MBNA AMERICA BANK, N.A v. MICHELE L. BIBB

(NOTE: The status of this decision is .)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4087-07T24087-07T2

MBNA AMERICA BANK, N.A.,

Plaintiff-Respondent,

v.

MICHELE L. BIBB,

Defendant-Appellant.

____________________________________________________

 

Argued May 6, 2009 - Decided

Before Judges Axelrad and Messano.

On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2070-06.

Philip D. Stern argued the cause for appellant (Wacks & Hartmann, LLC, attorneys; Mr. Stern, on the brief).

Mitchell L. Williamson argued the cause for respondent (Pressler and Pressler, L.L.P., attorneys; Mr. Williamson, on the brief).

PER CURIAM

Defendant Michele L. Bibb appeals from the judgment in the amount of $24,836.94 entered against her in favor of plaintiff MBNA America Bank, N.A. (MBNA), following a non-jury trial. She contends there was insufficient proof that the parties formed "an arbitration contract" because plaintiff's attempts "to unilaterally modify the parties' agreement to impose binding arbitration [wa]s ineffective." We have considered the arguments raised in light of the record and applicable legal standards. We affirm substantially for the reasons expressed by Judge John A. O'Shaughnessy in his oral opinion.

On April 24, 2006, plaintiff filed its complaint seeking judgment confirming an arbitration award previously entered in its favor. Defendant answered, asserting among other things, that there was no valid agreement to arbitrate.

At trial, Robert John Winzinger, Assistant Vice President of Bank of America, testified that defendant opened a "gold option account" with plaintiff on May 26, 1999. The account permitted defendant to issue checks for goods, services, or cash. Credit would issue to defendant, and plaintiff would thereafter send her monthly statements for payment. Defendant never used the account until February 2003. In the interim, in 2001, plaintiff sent defendant a modified "account agreement" (the agreement). The agreement specifically provided that when defendant "use[]d [the] account, [she] agree[d] to" its terms.

The agreement differed from any prior account agreements in that it now provided for binding arbitration before the National Arbitration Forum as to "[a]ny claim or dispute" between plaintiff and defendant regarding the account. It further provided that the arbitration provisions applied "unless [defendant] w[as] given the opportunity to reject the Arbitration provisions and [] did so reject [them]." Winzinger testified that defendant never sent a written rejection of the arbitration provisions to plaintiff prior to using the line of credit. In large type, the agreement contained the following provision:

THE RESULT OF THIS ARBITRATION AGREEMENT IS THAT, EXCEPT AS PROVIDED ABOVE, CLAIMS CANNOT BE LITIGATED IN COURT, INCLUDING SOME CLAIMS THAT COULD HAVE BEEN TRIED BEFORE A JURY, AS CLASS ACTIONS OR AS PRIVATE ATTORNEY GENERAL ACTIONS.

Defendant first used the account by issuing a series of checks during February and March 2003. Winzinger identified copies of those checks as well as thirty account statements dated from March 26, 2003 to July 26, 2005 that were sent to defendant. Defendant made periodic payments on the account, but they ceased on December 17, 2004. Defendant's account was eventually placed in default status and "charged off."

Plaintiff submitted its claim to the National Arbitration Forum in accordance with the agreement. A notice of arbitration was delivered to defendant's home on November 14, 2005, receipt of which was evidenced by confirmation plaintiff received from United Parcel Service. On January 18, 2006, plaintiff obtained an award from the arbitrator in the amount of $24,420.53. Defendant did not appear or participate in the arbitration.

Plaintiff rested after Winzinger's testimony and the admission of the documentary evidence. Defendant did not appear at trial and did not call any witnesses or produce any documentary evidence. In summation, defendant argued that "[n]o person can be forced into binding arbitration in the absence of an agreement to arbitrate[.]" She contended that plaintiff had unilaterally changed the terms and conditions upon which the account was originally opened, and that she never accepted the amendments as they related to binding arbitration.

Judge O'Shaughnessy found that the agreement was sent to defendant, that she received it, and that she never formally rejected its terms. He further found that defendant was "bound by the terms and conditions of that agreement which she accepted by the use of that credit card account[.]" As a result, the judge concluded:

I do find that based upon . . . a preponderance of the credible evidence that in fact the arbitration provisions did apply to Ms. Bib[b], that the notice of arbitration was sent to her, that she failed to respond to that notice, that she did in fact use the credit card account, the checking account in question on numerous occasions as previously noted.

He confirmed the arbitration award and entered the judgment under review.

We begin by noting the scope of our review of the judge's factual findings in a non-jury trial is limited. We will not disturb those findings unless "they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice[.]" Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974) (quotations and citation omitted). "Therefore, it [i]s improper for the Appellate Division to engage in an independent assessment of the evidence as if it were the court of first instance." State v. Locurto, 157 N.J. 463, 471 (1999). However, we give no special deference to the trial judge's interpretation of the legal consequences that flow from its factual findings. Manalapan Realty v. Manalapan Tp. Comm., 140 N.J. 366, 378 (1995).

Before us, defendant contends that the proof was insufficient to establish that she and plaintiff formed a contract to arbitrate their disputes regarding the account. Whether or not parties have a valid agreement to arbitrate is a matter of law for the court to decide. Muhammad v. County Bank of Rehoboth Beach, 189 N.J. 1, 12 (2006), cert. denied, 549 U.S. 1338, 127 S. Ct. 2032, 167 L. Ed. 2d 763 (2007); N.J.S.A. 2A:23B-6(b). "Because of the favored status afforded to arbitration, [a]n agreement to arbitrate should be read liberally in favor of arbitration. That favored status, however, is not without limits . . . . In the absence of a consensual understanding, neither party is entitled to force the other to arbitrate their dispute." Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 132 (2001) (internal quotations and citations omitted).

Defendant contends that the evidence was insufficient to support the conclusion that the parties formed a contract that included binding arbitration. "[A]t its heart, [arbitration is] a creature of contract." Kimm v. Blisset, LLC, 388 N.J. Super. 14, 25 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007). "In interpreting an arbitration clause, we rely upon basic contract principles." Alamo Rent A Car, Inc. v. Galarza, 306 N.J. Super. 384, 390-91 (App. Div. 1997) (citation omitted). "A contract arises from offer and acceptance, and must be sufficiently definite that the performance to be rendered by each party can be ascertained with reasonable certainty. Thus, if parties agree on essential terms and manifest an intention to be bound by those terms, they have created an enforceable contract." Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (internal quotations and citations omitted). "An offeree may manifest assent to the terms of an offer through words, creating an express contract, or by conduct, creating a contract implied-in-fact." Id. at 436. It has long been recognized in New Jersey that in the context of traditional credit cards, the cardholder's decision to use the card provides the requisite assent to the terms of the offer extended by the card's issuance, such that a contract is formed. Novack v. Cities Serv. Oil Co., 149 N.J. Super. 542, 548 (Law Div. 1977) (quoting City Stores Co. v. Henderson, 156 S.E.2d 818, 823 (App. Ct. 1967) ("[a]cceptance or use of the card by the offeree makes a contract between the parties according to its terms")), aff'd, 159 N.J. Super. 400 (App. Div.), certif. denied, 78 N.J. 396 (1978).

Defendant contends, however, that we should follow the Law Division's holding in Discover Bank v. Shea, 362 N.J. Super. 200 (Law Div. 2001). In Discover Bank, the plaintiff sought to compel the defendant to arbitrate his $100 dispute, rather than permit him to participate in an already-existing California class action. Id. at 202. The court noted that "[t]he original agreement . . . contain[ed] no relevant provisions about how disputes [we]re to be resolved." Id. at 205-06. Thereafter, the plaintiff attempted to amend the original agreement through a "bill-stuffer" notice that the defendant never saw. Id. at 209. The court held that "[the plaintiff's] unilateral attempt to amend its original cardholder agreement to . . . include an arbitration clause [wa]s ineffective." Id. at 205. The court also rejected the plaintiff's argument that the defendant had consented to the amendment of the cardholder's agreement by failing to reject the new terms or to close his account. Id. at 209.

Defendant in this case argues that Discover Bank implicitly rejected the proposition that a cardholder's subsequent use of the credit card was the equivalent of assent to the amended terms of the agreement. We need not decide whether such a broad conclusion is a correct statement of the law because the factual differences between that case, and this, are so substantial and significant that Discover Bank's holding is not controlling.

Here, plaintiff extended credit to defendant beginning in 1999. The offer it made to form a contract with defendant, however, was never accepted. See Novack, supra, 149 N.J. Super. at 549 (holding "that no contractual relationship was created by the issuance and receipt of the credit card"). Thus, unlike Discover Bank, where the parties' contractual agreement was evidenced by an offer already accepted, plaintiff in this case retained the right to change its offer by changing the terms and conditions under which it extended credit to defendant at any time prior to defendant's acceptance. Ibid.

When plaintiff amended its offer, in 2001, defendant still remained free to reject it. She chose not to, however, by utilizing the line of credit, thereby signaling her assent to the terms and conditions of the contract the parties then formed. As a result, the arbitration provisions, which were clearly set forth and highlighted in the agreement, became part and parcel of the parties' contract. Plaintiff had the right, therefore, to compel arbitration of its dispute with defendant, and thereafter, to have its award confirmed in Superior Court. N.J.S.A. 2A:23B-22.

Affirmed.

 

Winzinger explained that Bank of America had acquired MBNA on January 1, 2006. For seven years prior, Winzinger was employed by MBNA.

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A-4087-07T2

June 23, 2009