United States District Court, E.D. Michigan, Southern Division
JAMES LOSSIA, JR. and ALEXANDRA PLAPCIANU, individually and on behalf of others similarly situated, Plaintiffs,
FLAGSTAR BANCORP, INC., a/k/a FLAGSTAR BANK, Defendant.
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY
JUDGMENT [DOC. 62]
CARAM STEEH UNITED STATES DISTRICT JUDGE
matter comes before the court on defendant Flagstar Bancorp,
Inc.'s (“Flagstar”) motion for summary
judgment of plaintiffs James Lossia and Alexandra
Plapcianu's third amended complaint. The court heard oral
argument on Flagstar's motion on March 27, 2017. For the
reasons set forth below, Flagstar's motion for summary
judgment is GRANTED.
is a federally chartered bank incorporated in the State of
Michigan. The plaintiffs opened a joint checking account on
December 6, 2014 and signed Flagstar's signature card
acknowledging that they received and agreed to the written
terms of their account on January 15, 2015. Flagstar's
Terms and Conditions and Disclosure Guide
(“Agreement”) governs plaintiffs'
relationship with Flagstar. The Agreement contains the
Payment Order of Items
. . . .
Our policy is to process wire transfers, online banking
transfers, in branch transactions, ATM transactions, debit
card transactions, ACH transactions, bill pay transactions
and items we are required to pay such as returned deposit
items, first - as they occur on their effective date for the
business day on which they are processed. We process checks
and similar items second - in the order in which they are
received for the business day on which they are processed. .
. . .
transactions are electronic, automated clearinghouse
transactions. Flagstar explained that it receives ACH
transactions in batch format from the Federal Reserve and
then processes the ACH transactions in the order set by the
Federal Reserve. (Barlow dep. at 134-36). The Federal
Reserve, in turn, receives the ACH transaction files from the
merchants with whom the transactions were initiated. Flagstar
does not re-sequence the ACH transactions it receives from
the Federal Reserve. Flagstar began its current practice of
processing ACH transactions in this way in 2012. (Barlow dep.
to 2012, Flagstar's policy was to reorder checks and ACH
transactions from largest to smallest. (Barlow dep. at 12).
Defendant cites to Flagstar's Operating Statements to
show that in 2012 Flagstar experienced a significant decline
in income from deposit fees and charges. In September, 2014,
Flagstar undertook a new project which implemented a
“Posting Modification” relating to overdrafts.
According to a confidential document produced in discovery,
Flagstar implemented “OD & Bounce Re-launch”
in the first quarter of 2015 and saw an increase in income
from deposit fees and charges. It is against this backdrop
that plaintiffs' bring their lawsuit for violations of
the Deposit Agreement.
February 25 and February 28, 2015, plaintiff Lossia initiated
ten ACH transactions. On March 2, 2015, at 6:20 a.m., Lossia
checked his transaction history online with Flagstar and
observed that the ten transactions were listed as
“pending” in a different order than the order in
which he initiated them. Lossia knew he did not have enough
money in the account to cover the transactions. He checked
his online transaction history again at 11:58 a.m. and
noticed that the ten previously “pending”
transactions had now posted and were in a different order
than earlier in the day. In addition, Flagstar had assessed
seven overdraft fees. The same day, Lossia called Flagstar
and in a 28 minute call complained that his transactions were
processed in a different order than the order in which he
initiated them and that he was charged more than the maximum
number of five permitted insufficient fund
(“NSF”) fees per day. During this call, Lossia
told the Flagstar representative that he intended to charge
the Google Wallet transaction to his credit card, but
mistakenly charged it to his Flagstar account. (Def. Ex. F,
phone call transcript and Ex. G, audio file) Two days later,
the same transactions appeared online in yet a different
order and still showed the seven NSF fees. When plaintiffs
received their end of cycle bank statement, the transactions
were shown in still a different order and an eighth overdraft
fee was charged on March 2, 2015 on a physical check. The
statement shows that Flagstar reversed three of the eight
disputed NSF fees on March 3, 2015.
March 2, 2015 bank statements show the order in which
Flagstar processed the ten ACH transactions at issue:
□ $2, 825 to GOOGLE GOOGLE.COM/CH - WALLET/TOP
□ $500 to AMEX EPayment ER AM - ACH PMT
□ $200 to CHASE - EPAY
□ $450 to USAA.COM PAYMNT ACH ...