Badie v. Bank of America

79 Cal. Rptr. 2d 273 (1998)

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Badie v. Bank of America

California Court of Appeal
79 Cal. Rptr. 2d 273 (1998)

Facts

Bank of America (BOA) (defendant) issued credit cards to customers, including four individuals, various consumer-action organizations, and the California Trial Lawyers Association (collectively, customers) (plaintiffs). Each customer received an original credit agreement (original agreement) from BOA through either the credit card application or via mail after completing a pre-approved acceptance certificate. The original agreement included a change-of-terms provision allowing BOA to change or add any term, condition, or aspect of the agreement, provided that notice of the change was sent to customers. Customers received inserts, or bill stuffers, with their monthly bills that included a provision requiring alternative dispute resolution (ADR). The original agreement allowing BOA to add new terms was omitted from the bill stuffers. The customers brought suit, seeking to strike the ADR provision, arguing that they agreed to modifications of credit terms only, not added ADR provisions. BOA argued that the ADR provision was valid because BOA provided notice of the change as required by the original agreement. The trial court ruled in favor of BOA, finding that California public policy favored arbitration and that the original agreement allowed for the addition of the ADR provision because the original agreement’s statement that BOA could change any terms meant that BOA could amend or add any provision. The customers appealed.

Rule of Law

Issue

Holding and Reasoning (Phelan, J.)

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