Fredeking v. Chase Bank USA, N.A.

IN THE UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF WEST VIRGINIA

HUNTINGTON DIVISION

R. R. FREDEKING, II and

DEBBIE FREDEKING,

Plaintiffs,

v. CIVIL ACTION NO. 3:16-12415

JPMORGAN CHASE BANK, N.A.,

Defendant.

MEMORANDUM OPINION AND ORDER

Pending before the Court are three motions for partial summary judgment. ECF Nos. 105,

107, 110. For the foregoing reasons, the Court finds the following: for Defendant’s Motion for

Partial Summary Judgment on Counts One and Two (ECF No. 107), the Court GRANTS IN

PART, DISMISSES Count Two in its entirety and Debbie Fredeking as a Plaintiff from Count

One of the Complaint, and DENIES IN PART for the remainder; for Defendant’s Motion for

Partial Summary Judgment on Count Three (ECF No. 105), the Court GRANTS IN PART,

DISMISSES Debbie Fredeking as a Plaintiff in Count Three of the Complaint and all claims under

West Virginia Code Articles Six and Seven, and DENIES IN PART for the remainder; for

Plaintiffs’ Motion for Partial Summary Judgment (ECF No. 110), the Court DENIES the motion.

I. BACKGROUND

On April 13, 2016, Plaintiff R. R. Fredeking, II (“Mr. Fredeking”) signed a rental contract

with Rainbow Rentals for the use of a boat while in the Bahamas. Rental Agreement, ECF No.

107-1; R. R. Fredeking Depo., p. 147, ECF. 107-2. In the Agreement, Mr. Fredeking assumed total

responsibility “for damage to the boat or loss of any items.” Rental Agreement, ¶ 10. After signing

the Rental Agreement, Mr. Fredeking signed a credit card authorization slip. R. R. Fredeking

Depo., at 29–30. Mr. Fredeking claims he was told the slip was an authorization for a charge up to

$2500.00 and he would only need to cover the insurance deductible in the event of any damage or

loss. Id. at 33. Mr. Fredeking did not read the contract and does not recall the written amount on

the credit card authorization slip.1 Id. at 29–33.

The boat was rented with a credit card issued by Defendant Chase Bank USA, N.A.

(“Chase”). Compl., ¶ 12, ECF No. 1-1; First Interrog., pp. 3–4, ECF No. 107-4. This credit card

account is governed by the Cardmember Agreement between Mr. Fredeking and Chase, and serves

as the basis for the breach of contract claim. Compl., ¶ 8; R. R. Fredeking Depo., at 143. The

Cardmember Agreement imposes a “credit line”, or “credit limit”, but any charges that exceed the

credit line may be allowed by Chase. Cardmember Agreement, p. 1, ECF No. 107-9. The

Cardmember Agreement envisions a class of persons, “authorized users”, who may have access to

the line of credit created by the Agreement, but explicitly states the primary cardmember is solely

responsible for all authorized users’ charges to the account.2 In the event a cardmember disputes

a charge that appears on the billing statement, the cardmember can contact Chase, which will

trigger an investigation by Chase.3 Id. at 4. If Chase believes there was no error in processing the

disputed charge, the cardmember is obligated to pay the disputed amount. Id.

1 There is much confusion as to the number of credit card authorization slips and what

appeared on them. Mr. Fredeking’s testimony ranges from one signed slip that he thought was for

$2500.00, but can’t recall what it said, to two credit card slips, with one being blank and the other

being for $2500.00. R.R. Fredeking Depo, pp. 33, 147. Chase ultimately billed three separate

charges from Rainbow Rentals in the amounts of $725.63, $2500.00, and $60,931.00. Billing

Statements, pp. 22, 25, ECF No. 114-1; April Statement, p. 5, ECF No. 115-1.

2 The Court makes no determination as to whether an authorized user is a third-party

beneficiary to a cardmember agreement. While the Court found no caselaw on point, the Court

sees a plausible argument applying this doctrine to authorized users, as the Cardmember

Agreement appears to envision a third-party whose benefit is access to a line of credit.

3 The Fair Credit Billing Act is incorporated into the Contract, requiring an investigation

During the course of Mr. Fredeking’s rental period, the boat rented from Rainbow Rentals

was stolen. R. R. Fredeking Depo, at 30. Mr. Fredeking’s Chase credit card was charged separate

transactions of $2500.00 and $60,931.00 by Rainbow Rentals on April 18, 2016. Billing

Statements, pp. 22, 25, ECF No. 114-1. On the same day, Chase received a fraud claim from

Plaintiffs regarding the $60,931.00 charge with Rainbow Rentals. O’Malley Depo., p. 52, ECF No.

114-4. The account used in the transaction was closed and Mr. Fredeking was sent a letter dated

April 24, 2016, from Chase’s Fraud Department notifying him of the investigation. Chase Letters,

p. 3, ECF No. 107-11. This included a summary of the disputed charges, which listed both the

$2500.00 and the $60,931.00 charges by Rainbow Rentals. Id.

Subsequently, Chase conducted an investigation involving several members of their Fraud

Department. An initial investigation was conducted by Kirill Grinash, who determined the charge

was valid on June 6, 2016. Grinash Rebill, ECF No. 114-6. The basis for this conclusion was Mr.

Fredeking’s past business with Rainbow Rentals, the existence of a valid rental contract, and the

admission that the boat was stolen during the course of its rental. Id. This report was reviewed by

Tracey Dowdle, who sent the report back to Mr. Grinash because Mr. Fredeking had not been

reached by phone during the investigation. Id. However, reaching a customer by phone is not

determinative of the outcome of a fraud investigation. Grinash Depo., p. 115, ECF No. 114-5.

The fraud investigation continued when the claim was reviewed by Tracie Olson. Olsen

Rebill, ECF No. 114-9. Ms. Olson did not make contact Mr. Fredeking during her investigation.

Id.; Pl. Mem. Sup. Summ. J., at 3. On June 20, 2016, she determined the charge was valid based

on the cardmember’s history with Rainbow Rentals and a match between the signature on the

charge slip and the one Chase had on file for Mr. Fredeking. Id.; see also Charge Slip, ECF No.

to a disputed charged be “reasonable.” Cardmember Agreement, p. 4; 12 C.F.R. §1026.13.

114-1.4 Ms. Olson was assisted by Ms. Jody Casas during this review. Casas Depo., p. 40, ECF

No. 114-8. After their determination, the dispute was moved from the Fraud Department to the

Merchant Dispute Department, based on the admission that Mr. Fredeking participated in the

transaction. Id. at 17.

On June 22, 2016, Mr. Fredeking’s Chase account was again billed for the disputed

$60,931.00. Billing Statements, at 25. In response, Mr. Fredeking called Chase and stated that he

spoke with Chase employees “Beverly” and “Ray” to further dispute this charge. R. R. Fredeking

Depo., at 119. Mr. Fredeking followed up with a letter to Chase dated July 1, 2016. In it, he outlined

that he had only authorized a charge to cover the cost of the rental and a charge of $2500.00 to

cover the insurance deductible, which would be refunded once the boat was returned. July 1 Letter,

p. 1, ECF No. 115-11.5 Mr. Fredeking’s letter further stated he had become aware of Ms. Casas

billing dispute review through a conversation she had with Ms. Fredeking. Id. It appears that no

conversations took place between the Chase Fraud investigators and the Fredekings. Subsequently,

Mr. Fredeking received a letter dated July 8, 2016 that Chase’s Fraud Department determined both

the charges of $2500.00 and $60,931.00 were valid. Chase Letters, at 6. Beside each listed charge

the letter stated that “[Mr. Fredeking] notified [Chase] that this transaction is valid.”6 Id. Chase

claims Mr. Fredeking provided notice that these charges were valid because of the contract

between him and Rainbow Rentals. O’Malley Depo., at 54. However, Chase submitted no evidence

that it ever talked directly to the merchant, or anyone else, about Mr. Fredeking’s alleged oral

modification of the Rental Agreement, limiting his liability to the $2500 deductible.

4 The amount charged, not the signature itself, is disputed. R. R. Fredeking Depo., at 147.

5 A creditor’s duties under the Fair Credit Billing Act to conduct a reasonable investigation

are triggered only by a timely written notice from the credit card holder. 15 U.S.C. § 1666.

6 Chase states that these types of letters are automated. O’Malley Depo., at 41.

On July 18, 2016, the Merchant Disputes Department also determined the charge was valid

on the basis of the Rental Agreement. Stump Depo., p. 86, ECF No. 114-3. In a letter dated July

19, 2018, Chase wrote to Mr. Fredeking and notified him of its determination of the validity of the

$60,931.00 charge. Chase Letters, at 7. In that letter, Chase told Mr. Fredeking it had “requested

additional information so that [Chase] could move forward with [its] review, but [Chase] ha[d]n’t

received that information to date.” Id. However, the Merchant Disputes Department had not

actually requested any additional information. Stump Depo., at 108.

The present action was filed in the Circuit Court of Cabell County on November 9, 2016

and removed to this Court on December 21, 2016. Notice of Removal, ECF No. 1. In their

Complaint, Plaintiffs allege common law breach of contract based on the Cardmember Agreement,

request a declaratory judgment stating the charge itself is invalid, and claim violations of the West

Virginia Consumer Credit Protection Act (“WVCCPA”). Compl., at 4–7. All of the instant motions

for summary judgment were filed on November 21, 2018. ECF Nos. 105, 107, 110.

II. LEGAL STANDARD

To obtain summary judgment, the moving party must show there is no genuine issue as to

any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).

In considering this motion, the Court will not “weigh the evidence and determine the truth of the

matter[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Instead, the Court will draw

any permissible inference from the underlying facts in the light most favorable to the nonmoving

party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986).

Although the Court will view all underlying facts and inferences in the light most favorable

to the nonmoving party, the nonmoving party nonetheless must offer some “concrete evidence

from which a reasonable juror could return a verdict in his [or her] favor[.]” Anderson, 477 U.S.

at 256. Summary judgment is appropriate when the nonmoving party has the burden of proof on

an essential element of his or her case and does not make, after adequate time for discovery, a

showing sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

The nonmoving party must satisfy this burden of proof by offering more than a mere “scintilla of

evidence” in support of his or her position. Anderson, 477 U.S. at 252.

III. DISCUSSION

In their motion, Plaintiffs request the Court grant partial summary judgment on the claims

in Counts One and Three. Pl. Mot. Part. Summ. J., p. 1, ECF No. 110. Conversely, Chase’s

bifurcated motions cumulatively seek summary judgment on all three counts and raise the issue of

standing as to Plaintiff Debbie Fredeking (“Ms. Fredeking”) for the breach of contract claim, as

well as both Plaintiffs’ standing to raise claims under the WVCCPA. Def. Mot. Part. Summ. J. I,

p. 1–3, ECF No. 107; Def. Mot. Part. Summ. J. II, p. 1–2, ECF No. 105. For the sake of

comprehensibility, the Court will first address the issues of standing, followed by the arguments

on each of the counts alleged in the Complaint.

A. Standing

In supporting memoranda, Chase challenges the standing of Ms. Fredeking on the breach

of contract claim, as well as both of the Plaintiffs’ standing to bring a claim under the WVCCPA.

Def. Mem. Supp. Summ. J. I, pp. 3–4, ECF No. 108, ; Def. Mem. Sup. Summ. J. II, pp. 12–15, ECF

No. 106. As a threshold matter, the Court must address the choice of law issue before determining

standing. See Felman Prod., Inc. v. Bannai, 476 F. Supp. 2d 585, 586 (S.D.W. Va. 2007).

1. Choice of Law

“When exercising diversity jurisdiction, a federal district court must apply the choice-of-

law rules of the state in which it sits.” Cavcon, Inc. v. Endress ± Hauser, Inc., 557 F. Supp. 2d

706, 719 (S.D.W. Va. 2008) (citing Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496

(1941). Accordingly, the conflicts rules of West Virginia apply here.

Generally, West Virginia courts are deferential to the choice of law provision in a contract.

However, “[a] choice of law provision in a contract will not be given effect when the contract bears

no substantial relationship with the jurisdiction whose laws the parties have chosen to govern the

agreement, or when the application of that law would offend the public policy of this state.”

General Electric Company v. Keyser, 275 S.E.2d 289, Syl. Pt. 1 (W. Va. 1981). Here, the

Cardmember Agreement calls for Delaware law to apply. Cardmember Agreement, at 4. Chase is

a Delaware corporation and neither party has made a challenge on the basis of public policy. Notice

of Removal, ¶ 12. As such, the Court finds Delaware law applies to the breach of contract claim.

Plaintiffs’ claims under the WVCCPA are alleged as independent causes of action and seek

remedy for conduct after the breach. Compl., ¶¶ 35–42. Since Plaintiffs argue their WVCCPA

claims as independent state law violations, they are construed under West Virginia law. See Bishop

v. Ocwen Loan Servicing, LLC, No. 3:10-CV-0468, 2010 WL 4115463, at *7 (S.D.W. Va. July 9,

2013) (holding that claims under the WVCCPA can be pleaded as remedies in contract law or

independent causes of action); compare Harrison v. PNC Bank, Nat. Ass’n, No. 3:13-19944, 2015

WL 2171632 (S.D.W. Va. May 8, 2015) (granting summary judgment for the defendant on

WVCCPA claims that a loan contract was unconscionable, because Ohio law governed the loan).

2. Standing – Breach of Contract

Chase claims Ms. Fredeking has no standing to allege a breach of contract claim, as she is

not an account holder with Chase, nor is she obligated to pay for charges on Mr. Fredeking’s

account. Def. Mem. Sup. Summ. J. I, at 3–4. In response, Ms. Fredeking claims she is a third-party

beneficiary to the contract and is entitled to enforce its terms. Resp. to Def. Mot. Summ. J., pp. 3–

4, ECF No. 119.

“As a general rule, only parties to a contract and intended third-party beneficiaries may

enforce an agreement’s provisions.” E.I. du Pont de Nemours & Co. v. MacDermid Printing Sols.

L.L.C., 248 F. Supp. 3d 570, 575 (D. Del. 2017), appeal dismissed sub nom. EI DuPont de Nemours

& Co. v. MacDermid Printing Sols., No. 17-1895, 2017 WL 5158652 (3d Cir. July 19, 2017). A

contract creates an intended beneficiary where “(1) the contracting parties intended that the third

party would benefit from the contract, (2) the benefit is intended to be a gift or in satisfaction of a

pre-existing obligation to the third party, and (3) the intent to benefit the third party is a material

part of the contracting parties’ purpose in entering into the contract.” Id. (internal quotes omitted).

As a general principle of contact law, “[t]he party asserting third party beneficiary status

bears the burden of demonstrating that the contract, or a provision thereof, was made for its

benefit.” MBIA Ins. Corp. v. Royal Indem. Co., 519 F. Supp. 2d 455, 465 (D. Del. 2007), aff’d,

321 F. App’x 146 (3d Cir. 2009) (citing 13 Williston on Contracts § 37:8). “Delaware law make[s]

clear that a third party beneficiary will only be bound by the terms of the underlying contract where

the claims asserted by that beneficiary arise from its third party beneficiary status. E.I. DuPont de

Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187, 197 (3d Cir.

2001) (emphasis in original); see also Meades v. Wilmington Hous. Auth., No. C.A. 19743-NC,

2003 WL 939863, at *3 (Del. Ch. Mar. 6, 2003) (“Delaware law permits contracts to be made for

the benefit of a third party and gives the third party the right to enforce promises that were made

for the third party’s benefit.”).

Plaintiffs have not provided, nor has the Court unearthed, any caselaw holding an

authorized user of a credit card is a third-party beneficiary. This class of persons have no

guaranteed access to the use of another’s credit line but may certainly argue a contemplated benefit

within the bounds of the contract. Regardless, this principle is not applicable here as Ms. Fredeking

has not alleged a breach of any right that would pertain to her.

Even if Ms. Fredeking were found to be a third-party beneficiary to the Cardmember

Agreement, her rights would only extend so far as to have access to Mr. Fredeking’s credit line.

Here, her claims do not assert any impingement on her ability to use the account, but instead allege

that Chase breached the terms by permitting an unauthorized charge by the cardmember on the

card. Per the terms of the contract, the primary cardmember is solely responsible for any debt

incurred. Cardmember Agreement, at 1. Thus, Ms. Fredeking’s alleged rights have not been

violated under the claims in the Complaint. Therefore, the Court finds Ms. Fredeking has no

standing for the breach of contract claim, and is dismissed from Count One of the Complaint.

3. Standing – WVCCPA

Chase alleges Mr. and Ms. Fredeking have no standing under the WVCCPA. Chase argues

the WVCCPA act has a residency requirement but Plaintiffs are not residents of West Virginia,

the services at issue were delivered outside of West Virginia, and Ms. Fredeking is not a

“consumer” as required and defined by the Act. Def. Mem. Sup. Summ. J. II, at 12–15.

a. Residency

As this Court has held, residency is not a requirement under the WVCCPA. Polis v. Am.

Liberty Fin., Inc., 237 F. Supp. 2d 681 (S.D.W. Va. 2002). “[T]he exclusions to the WVCCPA are

clearly identified in § 105 and those exclusions do not limit the Act only to West Virginia

residents.” Id. at 686. “Instead, it merely clarifies what law will control under the circumstances

delineated therein.” Id. (citing Rhoades v. West Virginia Credit Bureau Reporting Serv., Inc., 96

F.Supp.2d 528, 533–34 (S.D.W.Va.2000) Accordingly, Plaintiffs’ residency is not relevant.

b. Delivery in West Virginia

While the WVCCPA is not limited to residents of West Virginia, there must be some

substantive link tying the alleged behavior violating the statute to the state. The WVCCPA

“represents a comprehensive attempt on the part of the legislature to extend protection to the

consumers and persons who obtain credit in [the] State . . . .” Harless v. First Nat’l Bank, 246

S.E.2d 270 (W. Va. 1978).

Chase argues the services at issue were provided in the Bahamas, and thus not subject to

the WVCCPA. Def. Mem. Sup. Summ. J. II, at 13. This facile argument mischaracterizes the

service rendered by Chase as providing the rental boat and runs counter to Chase’s argument earlier

in its memorandum that the Rental Agreement and the Cardmember Agreement are distinctly

separate transactions. Def. Mem. Sup. Summ. J. I, at 6. The service Chase provides is a line of

credit. This credit was established in Huntington, West Virginia and monthly bills were delivered

to Mr. Fredeking at his Huntington address. Billing Statements, passim. Because this service was

delivered in West Virginia, there are sufficient contacts and delivery of services to expose Chase

to the WVCCPA. See also Polis v. Am. Liberty Fin., Inc., 237 F. Supp. 2d at 687 (holding that

though property securing a disputed note was located in Kentucky, Defendants were potentially

liable under the WVCCPA because the loan was contracted for in West Virginia).

c. “Consumers” under the WVCCPA

To allege a claim under the WVCCPA, plaintiffs must be a “consumer” as defined by

statute. Young v. EOSCCA, 800 S.E.2d 224 (W. Va. 2017). The statutory definition “leaves no

doubt that a ‘consumer’ seeking recovery under the provisions of West Virginia Code § 46A-5-

101(1) ‘for any prohibited debt collection practice’ must be obligated or allegedly obligated to owe

the specific debt at issue.” Id. at 229.

As previously discussed, the terms of the contract clearly state Ms. Fredeking is not liable

for any debt on the account. Though Ms. Fredeking has claimed the debt was reported in her name,

she has not produced any evidence to that effect, nor has she shown that collection notices of the

debt at issue were directed to anyone other than Mr. Fredeking. Furthermore, neither plaintiff

brought a debt reporting or credit claim. As such, Ms. Fredeking has no standing for claims under

the WVCCPA. Accordingly, she is dismissed from Count Three of the Complaint.

B. Count One – Breach of Contract

In the Complaint, Mr. Fredeking alleges a breach of contract based on the Cardmember

Agreement. Compl., ¶ 8. He claims the breach occurred when Chase allowed an unauthorized

charge on the account that exceeded his credit limit and failed to conduct a reasonable

investigation. Pl. Mem. Sup. Summ. J., pp. 8–9, ECF No. 111.7 Mr. Fredeking further argues he is

entitled to summary judgment on the matter because the fact that the charge exceeded the credit

limit is undisputed. Id. Mr. Fredeking further argues that Chase failed to comply with its own

policies and the Fair Credit Billing Act (“FCBA”), which is incorporated by reference into the

Cardmember Agreement, by failing to conduct a reasonable investigation. Id. at 9–10.

Conversely, Chase argues that none of the alleged conduct breaches any specific term of

the contract and it is thus entitled to summary judgment in its favor. Chase points out that the

Cardmember Agreement states the account is a “credit access line” and does not have a “credit

limit.” Def. Mem. Sup. Summ. J. II., at 5–6 (“[Chase] may, but [is] not obligated to, allow your

Account to go over its credit line.”) (quoting Cardmember Agreement, at 1). Furthermore, neither

the contract nor the FCBA, which is implemented through Regulation Z, defines a what constitutes

7 In response to Defendant’s Partial Motion for Summary Judgment for Counts 1 & 2,

Plaintiffs incorporate their arguments from the Memorandum in Support of Plaintiffs’ Partial

Motion of Summary Judgment (ECF No. 111). Resp. Def. Mot. Summ. J., p. 2, ECF No. 119.

a reasonable investigation, and the terms of the contract envision parties disagreeing as to the

outcome of an investigation. Id. at 5–7 (quoting Cardmember Agreement, at 4).

Though the terms of the Cardmember Agreement states that Chase can authorize charges

beyond the credit line, the contract itself conflates the terms “credit line” and “credit limit.”

Cardmember Agreement, at 1. This ambiguity is further exacerbated by Mr. Fredeking receiving

monthly statements that indicate the “credit limit” set at $25,000. Billing Statements, passim.

Furthermore, neither party contests that Chase had a duty to conduct a reasonable

investigation.8 Mr. Fredeking supplied evidence that he notified Chase of an oral modification of

the Rental Agreement between him and Rainbow Rentals that limited his liability to $2500.00.

July 1 Letter, at 1. Chase offers no evidence that it inquired directly about this modification and

hangs its hat primarily on the existence of the Rental Agreement. Chase’s argument about the

Cardmember Agreement envisioning a difference of opinion as to the outcome of an investigation

misses the point. Mr. Fredeking does not allege the breach is based on the outcome of the

investigation, but the reasonableness of the investigation itself.

Neither the contract, nor the FCBA, define what constitutes actions that must be taken to

qualify an investigation as “reasonable.” The Court finds that differing minds could reasonably

reach opposing conclusions as to whether Chase’s investigation of the disputed charge was

“reasonable.” As such, the Court denies both Chase and Mr. Fredeking’s motions for summary

judgment on this issue.

8 Chase’s contention on this issue is not that the FCBA and Regulation Z do not apply to

it, but that Mr. Fredeking failed to allege their violation. Plaintiffs choose an admittedly odd path

by not stating a claim directly under the FCBA, but the terms of the contract still incorporate the

FCBA. Even without this incorporation, the contract fails to define what constitutes an

“investigation” and a reasonableness standard would be read in to cure this ambiguity.

C. Count Two – Declaratory Judgment

Chase argues that because the breach of contract claim fails, so does the request for

declaratory relief. While not explicitly alleged, Chase’s motion raises the issue of duplicative

pleadings and conservation of judicial resources.

“Federal courts sitting in diversity apply state substantive law and federal procedural law.”

Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996). Even if a plaintiff seeks

declaratory judgment under state law, district courts apply the federal Declaratory Judgment Act.

See McNeely v. Soyoola, No. 2:12-CV-8727, 2013 WL 3457731, at *2 (S.D.W. Va. July 9, 2013)

(citing Bourazak v. N. River Ins. Co., 379 F.2d 530, 533 (7th Cir.1967) (“The Declaratory

Judgment Act is a procedural statute and creates no substantive rights.”)).

The Declaratory Judgment Act states that, “[i]n a case of actual controversy within its

jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations

of any interested party seeking such declaration, whether or not further relief is sought.” 28 U.S.C.

§ 2201(a). A court may constitutionally exercise jurisdiction in a declaratory judgment proceeding

only when “the complaint alleges an actual controversy between the parties of sufficient

immediacy and reality to warrant issuance of a declaratory judgment.” Volvo Constr. Equip. N.

Am. v. CLM Equip. Co., 386 F.3d 581, 592 (4th Cir.2004) (internal quotations omitted). If a district

court possesses declaratory judgment jurisdiction, it may exercise its discretion and decline to

entertain the action. Id. at 594; see also Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995) (“Since

its inception, the Declaratory Judgment Act has been understood to confer on federal courts unique

and substantial discretion in deciding whether to declare the rights of litigants.”). The Fourth

Circuit recognizes that “the federal trial courts should weigh the legitimate concerns of efficiency

and comity when deciding whether to award declaratory relief.” Id.

Furthermore, a district court “has the duty to consider whether it should abstain from

exercising its discretionary jurisdiction to avoid needlessly deciding state issues and to prevent

duplicitous litigation.” McNeely, 2013 WL 3457731, at *3 (quoting Gov’t Emps. Ins. Co. v. Dizol,

133 F.3d 1220, 1232 (9th Cir.1998) (internal quotations omitted). “Although concerns over

duplicitous litigation generally arise with reference to concurrent state court proceedings, the

underlying efficiency concerns hold no less true when the concurrent proceeding is in federal court.

See Great Am. Ins. Co. v. Gross, 468 F.3d 199, 206 (4th Cir.2006).

Here, Plaintiffs request the Court declare the charge “unlawful.” Insofar that Plaintiffs

claim the charge is unlawful because it breached the contract when Chase allegedly failed to

conduct a “reasonable investigation”, this claim is needlessly duplicative. To the extent that

Plaintiffs allege the credit charge is unlawful because it was fraudulent, the Court finds that

Plaintiffs have not pled a claim of fraud and the Court does not have the input of a necessary party

(Rainbow Rentals) to make such a determination. As such, the Court dismisses Count Two of the

Complaint, and effectively dismisses Debbie Fredeking from the case entirely.

D. Count Three – Violations of the WVCCPA

As a final matter, Mr. Fredeking alleges four separate violations of the WVCCPA in the

Complaint. These include violations of §§ 46A-2-127; 46A-2-128; 46A-6-101, et. seq.; and 46A-

7-111. In his motion for summary judgment, Mr. Fredeking recharacterizes his Complaint as

raising only two claims under the WVCCPA. Pl. Mem. Sup. Summ. J., at 11. In its cross motion

for summary judgment on the claim, Chase addresses all the violations as alleged in the Complaint.

Def. Mem. Sup. Summ. J. II., at 15–20. The Court addresses each allegedly violated section of the

Act individually.

1. W. Va. Code § 46A-2-127 – Fraudulent, Deceptive, or Misleading Actions

Chase argues there was no alleged action on its part which constitutes “debt collection”

and, alternatively, any such action did not violate the statute. Id. at 15–16. Mr. Fredeking counters

that the letters from Chase stating Mr. Fredeking notified Chase the disputed transaction was valid,

and the letter from Chase stating that it had requested more information from him, were fraudulent

or misleading and attempted to collect a debt. Pl. Mem. Supp. Summ. J., at 11–12.

The Court's analysis is guided by the West Virginia Supreme Court of Appeals’ instruction

the WVCCPA be liberally construed in accordance with its remedial nature. See State ex rel.

McGraw v. Scott Runyan Pontiac-Buick, Inc., 461 S.E.2d 516 (W. Va. 1995). Under the

WVCCPA, a debt collector is “any person or organization engaging directly or indirectly in debt

collection.” W. VA. CODE § 46A–2–122(d). The definition for what constitutes debt collection is

relatively broad. “Debt Collection means any action, conduct or practice of soliciting claims for

collection or in the collection of claims owed or due or alleged to be owed or due by a consumer.”

W. VA. CODE § 46A–2–122(c).9

Chase admits the statement in the July 19 letter saying it had requested more information

was false. Stump Depo., at 108. Furthermore, Chase argues that the statement in the July 8 letter

saying Mr. Fredeking told it the transaction was valid was based on the Rental Agreement and not

on a verbal admission. O’Malley Depo., at 54. Whether the latter statement was “misleading”

9 In the Pretrial Conference, counsel for Chase stated the federal Fair Credit Billing Act

defines what constitutes debt collection and billing statements were not included in that definition.

However, the FCBA has no preemptory effect on state law claims, and therefore cannot define

what constituted “debt collection.” 15 U.S.C. 1666j(a); Chevy Chase Bank v. McCamant, 512

S.E.2d 217, 222 (W. Va. 1998) (“we find that the WVCCPA is not preempted by federal law from

regulating the appellee’s debt collection practices.”). As such, “debt collection” under the

WVCCPA is defined by state statute.

under the WVCPPA is a dispute of material fact open for interpretation. Furthermore, whether the

purpose of these letters was to collect on a debt, or only to notify Mr. Fredeking of the result of

the investigation, is a disputed material fact. Thus, these issues are proper for jury determination.

See Hager v. Am. Gen. Fin., Inc., 37 F. Supp. 2d 778, 789 (S.D.W. Va. 1999) (holding summary

judgment inappropriate when a material disputed issue existed as to whether an act by the

defendant constituted debt collection).

2. W. Va. Code § 46A-2-128 – Unfair or Unconscionable Means

Mr. Fredeking claims he is entitled to summary judgment here, as the investigation

conducted by Chase was “unreasonable” and thus constituted an unfair act in an attempt to collect

a debt. Pl. Mem. Sup. Summ. J., at 12. Chase counters by stating Mr. Fredeking did not allege or

show any action by Chase that runs counter to the enumerated list of prohibitions in section 128

of the Act. Pl. Mem. Sup. Summ. J. II., at 17. However, the list of prohibited acts in that section is

not exhaustive. The prefacing language reads: “No debt collector may use unfair or unconscionable

means to collect or attempt to collect any claim. Without limiting the general application of the

foregoing, the following conduct is deemed to violate this section[.]” W. Va. Code § 46A-2-128.

As previously discussed, Mr. Fredeking brought violations of the WVCCPA as claims

separate from his breach of contract claim. He alleges the investigation by Chase was an unfair or

unconscionable method for collecting an allegedly unauthorized debt.10 Just as a determination as

to whether the investigation was reasonable is a question to be committed to the jury to determine

a breach of contract, so must the question as to whether this was a debt collection practice which

was unfair or unconscionable be similarly committed.

10 This distinction is important, as any claim under the WVCCPA as a remedy for an

unconscionable contract or breach of contract would raise conflict-of-law issues.

3. W. Va. Code § 46A-6-101, et. seq. – Unfair or Deceptive Acts in Trade or Commerce

Chase argues summary judgment on any claim under Article Six of the WVCCPA should

be granted in its favor, as no allegation constitutes a “good or service” under the general

interpretation of this article’s regulation of “trade or commerce.” Def. Mem. Sup. Summ. J. II., at

18. Mr. Fredeking fails to address Chase’s claims, or ever mention this article of the WVCCPA

beyond the Complaint. The West Virginia Supreme Court of Appeals has acknowledged that

Article Six does not define what constitutes a good or service, and thus turns to the definitions

found in Article One. State ex rel. Morrisey v. Copper Beech Townhome Communities Twenty-Six,

LLC, 806 S.E.2d 172, 181 (W. Va. 2017).

“‘Services’ includes: (a) Work, labor and other personal services; (b) privileges with

respect to transportation, use of vehicles, hotel and restaurant accommodations, education,

entertainment, recreation, physical culture, hospital accommodations, funerals, cemetery

accommodations, and the like; and (c) insurance.” W. VA. CODE § 46A-1-102(47). Though Chase

presents caselaw holding loans do not constitute a “good or service”, the Court is not convinced

creditors fall out of the reach of Article Six. However, Mr. Fredeking is not arguing the credit line

service itself was unfair or deceptive, but that the investigation by Chase in effort to collect an of

an unauthorized debt was.11 These claims fall within the realm of the regulations found in Article

Two of the Act. As Mr. Fredeking has not sufficiently provided supporting facts, argument, or

evidence, the Court grants summary judgment for Chase on any claim under Article Six of the

WVCCPA.

11 See supra, note 10; see also Harrison v. PNC Bank, Nat. Ass’n, No. 3:13-19944, 2015

WL 2171632 (S.D.W. Va. May 8, 2015) (granting summary judgment for the defendant on

WVCCPA claims that a loan contract was unconscionable, because Ohio law governed the loan).

4. W. Va. Code § 46A-7-111 — Civil Actions by the Attorney General

In the Complaint, Mr. Fredeking claims the unauthorized charge by Chase is an “excess

charge” under W. Va. Code § 46A-7-111. Compl., § 40. Chase argues summary judgment on any

claim under Article Seven of the WVCCPA should be granted in its favor, as this article applies

only to actions by the Attorney General. Def. Mem. Sup. Summ. J. IT., at 19-20. Mr. Fredeking has

not provided any supporting facts, argument, or evidence as to this claim, and the Court finds

Chase’s argument to be legally sound. As such the Court grants summary judgment for Chase on

any claim under Article Seven of the WVCCPA.

IV. CONCLUSION

For the aforementioned reasons, the Court finds the following: For Defendant’s Motion for

Partial Summary Judgment on Counts One and Two (ECF No. 107), the Court GRANTS IN

PART, DISMISSES Count Two in its entirety and Debbie Fredeking as a Plaintiff from Count

One of the Complaint, and DENIES IN PART for the remainder; For Defendant’s Motion for

Partial Summary Judgment on Count Three (ECF No. 105), the Court GRANTS IN PART,

DISMISSES Debbie Fredeking as a Plaintiff in Count Three of the Complaint and all claims under

West Virginia Code Articles Six and Seven, and DENIES IN PART for the remainder; For

Plaintiffs’ Motion for Partial Summary Judgment (ECF No. 110), the Court DENIES the motion.

The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any

unrepresented parties.

ENTER: February 19, 2019

ROBERT C. CHAMBERS

UNITED STATES DISTRICT JUDGE

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