Jump to content

Just Served - WEBBANK / LendingClub


Recommended Posts

I've been helping a friend with a JDB that contacted her about an alleged debt from WEBBANK/LendingClub for just over $6,000.  She was served yesterday.

The allegations in the complaint are:

  1. #### is the successor in interest to WEBBANK and is the proper party Plaintiff.
  2. Defendant made purchases and/or cash advances on a charge account bearing account number XXXXX.
  3. Defendant defaulted under the terms of the charge account agreement by failing to make payment on the account.
  4. Defendant owes the Plaintiff $6,XXX on the account.

The JDB is alleging the account is a charge account that purchases and/or cash advances were made against.  They also referred to a charge account agreement.  This wasn't a credit card.  It was a consumer loan that involves a Borrower Agreement with a Loan Agreement and Promissory Note. The Borrower Agreement includes an arbitration provision -  Borrower Agreement - LendingClub 

The complaint was filed in Circuit Court.  The arbitration provision reads, "YOU AND WE NEVERTHELESS HEREBY KNOWINGLY AND VOLUNTARILY WAIVE OUR RIGHTS TO LITIGATE CLAIMS IN A COURT BEFORE A JUDGE OR JURY UPON ELECTION OF ARBITRATION BY EITHER YOU OR US."  This applies to successors, assignees, etc.

Link to comment
Share on other sites

2 hours ago, LaneBlane said:

I've been helping a friend in South Dakota with a JDB that contacted her about an alleged debt from WEBBANK/LendingClub for just over $6,000.  She was served yesterday.

The allegations in the complaint are:

  1. Spring Oaks Capital SPV, LLC is the successor in interest to WEBBANK and is the proper party Plaintiff.
  2. Defendant made purchases and/or cash advances on a charge account bearing account number XXXXX.
  3. Defendant defaulted under the terms of the charge account agreement by failing to make payment on the account.
  4. Defendant owes the Plaintiff $6,XXX on the account.

The JDB is alleging the account is a charge account that purchases and/or cash advances were made against.  They also referred to a charge account agreement.  This wasn't a credit card.  It was a consumer loan that involves a Borrower Agreement with a Loan Agreement and Promissory Note. The Borrower Agreement includes an arbitration provision -  Borrower Agreement - LendingClub 

The complaint was filed in Circuit Court.  The arbitration provision reads, "YOU AND WE NEVERTHELESS HEREBY KNOWINGLY AND VOLUNTARILY WAIVE OUR RIGHTS TO LITIGATE CLAIMS IN A COURT BEFORE A JUDGE OR JURY UPON ELECTION OF ARBITRATION BY EITHER YOU OR US."  This applies to successors, assignees, etc.

I’d MTC arbitration. 

Link to comment
Share on other sites

37 minutes ago, LaneBlane said:

Can a MTC Arbitration be used to answer a complaint, or does the answer also need to respond to all four allegations?

Your rules may have that information.  But if they don’t, I might file an answer responding to all the allegations and include arbitration as an affirmative defense.  Then I would follow the instructions in the cardmember agreement for electing arbitration.  And I would also file a motion to compel.

@BackFromTheDebt

Link to comment
Share on other sites

21 hours ago, BV80 said:

Your rules may have that information.  But if they don’t, I might file an answer responding to all the allegations and include arbitration as an affirmative defense.  Then I would follow the instructions in the cardmember agreement for electing arbitration.  And I would also file a motion to compel.

Thanks for the advise.  I'll look up the rules for South Dakota.

Here's the draft answer that does include arbitration as an affirmative defense.

 

ANSWER

The Defendant, ____________, Pro Se, provides the following Answer to Plaintiff’s Complaint.  By providing an Answer, Defendant does not intend to waive their right to defend against Plaintiff’s claims by final and binding arbitration as required in the arbitration provision between the parties.  Defendant specifically includes affirmative defenses regarding arbitration to preserve their rights in this regard:

 

1.      Defendant has insufficient information to either admit or deny the allegation in Paragraph 1 of Plaintiff’s Complaint, and therefore denies.

2.      Defendant denies the allegation in Paragraph 2 of Plaintiff’s Complaint. 

3.      Defendant denies the allegation in Paragraph 3 of Plaintiff’s Complaint.

4.      Defendant denies the allegation in Paragraph 4 of Plaintiff’s Complaint.

These are denied because the complaint alleged this was about charges and/or cash advances on a credit card, as well as breaching a charge account agreement.  This was actually a loan involving a different type of agreement.

AFFIRMATIVE DEFENSES

 

1.      Pursuant to Section 21 of the Borrower Agreement between WEBBANK and Defendant, Plaintiff’s claims against Defendant are subject to an arbitration clause that requires the sole and exclusive forum and remedy for resolution of a claim be final and binding arbitration.  The arbitration clause states a party does not have the right to litigate a claim in court if any party elects arbitration.  Defendant elects arbitration.
 

2.      Plaintiff’s Complaint fails to state a cause of action upon which relief may be granted.  Is this even required?

 

WHEREFORE, Defendant requests as follows:

 

1.      That Plaintiff’s Complaint be dismissed with prejudice.

2.      For such further relief as the Court deems appropriate.

Link to comment
Share on other sites

16 hours ago, LaneBlane said:

Thanks for the advise.  I'll look up the rules for South Dakota.

Because the arbitration provision is found in an agreement that's different from the agreement the JDB referred to in their complaint, should my friend hold off on using arbitration as an affirmative defense and filing a MTC?  Instead of responding to the allegations with denials, she would be correcting the allegations.

The JDB made the mistake of filing a complaint that alleges charges and cash advances were made to a credit card and breach of a charge account agreement.  Neither is true.  This involved a personal loan for which a borrower agreement existed.  She can deny the allegations because she didn't have a credit card through this company and no charge account agreement existed.

Here's the draft answer that does include arbitration as an affirmative defense.

 

ANSWER

The Defendant, ____________, Pro Se, provides the following Answer to Plaintiff’s Complaint.  By providing an Answer, Defendant does not intend to waive their right to defend against Plaintiff’s claims by final and binding arbitration as required in the arbitration provision between the parties.  Defendant specifically includes affirmative defenses regarding arbitration to preserve their rights in this regard:

 

1.      Defendant has insufficient information to either admit or deny the allegation in Paragraph 1 of Plaintiff’s Complaint, and therefore denies.

2.      Defendant denies the allegation in Paragraph 2 of Plaintiff’s Complaint. 

3.      Defendant denies the allegation in Paragraph 3 of Plaintiff’s Complaint.

4.      Defendant denies the allegation in Paragraph 4 of Plaintiff’s Complaint.

Numbers 2 and 3 are denied because the complaint alleged this was about charges and cash advances on a credit card, as well as breaching a charge account agreement.  This was actually a loan involving a different type of agreement.

AFFIRMATIVE DEFENSES

 

1.      Pursuant to Section 21 of the Borrower Agreement between WEBBANK and Defendant, Plaintiff’s claims against Defendant are subject to an arbitration clause that requires the sole and exclusive forum and remedy for resolution of a claim be final and binding arbitration.  The arbitration clause states a party does not have the right to litigate a claim in court if any party elects arbitration.  Defendant elects arbitration.
 

2.      Plaintiff’s Complaint fails to state a cause of action upon which relief may be granted.  Is this even required?

 

WHEREFORE, Defendant requests as follows:

 

1.      That Plaintiff’s Complaint be dismissed with prejudice.

2.      For such further relief as the Court deems appropriate.

Well, whether or not your friend raises arbitration as an affirmative defense depends on your courts.  Some states want arbitration raised as an affirmative defense whereas other states don’t require it.  I think @fisthardcheese always recommended going ahead and raising it because it can’t hurt.

Here’s what the SD Supreme Court decided in Rossi Fine Jewelers, Inc. v Gunderson (2002).

“Courts apply a two-part test for deciding whether arbitration has been waived. There must be (1) conduct or activity inconsistent with the right to arbitration and (2) prejudice to the party claiming waiver. Id.Mere delay in seeking a stay of litigation without some resultant prejudice to a party cannot be deemed a waiver. However, delay and the extent of the moving party's trial-oriented activity are material factors in assessing a claim of prejudice. Id. Prejudice may also result from lost evidence, duplication of efforts, or the use of discovery methods unavailable in arbitration.”

Link to comment
Share on other sites

19 hours ago, LaneBlane said:

Can a MTC Arbitration be used to answer a complaint, or does the answer also need to respond to all four allegations?

The answer depends on the court. 
 

In some, probably most, possibly all states a MTC can be filed in lieu of an answer.  For example in Florida one MUST file an MTC in lieu of an answer, else the court could throw out arbitration due to arbitration being deemed waived.  
 

In the other 49 states it is safest to file a complete answer with arbitration as an affirmative defense, and also file an MTC 

  • Like 1
Link to comment
Share on other sites

@BV80 @BackFromTheDebt

 

Thanks for your feedback.

The arbitration clause is contained in an agreement that's different from the type of agreement mentioned in the JDB's complaint.  What if the affirmative defense is written to point out the discrepancy?  Example:

 

Plaintiff furnished a Borrower Agreement to the Defendant prior to filing their Complaint.  Pursuant to Section 21 of the Borrower Agreement, Plaintiff’s claims against Defendant are subject to an arbitration clause that requires the sole and exclusive forum and remedy for resolution of a claim be final and binding arbitration.  The arbitration clause states a party does not have the right to litigate a claim in court if any party elects arbitration.  Defendant elects arbitration.

Link to comment
Share on other sites

Explain where you got your agreement and what is the different “type” of their agreement.  
 

If they furnished an agreement which has the arbitration clause, use their agreement.  Stipulate that the arbitration agreement is correct. 
 

I once have a c1 case where no agreement was provided.  This was before the CFPB, so back then the CIC folks would give each other copies of the agreements.  The plaintiff’s attorney objected to my motion, saying I had provided the wrong agreement.  They finally provided a slightly different agreement, but the arbitration provision was word for word identical.  I pointed that out and stipulated that they provided the correct arbitration clause.  The judge didn’t look kindly at the plaintiff and ruled in my favor 

Link to comment
Share on other sites

3 hours ago, BackFromTheDebt said:

Explain where you got your agreement and what is the different “type” of their agreement.  
 

If they furnished an agreement which has the arbitration clause, use their agreement.  Stipulate that the arbitration agreement is correct. 

The JDB sent the agreement to my friend after she sent them a debt validation letter last year.  This agreement is a Borrower Agreement for a personal loan.  Their actual complaint alleges a charge account under a charge account agreement.

One thing worth noting is the fact that the Borrower Agreement they produced earlier includes the wrong loan number in the very top margin of the first page.  The plan right now is to say nothing about it for the time being.

 

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.