Alicia Page v. Alliant Credit Union ( 2022 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 21-1983
ALICIA M. PAGE,
Plaintiff-Appellant,
v.
ALLIANT CREDIT UNION,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 19-cv-05965 — Sharon Johnson Coleman, Judge.
____________________
ARGUED SEPTEMBER 14, 2022 — DECIDED OCTOBER 25, 2022
____________________
Before EASTERBROOK, ROVNER, and ST. EVE, Circuit Judges.
ST. EVE, Circuit Judge. Alicia Page sued Alliant Credit Un-
ion on behalf of herself and other similarly situated custom-
ers, alleging that Alliant charged fees in violation of its con-
tract. The district court dismissed Page’s claim because, on its
reading of the contact, Alliant’s fee practices did not breach
the contract. Although our reasoning differs slightly from the
district court’s, we reach the same conclusion and affirm.
2 No. 21-1983
I. Background
Alliant Credit Union is a credit union organized under Il-
linois law that does business exclusively over the internet. Al-
liant serves a nationwide customer base that included, during
the relevant period, Alicia Page, a citizen of New Jersey. Like
many banks and credit unions, Alliant charges a nonsufficient
fund (“NSF”) fee when it rejects an attempted debit because
an account lacks sufficient funds to cover the transaction.1
This appeal concerns the methods that Alliant can use, pursu-
ant to its contact, to determine whether to assess an NSF fee
and how many NSF fees Alliant may charge based on a single
transaction by a customer. Page argues that the contract re-
quires Alliant to assess fees using the “ledger-balance
method,” while Alliant contends that the contract permits it
to use the “available-balance method.”2
A. The Ledger Balance and Available Balance
There are two basic ways to calculate an account balance
for purposes of determining whether it has sufficient funds.
The ledger-balance method calculates the balance based on
posted debits and deposits. The ledger balance does not
1An NSF fee differs from an overdraft fee, which is charged when a
financial institution allows a transaction that results in a negative balance.
2 Page asserts that there are two methods of calculating the available
balance, the “collected available balance” and the “artificial available bal-
ance,” which take into account different types of unsettled transactions.
But regardless of how Alliant calculates the available balance, if the Agree-
ment promises to use the ledger-balance method, then Page’s claim sur-
vives dismissal, while if the contract allows Alliant to use the available-
balance method, then her claim fails. For ease of reference, we refer simply
to the available-balance method.
No. 21-1983 3
incorporate transactions until they are settled. The available-
balance method, by contrast, calculates a customer’s balance
by considering holds on deposits and transactions that have
been authorized but not yet settled.
To illustrate the difference, suppose an Alliant customer
with $500 in his checking account goes to the mall. He pays a
merchant $300 using his debit card. Alliant authorizes the
payment, but the transaction is not immediately posted. The
customer then uses his debit card to pay a second merchant
another $300. Under the ledger-balance method, he would
have sufficient funds for the second transaction because the
first has not yet posted. But under the available-balance
method, the $300 authorization would leave an available bal-
ance of $200—insufficient funds for the second transaction.
B. Page’s Contract with Alliant
Page believes that her contract with Alliant requires the
credit union to use the ledger-balance method when assessing
NSF fees and permits only one NSF fee per transaction. She
alleges that on January 4, 2017, Alliant charged her a $25 NSF
fee when she attempted to pay a $6,000 bill even though her
account’s ledger balance was $6,670.94. On January 12, 2017,
Page alleges that Alliant charged multiple NSF fees “for the
same item.” Alliant breached its contract, Page argues, when
it charged her these fees.
The parties agree that the November 2013 Account Agree-
ment (the “Agreement”) applies. It provides, in relevant part:
7. TRANSACTION LIMITATIONS.
a. Withdrawal Restrictions. We permit withdrawals
only if your account has sufficient available funds to
cover the full amount of the withdrawal or you have
4 No. 21-1983
an established overdraft protection plan. Checks or other
transfer or payment orders which are drawn against insuffi-
cient funds may be subject to a service charge as set forth in
the Fee Schedule. If there are sufficient funds to cover
some, but not all, of your withdrawal, we may allow
those withdrawals for which there are sufficient funds
in any order at our discretion. …
8. OVERDRAFTS.
a. Overdraft Liability. If on any day, the funds in your
savings account are not sufficient to cover checks, fees
or other items posted to your account, those amounts
will be handled in accordance with our overdraft pro-
cedures or by one of the overdraft protection plans out-
lined below. Alliant’s determination of an insufficient
account balance may be made at any time between
presentation and our midnight deadline with only one
review of the account required. We do not have to no-
tify you if your account does not have funds to cover
checks, ACH debits, debit card transactions, fees or
other posted items. Whether the item is paid or re-
turned, your account may be subject to a charge as set forth
in the Fee Schedule. …
b. Overdraft Protection Plan. If you have applied for
and we have approved the Overdraft Protection plan
for your account, we will honor checks, ACH debits,
and Point-of-Sale (POS) and signature-based debit
card transactions drawn on insufficient funds by trans-
ferring funds from another account under this Agree-
ment or a loan account, as you have directed, or as re-
quired under Alliant’s Overdraft Protection policy
subject to the Overdraft Transfer Fee as set forth in the
No. 21-1983 5
Fee Schedule or per the terms of your applicable loan
account. … If the amount of the item presented for pay-
ment exceeds the total of all available overdraft
sources, the item will be returned as non-sufficient
funds (NSF) and you will be charged applicable fees. This
Agreement governs all overdraft transfers, except
those governed by agreements for loan accounts.
(emphasis added). The Fee Schedule provides for a $25 “Non-
sufficient Fund Item (each).” The Governing Law provision
states: “This Agreement is governed by Alliant’s bylaws, fed-
eral laws and regulations, the laws, including applicable prin-
ciples of contract law and regulations in the State of Illinois,
and local clearinghouse rules, as amended from time to time.”
C. Procedural History
Page filed this putative class action in federal district court
on behalf of herself and similarly situated Alliant customers
she alleges were improperly charged NSF fees. Page asserted
a federal claim under the Electronic Fund Transfers Act, 15
U.S.C. §§ 1693–1693r, and several state law claims including
breach of contract, which is the only claim at issue on appeal.
Page advanced two theories to support her breach-of-con-
tract claim. Under the account-balance theory, Page alleged
that the Agreement unambiguously prohibits Alliant from
charging NSF fees when an account has sufficient funds un-
der the ledger-balance method. Her multiple-fees theory ar-
gued that the Agreement unambiguously prohibits Alliant
from charging multiple NSF fees when a merchant repeatedly
attempts to debit an account with insufficient funds. In the al-
ternative, Page argued that the Agreement was ambiguous
6 No. 21-1983
and that discovery was necessary to determine the intent of
the contracting parties.
The district court granted Alliant’s motion to dismiss. See
Fed. R. Civ. P. 12(b)(6). First, the court rejected Page’s account-
balance theory, explaining that “the plain, unambiguous lan-
guage states that a member needs sufficient available funds”
and reasoning that Page’s proposed reading would render
§ 7(a)’s use of the word “available” meaningless. The court
distinguished an Eleventh Circuit case holding a similar con-
tract was ambiguous because the contract at issue in that case
did not contain the word “available” in proximity to “suffi-
cient funds.”
Second, the court rejected the multiple-fees theory. Section
8(a) states that when a transaction without sufficient funds oc-
curs, “your account may be subject to a charge,” indicating a
singular fee per transaction made by the customer. The court
held, however, that this interpretation would be inconsistent
with § 8(b), which provides: “If the amount of the item pre-
sented for payment exceeds the total of all available overdraft
sources, the item will be returned as non-sufficient funds
(NSF) and you will be charged applicable fees.” The plural
“fees,” the court concluded, permitted Alliant to charge mul-
tiple fees when a merchant presented the same transaction to
Alliant more than once.
The district court dismissed the case with prejudice. Page
appealed.
II. Discussion
A. Jurisdiction
As a court of limited jurisdiction, we have an obligation to
ensure that a case is properly in federal court before reaching
No. 21-1983 7
the merits. Helbachs Café LLC v. City of Madison, 46 F.4th 525,
529 (7th Cir. 2022). The Class Action Fairness Act of 2005
(“CAFA”) provides federal district courts with original juris-
diction over “any civil action in which the matter in contro-
versy exceeds the sum or value of $5,000,000, exclusive of in-
terest and costs, and is a class action in which—(A) any mem-
ber of a class of plaintiffs is a citizen of a State different from
any defendant ….” 28 U.S.C. § 1332(d)(2). Page, a New Jersey
citizen, brought this putative class action against Alliant, an
Illinois citizen, and she alleges that, in the aggregate, there is
more than $5,000,000 in controversy. So CAFA’s jurisdictional
requirements appear to be satisfied.
But CAFA requires a district court to abstain from exercis-
ing jurisdiction over some actions that meet its requirements.
At issue here is what we call the “home-state controversy” ex-
ception to CAFA jurisdiction. “A district court shall decline to
exercise jurisdiction” if “(B) two-thirds or more of the mem-
bers of all proposed plaintiff classes in the aggregate, and the
primary defendants, are citizens of the State in which the ac-
tion was originally filed.” § 1332(d)(4). Because this action as-
serts claims under Illinois law and Illinois law primarily pro-
tects Illinois citizens, we were concerned by the possibility
that § 1332(d)(4)(B) applied. Although a question of absten-
tion differs from one of subject-matter jurisdiction, see Myrick
v. WellPoint, Inc., 764 F.3d 662, 665 (7th Cir. 2014), we may
raise CAFA abstention on our own motion, see Johnson v. Dia-
kon Logistics, Inc., 44 F.4th 1048, 1051 (7th Cir. 2022). At oral
argument, we requested supplemental briefing on this issue.
After that briefing, we are satisfied that abstention is not
required. First, the Agreement’s choice-of-law provision
makes clear that Illinois law applies to all of Alliant’s
8 No. 21-1983
customers, not just Illinois citizens. This fact mitigates our
concern that at least two-thirds of class members might be Il-
linois citizens. Second, over 80% of Alliant customers with
checking accounts reside outside of Illinois. To be sure, citi-
zenship and residence are not equivalent, Myrick, 764 F.3d at
664, so some Illinois-resident customers may be citizens of
other states and vice versa. But with such a large disparity be-
tween the proportion of Alliant customers who are Illinois
residents and the proportion of Illinois citizens necessary to
trigger CAFA abstention, the difference between residence
and citizenship is not significant enough to require further
proof of class members’ citizenship at this stage. Cf. id. at 665
(indicating that CAFA abstention decisions can be made via
sampling). Because § 1332(d)(4)(B) does not apply, jurisdic-
tion under § 1332(d)(2) exists.3 We therefore turn to the merits.
B. Breach of Contract
We review de novo the grant of a motion to dismiss for
failure to state a claim. E. Coast Ent. of Durham, LLC v. Hous.
Cas. Co., 31 F.4th 547, 550 (7th Cir. 2022). To survive a motion
to dismiss under Rule 12(b)(6), a complaint must “state a
claim to relief that is plausible on its face.” Paradigm Care &
Enrichment Ctr., LLC v. W. Bend Mut. Ins. Co., 33 F.4th 417, 420
(7th Cir. 2022) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)). We take Page’s factual allegations as true and draw all
3 The parties also argue that at the time Page filed this lawsuit, the
district court had federal-question jurisdiction over the Electronic Fund
Transfers Act claim and supplemental jurisdiction over the state law
claims, see 28 U.S.C. §§ 1331, 1367(a), and that supplemental jurisdiction
still exists on appeal. Because we have jurisdiction under § 1332(d)(2), we
decline to consider this argument.
No. 21-1983 9
reasonable inferences in her favor. Bilek v. Fed. Ins. Co., 8 F.4th
581, 584 (7th Cir. 2021).
“Contract construction is a legal issue which is reviewed
de novo.” Hongbo Han v. United Cont’l Holdings, Inc., 762 F.3d
598, 600 (7th Cir. 2014). Illinois law governs the Agreement,
so we look to Illinois law for principles of construction.
“Courts applying Illinois law aim to ‘ascertain the parties’ in-
tent’ by first consulting ‘the plain and ordinary meaning of
the contract language.’” E. Coast Ent., 31 F.4th at 550 (quoting
Am. Bankers Ins. Co. of Fla. v. Shockley, 3 F.4th 322, 327 (7th Cir.
2021)). “Undefined terms will be given their plain, ordinary,
and popular meaning; i.e., they will be construed with refer-
ence to the average, ordinary, normal, reasonable person.”
Sproull v. State Farm Fire & Cas. Co., 184 N.E.3d 203, 209 (Ill.
2021). Mere “disagreement between the parties as to meaning
does not itself make the [contract] ambiguous, and the court
‘will not strain to find an ambiguity where none exists.’” Cres-
cent Plaza Hotel Owner, L.P. v. Zurich Am. Ins. Co., 20 F.4th 303,
308 (7th Cir. 2021) (quoting Founders Ins. Co. v. Munoz, 930
N.E.2d 999, 1004 (Ill. 2010)).
The district court held that the Agreement was unambig-
uous and that under its plain meaning, Alliant’s conduct was
not a breach of contract. We agree and affirm.
1. The Account-Balance Theory
In Page’s view, the Agreement promises that Alliant will
not charge NSF fees unless a customer’s account has an insuf-
ficient ledger balance at the time of the transaction. She con-
tends that the plain language of the contract makes this prom-
ise. Section 8(a) provides that when Alliant determines a cus-
tomer has an “insufficient account balance” to cover a
10 No. 21-1983
transaction, “[her] account may be subject to a charge.” Page
argues that an ordinary English speaker would understand
“account balance” to mean what the banking industry calls
the ledger balance. But even if Page is correct, we must look
beyond § 8(a) and construe the contract as a whole. Sanders v.
Ill. Union Ins. Co., 157 N.E.3d 463, 467–68 (Ill. 2019). Section
7(a) warns that Alliant “permit[s] withdrawals only if [an] ac-
count has sufficient available funds to cover the full amount of
the withdrawal” and that “[c]hecks or other transfer or pay-
ment orders which are drawn against insufficient funds may be
subject to a service charge as set forth in the Fee Schedule.”
(emphases added). A reasonable person would read § 7(a) be-
fore § 8(a) and understand that § 8(a)’s reference to an “insuf-
ficient account balance” refers back to § 7(a)’s “insufficient
available funds.”
Page counters that because § 7(a) and § 8(a) use different
words, an “insufficient account balance” under § 8(a) must
mean something different than lacking “sufficient available
funds.” She asserts that “every provision in the agreement
concerning fees expressly applies to ‘insufficient funds’ or the
equivalent. In contrast, not one of these provisions mentions
‘sufficient available funds,’ or explains that funds might not be
available ….” Page proposes this interpretation to reconcile
the Agreement’s use of different phrases: the available bal-
ance is relevant only for purposes of withdrawal restrictions,
while the ledger balance is used for purposes of assessing
fees.
There are several problems with this argument. First, Page
incorrectly states that “none of these provisions say … that
Alliant is entitled to a fee when it restricts withdrawals.” Sec-
tion 7(a) says just that: “Checks or other transfer or payment
No. 21-1983 11
orders which are drawn against insufficient funds may be
subject to a service charge as set forth in the Fee Schedule.”
Second, and relatedly, while § 7(a) is titled “Withdrawal Re-
strictions,” it applies to more transactions than what might be
considered a classic withdrawal, such as cash from an ATM.
It covers “[c]hecks or other transfer or payment orders,” a
phrase that encompasses virtually every debit against the ac-
count. Thus, § 7(a) informs the customer that whenever some-
one attempts a debit but the account lacks “sufficient available
funds,” Alliant may charge a fee. Third, a contract is con-
strued based on how a reasonable person would understand
it. Sproull, 184 N.E.3d at 209. It is implausible that a reasonable
person would think that, without expressly saying so, the
Agreement used two different methods of calculating the ac-
count balance in consecutive sections. Cf. Lease Mgmt. Equip.
Corp. v. DFO P’ship, 910 N.E.2d 709, 716–17 (Ill. Ct. App. 2009)
(holding that references to “return possession” and “redeliv-
ery” were synonymous, despite using different words).
Next, Page argues that evidence of a banking-industry
custom to clearly disclose when NSF fees are assessed based
on the available-balance method should inform interpretation
of the Agreement. According to Page, other institutions
clearly disclose—sometimes in large, bold print—when they
use the available-balance method. Alliant’s failure to use sim-
ilar language, Page argues, means that the Agreement must
not have been intended to allow Alliant to use the available-
balance method when assessing fees. The district court did
not consider this evidence because it held that the Agreement
was unambiguous, which Page argues was an error under Il-
linois law. Even if such evidence had been considered, it
would not have helped Page. Some of the proposed evidence,
such as changes Alliant made to its contracts, dates from after
12 No. 21-1983
the parties entered into the Agreement. This evidence is irrel-
evant because “[p]roof of custom or usage is intended as an
aid to the interpretation of the intent of the parties at the time
the contract was made.” Chi. Bridge & Iron Co. v. Reliance Ins.
Co., 264 N.E.2d 134, 139 (Ill. 1970). But even evidence that pre-
dates the Agreement would not change the outcome. The fact
that some institutions disclosed that they used the available-
balance method differently or more clearly does not prove
that the Agreement promised to use the ledger-balance
method or that the Agreement is ambiguous. The lack of con-
spicuous disclaimers about how Alliant assesses NSF fees
does not change the fact that the available-balance method
better fits the contractual language than the ledger-balance
method.
Finally, Page argues that the terms of the Agreement are
at a minimum ambiguous and asks us to let the litigation con-
tinue beyond the motion-to-dismiss stage. She compares the
Agreement’s language to contractual terms analyzed in Tims
v. LGE Community Credit Union, 935 F.3d 1228 (11th Cir. 2019).
In Tims, the contract stated:
“if an item is presented without sufficient funds in
your account to pay it” or “if funds are not available to
pay all of the items” presented for payment, [the credit
union] “may, at its discretion, pay” the item or items,
creating an overdraft for which [the credit union] will
charge a fee.
Id. at 1236 (internal alterations omitted). The court reversed
the grant of the defendant’s motion to dismiss “[b]ecause the
language remains ambiguous after considering both the plain
language of the contracts and the Georgia canons of construc-
tion before us ….” Id. at 1242.
No. 21-1983 13
The district court here distinguished Tims, which involved
“an agreement in which the term ‘available’ was untethered
to the financial institution’s fee policy for overdrafts.” Page
argues that “the court failed to recognize that ‘available’ is
equally untethered from overdrafts here” and that “the argu-
ment that Tims rejected—that the ‘proximity of the word
“available”’ to the fee provision was enough to indicate the
available-balance method—is precisely the argument that the
district court accepted here.” But Tims only considered—and
rejected—the proximity argument after determining that the
contract was ambiguous, and the contract in Tims was mate-
rially different than Alliant’s Agreement. See Tims, 935 F.3d at
1239–41. Section 7(a) of the Agreement links “sufficient avail-
able funds” with NSF fees in the span of two consecutive sen-
tences, tethering “available” to overdraft provisions much
more closely than in the Tims contract. The district court
rightly recognized these differences and reached a different
conclusion than Tims.
Analyzing this contract under Illinois principles of con-
struction, we agree with the district court that the Agreement
is not ambiguous and that it does not prohibit Alliant from
using the available-balance method to charge NSF fees. The
district court correctly rejected the account-balance theory.
2. The Multiple-Fees Theory
Page’s second theory is that the Agreement promises to as-
sess an NSF fee only one time per transaction by the customer.
She argues that if Alliant rejects a transaction and charges an
NSF fee, Alliant may not charge additional fees if the payee
presents the same transaction to Alliant again. The Fee Sched-
ule provides for a $25 “Nonsufficient Fund Item (each),” so
this theory turns on the definition of “item.”
14 No. 21-1983
Page reads § 7(a) and the Fee Schedule to mean that “Al-
liant may charge ‘a’ $25 [NSF] ‘charge’ for ‘each’ payment or-
der that a member draws against insufficient funds.” The dis-
trict court rejected this argument based in part on § 8(b),
“Overdraft Protection Plan,” which states: “If the amount of
the item presented for payment exceeds the total of all availa-
ble overdraft sources, the item will be returned as non-suffi-
cient funds (NSF) and you will be charged applicable fees.”
(emphasis added). Page argues that the district court was
wrong to consider § 8(b) because Page was not enrolled in a
protection plan. We agree. A reasonable person reading the
Agreement would not think that a provision describing an op-
tional plan would bear on the contract’s interpretation if she
opted out of that plan. Even if the person read past § 8(b)’s
title, its first sentence would indicate that it applies only “[i]f
you have applied for and we have approved the Overdraft
Protection plan for your account ….” The district court should
not have considered § 8(b) when analyzing Page’s multiple-
fees theory.
Even without considering § 8(b), though, we agree with
the district court that the Agreement does not forbid Alliant
from charging multiple fees when it is presented with the
same transaction more than once. Page argues that “item”
means a “payment order that a member draws against insuffi-
cient funds.” Under this interpretation, because she, the mem-
ber, made just one payment, Alliant can charge only one fee.
But this reading does not hold up under scrutiny. Section 8(a)
states: “We do not have to notify you if your account does not
have funds to cover checks, ACH debits, debit card transac-
tions, fees or other posted items. Whether the item is paid or
returned, your account may be subject to a charge as set forth
in the Fee Schedule.” The list ending with “other posted
No. 21-1983 15
items” means that the previous terms are also “items,” includ-
ing ACH debits. See Corbett v. County of Lake, 104 N.E.3d 389,
397 (Ill. 2017) (“[W]ords grouped in a list should be given re-
lated meaning.” (quoting Third Nat’l Bank in Nashville v. Impac
Ltd., 432 U.S. 312, 322 (1977))).4 An ACH debit—or an auto-
mated clearinghouse debit—occurs when a payee debits a
person’s account. Defining “item” by reference to the debit ra-
ther than the transaction or purchase renders Page’s reading
untenable. Taken together, § 8(a) and the Fee Schedule permit
Alliant to charge an NSF fee each time a payee attempts to
make an ACH debit from an account with insufficient funds.
The Agreement does not prohibit Alliant from charging
multiple NSF fees for a transaction that is presented and re-
jected several times. The district court correctly rejected the
multiple-fees theory.
III. Conclusion
Alliant could have drafted the Agreement more clearly
than it did, but that is not the question before this court. Our
inquiry is whether Alliant promised not to use the available-
balance method to assess NSF fees or not to charge multiple
fees when a transaction is presented to it multiple times. Al-
liant made no such promises, and the district court properly
dismissed Page’s breach-of-contract claim.
AFFIRMED
4 Corbett interpreted a statute, not a contract, but Illinois courts inter-
pret contracts by applying “general rules of construction.” See U.S. Tr. Co.
of N.Y. v. Jones, 111 N.E.2d 144, 147 (Ill. 1953).