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Lambert v. Navy Federal Credit Union

United States District Court, E.D. Virginia, Alexandria Division

August 14, 2019

RUBY LAMBERT, individually and on behalf of all others similarly situated, Plaintiff,
v.
NAVY FEDERAL CREDIT UNION, Defendant.

          MEMORANDUM OPINION AND ORDER

          Liam O'Grady United States District Judge

         This matter comes before the Court on Defendant's Motion to Dismiss for Failure to State a Claim (Dkt. 19). The Motion is fully briefed, and the Court heard oral argument on May 24, 2019. For the reasons stated below, and for good cause shown, Defendant's Motion to Dismiss for Failure to State a Claim (Dkt. 19) is hereby GRANTED.

         I. BACKGROUND

         Plaintiff Ruby Lambert alleges that Defendant Navy Federal Credit Union charges multiple nonsufficient fund fees for multiple attempts to process a single payment request in violation of contractual language implying that only a single nonsufficient fund fee would ever be charged for a payment request, no matter how many times that payment request is declined for nonsufficient funds.

         Plaintiffs contract with Navy Federal states that Navy Federal "may" assess "[a] fee" "for each returned debit item." Navy Fed. Credit Union Important Disclosures (hereinafter "Important Disclosures") at 4. Plaintiffs insurer, Mutual of Omaha, attempted to automatically deduct Plaintiffs insurance payment from her Navy Federal account (with Plaintiffs prior authorization) using an Automated Clearing House ("ACH") debit request. That request was rejected due to insufficient funds, and Plaintiff was charged a nonsufficient fund fee. Mutual of Omaha again submitted an ACH debit request for the same payment two days later. Navy Federal again rejected the request due to insufficient funds and charged Plaintiff with another nonsufficient fund fee. Plaintiff challenges Navy Federal's assessment of the second nonsufficient fund fee, as she views Mutual of Omaha's original payment request and subsequent reprocessing attempt as involving the same "debit item." Plaintiff has brought two claims against Navy Federal: (1) breach of contract and the covenant of good faith and fair dealing under Virginia law, and (2) violation of North Carolina's Unfair and Deceptive Trade Practices Act.

         Defendant Navy Federal Credit Union has moved to dismiss both claims on preemption grounds and for failure to state a valid claim.

         II. LEGAL STANDARD

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain sufficient factual information to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A motion to dismiss pursuant to Rule 12(b)(6) must be considered in combination with Rule 8(a)(2), which requires "a short and plain statement of the claim showing that the pleader is entitled to relief so as to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Id. (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While "detailed factual allegations" are not required, Rule 8 does demand that a plaintiff provide more than mere labels and conclusions stating that the plaintiff is entitled to relief. Id. In evaluating whether a complaint states a plausible claim to relief, "although a court must accept as true all factual allegations contained in [the] complaint, such deference is not accorded to legal conclusions stated therein." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012).

         III. ANALYSIS

         A. Plaintiffs Claims Are Partially Preempted.

         Defendant Navy Federal Credit Union argues Plaintiffs claims are preempted by the National Credit Union Administration's ("NCUA") regulations implementing the Federal Credit Union Act ("FCUA") and Truth in Savings Act ("TISA"). State law claims may be preempted by Congress "either expressly through the statute or regulation's language or impliedly through its aim and structure." Whittington v. Mobiloil Fed. Credit Union, 2017 WL 6988193, at *6 (E.D. Tex. Sept. 14, 2017) (citing Altria Grp., Inc. v. Good, 555 U.S. 70, 76 (2008)).

         The relevant implementing regulations of the FCUA and TISA are contained in 12 C.F.R.

         parts 701 and 707, respectively. The FCUA's implementing regulations state:

A Federal credit union may, consistent with this section, parts 707 and 740 of this subchapter, other federal law, and its contractual obligations, determine the types of fees or charges and other matters affecting the opening, maintaining and closing of a share, share draft or share certificate account. State ...

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