Refused Arbitration NAF proceeded anyway

[Friendsplacect]

I am helping out a friend with an alleged Debt. The NAF contacted him about an alleged Chase Account. He refused arbitration citing some case law and the very non-existance of any Arbitration Agreement. The NAF went trough with the case anyway and awarded the Complainer with the claim. Any ideas? Will they march into Court and try to get a judgement on their award? If so, does the express refusal on his side weigh into anything on evidence?

[2tim215]

Originally Posted by Friendsplacect

I am helping out a friend with an alleged Debt. The NAF contacted him about an alleged Chase Account. He refused arbitration citing some case law and the very non-existance of any Arbitration Agreement. The NAF went trough with the case anyway and awarded the Complainer with the claim. Any ideas? Will they march into Court and try to get a judgement on their award? If so, does the express refusal on his side weigh into anything on evidence?

Arbitration is governed by Federal law. According to Federal statute, you have 90 days to file a Motion to Vacate and if you don't within that time frame, you are guaranteed to lose on that basis alone. However, even though it is federal, the one area that goes by state law is the time you have to respond to an award granted against you. This could trump your appeal so you need to find out what the statute of limitations to file your motion is in your state. You can even appeal the decision with NAF (they actually have an appeal process too, but that may be only 30 days and would at least delay the creditor from pursuing things further for a while although there's probably a good chance that they will deny it). Typically the creditor (or collection agency) will not pursue a judgment until all the statutes have expired (if they haven't yet, you could still argue it in court if they didn't) as they know once they have, that it becomes a slam dunk for them.

If you do intend to try and vacate, then you need to consider whether you want to bring it your local court or to Federal. I think Federal is your best bet since most of the judges in the local court do not know very much about arbitration laws (since it is a federal issue) and will rule against just out of habit. You are more likely to get a fair shake from a Federal judge as I have heard they are more sympathetic to Pro Ses and will certainly be much more familiar with the arbitration laws.

This is just my opinion as you will have to decide what is best for you to do. Hope this helps a little.

2tim215
2 Timothy 2:15 (KJV) 1Study to show thyself approved unto God, a workman that needeth not to be ashamed, rightly dividing the word of truth.

[Friendsplacect]

What I dont underrstand is, within the Arbitration Award it states that both parties agreed to Abritrate , that is an all out LIE, he refused to Arbitrate and there was no contract to Arbitrate.

[2tim215]

Originally Posted by Friendsplacect

What I dont underrstand is, within the Arbitration Award it states that both parties agreed to Abritrate , that is an all out LIE, he refused to Arbitrate and there was no contract to Arbitrate.

The problem is not whether or not they had a right to arbitrate, it is first of all how you proceed (procedure wise) so that you can be heard. Over 80% of their awards/judgements are obtained by default (meaning that whoever it was who lost did not challenge or did not challenge within the required time frame or did not challenge properly). Every time you lose, you come closer to having exhausted all remedies. Your statement that your friend did not agree to arbitration is going to be (one of) your arguments against their award. I'm sure there are others who will give you suggestions on how to proceed from here. There may be other suggestions. This is just one.

2tim215
2 Timothy 2:15 (KJV) Study to show thyself approved unto God, a workman that needeth not to be ashamed, rightly dividing the word of truth.

[Judge Roy Bean]

Originally Posted by Friendsplacect

What I dont underrstand is, within the Arbitration Award it states that both parties agreed to Abritrate , that is an all out LIE, he refused to Arbitrate and there was no contract to Arbitrate.

You'll find the cardholder agreement includes the arbitration requirement. You'll also note they will send modifications to the terms and conditions from time to time and your continued use of the card or keeping the account open binds you to those terms. A number of them sneaked the arbitration requirement through that way. It's not something you can refuse, but as noted above, you have to respond before a court issues a judgment.

[Cracker]

NO VALID AGREEMENT TO ARBITRATE

3. Claimant has filed a claim with this forum listing false and misleading allegations
regarding the agreement to arbitrate. Arbitration Agreement is clearly defined in the
Code under Rule 2 C and is requirement in order to establish the existence of a valid
claim. Without first establishing the existence of this agreement any ruling rendered by
this forum for either party would be void on its face for lack of personal and subject
matter jurisdiction.

4. The courts have upheld that a party who has not agreed to arbitrate a dispute cannot be
forced to do so. In addition is has been established that the party making the claim must
show that the respondent in the claim was made aware of the arbitration agreement, and
that they agreed to its provisions. Casteel v. Clear Channel Broad., Inc.

5. Arbitration is a matter of contract, and a party cannot be compelled or required to submit
to arbitration any dispute he has not agreed to submit. A party who has not agreed to
arbitrate a dispute cannot be forced to relinquish the right to trial.

6. Further, under the first step in analysis to decide whether a dispute must be arbitrated
under the Federal Arbitration Act (FAA), a party may challenge the validity of an
arbitration agreement under general contract principles. 9 U.S.C.A. Sec.1 et seq.; See
also In Re David’s Supermarkets, Inc. 43 S.W.3d 94 (2001). In addition, the federal
policy favoring arbitration does not apply to the determination of whether there is a valid
agreement to arbitrate between the parties; instead ordinary contract principles determine
who is bound. 9 U.S.C.A Sec. 1 et seq.; Fleetwood Enterprises, Inc. v. Gaskamp, 280
F.3d 1069, opinion supplemental on denial of rehearing 303 F.3d 453.

7. Claimant claims that there was an alleged agreement to arbitrate. This would then be
governed by provisions under the FAA. Even under the FAA, there must be evidence of a
valid agreement. Courts are clear in upholding an agreement to arbitrate must be clear to
both parties. Otherwise, the legislative intent of arbitration is abused and devalued. In
Stout v. Byrider, 50 F.Supp.2d 733, affirmed 228 F.3d 709, the court held that arbitration
is a matter of contract, and thus, a party cannot be compelled to arbitrate any claims he or
she did not agree to arbitrate when making the contract. In the case at hand, Claimant
never agreed to arbitration. Claimant never received any agreement or contract, or
information regarding an arbitration clause.

8. The Federal Arbitration Act, 9 U.S.C.A., provides that the purpose of arbitration is to
give arbitration agreements the same force and effect as other contracts, where parties
expressly agree to submit to disputes to arbitration. Further, there must be a clear
agreement to arbitrate. In the case at hand, Respondent did not receive notice or
agreement to arbitrate, nor did Respondent ever expressly agree to arbitration. On this
basis it is reasonable to assume that Respondent was also not notified of his/her right to
opt out of this provision with out impunity.

9. No arbitration agreement exists between Respondent and Claimant whatsoever, and none
of Respondent’s arguments should be construed to mean that such agreement exists.

NO JURISDICTION UNDER THE FAA

10. “Federal law preempts state law on issues of arbitrability.” Three Valleys Mun. Water
Dist. v. E.F. Hutton (9th Cir. 1991) 925 F.2d 1136, 1139. “...a party who contests the
making of a contract containing an arbitration provision cannot be compelled to arbitrate
the threshold issue of the existence of an agreement to arbitrate. Only a court can make
that decision.” Three Valleys Mun. Water Dist. v. E.F. Hutton, at 1140/1141.

11. 9 USC Sec. 2 requires a written agreement to arbitrate. The requirement is jurisdictional.
Without a written agreement, the FAA does not apply. Further, there is no requirement
under the FAA mandating that the jurisdictional defense of “no agreement to arbitrate” be
raised within a particular period of time.

12. In the alternative, even with Claimant’s assertion that there was an agreement to
arbitrate, the alleged agreement is unenforceable. In Badie v. Bank of America,
67 Cal.App 4th 779, although a California case, the appellate court held that the
alleged agreements in the terms and conditions cannot be construed as agreement
to arbitrate. Therefore, even if Respondent had received an agreement to
arbitration notice, it would be unenforceable. The court stated that “the initial step
in determining whether there is an enforceable ADR agreement between a bank
and its customers involves applying ordinary state law principles that govern the
formation and interpretation of contracts in order to ascertain whether the parties
have agreed to some alternative form of dispute resolution. Under both federal
and California state law, arbitration is a matter of contract between the parties.”
(First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944-945; see also
Mastrobuono v. Shearson Lehman Hutton, Inc. (1995) 514 U.S. 52, 56-57, 62-63;
Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8.) As the United States
Supreme Court has stated, “The ‘liberal federal policy favoring arbitration
agreements,’ [citation] . . . is at bottom a policy guaranteeing the enforcement of
private contractual arrangements.” (Mitsubishi Motors v. Soler Chrysler-
Plymouth (1985) 473 U.S. 614, 625; see also Volt Info. Sciences v. Leland
Stanford Jr. U. (1989) 489 U.S. 468, 478.) Similarly, the California Supreme
Court has stated that, “[T]he policy favoring arbitration cannot displace the
necessity for a voluntary agreement to arbitrate.” (Victoria v. Superior Court
(1985) 40 Cal.3d 734, 739, italics in original.) “Although ‘[t]he law favors
contracts for arbitration of disputes between parties’ [citation omitted], ‘ “there is
no policy compelling persons to accept arbitration of controversies which they
have not agreed to arbitrate . . . .” ’ [Citation omitted.]” (Id. at pp. 744; see also
Arista Films, Inc. v. Gilford Securities, Inc. (1996) 43 Cal.App.4th 495, 501;
Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 640.).

13. Myers v. MBNA America and North American Capitol Corporation, CV 00-163-
M-DWM (D.Mont., March 20, 2001), although not an appellate case, is similar in
ruling as the above mentioned Badie case. The judge ruled that a mandatory
arbitration clause cannot be enforced. In that case, the arbitration clause in the
alleged credit card agreement was held unenforceable because the defendant
never agreed under the contractual relationship between parties to arbitrate her
dispute with MBNA. The judge found that no such agreement could be implied.
The judge further stated that “MBNA skipped offer and went straight to
acceptance. . . if MBNA’s argument that Myers agreed to arbitration . . . there
would be no reason to stop at arbitration. . . MBNA could amend the agreement
to include a provision taking a security interest in Myers’ home or requiring
Myers to pay a penalty if she failed to convince three friends to sign up for
MBNA cards.” Id.

[Cracker]

Originally Posted by Judge Roy Bean

You'll find the cardholder agreement includes the arbitration requirement. You'll also note they will send modifications to the terms and conditions from time to time and your continued use of the card or keeping the account open binds you to those terms. A number of them sneaked the arbitration requirement through that way. It's not something you can refuse, but as noted above, you have to respond before a court issues a judgment.

Forum selection clauses in contracts of adhesion are unenforceable if the clause is expressed in fine print, placed in the contract to avoid litigation, or if the forum selection clause could not have been disputed without impunity as part of a freely negotiated contract. See Johnson and Johnson, v. Holland America Line-Westours, Inc., 557 N.W.2d 475, Forum selection clause must be reasonable communicate terms and be fundamentally fair Deiro v. American Airlines, Inc., 816 F.2d 1360, 1364 (9th Cir. 1987). The forum selection clause must be "fundamentally fair." Shute, 499 U.S. at 595, In re: Hodes, 858 F.2d at 908, and Shankles v. Costa Armatori, S.P.A., 722 F.2d 861, 866 (1st Cir. 1983).

.

[Friendsplacect]

Good job cracker and thanks. I pulled up some case law on that also. I see who JRB works for.

[2tim215]

firendsplace,

It sounds like you got the ammunition you need from cracker, now you have to get the mechanics (that is, procedures) right. Best of luck.

2tim215
2 Timothy 2:15 (KJV) Study to show thyself approved unto God, a workman that needeth not to be ashamed, rightly dividing the word of truth.

[Cracker]

All thanks to: Beating up on debt collectors

Credit goes to where credit is due.