Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Corona v. First National Bank of Omaha

United States District Court, D. Nebraska

June 6, 2014

AMADOR L. CORONA, Attorney at Law, individually and on behalf of all other similarly situated persons, Plaintiff,
v.
FIRST NATIONAL BANK OF OMAHA, a Nebraska corporation, and UNITED BANK CARD, INC., a corporation doing business as Harbortouch; Defendants.

MEMORANDUM AND ORDER

JOSEPH F. BATAILLON, District Judge.

This matter is before the court on cross-motions for summary judgment filed by the plaintiff, Amador Corona, Filing No. 101; defendant First National Bank of Omaha ("First National" or "the Bank"), Filing No. 105; and defendant United Bank Card ("UBC") Filing No. 107.[1] This is a purported class action[2] for damages and declaratory relief for breach of contract and unjust enrichment in connection with the assessment and collection of an Internal Revenue Service ("IRS") Processing Validation Charge from credit card merchants.[3] The dispute involves whether the fees charged to merchants were properly noticed, charged, and collected by defendant UBC under the contract at issue.

The plaintiff argues that undisputed evidence establishes that he is entitled to summary judgment in his favor against defendant UBC. He asserts that the evidence shows that UBC breached its contract with the plaintiff by assessing and collecting fees from him, and by assessing and collecting the fees without the express consent and approval of First National.

In its motion for summary judgment, defendant First National argues that the undisputed evidence establishes that First National did not have any involvement in the conduct on which the plaintiff's claims are based. The plaintiff concedes the motion as to his individual claims against First National and those claims will be dismissed. See Filing No. 118, Plaintiff's Brief at 1.

UBC contends in its motion for summary judgment that there is no legal basis for the plaintiff's claims, arguing that the contract expressly provides that UBC could amend or modify the terms of the contract with 30 days' notice. It further argues that it is entitled to summary judgment on the plaintiff's unjust enrichment claim because the plaintiff's remedy, if any, lies in contract.

I. FACTS

The parties have submitted documents and deposition testimony in support of their respective positions. See Filing No. 104, Index of Evid., Exs. 1-26; Filing No. 109, Index of Evid., Exs. 1-26; Filing No. 110, Index of Evid., Exs. 1A-1E; Filing No. 111, Index of Evid., Exs. 1F-1T; Filing No. 116, Index of Evid., Exs. A-C. The court's review of the evidence reveals the following undisputed issues of material fact.

Corona is an attorney practicing in the State of California. Filing No. 109, Index of Evid., Ex. 1, Deposition of Amador Corona ("Corona Dep.") at 8. Defendant UBC is a credit card payment and transaction processor with its principal place of business in Allentown, Pennsylvania. Id. at 3. It now does business as Harbortouch. Id. Essentially, independent sales organizations such as UBC/Harbortouch recruit merchants to contract with banks for credit card processing through Visa and/or Mastercard. Filing No. 104-18, Index of Evid., Ex. 18, Deposition of Paula Radik ("Radik Dep.") at 28. First National is UBC's "sponsoring" bank. Filing No. 104-20, Index of Evid., Ex. 20, Deposition of Michael G. Ward ("Ward Dep.") at 32-33. UBC is the independent sales organization that facilitated credit card transactions with respect to the plaintiff's accounts at First National. Id. at 30.

First National, UBC, and the plaintiff entered into a "Merchant Transaction Processing Agreement" ("the Merchant Agreement"). Filing No. 8, Notice, Ex. C, Merchant Agreement; see also Filing No. 104-2, Index of Evid., Ex. 2, Merchant Agreement. First National generally agreed to process debit and credit card sales and the plaintiff, as Merchant, generally agreed to submit its sales from credit cards exclusively to First National for processing. See id. Corona agreed to pay First National "the fees as set forth in the Merchant Application and the Rate Descriptions and all other sums owed to First National ("FEES") for SALES and SERVICES as set forth in this AGREEMENT as amended from time to time." Id., Agreement at 3. Corona submitted two account applications that expressly incorporate the terms and conditions of the Merchant Agreement. Filing No. 104-20, Index of Evid., Ex. 20, Ward Dep. at 19. First National and UBC also entered into a "Third Party Organization Marketing and Registration Agreement" (the "Third Party Agreement"). See Filing No. 104-4, Index of Evid., Ex. 4, Third Party Agreement; Ex. 18, Radik Dep. at 18-19.

In March 2011, UBC notified the plaintiff in an attachment to his monthly First National account statement that a fee of $27.95 would be assessed in each of three installments on May 1, 2011 (the initial fee charge); on September 1, 2011; and on January 1, 2012. Filing No. 104-5, Index of Evid., Ex. 5, Notices at 5, 10; Ex. 6, billing statements. The notice explained that the IRS Fee was being charged to offset costs incurred with compliance with 26 U.S.C. § 6050W. Id., Ex. 5, notice at 5. The plaintiff acknowledges that he received the notice. Filing No. 117, Brief at 4; Filing No. 109, Ex. 1, Deposition of Amador Corona ("Corona Dep.") at 83, 143. On or about May 1, 2011, UBC assessed fees in the amount of $55.90 on the plaintiff-$27.50 for each of two accounts-and that amount was deducted from his accounts at First National. Filing No. 109-1, Index of Evid., Ex. 1, Corona Dep. at 96-97, 113-114.

The actual reporting to the IRS, in 1099K reports, was done by TSYS Company Solutions, LLC ("TMS"), a former division of First National that was later sold, on First National's behalf under amendments to a third party organization marketing and registration agreement between those parties. Filing No. 104-18, Ex. 18, Radik Dep. at 39-40. UBC's Chief Executive Officer ("CEO"), Jared Isaacman, testified by deposition that he was unable to quantify the costs UBC incurred in connection with § 6050W reporting, but he stated that its costs were $24.00 per year per account in an email in which he agreed to share the fee revenue with a major sales customer. Id., Ex. 19, Deposition of Jared Isaacman ("Isaacman Dep.") at 66. He also testified that the $24.00 figure was not accurate, but was based on "appeasing a sales office and not a hardcore analysis of our profit and loss related to this fee." Id. at 66-67. In answers to interrogatories, UBC estimated its costs of complying with §6050W were $6.50 to $7.00 per month per merchant. Id., Ex. 9, Answers to Interrogatories at 3, 11; see also id., Ex. 23, Isaacman Dep. at 38-40; Ex. 22, Ward Dep. at 110.

Isaacman testified by deposition that UBC's costs were composed of the amount it was charged by First National, manpower allocation, and an unspecified amount in "loss of customers." Id. at 26-30, 55. The evidence indicates that First National charged UBC seventy-five cents per account in connection with § 6050W reporting. Id. at 26, 100. Isaacman testified that he decided to pass the costs of compliance on to his merchants and he determined the amount of the fee. Id. at 43-44. He also testified he confirmed the reasonableness of the fee by consulting with two competitors. Id. at 35-36. He stated he has no spreadsheets or other documentation that would show the processes that underlie the decision to charge the fee or the determination of the amount of the fee. Id. at 86-88. The fee is no longer assessed; rather, an $89.00 annual fee that encompasses several fees that had previously been separately assessed, is charged to the merchants. Id. at 80-82.

II. LAW

Under Nebraska law, the meaning of a contract and whether a contract is ambiguous are questions of law. Kluver v. Deaver, 714 N.W.2d 1, 5 (Neb. 2006). A contract written in clear and unambiguous language is not subject to interpretation or construction and must be enforced according to its terms. Lexington Ins. Co. v. Entrex Commc'n Servs., 749 N.W.2d 124, 132 (Neb. 2008). A contract is ambiguous when a word, phrase, or provision in ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.