Star Financial Services, Inc. v. Cardtronics USA , 882 F.3d 176 ( 2018 )

Case: 17-30258 Document: 00514333874 Page: 1 Date Filed: 02/02/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 2, 2018
No. 17-30258
Lyle W. Cayce
Clerk
STAR FINANCIAL SERVICES, INCORPORATED, doing business as
Advanced ATM Services,
Plaintiff - Appellant
v.
CARDTRONICS USA, INCORPORATED,
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
Before HIGGINBOTHAM, JONES, and GRAVES, Circuit Judges.
PER CURIAM:
Plaintiff Star Financial Services, Inc., an ATM operator, having executed
a contract with Defendant Cardtronics, USA, Inc. in which Cardtronics agreed
to process the electronic transfer of funds associated with operating ATMs,
initiated this breach-of-contract action alleging that Cardtronics failed to
correct certain account information—an error that resulted in approximately
$250,000 of misdirected funds. The district court granted summary judgment
in favor of Cardtronics, finding that Star Financial failed to establish that
Cardtronics had an obligation under the contract to correct the specified
account information. We reverse and remand.
Case: 17-30258 Document: 00514333874 Page: 2 Date Filed: 02/02/2018
No. 17-30258
I.
Star Financial operates a large network of ATMs, (“Terminals”), in
Maryland, the District of Columbia, and Virginia. In February 2012, Star
Financial executed an agreement, (the “Contract”), with ATM Deployer
Services, LLC—succeeded by Columbus Data Services and subsequently
Cardtronics by merger—to process the electronic transfer of funds associated
with operating ATMs.
To commence, a Star Financial ATM must be “set up” in Cardtronics’s
system. This requires Star Financial to provide Cardtronics with a “Terminal
Set-up Form,” through which Star Financial, among other things, designates
a bank account into which Cardtronics is to credit amounts withdrawn from a
particular terminal. When a customer withdraws cash from a Star Financial
ATM, Cardtronics debits the amount withdrawn from the customer’s bank
account and then credits that amount back to the account that Star Financial
designated on the Terminal Set-up Form. Star Financial designates its
“Settlement Account” as the bank account for Star Financial–funded ATMs.
The Contract captures this process in sections 2.1, 4.1, and 4.2. Section
2.1 sets forth the services that Cardtronics provides to Star Financial. 1 Section
4.1 explains Star Financial’s obligation to provide Cardtronics with a Terminal
Set-up Form as follows:
[Star Financial] shall provide [Cardtronics] with a fully and
accurately completed . . . Terminal Set-up Form . . . for each
Terminal subject to this Agreement prior to the date on which
Services are to commence . . . [Star Financial] represents and
1Section 2.1 of the Contract, entitled “Services,” provides that Cardtronics shall “drive
the Terminals located at the Sites, . . . link such Terminals with one or more networks, . . .
transmit Transactions initiated at such Terminals through a Network, . . . transmit electronic
messages to such Terminals and . . . provide to [Star Financial] and Merchants periodic
electronic reports of Transactions generated at such Terminals.”
2
Case: 17-30258 Document: 00514333874 Page: 3 Date Filed: 02/02/2018
No. 17-30258
warrants that all information in each . . . Terminal Set-up Form .
. . shall be correct and complete. [Star Financial] must immediately
notify [Cardtronics] in writing of any change in the information set
forth in a Terminal Set-up Form . . . .
And, section 4.2 places the “responsibility” on Star Financial to “verify that all
information contained in a Terminal Set-up Form . . . is correct and complete.”
On August 19, 2015, Star Financial submitted Terminal Set-up Forms
for three ATMs—Terminals A282694, A282696, and A282697—to be activated
on November 1, 2015. When filling out the Terminal Set-up Forms, Star
Financial mistakenly designated an account for a merchant-owned ATM
belonging to third-party DC Stars, LLC, rather than Star Financial’s
Settlement Account. The next day, Star Financial notified Cardtronics of its
mistake and provided updated Terminal Set-up Forms with the correct account
number for all three terminals. Cardtronics confirmed receipt of the updated
Terminal Set-up Forms but only corrected the account information for
Terminal A282697. Consequently, Cardtronics credited amounts withdrawn
from Terminals A282694 and A282696 to DC Stars’s account, rather than to
Star Financial’s Settlement Account.
On March 17, 2016, Star Financial noticed an abnormal shortage of
funds in its Settlement Account. Using Cardtronics’s web portal, Star
Financial learned that Cardtronics’s failure to correct the account information
for Terminals A282694 and A282696 caused that shortage and misdirected
$250,900 to DC Stars’s account. Within twenty-four hours of this discovery,
Star Financial notified Cardtronics of the error. Star Financial recovered
$95,163.69 from DC Stars but has not recovered the remaining $155,736.32.
Star Financial sued to recover the remaining funds from Cardtronics,
alleging, among other things, that Cardtronics breached its obligations under
the Contract “when it failed to correct the account information of Terminals
3
Case: 17-30258 Document: 00514333874 Page: 4 Date Filed: 02/02/2018
No. 17-30258
A282694 and A282696, and when it failed to reimburse Star Financial for the
resulting misdirected funds.” Shortly thereafter, the district court granted
Cardtronics’s motion for summary judgment. Star Financial timely appealed.
II.
This Court reviews a district court’s grant of summary judgment de novo,
applying the same standard as the trial court. 2 Summary judgment is
appropriate where there is no genuine dispute of material fact and the movant
is entitled to judgment as a matter of law. 3 On summary judgment, a court
must view the evidence in the light most favorable to the nonmovant and draw
all reasonable inferences in the nonmovant’s favor. 4 To survive summary
judgment, the nonmovant must supply evidence “such that a reasonable jury
could return a verdict for the nonmoving party.” 5
III.
To prevail on a breach of contract claim, a plaintiff must prove “(1) the
obligor’s undertaking an obligation to perform, (2) the obligor failed to perform
the obligation (the breach), and (3) the failure to perform resulted in damages
to the obligee.” 6 The district court reached only the first element of Star
Financial’s breach-of-contract claim. Specifically, the court ruled that Star
Financial, not Cardtronics, has the obligation to “ensure that the terminal
information is correct.” The court rejected Star Financial’s argument that
Cardtronics had an obligation to correct the account information after
2 Orthopedic & Sports Injury Clinic v. Wang Labs., Inc., 922 F.2d 220, 223 (5th Cir.
1991).
3 FED. R. CIV. P. 56(a).
4 United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
5 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
6 Favrot v. Favrot, 68 So. 3d 1099, 1108–09 (La. App. 4 Cir. 2011).
4
Case: 17-30258 Document: 00514333874 Page: 5 Date Filed: 02/02/2018
No. 17-30258
receiving updated Terminal Set-up Forms, explaining that the “plain language
of the contract itself does not provide such contingencies and it would be
inappropriate for this Court to introduce them.”
We conclude that the district court misread the Contract. Interpreting a
contract requires determining the common intent of the parties, looking first
“to the words and provisions of the contract.” 7 When the words are “clear and
explicit and lead to no absurd consequences,” our interpretative inquiry into
the parties’ intent ends. 8 The district court, in relying solely on section 4.2,
failed to acknowledge the plain language of section 4.1, which requires Star
Financial to “immediately notify [Cardtronics] in writing of any change in the
information set forth in a Terminal Set-up Form.” By the words of that
provision, the parties created a procedure for Star Financial to make changes,
or in this case corrections, to a Terminal Set-up Form. 9
To be sure, the Contract does not state Cardtronics’s obligations upon
receiving changes to a Terminal Set-up Form. However, finding that
Cardtronics has no obligation to use correct account information—whether
Cardtronics receives that information initially or subsequently via an updated
Terminal Set-up Form—does not square with the Contract’s repeated
emphasis that Star Financial submit correct Terminal Set-up Forms.
Nevertheless, reading the Contract to not impose an obligation upon
Cardtronics to use correct account information after receiving updated
Terminal Set-up Forms leads to the absurd consequence that Star Financial
can never make effective changes to a Terminal Set-up Form despite an explicit
7 Amend v. McCabe, 664 So. 2d 1183, 1187 (La. 1995); see also LA. CIV. CODE art. 2045.
8 LA. CIV. CODE art. 2046.
9 “Each provision in a contract must be interpreted in light of the other provisions so
that each is given the meaning suggested by the contract as a whole.” LA. CIV. CODE art.
2050.
5
Case: 17-30258 Document: 00514333874 Page: 6 Date Filed: 02/02/2018
No. 17-30258
provision to the contrary. 10 Cardtronics’s obligation to deploy account
information in an updated Terminal Set-up Form is implicit in the contractual
process for updating a Terminal Set-up Form. We therefore conclude that
Cardtronics was obligated to use correct account information after receiving
updated Terminal Set-up Forms to ensure proper set up of Star Financial’s
ATMs.
IV.
The district court’s grant of summary judgment in favor of Cardtronics
is reversed. This action is remanded for the district court to determine in the
first instance whether Cardtronics breached its obligation under the Contract
and the appropriate damages, if any.
10See Amend, 664 So. 2d at 1187 (“[C]ourts should refrain from construing the contract
in such a manner as to lead to absurd consequences.”).
6