Court Rulings

Wrongful Arbitration Based Litigation Fought Tooth and Nail to the State Supreme Court

The California Supreme Court today declined to hear the appeal of this case today.

This was a case of a NAF arbitration award carried to the extreme. Komarova was pursued in the courthouse by MBNA debt collectors, all the way to the Supreme Court!

California's Ninth Circuit Vacates District Courts Order Compelling Arbitration

A favorite tactic of FIA Card Services (formerly MBNA Bank) is to put a stuffer in the envelope in your monthly statement. In these, they change the terms of the agreement. They don't ask you to agree to the change; nevertheless they claim the changed terms are now part of that initial application that you signed.

Needless to say, MBNA - FIA and their attorneys Wolpoff & Abramson, Gordon & Wong, Petanaude & Felix and others rely upon these papers added to your monthly statement to walk you into potentially wrongful arbitration, and convert your unsecured debt to an secured debt Abstract of Judgment, and the possible seizure by the County Sheriff of your property including contents of your bank accounts!

The class action case revolved around a dispute by a long distance provider (Talk America) and customers (Douglas was the class action representative. Of course the telephone company pushed for arbitration. The arbitration clause was added into the Terms and Conditions section of their web site, some time after customers were signed up. The District Court agreed with Talk America and order Arbitration. Douglas appealed.

In vacating the order to Arbitrate, the decision by Circuit Judges Kozinski, Gould and Callahan points out:

Parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side.1 Indeed, a party can’t unilaterally change the terms of a contract; it must obtain the other party’s consent before doing so. Union Pac. R.R. v. Chi., Milwaukee, St. Paul & Pac. R.R., 549 page 5 F.2d 114, 118 (9th Cir. 1976).

and further

...California Court of Appeal has held that a revised contract containing an arbitration clause is unenforceable against existing customers, even when they are given notice by mail. Badie v. Bank of Am., 67 Cal. App. 4th 779, 801 (Ct. App. 1998).

Do you remember agreeing to Arbitration when you got your MBNA or FIA credit card account? As these Judges note, one party cannot change the agreement without further acceptance by the other.