Customer owes bank more than $136,000

Where a customer refused to repay funds to the bank after a check she deposited was returned for insufficient funds, the bank was awarded the overdrawn amount, plus attorney’s fees and costs.

Background

Wells Fargo Bank NA has filed a motion for default judgment against Lisa Petrone. As alleged in the complaint, on or about Dec. 23, 2020, defendant deposited a check in the amount of $147,000 into her Wells Fargo checking account.

Defendant then proceeded to withdraw, transfer or otherwise use most of the funds. The following day, the $147,000 check was returned unpaid by SunTrust Bank, resulting in defendant’s checking account becoming overdrawn in the amount of $128,170, inclusive of all fees and credits to the account. Despite several demands from plaintiff, defendant has yet to reimburse plaintiff for the corresponding overdraft loss.

Plaintiff and defendant are parties to a standard “Deposit Account Agreement” which states that if a customer has overdrawn their account, they “must promptly make a deposit or transfer to return [their] account to a positive balance.” Failure to do so results in the closure of the customer’s account, and the customer is responsible for reimbursement of costs and expenses (including attorney’s fees) that the bank incurs.

On April 21, 2022, plaintiff filed a complaint against defendant alleging: (1) that she materially breached the terms of the agreement and (2) that she unjustly enriched herself at plaintiff’s expense.

Jurisdiction and venue

The court clearly has subject matter jurisdiction because there is complete diversity and the amount in controversy exceeds $75,000. Personal jurisdiction exists because defendant is a resident and citizen of the Commonwealth of Virginia. Venue is appropriate because defendant resides in the Eastern District of Virginia and a substantial part of the events that gave rise to the cause of action occurred in this district.

Breach of contract

First plaintiff alleges the existence of a valid, enforceable contract that governs defendant’s use of plaintiff’s services. Plaintiff has provided a copy of the agreement and has incorporated it into the complaint. Second, as part of the agreement, defendant is required to deposit and maintain sufficient funds in her checking account to cover any overdrafts and service charges, and defendant failed to do so when the check at issue was returned unpaid, thus breaching the agreement. Third, plaintiff alleges that because of defendant’s failure, it suffered a principal loss in the amount of $128,170. Accordingly, plaintiff has alleged sufficient facts to satisfy all elements of a valid breach of contract claim under Virginia law.

Unjust enrichment

Plaintiff also alleges unjust enrichment as an alternative to its breach of contract claim. However, under Virginia law, it is well settled that a plaintiff cannot recover under a theory of unjust enrichment where the parties have an express contract that covers the matter at issue. In light of the court’s ruling on the breach of contract claim, the court finds it unnecessary to address the alternative claim of unjust enrichment.

Damages

Because the damages being awarded here are based on a calculation of loss suffered by plaintiff, and are not proactively contemplated by the agreement, the damages are unliquidated, and the court exercises its discretion to deny pre-judgment interest on such damages.

After careful review of Fox Rothchild’s billing records, the court finds that the hourly rates and amount of time spent on this matter are sufficiently reasonable due to: (1) the discounted hourly rate at which both the relevant attorneys and paralegal billed, with counsel’s rates falling well below previous rates this court has approved for comparatively experienced attorneys and (2) the detailed time entries by counsel evidencing their work spent on tasks.

However the court declines to apply plaintiff’s calculation regarding future work that may occur after the court’s entry of default judgment against defendant. Such a determination would require the court to engage in a speculative analysis as to how much future work might be performed, which strays from the objective and concrete bases that the calculation of the lodestar figure rests on.

Accordingly, the court awards plaintiff $8,245.14 in attorney’s fees for past work performed in this case. Finally, based on the uncontested evidence documenting the expenses incurred in this action, and the agreement provision expressly addressing such expenses, the court awards plaintiff $522.67 in costs.

Plaintiff’s motion for default judgment granted in part, denied in part.

Wells Fargo Bank NA v. Petrone, Case No. 2:22-cv-164, Oct. 14, 2022. EDVA at Norfolk (Davis). VLW 022-3-469. 12 pp.