Global Client Solutions, LLC v. Ossello

• Decision Date: 02 March 2016
• Docket Number: No. DA 15–0301.,DA 15–0301.
• Citation: 367 P.3d 361,2016 MT 50,382 Mont. 345
• Parties: GLOBAL CLIENT SOLUTIONS, LLC, Third–Party Defendant and Appellant, v. Susan M. OSSELLO, Defendant, Third–Party Plaintiff and Appellee.
• Court: Montana Supreme Court

382 Mont. 345

367 P.3d 361

2016 MT 50

GLOBAL CLIENT SOLUTIONS, LLC, Third–Party Defendant and Appellant,

v.Susan M. OSSELLO, Defendant, Third–Party Plaintiff and Appellee.

No. DA 15–0301.

Supreme Court of Montana.

Submitted on Briefs Nov. 18, 2015.

Decided March 2, 2016.

For Appellant: Brendon J. Rohan, Emma R. Armstrong, Poore, Roth & Robinson, Butte, Montana, Richard W. Epstein, Greenspoon Marder, P.A., Fort Lauderdale, Florida.

For Appellee: A. Clifford Edwards, Triel D. Culver, Edwards, Frickle & Culver, Billings, Montana.

Chief Justice MIKE McGRATH

delivered the Opinion of the Court.

¶ 1 Global Client Solutions appeals from the District Court's order denying Global's motion to dismiss and to compel arbitration. We affirm.

¶ 2 Global presents issues for review which we restate as follows:

Issue 1: Whether the District Court erred in reserving to itself the determination of arbitrability.

Issue 2: Whether the District Court erred in determining that the arbitration provision was unconscionable and therefore not enforceable against Ossello.

BACKGROUND

¶ 3 In July 2012 Susan Ossello faced more than $40,000 in unsecured debt that she owed to Bank of America, Discover Bank and Citibank. She received an unsolicited mailing from an entity called World Law, advertising that it could provide her with debt relief services. The solicitation represented that World Law would furnish legal counsel concerning her debt issues; that it would negotiate with her creditors for a reduction of her debt; that it would prevent her from going into bankruptcy; and that under its plan she could be debt free in two to four years. Ossello called a phone number provided in the mailing and talked to a sales agent for World Law.¹

¶ 4 Ossello alleges that the agent represented that if she enrolled in the debt reduction program, World Law's attorneys would represent her and contact her creditors to negotiate reduced settlements of her credit card debts. The agent also told Ossello that these attorneys would represent Ossello if she got sued by a creditor. The agent then sent several form agreements to Ossello by email. She and the agent reviewed the forms over the phone, including a Client Services Agreement on behalf of World Law and a Dedicated Account Agreement on behalf of Global Client Solutions. The agent explained to her how to sign the agreements by entering her name into a box on the computer screen. Ossello electronically signed the agreements.

¶ 5 Global's Dedicated Account Agreement (DAA) established a non-interest-bearing account in an undisclosed bank, funded by an automatic monthly withdrawal of $589.29 from Ossello's existing bank account. The agent represented, and Ossello believed, that Global would use the proceeds in the account to pay her debts as they were negotiated and reduced. In reliance upon the advice of the agent and in a belief that she would benefit from a debt reduction plan, Ossello stopped making payments on her credit card debt. A year later, in September 2013, Discover Bank brought a collection action against her in Montana District Court.

¶ 6 Ossello contacted World Law or Global about the Discover Bank action. They sent her a form answer denying the material allegations of Discover Bank's complaint, and directed her to file it pro se. In November 2013 Ossello filed the form answer, which denied that she had ever applied for or received a credit card from Discover Bank; denied that she had any agreement with Discover Bank; and denied that she ever received monthly statements from Discover Bank. Ossello claims that World Law and Global knew that the representations in the answer were not based in fact, and that they never provided her with any material legal services. Ossello contends that World Law and Global never contacted her creditors to obtain any debt reduction for her and that "no payments were ever made to [her] creditors from the Dedicated Account."

¶ 7 Ossello obtained an attorney and on June 18, 2014, filed an amended answer to Discover Bank's complaint, and a third-party complaint against World Law and Global. The complaint alleges that World Law and Global used deceptive and fraudulent representations to solicit her participation in an illegal debt settlement plan. Ossello alleges that World Law and Global misrepresented to her that attorneys were providing her with legal services, and deceptively promised to significantly reduce her debt without ever actually doing so. The counts of the complaint allege claims for violation of the Montana Consumer Debt Management Services Act; violation of the Montana Consumer Protection Act; fraudulent misrepresentation and deceit; negligent misrepresentation; illegality, unconscionability and contract of adhesion; unjust enrichment; unauthorized practice of law; and civil conspiracy.

¶ 8 World Law failed to appear and defaulted in August 2014. Global, however, filed a motion to compel arbitration and to dismiss the third-party complaint for lack of jurisdiction.

¶ 9 The Global Dedicated Account Agreement that Ossello received on her computer and signed by email stated that Ossello had "approved certain transactions to be taken in [her] account application." The DAA gave Global authority to disperse funds from the account based on directions from Ossello or based on instructions from the "Sponsor as defined in [her] account application." The DAA gave Global the authority to act on the Sponsor's instructions "without further confirmation" from Ossello. The DAA authorized Global to deduct monthly fees and service charges from Ossello's money deposited into the account. Global could unilaterally increase those fees and charges "for any increase in the associated costs and expenses." Global also had the authority to transfer Ossello's account to another FDIC-insured institution, which was also not otherwise identified.

¶ 10 Attached to the DAA as Exhibit A was a single-page document entitled Dedicated Account Agreement and Application. That document provides that the "Dedicated Account" is to be administered at a bank selected by Global for the purpose of accumulating funds to "repay [Ossello's] debts in connection with a debt settlement program ... sponsored by the organization identified below." That document further provides that only the applicant "(or Authorized Contact, if any) may authorize deposits to and creditor payments from my Dedicated Account." The "authorized contact" refers to the Sponsor, but the "World Law" entity is not listed in either document or identified as the "Sponsor." The application form has a line for the "Sponsor's" Global Account number but it is left blank, and in a box labeled "Sponsor" the term "Company Code" is listed.

¶ 11 The Global documents authorize "the Sponsor" to direct disbursement of funds from the account. However, nowhere is the Sponsor, the bank holding the account, or the account number identified.

¶ 12 The application also contains a schedule of fees and charges. That schedule lists an account maintenance fee of $9.45 and a wire deposit fee of $10.00 as the only monthly fees not related to "disbursement services." Ossello's complaint alleged that as of June 2014 Global had deducted $12,502.38 from her bank account and deposited the money into the account. She alleged at the time her third-party complaint was filed, that Global had taken $6567.90 from the account in fees but that she had received no debt relief or actual legal services. She also asserted that according to Global, the account then had a remaining balance of $5712.13.

¶ 13 The DAA also contained a lengthy arbitration clause. The clause requires arbitration of "any controversy, claim or dispute ... arising out of or relating to" the Dedicated Account Agreement. The arbitration clause states that it applies to the "breach, termination, enforcement, interpretation or validity [of the Agreement], including the termination of the scope or applicability of this agreement to arbitrate." It provides that the arbitration would take place either in Oklahoma under the laws of that state, or in the state in which the consumer resides under the laws of that state. It provides that the arbitration would be "administered by the American Arbitration Association ("AAA") pursuant to its rules and procedures," before an arbitrator selected by the AAA. It also provides for sharing costs of the arbitration, with the customer's share being limited to $2000. It explains that binding arbitration means that both parties give up the right to trial by jury, the right to appeal from the ruling in most instances, and the right to conduct extensive discovery.

¶ 14 The arbitration clause further provides that if a party fails to engage in arbitration, unsuccessfully challenges the award, or fails to comply with the award, the other party is "entitled to costs of suit, including a reasonable attorney's fee for having to compel arbitration or defend or enforce the award." Thereby, Global would be entitled to claim from Ossello all its attorney fees in the current case, if it were to prevail.

¶ 15 Significantly, though the DAA arbitration clause broadly requires both parties to arbitrate "any controversy, claim or dispute ... relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof," Global reserved to itself in a separate paragraph of the DAA the right to bring "collection actions" in court against Ossello and require her to pay all costs and attorney fees related thereto. The DAA provides that if Ossello's bank account had a "negative balance" at any time, and Ossello failed to pay "upon demand," she was responsible for that deficit and "collection actions may be pursued against you. If any such collection action is undertaken, you agree to pay all court costs and collection fees, including reasonable attorney's fees to the extent permitted by applicable law." Therefore, if Ossello's bank account could not cover Global's periodic deductions for...