Background
Justin Klimek, a Nicolet National Bank account holder, filed a class action lawsuit alleging breach of contract and violation of the implied covenant of good faith and fair dealing. The dispute arose in July 2021 when a merchant submitted a payment request against Klimek’s account that exceeded his available balance. Nicolet charged an initial $35 non-sufficient funds (NSF) fee, which Klimek did not contest. The merchant then re-presented the same transaction for payment a second time — without any new instruction from Klimek — and Nicolet charged a second $35 fee after again finding the account balance insufficient.
Klimek argued that under the governing Deposit Account Terms and Conditions and Fee Schedule, the contract permitted only one fee per “item,” and that each merchant payment request — regardless of how many times it was re-presented — constituted a single “item.” He contended in the alternative that because the contract did not define “item,” the term was at minimum ambiguous, precluding dismissal at the pleading stage. The Brown County Circuit Court disagreed, holding that the contract unambiguously authorized a fee upon each presentment of an item against insufficient funds, and dismissed Klimek’s complaint with prejudice.
The Court’s Holding
The Wisconsin Court of Appeals, District III, affirmed the circuit court’s dismissal in a per curiam opinion. The court held that the contract unambiguously permitted Nicolet to charge a separate $35 fee each time an item was presented for payment against an account with insufficient funds, regardless of whether the same underlying item had been presented before. The key operative language — “each item presented for payment against insufficient available funds … [is] subject to an overdraft fee” — made clear that it is the act of presentment against an insufficient balance that triggers the fee, not the identity or novelty of the underlying item.
The court rejected each of Klimek’s arguments in turn. It found that the “per item” language in the Fee Schedule, read in context with the Deposit Account Terms and Conditions as a whole, simply fixed the fee amount per presentment event rather than capping fees to one per transaction. It declined to read the word “single” into the contract where no such limitation appeared. The court also declined to find ambiguity merely because the contract did not define “item,” concluding that when the term is considered in context, only one reasonable interpretation exists. The good faith and fair dealing claim failed as a consequence of the breach of contract claim, as the covenant cannot be used to override an express contractual term.
Key Takeaways
- Under this bank’s contract language, each re-presentment of a returned transaction against an insufficient balance constituted a separate fee-triggering event, permitting multiple NSF or overdraft fees on a single underlying transaction.
- An undefined contractual term does not automatically create ambiguity; courts will read the term in the context of the contract as a whole and apply the only reasonable interpretation available.
- Federal case law and FDIC regulatory guidance interpreting different contract language were deemed unpersuasive, underscoring that NSF fee litigation turns heavily on the specific wording of each bank’s account agreement.
- A good faith and fair dealing claim cannot survive where the challenged conduct is expressly authorized by the unambiguous terms of the contract.
Why It Matters
This decision illustrates that class action challenges to bank NSF re-presentment fee practices — a wave of litigation that has swept federal and state courts in recent years — are not uniformly successful and depend critically on the precise language of each institution’s deposit account agreement. Banks whose agreements tie fee liability to each “presentment” against insufficient funds, rather than to each discrete customer-initiated transaction, may be well-positioned to defeat such claims at the motion-to-dismiss stage.
Notably, the opinion is unpublished and cannot be cited as precedent in Wisconsin courts under WIS. STAT. RULE 809.23(3). Its practical significance lies in what it signals to practitioners: careful drafting of account agreement fee provisions — specifying that fees attach to each presentment event — can be dispositive, while arguments that undefined terms like “item” are inherently ambiguous face an uphill battle when surrounding contract language points in a clear direction.