In Arbitration with Capital One- They Think They Can Get Fees- Need Help

[Chills22]

Hello, Cap 1 is suing me for $2,XXX. The alleged account was opened in 2002 so I MTC Arbitration and Cap 1 did not oppose the motion. I initiated arbitration with JAMS. Cap 1 was supposed to pay $1,200 to commence and it looks like they did because I received a commencement letter and arbitrator strike list from JAMS. Cap 1 changed attorneys and I just received their Answer. In it they are alleging breach of contract and state that they are seeking not only the amount they claim I owe but they also state:

Under the Customer Agreement, Capital One is entitled to recover it's reasonable attorney's fees, costs, and expenses arising out of any legal action or other proceeding relating to sums due on the account.

Capital One seeks an award granting Capital One all fees and costs associated associated with the underlying state court action related to Claimant's account.  

Wherefore Capital One prays for judgment against Counterclaim Respondent... Capital One further prays for its' reasonable attorney's fees and expenses incurred in connection with its' Counterclaim; Capital One's cost of suit in this arbitration proceeding; Capital One's cost of suit in in the underlying state court action related to Claimant's account; and for such other relief as the arbitrator may deem just and proper. 

They then attach a customer agreement from 2014.

Again my agreement was from 2002 and that is what I submitted to the court in my MTC which was granted and to JAMS in my initiation paperwork. 

What should I do and how do I respond to this? My goal was to drive up their costs so that they would dismiss the case ideally or be willing to settle for a smaller amount. I don't think either of those are possible if they believe they can recover all of their costs.  

[BackFromTheDebt]

Well, the first lawyer was stupid to allow this to get into arbitration, but that is water under the bridge.

 

Fact of the matter is, you are in JAMS.  They agreed to get into JAMS.  There are certain rules for JAMS.  

Read up on the JAMS rules.  Very carefully.  

Also read up on California law.

Then see where what they are doing goes against the JAMS rules, and California law. 

Write up an objection to their counter claim for attorneys fees and JAMS fees and the like.  

Thing is, in JAMS, you HAVE to object to any games they play.  If they try something sleazy, you must object.  

[Chills22]

13 minutes ago, BackFromTheDebt said:

Well, the first lawyer was stupid to allow this to get into arbitration, but that is water under the bridge.

 

Fact of the matter is, you are in JAMS.  They agreed to get into JAMS.  There are certain rules for JAMS.  

Read up on the JAMS rules.  Very carefully.  

Also read up on California law.

Then see where what they are doing goes against the JAMS rules, and California law. 

Write up an objection to their counter claim for attorneys fees and JAMS fees and the like.  

Thing is, in JAMS, you HAVE to object to any games they play.  If they try something sleazy, you must object.  

In the letter that JAMS sent to me and opposing counsel they specifically said:

Those are the JAMS rules so there should not be a circumstance that I need to pay their fees. My understanding is that all fees are the responsibility of the non-consumer party. In the letter they state: According to this policy, the non-consumer party is responsible for 100% of the costs of arbitration and will be billed accordingly.

So I have to object and tell them those aren't the JAMS rules? How do I do that before an arbitrator has been assigned? Is there any template around for this? Sorry for all of the questions, I thought the attorneys would understand the rules and laws and make decisions based on that. 

[Chills22]

Also, I didn’t realize this but the new attorneys are in Alabama.  

[WhoCares1000]

The valid contract for this case is the contract in force at the time that you defaulted on the account, not the contract in force when you opened the account so the 2014 contract might be valid.

[BackFromTheDebt]

On 3/9/2018 at 3:28 PM, Chills22 said:

In the letter that JAMS sent to me and opposing counsel they specifically said:

Those are the JAMS rules so there should not be a circumstance that I need to pay their fees. My understanding is that all fees are the responsibility of the non-consumer party. In the letter they state: According to this policy, the non-consumer party is responsible for 100% of the costs of arbitration and will be billed accordingly.

So I have to object and tell them those aren't the JAMS rules? How do I do that before an arbitrator has been assigned? Is there any template around for this? Sorry for all of the questions, I thought the attorneys would understand the rules and laws and make decisions based on that. 

Just file an objection.  It doesn't matter if there is an arbitrator or not.  

File an objection the way you would with a court, just use JAMS instead of the court.  

[Chills22]

1 hour ago, BackFromTheDebt said:

Just file an objection.  It doesn't matter if there is an arbitrator or not.  

File an objection the way you would with a court, just use JAMS instead of the court.  

I am trying to work on it now. If I do it as an objection how would I word what I am requesting? Or should I do it as a motion to strike and ask that all references to the fees be stricken from their answer? 

[BackFromTheDebt]

There are all sorts of sample forms in the Sample Form subsection of this forum.  

Basically, they show you how to write a pleading.

 

Put something like "OBJECTION TO RESPONDENT'S DEMAND FOR FEES" in the title.

As the body, make sure you put the stuff from the JAMS letter, and move that JAMS deny the request.  

Look at some sample forms to see how to write it legal style.  

[Pericles]

1 hour ago, Chills22 said:

I am trying to work on it now. If I do it as an objection how would I word what I am requesting? Or should I do it as a motion to strike and ask that all references to the fees be stricken from their answer? 

Below is a redacted template of the same sort of motion (objection) that someone else posted when they were in exactly the same predicament that you're in now.

Quote

CLAIMANT’S OBJECTION TO  <BIG BANK>  <- replace with name of respodent ATTORNEY FEES AND ARBITRATION COSTS

   Claimant submits this OBJECTION to <BIG BANK> claim for attorney fees and arbitration costs.  

   On DATE  the Respondent submitted a counterclaim that asks for attorney fees and costs for disbursements of this arbitration matter. (Page , Line )

   JAMS policy on Consumer Arbitrations Minimum Standards,

8. In California, the arbitration provision may not require the consumer to pay the fees and costs incurred by the opposing party if the consumer does not prevail.

<redacted paragraph with identifying informaion>

(a) No neutral arbitrator or private arbitration company shall administer a consumer arbitration under any agreement or rule requiring that a consumer who is a party to the arbitration pay the fees and costs incurred by an opposing party if the consumer does not prevail in the arbitration, including, but not limited to, the fees and costs of the arbitrator, provider organization, attorney, or witnesses.

   What CCCP 1284.3(a) means is that in a consumer agreement that provides that a “prevailing party” recovers attorney’s fees from the other party, the attorney fee provision will not be enforceable against the consumer.

   The CCCP 1284.3(a) provides that even if a consumer loses, the consumer will not have to pay the attorney fees and costs of the opposing party even if the arbitration agreement or contract provides for the recovery of attorney’s fees and costs.

The Claimant objects to LAWYER continued misrepresentation of asking JAMS for attorney’s fees and costs as the facts show they are not allowed by both JAMS Minimum Consumer Standards and the California Code of Civil Procedure 1284.3(a)

See also Gardner Pool Plastering, Inc. v. Law.

[Chills22]

2 hours ago, Xerxes said:

Below is a redacted template of the same sort of motion (objection) that someone else posted when they were in exactly the same predicament that you're in now.

See also Gardner Pool Plastering, Inc. v. Law.

This was very helpful! I really appreciate it.

Should I also include that our 2002 agreement states that each side shall cover their own costs and has a survivability clause? I want to make sure I preserve my rights under that agreement to appeal. 

[WhoCares1000]

4 hours ago, Chills22 said:

This was very helpful! I really appreciate it.

Should I also include that our 2002 agreement states that each side shall cover their own costs and has a survivability clause? I want to make sure I preserve my rights under that agreement to appeal. 

Again, the 2002 agreement probably does not apply here. It would be the last agreement that was in force when you defaulted that would apply and they change those things more often than some people change their underwear.

[Chills22]

8 hours ago, WhoCares1000 said:

Again, the 2002 agreement probably does not apply here. It would be the last agreement that was in force when you defaulted that would apply and they change those things more often than some people change their underwear.

I did use the agreement as an exhibit to get into arbitration. It has a survivability clause which is supposed to cover any updates to the agreement. Since I am already in arbitration really all that I need it for is to reserve my right to appeal so that Cap 1 knows that I intend to appeal. 

[Pericles]

46 minutes ago, Chills22 said:

I did use the agreement as an exhibit to get into arbitration. It has a survivability clause which is supposed to cover any updates to the agreement. Since I am already in arbitration really all that I need it for is to reserve my right to appeal so that Cap 1 knows that I intend to appeal.

You're at the stage where it is time to submit your arbitrator strike and rank selections.  This is also the stage where it is often recommended that a more "formal complaint" (demand for arbitration) be submitted with your strike and rank selections, because your demand for arbitration can't be amended without arbitrator approval after an arbitrator is appointed.

How elaborate was your initial "complaint" (demand for arbitration) in your original filing?  If you didn't mention those issues (in the quote above) in your initial demand for arbitration, you can in your amended demand for arbitration.  Just be sure to submit it with (or before) your strike and rank selections. This is separate from any objection(s) you file, which can be filed as the need arises over the course of the arbitration.

In any "answer" to their counterclaim, you can also explicitly deny the relief sought in their prayer for relief in the counterclaim.

Aside from all of that, these issues may be raised in the initial telephone conference.  Don't waive any rights that you wish to preserve during the initial telephone conference.

[Chills22]

1 hour ago, Xerxes said:

You're at the stage where it is time to submit your arbitrator strike and rank selections.  This is also the stage where it is often recommended that a more "formal complaint" (demand for arbitration) be submitted with your strike and rank selections, because your demand for arbitration can't be amended without arbitrator approval after an arbitrator is appointed.

How elaborate was your initial "complaint" (demand for arbitration) in your original filing?  If you didn't mention those issues (in the quote above) in your initial demand for arbitration, you can in your amended demand for arbitration.  Just be sure to submit it with (or before) your strike and rank selections. This is separate from any objection(s) you file, which can be filed as the need arises over the course of the arbitration.

In any "answer" to their counterclaim, you can also explicitly deny the relief sought in their prayer for relief in the counterclaim.

Aside from all of that, these issues may be raised in the initial telephone conference.  Don't waive any rights that you wish to preserve during the initial telephone conference.

My initial complaint was very general. It just said that they filed a suit in Superior Court, I filed a MTC arbitration, and the motion was granted. I did cite the 2002 agreement as the location of the arbitration provision and attached 2 copies. 

So it sounds like for the Objection I should just submit what I have now related to JAMS policies and California State Law and not put in there the 2002 agreement's provision that both sides pay their own fees for arbitration and appeal. 

[BackFromTheDebt]

28 minutes ago, Chills22 said:

My initial complaint was very general. It just said that they filed a suit in Superior Court, I filed a MTC arbitration, and the motion was granted. I did cite the 2002 agreement as the location of the arbitration provision and attached 2 copies. 

So it sounds like for the Objection I should just submit what I have now related to JAMS policies and California State Law and not put in there the 2002 agreement's provision that both sides pay their own fees for arbitration and appeal. 

I would make the JAMS agreement the MAIN focus of the objection.

Perhaps a second part to the objection where you quote the 2002 contract, but perhaps not.  This depends on your strategy -- do you want to force them into a time-wasting argument as to whether to use the 2002 or 2014 contract, which you will probably lose, now or later.  If it were me, I would want that argument later.  At some point they might try to get it thrown out of arbitration because the 2014 agreement no longer has arb.  However, the court ordered it, and they did not object, so that is a moot point.  

If you are hoping to drive up their expenses, it might be better to have the argument over which contract to use decided by the arbitrator after a conference hearing as a separate issue.  

[Chills22]

7 minutes ago, BackFromTheDebt said:

I would make the JAMS agreement the MAIN focus of the objection.

Perhaps a second part to the objection where you quote the 2002 contract, but perhaps not.  This depends on your strategy -- do you want to force them into a time-wasting argument as to whether to use the 2002 or 2014 contract, which you will probably lose, now or later.  If it were me, I would want that argument later.  At some point they might try to get it thrown out of arbitration because the 2014 agreement no longer has arb.  However, the court ordered it, and they did not object, so that is a moot point.  

If you are hoping to drive up their expenses, it might be better to have the argument over which contract to use decided by the arbitrator after a conference hearing as a separate issue.  

I am hoping to drive up their expenses. So I will save that argument for later and focus on the JAMS policies. I have the arbitrator strike list and I am striking the cheapest arbitrator and listing my rankings by which arbitrator has the highest fees.  

[Clydesmom]

27 minutes ago, Chills22 said:

I am hoping to drive up their expenses.

For an original creditor that may not be a deterrent.  Both AMEX and Discover will spend a LOT of money in arbitration.  My theory is that they are paying an annual retainer to the attorneys so the expense in that area is fixed.  Cap1 may not care about the expenses on this since they removed the arbitration clause 8 years ago and rarely if ever face the survivability issue.  Have a plan for this.

[Chills22]

16 minutes ago, Clydesmom said:

For an original creditor that may not be a deterrent.  Both AMEX and Discover will spend a LOT of money in arbitration.  My theory is that they are paying an annual retainer to the attorneys so the expense in that area is fixed.  Cap1 may not care about the expenses on this since they removed the arbitration clause 8 years ago and rarely if ever face the survivability issue.  Have a plan for this.

I know, that is what I am worried about. However, I didn't really think I had a chance in regular court either. They just changed attorneys to a firm in Alabama (not sure how that would work if I request an in-person hearing; can they call-in?) and since they submitted a counterclaim to collect reasonable fees and costs I am hoping they will take their inability to do that into consideration at least to offer better settlement terms. They have not attempted to settle at all. Some of these arbitrator fees are very high. Thousands of dollars for half of a day.    

[Clydesmom]

11 minutes ago, Chills22 said:

I didn't really think I had a chance in regular court either.

A bad case in court is a bad case in arbitration.

12 minutes ago, Chills22 said:

They just changed attorneys to a firm in Alabama (not sure how that would work if I request an in-person hearing; can they call-in?)

Most likely this is a firm that is very experienced with arbitration.  They may not be the ones appearing but will advise a local firm on how to proceed.  This doesn't really help you much.

12 minutes ago, Chills22 said:

They have not attempted to settle at all.

Not surprising.  Both AMEX and Discover often refuse to settle once they enter arbitration.  

13 minutes ago, Chills22 said:

Some of these arbitrator fees are very high. Thousands of dollars for half of a day.    

From what we have seen with OCs they just don't care.  The point of arbitration with one is to attempt to get a better settlement but you cannot force them to do that.  

[Chills22]

2 hours ago, Clydesmom said:

A bad case in court is a bad case in arbitration.

I know. I just felt that this was my best option and it does give me some small satisfaction that they will be spending so much money to pursue this. It is likely they will end up spending much more than what they are able to collect if they follow all the way through.

In 2013 I was having a very rough time financially and I missed a few payments and with fees and interest the card ended up going over the limit (more fees for over the limit). They took away my ability to make any charges on the card. They called me and I explained my situation and they wanted me to make a payment of a couple hundred dollars to get back under the limit and make up for the missed payments. I told them I wanted to get back in good standing but the only way I could pay the amount that they were requesting was if I was able to have the card reinstated so that I could utilize the available balance because I would be using grocery money and would need to use the card to buy food. At this point I had been an 11 year customer with the card and never really had any issues. They told me that once I made the payment I would be able to use the available balance. I made the payment on the phone and after it was credited to my account the next day I tried to use the available balance for groceries and could not. I called them back and was told that they would not be reinstating the card and I needed to pay down the balance, and I would continue to be charged interest, but I would never be able to use the account again. I had to scramble to try to figure something out to feed my family and it was the last payment I ever made to Capital One.  

[LaneBlane]

On 3/12/2018 at 7:42 PM, Chills22 said:

In 2013 I was having a very rough time financially.......  it was the last payment I ever made to Capital One.  

If your last payment was made in 2013, the Statute of Limitations (SOL) should have run out four years from the date your payment was made.  This is based on the SOL in California.  The SOL clock will restart once a payment is made.

I currently have a commercial case with JAMS where the filing fee was $1,200.  When it comes to consumer debt, the only fee required to be paid by the consumer is $250.  Here's a link to JAMS consumer standards.   https://www.jamsadr.com/consumer-minimum-standards/

On this page, refer to #7.  Because you're in California, #8 also applies.  This one reads, "In California, the arbitration provision may not require the consumer to pay the fees and costs incurred by the opposing party if the consumer does not prevail."

 

[Chills22]

I just received the Appointment of Arbitrator Documents today. They are asking Capital One to pay a $5,000 deposit to move forward with a Management Conference Call. In the letter JAMS sent they again had the same language about not charging the consumer any fees. I also submitted my objection on Monday. 

[LaneBlane]

3 hours ago, Chills22 said:

I just received the Appointment of Arbitrator Documents today. They are asking Capital One to pay a $5,000 deposit to move forward with a Management Conference Call. In the letter JAMS sent they again had the same language about not charging the consumer any fees. I also submitted my objection on Monday. 

Please read my earlier post from this afternoon.

When you completed your Demand for Arbitration, did you specify this was consumer arbitration?  Look at page 5 of 7 of your JAMS Demand for Arbitration Form.  There are two check boxes toward the top to specify whether or not this is consumer arbitration.  You should have checked the first box, "YES, This is a CONSUMER ARBITRATION."

If you checked the correct box, I would send an objection to JAMS that states the matter involves consumer arbitration.  Here are two objections you can make:

1. This matter involves Consumer Arbitration.  As per JAMS' Consumer Arbitration Minimum Standards, Paragraph 7, "... when a consumer initiates arbitration against the company, the only fee required to be paid by the consumer is $250, which is approximately equivalent to current Court filing fees. All other costs must be borne by the company, including any remaining JAMS Case Management Fee and all professional fees for the arbitrator's services."  This is further stated in the JAMS Demand for Arbitration Form, Page 1 (D) which states, "For matters involving consumers, the consumer is only required to pay $250."
    
2. The Claimant is a resident of California.  According to JAMS Consumer Arbitration Minimum Standards, Paragraph 8, " In California, the arbitration provision may not require the consumer to pay the fees and costs incurred by the opposing party if the consumer does not prevail."

 

If you checked the wrong box on your demand form, indicating this involved a commercial matter, you will need to correct this with JAMS.

Again, here's a link to the consumer minimum standards:  https://www.jamsadr.com/consumer-minimum-standards/

[Chills22]

On 3/14/2018 at 9:34 PM, LaneBlane said:

Please read my earlier post from this afternoon.

When you completed your Demand for Arbitration, did you specify this was consumer arbitration?  Look at page 5 of 7 of your JAMS Demand for Arbitration Form.  There are two check boxes toward the top to specify whether or not this is consumer arbitration.  You should have checked the first box, "YES, This is a CONSUMER ARBITRATION."

If you checked the correct box, I would send an objection to JAMS that states the matter involves consumer arbitration.  Here are two objections you can make:

1. This matter involves Consumer Arbitration.  As per JAMS' Consumer Arbitration Minimum Standards, Paragraph 7, "... when a consumer initiates arbitration against the company, the only fee required to be paid by the consumer is $250, which is approximately equivalent to current Court filing fees. All other costs must be borne by the company, including any remaining JAMS Case Management Fee and all professional fees for the arbitrator's services."  This is further stated in the JAMS Demand for Arbitration Form, Page 1 (D) which states, "For matters involving consumers, the consumer is only required to pay $250."
    
2. The Claimant is a resident of California.  According to JAMS Consumer Arbitration Minimum Standards, Paragraph 8, " In California, the arbitration provision may not require the consumer to pay the fees and costs incurred by the opposing party if the consumer does not prevail."

 

If you checked the wrong box on your demand form, indicating this involved a commercial matter, you will need to correct this with JAMS.

Again, here's a link to the consumer minimum standards:  https://www.jamsadr.com/consumer-minimum-standards/

I did file an objection.

I haven't heard anything since the opposing attorney received the invoice earlier this week. Should I reach out to them and see if they are willing to dismiss? 

[BackFromTheDebt]

2 hours ago, Chills22 said:

I did file an objection.

I haven't heard anything since the opposing attorney received the invoice earlier this week. Should I reach out to them and see if they are willing to dismiss? 

Have you contacted them recently?

This is one of the best times to negotiate with them.  I don't know if Cap 1 will pursue your case or not.  Mine was many years ago, with some very serious violations of the part of Cap 1 and their attorneys, so Cap 1 didn't even bother to pay the fees.