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Arizona and Midland Funding - Compulsory Arbitration Conundrum


azwildman
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Filed my answer last week to Midland Funding's complaint.

 

The problem I have is that I want to fight Midland through JAMS but Arizona wants to appoint an arbiter for the two parties pre-trail to see if we can hash it out and solve the dispute. I can object to the arbiter or just not agree to anything in the court arbitration and we go to trial, but I want to avoid trial at all costs. I have a JAMS demand ready to go but will the state requirement mean that the cardholder agreement not come into play? Any advice would help. There seems to be limited cases on this site pertaining to Arizona.

 

Here is a link (hope I can post it) to the compulsory arbitration requirement in Arizona. Hope someone can steer me in the right direction:

 

https://govt.westlaw.com/azrules/Document/NF21848E066AF11DCBF04D29D5667A3CA?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=%28sc.Default%29

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I don't see the state requirement in any way trumping the card member agreement arb clause.  That clause is contractual, has JAMS as the arb forum, and the US Supreme Court has declared that arb clauses are to be honored and enforced.  ATT Mobility v Concepcion.  I would file the MTC arb with the court ASAP.

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I don't see the state requirement in any way trumping the card member agreement arb clause.  That clause is contractual, has JAMS as the arb forum, and the US Supreme Court has declared that arb clauses are to be honored and enforced.  ATT Mobility v Concepcion.  I would file the MTC arb with the court ASAP.

Thanks for responding, nobk. I am racking my brain looking for answers: "Should I just trust the court arbiter?..." "...or file a motion..." Mental hell I tell ya.

 

As for the MTC arb, would the court not just say that the plaintiff and I are already slated for arbitration, albeit the court's choosing? I want to be sure that a MTC arb is the right way to go because here in my county in AZ, the filing fee for a petition to stay or special action is around $175-204 depending on specifics. I would hate to toss good money at a lost cause.

 

If I file this MTC arb, do I attach the cardholder agreement to reinforce it? I sent a copy of the cardholder agreement with my answer--which requested the court toss the complaint due to improper venue as one of many of my denials and requests in the answer. Seems they either ignored it, didn't really read it or just interpreted it as I want to go into compulsory arbitration via court-appointed arbiter. Again, $200 just to file a motion.

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I also wanted to add that in the arbitration clause of the cardholder agreement states this:

 

The Claims subject to this arbitration provision include any Claims that arose or arise in the past, present or future, including Claims that arose before you opened your Account. Any questions about whether a Claim is subject to arbitration shall be resolved by interpreting this arbitration provision in the broadest way the law will allow it to be enforced. This arbitration provision is governed by the Federal Arbitration Act, not by any state arbitration statutes or rules. The arbitration shall be administered by JAMS under both its Financial Services Arbitration Rules and Procedures then in effect (the "Rules") and this Paragraph.

 

Does the bold wording mean that Arizona truly has NO jurisdiction in this matter? Am I being too optimistic?

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I also wanted to add that in the arbitration clause of the Citibank cardholder agreement it states this:

 

The Claims subject to this arbitration provision include any Claims that arose or arise in the past, present or future, including Claims that arose before you opened your Account. Any questions about whether a Claim is subject to arbitration shall be resolved by interpreting this arbitration provision in the broadest way the law will allow it to be enforced. This arbitration provision is governed by the Federal Arbitration Act, not by any state arbitration statutes or rules. The arbitration shall be administered by JAMS under both its Financial Services Arbitration Rules and Procedures then in effect (the "Rules") and this Paragraph.

 

Does the bold wording mean that Arizona truly has NO jurisdiction in this matter? Am I being too optimistic?

 

That is how I would read it:  the FAA governs.  And federal law trumps state law, pursuant to the Supremecy Clause of the Constitition.

 

Yes, attach a copy of the card member agreement to the MTC.

 

I hear you about the court fees to file a motion.  Is there any way you could get that fee waived, by filing in forma pauperis, if you qualify?

 

But filing the MTC is the only hope you have, IMO, of bringing the court case to a halt (stay pending arb).  Otherwise, it will keep steamrolling on.

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Any AZ case over 10,000 is subject to mandatory arbitration.  It usually comes on some pink paper.  It has Nothing to do with arbitration that comes stemming from the CC agreements  arbitration (JAMS).  I won my arbitration and the Plaintiff appealed that decision and took me to trial.  So Jams would be a good decision perhaps?

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Any AZ case over 10,000 is subject to mandatory arbitration.  It usually comes on some pink paper.  It has Nothing to do with arbitration that comes stemming from the CC agreements  arbitration (JAMS).  I won my arbitration and the Plaintiff appealed that decision and took me to trial.  So Jams would be a good decision perhaps?

Thanks for chiming in, piano lady. Here is what I did yesterday... I initiated JAMS and sent to appropriate office; and sent a copy to MIdland's lawyers. Is the court arbitration the place to express that I have JAMS initiated per agreement and that Midland is in breach? How should I approach this and what do you think the right course of action should be at this point? I am awaiting selection of court-appointed arbiter. If I file a MTC private arb, I sense that it could fall on deaf ears because they could just kick it aside saying that arbitration is slated already; wasting my 200 bucks.

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You HAVE TO file the MTC private arb, or the court case will keep rolling along, regardless of what you do in JAMS.  The court can't just ignore a motion like that, and if they do, you have a good issue for appeal.

 

I realize you are hesitant to spend money on the motion fee, but the MTC is the only thing that can stop the court case.

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In AZ, a Motion to Compel private contractual arbitration is not proper unless 1.) an agreement/contract has been shown with an arbitration clause; and 2.) one of the parties has refused to arbitrate per the agreement.  A.R.S. 12-1502(A).

 

Filing an answer is subjecting your claims to the jurisdiction of the court unless properly objected to.  You said your answer asked the court to dismiss the complaint due to improper venue.  Claims subject to arbitration are actually a jurisdictional challenge and not one of venue.  Perhaps the court ignored it because 'venue' was not the proper challenge.

 

It sounds like you have made some progress that can bring this back around.  You have shown the court an agreement with an arb clause, so requirement #1 from 12-1502(A) is in place.  Now all you need is Midland's refusal (or "ignoral") of your arbitration demand and then you can file a Motion to Compel, or "application" as it's called in 12-1502(A).

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@nobk4me

You HAVE TO file the MTC private arb, or the court case will keep rolling along, regardless of what you do in JAMS.  The court can't just ignore a motion like that, and if they do, you have a good issue for appeal.

 

I realize you are hesitant to spend money on the motion fee, but the MTC is the only thing that can stop the court case.

He didn't file a proper motion.  At best, the court will look at it as a defense and can wait until trial to hear the merits.

 

See my previous post for proper procedure in accordance with AZ statutes and Court Rules.

 

@azwildman

Unless there has been a major overhaul of the filing fee structure in the last few months, once you have filed your answer there are no additional costs for filing motions.  The cost for a motion is only when you have not previously paid to file an appearance (answer or other motion) in the lawsuit.

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I just took a look at the Maricopa County Superior Court website to confirm that there are indeed no fees for filing motions in Civil actions:

 

http://www.clerkofcourt.maricopa.gov/fees.asp#civil

 

If you're not in Maricopa, the fees may be different amounts.

 

Edit: A petition for a stay is $319, but I don't think that applies here.  At most, you'd be asking the court in a motion (or "application") to enforce a contract that orders the party to private arbitration.

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I just took a look at the Superior Court website to confirm that there are indeed no fees for filing motions in Civil actions:

 

http://www.clerkofcourt.maricopa.gov/fees.asp#civil

Thanks, Harry! I appreciate all of the feedback from you, nobk, and piano lady. That is fantastic news (at least, news to me) about the fee. I will definitely submit a MTC private arb then. Not that the fee was the deterent as much as the motion falling on deaf ears was my reluctance as seemed to have happened with the Answer which had the cardholder agreement attached.

 

Was I supposed to "exhibit a" that attachment with my Answer? Could that have been why it seemed to be ignored?

 

As for using the word "venue," I looked at my Answer and I clearly stated "...court's lack of jurisdiction over this matter..." BUT I did say along within that sentence: "...and is the improper venue because the exclusive remedy is contractually obligated private arbitration..." I said this in my Answer as well as other affirmative defenses, yet I still get court arb.

 

Next step, file the MTC private arb asap? What happens procedurally after that is filed? What should I expect?

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Once the Plaintiff files the complaint in sup court, the arbitration letters are automatically sent out. The people sending those out , do not know what you are doing in the case. It is mandatory.  Once an arbitrator is appointed , all communications go to them as well.  The Jams arbitration is what you should focus on , and not worry about the other arbitration.  That ruling is not binding anyhow. 

 

Either party can appeal the arbitrators ruling,.  In Jams, if it gets to that and they follow you in , that decision is binding.

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Once the Plaintiff files the complaint in sup court, the arbitration letters are automatically sent out. The people sending those out , do not know what you are doing in the case. It is mandatory.  Once an arbitrator is appointed , all communications go to them as well.  The Jams arbitration is what you should focus on , and not worry about the other arbitration.  That ruling is not binding anyhow. 

 

Either party can appeal the arbitrators ruling,.  In Jams, if it gets to that and they follow you in , that decision is binding.

Thanks! It's nice to see I have fellow travelers in this minefield of AZ courts. The laws here are a bit frustrating (especially the 6 year SOL).

 

Okay, you are saying focus on JAMS and not file a MTC private arb? How would you proceed, hot?

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Yes, Thanks to the darling Kyrsten Sinema who co-sponsored the 6 yr SOL bill. Inever elected arbitration because I only had the AAA option, and not that consumer friendly. If I had the Jams option knowing what I know now,  I would have elected it, and hoped the Plaintiff dismissed rather than follow me in.

 

Linda 7 is the arb specialist, and Harry has given you good advice.

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Usually a debt buyer (Midland, Cavalry, etc.) will farm out this kind of work to third-party law firms. In those cases there is a "capped fee" agreement, meaning that there is a "cap" on how much the debt buyer must pay in legal fees, no matter how much work is put in. This is bad for debtors, because the strategy of "running up their costs" no longer works - it doesn't cost the debt buyer any more money to pursue a debtor all the way through appeal. (The law firms accept this in order to keep getting the easy default judgement cases.) The advantage to debtors is that there is a limit to how much they will pay in legal fees if they lose.

 

In your case the lawyer works for the debt buyer (Midland). That means that he is probably on salary, so they are paying him whether he is working or not. What they will most likely do is use the Lodestar Method in order to calculate their fees, which could be astronomically higher than dealing with a capped fee.

 

If they follow you to JAMS (which depends on exactly how large the debt is), they will add those legal fees to the arbitrators award. No one really knows what the "cut off" amount is to be followed into JAMS. I've heard 5K, but is seems to be 10K. 

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Usually a debt buyer (Midland, Cavalry, etc.) will farm out this kind of work to third-party law firms. In those cases there is a "capped fee" agreement, meaning that there is a "cap" on how much the debt buyer must pay in legal fees, no matter how much work is put in. This is bad for debtors, because the strategy of "running up their costs" no longer works - it doesn't cost the debt buyer any more money to pursue a debtor all the way through appeal. (The law firms accept this in order to keep getting the easy default judgement cases.) The advantage to debtors is that there is a limit to how much they will pay in legal fees if they lose.

 

In your case the lawyer works for the debt buyer (Midland). That means that he is probably on salary, so they are paying him whether he is working or not. What they will most likely do is use the Lodestar Method in order to calculate their fees, which could be astronomically higher than dealing with a capped fee.

 

If they follow you to JAMS (which depends on exactly how large the debt is), they will add those legal fees to the arbitrators award. No one really knows what the "cut off" amount is to be followed into JAMS. I've heard 5K, but is seems to be 10K. 

Makes sense. What would compel them to follow me or anyone into JAMS? Isn't their business model mostly geared toward default judgements? Don't they need a strong standing in JAMS as they would in court, i.e. chain of custody, etc? Thanks again.

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The business model now depends on state. In most states the routine is now pretty mechanical - debt buyers know what buttons to push and tailor their cases for each jurisdiction. Default judgments are still the norm, but we see more and more people being chased to the end. Part of it because the evidence has gotten better - it is very hard to look a judge in the face and lie when confronted with CC statements with your name and address, etc.

 

JAMS will be worse than court - I've heard it explained that since creditors pay the bills, they get the rulings. Nobody expects to "win" in a forum like JAMS - the entire strategy is to make it so expensive for the plaintiff that they fold. If Midland is looking at collecting your whole five figure debt, plus their legal fees, they may not be scared by JAMS fees.

 

Others will (often vehemently) disagree with me, but arguments like chain of custody, standing, etc. don't work in most places anymore. Recent appellate rulings in AZ make this crystal clear. When a debt buyer brings a bill of sale, the line-item from that sale showing your account, CC statements, an online credit application and affidavits that tie all of it together using state-specific case law, courts now expect the defendant to provide countering EVIDENCE, not just challenging the trustworthiness of the plaintiff's case, and/or crying about violations of procedure.

 

Is your debt around 10K, or substantially higher? Have there been any settlement talks?

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