Arkansas Supreme Court Holds Federal Arbitration Act Requires Proof of Actual Receipt in Credit Card Agreement Amendment-by-Mail Case
Interpreting the Federal Arbitration Act, the Arkansas Supreme Court reversed and remanded the confirmation of an arbitration award in Betsy R. Danner v. MBNA America Bank, N.A., No. 06-1429. The case calls into question the practice of amending credit card agreements (and by extension, many types of consumer contracts such as insurance policies) by mail.
The holding suggests that summary confirmation of arbitration awards based on such amendments-by-mail is never appropriate when the consumer claims not to have received the amendment, or not to have agreed to the amendment.
Under Section 12 of the FAA, a party to an arbitration award has ninety days to challenge the validity of an award. Under Section 9 of the FAA the winner of arbitration can apply for an order confirming the judgment.
The plaintiff, Danner, held an MBNA credit card. After she agreed to the original card agreement, MBNA claims to have mailed an amendment to the agreement containing an arbitration clause, mandating that disputes regarding payments be decided by the National Arbitration Forum.
After Danner defaulted on her credit card payments, MBNA submitted a claim to the NAF. The arbitrator found for MBNA and issued an award on August 31, 2005. MBNA filed for confirmation of the award on December 13, 2005. Danner then contested the award, claiming not to have ever received or agreed to the arbitration clause:
Danner contends that she was not required to file a petition to set aside the arbitration award within three months of the filing or delivery of the award because she disputes entering into an arbitration agreement, she did not participate in the arbitration, and MBNA failed to provide proof that she had actually received notice of the award.
(emphasis supplied).
The Arkansas Supreme Court, following a First Circuit case, held that a material issue of fact existed as to whether there was a valid arbitration agreement between the parties, and reversed and remanded for such a determination.
