Miller v. BANK OF AMERICA, NT & SA

Relying upon our decision in Kruger v. Wells Fargo Bank (1974) 11 Cal.3d 352, 356 [ 113 Cal.Rptr. 449 , 521 P.2d 441 ] (Kruger), account holders who deposited Social Security or other public benefit funds into checking or savings accounts and then overdrew those accounts contend that Bank of America, NT & SA, may not recoup the overdrawn amounts and charge insufficient funds fees for each transaction that results in an overdraft. In Kruger , we held that a bank may not satisfy a credit card debt by deducting the amount owed from a separate checking account containing deposits that “derived from unemployment and disability benefits” and, thus, were “protected from the claims of creditors.” (Ibid.) One year later, the Legislature enacted Financial Code section 864, which comprehensively governs the manner in which banks may exercise the right to set off debts. Financial Code section 864, subdivision (a)(2) expressly excludes overdrafts and bank charges from the statute’s definition of debt. We conclude that Bank of America’s practice does not run afoul of our holding in Kruger because the setoff of independent debt at issue in Kruger is not implicated here. We further…