In re Checking Account Overdraft Litig.

694 F. Supp. 2d 1302 (S.D. Fla. 2010)



As a general principle, there can be no breach of the implied promise or covenant of good faith and fair dealing where a contract expressly permits the actions being challenged, and the defendant acts in accordance with the express terms of the contract. The implied obligation of good faith cannot be used to vary the terms of an express contract. Good faith is a compact reference to an implied undertaking not to take opportunistic advantage in a way that could not have been contemplated at the time of drafting.


In multi-district litigation, plaintiff checking account customers, for themselves and others similarly situated, sued defendant federally chartered banks to recover excessive overdraft fees for charges to their accounts on debit card transactions, alleging breach of contract and of the covenant of good faith, unconscionability, conversion, unjust enrichment, and violation of consumer protection laws. The banks moved to dismiss the complaint. The court granted the motion to dismiss the state statutory claims where no named customer resided; the Massachusetts and New Mexico consumer protection laws claims, which were dismissed without prejudice; the California, Oregon, Montana, Ohio, and Wisconsin consumer protection law claims, which were dismissed with prejudice; and the Texas breach of the covenant of good faith claim. The court otherwise denied the banks' motion to dismiss.


Was the conduct complained of in accord with the express terms of the agreements between the bank and the Plaintiff? 


No. (Except for Texas)


Except for Texas, the court found that the customers sufficiently alleged breach of contract and of the implied covenant of good faith and fair dealing. The Court finds that while in certain instances Texas law supports a claim for breach of contract based on the implied covenant, the facts before the Court do not satisfy the additional requirements imposed by Texas law to raise a claim based on the implied covenant. Therefore, Defendants' Motion to Dismiss Plaintiffs' breach of the implied covenant claims based on Texas law only, is granted without prejudice to amend. 

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