Justia Arbitration & Mediation Opinion Summaries

William Lyons opened a Home Equity Line of Credit (HELOC) account with National City Bank in 2005, which was later acquired by PNC Bank. PNC withdrew funds from Lyons' deposit accounts to offset outstanding HELOC payments without prior notification. Lyons contested these withdrawals, claiming they were unauthorized. PNC responded, asserting their right to make the withdrawals. Lyons then sued for economic and statutory damages, as well as emotional distress.The case was initially heard in the United States District Court for the District of Maryland. PNC moved to compel arbitration on the Truth in Lending Act (TILA) claim, which the district court partially granted. Both parties appealed, and the United States Court of Appeals for the Fourth Circuit held that the Dodd-Frank Act prohibits arbitration of claims related to residential mortgage loans. The case was remanded to the district court, which ruled in favor of PNC on both the TILA and Real Estate Settlement Practices Act (RESPA) claims. The district court held that TILA’s offset provision does not apply to HELOCs and that the CFPB had the authority to exempt HELOCs from RESPA’s requirements.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court held that TILA’s offset provision does apply to HELOCs, reversing the district court’s decision on the TILA claim. The court found that the term "credit card plan" includes HELOCs when accessed via a credit card. However, the court affirmed the district court’s decision on the RESPA claim, agreeing that the CFPB has the authority to exempt HELOCs from RESPA’s definition of “federally related mortgage loans.” The case was reversed and remanded in part and affirmed in part. View "Lyons v. PNC Bank, N.A." on Justia Law

The case involves a dispute over a contract between a plaintiff, Pamela Phillips, and the defendant, Charlotte Metro Credit Union. In 2014, Phillips opened a checking account with the Credit Union and agreed to a standard membership agreement. This agreement included a "Notice of Amendments" provision, which allowed the Credit Union to change the terms of the agreement upon notice to Phillips. In 2021, the Credit Union amended its membership agreement to require arbitration for certain disputes and to waive members' right to file class actions. Phillips did not opt out of this amendment within the given 30-day window. Later that year, Phillips filed a class action complaint against the Credit Union for the collection of overdraft fees on accounts that were never overdrawn. The Credit Union responded by filing a motion to stay the action and compel arbitration.The trial court denied the Credit Union's motion to stay and compel arbitration, concluding that the "Notice of Amendments" provision did not permit the Credit Union to unilaterally add an arbitration provision. The Credit Union appealed this decision to the Court of Appeals, which reversed the trial court's determination and remanded the case to the trial court to stay the action pending arbitration.The Supreme Court of North Carolina affirmed the decision of the Court of Appeals. The court concluded that the Arbitration Amendment was within the universe of terms of the contract between the parties, and thus complies with the implied covenant of good faith and fair dealing and does not render the contract illusory. As such, the Arbitration Amendment is a binding and enforceable agreement between Phillips and the Credit Union. View "Canteen v. Charlotte Metro Credit Union" on Justia Law

The Indiana Supreme Court heard a case involving a dispute between Tonia Land and the IU Credit Union (IUCU). When Land became a customer at the credit union, she was given an account agreement that could be modified at any time. Later, when she registered for online banking, she accepted another agreement that allowed the IUCU to modify the terms and conditions of the services. In 2019, the IUCU proposed changes to these agreements, which would require disputes to be resolved through arbitration and prevent Land from initiating or participating in a class-action lawsuit. Land did not opt out of these changes within thirty days as required, which, according to the IUCU, made the terms binding. However, Land later filed a class-action lawsuit against the credit union, which attempted to compel arbitration based on the addendum.The court held that while the IUCU did provide Land with reasonable notice of its offer to amend the original agreements, Land's subsequent silence and inaction did not result in her assent to that offer, according to Section 69 of the Restatement (Second) of Contracts. The credit union petitioned for rehearing, claiming that the court failed to address certain legal authorities and arguments raised on appeal and in the transfer proceedings.Upon rehearing, the court affirmed its original decision, rejecting the credit union's arguments. However, the court also expressed a willingness to consider a different standard governing the offer and acceptance of unilateral contracts between businesses and consumers in future cases. The court found no merit in the credit union's arguments on rehearing and affirmed its original opinion in full. View "Land v. IU Credit Union" on Justia Law

Respondent is a former employee who won a judgment in Argentina's National Court of Labor Appeals against Citibank, N.A. Petitioner, the Argentinian branch of Citibank, N.A., filed a demand for arbitration with the American Arbitration Association and brought the proceedings below. The district court compelled arbitration, preliminarily enjoined the employee from enforcing the Argentinian judgment against Petitioner, and held Respondent in contempt of court. It also denied his motion to dismiss.   The Second Circuit reversed and remanded. The court held that the district court lacked subject matter jurisdiction over the Petition. Therefore, the district court was without authority to issue its orders in this case. The court reversed the district court's orders -- including its order to compel arbitration, the preliminary injunction it entered against Respondent, its order finding Respondent in contempt, and its order requiring Respondent to pay the Branch's attorneys' fees and costs. The court concluded that because the Branch has not shown it enjoys independent legal existence and Citibank has not sought to substitute itself or join this action as the real party in interest, there has been no party adverse to Respondent. Without adverse parties, there can be no subject matter jurisdiction under Article III. View "The branch of Citibank, N.A., established in the Republic of Argentina v." on Justia Law

In March 2021, Riverside County, California District Attorney sued Credit One Bank in Riverside County Superior Court. The lawsuit (the “state action”) alleged that Credit One, a national bank, violated California law by employing a vendor to make extensive harassing debt collection phone calls to California residents. In a related federal case (the “federal action”), Credit One requested that the United States District Court for the Central District of California enjoin the state action on the ground that it was an unlawful exercise of “visitorial powers,” which the National Bank Act (“NBA”) and its associated regulations grant exclusively to the Office of the Comptroller of the Currency (“OCC”). The district court ultimately decided to abstain under Younger v. Harris, 401 U.S. 37 (1971), in favor of the state action and dismissed the federal action. Credit One appealed that dismissal.   The Ninth Circuit affirmed. The panel held that the district court correctly abstained because all four Younger factors were met. First, the state action qualified as an “ongoing” judicial proceeding because no proceedings of substance on the merits had taken place in the federal action. Second, the state court action implicated the important state interest of protecting consumers from predatory business practices. The panel held that the state court action was not an exercise of “visitorial powers,” and nothing in federal law prevents a district attorney from vindicating a state interest in consumer protection by suing a national bank. Third, Credit One had the ability to raise a federal defense under the National Bank Act. And fourth, the injunction Credit One sought would interfere with the state court proceeding. View "CREDIT ONE BANK, N.A. V. MICHAEL HESTRIN" on Justia Law

An arbitrator determined that a borrower and lender were liable to each other for similar amounts, each roughly two and a half million dollars. He then offset the awards against each other, resolving the disputed issue of whether a setoff was proper. A bank, however, had also lent money to the borrower. The bank was not a party to the arbitration, but believed the setoff effectively circumvented the agreement among it, the borrower, and the other lender that the bank’s loan had priority and would be paid back first. Instead of being offset against the other lender’s award, the bank believed, the borrower’s award should have gone toward satisfying the bank’s loan. It thus convinced the trial court to correct the arbitrator’s award by eliminating the setoff. The Court of Appeal held that on the facts presented, the correction affected the merits of the arbitrator’s decision. Accordingly, the correction was improper, and the Court reversed. View "E-Commerce Lighting, Inc. v. E-Commerce Trade LLC" on Justia Law

OneMain, a non-bank finance company, loaned Zirpoli $6,200.08, to be repaid at a rate of 26.91% (total $11,364.35). The loan was issued under the Consumer Discount Company Act (CDCA), a consumer protection statute, which creates an exception to Pennsylvania’s usury law. The loan is governed by a disclosure statement, a security agreement, and an arbitration agreement. Later, OneMain sold delinquent accounts to Midland, including Zirpoli’s loan. Midland sued Zirpoli but later dismissed the suit and undertook collection efforts.Zirpoli filed a class action, alleging that Midland’s collection activities constituted an unlawful attempt to collect the loan because Midland does not have a CDCA license and never obtained nor requested approval from the Department of Banking. Midland was, therefore, not lawfully permitted to purchase the loan. Midland moved to compel arbitration. The court denied the motion, focusing on the validity of the assignment from OneMain and Midland. The Third Circuit vacated. The ultimate illegality of a contract does not automatically negate the parties’ agreement that an arbitrator should resolve disputes arising from the contract. The parties to the loan clearly agreed to arbitrate the issue of arbitrability. The arbitration agreement provides that an arbitrator shall resolve the arbitrability of defenses to enforcement, including alleged violations of state usury laws. View "Zirpoli v. Midland Funding LLC" on Justia Law

In 2005, Lyons opened a Home Equity Line of Credit (HELOC) with PNC’s predecessor, signing an agreement with no arbitration provision. In 2010, Lyons opened deposit accounts at PNC and signed a document that stated he was bound by the terms of PNC’s Account Agreement, including a provision authorizing PNC to set off funds from the account to pay any indebtedness owed by the account holder to PNC. PNC could amend the Account Agreement. In 2013, PNC added an arbitration clause to the Account Agreement. Customers had 45 days to opt out. Lyons opened another deposit account with PNC in 2014 and agreed to be bound by the 2014 Account Agreement, including the arbitration clause. Lyons again did not opt out. Lyons’s HELOC ended in February 2015. PNC began applying setoffs from Lyons’s 2010 and 2014 Accounts.Lyons sued under the Truth in Lending Act (TILA). PNC moved to compel arbitration. The court found that the Dodd-Frank Act amendments to TILA barred arbitration of Lyons’s claims related to the 2014 Account but did not apply retroactively to bar arbitration of his claims related to the 2010 account. The Fourth Circuit reversed in part. The Dodd-Frank Act 15 U.S.C. 1639c(e) precludes pre-dispute agreements requiring the arbitration of claims related to residential mortgage loans; the relevant arbitration agreement was not formed until after the amendment's effective date. PNC may not compel arbitration of Lyons’s claims as to either account. View "Lyons v. PNC Bank" on Justia Law

Plaintiff appeals two concurrent orders denying his petition to confirm an arbitration award and granting Comerica Bank's petition to vacate the award on the ground that the arbitrator made a material omission or misrepresentation in his disclosure of prior cases involving the parties' lawyers.The Court of Appeal concluded that, because the bank failed to seek the arbitrator's disqualification within 15 days of discovering the facts requiring disqualification and before the arbitrator decided the pending fee motion, it forfeited the right to demand disqualification. Accordingly, the court reversed the order vacating the award based on the arbitrator's disqualification. Because the bank identified no other grounds for denying the petition to confirm the award, the court granted that petition. View "Goodwin v. Comerica Bank, N.A." on Justia Law

In 1989, the Plaintiffs opened Money Market Investment Accounts (MMIAs) with FNB. FNB guaranteed that the MMIAs’ annual rate of interest would “never fall below 6.5%.” The original contract did not limit an account holder’s right to enforce the agreement in court but stated: Changes in the terms of this agreement may be made by the financial institution from time to time and shall become effective upon the earlier of (a) the expiration of a thirty-day period of posting of such changes in the financial institution, or (b) the making or delivery of notice thereof to the depositor by the notice in the depositor’s monthly statement for one month.In 1997, FNB merged with BankFirst. In 2001, BankFirst merged with BB&T, which sent a Bank Services Agreement (BSA) to each account holder, which included an arbitration provision. A 2004 BSA amendment added a class action waiver. A 2017 Amendment made massive changes to the BSA, including an extensive arbitration provision and stating that continued use of the account after receiving notice constituted acceptance of the changes. The Plaintiffs maintained their accounts. In 2018, the Plaintiffs were notified that the annual percentage rate applicable to their accounts would drop from 6.5% to 1.05%.The Sixth Circuit reversed the dismissal of the Plaintiffs' breach of contract suit. Because there was no mutual assent, the 2001 BSA and its subsequent amendments are invalid to the extent that they materially changed the terms of the original agreement. BB&T gave the Plaintiffs no choice other than to acquiesce or to close their high-yield savings accounts. BB&T did not act reasonably when it added the arbitration provision years after the Plaintiffs’ accounts were established, thus violating the implied covenant of good faith and fair dealing. View "Sevier County Schools Federal Credit Union v. Branch Banking & Trust Co." on Justia Law