United States District Court, D. New Mexico
BERKLEY V. WALKER, on behalf of himself and all others similarly situated, Plaintiffs,
BOKF, NATIONAL ASSOCIATION d/b/a BANK OF ALBUQUERQUE, N.A., Defendant.
MEMORANDUM OPINION AND ORDER
C. HERRERA UNTIED STATES DISTRICT COURT JUDGE
case presents the question of whether the National Bank Act
(“NBA”), 12 U.S.C. §§ 85-86, a federal
law that regulates interest rates banks are able to charge,
applies to extended overdraft fees banks charge to overdrawn
accounts. On September 20, 2018, BOKF, National Association
d/b/a Bank of Albuquerque, N.A. (“Defendant” or
“BOKF”) filed a Motion to Dismiss (ECF No. 5) the
claim against it. The Court, having reviewed the motion,
briefs, relevant law, and otherwise being fully advised,
finds that the motion should be granted.
Berkley V. Walker (“Plaintiff”) resides in
Albuquerque and maintains a checking account at
Defendant's Albuquerque branch. Compl. ¶ 7, at 3,
ECF No. 1. The account is governed by BOKF's standardized
account agreement, which states:
If Multiple items have been presented against the Account and
your Available Balance is insufficient to pay all the items
presented, we will charge a fee (Overdraft Fee or Returned
Item Fee) with respect to each item paid or returned.
If your balance continues to remain overdrawn more than five
business days, you will be subject to an Extended Overdraft
in the amount set in the Summary of Fees.
Id. ¶ 10, at 4. According to the Summary of Fees,
if BOKF pays for an item that a depositor authorizes of an
amount greater than the account balance, BOKF charges a
$34.50 fee for the initial overdraft. Id. ¶ 12,
at 4. If the account status remains overdrawn five business
days after the initial overdraft fee, BOKF may charge an
additional Extended Overdraft Fee of $6.50 per business day.
Id. ¶ 13, at 5.
January 19, 2017, Plaintiff overdrew funds from his Bank of
Albuquerque checking account. Id. ¶ 21, at 8.
In accordance with the deposit account agreement and summary
of fees, Defendant assesed an initial overdraft fee.
Id. On January 26, the sixth business day after the
initial overdraft, Defendant assesed an extended overdraft
fee. Id. ¶ 22, at 8. Defendant continued to
asses extended overdraft fees each business day until the
account balance was no longer negative on March 17, 2017.
Id. This created thirty-six separate extended
overdraft fee charges, worth $234 dollars, extending
Plaintiff's negative account balance from $59.81 to
$293.81. Id. ¶ 23, at 8.
subject to the NBA and regulations promulgated by the Office
of the Comptroller of the Currency (“OCC”), the
primary regulator of national banks. Id. ¶ 8,
at 3. The NBA prevents national banks from assessing usurious
interest rates on any extension of credit. See 12
U.S.C. §§ 85-86.
August 22, 2018, Plaintiff filed a putative class action on
behalf of himself and others similarly situated. Plaintiff
asserted only one claim, alleging that the extended overdraft
fees in BOKF's standardized deposit account agreement are
interest and that the interest rate violates the NBA.
Plaintiff contends that Defendant is effectively charging an
annulaized interest rate of between 501% and 2, 464%, or 83
times what Defendant may legally charge under the NBA. Compl.
¶¶ 43, 44 at 13.
September 20, 2018, Defendant filed the Motion to Dismiss,
arguing extended overdraft fees are not interest under the
NBA. In support, Defendant asserts that there is a long
history of case law where courts held that both initial and
extended overdraft fees are not interest under the NBA,
although there is no Tenth Circuit Court of Appeals decision
that directly resolves this issue. See Def.'s
Br. Supp. Mot. Dismiss, ECF No. 6, at 2. Defendant further
asserts OCC's interpretation of overdraft fees places
extended overdraft fees as an element of deposit account
services rather than interest. See OCC Interpretive
Letter No. 1082, 2007 WL 5393636 (May 17, 2007) (“the
response, Plaintiff urges the Court to adopt the reasoning
outlined in Farrell v. Bank of Am. N.A., 224
F.Supp.3d 1016 (S.D. Cal. Dec. 19, 2016), which is the only
court to find that extended overdraft fees are interest rates
under the NBA. First, Plaintiff argues that initial overdraft
fees and extended overdraft fees are entirely separate and
triggered at different times and for different reasons.
Pl.'s Resp., ECF No. 15, at 8. Although initial overdraft
fees are deposit account services, extended overdraft fees
cannot be considered connected to the same banking services
banks provide to their depositors. Id. In reality,
Plaintff says, extended overdraft fees are for failure to pay
back the initial overdraft fee placed upon the account.
Id. Second, Plaintiff argues that when a bank covers
an overdrawn account, they are “loaning” money to
the account depositor. Id. at 14 (citing Joint
Guidance on Overdraft Protection Programs, 70 FR 97127-01,
2005 WL 420970 (Feb. 24, 2005)). As such, the extended
overdraft fee is really the interest on this
“loan” by the bank. Id. Therefore,
Plaintiff contends that extended overdraft fees should be
subjected to the usurious interest rate regulations of the
NBA. Id. at 19.