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Bettencourt v. Jeanne D'arc Credit Union

United States District Court, D. Massachusetts

April 1, 2019

MARK BETTENCOURT, Individually and On Behalf of All Others Similarly Situated, Plaintiff,
JEANNE D'ARC CREDIT UNION and DOES 1 Through 100, Defendants.


          Nathaniel M. Gorton, United States District Judge.

         Plaintiff Mark Bettencourt (“Bettencourt” or “plaintiff”) brings this putative class action against Jeanne D'Arc Credit Union and numerous unnamed potential parties who are agents, partners, joint venturers, subsidiaries and/or affiliates of that financial institution (collectively “JDCU” or “defendants”). Bettencourt alleges that JDCU improperly charged him and other customers overdraft fees notwithstanding balances in their respective checking accounts sufficient to defray the subject purchases. Bettencourt claims that JDCU's policy constitutes, among other things, a breach of contract and a violation of Regulation E of the Electronic Fund Transfer Act (“the EFTA”), 15 U.S.C. § 1693 et seq. He seeks to certify three classes comprising similarly situated customers of JDCU.

         Pending before this Court is defendants' motion to dismiss. For the following reasons, that motion will be allowed, in part, and denied, in part.

         I. Background

         A. Facts

         Bettencourt is a resident of Hopkinton, New Hampshire. JDCU is a credit union headquartered in Lowell, Massachusetts, with numerous branches in Massachusetts and one office in New Hampshire. At some point before 2014, Bettencourt opened a checking account with JDCU.

         In creating that account, plaintiff entered into two contracts with defendants. The first agreement was titled “Terms and Conditions of Your Account” (“the Account Agreement”). That contract prescribed the rights and obligations of the account holder and the credit union. Included in the agreement was JDCU's policy on withdrawals and overdraft fees. An overdraft fee is a charge imposed by a financial institution when a customer makes a purchase for an amount that exceeds his or her account balance.

         There are two methods by which an overdraft fee can be calculated. The first is based on the “ledger” or “actual balance” which is the standing balance of the member's account less any payments that have actually been processed. A second method is based on the “available balance” which is the standing balance less any “holds” on deposits and pending debits that have not yet been posted. The “available balance”, therefore, may be substantially lower than the “actual balance”.

         The Account Agreement provides, in relevant part, that:

1) We [JDCU] may determine the amount of available funds in your account for the purpose of deciding whether to return an item for insufficient funds at any time between the time we receive the item and when we return the item or send a notice in lieu of return . . . [and [w]e need only make one determination, but if we choose to make a subsequent determination, the account balance at the subsequent time will determine whether there are insufficient available funds;
2) [W]e may, at our discretion, honor withdrawal requests that overdraw your account . . . [but] the fact that we may honor withdrawal requests that overdraw the account balance does not obligate us to do so later; and
3) Our payment policy will cause your largest, and perhaps most important, items to be paid first . . . but may increase the overdraft or NSF fees you have to pay if funds are not available to pay all of the items . . . [and] [i]f an item is presented without sufficient funds in your account to pay it, we may, at our discretion, pay the item (creating an overdraft) or return the item (NSF).

(emphasis added). The Account Agreement also contains a so-called Funds Availability Policy which describes JDCU's practice of withholding availability of certain deposits for some period of time.

         The second agreement that Bettencourt entered into with JDCU was an “Opt-In Contract” which describes JDCU's overdraft service policy for non-recurring transactions as required by Regulation E of the EFTA. 12 C.F.R. § 1005.17. The contract provides that JDCU will “not authorize and pay overdrafts caused by one-time debit card transactions unless you authorize us to do so”. It defines “overdraft” as

occur[ing] when you do not have enough money in your account to cover a transaction, but we pay it anyway.

(emphasis added).

         Neither the Account Agreement nor the Opt-In Contract defines the terms “insufficient funds”, “available funds” or “account balance” nor does the Funds Availability Policy link the availability of funds for withdrawal to the charging of overdraft fees. Nor does either agreement state that overdraft fees will be charged as a result of holds placed on funds designated for pending transactions. JDCU maintains, however, that the agreements, considered together, clearly articulate that overdraft ...

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