In the
United States Court of Appeals
For the Seventh Circuit
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No. 04-1378
ANDREW GALE,
Plaintiff-Appellant,
v.
HYDE PARK BANK,
Defendant-Appellee.
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Appeal from the United States District Court for
the Northern District of Illinois, Eastern Division.
No. 02 C 3663—John W. Darrah, Judge.
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SUBMITTED AUGUST 31, 2004—DECIDED SEPTEMBER 17, 2004
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Before BAUER, EASTERBROOK, and ROVNER, Circuit
Judges.
EASTERBROOK, Circuit Judge. In April 2002 Andrew Gale
overdrew his checking account at Hyde Park Bank. He
blamed the Bank, asserting that its delay in posting to his
account a transaction in December 2001 with his debit card
led him to think that the account contained a greater
balance. He sued under the Electronic Funds Transfer Act,
contending that the delay in posting the debit-card transac-
tion violated 15 U.S.C. §1693h(a)(1), which requires banks
to make electronic fund transfers in a “timely manner”. He
also contended that the Bank had failed to provide him with
2 No. 04-1378
information required by 15 U.S.C. §1693f. The district court
dismissed the complaint under Fed. R. Civ. P. 12(b)(6) for
failure to state a claim on which relief may be granted. The
district court wrote that the Bank had posted the transac-
tion within 48 hours of its arrival through the interbank
network, and that the merchant (or perhaps the network)
rather than the Bank had been responsible for the delay.
The court’s assumption that 48 hours was “timely” may be
tenable, though both the statute and the implementing
regulations leave that word undefined. See Donald I. Baker &
Roland E. Brandel, The Law of Electronic Fund Transfer
Systems: Legal and Strategic Planning ¶17.03[3][a] (2004
ed.). But in supposing that the Bank acted promptly after
notification, the court relied on a view of the facts adverse
to the plaintiff, which Rule 12(b)(6) does not permit. See
Hishon v. King & Spalding, 467 U.S. 69 (1984). It is not as
if Gale had himself pleaded that the debit did not find its
way to the Bank for four months after the retail transac-
tion. This is the Bank’s view of matters, not Gale’s. That the
Bank said the same thing to Gale in email messages that
Gale attached to the complaint does not amount to a
concession; the plaintiff may tell the court what his adver-
sary has said without throwing in the towel. See Carroll v.
Yates, 362 F.3d 984, 986 (7th Cir. 2004). Anyway, attributing
significance to the emails should have led the judge to con-
vert the Bank’s motion to one for summary judgment, as
Rule 12(b) itself provides. What actually happened should
be resolved by summary judgment or trial, not by decision
on the pleadings.
Still, the district court’s disposition was at least partly
correct. To recover under §1693h the plaintiff must show
that a violation of the law led to injury, and Gale has
pleaded himself out of court on that subject by demonstrat-
ing that his errors rather than the Bank’s caused all loss.
(The only loss appears to be the fee for overdrawing the
account.) Gale’s complaint shows that his failure to keep the
No. 04-1378 3
account adequately funded is the root of the problem. Had
the debit been posted in December 2001, and everything
else remained the same, Gale still would have overdrawn
the account in April 2002.
Using a debit card is like writing a check: Gale’s contract
with the Bank required him to record all transactions and
ensure that the balance supports each new one, even if
transactions are not yet posted (just as some checks may
not be cashed immediately). The Bank sent Gale statements
showing that his purchase in December 2001 had yet to be
deducted from his account. Gale needed to keep on hand
funds to cover all outstanding transactions; he failed to do
this and cannot shift responsibility to the Bank.
The timeliness requirement is principally for the benefit
of the person entitled to receipt of the funds. In other words,
transferees are in the zone of interests protected by this aspect
of the statute. Cf. National Credit Union Administration v.
First National Bank & Trust Co., 522 U.S. 479 (1998).
Transferors usually are not, as delay gives them the benefit
of the float. One can imagine an injury that transferors
could suffer: if the merchant noticed the delay in payment
and took steps that deprived the transferor of the benefit of
the bargain, or adversely affected his credit rating, then
there could be a compensable injury. Gale does not allege
such events, however; his complaint and appellate brief
show that his sole concern is ending up with an overdrawn
account in April 2002. Failure to keep the account in funds
cannot be a source of damages under §1693h(a).
This leaves the claim based on §1693f, which both the dis-
trict court and the Bank’s appellate brief let pass in silence.
It is not so easily disposed of, because violations of that
section (unlike violations of §1693h) can lead to statutory
damages even in the absence of injury. Compare 15 U.S.C.
§1693m(a)(2)(A) with §1693h(c).
Section 1693f(a) provides that after a customer reports
that an error has occurred, the financial institution must
4 No. 04-1378
“investigate the alleged error, determine whether an error
has occurred, and report or mail the results of such inves-
tigation and determination to the consumer within ten busi-
ness days.” Gale contends that he did not receive a timely
report of “the results”; instead the Bank rejected his claim
without much explanation. In other words, Gale contends,
he got a “determination” but not “the results of such inves-
tigation” or the supporting documentation. See §1693f(d)
(“If the financial institution determines after its investiga-
tion pursuant to subsection (a) . . . that an error did not occur,
it shall deliver or mail to the consumer an explanation of its
findings within 3 business days after the conclusion of its
investigation, and upon request of the consumer promptly
deliver or mail to the consumer reproductions of all docu-
ments which the financial institution relied on to conclude
that such error did not occur. The financial institution shall
include notice of the right to request reproductions with the
explanation of its findings.”).
Moreover, implementing regulations require financial in-
stitutions to provide customers with details of their error-
resolution procedures and update these notices at least an-
nually. 12 C.F.R. §§ 205.7(b)(10), 205.8(b). Gale’s complaint
can be read to allege that the Bank failed to give him this
required information. Likewise it can be read to allege a
violation of 12 C.F.R. §205.11(a), which requires financial
institutions to provide customers on request with “addi-
tional information or clarification concerning an electronic
fund transfer, including a request the consumer makes to
determine whether an error exists”. Although the complaint
did not cite these regulations, it did not have to. Complaints
plead claims, not legal theories. See Bartholet v. Reishauer
A.G. (Zürich), 953 F.2d 1073 (7th Cir. 1992). All a complaint
need do is narrate a claim for relief. See Fed. R. Civ. P. 8;
Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002). Gale’s
complaint met this standard. He is entitled to judicial
resolution of that grievance.
No. 04-1378 5
The judgment is vacated, and the case is remanded for
further proceedings on Gale’s claim under §1693f and the
corresponding regulations.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—9-17-04