Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
Appeal from an order of the Superior Court of Los Angeles County, Super. Ct. No. YS015166, William G. Willett, Judge.
Law Offices of Omatshola E. Dafeta and Omatshola E. Dafeta, for Defendant and Appellant.
Stephanie J. Finelli, Lawrence Smith and John J. Pugh, for Plaintiff and Respondent.
ALDRICH, J.
INTRODUCTION
Appellant Taylor Billingslea (Billingslea) appeals from the order of the trial court that confirmed an arbitration award in favor of petitioner Columbia Credit Services, Inc. (Columbia Credit). Billingslea denies he received notice of an amendment to his credit card agreement providing for arbitration and denies he received notice of the arbitration held after he ceased paying his credit card debt. We hold that Billingslea failed to demonstrate trial court error. Accordingly, the order is affirmed.
FACTUAL AND PROCEDURAL BACKGROUND
In September 1997, Billingslea applied to MBNA America Bank, N.A. (MBNA) for a credit card. He received credit card number [xxxx-xxxx-xxxx]-1753 along with an agreement. That agreement provided that upon use of the credit card, Billingslea agreed to be bound by its provisions and that Delaware and federal law governed. The agreement also provided that MBNA could amend it at any time in compliance with the applicable notification requirements of federal and Delaware law.
In December 1999, according to a declaration filed in the trial court by MBNA’s Senior Personal Banking Officer, Joseph Plummer, MBNA sent Billingslea a notice to credit cardholders that stated that the credit card agreement was being amended effective February 1, 2000, to include an arbitration section. The notice and the current agreement were sent to Billingslea’s Inglewood address of record.
The amendment stated in pertinent part, “As provided in your Credit Card Agreement and under Delaware law, we are amending the Credit Card Agreement to include an Arbitration Section. Please read it carefully because it will affect your right to go to court, including any right you may have to have a jury trial. Instead, you . . . will have to arbitrate claims. You may choose not to be subject to this Arbitration Section by following the instructions at the end of this notice. This Arbitration Section will become effective on February 1, 2000.” The last two paragraphs of the notice read: “THE RESULT OF THIS ARBITRATION SECTION IS THAT EXCEPT AS PROVIDED ABOVE, CLAIMS CANNOT BE LITIGATED IN COURT, INCLUDING SOME CLAIMS THAT COULD HAVE BEEN TRIED BEFORE A JURY, AS CLASS ACTIONS AS PRIVATE ATTORNEY GENERAL ACTIONS. [¶] If you do not wish your account to be subjected to this Arbitration Section, you must write to us at MBNA . . . . You must give notice in writing; it is not sufficient to telephone us. . . . We must receive your letter at the above address by January 25, 2000 or your rejection of the Arbitration Section will not be effective.” (Original emphasis.)
Billingslea did not opt out of the amendment and continued to make payments on his account for three more years. The last payment MBNA received on Billingslea’s account was made in May 2003. In September 2003, Billingslea owed $17,821.39 on his credit card with a per annum interest rate of 24.98 percent compounded daily.
MBNA sold its interest in the credit card to Hilco Receivables, LLC, who a year later sold its rights to Columbia Credit. Thereafter, for internal purposes only, MBNA assigned a new account number to Billingslea’s account, [xxxx-xxxx-xxxx]-1319.
After Billingslea defaulted on his payments, on November 2, 2004, Columbia Credit initiated arbitration. Columbia Credit sought the $17,821.39 balance, plus interest of $5,020.02, arbitration costs of $110, and $7,537.66 in attorney fees.
After the hearing on February 7, 2005, the arbitrator issued an award. The arbitrator found no known conflict of interest existed; the parties had entered into an agreement providing for binding arbitration; and the parties had the opportunity to present all evidence and information to the arbitrator. Accordingly, the arbitrator awarded Columbia Credit $31,653.71. The arbitrator’s award was sent to Billingslea at his Inglewood address on February 7, 2005.
On October 20, 2005, Columbia Credit petitioned the trial court to confirm the arbitration award. Notice of the hearing on the petition to confirm the arbitration award was sent to Billingslea at the Inglewood address listed on his credit card account on November 21, 2005. Notice that the hearing was continued to December 2005 was also sent to Billingslea.
On January 6, 2005, Billingslea filed an “opposition to motion [] vacate arbitration award and stay for proceedings.” Billingslea requested that the arbitration award be vacated because he was never served; had never seen the arbitration claim; and “found out about alleged claim through conversation on phone with Claimant employee . . . on February 1, 2005;” had no written or oral contract with claimant or any assignee; had never signed an arbitration agreement; and the alleged account number [xxxx-xxxx-xxxx]-1753 had been changed. In his declaration attached to the motion, Billingslea asserted that he never agreed to arbitration in 2004, and MBNA did not have an arbitration clause in its contracts until 2000. He asserted that he “found out about this Arbitration from a letter asking for the Arbitration board to change Arbitrators dated January 6, 2005.” Billingslea then called Columbia Credit on January 6, 2005. He “finally found out where the Arbitration would be held by going back and looking through paperwork . . . .”
At the hearing before the trial court, Billingslea argued, although he had an MBNA credit card account and used that account, that it was not the same card that was subject to the arbitration. Concerned that confirming the arbitration award could unfairly determine that Billingslea owed money under a credit card that was not his, the court asked whether MBNA and its assignees could present evidence to support its contention that the card that was subject to the arbitration was Billingslea’s card.
The court received copies of Billingslea’s canceled checks from 1998 containing the correct credit card account number. At least one of the check stubs contained the notion of an account number [xxxx-xxxx-xxxx]-1753. Billingslea acknowledged that that was his card number. He observed, however, that the card number Columbia Credit collected on was [xxxx-xxxx-xxxx]-1319. The court noted a document indicating that number 1319 was formerly 1753. The court requested that Columbia Credit explain the discrepancy between Billingslea’s credit card number and the card number that was subject to the arbitration. Columbia Credit explained that the 1319 number was added for internal purposes but that the card that was the subject of the collection efforts was always 1753. Further, Columbia Credit observed that there should have been no confusion because the Confirmation of Collection Assignment, Columbia’s Claim for Arbitration, the arbitration award itself, and the petition for confirmation of the arbitration award all listed Billingslea’s account number 1753, and some also included the new account number 1319. Billingslea never denied, if he was issued an MBNA credit card and used it and did not pay the bill, that MBNA or its assignees were entitled to collect the amount owed. Billingslea stated he never denied that he would owe money, but denied he agreed to arbitrate.
With respect to whether Billingslea had agreed to arbitration and whether he received notice of Columbia Credit’s arbitration claim, Columbia Credit submitted to the trial court the January 17, 2006, declaration of Judy Daly. Daly, Columbia Credit’s records custodian who monitors agreements with debtors who are in default, declared that Columbia Credit’s arbitration claim was served on Billingslea by UPS delivery at his Inglewood address in accordance with the National Arbitration Forum’s Code of Procedure. Exhibit A was a copy of the UPS receipt bearing the signature of a “Taylor” who accepted the service on November 8, 2004. Attached to Columbia Credit’s petition to confirm the award was the declaration of Joseph Plummer, Senior Personal Banking Officer at MBNA, who testified that in December 1999, MBNA sent to Billingslea the notice to cardholders that the agreement was being amended effective February 1, 2000, to require arbitration. Plummer also confirmed that MBNA’s records showed that Billingslea never notified the bank that he wanted to opt out of arbitration.
Thereafter, the court granted Columbia Credit’s motion to confirm the arbitration award and entered judgment in the total amount of $39,135.69. Billingslea’s timely appeal followed.
CONTENTIONS
Billingslea contends that the agreement to arbitrate was unenforceable because it was unconscionable and that the arbitration award was taken through mistake, inadvertence, surprise, or excusable neglect because he did not receive notice of Columbia Credit’s arbitration claim.
DISCUSSION
1. Billingslea’s challenge to the trial court’s order is untimely
Billingslea contends that he was not notified of the amendment to the credit card agreement adding the arbitration clause and no notice of Columbia Credit’s actual arbitration claim.
Code of Civil Procedure section 1286.4 states, “The court may not vacate an award unless: [¶] (a) A petition or response requesting that the award be vacated has been duly served and filed; or [¶] (b) A petition or response requesting that the award be corrected has been duly served and filed and: [¶] (1) All petitioners and respondents are before the court; or [¶] (2) All petitioners and respondents have been given reasonable notice that the court will be requested at the hearing to vacate the award or that the court on its own motion has determined to vacate the award and all petitioners and respondents have been given an opportunity to show why the award should not be vacated.”
A party seeking to vacate an arbitration award must do so within 100 days from the date of service of the arbitrator’s award. (Code Civ. Proc., §§ 1288 & 1288.2.) If a party opposing the arbitration award does not petition to vacate the award during the statutory period, “there is nothing to review and the appeal must fail. [¶] The arbitration statute is clear. A party to an arbitration proceeding must challenge an award under [Code of Civil Procedure] section 1288 by a petition to vacate or correct the award within 100 days of service of the award. An appeal of the judgment confirming the award may not be used to circumvent the prescribed time allowed to petition for vacation or correction of an award.” (Knass v. Blue Cross of California (1991) 228 Cal.App.3d 390, 395-396.)
Billingslea failed to meet the statutory deadlines with the result that his appeal fails. The arbitrator served the award on Billingslea on February 7, 2005. Billingslea had until May 18, 2005, to petition the court to vacate the award. (Code Civ. Proc., §§ 1288 & 1288.2.) Yet, Billingslea’s response to the petition to confirm the award was filed in January 2006, nine months late. Billingslea does not contend he did not receive a copy of the award. Thus, his appeal should fail.
However, because Billingslea’s challenge to the award is inextricably tied to his contention that the arbitration clause was invalid, we must address the merits of Billingslea’s appeal.
2. Billingslea has failed to carry his burden
a. The amendment is enforceable and so Billingslea is bound by the arbitration clause
(i) The agreement was properly amended under Delaware law and Billingslea received notice of it and did not opt out
Billingslea does not disagree that Delaware law governs this contract. Delaware law permits banks to amend credit card agreements unilaterally by notice to credit cardholders of proposed changes to the agreement and an opt-out procedure whereby the cardholders may reject the amendment. (5 Del. C. § 952; Edelist v. MBNA America Bank (2001) 790 A.2d 1249, 1257-1258.)
5 Delaware Code section 952 reads: “(a) Unless the agreement governing a revolving credit plan otherwise provides, a bank may at any time and from time to time amend such agreement in any respect, whether or not the amendment or the subject of the amendment was originally contemplated or addressed by the parties or is integral to the relationship between the parties. Without limiting the foregoing, such amendment may change terms by the addition of new terms or by the deletion or modification of existing terms, whether relating to plan benefits or features, the rate or rates of periodic interest, the manner of calculating periodic interest or outstanding unpaid indebtedness, variable schedules or formulas, interest charges, fees, collateral requirements, methods for obtaining or repaying extensions of credit, attorney’s fees, plan termination, the manner for amending the terms of the agreement, arbitration or other alternative dispute resolution mechanisms, or other matters of any kind whatsoever. Unless the agreement governing a revolving credit plan otherwise expressly provides, any amendment may, on and after the date upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower’s account under the plan, including any such indebtedness that arose prior to the effective date of the amendment. An agreement governing a revolving credit plan may be amended pursuant to this section regardless of whether the plan is active or inactive or whether additional borrowings are available thereunder. Any amendment that does not increase the rate or rates of periodic interest charged by a bank to a borrower under § 943 or § 944 of this title may become effective as determined by the bank, subject to compliance by the bank with any applicable notice requirements under the Truth in Lending Act (15 U.S.C. §§ 1601 et seq.), and the regulations promulgated thereunder, as in effect from time to time. Any notice of an amendment sent by the bank may be included in the same envelope with a periodic statement or as part of the periodic statement or in other materials sent to the borrower.”
Billingslea declared he never received notice of the amendment adding the arbitration requirement. Columbia Credit filed the employee declaration testifying that the amendment was sent to Billingslea at the address of record for his billing statements. Both the arbitrator and the trial court implicitly found that Billingslea did receive the amendment and did not exercise his right to opt out and was therefore subject to the amendment. The arbitrator made this finding implicitly when it found that the parties had entered into an agreement providing for “binding arbitration.” The court made the finding when it confirmed the award. The trial court believed Columbia Credit and we may not reweigh that credibility finding. In sum, the finding that Billingslea received notice of the amendment is supported by substantial evidence.
On appeal, Billingslea contends that Columbia Credit did not carry its burden to prove that the amendment was actually made to the original agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972 [petitioner “bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence”].) He notes that Columbia Credit never presented the arbitrator or the trial court with a copy of the original credit card agreement or the original amendment adding the arbitration requirement. Rather, Columbia Credit submitted the declaration of MBNA’s Plummer about the contents of the original contract. The version of the credit card agreement actually filed with the court was “Revised 4/2000,” three months after the effective date of the amendment.
This argument is really based on the “best evidence rule.” (Evid. Code, § 1523.) However, Billingslea did not object to the declaration and the April 2000 version of the agreement in the trial court and failed to obtain a ruling from the court on this contention. Therefore, the objection was not preserved for appellate review, and we must deem admissible Columbia Credit’s declaration about the contents of the original agreement and the amended version. (K.R.L. Partnership v. Superior Court (2004) 120 Cal.App.4th 490, 495, fn. 4, citing Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 670, fn. 1; Laird v. Capital Cities/ABC, Inc. (1998) 68 Cal.App.4th 727, 736.)
In sum, the contract was properly amended under Delaware law and as the evidence supports the finding Billingslea received notice of the amendment providing for arbitration and did not opt out, he is bound by it.
(ii) Billingslea has not successfully challenged the arbitration amendment
California has a strong public policy favoring arbitration and “ ‘doubts concerning the scope of arbitrable issues are to be resolved in favor of arbitration. [Citations.]’ [Citations.]” (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 651.) Despite this policy, however, “there are circumstances in which California courts may invalidate or limit agreements to arbitrate. Employing ‘general contract law principles,’ courts will refuse to enforce arbitration provisions that are ‘unconscionable or contrary to public policy.’ ” (Ibid., citing Armendariz v. Foundation Health Psychcare Services, Inc. (2000)24 Cal.4th 83, 99; see also, Code Civ. Proc., § 1281 .)
Code of Civil Procedure section 1281 states: “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.”
Where the parties present no disputed extrinsic evidence concerning the agreement to arbitrate, the validity of the agreement is subject to de novo appellate review. (Abramson v. Juniper Networks, Inc., supra, 115 Cal.App.4th at p. 650.)
Billingslea relies on the defense of unconscionability. (Civ. Code, § 1670.5, subd. (a); Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 1099.) As the party opposing arbitration, Billingslea has the burden of proving the arbitration provision is unconscionable. (Ibid.)
“Unconscionability has procedural and substantive aspects. [Citation.] ‘Both procedural and substantive unconscionability must be present before a court can refuse to enforce an arbitration provision based on unconscionability. However, the two elements need not be present in the same degree.’ [Citation.] Courts use a ‘ “sliding scale” ’ approach in assessing the two elements. [Citation.] ‘In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ ” (Abramson v. Juniper Networks, Inc., supra, 115 Cal.App.4th at pp. 655-656, citing Armendariz v. Foundation Psychcare Services, Inc., supra, 24 Cal.4th at p. 114.)
“ ‘ “Procedural unconscionability” concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.]’ [Citation.] The relevant factors are oppression and surprise. [Citations.] [¶] ‘The oppression component arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party. [Citations.]’ [Citation.] [¶] The component of surprise arises when the challenged terms are ‘hidden in a prolix printed form drafted by the party seeking to enforce them. [Citation.]’ [Citation.]” (Abramson v. Juniper Networks, Inc., supra, 115 Cal.App.4th at p. 656.)
“ ‘ “Substantive unconscionability” focuses on the terms of the agreement and whether those terms are “so one-sided as to ‘shock the conscience.’ ” [Citations.]’ [Citations.]” (Abramson v. Juniper Networks, Inc., supra, 115 Cal.App.4th at p. 656.)
Billingslea contends the amendment is procedurally unconscionable. He argues, “Even if [he] received notice of the proposed amendment, the inconspicuous placement of the arbitration clause in the contract, contained in fine print is not likely or not liable to raise expectations of containing an agreement to arbitrate . . . .” But, the amendment is neither inconspicuous nor in fine print. The amendment was sent to Billingslea as a separate document from the contract. As set forth above, much of the important part of the amendment is in all capital letters and is italicized, which underscores the importance of the information conveyed. Billingslea next points to the contract’s provision that if he opted out of an amendment, MBNA may terminate his right to receive credit. However, there is no indication that MBNA would have terminated Billingslea’s right to receive credit. Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, is irrelevant as it holds that an arbitration provision contained in a document incorporated by reference was not clearly and unequivocally referred to. (Id. at p. 643.) Likewise, Windsor Mills, Inc. v. Collins & Aikman Corp. (1972) 25 Cal.App.3d 987 at page 994 is unavailing. In that case, the arbitration clause was in small print and inconspicuously placed on the back of the agreement. Unlike those cases, the arbitration amendment here was contained in a separately mailed document.
In particular, the agreement stated: “If an amendment gives you the opportunity to reject the change, and if you reject the change in the manner provided in such amendment, we may terminate your right to receive credit and may ask you to return all credit devises as a condition of your rejection. . . . We may replace your credit card with another card at any time.”
Billingslea also argues that the amendment was substantively unconscionable because MBNA “had the upper hand in the process of negotiations” and modified the credit card agreement three years after Billingslea had commenced using the card. However, the original agreement provided that MBNA could amend the agreement at any time. The amendment and the amendment’s notice complied with Delaware law. (5 Del. C. § 952; Edelist v. MBNA America Bank, supra, 790 A.2d at pp. 1257-1258.) Although such amendment might offend California law (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 797, 803 [holding under California law that unilateral amendment to agreement adding arbitration clause with opt out provision sent as bill stuffer does not create agreement to arbitrate and does not constitute unambiguous and unequivocal waiver of right to jury trial]), this case is governed by Delaware law. An amendment containing strikingly similar language to the one here was held to comply with Delaware law. (Edelist v. MBNA American Bank, supra, 790 A.2d at p. 1260.)
b. The trial court properly confirmed the arbitration award
Billingslea contends, citing MJM, Inc. v. Tootoo (1985) 173 Cal.App.3d 598, that the trial court could properly set aside the arbitration award under Code of Civil Procedure section 473 for mistake, inadvertence, surprise, or excusable neglect.
Assuming that the trial court has the discretion under Code of Civil Procedure section 473 to vacate the nonjudicial arbitration award (MJM, Inc. v. Tootoo, supra, 173 Cal.App.3d at p. 604), we conclude that Billingslea has not demonstrated an abuse of discretion in denying his request to vacate this award.
Billingslea points to his declaration stating that he did not receive notice of the arbitration itself. However, the trial court had evidence, in the form of (1) Daly’s declaration stating that Columbia Credit served the arbitration claim on Billingslea according to the arbitration rules and (2) a copy of the UPS receipt, showing that on November 8, 2004, a “Taylor” signed for delivery of the arbitration claim. While the trial court also had Billingslea’s declaration testifying that he was not aware of the arbitration itself, that declaration contains internal inconsistencies. The trial court was entitled to disbelieve Billingslea.
The asserted confusion about whether the consumer credit account that was the subject of the arbitration was Billingslea’s account was resolved in the trial court. It appears that once Billingslea’s account went into default, MBNA assigned a second number to the account for internal purposes. Thereafter, some of the documents sent to Billingslea contained both his credit card number and the internal number. Billingslea was understandably confused about whether Columbia Credit might have attempted to collect on a credit card that was not his. However, after the first hearing on Columbia Credit’s motion to confirm the arbitration award, Columbia Credit submitted documents demonstrating the cause of the confusion, and the fact that all of the relevant documents that were sent to Billingslea contained his credit card number. This does not constitute grounds under Code of Civil Procedure section 473 to vacate the award.
DISPOSITION
The order is affirmed.
We concur: CROSKEY, Acting P. J., KITCHING, J.