Good Faith Covenant-Banking Fees

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WI Court of Appeals – District III

Case Name: Justin Klimek v. Nicolet National Bank

Case No.: 2024AP001615

Officials: Stark, P.J., Hruz, and Gill, JJ.

Focus: Good Faith Covenant-Banking Fees

Klimek sued Nicolet National Bank, alleging that the bank breached its deposit-account agreement by charging multiple $35 non-sufficient funds (NSF) fees when a merchant repeatedly sought payment on the same transaction after an initial denial. Klimek argued that the contract permitted only one fee per “item” and that the term “item” referred to a single payment instruction, regardless of how many times the merchant re-presented it for payment. He alternatively contended that the contract was ambiguous and therefore could not support dismissal of his claims. The circuit court dismissed the case, finding that the contract governing the account and transactions authorized a fee each time an item was presented for payment against an account.

The Court of Appeals reviewed the deposit agreement and fee schedule and concluded that the contract unambiguously authorized a fee each time an item was presented for payment against an account with insufficient funds. The court reasoned that the triggering event was the presentment of a payment request when insufficient funds existed, not the identity of the underlying transaction itself. Thus, when a merchant re-presented the same item and the account still lacked sufficient funds, the bank was entitled to charge another NSF fee.

The court rejected Klimek’s reliance on federal cases and regulatory guidance, finding that those authorities involved different contractual language and did not render Nicolet’s agreement ambiguous. Because the contract expressly permitted the challenged fee, Klimek’s related claim for breach of the covenant of good faith and fair dealing also failed.

Affirmed.

Decided 06/16/26

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