Edelist v. MBNA America Bank

• Decision Date: 09 August 2001
• Docket Number: No. 01,01
• Citation: 790 A.2d 1249
• Parties: Daniel EDELIST, an individual, on behalf of himself and all others similarly situated, Plaintiff, v. MBNA AMERICA BANK, Defendant.
• Court: Delaware Superior Court

790 A.2d 1249

Daniel EDELIST, an individual, on behalf of himself and all others similarly situated, Plaintiff, v. MBNA AMERICA BANK, Defendant.

Civ.A. No. 01C-01-195-JOH.

Superior Court of Delaware, New Castle County.

Argued: March 16, 2001.

Submitted: April 30, 2001.

Decided: August 9, 2001.

John S. Spadaro, and Jonathan L. Parshall, of Murphy, Spadaro & Landon, Wilmington, and Gretchen Carpenter (argued) of Strange & Hoey, Los Angeles, CA, for plaintiff. Kathleen M. Jennings, of Oberly & Jennings, P.A., Wilmington, and Richard C. Pepperman, II (argued) of Sullivan & Cromwell, New York City, for defendant.

OPINION

HERLIHY, Judge.

Plaintiff Daniel Edelist has filed an action on his own behalf and a putative class action against MBNA America Bank. The claims arise out of his credit card account and the accounts of others he alleges are similarly situated. He seeks damages for himself and the class for alleged breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent or negligent misrepresentation and violation of the Delaware Consumer Fraud Act.

MBNA has moved to stay or dismiss his action on the strength of an arbitration provision which it claims forms part of his credit card agreement. The arbitration provision was part of an amendment sent out to Edelist and others after they entered into their initial agreements. It provides for arbitration of all disputes and that there will be no jury trial concerning these disputes. Each credit cardholder was given the opportunity to opt out of the proposed amendment. Edelist did not exercise that option.

As a general rule, Delaware law permits credit card agreements to be unilaterally amended as was done here. It is an issue of first impression, however, whether Delaware law permits the right to jury trial to be amended in the manner done here. Edelist, however, is a California resident. California law will not enforce such unilateral amendments and will not recognize the waiver of jury trial rights in the way done here.

The issues, therefore, are which state's law applies, California or Delaware. If Delaware law applies, the issues are whether MBNA properly amended Edelist's credit card agreement and if the waiver of jury trial is valid.

The Court holds Delaware law applies. MBNA properly amended Edelist's original agreement and his waiver of jury trial is valid.

FACTUAL BACKGROUND

In his complaint, Edelist alleges he is a MBNA credit cardholder. He does not attach to his complaint a copy of his credit card agreement nor say when he opened the account.¹ He does not even state in his complaint that he lives in California. He has not filed any other pleading indicating a residence address.²

In its moving papers, MBNA attached an affidavit from Deborah Fisher, Senior Vice President of MBNA, giving Edelist's Los Angeles address. That affidavit does not specify when Edelist opened his credit card account. She attached copies of the original credit card agreement concerning Edelist's account. She avers that the copy of the agreement she attached to her affidavit is a "true and correct copy of the [one] governing his account."³

Edelist's reply to MBNA's motion argues, however, that there is no proof what Fisher provided is the actual agreement between the parties. As noted earlier, Edelist did not attach a copy of the agreement to his complaint. He has not supplied an affidavit denying the accuracy or completeness of the documents attached to Fisher's affidavit nor supplied in his response a copy of his agreement. He merely asserts there is no proof that what Fisher provided is a copy of his agreement with MBNA. The Court finds Fisher's affidavit sufficient to show the agreement. It rejects Edelist's bare assertions.⁴

Pertinent portions of the original agreement provided:

GOVERNING LAW

This Agreement is made in Delaware. It is governed by the laws of the State of Delaware, without regard to its conflicts of laws principles, and by any applicable federal laws. You agree that any litigation brought by you against us regarding this account or this Agreement shall be brought in a court located in the State of Delaware.

If any part of this Agreement is found to be invalid, the rest remains effective. Our failure or delay in exercising any of our rights under this Agreement does not mean that we are unable to exercise those rights later.

All persons who initially or subsequently request, accept or use the account are individually and together responsible for any outstanding balance. If two or more persons are responsible to pay any outstanding balance, we may refuse to release any of them from liability until all of the unexpired cards outstanding under the account have been returned to us and the balance is paid in full.

You must return all credit cards to us on request.⁵

AMENDMENTS

We may amend this Agreement by complying with the applicable notification requirements of federal law and the laws of the State of Delaware. If you fail to accept any amendment to this Agreement in the manner provided in such amendment, we may terminate your rights to receive credit and may ask you to return all credit devices as a condition of your rejection. The amended Agreement (including any higher rate or other higher charges or fees) will apply to the entire unpaid balance, including the balance existing before the amendment became effective. We may replace your credit card with another card at any time.⁶

Despite the absence of a more specific date the original account was opened,⁷ the parties agree the arbitration provision at issue was in a subsequent document. Fisher states that on or about December 20, 1999, MBNA sent Edelist and other credit cardholders the arbitration provision.⁸ Edelist does not claim he never received it. Obviously, he contends, "[a] waiver of fundamental rights, such as a right to trial by jury, cannot be based on pure speculation as to what an agreement actually provided for."⁹ This statement does not even rise to the level of a bare assertion and is unacceptable to challenging the authenticity of what Fisher supplied. The 1999 amendments contained several items. The most extensive portions covered arbitration and provided:

Arbitration: Any claim or dispute ("Claim") by either you or us against the other, or against the employees, agents or assigns of the other, arising from or relating in any way to this Agreement or any prior Agreement or your account (whether under a statute, in contract, tort, or otherwise and whether for money damages, penalties or declaratory or equitable relief), including Claims regarding the applicability of this Arbitration section or the validity of the entire Agreement or any prior Agreement shall be resolved by binding arbitration." [sic] The arbitration shall be conducted by the National Arbitration Forum ("NAF"), under the Code of Procedure in effect at the time the claim is filed. Rules and forms of the National Arbitration Forum may be obtained and Claims may be filed at any National Arbitration Forum office, www.arb-forum.com or P.O. Box 50191, Minneapolis, Minnesota 55405, telephone 1-800-474-2371. If the NAF is unable or unwilling to act as arbitrator, we may substitute another nationally recognized, independent arbitration organization that uses a similar code of procedure. At your written request, we will advance any arbitration filing fee, administrative and hearing fees which you are required to pay to pursue a Claim in arbitration. The arbitrator will decide who will be ultimately responsible for paying those fees. In no event will you be required to reimburse us for any arbitration filing, administrative or hearing fees in an amount greater than what your court costs would have been if the claim had been resolved in a state court with jurisdiction. Any arbitration hearing at which you appear will take place within the federal judicial district that includes you billing address at the time the Claim is filed. This arbitration agreement is made pursuant to a transaction involving interstate commerce, and shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16 ("FAA"). Judgment upon any arbitration award may be entered in any court having jurisdiction. The arbitrator shall follow existing substantive law to the extent consistent with the FAS and applicable statues of limitations and shall honor any claims or privilege recognized by law. If any party requests, the arbitrator shall write an opinion containing the reasons for the award.

No Claim submitted to arbitration is heard by a jury and no Claim may be brought as a class action or as a private attorney general. You will not have the right to act as a class representative or participate as a member of a class of claimants with respect to any Claim. This Arbitration Section does not apply to Claims between you and us previously asserted in any lawsuits filed before the date this Arbitration Section becomes effective. However, this Arbitration Section applies to all Claims now in existence or that may arise in the future.

This Arbitration Section shall survive the termination of your account with us as well as any voluntary payment of the debt in full by you, any bankruptcy by you or sale of the debt by us.

For the purposes of this Arbitration Section, "we" and "us" means MBNA America Bank, N.A., its parent, subsidiaries, affiliates, licensees, predecessors, successors, assigns, and any purchaser of your account, and all of the officers, directors, employees, agents and assigns or any and all of them. Additionally, "we" or "us" shall mean any third party providing benefits, services, or products in connection with the account (including but not limited to credit bureaus, merchants that accept any credit device issued under the account, rewards or enrollment services, credit insurance companies, debt collectors and all of their officers, directors, employees and agents) if, and only if, such a third party

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