Introduction

In a significant decision for consumer banking and contract interpretation, the Kansas Supreme Court held that an ambiguous “improper charges” notice provision in a bank’s deposit account agreement does not sweep in bank-imposed fees (such as overdraft or insufficient funds fees). When, after applying the standard interpretive tools to the face of a contract, the court remains genuinely uncertain among competing meanings, the ambiguity must be construed against the drafter. Applying that principle, the court concluded that Capitol Federal’s 30-day statement notice clause did not apply to the plaintiffs’ fee disputes.

The case arises from a putative class action brought by account holders Jennifer Harding and Samantha Ramirez against Capitol Federal Savings Bank. Harding challenged so-called “APPSN” overdraft fees (fees assessed when a transaction authorized on a positive balance later settles after intervening debits cause overdraft status). Ramirez challenged multiple NSF/overdraft fees assessed on repeated re-presentments of a single attempted payment. The district court dismissed the case under a notice provision requiring customers to notify the bank within 30 days of “errors or improper charges” appearing on account statements. The Court of Appeals reversed; the Kansas Supreme Court affirmed that reversal and went further by construing the ambiguous notice term against the bank, holding as a matter of law that the notice clause does not cover the bank’s own fee assessments.

Beyond the consumer banking context, the opinion sharpens Kansas law on ambiguity: courts must attempt to resolve meaning using all pertinent interpretive rules applied to the written instrument. If genuine uncertainty persists, contra proferentem—construction against the drafter—decides the issue.

Summary of the Opinion

• Issue Presented: Whether Capitol Federal’s deposit account agreement—which requires customers to notify the bank within 30 days of “errors or improper charges” on a statement—bars plaintiffs’ breach-of-contract claims about overdraft/NSF fees when no such notice was given.
• Holding: The term “improper charges” in the notice provision is ambiguous after applying the pertinent rules of interpretation to the face of the contract. Construing the ambiguity against Capitol Federal as the drafter, the court holds that “improper charges” does not include bank-imposed fees. Therefore, the 30-day notice provision does not apply to plaintiffs’ overdraft and NSF fee disputes.
• Disposition: The Supreme Court affirmed the Court of Appeals’ reversal of the district court’s dismissal, reversed the district court, and remanded for further proceedings. Remaining issues (including arguments about fact-finding beyond the pleadings) were deemed moot in light of the court’s legal construction of the contract.
• Key Reasoning: Contextual reading (including the notice clause’s references to forgeries and alterations), the purpose of such notice clauses, and usage of “charge” elsewhere in the agreement show two plausible meanings—third-party debits versus bank fees—creating genuine ambiguity. Under Kansas law, such ambiguity must be construed against the drafter.

Analysis

A. Precedents Cited and Their Role

• Jayhawk Racing Properties v. City of Topeka, 313 Kan. 149, 154, 484 P.3d 250 (2021): Cited for the standard of review—questions of law (including dismissal for failure to state a claim) receive unlimited (de novo) review. It frames the court’s authority to interpret the contract anew.
• Trear v. Chamberlain, 308 Kan. 932, 936, 425 P.3d 297 (2018): Confirms that interpretation and legal effect of written instruments, including ambiguity determinations, are subject to unlimited review. Reinforces the court’s role in deciding ambiguity as a matter of law.
• Peterson v. Ferrell, 302 Kan. 99, 104, 349 P.3d 1269 (2015): Restates the primary interpretive rule—ascertain the parties’ intent from the contract’s language when it is clear, without resorting to rules of construction. This sets the threshold for when canons become necessary.
• Waste Connections of Kansas, Inc. v. Ritchie Corp., 296 Kan. 943, 963, 298 P.3d 250 (2013): Emphasizes the “four corners” approach—interpret provisions in light of the entire instrument, not in isolation. Also cited as an example where reasonable competing readings created ambiguity.
• Botkin v. Security State Bank, 281 Kan. 243, Syl. ¶ 7, 130 P.3d 92 (2006): Supplies the rule that ambiguous language is strictly construed against the drafter (contra proferentem). This is the decisive doctrine once ambiguity is found.
• Geer v. Eby, 309 Kan. 182, 192–93, 432 P.3d 1001 (2019): Defines ambiguity and explains when it arises—only after applying the pertinent rules of interpretation to the face of the instrument and remaining genuinely uncertain. The court closely tracks Geer’s formulation and applies it here.
• Holly Energy, Inc. v. Patrick, 239 Kan. 528, 534, 722 P.2d 1073 (1986): Directs courts to harmonize language across the instrument and recognizes ambiguity when words can bear two or more reasonable meanings. Used to justify looking at the agreement’s other sections where “charge” appears.
• American Family Mut. Ins. Co. v. Wilkins, 285 Kan. 1054, Syl. ¶ 5, 179 P.3d 1104 (2008): Example of ambiguity when a key term (“occurrence”) is susceptible to conflicting meanings in the policy context. Shows Kansas courts’ readiness to call ambiguity where competing reasonable meanings exist.
• O’Bryan v. Columbia Ins. Group, 274 Kan. 572, 56 P.3d 789 (2002): Another ambiguity example—coverage limitation language supported multiple reasonable readings, underscoring the willingness to find ambiguity in complex instruments.
• Fawcett Trust v. Oil Producers Inc. of Kansas, 315 Kan. 259, 290, 507 P.3d 1124 (2022): Cited by analogy for the proposition that where facts (or language) are subject to multiple constructions, a party pressing a single construction will not prevail. Helps situate the court’s comfort with multiplicity of plausible meanings.

B. The Court’s Legal Reasoning

1. Framing the interpretive task: The court first applied the “four corners” and other interpretive canons to decide whether “improper charges” plainly includes bank fees. It refused to isolate the phrase and instead read Section G (the notice clause) in context—where it sits among references to forgeries and alterations—and alongside other sections that use “charge” and “fee.”
2. Contextual clues and noscitur a sociis: The notice clause’s immediate context is fraud-related (forgeries, alterations), suggesting “improper charges” are of like kind—i.e., third-party debits appearing on a statement. Invoking noscitur a sociis (a word is known by the company it keeps), the court reasoned that the notice clause targets unauthorized or erroneous debits the customer is best positioned to detect upon reviewing statements.
3. Purpose of a notice-of-statement clause: The court emphasized that the bank is in the best position to know whether its own fees are “proper” under its agreement and fee schedules. Requiring customers to notify the bank of the bank’s own fee assessments—fees the bank already believes to be authorized—does not fit the apparent purpose of a statement error notice, which is to surface customer-unique information (e.g., unauthorized transactions).
4. Harmonizing the instrument: In other parts of the agreement, “charge” sometimes denotes third-party transactions processed against the account (e.g., items “charged against” the account) while “fee” denotes bank-imposed amounts (e.g., service charges in the fee schedule). Elsewhere “charge” as a noun can refer to bank activity. These mixed usages support two plausible readings and, therefore, ambiguity.
5. Conclusion on ambiguity: After applying these interpretive tools, the court remained genuinely uncertain whether “improper charges” in the notice clause included bank fees or referred only to third-party debits, satisfying Kansas’ definition of ambiguity.
6. Contra proferentem applied: Because ambiguity persisted, the court construed the term against the drafter—Capitol Federal. It held “improper charges” does not include the bank’s own fee assessments. As a result, the 30-day notice provision does not bar plaintiffs’ fee-related contract claims.
7. Procedural consequences: Having resolved the notice issue as a matter of law, the court held other issues (including whether the district court improperly engaged in fact-finding at the motion-to-dismiss stage and arguments about “invited error”) were moot.

C. How the Decision Interacts with the Court of Appeals’ Reasoning

The Court of Appeals declared “improper charges” ambiguous and criticized the district court for engaging in fact-finding at the motion to dismiss, particularly on whether the condition precedent (notice) applied. The Supreme Court agreed on ambiguity but did not stop there. Rather than remand for fact-finding about notice compliance, it construed the ambiguous clause against the drafter, definitively holding that the notice prerequisite does not apply to the particular category of claims (bank fee disputes). That move converts what the panel viewed as a fact-laden condition-precedent issue into a resolved legal construction, streamlining the case for a merits-focused remand.

D. The Impact of Precedents and Canons

The opinion synthesizes core interpretive commitments in Kansas contract law:

• Four corners, context, and purpose matter: Waste Connections and Holly Energy anchor the insistence on holistic reading and harmonization.
• Ambiguity is a legal threshold: Under Geer, courts must exhaust textual and contextual tools before declaring ambiguity. The Supreme Court models that analytic discipline here, weighing both sides’ readings.
• Contra proferentem is not optional once ambiguity persists: Botkin provides the mandatory construction against the drafter, decisive in this case.
• Explanatory canons are substantive tools: The court’s use of noscitur a sociis gives teeth to contextual arguments, especially where neighboring terms (forgery, alteration) signal the clause’s risk-allocation purpose.

E. Practical and Doctrinal Impact

1. For Future Banking Fee Litigation

• Notice defenses constrained: Kansas banks cannot rely on generic statement-notice clauses using terms like “improper charges” to bar lawsuits over bank-imposed fees unless the contract unmistakably states that those fees are subject to the notice requirement.
• APPSN and re-presentment claims proceed on the merits: Plaintiffs challenging overdraft fee practices (including authorization/settlement timing issues and multiple fees on re-presented transactions) will not be dismissed on 30-day notice grounds where language mirrors Capitol Federal’s.
• Drafting responses anticipated: Banks seeking to preserve short-fuse notice defenses for fee disputes must revise agreements to:
  • Define “charge” and “fee” distinctly and consistently;
  • Expressly state that “improper charges” includes “fees and service charges assessed by the bank, including overdraft and NSF fees”;
  • Place any fee-related notice requirement in a paragraph that is not limited by examples of unauthorized or fraudulent activity, or provide separate, clear notice provisions for fee disputes versus third-party errors.

2. For Contract Interpretation in Kansas More Broadly

• Reaffirmed sequencing: Courts must first apply interpretive tools to the contract’s text; only if genuine uncertainty persists does contra proferentem apply. The syllabus distills this as a clear directive.
• Contextual canons are outcome-determinative: The opinion underscores that the semantic environment (e.g., references to forgeries/alterations) is central in deciding scope, resisting efforts to universalize an unbounded dictionary meaning across the contract.
• Notice/condition-precedent clauses construed narrowly when ambiguous: Where performance conditions potentially extinguish claims, ambiguity will be resolved against the drafter, preserving claim access absent unmistakable language.

3. Litigation Practice and Procedure

• Motion to dismiss strategy: Defendants relying on notice provisions must show clarity from the “four corners” without resort to extrinsic evidence. Ambiguity will likely defeat a dismissal predicated on notice provisions—and, as here, may be resolved against the drafter as a matter of law.
• Pleading considerations: Plaintiffs can focus pleadings on contract text and context. Where the contract’s structure supports multiple plausible meanings, pointing out those cross-references can trigger contra proferentem.

Complex Concepts Simplified

• APPSN (Authorize Positive Purportedly Settle Negative): A bank authorizes a debit when the account shows a positive available balance, but later—because other transactions settle first—the account goes negative, and the bank assesses an overdraft fee when the original authorized item posts. Some banks then assess an additional overdraft fee when that authorized item settles after the account is already negative, leading to “second” fees on the same purchase.
• Re-presentment/Multiple NSF Fees: When a payment attempt is returned for insufficient funds, the payee or processor may attempt to collect it again (re-presentment). If each attempt triggers a new NSF or overdraft fee, customers may be charged multiple times for what they view as a single transaction.
• Notice Provision / Condition Precedent: A clause that requires a party to take a specific action (e.g., notifying the bank within 30 days of errors) before being allowed to sue. If applicable and unfulfilled, it can bar the claim. Courts often construe such provisions strictly, especially when their scope is ambiguous.
• Ambiguity: Not mere disagreement over meaning; it exists only after applying standard interpretive rules to the contract’s text and still being genuinely uncertain among two or more reasonable meanings.
• Contra Proferentem (construction against the drafter): If a contract term remains ambiguous after applying interpretive tools, the ambiguity is resolved against the party who drafted the agreement.
• Noscitur a Sociis: A canon of construction meaning a word’s meaning is informed by the words around it. Here, “improper charges” sits beside references to forgeries and alterations, signaling third-party unauthorized transactions.
• Four Corners Rule: Interpret the contract by reading it as a whole, considering how terms are used throughout the document to achieve harmonious meaning.
• Unlimited (De Novo) Review: Appellate courts independently decide questions of law, including contract interpretation and whether a complaint states a claim, without deference to the lower court’s conclusions.
• Mootness (in this context): Once the Supreme Court construed the notice provision as inapplicable to fee disputes, disputes about whether plaintiffs gave timely notice (or whether the district court engaged in improper fact-finding about notice) no longer affected the outcome, and thus were moot.

Key Takeaways

• The Kansas Supreme Court holds that where a notice-of-statement clause uses the term “improper charges” in a context emphasizing forgeries and alterations, the clause is ambiguous as to bank-imposed fees; the ambiguity is construed against the bank.
• As a matter of law, Capitol Federal’s 30-day notice provision does not bar plaintiffs’ claims challenging overdraft and multiple NSF fee practices.
• The opinion crystallizes the Kansas ambiguity standard: only after applying all interpretive tools to the face of the instrument and remaining genuinely uncertain should courts invoke contra proferentem—and then, they must.
• Banks operating in Kansas should revisit deposit account agreements to use clear, consistent definitions and to expressly address whether fee disputes are subject to short-fuse notice requirements.
• Plaintiffs’ class claims over APPSN and re-presentment fees proceed on remand without the notice bar, focusing the litigation on the merits of the contract-based challenges.

Conclusion

Harding v. Capitol Federal Savings Bank materially clarifies Kansas contract law’s approach to ambiguous notice provisions in consumer banking agreements. The court reiterates that ambiguity exists only after a disciplined, contextual reading of the entire instrument. But once ambiguity persists, courts must construe against the drafter. Applied here, “improper charges” in a statement-notice clause, embedded among references to forgeries and alterations, does not unambiguously reach bank-imposed fees. Construed against the bank, the clause does not bar claims over overdraft and NSF fee practices.

The decision will reverberate through consumer banking litigation in Kansas, narrowing reliance on generic notice provisions to cut off fee disputes and encouraging clearer drafting. More broadly, it underscores that interpretive context and purpose—not isolated dictionary breadth—drive meaning, and that risk of ambiguity in standardized agreements remains with the drafter.

Case Metadata

• Parties: Jennifer Harding and Samantha Ramirez (Appellants) v. Capitol Federal Savings Bank (Appellee)
• Lower Courts: Shawnee District Court (dismissal under notice provision); Court of Appeals (reversed)
• Supreme Court Disposition: Court of Appeals affirmed; District Court reversed; remanded
• Counsel for Appellants: David G. Seeley, Lyndon W. Vix
• Counsel for Appellee: Kersten L. Holzhueter, Bryant T. Lamer