Being sued by Midland Funding, Filed MTC ARB they Opposed.

[Busymom5]

I am being sued by Midland funding. I filed MTC ARB. Midland 'S Attorney's filed an Opposition to MTC based on equity and are asking court to assign a Judge Pro Tem. Can I come an opposition to their opposition? Suppose to go to court for oral argument on Monday. Help please. 

[Goody_Ouchless]

2 minutes ago, Busymom5 said:

Midland 'S Attorney's filed an Opposition to MTC based on equity

Can you post their actual opposition?

 

[Busymom5]

See

[Busymom5]

Can I file this and should I? I hope it is all readable if not I will try again. 

[Busymom5]

I know it may not sound like a lot but I have no way to pay and they will not accept payments. 

[Goody_Ouchless]

We'll have to look at that closer, but those arguments about it being too expensive don't hold up. They put arbitration in their contract and they need to abide by it.

 

[Busymom5]

Here are better copies, and I forgot to mention that this is in Arizona.  Midland also filed or sent me "Notice of service of Plaintiff's Rule 121 Disclosure Statement" with another copy of all the same paperwork that they sent when they summoned me.  I am supposed to go to court on Monday for an "Oral Argument".  Do I need to send a Rule: 121 Disclosure Statement to them as well?  I don't know what I would send other than the copy of the contract, which I have already sent to them with the copy of the court stamped MTC ARB. Should I send it again?  Should I file my Opp to their Opp or wait until Monday at court? I also included a copy of my MTC ARB that they are Opposing.  I appreciate any advice.

Def Opp to Plaintiff's Opp to MTC ARB.pdf Plaintiff's Opp to MTC.pdf Def MTC ARB.pdf

[Goody_Ouchless]

I love their argument, and am surprised we haven't seen it before. Essentially they are saying that a contract needs to interpreted in terms of reasonable intent, as clearly the intent was not to spend 5K to collect 800. They back that up with the idea that arbitration is intended to be efficient and cost effective, which this certainly isn't.

The problem they have is that the cases they cite don't apply to this situation:

Van Ness concerns a clear "carve out" in the original agreement that precludes arbitration. Not sure how they are trying to relate that to ARS 12-1501

Goddard concerns intent in a contract when the language is ambiguous. Has nothing to do with arbitration

Menorah appears to concern a case where one party invoked arbitration in order to delay a case that was already in progress. It is, however, damning in repeated references to arbitration being meant to make things faster and cheaper and not to be used as a "weapon."

Ultimately the arbitration clause in the CC agreement is clear and unambiguous. A contract exists and court must compel.

 

[Busymom5]

So should I file my opposition to their opposition of the MTC ARB as a confirmation that I still intend to push for ARB or wait until the oral argument on Monday and hope that the judge agrees with you? I posted a copy of my Opposition to their OPP of my MTC ARB that I was thinking about filling, did you see that? I am not sure if I can do that or not, but it basically states that the CC agreement calls for ARB and that it also provides for a an assigned method of ARB and that the court does not have jurisdiction to assign a Judge Pro Tem. 

[Busymom5]

I have not filled this, I guess I am questioning whether it is proper format, the Def Opp to Ptf Opp to MTC ARB? 

[Busymom5]

Again I appreciate any advice you can give. 

[Goody_Ouchless]

Probably too late if hearing is Monday. I would stick to facts that neither AZ statues, nor CC agreement are ambiguous. Plaintiff put arb clause in solely in order to derail class action suits, so to argue that arbitration is meant as a totally benign means of conflict resolution is a bit disingenuous.

They bought that contract and need to own it.

 

[Brotherskeeper]

15 hours ago, Busymom5 said:

I have not filled this, I guess I am questioning whether it is proper format, the Def Opp to Ptf Opp to MTC ARB? 

Defendant's Reply to Plaintiff's Response in Opposition to Defendant's Motion to Compel Arbitration and Dismiss (Caveat: I am not a lawyer.)

16 A.R.S. Rules of Civil Procedure, Rule 7.1
Rule 7.1. Motions
Currentness
(a) Requirements.
(1) Generally. An application to the court for an order must be by motion which, unless made during a hearing or trial, must be in writing, state with particularity the grounds for granting the motion, and set forth the relief or order sought.
(2) Supporting Memorandum. All motions must be accompanied by a memorandum setting forth the reasons for granting the motion, along with citations to the specific parts or pages of supporting authorities and evidence. Unless the court orders otherwise, a motion and supporting memorandum may not exceed 17 pages, exclusive of attachments and any required statement of facts.
(3) Responsive and Reply Memoranda. Unless a specific rule states otherwise, an opposing party must file any responsive memorandum within 10 days after the motion and supporting memorandum are served; and, within 5 days after a responsive memorandum is served, the moving party may file a reply memorandum, which may address only those matters raised in the responsive memorandum. Unless the court orders otherwise, a responsive memorandum may not exceed 17 pages, exclusive of attachments and any required statement of facts, and a reply memorandum may not exceed 11 pages, exclusive of attachments.
(4) Affidavits and Other Evidence. Affidavits and other evidence submitted in support of any motion or memorandum must be filed with the motion or memorandum, unless the court orders otherwise.
(5) Motions in Open Court. The court may waive any of these requirements for motions made in open court.

[Brotherskeeper]

@Goody_Ouchless @fisthardcheese Perhaps we should start an archive of all of these JDB oppo MTC response briefs we're seeing. They really are trying to find an argument that a judge will buy. 

[Goody_Ouchless]

Good idea. I think this is as close as they've come - $5000 to arbitrate an $800 dispute does not equal efficiency and economy, and they've come really close to connecting those dots.

The problem they still face is that there is no ambiguity in the CC agreement and the defendant can argue that they prefer, for whatever reason, to adjudicate this matter in AAA, per the clearly written contract.

Clever of them to say "if you want arbitration, for arbitration's sake, then have judge appoint one." This puts the defendant in the position of essentially having to admit that AAA is being used as a weapon.

 

[Busymom5]

Thank you, for that information, I guess I am to late and lost my opportunity to reply. It says that the 

The court may waive any of these requirements for motions made in open court.

Could I change it to a reply or motion and take it to court on Monday? 

What about disclosure, I never sent anything other than a copy of the contract with the original MTC? 

 

[Busymom5]

It sounds like you guys don't think I stand a chance at this point with their argument. 

[Goody_Ouchless]

We need @fisthardcheese to chime in. Plaintiffs have made the "cost" argument before and judges say "tough - it's your contract." This is the first time we've seen them tie it together with case law, although I have no idea if any of those cases carry any weight.

Monday you just argue that the statute and contract are clear and unambiguous. 

 

[Busymom5]

According to ARS Rule 7.1(5)   "The Court may waive any of these requirements for motions made in open court."   Can I bring my reply to court without including it in a 1221 Statement of Disclosure? or are you saying for me to just verbally argue the points in my reply?  I wish that I had realized the time frame better. Thank you both for your help, I really appreciate it.

[Brotherskeeper]

@Busymom5 I am not familiar with Arizona rules or court. But, you should always know your court rules because the court expects you to. If you are having a hearing to "hear" the arguments for and against your motion, you would bring up support for your arguments or those that tear down theirs at the hearing. A Reply to a Response is confined to new arguments or issues they raised in their Response that were not covered in your Motion itself. Having the judge read everything before the hearing is wise but perhaps not critical to your success. You'll need to have precedential court rulings on the unconscionability argument over the arb costs and the required elements under case law that must be proved/supported by them in order for the judge to agree. 

[Busymom5]

According to the rules  I only had 40 days to send the plaintiff our 121 disclosure statement, and we did not do that.  The only thing we had to send is the contract itself and we had already sent a copy of it with the MTC ARB.  Could I be penalized for not sending that? 

[Goody_Ouchless]

The argument seems to hinge on how court defines "equity," as used in ARS 12-1501. Midland is arguing that, while there is no legal remedy available, the court is free to invalidate the arbitration clause based on a sense of fairness. I guess it's just me, but I'm blown away that it may have always been this simple to destroy the arbitration strategy.

 

[Brotherskeeper]

@Busymom5 Here are some citations to consider:

Harrington v. Pulte Home Corp., 211 Ariz. 241, 252-53 119 P.3d 1044, 1055-56 (Ct.App. 2005).

" ¶ 9...Specifically, the United States Supreme Court has held that states may regulate arbitration clauses "under general contract law principles and they may invalidate an arbitration clause `upon such grounds as exist at law or in equity for the revocation of any contract.'" Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 281, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (quoting 9 U.S.C. § 2) (emphasis added).[6] This authority is limited:

What states may not do is decide that a contract is fair enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce its arbitration clause. The Act makes any such state policy unlawful, for that kind of policy would place arbitration clauses on an unequal `footing' directly contrary to the Act's language and Congress' intent.
Id.

¶ 10 Because of this policy, "[g]enerally applicable contract defenses, such as 1049*1049 fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2" of the FAA. Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). Courts may not, however, "invalidate arbitration agreements under state laws applicable only to arbitration provisions." Id.

¶ 11 Accordingly, Arizona contract law may be applied if it is contract law applicable to contracts generally and not simply arbitration clauses. Both the doctrines of reasonable expectations and substantive unconscionability are such doctrines. Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383, 392, 682 P.2d 388, 397 (1984) ("In adopting this rule [of reasonable expectations] we do not create a special field of contract law . . . ."); Maxwell v. Fid. Fin. Servs., Inc., 184 Ariz. 82, 87-88, 907 P.2d 51, 56-57 (1995) ("This court previously has noted the rule that `reasonable expectations' and unconscionability are two distinct grounds for invalidating or limiting the enforcement of a contract. . . ."). Arizona law pertaining to reasonable expectations and substantive unconscionability is applicable here.

[snip]

"¶ 38...We are not at liberty to create a separate "reasonable expectations" rule for arbitration clauses. Were we to do so we would run afoul of Supreme Court decisions and the FAA. See Allied-Bruce Terminix Cos., 513 U.S. at 281, 115 S.Ct. 834 ("What States may not do is decide that a contract is 1055*1055 fair enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce its arbitration clause.")."

 

Rocz v. Drexel Burnham Lambert, Inc., 154 Ariz. 462, 743 P.2d 971, 975 (Ariz.Ct. App.1987) :

"Rocz's arguments are ill-conceived. Parties cannot repudiate their written contracts by asserting that they neglected to read them or did not really mean them. As the court stated in Boyd v. Merrill Lynch, 611 F. Supp. 218, 221, aff'd on rehearing, 614 F. Supp. 940 (S.D.Fla. 1985):

In this case, plaintiff has alleged that she is an unsophisticated investor, that the arbitration clause is merely a standardized form favoring defendants, and that plaintiff never agreed to be bound by the arbitration provision. Plaintiff basically attempts to argue out of existence all standardized customer contracts in the brokerage industry. The proliferation of these contracts, while not absolute proof of their legality, certainly is testimony to their workability and suggests that they are valid."

 

Clark v. Renaissance W., LLC, 232 Ariz. 510, 307 P.3d 77, 79 (Ariz.Ct.App.2013).

"¶ 10 In determining whether arbitration costs are prohibitively expensive, courts have considered several factors. First, the party seeking to invalidate the arbitration agreement must present evidence concerning the cost to arbitrate. Randolph, 531 U.S. at 91-92, 121 S.Ct. 513; Harrington, 211 Ariz. at 252, ¶¶ 41-44, 119 P.3d at 1055. This evidence cannot be speculative; it must be based on specific facts showing with reasonable certainty the likely costs of arbitration. Randolph, 531 U.S. at 91-92, 121 S.Ct. 513; Harrington, 211 Ariz. at 252, ¶¶ 41-44, 119 P.3d at 1055; see also Phillips v. Assocs. Home Equity Servs., Inc., 179 F.Supp.2d 840, 847 (N.D.Ill.2002) (party must make "a reasonable, good faith effort to estimate" arbitration costs).

¶ 11 Second, a party must make a specific, individualized showing as to why he or she would be financially unable to bear the costs of arbitration. Id. at ¶ 47. This evidence must consist of more than conclusory allegations stating a person is unable to pay the costs of arbitration. Id. Rather, parties must show that based on their specific income/assets, they are unable to pay the likely costs of arbitration. Id."

[MikeB35]

8 hours ago, Brotherskeeper said:

@Goody_Ouchless @fisthardcheese Perhaps we should start an archive of all of these JDB oppo MTC response briefs we're seeing. They really are trying to find an argument that a judge will buy. 

I honestly this this is a great idea and should be pinned for reference!

[Harry Seaward]

While the Menorah case isn't binding on any AZ court, if it were, this would be the nail in the coffin of their "economic"/"equity" argument from Menorah.

Quote

("Arbitration is a service sold in a competitive market. The rules adopted by the sellers are presumptively efficient."); see also Steven Shavell, Alternative Dispute Resolution: An Economic Analysis, 24 J. Legal Stud. 1, 8-9 (1995) (a central rationale for encouraging parties to contract for their own method of dispute resolution is that they are likely to agree to the most efficient forum to serve their needs).

The Court in Menorah isn't at all saying arbitration shouldn't be used if it's 'too expensive'.  The Court is actually giving a 'nod' to contractual arbitration based on the presumption that the parties know what they are doing when they agree to use arbitration.  The real question in Menorah was whether Defendant INX had waived its right to arbitration by waiting until after Menorah had already obtained a judgment against it in a court of law.

Since Menorah is really the only case they bring to the table in support of their "equity" agreement, I would first argue that Menorah isn't binding on any AZ court.  Second, the pivotal question in Menorah was about waiver and not equity.  And third, I would point out what I quoted from the case - the court supported the parties choice to use arbitration absent a finding of waiver, and, absent waiver, found it would be inappropriate to override the parties decision to use arbitration because, after all, the parties did mutually agree to that forum in the first place.  You were not consulted during the OC's decision to include AAA/JAMS in their credit card agreement; thus you should not be denied your contractual right for choices made unilaterally by the original creditor.

For me, the question of "equity" comes down to one single test.  What would Midland's response be if they tried to use arbitration against you, and you claimed it wasn't fair?  I would seriously put that in your reply to their opposition to MTC.  And I would make a point to bring that up in your oral hearing as well. Be prepared for them to argue back that arb doesn't cost you what it costs them.  My response would be that they bought a contract with an arb clause and you have no control over who pays what.

 

And then there's this:

  Quote

Grounds in equity or law for revocation of a contract include an allegation that the contract is void for lack of mutual consent, consideration or capacity or voidable for fraud, duress, lack of capacity, mistake, or violation of a public purpose. Cf. Flower World v. Wenzel, 122 Ariz. 319, 594 P.2d 1015 (App. 1978).

US Insulation, Inc. v. Hilro Const. Co., 705 P. 2d 490 - Ariz: Court of Appeals, 1st Div., Dept. A 1985
https://scholar.google.com/scholar_case?case=17379273293286878317

I'd love to hear Midland argue against mutual consent, consideration or capacity on a contract you didn't draft.