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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

JAMES LOSSIA, JR. and 

ALEXANDRA PLAPCIANU, 

individually and on behalf of 

others similarly situated, 

Plaintiffs, 

Case No. 15-12540 

vs. 

HON. GEORGE CARAM STEEH 

FLAGSTAR BANCORP, INC., 

a/k/a FLAGSTAR BANK, 

Defendant. 

____________________________/ 

ORDER GRANTING DEFENDANTS’ MOTION 

FOR SUMMARY JUDGMENT [DOC. 62] 

 This matter comes before the court on defendant Flagstar Bancorp, 

Inc.’s (“Flagstar”) motion for summary judgment of plaintiffs James Lossia 

and Alexandra Plapcianu’s third amended complaint. The court heard oral 

argument on Flagstar’s motion on March 27, 2017. For the reasons set 

forth below, Flagstar’s motion for summary judgment is GRANTED. 

 FACTUAL BACKGROUND 

 Flagstar is a federally chartered bank incorporated in the State of 

Michigan. The plaintiffs opened a joint checking account on December 6, 

2014 and signed Flagstar’s signature card acknowledging that they 

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received and agreed to the written terms of their account on January 15, 

2015. Flagstar’s Terms and Conditions and Disclosure Guide 

(“Agreement”) governs plaintiffs’ relationship with Flagstar. The Agreement 

contains the following provision: 

Payment Order of Items 

. . . . 

Our policy is to process wire transfers, online banking transfers, 

in branch transactions, ATM transactions, debit card 

transactions, ACH transactions, bill pay transactions and items 

we are required to pay such as returned deposit items, first – as 

they occur on their effective date for the business day on which 

they are processed. We process checks and similar items 

second – in the order in which they are received for the 

business day on which they are processed. 

. . . . 

ACH transactions are electronic, automated clearinghouse 

transactions. Flagstar explained that it receives ACH transactions in 

batch format from the Federal Reserve and then processes the ACH 

transactions in the order set by the Federal Reserve. (Barlow dep. at 

134-36). The Federal Reserve, in turn, receives the ACH transaction 

files from the merchants with whom the transactions were initiated. 

Flagstar does not re-sequence the ACH transactions it receives from 

the Federal Reserve. Flagstar began its current practice of 

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processing ACH transactions in this way in 2012. (Barlow dep. at 

151-52). 

Prior to 2012, Flagstar’s policy was to reorder checks and ACH 

transactions from largest to smallest. (Barlow dep. at 12). Defendant 

cites to Flagstar’s Operating Statements to show that in 2012 

Flagstar experienced a significant decline in income from deposit fees 

and charges. In September, 2014, Flagstar undertook a new project 

which implemented a “Posting Modification” relating to overdrafts. 

According to a confidential document produced in discovery, Flagstar 

implemented “OD & Bounce Re-launch” in the first quarter of 2015 

and saw an increase in income from deposit fees and charges. It is 

against this backdrop that plaintiffs’ bring their lawsuit for violations of 

the Deposit Agreement. 

 Between February 25 and February 28, 2015, plaintiff Lossia 

initiated ten ACH transactions. On March 2, 2015, at 6:20 a.m., 

Lossia checked his transaction history online with Flagstar and 

observed that the ten transactions were listed as “pending” in a 

different order than the order in which he initiated them. Lossia knew 

he did not have enough money in the account to cover the 

transactions. He checked his online transaction history again at 

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11:58 a.m. and noticed that the ten previously “pending” transactions 

had now posted and were in a different order than earlier in the day. 

In addition, Flagstar had assessed seven overdraft fees. The same 

day, Lossia called Flagstar and in a 28 minute call complained that 

his transactions were processed in a different order than the order in 

which he initiated them and that he was charged more than the 

maximum number of five permitted insufficient fund (“NSF”) fees per 

day. During this call, Lossia told the Flagstar representative that he 

intended to charge the Google Wallet transaction to his credit card, 

but mistakenly charged it to his Flagstar account. (Def. Ex. F, phone 

call transcript and Ex. G, audio file) Two days later, the same 

transactions appeared online in yet a different order and still showed 

the seven NSF fees. When plaintiffs received their end of cycle bank 

statement, the transactions were shown in still a different order and 

an eighth overdraft fee was charged on March 2, 2015 on a physical 

check. The statement shows that Flagstar reversed three of the eight 

disputed NSF fees on March 3, 2015. 

 Plaintiffs’ March 2, 2015 bank statements show the order in 

which Flagstar processed the ten ACH transactions at issue: 

 $2,825 to GOOGLE GOOGLE.COM/CH – WALLET/TOP 

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 $500 to AMEX EPayment ER AM – ACH PMT 

 $200 to CHASE – EPAY 

 $450 to USAA.COM PAYMNT ACH PAYMENTS 

 $500 to CHASE – EPAY 

 $200 to CHASE – EPAY 

 $200 to CITI CARD ONLINE – PAYMENT 

 $100.00 to DISCOVER DC PYMNTS DCIINTNET 

 $200 to DISCOVER DC PYMNTS DCIINTNET 

 $185.71 to BARCLAYCARD US – CREDITCARD 

The order of these transactions matches the order in which they 

appear in the ACH “batch” files that Flagstar received from the 

Federal Reserve. 

 Plaintiffs stopped using the Flagstar account after Flagstar 

refused to refund the five remaining NSF fees assessed on March 2, 

2015. On May 1, 2015, Flagstar notified Lossia that the account had 

been charged off and closed due to a continuous overdraft position. 

Flagstar referred the account to Client Financial Services (“CFS”), a 

collection agency. It also reported the amount to a consumer 

reporting agency, ChexSystems. 

 Plaintiff Lossia contends that on July 16, 2015, he submitted a 

written notice of dispute to ChexSystems disputing the information 

reported by Flagstar on his credit report. (Pl. Ex. 14, Postal Service 

Certificate of Mailing) Flagstar responds that it never received notice 

of the dispute from ChexSystems. ChexSystems states that it did not 

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receive a notice of dispute from Lossia prior to September 21, 2015. 

(Def. Ex. 14, ChexSystems Aff.) 

 On September 21, 2015, ChexSystems received written notice 

of Lossia’s dispute of the information Flagstar reported to 

ChexSystems regarding his charged-off account. ChexSystems 

placed the account on reinvestigation status. On September 23, 

2015, ChexSystems sent Flagstar a Standard Investigation Form 

notifying Flagstar that Lossia was disputing the amount Flagstar was 

reporting he owed and asked the bank to verify the charged-off 

amount of Lossia’s debt. ChexSystems requested that Flagstar 

submit a response to Lossia’s dispute and stated that it would remove 

the disputed information from its files if Flagstar did not submit a 

response by October 19, 2015. 

 Flagstar investigated its reporting of plaintiffs’ checking 

account. Sharon Whitney, a team leader in Flagstar’s Central 

Services Department, testified that she investigated plaintiffs’ account 

and confirmed that the fees were legitimate and the account balance 

was negative for at least 60 days. (Pl. Ex. 13, Whitney dep. at 9-10, 

16, 27, 33). Flagstar’s legal department completed the response to 

ChexSystems’ Standard Reinvestigation Form notifying 

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ChexSystems that it should remove the disputed information on 

Lossia’s credit report because “Flagstar has determined that the 

disputed amount is the subject of pending litigation”. Ms. Whitney 

provided this response form to ChexSystems on October 20, 2015. 

ChexSystems removed the trade line from Lossia’s credit report on 

October 19, 2015. 

Flagstar ultimately removed Lossia’s trade line from collections 

because the account was the subject of this litigation. Flagstar also 

notified CFS to remove Lossia’s account from collections. 

 STANDARD FOR SUMMARY JUDGMENT 

 Federal Rule of Civil Procedure 56(c) empowers the court to render 

summary judgment "forthwith if the pleadings, depositions, answers to 

interrogatories and admissions on file, together with the affidavits, if any, 

show that there is no genuine issue as to any material fact and that the 

moving party is entitled to judgment as a matter of law." See Redding v. St. 

Eward, 241 F.3d 530, 532 (6th Cir. 2001). The Supreme Court has 

affirmed the court's use of summary judgment as an integral part of the fair 

and efficient administration of justice. The procedure is not a disfavored 

procedural shortcut. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); 

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see also Cox v. Kentucky Dept. of Transp., 53 F.3d 146, 149 (6th Cir. 

1995). 

 The standard for determining whether summary judgment is 

appropriate is "'whether the evidence presents a sufficient disagreement to 

require submission to a jury or whether it is so one-sided that one party 

must prevail as a matter of law.'" Amway Distributors Benefits Ass’n v. 

Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir. 2003) (quoting Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). The evidence and all 

reasonable inferences must be construed in the light most favorable to the 

non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 

475 U.S. 574, 587 (1986); Redding, 241 F.3d at 532 (6th Cir. 2001). "[T]he 

mere existence of some alleged factual dispute between the parties will not 

defeat an otherwise properly supported motion for summary judgment; the 

requirement is that there be no genuine issue of material fact." Anderson 

v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original); 

see also National Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 

(6th Cir. 2001). 

 If the movant establishes by use of the material specified in Rule 

56(c) that there is no genuine issue of material fact and that it is entitled to 

judgment as a matter of law, the opposing party must come forward with 

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"specific facts showing that there is a genuine issue for trial." First Nat'l 

Bank v. Cities Serv. Co., 391 U.S. 253, 270 (1968); see also McLean v. 

988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). Mere allegations 

or denials in the non-movant's pleadings will not meet this burden, nor will 

a mere scintilla of evidence supporting the non-moving party. Anderson, 

477 U.S. at 248, 252. Rather, there must be evidence on which a jury 

could reasonably find for the non-movant. McLean, 224 F.3d at 800 (citing 

Anderson, 477 U.S. at 252). 

 ANALYSIS 

I. Breach of Contract 

 Plaintiffs’ breach of contract claim is based primarily on the allegation 

that Flagstar reorders transactions to maximize overdraft fee revenue in 

violation of the Deposit Agreement. In order to determine if a breach has 

occurred, it is important to first understand how ACH transactions are 

processed. There are five participants in an ACH transaction: (1) the 

Originator; (2) the Originating Depository Financial Institution (“ODFI”); (3) 

the ACH Operator; (4) the Receiving Depository Financial Institution 

(“RDFI”); and the Receiver. In this case, the Originator is Lossia, who 

initiated the ACH entries. The Receivers are the entities Lossia intended to 

pay. The ODFI, in this case Flagstar, receives payment instructions from 

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the Originator and forwards that entry to the ACH Operator, which is the 

central clearinghouse that forwards the ACH entry to the RDFI. The ACH 

Operator in this case is the Federal Reserve. After the RDFI, the 

Receiver’s bank, receives the ACH entry from the Federal Reserve, it posts 

the entry to the account of the Receiver. All ACH transactions are 

governed by the National Automated Clearing House Association 

(“NACHA”) Operating Rules. 

 Taryn Barlow, First Vice President, Retail and Commercial Services 

Director at Flagstar, testified that Flagstar processes ACH transactions in 

the order in which the transactions are received in batch files generated by 

the ACH Operator, the Federal Reserve. (Def. Ex. 5, Barlow dep. at 132-

35) The order is determined based on the order in which the Federal 

Reserve receives the transactions from various merchants. (Id.) Lossia 

testified that he understood that his ACH transactions were to be 

processed in “[t]he order they were presented to the bank . . .”and not the 

order in which they were initiated by him. (Def. Ex. 2, Lossia dep. at 48, 

55) Plaintiffs’ account statement and the Federal Reserve ACH transaction 

files, as received by Flagstar’s Core database system, show that the ACH 

transactions are ordered in the exact same manner in both sets of 

documents. (Def. Ex. 9 and 10) 

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 The fact that plaintiffs’ online banking displays changed the order in 

which transactions were listed could certainly confuse a bank customer, but 

it is not material to plaintiffs’ breach of contract claim. First, the Deposit 

Agreement addresses how transactions will be processed, not how they will 

be displayed online. The screen shots of plaintiffs’ account are not 

evidence of how the bank processed transactions. Second, plaintiffs’ bank 

statements show that the ACH transactions were processed in the order 

they occurred in the Federal Reserve batch files. Third, the transactions 

are not processed in high-to-low order, which would be necessary if 

Flagstar’s motive was to maximize overdraft fee revenue. In the series of 

transactions highlighted by plaintiffs, the first transaction is the largest, but 

after that there is no pattern to the order in which the debits are processed. 

 Plaintiffs argue that the Deposit Agreement does not explain the role 

of the Federal Reserve with respect to the order in which ACH transactions 

are processed in a way that an unsophisticated customer would 

understand. The Agreement simply states that Flagstar processes ACH 

transactions “as they occur on their effective date for the business day on 

which they are processed . . .” However, given that ACH transactions are 

processed pursuant to NACHA operating rules, which the Deposit 

Agreement is subject to, Flagstar’s explanation that the transactions are 

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processed as they are received from the Federal Reserve clearly 

corresponds with what is meant by the phrase “as they occur.” 

 Plaintiffs next argue that the Deposit Agreement treats ATM 

transactions, POS transactions and ACH transactions in the exact same 

manner and states they are all processed “as they occur.” ATM and POS 

transactions are posted in real time, while ACH transactions are presented 

by the Federal Reserve in the order in which they are submitted by the 

merchants. The fact that the different types of transactions are handled in 

different ways in the banking industry does not change the fact that they 

are all processed “as they occur.” 

 A second breach of the Deposit Agreement alleged by plaintiffs is that 

Flagstar permits overdraft fees in excess of the maximum allowed per day. 

While plaintiffs acknowledge that Flagstar reversed the three NSF fees the 

following day, they contend they were still damaged because their 

transactions were declined. As a result, several third party payees 

resubmitted the declined transactions over the course of the next several 

days in accordance with their own policies. This resulted in Flagstar 

charging plaintiffs three additional overdraft fees on March 3, one additional 

fee on March 4, three additional fees on March 5 and three additional fees 

on March 6. However, none of these additional NSF fees on subsequent 

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days have anything to do with Flagstar charging more than 5 NSF fees in 

one day. Rather, they have to do with plaintiffs having insufficient funds in 

their account to cover the transactions they initiated. 

 Plaintiffs present expert witness testimony that Flagstar had the 

ability and technology to limit the NSF fees it could charge in one day to 

five. According to plaintiffs, the fact that Flagstar did not utilize its ability to 

program its software to limit the number of NSF fees assessed per day 

demonstrates that such assessments were intentional. Plaintiffs further 

allege that defendant does not automatically reverse excessive overdraft 

fees. 

Flagstar responds to this allegation by stating that if plaintiffs had 

asked this question in discovery they would have learned that Flagstar’s 

system is programmed to automatically generate a list of customers who 

have had more than five overdraft fees assessed against their accounts in 

a day. The bank then manually reverses these fees for all affected 

customers the next day. (Def. Ex. A, Barlow dep. at 9) This evidence 

contradicts plaintiffs’ theory that Flagstar only reversed the excess NSF 

fees because plaintiffs asked them to do so. The testimony of plaintiffs’ 

experts is not helpful because it is based on speculation. They opine about 

Flagstar without any reference to the facts of this case. They offer 

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conclusory assertions about what merchants do rather than about bank 

practices. The court finds that plaintiffs’ experts’ testimony provides little 

value to the pending motion. 

 The third alleged breach of contract is that Flagstar charges overdraft 

fees even when there are sufficient funds in the account to cover the 

transaction. This issue was the subject of a class action lawsuit that was 

filed against Flagstar in Oakland County Circuit Court, Faris v. Flagstar 

Bank, FSB, Oakland County Circuit Court Case No. 15-145287-CZ (the 

“Faris Case”). The Faris Case certified a class of “all Flagstar customers 

in the United States who had one or more deposit accounts and who 

incurred an overdraft fee based on a debit transaction that did not exceed 

the money in their account” from October 21, 2017 through October 8, 

2015. (Def. Ex. 17, Final Judgment November 18, 2016) 

 Defendant contends that the plaintiffs’ claim is covered by Faris, 

although plaintiffs are not identified as class members. The court agrees 

that the ACH transactions at issue are debit transactions because they 

removed money from an account. Furthermore, plaintiffs maintained their 

Flagstar account within the class period. The Faris Settlement Agreement 

provides that the overdraft fees covered “any fee assessed to an Account 

when paying an item that the Account lacks sufficient funds (as determined 

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by the Bank at the time of posting) to cover.” (Def. Ex. E, Settlement 

Agreement ¶ 42) The Faris release extinguishes all claims that could have 

been filed in the case including claims relating to all of Flagstar’s “policies 

and procedures” concerning “Overdraft Fees” and “the ordering of 

transactions”. (Pl. Ex. 17, Final Judgment at ¶ 6). Plaintiffs are not listed 

as Faris class members because the evidence shows they were only 

charged NSF fees when they did not have sufficient funds in their account 

to cover the ACH transactions. Even if plaintiffs could state a valid claim 

for breach of the Deposit Agreement, their claim is subject to the Faris

release. 

 It is clear from the evidence in this case that instead of suffering due 

to Flagstar’s “unfair, misleading, and deceptive practices” of reordering 

transactions, plaintiffs’ overdraft fees were self-inflicted. Lossia admitted 

during his March 2, 2015 phone call to the bank that he never intended to 

pay the $2,825 Google Wallet transaction from his Flagstar account. (Def. 

Ex. F, Transcript entries 17-29). Lossia explains that he intended to use 

his credit card to pay the Google Wallet transaction, but the way his Google 

Wallet account was set up to detect fraud caused it to default to debiting his 

bank account instead of charging his credit card. 

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 Plaintiffs have not provided sufficient evidence to raise a question of 

material fact that defendant breached the terms of the Deposit Agreement. 

In order to survive a motion for summary judgment a plaintiff must provide 

more than mere suspicion in support of a claim. Defendant’s motion for 

summary judgment on plaintiffs’ breach of contract claim is GRANTED. 

II. Fair Credit Reporting Act 

 Flagstar’s duties under the Fair Credit Reporting Act arise after the 

bank receives a notice of dispute from a consumer reporting agency 

(“CRA”) like ChexSystems. 15 U.S.C. §1681s-2(b)(1). Once notified, 

furnishers of information must perform several tasks, including investigating 

the dispute, reviewing the information provided by the CRA, and reporting 

the results of that investigation to the CRA. 15 U.S.C. §1681s-2(b)(1)(A)-

(E). “[T]he investigation an information furnisher undertakes must be a 

reasonable one,” meaning it “denotes a ‘fairly searching inquiry,’ or at least 

something more than a merely cursory review.” Boggio v. USAA Fed. Sav. 

Bank, 696 F.3d 611, 616 (6th Cir. 2012) (citations omitted). The FCRA 

expressly creates a private right of action against a furnisher who fails to 

satisfy one of the duties identified in 15 U.S.C. §1681s-2(b). A consumer 

who demonstrates that a furnisher was negligent in breaching one of the 

duties with respect to that consumer’s disputed information is entitled to 

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actual damages under 15 U.S.C. §1681o. If the consumer can establish 

that a furnisher willfully violated one of the duties, then the consumer can 

recover actual or statutory damages, as well as punitive damages, 

pursuant to 15 U.S.C. §1681n. Id. at 618. 

 Flagstar received ChexSystems’ Request for Reinvestigation, dated 

September 23, 2015, and undertook an investigation of plaintiffs’ account. 

(Def. Ex. 13, Whitney dep. at 9-10) Ms. Whitney testified to verifying the 

fees in plaintiffs’ bank statements to make sure they added up to “what our 

system [was] saying” and confirming that the disputed charges were 60 

days past due. (Id. at 10, 27, 33) Whitney also consulted with Flagstar’s 

Central Services department and its legal department due to the pending 

litigation regarding the disputed charges. (Id. at 32-36) 

 Following the investigation of plaintiffs’ notice of dispute, Flagstar 

reported the results of its investigation to ChexSystems and instructed 

ChexSystems to remove the disputed trade line from Lossia’s credit report 

because of pending litigation. (Def. Ex. 16) Flagstar also notified Client 

Financial Services to cease collection activity on plaintiffs’ account. The 

disputed information no longer appears on Lossia’s credit report, and it 

never occurred on Plapcianu’s credit report. 

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 Lossia states in his Affidavit that he submitted a written notice of 

dispute to ChexSystems on July 16, 2015. (Pl. Ex. 7) Lossia has also 

submitted a proof of mailing his dispute to ChexSystems on that date. (Pl. 

Ex. 14) Plaintiffs argue that there is an issue of fact when Flagstar was first 

notified of the disputed information, and therefore when their duties were 

triggered under the FCRA. However, ChexSystems provided an Affidavit 

stating that it had no record of ever receiving the alleged July notice of 

dispute from Lossia, and that the first written notice of dispute was received 

September 21, 2015. (Def. Ex. 14, ChexSystems Aff at ¶7-8) 

 To trigger the FCRA requirements, ChexSystems must provide the 

notice to Flagstar. Any evidence that Flagstar knew of Lossia’s dispute 

because Lossia complained directly to Flagstar is immaterial under the 

FCRA because furnisher’s obligations are only triggered by receipt of 

notice from a credit reporting agency. 

 Lossia next argues that Flagstar still failed to comply with its duties 

under the FCRA after receiving notice of his September 21, 2015 dispute. 

Flagstar had 30 days to investigate and respond under the statute, but it 

was one day late in fulfilling its obligations. Technically this is not true. The 

notice of dispute sent to Flagstar by ChexSystems was dated September 

23, 2015. This means Flagstar had thirty days, or until October 23, 2015, 

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to respond. However, ChexSystems’ notice gave Flagstar until October 19, 

2015 to respond. The fact that Flagstar responded to ChexSystems on 

October 20 is not a violation of any duty on the part of Flagstar. 

Furthermore, ChexSystems deleted the contested reporting on October 19, 

within 30 days after the notice was given. Because this is the exact result 

Lossia would have obtained had Flagstar submitted its response a day 

earlier, there is no consequence resulting from Flagstar’s actions. 

 CONCLUSION 

 For the reasons stated above, defendant’s motion for summary 

judgment is GRANTED in its entirety. 

Dated: March 29, 2017 

 s/George Caram Steeh 

 GEORGE CARAM STEEH 

 UNITED STATES DISTRICT JUDGE 

CERTIFICATE OF SERVICE 

Copies of this Order were served upon attorneys of record on 

March 29, 2017, by electronic and/or ordinary mail. 

s/Marcia Beauchemin 

Deputy Clerk

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