Source: http://il.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20040126_0000132.NIL.htm/qx
Timestamp: 2017-03-29 19:30:23
Document Index: 252291698

Matched Legal Cases: ['§ 371', '§ 1341', '§ 1343', '§ 2314', '§ 1512', '§ 1956', '§ 1', '§ 2', '§ 3', '§ 2', '§ 2']

FRANK R. DAVIS and ELMA L. DAVIS, Plaintiffs,
JP MORGAN CHASE BANK, f/k/a The Chase Manhattan Bank Successor by Merger to Chase Bank of Texas, N.A., f/k/a Texas Commerce Bank, N.A., as Custodian by Saxon Mortgage Services, Inc., f/k/a Meritech Mortgage Services, Inc., as their Attorney-in-Fact, Assignee of Choice Mortgage Services, Inc.; BA MORTGAGE LLC, a wholly owned subsidiary of Bank of America, N. A., Successor in Interest by Merge of Nations Bank Mortgage Corporation; MANUFACTURERS & TRADERS TRUST COMPANY, One M&T Plaza, Buffalo, N.Y. 14203-2399, Trustee for Securitization Series 1997-5, Agreement dated 12-01-97; THE BANK OF NEW YORK as Trustee under the Pooling and Servicing Agreement dated as of November 30, 1997, Series 1997-D; BANK ONE; DIRECT MERCHANTS BANK and MBNA AMERICA VISA, Defendants
Plaintiffs, Frank R. Davis and Elma R. Davis, filed a rambling pro se
defendants due to, among other things, alleged gross mismanagement,
of state and federal statutes of banking, usurious lending practices,
violations of the RICO Act and Illinois Organized Crime Act, conspiracy
in violation of 18 U.S.C. § 371, mail fraud in violation of
18 U.S.C. § 1341, wire fraud in violation of 18 U.S.C. § 1343, aiding and
abetting the interstate transportation of funds taken by fraud in
violation of 18 U.S.C. § 2314, tampering with a witness in violation
of 18 U.S.C. § 1512, and conspiracy to launder money instruments in
violation of 18 U.S.C. § 1956(a)(1)(A)(i), 1956(a)(1)(B)(i), and
1956(h). With respect to defendant Bank One, Delaware, N.A. ("Bank One"),
plaintiffs seek to discharge all of their financial obligations incurred
from use of a credit card. Bank One has moved to stay and compel
arbitration. For the reasons stated below, the motion to stay and compel
arbitration is granted.
The instant matter pertains to a credit card issued to Mr. Davis
initially by Chevy Chase Bank and later transferred to Bank One. When
plaintiff opened the account, Chevy Chase Bank sent plaintiff a
"CARDHOLDER RULES AND REGULATIONS AND NOTICE OF BILLING RIGHTS"
("Cardmember Agreement") establishing the terms of the Account. The
pertinent part of the Cardmember Agreement concerned an alternative
dispute resolution provision. The agreement stated that "[a]ny
controversy or claim ("Claim") between or among you and us or our agent,
employees and affiliates, including but not limited to those arising out
of or relating to this Agreement or any related agreements . . . shall
. . . be submitted to mediation."
In December 1998 when the credit card was transferred to Bank One,
defendant sent a mailing modifying the Cardmember Agreement to reflect
Bank One as the issuer of plaintiff's account. That mailing was entitled
"IMPORTANT NOTICE FOR CHEVY CHASE CREDIT CARD CUSTOMERS ABOUT CHANGES TO
YOUR CHEVY CHASE CREDIT CARD AGREEMENT." The new agreement explained that
the previous alternative dispute resolution provision was replaced with a
section entitled "Arbitration" (the "Arbitration Provision"). The
notice stated that the new Arbitration Provision would become
effective February 1, 1999. The Arbitration Provision stated:
[a]ny claim, dispute or controversy ("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
your Account, including Claims regarding the
applicability of this arbitration clause or the
validity of the entire Agreement, shall be resolved
by binding arbitration . . .
Plaintiff had the option of rejecting the new Arbitration Provision by
notifying Bank One in writing by January 15, 1999. Plaintiff did not
notify Bank One of a refusal to accept the new provision, nor did he
cease using the credit card.
In its motion to stay and compel arbitration pursuant to the Federal
Arbitration Act (the "FAA"), 9 U.S.C. § 1 et seq.,
defendant argues that the Arbitration Provision was properly adopted and
is enforceable, and that plaintiffs' claims fall under the Arbitration
Section 2 of the FAA, 9 U.S.C. § 2 provides:
A written provision in any maritime transaction or
a contract evidencing a transaction involving
commerce to settle by arbitration a controversy
thereafter arising out of such contract or
transaction, or the refusal to perform the whole or
any part thereof, or an agreement in writing to
submit to arbitration an existing controversy
arising out of such a contract, transaction, or
refusal, shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law
or in equity for the revocation of any contract.
Section 3 of the FAA, 9 U.S.C. § 3 provides:
courts of the United States upon any issue
referable to arbitration under an agreement in
writing for such arbitration, the court in which
such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is
referable to arbitration under such an agreement,
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,
providing the applicant for the stay is
not in default in proceeding with such
The Arbitration Provision provides in pertinent part:
Thus, there can be no question that under the FAA, plaintiffs' claim
against Bank One is subject to the arbitration clause because it concerns
a "written provision" about a "transaction involving commerce to settle
by arbitration." 9 U.S.C. § 2. Clearly, any request to discharge all
financial obligations to defendant arises from the Cardmember Agreement.
While plaintiffs bring many claims, they do not challenge the validity of
the Arbitration Provision. The FAA explicitly provides that arbitration
agreements "shall be valid, irrevocable and enforceable." 9 U.S.C. § 2.
Further, "any doubts concerning the scope of arbitrable issues should
be resolved in favor of arbitration. . . ." Moses H. Cohen Mem.
Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983).
Accordingly, the arbitration agreement is enforceable.
Plaintiffs accepted the modification in the Cardmember Agreement by
continuing to use the credit card after notification that the terms had
changed. Other courts in this district have upheld defendant's method of
amending its credit card terms, and this court will do the same. See
Bellavia v. First USA Bank, 02 C 3971: Reed v. First USA
Bank, 99 C 6207; Frerichs v. Credential Serv., 98 C 3684.
In response to Bank One's motion, plaintiffs deny the validity of a
signature pursuant to 3-308 of the Uniform Commercial Code ("UCC")
810 ILCS 5/3-308. Article 3 of the UCC deals
with negotiable instruments. Since there is no negotiable
instrument at issue in the Arbitration Provision, 3-308 is immaterial and
irrelevant to defendant's motion to stay and compel arbitration.
Finally, plaintiffs assert that defendant has lost standing and is in
default. This court granted defendant's motion for an extension of time
to answer or otherwise plead to the complaint. On November 18, 2003,
defendant timely filed its motion to compel arbitration. Plaintiffs'
claims are therefore without merit.
For the reasons stated herein, defendant's motion to stay and ...