Sued - arbitration

[HulkHogan'sHeroes]

I am attempting to delete this post for personal reasons. 

[Harry Seaward]

Can you post the text of arbitration provision they sent, please? 

[Pericles]

Quote

Their lawyer emailed me several documents including: a copy of the Motion for Summary Disposition that they filed,

Were you aware of the Summary Judgment Motion before receiving a copy of it with the emailed batch of documents?  Was there prior service of the Summary Judgment Motion by postal mail?  Has it been filed with the court?  If so, when?

Even if you file a motion to compel arbitration, you'll likely still have to file some response to the Summary Judgment Motion, if it has been filed with the court.

 

 

[Clydesmom]

6 hours ago, Thenormalwoman said:

I am trying to prepare a letter of intent to arbitrate, a Motion to Compel Arbitration and the JAMS application to mail all at the same time. 

In Texas you have to raise arbitration as an affirmative defense in your answer.  Also, by having a pre-trial hearing and discovery you need to be prepared that the court will rule by participating in the litigation process and not using arbitration as an affirmative defense the court will rule you waived your right to it.   This has happened so be ready with valid legal arguments as to why you should prevail.  Texas case law is absolutely necessary.

[Brotherskeeper]

Here's a law article on waiver of right to arbitration in Texas. http://www.cooperscully.com/uploads/seminars/Sohlman-PerryHomes.pdf

IV. CONCLUSION

The Texas Supreme Court’s decision in Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2007). and subsequent Texas case law demonstrate that a finding of waiver of arbitration will be a rare event. The presumption against finding waiver of arbitration remains strong. For implied waiver of arbitration, a challenger must show that a party substantially invoked the litigation process as opposed to taking steps to avoid litigation, promoting settlement, or undertaking discovery that would also be allowed in arbitration. If any of these other explanations are available, the factors will likely tip more in favor of finding a party did not substantially invoke the litigation process. 

# # #

B. Establishing Waiver of Arbitration
In order to establish an implied waiver of arbitration, a party asserting the defense must show that the party seeking to compel arbitration substantially invoked the judicial process to the challenger’s detriment or prejudice. Id. at 589- 590. In deciding if the judicial process has been substantially invoked, courts must examine waiver of arbitration on a case-by-case basis and look at the totality-of-the-circumstances. Id. at 591. Substantially invoking the judicial process is not enough by itself to establish waiver of arbitration. A challenger must also show that it has suffered prejudice as a result. Id. at 593- 594. The question with waiver of arbitration “is not so much when waiver occurs as when a party can no longer take it back.” Id. at 595. The case for waiver must be strong as there is a strong presumption against waiver of arbitration, creating a difficult burden for the challenger. See id. at 590. 

The Texas Supreme Court looked at factors that federal courts utilize in applying a totality-of-the-circumstances test on a case-by-case basis. The factors include:
Whether the movant was plaintiff (who chose to file in court) or defendant (who merely responded);
How long the movant delayed before seeking arbitration;
Whether the movant knew of the arbitration clause all along;
How much pretrial activity related to the merits rather than arbitrability or jurisdiction;

How much time and expense has been incurred in litigation;
Whether the movant sought or opposed arbitration earlier in the case;
Whether the movant filed affirmative claims or dispositive motions;
What discovery would be unavailable in arbitration;
Whether activity in court would be duplicated in arbitration; and
Whether the case was to be tried.
Id. at 591 (citations omitted).

2. Is a Showing of Prejudice Required?
Waiver of arbitration will not be found based solely on substantial invocation of the judicial process; the challenger must also have suffered prejudice as a result of the opposing party’s actions. Prior to Perry Homes, the Texas Supreme Court found that prejudice was a requirement of waiver of arbitration in at least eight cases. Id. at 593-594. Likewise, federal courts also favor requiring a finding of prejudice. Ten of the twelve regional circuit courts require a showing of prejudice, and the remaining two consider it a factor. Id. at 594. The Court decided to adopt the prejudice requirement as the second part of the test for waiver in Perry Homes. Id. at 595.
The Court explained what type of prejudice must result from the opposing party’s substantial invocation of the judicial process. Under the Federal Arbitration Act, prejudice relates to inherent unfairness in a party taking advantage of the litigation process and then shifting to the arbitration process for its own advantage. The unfairness applies in terms of delay, expense or damage to the challenger’s position when a party forces the challenger to litigate issues and then seeks arbitration on the same issues. Id. at 597. 

[Brotherskeeper]

@Thenormalwoman Here's an article on amending pleadings. I'm not a lawyer, nor am I familiar with Texas rules of civil procedure; having said that, you may need to amend your original answer to include arbitration as an affirmative defense. Hopefully someone from Texas will chime in here. 

http://www.houston-opinions.com/law-amending-pleadings-under-TRCP.html

 "Unless a different deadline is provided by the trial court’s scheduling order, parties may freely amend their pleadings without leave of court up to seven days before trial unless the amended pleadings operate as a surprise to the opposing party.  TEX. R. CIV. P. 63; In re Estate of Henry, 250 S.W.3d 518, 526 (Tex. App.—Dallas 2008, no pet.).  A summary judgment proceeding is a trial within the meaning of rule 63.  Goswami v. Metro. Sav. & Loan a$$’n, 751 S.W.2d 487, 490 (Tex. 1980); Mensa-Wilmot v. Smith Int’l, Inc., 312 S.W.3d 771, 778 (Tex App.—Houston [1st Dist.] 2009, no pet.)."   

[Goody_Ouchless]

So the two questions are:

1) Will this be considered a "surprise?" I think we all know the answer to that. I would certainly argue that the time and money already put into prosecuting the case makes "arbitration" way more than a "surprise" at this stage.

2) As Xerxes mentioned, what is the timing of the MSJ? That could bring the seven day window into play.

 

[Clydesmom]

26 minutes ago, Brotherskeeper said:

@Thenormalwoman Here's an article on amending pleadings. I'm not a lawyer, nor am I familiar with Texas rules of civil procedure; having said that, you may need to amend your original answer to include arbitration as an affirmative defense. Hopefully someone from Texas will chime in here. 

http://www.houston-opinions.com/law-amending-pleadings-under-TRCP.html

 "Unless a different deadline is provided by the trial court’s scheduling order, parties may freely amend their pleadings without leave of court up to seven days before trial unless the amended pleadings operate as a surprise to the opposing party.  TEX. R. CIV. P. 63; In re Estate of Henry, 250 S.W.3d 518, 526 (Tex. App.—Dallas 2008, no pet.).  A summary judgment proceeding is a trial within the meaning of rule 63.  Goswami v. Metro. Sav. & Loan a$$’n, 751 S.W.2d 487, 490 (Tex. 1980); Mensa-Wilmot v. Smith Int’l, Inc., 312 S.W.3d 771, 778 (Tex App.—Houston [1st Dist.] 2009, no pet.)."   

The only problem with this citation is it is for Civil Court.  A few years back Texas enacted a different more lax set of rules for Justice Court and those are the 500 section.  That is the case law that would be needed since that is where the case is.

 

[Brotherskeeper]

http://guides.sll.texas.gov/small-claims

http://www.txcourts.gov/media/1435952/trcp-all-updated-with-amendments-effective-january-1-2018.pdf

RULE 500.3. APPLICATION OF RULES IN JUSTICE COURT CASES

(e) Application of Other Rules. The other Rules of Civil Procedure and the Rules of Evidence do not apply except:
(1) when the judge hearing the case determines that a particular rule must be followed to ensure that the proceedings are fair to all parties; or
(2) when otherwise specifically provided by law or these rules.

RULE 502.5. ANSWER
(b) General Denial. An answer that denies all of the plaintiff’s allegations without specifying the reasons is sufficient to constitute an answer or appearance and does not bar the defendant from raising any defense at trial.

RULE 502.7. AMENDING AND CLARIFYING PLEADINGS
(a) Amending Pleadings. A party may withdraw something from or add something to a pleading, as long as the amended pleading is filed and served as provided by Rule 501.4 not less than 7 days before trial. The court may allow a pleading to be amended less than 7 days before trial if the amendment will not operate as a surprise to the opposing party. 

[Brotherskeeper]

@Thenormalwoman Please post the Citibank arbitration clause as @Harry Seaward requested. Are you in the Texas equivalent to small claims court?

This is from a current Citi cardmember agreement arbitration section:

"Arbitration limits • Individual Claims filed in a small claims court are not subject to arbitration, as long as the matter stays in small claims court."

[Clydesmom]

34 minutes ago, Brotherskeeper said:

@Thenormalwoman Please post the Citibank arbitration clause as @Harry Seaward requested. Are you in the Texas equivalent to small claims court?

This is from a current Citi cardmember agreement arbitration section:

"Arbitration limits • Individual Claims filed in a small claims court are not subject to arbitration, as long as the matter stays in small claims court."

I completely forgot about that Citi carve out  If she is in Justice Court she is in small claims.

[Pericles]

5 hours ago, Brotherskeeper said:

Are you in the Texas equivalent to small claims court?

This is from a current Citi cardmember agreement arbitration section:

"Arbitration limits • Individual Claims filed in a small claims court are not subject to arbitration, as long as the matter stays in small claims court."

 

4 hours ago, Clydesmom said:

I completely forgot about that Citi carve out  If she is in Justice Court she is in small claims.

 

The language in the agreement is "small claims court".

From HowToSueInJusticeCourt-SB0119E-1013_Web.pdf:

Quote

Small claims court was known as the “People’s Court” and on August 31, 2013 it was abolished by the Texas Legislature. This does not mean you can no longer file your small claims case. Instead, you will file your small claims case in Justice Court.

Some entities, however, may not use Justice Court. Banks and other institutions that are in the business of lending money for interest cannot sue in Justice Court. A collection agency also cannot sue in Justice Court. But if you have a claim against a bank or a collection agency, you can file suit against them in Justice Court.

 

But debt buyers sue in Texas Justice Court all the time, (see sample petition here).  Not by filing a small claims case in Justice Court, but instead by filing a debt claim case in Justice Court.

From Taylor County Closure - Small Claims and Debt Claims:

Quote

While small claims court and debt claim court both occur in the same courtroom, are presided over by the same justice of the peace, and have the same monetary limits, they are in fact two very different courts with different rules.

Also, an action in small claims court may not be brought by:
An assignee of the claim or other person seeking to bring an action of an assigned claim
A person primarily engaged in the business of lending money at interest
A collection agency or agent

 

From Information about Debt Claims Cases:

Quote

Debt Claim Cases in the Justice Court are governed by Rules 500 – 507, and Rules 508.1 – 508.3 of the Rules of Practice in Justice Courts

Debt-Claim-Rules-508.pdf

 

So, it seems that some argument(s) can be be made about the following:

The Texas Legislature abolished "small claims court" in 2013.

A small claims case may be filed in Justice Court, but not all cases filed in Justice Court are small claims cases.

A debt claim case is not a small claims case.  A debt claim case is governed by additional rules not applicable to a small claims case.

An assignee of a claim may not bring an action in a small claims case.

 

I don't know if any of the above arguments have been tried or will work.

[Brotherskeeper]

Justice Court Case Types
Small Claims

A small claims case is a lawsuit brought for the recovery of money damages, civil penalties, personal property, or other relief allowed by law. The claim can be for no more than $10,000, excluding statutory interest and court costs but including attorney fees, if any. Small Claims cases are governed by Rules 500-507 of Part V of the Rules of Civil Procedure.

Debt Claim

A debt claim case is a lawsuit brought to recover a debt by an assignee of a claim, a debt collector or collection agency, a financial institution, or a person or entity primarily engaged in the business of lending money at interest. The claim can be for no more than $10,000, excluding statutory interest and court costs but including attorney fees, if any. Debt Claim cases in justice court are governed by Rules 500-507 and 508 of Part V of the Rules of Civil Procedure.

RULE 508. DEBT CLAIM CASES

RULE 508.1. APPLICATION

Rule 508 applies to a claim for the recovery of a debt brought by an assignee of a claim, a financial institution, a debt collector or collection agency, or a person or entity primarily engaged in the business of lending money at interest.. . .

RULE 508.2. PETITION

(a) Contents. In addition to the information required by Rule 502.2, a petition filed in a lawsuit governed by this rule must contain the following information:

(1) Credit Accounts. In a claim based upon a credit card, revolving credit, or open account, the petition must state:

     (A) the account name or credit card name;

     (B) the account number (which may be masked);

     (C) the date of issue or origination of the account, if known; 

     (D) the date of charge-off or breach of the account, if known;

     (E) the amount owed as of a date certain; and

     (F) whether the plaintiff seeks ongoing interest. . . .

(4) Assigned Debt. If the debt that is the subject of the claim has been assigned or transferred, the petition must state:

     (A) that the debt claim has been transferred or assigned;

     (B) the date of the transfer or assignment;

     (C) the name of any prior holders of the debt; and

     (D) the name or a description of the original creditor.

 

[Goody_Ouchless]

Nice find - so anything under 10K in TX will be subject to Small Claims carve-out.

 

[Pericles]

40 minutes ago, Goody_Ouchless said:

Nice find - so anything under 10K in TX will be subject to Small Claims carve-out.

I'm missing how you've come to that conclusion.  Would you please elaborate?

[Goody_Ouchless]

My mistake - I was thinking of clauses that include DE Justice Court as an equivalent. It seemed that the combination of Small Claims and Justice could be used to argue that Justice Court is now Small Claims, but since debt collection was previously banned in TX Small Claims, that would be a stretch.

The Citi agreement I found specifically lists AAA, and says that they will not pay debtor's costs in debt collection cases.

 

[Pericles]

1 hour ago, Goody_Ouchless said:

The Citi agreement I found specifically lists AAA, and says that they will not pay debtor's costs in debt collection cases.

OP mentioned in another topic (here) that the suit was filed just within the SOL, which is 4 years in TX.  So, the agreement that cavalry provided is likely from the 2013-2014 era.  Virtually all citibank agreements from that period contain arbitration provisions like the one in this agreement from that period.

Your point is important though because going forward citibank arbitration provisions will be of much less use to consumers in debt collection actions.

 

1 hour ago, Goody_Ouchless said:

... I was thinking of clauses that include DE Justice Court as an equivalent. It seemed that the combination of Small Claims and Justice could be used to argue that Justice Court is now Small Claims, but since debt collection was previously banned in TX Small Claims, that would be a stretch.

Two recent topics (here and here) for Texas cases both have arbitration agreements that reference small claims language in some fashion or other.  The former has the infamous barclays language with the language about an equivalent court and the ambiguous quoted small claims language.

According to the OP in those topics, both of those cases were heard in the same court on the same day in immediate succession.  The attorney for the barclays' case made arguments about the small claims language but the justice denied arbitration not based on that, but based on cost arguments made by the attorney.  Then, the justice orders arbitration in the other case that came right after.

So, as a practical matter, OP in this thread should consider any argument about arbitration in Texas Justice Court something like a roll of the dice.

[Goody_Ouchless]

12 minutes ago, Xerxes said:

So, as a practical matter, OP in this thread should consider any argument about arbitration in Texas Justice Court something like a roll of the dice.

Exactly. Small Claims language is least worry. I would expect the amount of litigation that has already taken place to be the biggest obstacle. The fact that the plaintiff has already expended resources in court would seem to be a compelling argument, and one that should fit the definition of "surprise" in an amended answer.

[Pericles]

Midland made an argument (see pdf in this post) about prejudice and waiver because of delay in a Texas case. We don't know if it worked, because OP abandoned that topic shortly thereafter.  But in that case Midland claimed that the defendant made the argument for arbitration very close to trial, but the OP denied such delay.

In attempts to help the OP in that topic, BV80, debtzapper, and Brotherskeeper each posted some Texas case law about waiver, here, here and here.

Maybe if OP of this thread is reading, she can get a head start to rebut waiver arguments in case cavalry makes them.

[HulkHogan'sHeroes]

Hey everybody, sorry I disappeared.  I attached the card agreement and fact sheet. It is from 2013 and it does have the small claims court exception but I agree that that shouldn't count for justice court. 

Fact sheet and card agreement.pdf

[HulkHogan'sHeroes]

On 2/20/2018 at 6:34 PM, Xerxes said:

Were you aware of the Summary Judgment Motion before receiving a copy of it with the emailed batch of documents?  Was there prior service of the Summary Judgment Motion by postal mail?  Has it been filed with the court?  If so, when?

Even if you file a motion to compel arbitration, you'll likely still have to file some response to the Summary Judgment Motion, if it has been filed with the court.

 

 

No, I wasn't aware of it until the email. I got service of it in the mail a few days later. I haven't filed a response to it. Unfortunately, the hearing for the MSJ is only 5 days away so I'm not sure if I have the option now or if I just need to bring an answer with me. Online, it shows a hearing for the MSJ is on March 5th but the non-jury trial still shows up as scheduled for April 9th. 

In response to my MTC, it just says, "PER JUDGE TO ADDRESS AT SUMMARY DISPOSTION HEARING" 
 

[HulkHogan'sHeroes]

On 2/21/2018 at 2:11 PM, Goody_Ouchless said:

So the two questions are:

1) Will this be considered a "surprise?" I think we all know the answer to that. I would certainly argue that the time and money already put into prosecuting the case makes "arbitration" way more than a "surprise" at this stage.

2) As Xerxes mentioned, what is the timing of the MSJ? That could bring the seven day window into play.

 

That's where it's kinda weird.  A hearing for the MSJ is scheduled for March 5th, but it also still shows the non-jury trial scheduled for April 9th.  Does a hearing count as trial? Also, in response to my MTC, a comment was added to the case that says, PER JUDGE TO ADDRESS AT SUMMARY DISPOSTION HEARING"  so I guess the judge is planning to decide about both the MSJ and the MTC at the same hearing and is leaving the trial scheduled just in case. 

[Goody_Ouchless]

4 minutes ago, Thenormalwoman said:

Online, it shows a hearing for the MSJ is on March 5th but the non-jury trial still shows up as scheduled for April 9th. 

They set schedule in advance for events that may never happen. That is where many folks defending themselves get tripped up - there could be a mediation session scheduled for a month in the future, and in the meantime they file an MSJ. The defendant is focused on the scheduled hearing, not realizing that the judge could rule before that date ever arrives.

8 minutes ago, Thenormalwoman said:

In response to my MTC, it just says, "PER JUDGE TO ADDRESS AT SUMMARY DISPOSTION HEARING" 

That could mean that he's decided that too much litigation has already taken place, so he'll dispose of MTC and then grant MSJ.

[HulkHogan'sHeroes]

1 minute ago, Goody_Ouchless said:

They set schedule in advance for events that may never happen. That is where many folks defending themselves get tripped up - there could be a mediation session scheduled for a month in the future, and in the meantime they file an MSJ. The defendant is focused on the scheduled hearing, not realizing that the judge could rule before that date ever arrives.

That could mean that he's decided that too much litigation has already taken place, so he'll dispose of MTC and then grant MSJ.

My defense is that as soon as I was presented with the card agreement showing the option to arbitrate, I went for that option. If they had presented the card agreement (they included no documentation at all) with their initial petition, I would have opted for arbitration at that point. 

[Goody_Ouchless]

From all we've seen, it looks like you are good on the Small Claims part, but the whole Amending Answer/MTC thing may be too late. I would expect the plaintiff to argue that they have invested  enough resources in this case, already, that granting MTC, at this stage, amounts to trial-by-ambush.

Hopefully others have case law that you can use to counter that argument. Does CC agreement have language stating that arbitration can be elected "any time," even after litigation in court has already started? I know I've seen similar language in some agreements.