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MBNA America Bank, N.A. v. Cohen

A-5484-07T2 (N.J. Super. App. Div. 2010) (Unpublished)

ARBITRATION; CREDIT CARDS — Where a credit card member agreement requires that disputes arising out of the agreement be submitted to binding arbitration, use of the credit card by a borrower will signify the borrower’s acceptance of that agreement’s arbitration clause.

A borrower signed a series of checks for cash advances against four separate credit card accounts over the course of two years. The card holder did not repay the cash advances. The lender sought relief through binding arbitration and was awarded judgments in four separate actions. The lender brought four suits against the card holder seeking to confirm the arbitration awards. The lower court ruled in favor of the lender in all four suits, noting that the arbitration clause was included in the credit card member agreement in large font print, that the card holder accepted the terms by beginning to use the card, and that the card holder failed to raise any factual defense.

On appeal, the card holder first argued that the lower court improperly awarded the lender summary judgment because the evidentiary record was insufficient to sustain a favorable verdict at trial. Specifically, the card holder argued that none of the various employees and officers of the lender, each of whom submitted certifications to the court, possessed any personal knowledge of the accounts. The Appellate Division disagreed with the card holder, finding instead that a plaintiff seeking summary judgment need not meet the standards of admissibility that might be found at trial.

Second, the card holder argued that there was insufficient evidence to support a legally enforceable agreement to arbitrate disputes regarding the credit card. The Court found that the card holder’s use of the credit card was sufficient to indicate acceptance of the terms of the agreement, distinguishing a lower court case in which credit card terms were changed by use of a “bill stuffer” notice.

Finally, the Court found that the card holder was sufficiently served when copies of the summons and complaint were tendered to a domestic worker at the card holder’s home. Although court rules require that papers be tendered to a household member, technical violations of the rule will not defeat jurisdiction when the party being served receives proper notice. Here, for example, the card holder was an active participant in the proceeding arbitration process, had already answered previous related complaints, and did not dispute that he did, in fact, receive the documents in question.

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