Court Opinion

ID: 9749495
Source: CourtListenerOpinion
Date Created: 2023-08-27 16:47:40.969822+00
Date Added: 2024-06-11T07:25:50.049153
License: Public Domain

FYBEL, J., Concurring and Dissenting.
In a companion opinion, Mandel v. Household Bank (Nevada) (2003) 105 Cal.App.4th 75  [129 Cal.Rptr.2d 380] *91(Mandel), we analyzed a provision in a credit card agreement barring class actions identical to the provision in this case. In Mandel, we concluded the provision was unconscionable. As in Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094 [118 Cal.Rptr. 862], we struck and severed the provision and ordered the matter to arbitration under the principles of Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 [99 Cal.Rptr.2d 745, 6 P.3d 669]. I favor reaching the same result in this case.
I concur in the portion of the majority opinion finding the limitation on class actions in the arbitration agreement in this case is unconscionable. I respectfully dissent, however, from the majority’s conclusion that Shea is not bound by the arbitration agreement. The trial court heard the motion to compel arbitration under Code of Civil Procedure section 1281.2. The arbitration agreement was alleged. The same majority members in this case previously held that once the existence of the arbitration agreement is alleged, the burden shifts to the objecting party to prove the arbitration agreement does not apply. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219 [105 Cal.Rptr.2d 597].) For the following reasons and authorities, Shea failed to meet this burden.
Shea’s credit agreement with Household Bank stated it was for “the open end line of credit we have established for you and which can be accessed by your Card or other means approved by us.” The credit agreement also provided: “This Agreement (and any amendments) covers your Account with us, and you and we will be bound by it from the time you receive your Card or Agreement. ... You may cancel this Account before using it without paying any fees.” Thus, the agreement at issue in this case is one in which Household Bank extended credit and Shea used that extension of credit.
In Mandel, we acknowledged that Nevada law permitted Household Bank to unilaterally amend the terms and conditions of Mandel’s credit agreement. Shea contends he effectively rejected the arbitration provision of the amended agreement when his attorney called Household Bank’s customer service department and informed it “that Mr. Shea was refusing to accept the arbitration agreement being unilaterally imposed by [Household Bank], and that Mr. Shea no longer wished to continue using his account.”
Despite Shea’s counsel’s statement, Shea did not stop using his account. Instead, he continued to use the extension of credit offered by the account. As of the time of the hearing on the petition to compel arbitration, Shea had a balance of almost $3,000 owing to Household Bánk.
*92The extension of credit is a benefit of the account. By failing to pay the account balance, Shea continued to use the account. I depart from the majority because under Nevada law, Shea cannot reject a term of the account—the arbitration clause—while continuing to use the account by enjoying the extension of credit.
On the question whether Shea’s case should be arbitrated, the majority principally relies on a Nevada statute deeming “actual use” of the card acceptance of a credit card agreement. (Nev. Rev. Stat. Ann. § 97A.140, subd. 2.) This statute simply identifies the trigger for starting an account. It does not address the question whether continuing to maintain an extension of credit (i.e., failing to pay the account balance) without making new purchases constitutes continued use of the account. No Nevada case authority supports the broad statutory construction given by the majority opinion. Significantly, the parties’ agreement itself concerns an “open end line of credit.” Shea continued to use the open line of credit by failing to pay the balance and enjoying the extension of credit.
Many Nevada cases hold as a general proposition that a party cannot simultaneously repudiate and benefit from a contract. (E.g., Union Lead Mining & Smelter Co. v. Dachner (1951) 68 Nev. 518 [239 P.2d 248, 252]; Federal Mining & Engineering Co. v. Pollak (1939) 59 Nev. 145 [85 P.2d 1008, 1012]; Alexander v. Winters (1897) 24 Nev. 143 [50 P. 798, 799].) The Mandel and Shea opinions recognize this very principle by citing Clark County Sports Enterprises v. City of Las Vegas (1980) 96 Nev. 167 [606 P.2d 171]. That principle applies here.
The majority also notes the amendment to the credit agreement (which Shea purportedly rejected) stated the arbitration provision survived termination, and repayment, of the account. The majority suggests such a provision could be unconscionable, but concludes that determination is not a necessary underpinning of the decision. I agree such a provision may be unconscionable. An unconscionable provision should not be relied upon to support the majority’s decision.
The majority opinion asserts Shea could not be expected to pay off his credit card debt. (I am not persuaded it is even relevant whether Shea could pay off his account. The assumption he could not pay the balance—either with his own funds or by finding another account—shows Shea is benefiting from the extension of credit.) Nevertheless, nothing in the appellate record cited by the majority supports the statement that Shea was unable to pay off his debt. Shea did not satisfy his burden to prove the arbitration agreement *93did not apply under Condee v. Longwood Management Corp., supra, 88 Cal.App.4th 215. As the trial court noted, Shea may or may not have had alternative sources of credit (with no arbitration clause) with which he could have paid off his Household Bank account. “In actual effect, anybody who is savvy when it comes to credit cards, as Mr. Shea was, knows that he opens one of the other six or seven envelopes in his mail, finds a card that’s giving him an extremely low interest rate for the first two months, and he rolls it all over and pays it off that way and saves himself some money in the short run.”
Shea might or might not have established another credit account without the arbitration provision to which he objected. The important point, however, is there is nothing in the record cited by the majority that tells us what Shea could or could not have done.
Finally, Shea and Mandel once were both plaintiffs in the same case, but their cases were separated because their claims were against different entities. Their claims for relief, however, are identical. Requiring Mandel to arbitrate while permitting Shea to proceed to trial may lead to inconsistent results. Because the trial court concluded that neither case should be ordered to arbitration, it did not make any findings regarding the possibility of inconsistent results under Code of Civil Procedure section 1281.2, subdivision (c).
I conclude that Shea’s claims are arbitrable for the same reasons and on the same basis as set forth in Mandel, and would reverse the trial court’s order denying the petition to compel arbitration. At a minimum, I would remand the matter to the trial court to make findings under Code of Civil Procedure section 1281.2.
Appellant’s petition for review by the Supreme Court was denied April 9, 2003.