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 transaction 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 transaction 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 transaction. 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 adversary 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 convert 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 demonstrating 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 district 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 investigation and determination to the consumer within ten business 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 investigation” or the supporting documentation. See §1693f(d)

(“If the financial institution determines after its investigation 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 documents 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 institutions to provide customers with details of their errorresolution procedures and update these notices at least annually. 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 “additional 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