Opinion
Case No. 2:19-cv-07240-ODW(JPRx)
03-10-2020
Armen GINOYAN, Plaintiff, v. BARCLAYS BANK DELAWARE, et al., Defendants.
Youssef Hussein Hammoud, Hammoud Law PC, Santa Ana, CA, Lauren Tegan Rodkey, Price Law Group APC, Encino, CA, for Plaintiff. Tamar Gabriel Ellyin, Behzad Ben Mohandesi, Yu Mohandesi LLP, Los Angeles, CA, Kristin L. Marker, Quilling Selander Lownds Winslett and Moser PC, Plano, TX, Katherine A. Neben, Ryan Ho Wai Chan, Irvine, CA, for Defendants.
Youssef Hussein Hammoud, Hammoud Law PC, Santa Ana, CA, Lauren Tegan Rodkey, Price Law Group APC, Encino, CA, for Plaintiff.
Tamar Gabriel Ellyin, Behzad Ben Mohandesi, Yu Mohandesi LLP, Los Angeles, CA, Kristin L. Marker, Quilling Selander Lownds Winslett and Moser PC, Plano, TX, Katherine A. Neben, Ryan Ho Wai Chan, Irvine, CA, for Defendants.
ORDER GRANTING DEFENDANT BARCLAYS BANK DELAWARE'S MOTION TO COMPEL ARBITRATION AND STAY LITIGATION [37]
OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
This matter comes before the Court on Defendant Barclays Bank Delaware's Motion to Compel Arbitration and Stay Litigation ("Motion"). (ECF No. 37.) For the following reasons, the Court GRANTS Barclays's Motion.
After carefully considering the papers filed in support of the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78 ; L.R. 7-15.
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II. BACKGROUND
Ginoyan claims that in or around January 2019, he applied for a Barclays credit card (the "Card") offering zero annual percentage rate balance transfers for fifteen months. (Compl. ¶ 24, ECF No. 1.) Once Barclays approved his Card application, Ginoyan requested a balance transfer of $19,500 to pay off a US Bank account. (Compl. ¶¶ 25, 37.) Ginoyan alleges that Barclays failed to process his balance transfer properly. (See Compl. ¶ 27.) Although Barclays did not pay off the balance on the US Bank account, it charged the amount to Ginoyan's Barclays account (the "Account") and began to send him monthly bills. (Compl. ¶¶ 26–31.) When Ginoyan failed to make minimum payments, Barclays began to make collection calls and ultimately reported the debt to credit reporting agencies, lowering Ginoyan's credit score significantly. (See Compl. ¶¶ 33, 38–41.) On or about April 18, 2019, Barclays sent Ginoyan a letter explaining that the balance transfer was returned unprocessed and that it would credit his Account for the balance amount and any applicable fees. (Compl. ¶¶ 42–43.) Despite Barclays's rectification, Ginoyan continued to face problems in correcting his credit reports. (See Compl. ¶¶ 44–75.)
On August 20, 2019, Plaintiff Armen Ginoyan filed this action against Defendants Barclays Bank Delaware, Trans Union LLC, Experian Information Solutions, Inc., and Equifax Information Services, LLC. (See Compl.) Ginoyan alleges federal causes of action under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. , against all Defendants, as well as two state causes of action under the Consumer Credit Reporting Agencies Act, California Civil Code section 1785 et seq. , and the Rosenthal Fair Debt Collection Practices Act, California Civil Code section 1788 et seq. , against Barclays. (Compl. ¶¶ 78–103.) The Court now addresses Defendant Barclays's Motion.
III. LEGAL STANDARD
Section two of the Federal Arbitration Act ("FAA") provides that "arbitration agreements ‘shall be valid, irrevocable, and enforceable, save upon such grounds that exist at law or in equity for the revocation of any contract. ’ " Circuit City Stores, Inc. v. Adams , 279 F.3d 889, 892 (9th Cir. 2002) (quoting 9 U.S.C. § 2 ). "But ‘[a]rbitration is a matter of contract and a party cannot be required to submit any dispute which he has not agreed so to submit.’ " Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc. , 925 F.2d 1136, 1139 (9th Cir. 1991) (quoting AT & T Techs., Inc. v. Commc'ns Workers , 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ). The Court's role under the FAA is limited to resolving two "gateway" issues: "(1) whether there is an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute." Brennan v. Opus Bank , 796 F.3d 1125, 1130 (9th Cir. 2015) (citing Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) ).
IV. DISCUSSION
In this case, the parties dispute only whether there is an agreement to arbitrate. Ginoyan argues that he never accepted Barclays's Cardmember Agreement (the "Agreement"). (Opp'n to Mot. ("Opp'n") 4, ECF No. 38.) Barclays insists that Ginoyan's argument is an attack on the validity of the Agreement that must be resolved by the arbitrator. (Mot. 6–7; Reply in Supp. of Mot. ("Reply") 3, ECF No. 39.)
As the Ninth Circuit has clarified multiple times, "[a]lthough challenges to the validity of a contract with an arbitration clause are to be decided by the arbitrator ... challenges to the very existence of the contract are, in general, properly directed to the court." Kum Tat Ltd. v. Linden Ox Pasture, LLC , 845 F.3d 979, 983 (9th Cir. 2017) (citing Supreme Court and Ninth Circuit precedent); Three Valleys , 925 F.2d at 1140–41 ("[A] party who contests the making of a contract containing an arbitration provision cannot be compelled to arbitrate the threshold issue of the existence of an agreement to arbitrate. Only a court can make that decision."). "In determining whether a valid arbitration agreement exists, federal courts ‘apply ordinary state-law principles that govern the formation of contracts.’ " Nguyen v. Barnes & Noble Inc. , 763 F.3d 1171, 1175 (9th Cir. 2014) (quoting First Options of Chi., Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ).
The Court rejects Barclays's argument that Ginoyan is attacking the validity of the Agreement. Ginoyan clearly argues that no contract exists between the parties. That question is properly before this Court. However, for the following reasons, the Court concludes that the Agreement, including its arbitration provision, binds Ginoyan.
A. Existence of a Contract
Here, the Agreement undisputedly states that "[b]y signing, keeping, using or otherwise accepting your Card or Account, you agree to the terms and conditions of this Agreement." (Decl. of David Hensley Ex. B ("Agreement") 6, ECF No. 37-2.) Ginoyan, however, argues that he never accepted the Agreement to begin with. (Opp'n 4.) According to him, Barclays offered him a credit card with a promotional balance transfer offer. (Opp'n 4.) That promotion was the only reason why he applied for the Card. (Opp'n 5.) He argues that he never used the Card—and thus never actually accepted Barclays's offer—because Barclays did not approve the balance transfer, and he did not make other charges to the Card. (Opp'n 5.)
"California law is clear that there is no contract until there has been a meeting of the minds on all material points, despite the fact some terms have been agreed orally, or some action has been taken." Grove v. Grove Valve & Regulator Co. , 4 Cal. App. 3d 299, 312, 84 Cal.Rptr. 300 (1970) ; see also Banner Entm't, Inc. v. Super. Ct. , 62 Cal. App. 4th 348, 357–58, 72 Cal.Rptr.2d 598 (1998). "Terms proposed in an offer must be met exactly, precisely, and unequivocally for its acceptance to result in the formation of a binding contract ...." Panagotacos v. Bank of Am. , 60 Cal. App. 4th 851, 855, 70 Cal.Rptr.2d 595 (1998).
1. Meeting of the Minds, Consideration, and Mistake
Ginoyan argues that there was no meeting of the minds or mutual consent because he never received the benefit of Barclays's promotional balance transfer offer and mistake prevented formation of the contract. (Opp'n 5–8.) Specifically, he believed that he was contracting with Barclays for the promotional balance transfer offer, which he never ultimately received. (Opp'n 7.)
"Consent is not mutual, unless the parties all agree upon the same thing in the same sense." Balistreri v. Nev. Livestock Prod. Credit Ass'n , 214 Cal. App. 3d 635, 641–42, 262 Cal.Rptr. 862 (1989) (internal quotation marks omitted) (quoting Cal. Civ. Code § 1580 ). "In certain cases where there is a mutual misunderstanding regarding the identity of the subject matter of the contract, and either both parties are at fault in creating the mistake, or neither of the parties is at fault, there is no meeting of the minds as to a material matter, and no contract is formed." Id. at 642, 262 Cal.Rptr. 862 (internal quotation marks and alteration omitted).
Ginoyan's arguments are not persuasive. Neither party was mistaken about their agreement: A credit card account with a balance transfer offer of zero annual percentage rate for fifteen bill cycles. That is what Ginoyan expected and what Barclays attempted to provide, albeit unsuccessfully. Because of this, the cases that Ginoyan cites in support of his arguments are all distinguishable. See Balistreri , 214 Cal. App. 3d at 638, 262 Cal.Rptr. 862 (involving a complete misunderstanding as to material term in the contract); Kyle v. Kavanagh , 103 Mass. 356, 359–60 (1869) (same); Raffles v. Wichelhaus (Peerless ), 159 Eng. Rep. 375, 375 (1864) (same). Ginoyan also argues that Barclay's conduct "precluded Mr. Ginoyan from accepting the contract he wanted because the offer was only open for 45 days." (Opp'n 8.) But no evidence exists that he ever even asked Barclays whether he could still take advantage of the balance transfer promotion under the circumstances.
For these reasons, the Court finds that the Parties had a proper meeting of the minds sufficient to establish the parameters of a contract for credit.
2. Acceptance
Next, Ginoyan argues that he did not accept the Card or Account and is thus not bound by the Agreement's terms. (Opp'n 8.)
As an initial matter, Ginoyan claims that the Agreement is ambiguous as to what constitutes acceptance of the terms because of the following provision: "You do not need to accept the Account and this Agreement and none of the fees on this Account (except as otherwise provided herein) will apply unless you use the Account." (Opp'n 8–9; Agreement 6.) According to him, this provision limits the method of acceptance to "using" the Account, as opposed to "signing, keeping, using or otherwise accepting your Card or Account," as stated in a different section of the Agreement. (Opp'n 9.) The Court, however, agrees with Barclays that the phrase "unless you use the Account" qualifies the imposition of fees only. (Reply 5 n.1.); Zalkind v. Ceradyne, Inc. , 194 Cal. App. 4th 1010, 124 Cal.Rptr.3d 105, (2011) ("To the extent practicable, the meaning of a contract must be derived from reading the whole of the contract, with individual provisions interpreted together, in order to give effect to all provisions and to avoid rendering some meaningless."). Accordingly, the Court must determine whether Ginoyan signed, kept, used, or otherwise accepted the Card or Account.
i. Whether Ginoyan "used" the Card or Account
The question of whether Ginoyan "used" the Card or Account is a close one. Ginoyan denies doing so and notes that the term "use" is not defined in the Agreement. (Opp'n 9.)
"Language in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract." Cal. v. Cont'l Ins. Co. , 55 Cal. 4th 186, 195, 145 Cal.Rptr.3d 1, 281 P.3d 1000 (2012) (internal quotation marks omitted). Unless given a special or technical meaning, "[t]he words of a contract are to be understood in their ordinary and popular sense." See Cal. Civ. Code § 1644. The Merriam-Webster dictionary defines the term "use" as "to put into action or service," "avail oneself of," "employ," "to expend or consume by putting to use," or "to carry out a purpose or action by means of." Use , Merriam-Webster Dictionary, www.merriam-webster.com/dictionary/use (last visited Mar. 10, 2020).
Ginoyan denies using the Card because Barclays did not process his balance transfer successfully and he did not make any other charges to the Account. (Opp'n 9.) The Court disagrees. What matters is that Ginoyan used the Account to request the balance transfer irrespective of whether the transfer was ultimately successful.
ii. Whether Ginoyan "kept" the Card or Account
Ginoyan admits that he kept the Card but argues that Barclays forced him to do so in order to remedy the balance transfer issue. (Opp'n 9–10.) The Court, however, is not convinced that Barclays did anything to prevent Ginoyan from closing the Account or returning the Card. Ginoyan fails to present any evidence that he ever inquired about whether he had to keep the Account and Card in order to continue disputing the incorrect balance transfer charges. Thus, the Court rejects Ginoyan's conclusory argument.
In summary, the Court concludes that Ginoyan both used and kept the Card and Account in question.
3. Consideration
Ginoyan also claims that he did not receive any consideration from Barclays. Instead, Barclays billed him for over $19,000 that he never received and harmed his credit worthiness, causing significant emotional and mental anguish. (Opp'n 5–6.) But Ginoyan cannot dispute that Barclays did approve his application for a line of credit, which he was free to use for a variety of reasons in addition to a balance transfer. Ginoyan places too much emphasis on his subjective intent in applying for the Card, even though he knew he would receive additional benefits from Barclays. See Roth v. Malson , 67 Cal. App. 4th 552, 557, 79 Cal.Rptr.2d 226 (1998) ("Contract formation is governed by objective manifestations, not subjective intent of any individual involved."). Moreover, as the Court previously stated, Ginoyan accepted Barclays's offer and entered into a written contract, which is presumptive evidence of consideration. Cal. Civ. Code § 1614. Therefore, Ginoyan is bound by the Agreement, including its arbitration provision.
B. Equitable Estoppel
Ginoyan argues that, even if the Agreement binds him, Barclays should be equitably estopped from compelling arbitration because of the failed balance transfer. (Opp'n 11–12.) "Equitable estoppel precludes a party from claiming the benefits of a contract while simultaneously attempting to avoid the burdens that contract imposes." Yang v. Majestic Blue Fisheries, LLC , 876 F.3d 996, 1002 (9th Cir. 2017) (internal quotation marks omitted); see also Cal. Civ. Code § 3521 ("He who takes the benefit must bear the burden.").
Ginoyan's argument fails because he does not cite any authority allowing the Court to consider his equitable estoppel argument. Rather, because the Court already found that the Agreement binds Ginoyan, it is now up to the arbitrator to consider whether equitable estoppel applies. See Howsam , 537 U.S. at 85, 123 S.Ct. 588 (explaining that unless the parties agree otherwise, "issues of substantive arbitrability are for a court to decide and issues of procedural arbitrability, i.e., whether prerequisites such as time limits, notice, laches, estoppel, and other conditions precedent to an obligation to arbitrate have been met, are for the arbitrators to decide" (internal quotation marks omitted)).
C. Stay of the Case
Barclays requests a stay of this litigation pending completion of the arbitration. (Mot. 1.) Once a court is satisfied that an issue is referable to arbitration, it "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3. Nevertheless, in the Ninth Circuit, district courts have discretion to dismiss a party's complaint if an arbitration clause ensnares all of the party's claims. See Sparling v. Hoffman Constr. Co. , 864 F.2d 635, 638 (9th Cir. 1988) (holding that section three does not limit the court's authority to grant dismissal). "When there are some claims subject to arbitration, and some claims that are not subject to arbitration the decision regarding whether the entire case should be stayed pending the outcome of arbitration is one left to the district court as a matter of its discretion to control its docket." Chartwell Staffing Servs. Inc. v. Atl. Sols. Grp. Inc. , No. CV 19-00642-JLS (JDEx), 2020 WL 620294, at *12 (C.D. Cal. Jan. 9, 2020) (internal quotation marks and alterations omitted).
Here, Ginoyan initially filed claims against four Defendants, including Barclays. (See generally Compl.) Ginoyan has settled his claims against Equifax and Experian. (See Notice of Settlement as to Equifax, ECF No. 46; Notice of Settlement as to Experian, ECF No. 48). Ginoyan is still litigating his claims against Trans Union.
Accordingly, the Court finds a stay more appropriate than dismissal, given the possibility that the arbitrator may apply equitable estoppel and return the dispute to this Court. Because the arbitration may resolve some of the issues underlying Ginoyan's claims against the other remaining Defendants, the Court will stay the entire action pending completion of arbitration. See Chartwell , 2020 WL 620294, at *12 (staying the entire action "to avoid the simultaneous, piecemeal litigation of this dispute in two different forums").
V. CONCLUSION
For the foregoing reasons, Defendant Barclays's Motion to Compel Arbitration and Stay Litigation is GRANTED . This action is stayed pending completion of Ginoyan's arbitration with Barclays. Plaintiff Ginoyan must commence arbitration of the claims against Barclays in this action within 60 days of this Order. Barclays and Ginoyan shall file a joint status report every 60 days from the date of this Order.