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Larin v. Bank of America

July 22, 2010

EDUARDO LARIN, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED,, PLAINTIFFS,
v.
BANK OF AMERICA, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER GRANTING AMENDED COMPLAINT DEFENDANT'S MOTION TO DISMISS THE SECOND [Docket No. 36]

On September 30, 2009, this Court granted Defendant's motion to dismiss Plaintiff's First Amended Complaint because Plaintiff's claims were preempted by the Expedited Funds Availability Act ("EFAA") and the National Bank Act ("NBA"). After obtaining new counsel to represent him in this matter, Plaintiff filed a Second Amended Complaint that realleges the claims in the First Amended Complaint. In response to the Second Amended Complaint, Defendant filed the present motion to dismiss. Plaintiff filed an opposition to the motion, and Defendant filed a reply. For the reasons discussed below, the Court grants Defendant's motion.

I. BACKGROUND

This case is a purported class action alleging violations of California's Consumer Legal Remedies Act ("CLRA"), unfair competition and false advertising laws, and a breach of the implied covenant of good faith and fair dealing. The named Plaintiff, Eduardo Larin, had a checking account and credit card with Defendant Bank of America. Plaintiff was also enrolled in one of Defendant's overdraft protection plans, specifically, one which linked his credit card to his checking account for overdraft protection.

Plaintiff alleges that when he enrolled in Defendant's overdraft protection plan ("ODP"), Defendant also enrolled Plaintiff in an uncollected funds protection plan ("UFP") without his knowledge or consent. (Second Am Compl. ¶ 30.) In contrast to the basic method of processing deposits, which Plaintiff alleges is based primarily on the customer's checking account balance, UFP uses "linked accounts (balances, credit limits) as funding sources to secure quicker access to uncollected funds when the checking account balance would otherwise trigger a hold." (Id. ¶ 27.)

On May 16, 2006, Plaintiff deposited a check for $7,500 into his checking account at a Bank of America branch in San Diego, California. (Id. ¶ 47.) Before making this deposit, Plaintiff had $1,847.17 in his checking account. (Id.) After the deposit, and in accordance with the UFP feature, Plaintiff's available balance appeared to be $9,347.17. (Id. ¶ 48.) Plaintiff alleges these funds would not have been available immediately if he had not enrolled in ODP. (Id. ¶ 49.)

On May 18, 2006, Plaintiff withdrew $6,420 from his checking account at a Bank of America branch in San Diego, California. (Id. ¶ 49.) The next day, a check for $200 was paid out of Plaintiff's checking account, leaving a balance of $2,727.17. (Id.)

On or before May 23, 2006, the $7,500 check Plaintiff deposited into his account was returned. (Id. ¶ 50.) This left a negative balance of $4,772.83 in Plaintiff's checking account. (Id.) Plaintiff was charged a "deposited item return fee" of $5. (Id.)

In accordance with Plaintiff's ODP, Defendant transferred $4,800 from Plaintiff's credit card to his checking account to cover the negative balance. (Id. ¶ 51.) In connection with this transaction, Plaintiff was charged a "cash advance fee" of $144, and an interest rate of 23.99% on the $4,800 balance on his credit card. (Id. ¶ 52.)

Plaintiff alleges Defendant's policies and practices relating to its ODP violates the CLRA and California's unfair competition and false advertising laws, and that this conduct amounts to a breach of the implied covenant of good faith and fair dealing.

II. DISCUSSION

Defendant raises two primary arguments in its motion to dismiss. As in its first motion to dismiss, Defendant argues Plaintiff's claims are preempted by the EFAA and the NBA. Second, Defendant contends Plaintiff has failed to plead the necessary elements of each claim.

A. Standard of Review

In two recent opinions, the Supreme Court established a more stringent standard of review for 12(b)(6) motions. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this new standard, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that ...


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