Court Opinion

ID: 68379
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:32:42+00
Date Added: 2024-06-11T12:18:32.931252
License: Public Domain

[DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                         ________________________                  FILED
                                                          U.S. COURT OF APPEALS
                                No. 09-10677                ELEVENTH CIRCUIT
                                                                Aug. 26, 2009
                            Non-Argument Calendar
                                                             THOMAS K. KAHN
                          ________________________
                                                                  CLERK

                      D. C. Docket No. 08-60964-CV-CMA

BRETT RENSLOW,
an individual,
                                                              Plaintiff-Appellant,

CUNEYT DURU, etc., et al.,
                                                                       Plaintiffs,

                                       versus

CAPITAL ONE SERVICES, INC.,
a foreign corporation authorized to
do business in the State of Florida,
                                                                      Defendant,
CAPITAL ONE BANK (USA), N.A.,
a nationally chartered institution
headquartered in Virginia,

                                                             Defendant-Appellee.

                          ________________________

                   Appeal from the United States District Court
                       for the Southern District of Florida
                         _________________________

                                 (August 26, 2009)
Before CARNES, WILSON and KRAVITCH, Circuit Judges.

PER CURIAM:

       Brett Renslow, Cuneyt Duru, Melek Duru, and Ann Marie Caban

(collectively “Plaintiffs”) appeal the district court’s dismissal of their complaint

for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).

On appeal, plaintiffs argue that their complaint did state a viable claim for breach

of the covenant of good faith and fair dealing against Capital One Bank (U.S.A.),

N.A. (“Capital One”).1 We agree with the district court and affirm.

       Plaintiffs filed this class action suit against Capital One alleging that Capital

One was improperly calculating and charging the daily periodic rate for finance

charges in leap years. Specifically, Plaintiffs alleged that Capital One

       intentionally overcharges card holders by dividing the nominal annual
       percentage rate for any given billing cycle by 365, instead of 366, in
       order to arrive at an inflated ‘daily periodic rate.’ CAPITAL ONE
       then applies this inflated ‘daily periodic rate’ to determine finance
       charges for every one of the 366 days that comprise a leap year.

       1
         In their complaint, Plaintiffs asserted multiple claims against Capital One, including
breach of fiduciary duty, breach of implied fiduciary duty, violations of the Florida Deceptive
and Unfair Trade Practices Act, and a request for injunctive relief. Plaintiffs, however, failed to
offer any arguments regarding these causes of action on appeal and have therefore abandoned
these claims. United States v. Cunningham, 161 F.3d 1343, 1344 (11th Cir. 1998). Plaintiffs
briefly mentioned their claim for breach of an implied fiduciary duty in their “Statement of
Issues,” but never mentioned this again. This brief reference to a claim is insufficient to raise the
issue on appeal. Greenbriar, Ltd. v. City of Alabaster, 881 F.2d 1570, 1573 n.6 (11th Cir. 1989).

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Plaintiffs alleged that this scheme overcharged them for leap years 2004 and 2008

and thereby breached the implied covenant of good faith and fair dealing.

      Capital One sent a mailing to each plaintiff, inviting them to apply for a

credit card. Each plaintiff applied for a credit card and entered into a “Customer

Agreement” with Capital One which described the terms of the use of the credit

card. Although Plaintiffs held slightly different versions of Capital One’s credit

card, the language regarding the calculation of the daily periodic rate was

identical – or nearly identical – in the customer agreements for each plaintiff. The

customer agreements stated: “We determine the daily periodic rate by dividing the

annual percentage rate by 365 and rounding it to the nearest 1/100,000th of 1%.”

      Plaintiffs asserted that because the agreements do not explicitly provide for

an interest rate applicable to leap years, Capital One “re-defin[ed] to its

advantage” the daily periodic rate in leap years. Plaintiffs stated that Capital One

“did so when it determined this interest rate in a leap year by dividing the nominal

Annual Percentage Rate not by 366, the actual number of daily periods that

comprise the leap year, but by 365, the daily periods comprising a regular year, in

order to arrive at an inflated periodic rate.”

      We review a grant of a motion to dismiss for failure to state a claim de

novo, “accepting the allegations in the complaint as true and construing them in

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the light most favorable to the plaintiff.” Spain v. Brown & Williamson Tobacco

Corp., 363 F.3d 1183, 1187 (11th Cir. 2004).

       Under the Virginia law applicable to these agreements,2 “every contract

contains an implied covenant of good faith and fair dealing in the performance of

the agreement.” Pennsylvania Life Ins. Co. v. Bumbrey, 665 F.Supp. 1190, 1195

(E.D. Va. 1987) (citing McMullen v. Entre Computer Ctr., Inc., 819 F.2d 1279

(4th Cir. 1987)). The implied covenant of good faith and fair dealing does not,

however, apply to the rights created in a valid and binding written contract.

Ward’s Equip., Inc. v. New Holland N. Am., Inc., 493 S.E.2d 516, 520 (Va. 1997).

Additionally, “[a]n implied duty of good faith cannot be used to override or

modify explicit contractual terms.” Riggs Nat’l Bank of Wash., D.C. v. Linch, 36

F.3d 370, 373 (4th Cir. 1994).

       Here, the contract explicitly lays out the method of calculating the “daily

periodic rate” which establishes the daily interest rate applied to credit card

charges; the contract clearly states that the rate will be the annual rate divided by

365. This contract language clearly and unambiguously establishes how the daily

       2
          All relevant credit card agreements contain a forum selection clause designating
Virginia law as the state law governing this dispute. Although plaintiffs challenged the validity
of the forum selection clauses and the application of Virginia law below, they have not raised any
such arguments before this court. They have therefore abandoned that issue, Cunningham, 161
F.3d at 1344, and we apply Virginia law to this dispute.

                                                4
periodic rate will be calculated for every day of every year. Virginia law does not

allow alteration of such explicit contract terms in the name of an implied covenant

of good faith and fair dealing. Riggs, 36 F.3d at 373. Thus, we will not alter the

terms of the contract for leap years.

       The failure to provide a separate calculation for leap years does not create

any ambiguity allowing for the application of an implied covenant of good faith

and fair dealing. Capital One established a set method by which it would calculate

the daily interest rate for all days in all years. It need not specifically clarify that it

will apply the same method even in leap years; it stated that it would apply this

calculation in leap years by stating that it would calculate the rate in this manner in

all instances. As stated above, because there is no ambiguity, Virginia law

precludes us from altering the plain language of the contract under an implied

covenant of good faith and fair dealing.

       Because the unambiguous written contracts between the plaintiffs and

Capital One foreclose recovery for breach of any implied covenant of good faith

and fair dealing, we AFFIRM the decision of the district court to dismiss

Renslow’s complaint for failure to state a claim.

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