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Fredeking v. JPMorgan Chase Bank, N.A.

United States District Court, S.D. West Virginia, Huntington Division

February 19, 2019

R. R. FREDEKING, II and DEBBIE FREDEKING, Plaintiffs,
v.
JPMORGAN CHASE BANK, N.A., Defendant.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. CHAMBERS, UNITED STATES DISTRICT JUDGE.

         Pending before the Court are three motions for partial summary judgment. ECF Nos. 105, 107, 110. For the foregoing reasons, the Court finds the following: for Defendant's Motion for Partial Summary Judgment on Counts One and Two (ECF No. 107), the Court GRANTS IN PART, DISMISSES Count Two in its entirety and Debbie Fredeking as a Plaintiff from Count One of the Complaint, and DENIES IN PART for the remainder; for Defendant's Motion for Partial Summary Judgment on Count Three (ECF No. 105), the Court GRANTS IN PART, DISMISSES Debbie Fredeking as a Plaintiff in Count Three of the Complaint and all claims under West Virginia Code Articles Six and Seven, and DENIES IN PART for the remainder; for Plaintiffs' Motion for Partial Summary Judgment (ECF No. 110), the Court DENIES the motion.

         I. BACKGROUND

         On April 13, 2016, Plaintiff R. R. Fredeking, II (“Mr. Fredeking”) signed a rental contract with Rainbow Rentals for the use of a boat while in the Bahamas. Rental Agreement, ECF No. 107-1; R. R. Fredeking Depo., p. 147, ECF. 107-2. In the Agreement, Mr. Fredeking assumed total responsibility “for damage to the boat or loss of any items.” Rental Agreement, ¶ 10. After signing the Rental Agreement, Mr. Fredeking signed a credit card authorization slip. R. R. Fredeking Depo., at 29-30. Mr. Fredeking claims he was told the slip was an authorization for a charge up to $2500.00 and he would only need to cover the insurance deductible in the event of any damage or loss. Id. at 33. Mr. Fredeking did not read the contract and does not recall the written amount on the credit card authorization slip.[1] Id. at 29-33.

         The boat was rented with a credit card issued by Defendant Chase Bank USA, N.A. (“Chase”). Compl., ¶ 12, ECF No. 1-1; First Interrog., pp. 3-4, ECF No. 107-4. This credit card account is governed by the Cardmember Agreement between Mr. Fredeking and Chase, and serves as the basis for the breach of contract claim. Compl., ¶ 8; R. R. Fredeking Depo., at 143. The Cardmember Agreement imposes a “credit line”, or “credit limit”, but any charges that exceed the credit line may be allowed by Chase. Cardmember Agreement, p. 1, ECF No. 107-9. The Cardmember Agreement envisions a class of persons, “authorized users”, who may have access to the line of credit created by the Agreement, but explicitly states the primary cardmember is solely responsible for all authorized users' charges to the account.[2] In the event a cardmember disputes a charge that appears on the billing statement, the cardmember can contact Chase, which will trigger an investigation by Chase.[3] Id. at 4. If Chase believes there was no error in processing the disputed charge, the cardmember is obligated to pay the disputed amount. Id.

         During the course of Mr. Fredeking's rental period, the boat rented from Rainbow Rentals was stolen. R. R. Fredeking Depo, at 30. Mr. Fredeking's Chase credit card was charged separate transactions of $2500.00 and $60, 931.00 by Rainbow Rentals on April 18, 2016. Billing Statements, pp. 22, 25, ECF No. 114-1. On the same day, Chase received a fraud claim from Plaintiffs regarding the $60, 931.00 charge with Rainbow Rentals. O'Malley Depo., p. 52, ECF No. 114-4. The account used in the transaction was closed and Mr. Fredeking was sent a letter dated April 24, 2016, from Chase's Fraud Department notifying him of the investigation. Chase Letters, p. 3, ECF No. 107-11. This included a summary of the disputed charges, which listed both the $2500.00 and the $60, 931.00 charges by Rainbow Rentals. Id.

         Subsequently, Chase conducted an investigation involving several members of their Fraud Department. An initial investigation was conducted by Kirill Grinash, who determined the charge was valid on June 6, 2016. Grinash Rebill, ECF No. 114-6. The basis for this conclusion was Mr. Fredeking's past business with Rainbow Rentals, the existence of a valid rental contract, and the admission that the boat was stolen during the course of its rental. Id. This report was reviewed by Tracey Dowdle, who sent the report back to Mr. Grinash because Mr. Fredeking had not been reached by phone during the investigation. Id. However, reaching a customer by phone is not determinative of the outcome of a fraud investigation. Grinash Depo., p. 115, ECF No. 114-5.

         The fraud investigation continued when the claim was reviewed by Tracie Olson. Olsen Rebill, ECF No. 114-9. Ms. Olson did not make contact Mr. Fredeking during her investigation. Id.; Pl. Mem. Sup. Summ. J., at 3. On June 20, 2016, she determined the charge was valid based on the cardmember's history with Rainbow Rentals and a match between the signature on the charge slip and the one Chase had on file for Mr. Fredeking. Id.; see also Charge Slip, ECF No. 114-1.[4] Ms. Olson was assisted by Ms. Jody Casas during this review. Casas Depo., p. 40, ECF No. 114-8. After their determination, the dispute was moved from the Fraud Department to the Merchant Dispute Department, based on the admission that Mr. Fredeking participated in the transaction. Id. at 17.

         On June 22, 2016, Mr. Fredeking's Chase account was again billed for the disputed $60, 931.00. Billing Statements, at 25. In response, Mr. Fredeking called Chase and stated that he spoke with Chase employees “Beverly” and “Ray” to further dispute this charge. R. R. Fredeking Depo., at 119. Mr. Fredeking followed up with a letter to Chase dated July 1, 2016. In it, he outlined that he had only authorized a charge to cover the cost of the rental and a charge of $2500.00 to cover the insurance deductible, which would be refunded once the boat was returned. July 1 Letter, p. 1, ECF No. 115-11.[5] Mr. Fredeking's letter further stated he had become aware of Ms. Casas billing dispute review through a conversation she had with Ms. Fredeking. Id. It appears that no conversations took place between the Chase Fraud investigators and the Fredekings. Subsequently, Mr. Fredeking received a letter dated July 8, 2016 that Chase's Fraud Department determined both the charges of $2500.00 and $60, 931.00 were valid. Chase Letters, at 6. Beside each listed charge the letter stated that “[Mr. Fredeking] notified [Chase] that this transaction is valid.”[6] Id. Chase claims Mr. Fredeking provided notice that these charges were valid because of the contract between him and Rainbow Rentals. O'Malley Depo., at 54. However, Chase submitted no evidence that it ever talked directly to the merchant, or anyone else, about Mr. Fredeking's alleged oral modification of the Rental Agreement, limiting his liability to the $2500 deductible.

         On July 18, 2016, the Merchant Disputes Department also determined the charge was valid on the basis of the Rental Agreement. Stump Depo., p. 86, ECF No. 114-3. In a letter dated July 19, 2018, Chase wrote to Mr. Fredeking and notified him of its determination of the validity of the $60, 931.00 charge. Chase Letters, at 7. In that letter, Chase told Mr. Fredeking it had “requested additional information so that [Chase] could move forward with [its] review, but [Chase] ha[d]n't received that information to date.” Id. However, the Merchant Disputes Department had not actually requested any additional information. Stump Depo., at 108.

         The present action was filed in the Circuit Court of Cabell County on November 9, 2016 and removed to this Court on December 21, 2016. Notice of Removal, ECF No. 1. In their Complaint, Plaintiffs allege common law breach of contract based on the Cardmember Agreement, request a declaratory judgment stating the charge itself is invalid, and claim violations of the West Virginia Consumer Credit Protection Act (“WVCCPA”). Compl., at 4-7. All of the instant motions for summary judgment were filed on November 21, 2018. ECF Nos. 105, 107, 110.

         II. LEGAL STANDARD

         To obtain summary judgment, the moving party must show there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). In considering this motion, the Court will not “weigh the evidence and determine the truth of the matter[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Instead, the Court will draw any permissible inference from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986).

         Although the Court will view all underlying facts and inferences in the light most favorable to the nonmoving party, the nonmoving party nonetheless must offer some “concrete evidence from which a reasonable juror could return a verdict in his [or her] favor[.]” Anderson, 477 U.S.

         at 256. Summary judgment is appropriate when the nonmoving party has the burden of proof on an essential element of his or her case and does not make, after adequate time for discovery, a showing sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The nonmoving party must satisfy this burden of proof by offering more than a mere “scintilla of evidence” in support of his or her position. Anderson, 477 U.S. at 252.

         III. DISCUSSION

         In their motion, Plaintiffs request the Court grant partial summary judgment on the claims in Counts One and Three. Pl. Mot. Part. Summ. J., p. 1, ECF No. 110. Conversely, Chase's bifurcated motions cumulatively seek summary judgment on all three counts and raise the issue of standing as to Plaintiff Debbie Fredeking (“Ms. Fredeking”) for the breach of contract claim, as well as both Plaintiffs' standing to raise claims under the WVCCPA. Def. Mot. Part. Summ. J. I, p. 1-3, ECF No. 107; Def. Mot. Part. Summ. J. II, p. 1-2, ECF No. 105. For the sake of comprehensibility, the Court will first address the issues of standing, followed by the arguments on each of the counts alleged in the Complaint.

         A. Standing

         In supporting memoranda, Chase challenges the standing of Ms. Fredeking on the breach of contract claim, as well as both of the Plaintiffs' standing to bring a claim under the WVCCPA. Def. Mem. Supp. Summ. J. I, pp. 3-4, ECF No. 108, ; Def. Mem. Sup. Summ. J. II, pp. 12-15, ECF No. 106. As a threshold matter, the Court must address the choice of law issue before determining standing. See Felman Prod., Inc. v. Bannai, 476 F.Supp.2d 585, 586 (S.D. W.Va. 2007).

         1. Choice of Law

         “When exercising diversity jurisdiction, a federal district court must apply the choice-of-law rules of the state in which it sits.” Cavcon, Inc. v. Endress ± Hauser, Inc., 557 F.Supp.2d 706, 719 (S.D. W.Va. 2008) (citing Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941). Accordingly, the conflicts rules of West Virginia apply here.

         Generally, West Virginia courts are deferential to the choice of law provision in a contract. However, “[a] choice of law provision in a contract will not be given effect when the contract bears no substantial relationship with the jurisdiction whose laws the parties have chosen to govern the agreement, or when the application of that law would offend the public policy of this state.” General Electric Company v. Keyser, 275 S.E.2d 289, Syl. Pt. 1 ( W.Va. 1981). Here, the Cardmember Agreement calls for Delaware law to apply. Cardmember Agreement, at 4. Chase is a Delaware corporation and neither party has made a challenge on the basis of public policy. Notice of Removal, ¶ 12. As such, the Court finds Delaware law applies to the breach of contract claim.

         Plaintiffs' claims under the WVCCPA are alleged as independent causes of action and seek remedy for conduct after the breach. Compl., ¶¶ 35-42. Since Plaintiffs argue their WVCCPA claims as independent state law violations, they are construed under West Virginia law. See Bishop v. Ocwen Loan Servicing, LLC, No. 3:10-CV-0468, 2010 WL 4115463, at *7 (S.D. W.Va. July 9, 2013) (holding that claims under the WVCCPA can be pleaded as remedies in contract law or independent causes of action); compare Harrison v. PNC Bank, Nat. Ass'n, No. 3:13-19944, 2015 WL 2171632 (S.D. W.Va. May 8, 2015) (granting summary judgment for the defendant on WVCCPA claims that a loan contract was unconscionable, because Ohio law governed the loan).

         2. Standing - ...


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