Land v. IU Credit Union
| Decision Date | 30 December 2022 |
| Docket Number | Court of Appeals Case No. 22A-CP-382 |
| Citation | 201 N.E.3d 246 |
| Parties | Tonia LAND, individually and on behalf of all others similarly situated, Appellant-Plaintiff, v. IU CREDIT UNION, Appellee-Defendant. |
| Court | Indiana Appellate Court |
Attorneys for Appellant: Lynn A. Toops, Vess A. Miller, Lisa M. LaFornara, Tyler B. Ewigleben, Cohen & Malad, LLP, Indianapolis, Indiana, John Steinkamp, John Steinkamp & Associates, P.C., Indianapolis, Indiana
Attorneys for Appellee: James R. Branit, Phillip G. Litchfield, Litchfield Cavo LLP, Chicago, Illinois
[1] Tonia Land sued IU Credit Union ("IUCU") on behalf of a putative class, claiming IUCU had wrongfully assessed overdraft fees against her and other customers. IUCU moved to compel arbitration, arguing Land had already agreed via contract that her claims would be addressed out of court.
[2] The trial court granted IUCU's motion. In this interlocutory appeal, Land claims the purported agreement to arbitrate is invalid. We reverse and remand.
[3] Land raises three issues, which we consolidate and restate as: whether the trial court erred when it granted IUCU's Motion to Compel Arbitration.
[4] Land has several accounts with IUCU, including a checking account with a debit card. When she became an IUCU customer, she received a "Membership & Account Agreement" ("The Agreement"). Appellant's App. Vol. II, p. 36. Among other provisions, the Agreement discusses IUCU's methods for processing Land's expenditures from her account, as well as overdraft policies. The Agreement provides, in relevant part:
[5] Land later registered for online banking. IUCU sent to Land via electronic means an "Online Banking, Mobile Banking and Text (SMS) Message Banking Agreement and Disclosure" ("the Disclosure"). Id. at 112. According to the Disclosure, Land agreed that IUCU could send notices to her electronically. Further, the Disclosure stated, Id. at 118. Finally, the Disclosure provided that Land would accept the terms and conditions by clicking an "Accept" button. Id. at 119.
[6] In 2019, IUCU sought to require its members to arbitrate any claims they may have against IUCU and to waive their right to participate in class actions against IUCU. It prepared a one-page document entitled "ADDENDUM TO THE MEMBERSHIP & ACCOUNT AGREEMENT" ("the Addendum"). Id. at 127. In summary, the Addendum provides: (1) either party may require any dispute to be resolved by arbitration without the other party's consent; and (2) Land and other customers cannot initiate or join a class action in any arbitration or court proceeding between the parties. Further, the Addendum states:
[7] IUCU attempted to mail the Addendum to each member, enclosed at the end of their July 2019 account statements. The first page of the account statement included the following language:
Id. at 123. As for IUCU members who had enrolled in electronic banking services, IUCU attempted to email them to inform them about the Addendum.
[8] With respect to Land in particular, IUCU mailed the Addendum to the address she had given the credit union, along with an account statement, but: (1) the Addendum was included in an account statement for an account other than Land's checking account; and (2) Land does not recall receiving the new terms.
[9] Further, IUCU claims to have sent Land an email stating: "You have a new eStatement to retrieve in Online Banking." Id. at 178. If she had clicked on a link in the email, it would have directed her to the account statement and the Addendum. Land does not recall receiving that email, but its language is identical to other notifications she receives when a new monthly banking statement is available for review, and would not have alerted her that IUCU was attempting to impose new terms on their banking relationship. In any event, Land did not send IUCU a notice that she chose to opt out of the Addendum's arbitration requirement.
[10] On March 18, 2021, Land filed a Class Action Complaint, alleging IUCU had wrongfully assessed overdraft fees on accounts that were not overdrawn. In particular, she claimed that on October 3, 2018, IUCU wrongfully assessed a $30 overdraft fee against her on a $4.31 debit card transaction, even though IUCU had previously authorized the transaction on sufficient funds. Land further claimed that IUCU's actions amounted to breach of contract, breach of a duty of good faith and fair dealing, unjust enrichment, and violation of Indiana's Deceptive Consumer Sales Act.
[11] On June 15, 2021, IUCU filed a Motion to Compel Arbitration, claiming the Addendum required that Land's claims be submitted to arbitration.1 Land responded to the motion, and IUCU filed a reply in support of its motion. The trial court held a hearing on the motion and later granted it, concluding "an enforceable agreement to arbitrate exists between the parties." Id. at 10. Next, Land requested and received permission from the trial court and this Court to pursue an interlocutory appeal, and this appeal followed.
[12] Land argues the trial court erred in determining her claim against IUCU was subject to mandatory arbitration, claiming the alleged contract was invalid due to lack of reasonable notice and, in addition, she never accepted the offer. In response, IUCU argues the parties validly contracted to submit all claims to arbitration.2 The parties agree that this appeal raises questions of law, which we review de novo. See Doe v. Carmel Operator, LLC , 160 N.E.3d 518, 521 (Ind. 2021) ().
[13] Before imposing arbitration, a trial court must determine whether the arbitration agreement between the parties is valid. Novotny v. Renewal by Andersen Corp. , 861 N.E.2d 15, 20 (Ind. Ct. App. 2007). A valid agreement is a prerequisite because arbitration is a matter of contract, and a party cannot be required to submit to arbitration unless the party has agreed to do so. Homes By Pate, Inc., v. DeHaan , 713 N.E.2d 303, 306 (Ind. Ct. App. 1999). The party seeking to compel arbitration must demonstrate the existence of an enforceable arbitration contract. Precision Homes of Ind., Inc. v. Pickford , 844 N.E.2d 126, 130 (Ind. Ct. App. 2006), trans. denied.
[14] When determining whether the parties have agreed to arbitrate a dispute, we apply ordinary contract principles governed by state law. Showboat Marina Casino P'ship v. Tonn & Blank Constr. , 790 N.E.2d 595, 598 (Ind. Ct. App. 2003). The basic requirements for a contract are offer, acceptance, consideration, and a meeting of the minds of the contracting parties. Mueller v. Karns , 873 N.E.2d 652, 657 (Ind. Ct. App. 2007). The meeting of the minds between the parties "is essential to the formation of a contract." Ind. Dep't of Corr. v. Swanson Servs. Corp. , 820 N.E.2d 733, 737 (Ind. Ct. App. 2005), trans. denied.
[15] Land argues there was no meeting of the minds with respect to the Addendum because it was not communicated to her in a reasonable manner. We turn for guidance to a recent decision by a panel of this Court in Decker v. Star Financial Group, Inc. , 187 N.E.3d 937 (Ind. Ct. App. 2022), vacated on transfer. The Indiana Supreme Court has vacated the Court of Appeals’ decision through the grant of transfer, but we find the reasoning in that case persuasive.
[16] In Decker , a couple sued their bank, claiming it had improperly assessed overdraft fees against them and a putative class. The bank claimed the Deckers had agreed to arbitrate their claims via an addendum to their original banking agreement. The bank further claimed it had notified the Deckers via email of the Addendum. The email advised the Deckers only that a new monthly banking statement was available, without mentioning the addendum, which the Deckers could have accessed by clicking on a link in the email.
[17] The trial court granted the bank's motion to compel arbitration, but a panel of this Court reversed. The Decker panel determined the bank's proposed addendum was invalid because it was not sent in a manner "reasonably calculated to reach the intended audience." Id. at 945. Specifically, the bank's email did not reference the added arbitration terms and placed the new terms at the back of the statement. In addition, the email and the first page of the statement both...
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