Badie v. Bank of America

• Decision Date: 03 November 1998
• Docket Number: No. A068753,A068753
• Court: California Court of Appeals Court of Appeals
• Parties: , 98 Cal. Daily Op. Serv. 8189, 98 Daily Journal D.A.R. 11,359 Sandra L. BADIE et al., Plaintiffs and Appellants, v. BANK OF AMERICA, Defendant and Respondent.

Page 273

79 Cal.Rptr.2d 273

67 Cal.App.4th 779, 98 Cal. Daily Op. Serv. 8189,

98 Daily Journal D.A.R. 11,359

Sandra L. BADIE et al., Plaintiffs and Appellants, v. BANK OF AMERICA, Defendant and Respondent.

No. A068753.

Court of Appeal, First District, Division 3, California.

Nov. 3, 1998.

Rehearing Denied Dec. 2, 1998.

Review Denied Feb. 24, 1999. ^*

The Sturdevant Law Firm, James C. Sturdevant, Ann Saponara, San Francisco, for Plaintiffs and Appellants.

Bank of America NT & SA, Office of General Counsel, John F. Cooney, Arne D. Wagner, Michael J. Halloran, San Francisco, Morrison & Foerster LLP, Seth M. Hufstedler, Kathleen V. Fisher, Carla B. Oakley, Jennifer Lee Taylor, San Francisco, for Defendant and Respondent.

PHELAN, Presiding Justice.

Plaintiffs, four individuals and two consumer-oriented organizations, Consumer Action and California Trial Lawyers Association, ¹ challenge the validity of an alternative dispute resolution (ADR) clause which Bank of America (the Bank) sought to add to existing account agreements between itself and its deposit account and credit card account customers by sending those customers an insert with their monthly account statements (hereafter, "bill stuffer"), notifying them of the new term. None of the individual plaintiffs had a deposit account with the Bank, but all had the Bank's credit cards. ²

Plaintiffs filed their complaint shortly after the Bank began sending the "bill stuffers" to its customers. All six plaintiffs, acting as private attorneys general, sought to enjoin implementation of the ADR provision on the ground that its addition to the account agreements violated the Unfair Competition Act, Business and Professions Code section 17200 et seq. The four individual plaintiffs alleged two additional causes of action on their own behalf. In one, they sought to enjoin implementation of the ADR provision on the ground that its addition to the account agreements violated the Consumer Legal Remedies Act, Civil Code section 1750 et seq., and in particular section 1770, subdivisions (n) and (s). ³ In the other, they sought a declaration as to the validity and enforceability of the ADR clause.

After a 17-day nonjury trial, the trial court entered judgment in favor of the Bank, ruling that the change of terms provision in the original account agreements permitted the addition of the ADR clause, and that the new provision was enforceable because it was not unfair or unconscionable and was consistent with the covenant of good faith and fair dealing. The trial court also ruled that plaintiffs had failed to prove their Consumer Legal Remedies Act claim.

Plaintiffs timely appealed. While they make numerous arguments referring to the alleged unfairness, unlawfulness, deceptiveness and unconscionability of the ADR clause and the Bank's method of adding it to the account agreements, nowhere in either their opening brief or their reply brief do they directly address the statutory causes of action they brought under Business and Professions Code section 17200 et seq. or Civil Code section 1770, subdivisions (a)(14) and (a)(19). Indeed, the briefs do not even so much as cite to the Unfair Competition Act or the Consumer Legal Remedies Act, much less discuss their provisions or their application to the evidence presented at trial and to the causes of action framed under them. When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived. (People v. Stanley (1995) 10 Cal.4th 764, 793, 42 Cal.Rptr.2d 543, 897 P.2d 481; Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4, 188 Cal.Rptr. 115, 655 P.2d 317; Muega v. Menocal (1996) 50 Cal.App.4th 868, 877, 57 Cal.Rptr.2d 697; San Mateo County Coastal Landowners' Assn. v. County of San Mateo (1995) 38 Cal.App.4th 523, 559, 45 Cal.Rptr.2d 117; Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979, 21 Cal.Rptr.2d 834.) We therefore limit our review to the trial court's disposition of the third cause of action for declaratory relief as to the validity and enforceability of the ADR clause brought by the individual plaintiffs.

BACKGROUND

Starting in June 1992 and for a period of several months thereafter, the Bank mailed half-page "bill stuffers" to its personal credit card and deposit account customers, informing them that, from that time forward, any dispute between a customer and the Bank regarding customer accounts would be resolved either "by arbitration or by reference" if either the Bank or customer so The contract documents comprising the original credit account agreements consisted of either an application or, if the account was opened in response to a direct mail solicitation to accept a "pre-approved" credit card, an "Acceptance Certificate," plus a document referred to as an account agreement and disclosure statement, which was sent to the customer after the account was opened. A change of terms provision was included in each of these documents. The applications and acceptance certificates, which took various forms, set forth the Bank's annual percentage rate for purchases, its annual membership fee, its transaction fee for cash advances, its late payment fee, its method of computing balances for purchases, and its grace period for repayment of the balance for purchases. All of the exemplars of these forms which were admitted into evidence included a provision stating, "All terms are subject to change." All of them also stated that the signer agreed to be bound by the "terms and conditions of the agreement and disclosure statement" that would be sent to the signer with his or her cards.

                requested. 4  The full text of the "bill stuffer" sent to personal credit account customers reads as follows:  "Change of Terms Notice for BankAmericard Visa, MasterCard, Visa Gold, Gold MasterCard, and Apollo Accounts [p] Dispute Resolution--If you or we request, any controversy with us will be decided either by arbitration or reference.  Controversies involving one account, or two or more accounts with at least one common owner, will be decided by arbitration under the Commercial Arbitration Rules of the American Arbitration Association.  All other controversies will be decided by a reference under California Code of Civil Procedure Section 638 and related sections.  A referee who is an active attorney or retired judge will be appointed by the court after selection by the American Arbitration Association using its procedures for selecting arbitrators.  The arbitration or reference will take the place of a trial before a judge and jury.  (This is a new provision for Cardmember and Apollo Account Agreements.  If you continue to use your account, this new provision will apply to all past and future transactions.)"  (Bold in original.)   The Bank's intention in sending the "bill stuffer" was to add a new provision to the existing account agreements.  In attempting to add the ADR clause to the existing agreements, the Bank relied upon the change of terms provision included in the original account agreements, which gave the Bank the [67 Cal.App.4th 786] unilateral right to modify the agreements after customers entered into them.  It is undisputed that the account agreements were contracts of adhesion. 5
                

The account agreement and disclosure statement provided a more detailed description of the account features, including fees, the method of calculating balances and finance charges, how payments were applied, the circumstances under which the Bank would close an account, and so forth. Multiple exemplars of the account agreement and disclosure statement were admitted into evidence. Some pertained to Visa accounts, and some pertained to MasterCard accounts. All versions of the agreement presented at trial included a provision labeled "Change of Terms," which was set forth in a section headed "Other Important Information." In most versions, which were dated between April 1988 and June 1992, the change of terms provision stated, "We may change any term, condition, service or feature of your Account at any time. We will provide you with notice of the change to the extent required by law." In two versions of the None of the agreements admitted into evidence contained any provision regarding the method or forum for resolving disputes. The only portions of the agreements that touched even obliquely on dispute resolution were general admonitions in the Fair Credit Billing Act notice, which was included in each agreement, regarding the need to notify the Bank promptly of suspected mistakes or questions about the bill; a reference under the heading "OTHER BANKCARD FEES AND CHARGES" to "court costs" a customer would be required to pay in the event the Bank incurred them while enforcing its rights if a customer defaulted; and a reference to the Bank's ability to collect from "or sue" any one of several cardholders without giving up its rights against the others, which was included in the two superseded versions of the agreement under the heading "Joint and Several Liability."

                agreement, one a December 1989 reprint of an April 1986 version of the document pertaining to both Visa and MasterCard accounts, and the other an August 1988 version pertaining to Visa Gold accounts, the change of terms provision was worded as follows:  "WE MAY CHANGE OR TERMINATE ANY TERMS, CONDITIONS, SERVICES OR FEATURES OF YOUR ACCOUNT (INCLUDING INCREASING YOUR FINANCE CHARGES) AT ANY TIME. WE MAY IMPOSE ANY CHANGE IN [67 CAL.APP.4TH 787] TERMS ON YOUR OUTSTANDING BALANCE, AS WELL AS ON SUBSEQUENT TRANSACTIONS AND BALANCES.  We may also add new terms, conditions, services or features to your Account.  To the extent required by law, we will notify you in advance of any change in terms by mailing a notice to you at your address as shown on our records."  (Upper case and bold in original.)   By mid-1992, the two versions of the account agreement

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