Parrish v. Arvest Bank ( 2017 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT November 20, 2017
_________________________________
Elisabeth A. Shumaker
Clerk of Court
SARAH LEE GOSSETT PARRISH,
Plaintiff - Appellant,
v. No. 17-6042
(D.C. No. 5:15-CV-00913-HE)
ARVEST BANK, (W.D. Okla.)
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before BRISCOE, O’BRIEN, and BACHARACH, Circuit Judges.
_________________________________
Sarah Lee Gossett Parrish appeals from the dismissal of her second amended
class action complaint (“Complaint”) for failure to state a claim under Fed. R. Civ. P.
12(b)(6). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm in part, reverse
in part, and remand for further proceedings.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
I. Background
Parrish filed her Complaint against Arvest Bank on behalf of herself and all
others similarly situated. She included claims for actual fraud, constructive fraud,
false representation/deceit, breach of fiduciary duty, breach of contract, and unjust
enrichment. In support of her fraud claims, she alleges Arvest made false or
misleading statements in its Electronic Fund Transfer Agreement and Disclosure
(“EFTA”) and in certain marketing materials, which led customers to believe their
transactions would be debited chronologically, i.e., in the order transactions are
initiated (or in the case of checks, in the order they are presented). But, and contrary
to the misrepresentations, Arvest actually posts all transactions in “batches” by
transaction type at the end of each business day. She claims the batching process
manipulates the posting order of transactions to maximize the number of insufficient
funds and overdraft fees (“NSF/OD Fees”) it imposes on customers. More
specifically, she alleges the batching causes transactions to be posted in the following
order: POS transactions,1 other debit transactions, check transactions, ACH
transactions,2 and other types of transactions. Moreover, she claims transactions of
the same type are not necessarily posted in chronological order within a batch.
1
According to the EFTA, which Parrish attached to her Complaint, POS stands
for “Point-of-Sale.” Aplt. App., Vol. 2 at 251. A POS transaction occurs when a
customer uses a CheckCard to purchase goods and services from a participating
merchant. See id.2
ACH stands for “Automated Clearing House,” a network through which bank
customers can pay certain bills electronically. Aplt. App., Vol. 2 at 252.
2
In sum, Parrish claims Arvest’s false and misleading statements regarding the
chronological posting of transactions leaves its customers unable to determine
(before initiating and completing a transaction) whether it will result in an NSF/OD
Fee. She alleges generally that Arvest assessed one or more NSF/OD Fees on
multiple occasions when her check register showed a positive balance, and she claims
she would have incurred fewer NSF/OD Fees on other occasions had Arvest posted
her transactions chronologically.
She also alleges fraud based on the account information Arvest displays via its
online and mobile banking platforms, in which it misrepresents customers’ account
balances to be accurate, “real-time” balances, when they are actually inaccurate,
“false” balances because of Arvest’s posting process. She claims to have relied on
inaccurate account balances in initiating and completing transactions and, as a result,
incurred unexpected NSF/OD Fees.3
In addition to her fraud claims, Parrish alleges claims for breach of fiduciary
duty, breach of the EFTA, and unjust enrichment based on the same factual
allegations.
The district judge decided Parrish’s Complaint fails to state a claim under Rule
12(b)(6) because: 1) her fraud claims do not allege with particularity any
misrepresentation by Arvest that it posts transactions instantaneously or in
3
Parrish clarifies that her fraud claims “do not challenge Arvest’s chosen
posting order, nor do they attempt to require Arvest to make particular disclosures to
its customers.” Aplt. Reply Br. at 11.
3
chronological order; 2) the facts she alleges in her fiduciary duty claim do not
support a fiduciary relationship between Arvest and its customers; 3) her
breach-of-contract claim is infirm because Arvest did not promise in the EFTA to
provide account balances reflecting instantaneous posting, and she does not
adequately plead facts supporting her general allegation that Arvest breached the
implied covenant of good faith and fair dealing; and 4) her unjust enrichment claim
does not state a plausible basis to infer that Arvest’s conduct was unfair,
unconscionable, and oppressive.
II. Discussion
We review de novo the dismissal of a complaint for failure to state a claim
under Rule 12(b)(6). George v. Urban Settlement Serv., 833 F.3d 1242, 1247
(10th Cir. 2016). “We accept a plaintiff’s well-pleaded factual allegations as true and
determine whether the plaintiff has provided enough facts to state a claim to relief
that is plausible on its face.” Id. (internal quotation marks omitted). “[A] claim is
facially plausible if the plaintiff has pled factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Id.(internal quotation marks omitted). “The plausibility standard is not akin to a
probability requirement, but it asks for more than a sheer possibility that a defendant
has acted unlawfully. Where a complaint pleads facts that are merely consistent with
a defendant’s liability, it stops short of the line between possibility and plausibility of
entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and
internal quotation marks omitted). A putative class action complaint should be
4
dismissed if the named plaintiff’s individual claims fail to state a claim for relief.
See Robey v. Shapiro, Marianos & Cejda, L.L.C., 434 F.3d 1208, 1213 (10th Cir.
2006) (holding class-action allegations were properly dismissed where plaintiff failed
to state a claim on his own behalf).
A. Fraud Claims
A stricter pleading standard applies to Parrish’s fraud claims. Under
Fed. R. Civ. P. 9(b), “a party must state with particularity the circumstances
constituting fraud . . . . Malice, intent, knowledge, and other conditions of a person’s
mind may be alleged generally.” “More specifically, this court requires a complaint
alleging fraud to set forth the time, place and contents of the false representation, the
identity of the party making the false statements and the consequences thereof.”
Koch v. Koch Indus., Inc., 203 F.3d 1202, 1236 (10th Cir. 2000).
1. Alleged Misrepresentations Regarding Chronological
Processing of Transactions
Parrish does not claim Arvest explicitly stated that it posts transactions
chronologically, rather that it made misleading statements in the EFTA and in certain
marketing materials, which created the false impression it does so, when in fact it
does not—it batch posts transactions at the end of each business day.
She first points to the following statement in the EFTA: “Each time you use
your CheckCard, the amount of the transaction will be debited from your designated
account.” Aplt. App., Vol. 2 at 252. Emphasizing the words “each time,” she alleges
that, although this statement “may or may not imply that the posting will be
5
instantaneous, it clearly does imply that transactions will be debited in the order in
which they occur.” Id. at 240. Moreover, she says, Arvest reinforced this
implication in a pamphlet titled “How to Keep Good Bank Records” by advising
customers to “enter every transaction as soon as possible.” Id. at 230 (internal
quotation marks omitted). She alleges that, by specifically telling customers “Check
numbers do not always clear in numerical order or immediately,” id. at 230-31
(internal quotation marks omitted), the pamphlet suggests other transactions do post
chronologically.
The district judge concluded the statement in the EFTA about accounts being
debited “each time” a customer uses a debit card “does not say or imply that the
posting will be instantaneous,” nor does the pamphlet suggest that non-check
transactions are posted immediately or chronologically. Id. at 371. Parrish
complains that the judge failed to view the facts she alleged in the light most
favorable to her position and did not address her contention regarding chronological
(as opposed to immediate) posting. When considered together, she urges, the EFTA
and the pamphlet create a false impression that customers’ accounts are debited in the
order their transactions occur.
Arvest contends its “each time” statement in the EFTA addresses only the
mechanics of how a CheckCard works, i.e., indicating that each POS transaction will
result in a debit to the customer’s account. It points to language in the pamphlet
telling customers, “The debit card purchase amount may show one day as verification
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and then will be processed as the actual purchase amount in one or more days and
they may not be the same amount.” Id. at 289.4
The district judge is correct: Parrish fails to allege a misrepresentation by
Arvest. Her fraud allegations do not plausibly show what she claims: that the EFTA
or the pamphlet actually represents that CheckCard or other transactions will be
posted in chronological order. Her allegations are, at best, “merely consistent with”
her claim that Arvest made false representations. Iqbal, 556 U.S. at 678 (internal
quotation marks omitted). That is not enough and our saying so does not merely
choose one plausible interpretation over another. Arguments about plausibility must
be rationally based; they are not all equally meritorious.
Parrish relies heavily on Gutierrez v. Wells Fargo Bank, NA, 704 F.3d 712,
730 (9th Cir. 2012), in which the Ninth Circuit affirmed a holding that Wells Fargo
violated California’s unfair competition law “by making misleading statements likely
to deceive its customers.” We do not see the facts in Gutierrez as sufficiently similar
to those presented here. There Wells Fargo posted debit-card purchases in the order
of highest to lowest dollar amount, which increased the number of NSF/OD Fees
4
Although Parrish did not attach a copy of the pamphlet to the Complaint, she
did refer to it and the document is central to her fraud claims. Because Parrish has
not disputed the authenticity of the pamphlet document Arvest submitted with its
motion to dismiss, we consider that document as part of Parrish’s Complaint. See
GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir.
1997) (“[I]f a plaintiff does not incorporate by reference or attach a document to its
complaint, but the document is referred to in the complaint and is central to the
plaintiff’s claim, a defendant may submit an indisputably authentic copy to the court
to be considered on a motion to dismiss.”).
7
customers incurred. See id. at 716-17.5 But contrary to its actual practice, Wells
Fargo explicitly told customers in marketing materials that check card transactions
“generally reduce the balance in your account immediately,” “the money comes right
out of your checking account the minute you use your debit-card,” and POS
purchases are deducted “immediately” or “automatically” from a customer’s account.
Id. at 729 (internal quotation marks omitted).
As Parrish readily acknowledges, she does not allege any such explicit
representations by Arvest in the EFTA or the pamphlet regarding chronological
posting. She nonetheless points to allegations in her Complaint similar to the facts
recited in Gutierrez, in particular Arvest’s display of transactions in chronological
order via its online and mobile banking platforms and its advice to customers to
maintain accurate check registers. In Gutierrez, the district judge found similar
practices to have bolstered Wells Fargo’s numerous explicit statements regarding
immediate debiting of transactions. See Gutierrez v. Wells Fargo Bank, N.A., 730 F.
Supp. 2d 1080, 1117 (N.D. Cal. 2010), aff’d in part and rev’d in part by Gutierrez,
704 F.3d at 730. But it did not rely on these practices alone in finding that Wells
Fargo had “promoted a false perception that debit-card purchases would be deducted
from [customers’] accounts in the order transacted.” Id.; see also id. at 1116-17
5
In striking contrast, Parrish does not allege Arvest posts debit-card
transactions in high-to-low order. She does claim check transactions have a higher
median transaction value than ACH transactions, and that Arvest batch posts checks
before ACH transactions. But she also alleges that Arvest posts POS and other types
of debit transactions first, and she does not claim these types of transactions have a
higher median transaction value than check or ACH transactions.
8
(listing numerous explicit statements by Wells Fargo regarding immediate balance
reductions).
Moreover, Parrish also fails to allege facts demonstrating her reliance on any
misrepresentation by Arvest regarding chronological posting. Under Rule 9(b), she
must allege with particularity the “consequences” of Arvest’s false statements. Koch,
203 F.3d at 1236; see also George, 833 F.3d at 1256 (holding allegations
“identify[ing] the actions the plaintiffs took in reliance on [the] misrepresentations,
[and] detail[ing] the injuries they suffered as a result” were sufficient to satisfy
Rule 9(b)).
Here, she alleges only two specific instances in which she incurred unexpected
NSF/OD Fees on her Arvest accounts. Her allegations regarding transactions on July
2-3, 2012, fail to show she would have incurred fewer fees had her transactions been
posted chronologically. See Aplt. App., Vol. 2 at 232-34. Parrish now maintains
these allegations are not intended to demonstrate her reliance. See Aplt. Reply Br. at
4. That leaves her allegations regarding an NSF/OD Fee she incurred on July 13,
2015. But these allegations also do not relate to Parrish’s claim of reliance on
chronological posting of transactions. See Aplt. App., Vol. 2 at 236-37. Nor are her
other broad allegations regarding her reliance sufficient to satisfy Rule 9(b). See
Koch, 203 F.3d at 1236-37 (affirming dismissal of fraud claims based on broad
allegations that “set forth none of the specific and required allegations,” id. at 1237).
9
2. Alleged Inaccurate and Unreliable Account Balances
Parrish also attempts to allege a fraud claim related to the account balance
information available to customers through Arvest’s online and mobile banking
platforms. She alleges she believed, due to Arvest’s misrepresentations, that it
provided “real-time account balances” through these services. Aplt. App., Vol. 2
at 236. Parrish claims she initiated and completed transactions in reliance on these
account balances, incurring unexpected NSF/OD Fees as a result.
To the extent she relies on alleged misrepresentations by Arvest regarding
chronological posting, this claim fails for the reasons explained above. But Parrish
also points to the following language in the EFTA:
ONLINE & MOBILE BANKING – You may use your access code to
perform the following functions through our internet banking or mobile
banking solutions:
 Initiate transfers of funds between your Arvest Bank accounts.
 Check your Arvest Bank account balance(s), and the credits and
debits that have posted to your accounts.
Id. at 252. She argues Arvest misrepresents through this language that it displays
accurate account balances via its online and mobile banking systems when in fact it
does not.
Once again, Parrish must allege a plausible fraud claim with particularity.
According to the Complaint:
[O]n July 8, 2015, Parrish mistakenly wrote a check from her bank account
ending in 9398, believing she had done so from a different account. When
she realized her error over the weekend, Parrish checked the balance
reflected on Arvest’s online banking system. It reflected that the check had
not processed and there were sufficient funds in the account. Parrish relied
10
on this representation, which ultimately proved to be false, and waited until
the following Monday morning to deposit additional funds in the account.
On Monday, July 13, 2015, Arvest’s online banking system indicated that
Arvest had in fact processed and posted the check prior to Parrish’s deposit,
contrary to the representation upon which Parrish relied over the weekend.
As a result of this reliance, Parrish incurred an unexpected NSF/OD Fee.
Id. at 236-37. These fraud allegations do not survive a motion to dismiss. Parrish
claims she checked her online balance once at some undisclosed point during a
weekend, noting her check had not yet cleared. She alleges vaguely there were
“sufficient funds” in her account at that time, but she does not say her check was the
only transaction affecting the account. She states that she decided to delay—not
forgo—making a deposit. Ultimately, Parrish fails to explain how Arvest’s posting
of her check at some point before she put more money in her account on the
following Monday demonstrates that the online balance Arvest displayed over the
weekend was “false” at that time. Parrish’s allegations do not allege with specificity
a plausible fraud claim against Arvest.
We affirm the district judge’s dismissal of Parrish’s fraud claims. She did not
“nudge[]” these claims “across the line from conceivable to plausible.” Iqbal,
556 U.S. at 680 (internal quotation marks omitted).6
6
Parrish’s constructive fraud claim fails for the same reasons as her other
fraud claims. Moreover, she does not allege facts supporting her two theories why
Arvest had a duty to disclose information about its posting practices. She alleges no
partial, misleading disclosure by Arvest giving rise to a duty to speak. Nor, as we
explain next, does she allege facts supporting a finding that Arvest has a fiduciary
relationship with its customers.
11
B. Breach of Fiduciary Duty
Under Oklahoma law, a bank does not owe its customers fiduciary duties
absent a written agreement:
Unless a state or national bank shall have expressly agreed in writing to
assume special or fiduciary duties or obligations, no such duties or
obligations will be imposed on the bank with respect to a depositor of the
bank . . . and no special or fiduciary relationship shall be deemed to exist.
Okla. Stat. tit. 6, § 425. Parrish’s breach-of-fiduciary-duty claim was dismissed
because she failed to allege an express written agreement to assume such duties. The
judge also held her allegation of a special relationship between Arvest and its
customers—based on Arvest’s superior knowledge of its posting processes and its
customers’ lack of sophistication—failed as a matter of law. See First Nat’l Bank &
Tr. Co. of Vinita v. Kissee, 859 P.2d 502, 510-11 (Okla. 1993).
In support of her fiduciary duty argument Parrish points to Arvest’s agreement
in the EFTA to provide accurate, real-time account balance information through its
online and mobile banking platforms. Banks have always been expected to provide
accurate account information, but that does not transform a creditor-debtor
relationship between a bank and its customers into a special relationship giving rise
to fiduciary duties, and we fail to see how the offering of what has now become
routine banking services will do so. Parrish has offered no contrary authority. We
see no error.
12
C. Breach of Contract
Parrish initially contends her Complaint states a claim for breach of the
implied covenant of good faith and fair dealing. She cites cases in which other courts
have refused to dismiss implied-covenant claims with fact patterns similar to those
she has alleged. In particular, she notes her allegations regarding Arvest’s posting
process, its failure to fully inform customers regarding that process, and its
misleading statements regarding chronological posting. But she does not tether these
allegations to anything Arvest agreed to do, but has not performed in good faith. In
the cases she relies on, the plaintiffs alleged that banks failed to exercise good faith
in performing express contractual terms granting them discretion to post transactions
in any order. See, e.g., In re Checking Account Overdraft Litig., 694 F. Supp. 2d
1302, 1314-16 (S.D. Fla. 2010). Since she does not point to any similar allegation in
her Complaint she fails to demonstrate how the district judge erred in concluding her
general allegation regarding Arvest’s breach of the implied covenant is insufficient to
state a claim under Rule 12(b)(6).
Parrish also alleges Arvest breached its agreement in the EFTA to provide
accurate and reliable account balance information via its online and mobile banking
platforms. As noted above, the EFTA provides that, via these systems, customers can
initiate transfers between their Arvest accounts, as well as check their “account
balance(s), and the credits and debits that have posted to [their] accounts.” Aplt.
App., Vol. 2 at 252. She construes this language as an agreement to provide current,
real-time balance information, which she claims Arvest breached by displaying
13
inaccurate account balances. By example, she alleges that Arvest does not
instantaneously process transfers between Arvest accounts, even when it represents
through a customer’s online or mobile account balance it has done so. See id. at 236.
And she claims to have relied on that inaccurate online and mobile account balance
information in initiating and completing transactions. As a result, she overdrew her
accounts and incurred unexpected NSF/OD Fees.
In dismissing this claim, the district judge incorporated the following
reasoning from a previous dismissal order:
The complaint asserts that Arvest breached the [EFTA] by providing
inaccurate account balances, but it is not apparent what makes the balances
inaccurate. Plaintiff’s argument is essentially that an “accurate” balance is
only one which reflects instantaneous posting of transactions. But the
agreement promises no such thing and there is no apparent reason for
concluding that transactions posted by size or some other batching process
result in balances that are other than “accurate” for purposes of the
agreement.
Aplt. App., Vol. 1 at 220.
But the EFTA tells customers they can use Arvest’s online and mobile banking
platforms to check their account balances and the credits and debits that have posted
to their accounts. Parrish alleges, to the contrary, that account information Arvest
makes available through its online and mobile banking platforms does not accurately
reflect actual account balances. Her example of Arvest not carrying out an intra-bank
transfer, while displaying the transfer as completed, illustrates how an online or
mobile banking account balance could be inaccurate. Unlike her fraud claims,
Parrish was not required to plead this claim with particularity. And her allegations
14
are not, as Arvest maintains, merely conclusory. Accepting her allegations as true
and construing them in a light most favorable to her, she has alleged enough facts to
plausibly state a facially valid claim to relief.
Arvest asserts the form agreements governing Parrish’s use of its online and
mobile banking platforms do not warrant these systems as error free and also
disclaim liability for customers’ reliance upon them. But Parrish’s claim is based on
the EFTA, which she attached to her complaint. She does not rely on or attach the
other agreements Arvest cites. We do not consider these other agreements because
“[o]ur role is to assess whether the plaintiff’s complaint alone is legally sufficient to
state a claim upon which relief may be granted.” U.S. ex rel. Sikkenga v. Regence
BlueCross BlueShield of Utah, 472 F.3d 702, 713 (10th Cir. 2006).
We affirm the district judge’s dismissal of Parrish’s claim asserting breach of
the implied covenant of good faith and fair dealing, but reverse its dismissal of her
claim asserting Arvest breached the EFTA by providing inaccurate account balance
information to customers through its online and mobile banking platforms.
D. Unjust Enrichment
Parrish asserts an unjust-enrichment claim as an alternative to her
breach-of-contract claim. She first maintains this claim is based upon Arvest’s
alleged misrepresentations regarding chronological posting of transactions and the
resulting increase in NSF/OD Fees Arvest imposes. Because she fails to allege a
misrepresentation by Arvest regarding chronological posting, these allegations do not
support a claim for unjust enrichment.
15
Parrish also asserts her unjust-enrichment claim is based on the allegedly false
account balance information Arvest provides through its online and mobile banking
platforms. We have affirmed dismissal of her fraud claim based on these allegations
because she did not plead with particularity any false account balance information
pertaining to her own accounts. But we have reversed the dismissal of Parrish’s
breach-of-contract claim based on inaccurate balance information displayed via
Arvest’s online or mobile banking systems. Under Oklahoma law, Arvest says,
quasi-contractual remedies such as unjust enrichment are not available where an
enforceable contract governs the parties’ relationship. Parrish does not address this
contention in her reply brief.
In Oklahoma “a party is not entitled to pursue a claim for unjust enrichment
when it has an adequate remedy at law for breach of contract.” Am. Biomedical Grp.,
Inc. v Techtrol, Inc. 374 P.3d 820, 828 (Okla. 2016).7 We have cited “the hornbook
rule that quasi-contractual remedies . . . are not to be created when an enforceable
express contract regulates the relations of the parties with respect to the disputed
issue.” Member Serv. Life Ins. Co. v. Am. Nat’l Bank & Tr. Co. of Sapulpa, 130 F.3d
950, 957 (10th Cir. 1997) (citing 1 Joseph M. Perillo, Corbin on Contracts § 1.20
(rev. ed. 1993)). We applied this rule in a case where the plaintiff tried to allege an
unjust-enrichment claim to recover unpaid royalties. See Elliott Indus. Ltd. P’ship v.
7
This rule does not apply when a party is seeking to rescind the contract, see
Roberson v. PaineWebber, Inc., 998 P.2d 193, 200 (Okla. Civ. App. 1999), but
Parrish does not seek to rescind the EFTA.
16
BP Am. Prod. Co., 407 F.3d 1091, 1107-09 (10th Cir. 2005). We affirmed a
summary judgment because “the claim for unpaid royalties is grounded in the parties’
contractual relationship.” Id. at 1117. Parrish presents no argument as to why this
rule does not bar her unjust-enrichment claim. We therefore affirm the dismissal of
her claim on that basis.
III. Conclusion
The district court’s judgment is affirmed in part and reversed in part. The case
is remanded for further proceedings consistent with this order and judgment.
Entered for the Court
Terrence L. O’Brien
Circuit Judge
17