Court Opinion

ID: 9929235
Source: CourtListenerOpinion
Date Created: 2024-02-01 23:04:48.325795+00
Date Added: 2024-06-11T10:06:13.154552
License: Public Domain

FILED
                                                                Feb 01 2024, 3:56 pm

                                                                     CLERK
                                                                 Indiana Supreme Court
                                                                    Court of Appeals
                                                                      and Tax Court

                             IN THE

     Indiana Supreme Court
                Supreme Court Case No. 23S-CP-115

Tonia Land, individually and on behalf of all others
                similarly situated,
                      Appellant (Plaintiff below)

                                 –v–

                       IU Credit Union,
                      Appellee (Defendant below)

           Argued: June 29, 2023 | Decided: February 1, 2024

                Appeal from the Monroe Circuit Court,
                        No. 53C06-2103-PL-562
                The Honorable Holly M. Harvey, Judge

      On Petition to Transfer from the Indiana Court of Appeals,
                            No. 22A-CP-382

                Opinion on Rehearing by Justice Goff
  Chief Justice Rush and Justices Massa, Slaughter, and Molter concur.
Goff, Justice.

  The essential facts of this case are as follows: When Tonia Land first
became a customer of IU Credit Union (IUCU), she received an account
agreement, the terms of which were “subject to change at any time.” App.
Vol. II, p. 43. When Land later registered for online banking, she received
and accepted a second agreement, permitting IUCU to “modify the terms
and conditions applicable to the Services from time to time.” Id. at 118. In
2019, IUCU sent to Land a proposed change to these agreements (the
Addendum). The terms of the Addendum would have (1) permitted either
party to require arbitration for resolving disputes and (2) prohibited Land
from initiating or joining a class-action lawsuit. Id. at 127. Unless Land
exercised her “right to opt out” of this arrangement within thirty days of
receiving notice, the Addendum stated, its proposed terms would become
binding. Id. Land, while never having exercised this right, later filed a
class-action complaint against IUCU. Citing the Addendum, IUCU sought
to compel arbitration.

   On transfer, this Court held that, while IUCU provided Land with
reasonable notice of its offer to amend the original agreements, Land’s
subsequent silence and inaction did not—under Section 69 of the
Restatement (Second) of Contracts—result in her assent to that offer. Land
v. IU Credit Union, 218 N.E.3d 1282, 1291 (Ind. 2023).

   IUCU now petitions for rehearing, claiming that the Court failed to
address certain legal authorities and arguments raised on appeal and in
the transfer proceedings. We hereby grant the petition to address these
claims. While we affirm our original opinion in full, we leave open the
possibility, in some future case, of adopting a different standard
governing the offer and acceptance of unilateral contracts between
businesses and consumers.

Discussion and Decision
   IUCU raises two principal claims on rehearing: (1) that the Court failed
to consider “two directly applicable authorities” supporting its argument
that Land “assented to arbitration by failing to opt out” and by continuing

Indiana Supreme Court | Case No. 23S-CP-115 | February 1, 2024     Page 2 of 7
to use her accounts, and (2) that the Court failed to consider IUCU’s
“alternative” argument that the agreements’ modification clauses
precluded the need for Land’s assent to arbitration. Pet. for Reh’g at 5–6.

    We address these arguments in turn.

I. This Court did not improperly fail to address the
   supplemental authorities cited by IUCU.
    In its notice of additional authorities, filed during the proceedings on
transfer, IUCU directed this Court’s attention to two legal authorities—
Cornell v. Desert Financial Credit Union, 524 P.3d 1133 (Ariz. 2023), and
Section 3 of the Restatement of Consumer Contracts (RCC). Notice at 3.
These authorities, IUCU explained, specifically supported the arguments
it had raised in pages 39 through 41 of its appellee’s brief.1 Id. IUCU now
faults the Court for failing to consider these authorities in our opinion.2
Pet. for Reh’g at 6–8. But neither Cornell nor Section 3 of the RCC supports
the arguments IUCU had raised.

    In Cornell, the plaintiff (a bank customer) signed an agreement which
contained no arbitration clause but expressly allowed the bank to “change
[the] terms and conditions” of the agreement “from time to time.” 524
P.3d at 1135. The bank later updated the terms of the agreement by adding
a mandatory arbitration clause, which customers could opt out of
(without penalty) by giving notice within a prescribed period. Id. The
plaintiff, while never having exercised her right to opt out, later filed a
class-action claim against the bank, alleging illegal overdraft fees. Id. at

1“When pertinent and significant authorities come to the attention of a party after the party’s
brief or Petition has been filed, or after oral argument but before decision,” our appellate rules
allow a party to “promptly file with the Clerk a notice of those authorities setting forth the
citations.” Ind. Appellate Rule 48. The notice must include “a reference either to the page of
the brief or to a point argued orally to which the citations pertain, with a parenthetical or a
single sentence explaining the authority.” Id.
2While we appreciate vigorous legal advocacy, we strongly caution IUCU’s counsel against
the indecorous tone of argument in their rehearing petition.

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1136. The bank moved to compel arbitration. Id. The plaintiff responded
by arguing that she never assented to the arbitration clause. Id. In rejecting
the plaintiff’s argument, the Supreme Court of Arizona adopted Section 3
of the RCC to hold that a business may modify a contract if (1) the
contract’s original terms contained an express modification clause; (2) the
business gave, and the consumer received, reasonable notice of the
modification and an opportunity to opt out with no penalty; and (3) the
consumer continued the business relationship past a reasonable opt-out
period. Id. at 1135 (citing RCC § 3 (Am. L. Inst., Tentative Draft No. 2,
2022)).

   Importantly, the Cornell court expressly held that its ruling applied
only to “on-going, at-will, consumer-business relationships” that “consist
of the day-to-day offer and acceptance of unilateral contracts.” Id.
(emphasis added); see also RCC § 3 (specifying its applicability to a
“standard contract term in a consumer contract governing an ongoing
relationship”). By contrast, the Cornell court emphasized at length, a party
may not modify the original terms of a bilateral contract—absent an
express provision for unilateral modification—without an additional offer,
acceptance, and consideration. 524 P.3d at 1136, 1137–38.

    It would certainly be fair to characterize the relationship between Land
and IUCU as an “on-going, at-will, consumer-business relationship.” See
id. at 1135. But IUCU, in that section of its appellee’s brief referred to in its
notice of additional authorities, disclaimed—repeatedly—its authority
under the original agreements’ change-in-terms clauses to “unilaterally
impose the Arbitration [Addendum] on anyone.” Appellee’s Br. at 39.
Those agreements, IUCU emphasized instead, were “necessarily
bilateral,” and the issue in this case, IUCU insisted, was “whether the
parties can enter into a new contractual amendment regarding arbitration
by establishing the three essential elements of any contract under standard
contract law—offer, acceptance, and consideration.” Id. at 40, 41 (emphasis

Indiana Supreme Court | Case No. 23S-CP-115 | February 1, 2024          Page 4 of 7
added).3 This emphasis on the bilateral nature of the agreements aligns
with IUCU’s reliance on Section 69 of the Restatement (Second) of
Contracts, which recognizes a party’s silence as acceptance in only a few
exceptional circumstances—and which we expressly based our holding
on. Id. at 37. By contrast, Section 3 of the RCC recognizes silence by
acceptance as the default rule, so long as the offeree received reasonable
notice and an opportunity to opt out without penalty and continued
business with the offeror.

  To be sure, Section 3 of the RCC may very well offer “an effective
modification procedure that fairly balances the public policies of economic
efficiency and consumer protection.” See Cornell, 524 P.3d at 1139. And we
recognize the practical difficulties that businesses may face in securing
affirmative consent to contract modifications from existing customers. For
these reasons, we leave open the possibility of adopting Section 3 of the
RCC in some future case. But, given IUCU’s arguments on appeal and on
transfer, neither Section 3 of the RCC nor Cornell apply to this case. We
thus did not improperly fail to consider those authorities.

II. This Court did not improperly fail to consider
    IUCU’s “alternative” argument on appeal.
   IUCU also faults the Court for failing to consider its “alternative”
argument that it “properly applied” the agreements’ modification clauses
“when it added an additional forum of arbitration to an already existing
term establishing a forum for resolving disputes.” Pet. for Reh’g at 16.
Those clauses, IUCU insists, “allowed [it] to ‘unilaterally’ amend” the
agreements’ existing terms “without the need to establish Land’s assent to

3See also Appellee’s Br. at 40 (insisting that IUCU’s “right to freedom of contract does not
depend in any way on the ‘change in terms’ clause, nor does that clause . . . serve in any [way]
to limit IUCU’s or Land’s freedom to enter into new agreements of any type, including
arbitration agreements”); id. at 41 (relying on “Indiana contract law rather than the ‘change in
terms’ provision in the Agreement to establish it entered into a new contractual amendment
requiring arbitration”).

Indiana Supreme Court | Case No. 23S-CP-115 | February 1, 2024                       Page 5 of 7
the change.” Id. (citing Appellee’s Br. at 42, 47–48) (bold emphasis added,
italics omitted).

   We view this claim as nothing more than a variation of IUCU’s first
argument, signaling a labored attempt to litigate theories that IUCU
expressly rejected on direct appeal.

   In her appellant’s brief, Land argued that the agreements’ modification
clauses did not permit IUCU’s unilateral addition of the arbitration
Addendum. Appellant’s Br. at 35–41. In response, IUCU insisted that it
was “not relying on the change in terms clause as the basis for its ability
to add an arbitration provision.” Appellee’s Br. at 45 (emphasis added).
Instead, IUCU emphasized, it was “relying on standard Indiana contract
law” and the parties’ “freedom” to contract “to support its ability to enter
into arbitration agreements with its members.” Id. Thus, IUCU concluded,
“interpretation of the change in terms clause is irrelevant to the Court’s
ultimate decision in this case.” Id. (emphasis added). To be sure, if the
Court were to have found otherwise, IUCU asked us to “reject Land’s
suggested interpretation” of the change-in-terms clauses. Id. at 46. But
ultimately, we chose the former option. See Land, 218 N.E.3d at 1287 n. 3
(declining to address Land’s argument “that the terms of the original
account Agreement did not permit the unilateral addition of the
Addendum” because we “resolve[d] this case in her favor on other
grounds”). So, IUCU can’t now complain that the Court’s opinion
improperly omitted its “alternative argument” from consideration.4

4IUCU also argues that subsection 69(1)(a) of the Restatement imposed on Land a duty to opt
out to avoid assenting to the Addendum and that the parties’ “previous dealings” under
subsection 69(1)(c) gave Land clear notice that continued use of the account without opting
out would amount to acceptance. Pet. for Reh’g at 12–14. But IUCU raised no arguments
under subsection 69(1)(a) in its appellee’s brief or transfer petition, thus waiving the issue on
rehearing. See Strong v. Jackson, 781 N.E.2d 770, 772 (Ind. Ct. App. 2003). And even if Land had
“necessarily” agreed in the original contracts “to be bound by any change in terms as long as
she maintained her banking relationship with IUCU,” Pet. for Reh’g at 11, that arguably
defeats the purpose of giving her the right to “opt out” of the Addendum. In any case, IUCU,
to reiterate, repeatedly disclaimed its authority under the original change-in-terms clauses to
“unilaterally impose the Arbitration Provision on anyone.” Appellee’s Br. at 39.

Indiana Supreme Court | Case No. 23S-CP-115 | February 1, 2024                        Page 6 of 7
Conclusion
    We recognize the practical difficulties that businesses may face in
securing affirmative consent to contract modifications from existing
customers. And for that reason, we leave open the possibility of adopting,
in some future case, a different standard governing the offer and
acceptance of unilateral contracts between businesses and consumers. But
given IUCU’s emphasis on the bilateral nature of the agreements here, and
its persistent disavowal of authority to unilaterally impose the arbitration
Addendum, we find no merit in IUCU’s arguments on rehearing. We thus
affirm our original opinion in full.

Rush, C.J., and Massa, Slaughter, and Molter, JJ., concur.

 ATTORNEYS FOR APPELLANT                        ATTORNEYS FOR APPELLEE
 Tyler B. Ewigleben                             James R. Branit
 Lisa M. LaFornara                              Phillip G. Litchfield
 Vess A. Miller                                 Litchfield Cavo LLP
 Lynn A. Toops                                  Chicago, Illinois
 Cohen & Malad, LLP
 Indianapolis, Indiana

 Matthew R. Gutwein
 DeLaney & DeLaney LLC
 Indianapolis, Indiana

 John Steinkamp
 John Steinkamp & Associates, P.C.
 Indianapolis, Indiana

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