Re: National Arbitration Forum against me

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Here's an interesting ruling that was sent to me by a fellow
CounselNetter. It is only a Vermont Superior Court Ruling, so it
won't be much use as precedent in other jurisdictions. But there
might be some interesting ideas/resources etc in here to help
folks fight back against these crooks.

MBNA did not appeal this ruling and is currently being sued
by "Mary Smith" -- the name has been changed for privacy -- for
harrasment, violations of the FDCPA etc. Smith is also suing NAF,
Wolpoff & Abramson and the (incompetent?)lawyers who filed the
MBNA petition to arbitrate against Smith that was vacated in the
ruling below.

Please note that Smith is a Pro Se candidate (that means that she
did all of the legal work herself and represented herself.
Also, "Pro Per") yet she took the country's biggest arbitration
scammers -- with billions of dollars worth of lawyers at their
back -- to the woodshed for a good ol' Vermont butt kicking! :-)

If she can do it, so can you.

Good Luck!

STATE OF VERMONT WINDHAM COUNTY

MBNA AMERICA BANK NA,
Plaintiff,
v. WINDHAM SUPERIOR COURT DOCKET NO. 588-12-06
Wmcv "MARY SMITH,"

Defendant.

DENIAL OF PETITION TO CONFIRM ARBITRATION AWARD

Plaintiff-creditor MBNA filed this petition to confirm and enforce
an arbitration award of $7,776.85. However, MBNA failed to file
anything to establish the existence of a written agreement
containing an arbitration provision that was binding on Defendant-
debtor Smith. Moreover, MBNA's substitute service of the notice of
the arbitration on an unknown person who refused to identify
himself was inadequate under the arbitration rules, the civil
rules, and principles of due process. Additionally, the notice of
the arbitration award shows that it (and presumably anything else
sent out by the arbitrator) was sent to Smith at the wrong street
address. While it is true that state and federal laws reflect a
policy of favoring arbitration of commercial disputes and
upholding arbitration awards where parties to commercial
transactions have agreed to arbitrate, this does not mean that
courts should turn a blind eye to credit industry practices that
transgress the boundaries of due process. Accordingly, MBNA's
petition to confirm and enforce the award is DENIED and the award
is VACATED.'
Although the parties have presented cross-motions for summary
judgment, the Vermont Supreme Court has held that petitions to
confirm should themselves be summarily treated as motions under
V.R.C.P. 78. See Springfield Teachers Assn. V. Springfield School
Directors, 167 Vt. 180. 186 (1997). Since the Court is deciding
the petition without a hearing under V.R.C.P. 78(b)(2), the
questions are essentially the same - are there any genuine issues
of material fact in dispute and is it clear that one side is
entitled to prevail.

Existence of the Agreement
While not explicitly required by the Vermont Arbitration Act, the
Federal Arbitration Act (FAA) specifies that an application to
confirm an arbitration award must be accompanied by a copy of the
parties' agreement to submit any dispute to arbitration. 9
U.S.C.A. § 13(a). Here, MBNA did not file an agreement with its
application. It did subsequently attach a generic credit card
agreement as an unauthenticated exhibit to a brief; notably, the
standard arbitration provision therein states that the FAA will
govern. Even more notable, however, is absence of admissible
evidence to show that Smith ever received or consented to be bound
by this agreement.

At least two other courts have denied petitions to confirm awards
where the debtor challenged the existence of an applicable
agreement and MBNA failed to produce evidence of one. See MBNA
America Bank, N.A. v. Credit, 132 P.3d 898, 900-02 (Kan. 2006)
(noting a “national trend in which consumers are questioning MBNA
and whether arbitration agreements exist”); MBNA America Bank,
N.A. v. Straub, 815 N.Y.S.2d 450 (N.Y. Civ. Ct. 2006). Moreover, a
debtor may raise lack of an arbitration agreement as a defense to
a petition to confirm an arbitration award even if he or she did
not timely move to vacate the award. MBNA America Bank N.A v.
Boata, 893 A.2d 479 (Conn. Ct. App. 2006); see also Straub, 815
N.Y.S.2d at 455.1

Recognizing the unusual fashion in which credit card contracts are
generally formed, the

((([THIS IS A FOOTNOTE 2] MBNA would be hard-pressed to make this
argument in any case, since Smith denies receiving the notice of
the award and MBNA's own documentation shows it went to the wrong
address.)))

court in Straub set out exactly the method of proof it would
expect of credit card companies to establish the existence of an
applicable agreement in these types of cases: the credit card
company must provide both (1) the written contract containing the
provision authorizing arbitration, and (2) proof that the
cardholder agreed to be bound by this contract, in writing or by
conduct. 815 N.Y.S.2d at 452. In other contexts, these two steps
will generally be one and the same because the existence of the
written agreement can be established by simply producing the
executed written document. With credit cards, however, the written
agreement on which the creditor relies will generally not be an
executed document, so the second step - establishing that this
debtor implicitly agreed to be bound by the generic written
agreement containing the arbitration provision - will generally
require an affidavit from someone who can tie the debtor in
question to the generic written agreement by testifying, based on
personal knowledge, that the debtor received the written agreement
and subsequently proceeded to use the credit card. 815 N.Y.S.2d at
453-54.3 For a general discussion of the unique way credit card
agreements are made and how that impacts what must be done to
establish their existence, see also MBNA America Bank, N.A. v.
Nelson, 15 Misc.3d 1148(A), 2007 WL 1704618 (N.Y. City Civ. Ct.
2007), unpublished slip op. at sect. V.B., pp. 7-11.
Citing David L. Thelkeld & Co. v. Metallgesellschaft, 923 F.2d 245
(2d Cir. 1991), MBNA claims that the holding in that case
justifies its extreme position that no showing of an

((([THIS IS A FOOTNOTE 3]))) The court in Straub relied to some
degree on New York procedural rules, but these rules are not very
different from ours. More importantly, the requirements set out in
Straub are equally grounded in the FAA, which is fully applicable
to agreements in Vermont. Based on the extremely well-reasoned
analysis of the Straub holding, this Court finds it eminently
persuasive and predicts that it will be adopted by the Vermont
Supreme Court should the issues herein be squarely presented on
appeal..

applicable written agreement is necessary at all. This argument
takes Metallgesellsc haft beyond the reach of its ruling, which
did not involve the need to prove the arbitration agreement.
Metallgesellschaft, which was based on preemption analysis, held
that Vermont could not impose an additional requirement, beyond
those of the FAA, that there be an explicit and prominent
acknowledgment of the arbitration provision by the debtor,
separate from the debtor's agreement to be bound by the rest of
the contract. However, Metallgesekkschaft did not and could not
render unnecessary the existence of a written agreement containing
an arbitration provision and binding the particular debtor in
question, since the existence and production of such an agreement
is required by the FAA itself See 9 U.S.C.A. §§ 2 & 13. "Federal
public policy favors arbitration, but not at the price of fairness
and common sense." Stone v. Golden Wexler & Sarnese, P.C., 341
F.Supp.2d 189, 192 (E.D.N.Y. 2004).

Based on the language of 9 U.S.C.A. § § 2 & 13 and the persuasive
logic of Credit and Straub, the Court concludes that MBNA's
petition to confirm the arbitration award must be denied based on
its failure to document the existence of a written agreement
containing an arbitration provision which can be shown to be
binding on Smith.

Service

If MBNA's failure to establish the existence of a written
agreement containing an arbitration provision were the only
problem here, the Court would simply deny the petition to confirm
without prejudice, allowing MBNA the opportunity to document the
existence of such an agreement if it could. Such an opportunity to
cure would be superfluous, however, because MBNA's service of the
notice of arbitration was insufficient under the applicable rules
and principles of due process, resulting in an arbitration
proceeding that was fundamentally flawed.

Assuming that Smith can be shown to be bound by the generic
written agreement containing an arbitration provision, that
provision specifies that the arbitration will proceed under the
Code of Procedure of the National Arbitration Forum (NAF). Rule 6
(B) of the NAF Code lists the ways in which the notice of the
arbitration claim may be served. One of these ways, see Rule 6(B)
(4), is service in accordance with either the Federal Rules of
Procedure or the procedural rules of the jurisdiction in which the
agreement was made. Under both the Vermont Rules and the Federal
Rules, service may be made by leaving copies at the defendant's
dwelling house or usual place of abode, "with some person of
suitable age and discretion then residing therein." V.R.C.P. 4(d)
(1); see also F.R.C.P. 4(e)(2).

This was apparently what the process server tried to do in this
case, but the server's unsworn proof of service reveals that the
notice of arbitration was served on an unknown 5'7" white male at
Smith's address who refused to identify himself. Smith stated in
her Answer that she did not receive notice of the arbitration; and
she also submitted an affidavit from her boyfriend stating that he
did not receive the service and that he is 6’0” tall.

Additionally, the arbitrators used an erroneous street address for
Smith, so that notices subsequently mailed out by the arbitrators,
including the award itself, were sent to someone else's address.
"An elementary and fundamental requirement of due process in any
proceeding which is to be accorded finality is notice reasonably
calculated, under all the circumstances, to apprise interested
parties of the pendency of the action and afford them an
opportunity to present their objections." Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). Indeed, it is
to meet this minimal requirement that the papers to be served must
be left with a person of suitable age and discretion then residing
therein - otherwise, the act of leaving them with a third
person is not reasonably calculated to provide actual notice of
the pending proceeding. When, as here, an unknown person answers
the door and refuses to cooperate even to the point of identifying
himself, how can he be deemed a person of suitable age and
discretion then residing therein? Even more pertinently, how can
he be considered reasonably likely to actually pass the papers
along to the person who needs to receive them? The Court notes
that the process service company apparently recognized this
potential problem, because its invoice contained a warning that if
the papers were left with someone who refused to identify himself,
the client should consider whether further or alternative attempts
to serve should be made.

Although the Court's scope of review on a petition to confirm an
arbitration award is limited, it can and should include the
question of whether the parties were afforded due process in the
arbitration proceeding. Cf. Springfield Teachers' Assoc. v.
Springfield School Directors, 167 Vt. 180, 184 (1997) (court does
not review arbitrator's decision for errors of fact or law, but
confines its review to whether there are statutory grounds to
vacate or modify, and whether the parties were afforded due
process). Here, the Court concludes as a matter of law based on
the undisputed facts that the service of the notice of arbitration
was not on a person of suitable age and discretion who resided in
Smith's home, that it was not reasonably calculated to provide
Smith with actual notice of the proceeding, and that it therefore
violated both the procedural rules and Smith's due process rights.
Accordingly, the arbitration award must be vacated; and if MBNA
chooses to pursue its claim against Smith through arbitration, it
will need to start the process anew.

ORDER

MBNA's petition to confirm and enforce an arbitration award is
DENIED and the award is VACATED.