The Court of Appeal of the State of Florida, Fifth District, recently affirmed the dismissal of a check payee’s claims against the drawee bank for charging a fee to cash the check in person, holding that while section 655.85, Florida Statutes, prohibits the bank from charging such a fee, it does not create a private cause of action.

However, the Court also held that federal law did not preempt the state “anti-check cashing fee” statute, even as applied to an out-of-state insured state bank.

A copy of the opinion is available at: Link to Opinion.

The payee of a check sued the drawee bank for imposing a service charge when he presented the check in person.

In a prior ruling from 2012, the Fifth District held that section 655.85, Florida Statutes, prohibits a bank from charging such a fee, and that the statute was not preempted by federal law, 12 U.S.C. § 1831a(j)(1).

In the case at bar, the trial court concluded that 12 U.S.C. § 1831a(j)(2) preempts section 655.85, Florida Statutes, and that the Florida state statute does not provide a private cause of action.

On appeal, the Fifth District disagreed with the trial court on the issue of federal preemption, reasoning that 12 U.S.C. § 1831a(j)(2) bore no relation to the state statute at issue, 655.85, Florida Statutes, because the state statute has nothing to do with the acquisition or retention of investments, but simply requires that checks be settled at “par” or face value.

As you may recall, 12 U.S.C. § 1831a(j)(2)  provides: “…. An insured State bank that establishes a branch in a host State may conduct any activity at such branch that is permissible under the laws of the home State of such bank, to the extent such activity is permissible either for a bank chartered by the host State (subject to the restrictions in this section) or for a branch in the host State of an out-of-State national bank.”

The Appellate Court noted that “activity” is defined as “includ[ing] acquiring or retaining any investment.”  12 U.S.C. § 1831a(h).  Therefore, the Fifth District reasoned, “states may not lessen restrictions on ‘activities’ placed on insured state banks under the federal statutory scheme but they are not preempted from imposing more stringent ones.”  The Appellate Court also reasoned that “[w]hen the statutory definition of ‘activity’ is used to interpret § 1831a(j)(2), it is clear that this federal statute has nothing to do with the state statute at issue here. Section 655.85 does not pertain to the acquisition or retention of an investment. It simply mandates that checks be settled at ‘par,’ meaning face value.”

The Appellate Court, however, agreed with the trial court that section 655.85, Florida Statutes, does not create a private cause of action, reasoning that not only does the statute not expressly create a private cause of action, but that it could discern no intent on the part of the legislature from which it could judicially imply such a right of action.

The Appellate Court next rejected the payee’s claim that the bank was liable under sections 673.4131 and 673.4081 of Florida’s version of the Uniform Commercial Code because it varied the terms of the check by redeeming it for less than face value.

The Fifth District reasoned that, even though the bank varied the terms, the U.C.C. does not provide a remedy. This is because under section 673.4081, the drawee bank is not liable on a check until it “accepts” the check. The drawee bank can either accept the check as presented or it can accept the check and “vary” its terms under section 673.4101. If the holder of the check disagrees with the varied terms, he can either acquiesce or treat the conditional acceptance as “dishonored” and revoke acceptance without incurring any liability.

The Appellate Court held that, because the payee accepted the varied terms, the bank’s sole obligation was to pay the draft as varied.

The Fifth District next rejected without discussion the payee’s claim under the Florida Consumer Collection Practices Act, and also rejected the payee’s common law claim for unjust enrichment.

The Appellate Court reasoned that:  (1) the check was an express contract between the maker and payee, and the existence of an express contract bars a claim for unjust enrichment; (2) by accepting the bank’s varied terms, i.e., payment minus the service charge, the bank was absolved of liability under the U.C.C. and, therefore, for any unjust enrichment claim as well; and (3) because the bank promptly paid the check in exchange for the service charge, the bank was unjustly enriched.