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White v. Chase Bank USA, N.A.

United States District Court, E.D. North Carolina, Western Division

March 24, 2017

CHASE BANK USA, N.A., Defendant.



         This matter is before the court on the partial motion to dismiss filed by defendant Chase Bank USA, N. A. ("Chase"). (DE # 14.) The motion has been fully briefed and is therefore ripe for disposition.

         I. FACTS

         In 2010, plaintiff opened a credit card account with Chase. (Am. Compl., DE # 8, ¶10.) After the account was open, plaintiff used the credit card for personal purposes, and received monthly credit card statements from Chase. (Id. ¶¶ 11-12.) At some point, plaintiff noticed several unauthorized charges on her credit card statements. (Id. ¶ 13.) The unauthorized charges appeared on her statements as "PP *FACEBOOKPAY, " and plaintiff believed the transactions originated from an internet bot that wrongfully charged her credit card. (Id. ¶14.) Plaintiff claims that she "promptly notified" Chase to alert it of the fraudulent transactions, but Chase failed to take timely and reasonable measures to address the issue. (Id. ¶¶ 15-18.) According to plaintiff, the unauthorized transactions resulted in her being improperly assessed the principal amount of $272, 640.55. (Id. ¶¶ 30-31.)

         Plaintiff acknowledges that Chase ultimately did undertake an investigation of her allegations of billing errors. (Id. ¶¶ 32-34.) The investigation concluded that the challenged charges were fraudulent, and Chase issued a long line of credits to plaintiffs credit card account totaling $209, 587.69. (Id. ¶¶ 32-33.) In May 2015, Chase issued plaintiff a credit card statement showing a credit to her account for a fraud claim and a total credit balance of $59, 403.39. (Id. ]} 35; see also Ex. A, DE # 8-1.) The statement stated, in pertinent part, "You have a credit balance, so no payment is required. You may make charges against the credit or request a refund by contacting Cardmember Service at the address above." (Ex. A., DE # 8-1, at 3.) After receiving the statement, plaintiff contacted Chase to request a refund of these funds. (Am. Compl., DE # 8, 1} 36.) Chase refused to tender the funds shown on the statement. (Id.)

         The following month, in June 2015, Chase issued a credit card statement which plaintiff claims showed two allegedly improper charges to her account for "fraud claim credits" totaling $84, 568.35. (Id. ¶ 38.) Plaintiff notified Chase of the billing error in the June 2015 statement, and continued to request a refund of the credit balance shown on the May 2015 statement. (Id. ¶39.) Plaintiff alleges that Chase ignored her notice of the billing error and used the credit balance in her account to offset the new charges on her June 2015 statement. (Id. ¶¶ 41-42.) According to plaintiff, Chase currently owes her the amount of $63, 052, 986 plus late fees and interest. (Id. ¶ 43.)

         On 9 March 2016, plaintiff initiated this action in the Superior Court of North Carolina, Wake County, seeking recovery for the improperly assessed charges. (DE # 1-1.) Chase subsequently removed the action to this court. (DE #1.) Plaintiff later amended her complaint on 6 June 2016. (DE # 8.) The amended complaint asserts claims under the Fair Credit Billing Act ("FCBA"), 15 U.S.C. § 1693 etseq., and the Electronic Funds Transfer Act ("EFTA"), 15 U.S.C. § 1601 et seq., as well as state law claims for breach of contract, unfair and deceptive trade practices under North Carolina's Unfair and Deceptive Trade Practices Act ("UDTPA"), N.C. Gen. Stat. § 75-1 etseq., and declaratory judgment. (Id.) On 5 July 2016, Chase filed a motion for partial dismissal of the amended complaint. (DE # 14.) Plaintiff subsequently filed a memorandum in opposition, (DE # 17), to which Chase replied, (DE #21).

         II. ANALYSIS

         Chase seeks partial dismissal of plaintiff s amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Chase concedes that plaintiff has alleged the existence of a valid contract, as well as a cognizable claim for breach of that contract. (Defi's Mem. in Support, DE # 15, at 4.) However, Chase contends that "the remaining causes of action in the Amended Complaint should be dismissed because they fail to state claims upon which relief can be granted." (Id. at 1-2.)

         The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint, not to "resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Edwards v. City of Goldsboro. 178 F.3d 231, 243-44 (4th Cir. 1999). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Although "detailed factual allegations" are not required, "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]" Twombly, 550 U.S. at 555. The complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)[.]" Id. at 555-56 (internal citations omitted). In determining a motion to dismiss, "a court may consider documents attached to the complaint or the motion to dismiss so long as they are integral to the complaint and authentic." Kensington Volunteer Fire Dep't Inc. v. Montgomery Cty., 684 F.3d 462, 467 (4th Cir. 2012) (internal quotation marks and citation omitted).

         A Fair Credit Billing Act Claim

         In her amended complaint, plaintiff alleges that Chase committed three violations of the FCBA: (1) a violation of the billing dispute resolution procedures in 15 U.S.C. § 1666; (2) a violation of the treatment of credit balances provision in 15 U.S.C. § 1666d; and (3) a violation of the prohibition on offsets in 15 U.S.C. § 1666h. (Am. Compl., DE # 8, ¶¶ 68-72.) Chase argues that this claim should be dismissed because plaintiffs amended complaint merely states legal conclusions instead of alleging facts plausibly demonstrating that Chase violated any of the obligations the FCBA imposes on creditors who extend consumer credit. (Def's Mem. in Support, DE# 15, at 8.)

         Plaintiff first alleges that Chase violated the billing dispute procedures contained in the FCBA because it failed to conduct a reasonable investigation of the alleged billing errors and correct the billing errors as required by 15 U.S.C. § 1666. (Am. Compl., DE # 8, ¶¶ 68-69.) The FCBA, which is enforced by the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, and implemented through Regulation Z, 12 C.F.R. § 1026, "provides an avenue by which a debtor may challenge perceived billing errors on any credit card account statement and procedures that a creditor must follow in responding to properly raised billing errors." Esquibel v. Chase Manhattan Bank USA. N. A.. 487 F.Supp.2d 818, 825 (S.D. Tex. 2007) (citing 15 U.S.C. § 1666). "To succeed on a claim under § 1666, plaintiff must show (1) the existence of a billing error, (2) timely notification of the billing error, and (3) failure of the bank issuing the card to comply with the procedural requirements of Section 1666." Cunningham v. Bank One, 487 F.Supp.2d 1189, 1191-92 (W.D. Wash. 2007) (citation omitted). With respect to the requisite timely notice of a billing error:

Section 1666(a) provides that if, within sixty days after having sent an obligor a statement of his or her account, the creditor receives a written notice from the obligor indicating his or her belief that the statement contains a billing error, the amount of the error, and the reason for believing there is an error, the creditor must make corrections in the account or investigate and explain why the account is correct prior to taking any action to collect the amount.

Middleton v. Rogers Ltd., Inc., 804 F.Supp.2d 632, 637 (S.D. Ohio 2011) (citing 15 U.S.C. § 1666(a)). It follows that a creditor's statutory duties under §1666 are triggered when a credit card holder sends a creditor written notice "no later than 60 days after the creditor transmitted the first periodic statement that ...

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