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Austin Air v. Bank of America Corporation

September 28, 2012


The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Judge



Plaintiff Austin Air Systems, Ltd., commenced this action seeking damages for Defendants' alleged breach of a credit card processing agreement and fraudulent inducement of that contract. Presently before this Court is the motion of Defendants Bank of America Corporation, Bank of America, N.A., and Banc of America Merchant Services, LLC to either dismiss the complaint or stay the action and compel arbitration. This Court finds the matter fully briefed and oral argument unnecessary. For the reasons that follow, Defendants' motion is granted and the complaint is dismissed.


Plaintiffs manufacture and sell commercial and consumer air purification systems. (Compl. ¶ 8, Docket No. 1-1.) In August 2004, Defendants presented Plaintiff with a proposal for credit card processing services. (Id. ¶ 14.) Based on that proposal, Plaintiff entered into an agreement with Defendants on September 14, 2004. (Id. ¶ 16.) A one page Merchant Services Account Application, signed by Plaintiff's president, contained the following paragraph under the heading "Agreement Signatures":

By signing below, the Merchant named above (1) certifies that all information and documents submitted in connection with this Application are true and complete; (2) acknowledges receipt of the Bank of America, N.A. Merchant Services Agreement ("Agreement"); (3) agrees that Merchant and each transaction submitted to Bank of America, N.A. ("Bank") will be bound by that Agreement; (4) agrees that Merchant will submit transactions to Bank only in accordance with information in this Application and will immediately inform Bank as required in the Notices section of the Agreement if any information in this Application changes; (5) agrees that American Express Travel Related Services Company, Inc. ("Amex") will send a Welcome Letter and the Terms and Conditions for American Express® Card Acceptance to Merchant after Amex approves Merchant to accept the Amex Card and other account access devices issued by Amex, or its subsidiaries or affiliates or its or their licensees bearing the Amex name or an Amex trademark, service mark or logo ("Card or Cards"), and that by accepting Amex Cards, Merchant agrees to be bound by those terms and conditions;

(6) agrees to the Fee Schedule provided to the Merchant; and (7) agrees that this application is subject to approval by Bank, and Amex. Your signature authorizes Bank and Amex each to verify any of the information given including credit references; to obtain credit reports on the business and each of you individually, including Guarantors; and authorizes Bank to share or provide this information with Bank's affiliates. (Stipulation*fn1 ¶ 1, Ex. 1, Docket No. 26 (emphasis added); Compl. Ex. B.)

According to Defendants, the "Merchant Services Agreement" referenced in the above paragraph refers to a separate 66-page document containing the following arbitration clause:


Any claim or controversy ("Claim") between you and us, whether arising in contract or tort or by statute including, but not limited to, Claims resulting from or relating to this Agreement shall, upon request of either party, be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, US Code). . . . By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim. Furthermore, if for any reason a Claim is not arbitrated, the parties irrevocably and voluntarily agree to waive any right to a trial by jury in respect of such Claim. (Decl. of Sandra Turner Ex. A at 23, Docket No. 17.)

In contrast, Plaintiffs assert that the entirety of the agreement between the parties consists of three pages, and that "Merchant Services Agreement" refers to a two-page document entitled "MERCHANT SERVICES AGREEMENT" and subtitled "Fee Schedule." (Compl. Ex. B.; Pl's Mem of Law in Opp'n at 4-5, Docket No. 22.) This document lists the rates for processing fees, service fees, and product fees. (Compl. Ex. B.) The following language appears under the heading "Pricing Acknowledgement" [sic] on page two:

I have reviewed the above fee structure of my Bank of America, N.A. ("Bank") merchant services account. I understand that the above stated pricing for Visa/MasterCard is based on a minimum threshold of an average transaction size of $281 and an annualized Visa/MasterCard sales volume of $1,014,000. The rates and fees quoted by the Bank for acceptance of the American Express Card and Discover Card/NOVUS Card brands are subject to the terms and conditions for each respective Card Issuer.

I further understand that the Bank will review those assumptions after a period of actual processing and that my rate could be increased if either the average ticket or volume run rates are lower than the minimum thresholds.

In addition, the Bank may pass on charges imposed by credit card associations, such as Visa and MasterCard, resulting from my failure to comply with credit card regulations. Th[e] Bank may collect these charges in the same way as other amounts owed by me under the Merchant Services Agreement ("Agreement"). I acknowledge that the Agreement provides for increases in fees. I understand that my application is subject to approval by the Bank and by American Express and Discover Card/NOVUS Card Issuers for processing their transactions. (Stipulation ...

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