Beneficial National Bank, U.S.A. v. Payton

214 F.Supp.2d 679 (2001)

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Nature of the Case

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Facts

D purchased a home satellite system which he financed through a revolving credit card account with P. That account was later assigned to Household. D filed suit against Ps alleging that his participation in this transaction was induced by fraudulent misrepresentations and other wrongful conduct on the part of Household and its agents. Ps brought this action in federal court to compel arbitration in accordance with § 4 of the FAA. D signed the credit application with P. In 1996, the year after D applied for and was approved for the P account, P sent a notice to D advising that changes were being made to the Cardholder Agreement, and specifically, that a provision for mandatory arbitration was to become a part of the agreement unless the cardholder rejected the change. D did not notify P within the thirty-day period that he did not agree to accept these changes, and thus according to P, the changes became effective November 8, 1996. In May 1999, D's account with P was assigned to Household Bank. Cardholders were notified of the assignment by a billing statement insert. D insists that he never agreed to arbitrate any disputes with Ps, as the original agreement did not grant the right to add altogether new terms to the parties' existing agreement. D also takes the position that the putative arbitration agreement(s) are substantively unconscionable and hence unenforceable.