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Arbitration – Banks & Banking – Deposit Agreement – Amendment

Arbitration – Banks & Banking – Deposit Agreement – Amendment

In their deposit agreement, the plaintiff-customer agreed that the defendant-credit union could amend the agreement and give her notice by email of any such change. The credit union sent plaintiff three emails notifying her of a change to the agreement’s forum-selection procedure, making disputes subject to arbitration and waiving plaintiff’s right to class actions against the credit union. If plaintiff had followed the links in the emails, she could have opted out of the amendment, but she did not do so; consequently, she is bound by the new arbitration clause.

We reverse the trial court’s denial of the credit union’s motion to compel arbitration.

Plaintiff argues, and the trial court held, the credit union’s contractual right to change the terms of the deposit agreement did not authorize the credit union to add provisions addressing an entirely new subject, such as arbitration. The trial court held that such addition was not contemplated and, otherwise, that the credit union was violating the covenant of good faith and fair dealing implied in every contract by adding a provision that was not in “the universe of terms included in its original agreement”, citing Sears Roebuck & Co. v. Avery, 163 N.C. App. 207, 593 S.E.2d 424 (2004). Indeed, Sears held that no valid arbitration agreement existed based on a unilateral amendment because the original contract “made no reference to arbitration or any other dispute resolution procedures and did not in any manner address the forum in which a customer could have disputes resolved.”

However, the agreement here did contain a “Governing Law” provision, which outlined the appropriate choice of law and forum for settling disputes. Plaintiff was therefore on notice that the credit union could change this provision to allow for disputes to be settled, not in the court where the credit union was located, but rather in another forum, including before an arbitrator.

Plaintiff might not have read the email notifications. However, she agreed to be bound to amendments when notified of them by email. And our court has long held that the law will not relieve one who can read and write from liability upon a written contract, upon the ground that he did not understand the purpose of the writing, or that she has made an improvident contract, when she could inform herself and has not done so.

Not only did the credit union’s email notice include the text of the new amendment, but it also included a link to a thorough explanation in plain language.

Plaintiff was given the right to opt out of the provisions in the amendment yet failed to do so.

Plaintiff claims that an ambiguity in the optout provision made it impossible for her to decline arbitration. This provision reads, “You have the right to opt out of this agreement to arbitrate if you tell us within 30 days of the opening of your account or the mailing of this notice, whichever is sooner.”

Plaintiff argues that, because she opened her account in 2014 and the notice was not sent until 2021, this provision makes it impossible for her to opt out. We agree that this provision could be construed to suggest that plaintiff’s right to opt out of the amendment expired in 2014, long before the amendment was even contemplated. But such a reading is nonsensical. As such, we construe the provision as to allow plaintiff 30 days from the date she received notice to opt out. Yet she failed to do so.

Reversed and remanded.

Dissent

(Arrowood, J.) The deposit agreement allowed the credit union to “change the terms of this Agreement” and stated the credit union would notify customers of “any change in terms,” but it did not put customers on notice that it would add additional, uncontemplated terms.

Nothing in the agreement allowed the credit union to add new provisions to the agreement and make those new additions apply retroactively to protect their past actions. The majority’s opinion improperly interprets the agreement to allow for this occurrence and sanctions such behavior by allowing a financial institution to protect itself from actions for which it is already being sued in other litigation.

Even if the agreement allowed the credit union to “add” new terms as opposed to changing current terms, which I do not believe it did, the cunning method in which the credit union attempted to do so (requiring its customers to click thru numerous links and forms to determine that it was attempting to add new terms to the agreement) blatantly breached the covenants of good faith and fair dealing provisions inherent in every contract.

Furthermore, allowing the credit union unlimited authority to alter the terms of an established contract renders the contract illusory.

Canteen v. Charlotte Metro Credit Union (Lawyers Weekly No. 011-208-22, 14 pp.) (Chris Dillon, J.) (John Arrowood, J., dissenting) Appealed from Mecklenburg County Superior Court (George Bell, J.) Vess Miller and Josh Van Kampen for plaintiff; Mica Worthy, Steven Bader and Ryan Bolick for defendant. 2022-NCCOA-779

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