sept. 30,
2013) (“[T]he Court cannot make a determination of the choice of law issue at this
time . . . The parties may revisit the choice of law issue at the summary judgment
stage, at which time the Court will be in a better position to determine which state
law is applicable.”); Clean Earth of Md., Inc. v. Total Safety, Inc., No. 2:10-cv-119,
2011 WL 1627995, at *4 (N.D. W. Va. Apr. 28, 2011) (“Importantly, a court is
typically in a better position to decide a choice of law issue after the parties have
developed the factual evidence through the process of discovery.” (collecting cases)).
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Defendant contends that the same result is warranted here. However, Defendant
omits an important aspect of this case. The Court noted that it was “not disputed
that the operative events that form the basis of [the] [p]laintiff's claims occurred in
Virginia” and that it was “also not disputed that the relevant witnesses and
physical evidence [we]re located in Virginia.” Id. at *7. Therefore, the instant case
is distinguishable because the facts are more nebulous, the place of injury is
disputed, and discovery is needed to iron out these issues. Accordingly, the Court
determines that it would be premature to dismiss Plaintiffs’ NCUDTPA claim now.
IV.

CONCLUSION
Regarding the aspects of the M&R to which no party objected, the Court has

nevertheless conducted a full, thorough, and independent review of the M&R and
record and concludes that those findings and conclusions of the M&R are correct
and in accordance with law.
IT IS THERFORE ORDERED THAT:
1. The Magistrate Judge’s M&R, (Doc. No. 38), be ADOPTED IN
PART and DENIED IN PART. Specifically, the Court adopts the
M&R’s findings and conclusions regarding Plaintiffs’ claims for
breach of contract; breach of implied covenant of good faith and fair
dealing; conversion; unjust enrichment; the NCUDTPA; and
Plaintiff Bui’s California consumer protection act claim. The Court
declines to adopt, however, the M&R’s findings and conclusions
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regarding Plaintiffs’ consumer protection claims under Oklahoma
law (OCPA) and Georgia law (GFBPA);
2. Defendant’s Motion to Dismiss Plaintiffs’ Second Amended
Complaint, (Doc. No. 22), is GRANTED IN PART and DENIED IN
PART. Specifically, the Motion is GRANTED as to Plaintiffs’
claims for conversion (Count 3); unjust enrichment (Count 4);
breach of implied covenant of good faith and fair dealing (Count 2);
violation of the OCPA (Count 6); and violation of the GFBPA (Count
9). The Motion is DENIED as to Plaintiffs’ breach of contract claim
(Count 1) and NCUDTPA claim (Count 5); and Plaintiff Bui’s
California consumer protection act claim (Counts 7, 8); and
3. The remaining claims may proceed through discovery.

Signed: March 29, 2019

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