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Repay v. Bank of America, N.A.

United States District Court, Seventh Circuit

November 27, 2013

HENRY REPAY, Plaintiff,
v.
BANK OF AMERICA, N.A., ET AL., Defendant.

MEMORANDUM OPINION AND ORDER

ROBERT M. DOW, Jr., District Judge.

This matter is before the Court on two motions to dismiss [43 and 46], filed by Defendants Bank of American, N.A., FIA Card Services, N.A., and Frederick J. Hanna & Associates, P.C. For the reasons set forth below, the Court grants Defendants' motions [43 and 46]. The Court also grants Plaintiff's motion for leave to file a surreply [52]. Defendants' unopposed motion to stay discovery [57] is denied as moot.

I. Background

A. Procedural History

On December 21, 2012, Plaintiff Henry Repay filed a one-count complaint against Defendants Bank of America, N.A. ("BOA"), and FIA Card Services, N.A. ("FIA"), alleging a violation of the Electronic Funds Transfer Act ("EFTA"). Defendants BOA and FIA moved to dismiss the initial complaint, and Plaintiff responded by seeking leave to amend. The Court granted the request, and in March 2013, Plaintiff filed his amended complaint, adding the law firm Frederick J. Hanna & Associates, P.C. ("Hanna") as well as additional allegations regarding debits that Hanna purportedly caused to be charged to Plaintiff's checking account. All Defendants have moved to dismiss the amended complaint on statute of limitations grounds, and Defendants BOA and FIA also contend that the amended complaint should be dismissed because it fails to state a claim against BOA or FIA.

B. Plaintiff's Allegations

BOA and FIA, both subsidiaries of Bank of America Corporation, are major issuers and servicers of credit cards. FIA services many or all credit cards issued by BOA. BOA issued two credit cards to Repay, and he fell behind in his payments on both accounts. According to the amended complaint, BOA or FIA (or both) retained Defendant Hanna, a law firm, to collect on the accounts. In connection with its collection efforts, Hanna sent letters to Repay naming FIA as the account holder.

Plaintiff negotiated a payment arrangement with Hanna to repay the accounts. Under the arrangement, payments were to be made through recurring debits by Hanna to a checking account at Blackhawk Bank. Plaintiff alleges that for the first credit card account, the debits began in October 2011, continued through March 2012, and then occurred again in August and September 2012. For the second credit card account, the debits began in October 2011 and continued until March 2012, at which time the account was paid in full pursuant to the settlement arrangement. After paying off the second account, Repay received a letter from BOA stating that it was paid off. Although the complaint alleges that the payment arrangements contemplated that Hanna would initiate the recurring debits, it does not specify which entity-BOA, FIA, or Hanna-actually made the debits. Plaintiff alleges that that he did not provide any written authorization for these debits.

II. Legal Standard

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a 12(b)(6) motion to dismiss, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed.R.Civ.P.8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level, " assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint. Twombly, 550 U.S. at 563. The Court accepts as true all of the well-pleaded facts alleged by the plaintiff and all reasonable inferences that can be drawn therefrom. See Barnes v. Briley, 420 F.3d 673, 677 (7th Cir. 2005).

The Seventh Circuit has been clear in its assessment of the limitations periods: "[O]n the subject of the statute of limitations * * * * [w]hat a complaint must plead is enough to show that the claim for relief is plausible. Complaints need not anticipate defenses and attempt to defeat them. The period of limitations is an affirmative defense * * * * We have held many times that, because complaints need not anticipate defenses, Rule 12(b)(6) is not designed for motions under Rule 8(c)(1)." Richards v. Mitcheff, 696 F.3d 635, 637-38 (7th Cir.2012) (internal citations omitted); see also United States Gypsum Co. v. Indiana Gas Co., 350 F.3d 623 (7th Cir.2003); United States v. Northern Trust Co., 372 F.3d 886 (7th Cir. 2004); Xechem, Inc. v. Bristol- Myers Squibb Co., 372 F.3d 899 (7th Cir. 2004). In Mitcheff, the court concluded by reminding judges to "respect the norm that complaints need not anticipate or meet potential affirmative defenses."

Despite these admonitions, the Seventh Circuit also has consistently reaffirmed that a plaintiff may plead himself out of court by alleging facts that are sufficient to establish a statuteof-limitations defense. See Cancer Found., Inc. v. Cerberus Capital Mgmt., LP, 559 F.3d 671, 675 (7th Cir. 2009) (dismissal is appropriate where it is "clear from the face of the amended complaint that it [was] hopelessly time-barred"); Andonissamy v. Hewlett-Packard Co., 547 F.3d 841, 847 (7th Cir.2008) (stating that "[a] statute of limitations defense, while not normally part of a motion under Rule 12(b)(6), is appropriate where the allegations of the complaint itself set forth everything necessary to satisfy the affirmative defense, such as when a complaint plainly reveals that an action is untimely under the governing statute of limitations") (internal quotations omitted); U.S. Gypsum Co. v. Ind. Gas Co., Inc., 350 F.2d 623, 626 (7th Cir.2003) ("A litigant may plead itself out of court by alleging (and thus admitting) the ingredients of a defense"); Xechem, Inc. v. Bristol-Myers Squibb Co., 372 F.3d 899, 901 (7th Cir.2004) ("Only when the plaintiff pleads itself out of court-that is, admits all the ingredients of an impenetrable defense-may a complaint that otherwise states a claim be dismissed under Rule 12(b)(6)."); see also Baldwin v. Metro. Water Reclamation Dist. Of Greater Chicago, 2012 WL 5278614, at * 1 ("A plaintiff whose allegations show that there is an airtight defense has pleaded himself out of court, and the judge may dismiss the suit on the pleadings * * *.") (quoting Mitcheff, 696 F.3d at 637). In the present case, Plaintiff has pled all of the necessary facts to resolve this issue. Where a plaintiff has pled facts which arguably establish an affirmative defense and both sides have briefed the issue, practical considerations-such as discovery costs, attorneys' fees, and judicial efficiency-provide courts with ample reasons to resolve a dispositive point of law early in a case, whether the parties have briefed the question as a 12(b)(6) or a 12(c) issue. In either case, a court's decision rests on the pleadings and whether a plaintiff has affirmatively pled himself out of court.

III. Analysis

Plaintiff contends that all Defendants violated § 1693e(a) of the Electronic Funds Transfer Act ("EFTA"), which provides that "[a] preauthorized electronic fund transfer from a consumer's account may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made." 15 U.S.C. § 1693e(a). The EFTA defines "preauthorized electronic fund transfer" as "an electronic fund transfer authorized in advance to recur at substantially regular intervals." 15 U.S.C. § 1693a(9). Defendants contend that Plaintiff's action is barred under the EFTA's one-year statute of limitations set forth in 15 U.S.C. § 1693m(g), or, alternatively, that the amended complaint should be dismissed ...


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