Fleming v. Oliphant Financial

Filed 1/31/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
BRUNO FLEMING,
Plaintiff and Respondent,
A165837
v.
OLIPHANT FINANCIAL, LLC., (Santa Clara County
Super. Ct. No. 20CV363729)
Defendant and Appellant.
Before a trial court may grant a motion to compel arbitration it must
necessarily determine if a valid agreement exists to arbitrate the dispute.
This is a requirement set forth in the Federal Arbitration Act (9 U.S.C. § 2 et
seq., FAA) and the California Code of Civil Procedure. (Code Civ. Pro.
§ 1281.2.) This appeal raises a single issue: Did Oliphant Financial, LLC
(Oliphant) meet its burden in proving the existence of a valid arbitration
agreement with Bruno Fleming, which would then allow the trial court to
compel the arbitration of a financial dispute between these two parties? The
trial court determined that Oliphant did not meet this initial burden. The
court’s apt conclusion stemmed from the evaluation of the undisputed
evidence that Oliphant never provided any agreement, let alone one
including a provision for arbitration, to Fleming. This necessarily foreclosed
his ability to consent to arbitration. In the absence of evidence
demonstrating the existence of any agreement, the trial court properly denied
the motion to compel arbitration. We affirm.
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I.
FACTUAL AND PROCEDURAL BACKGROUND
On February 13, 2020, Fleming filed a complaint against Oliphant.
The class action complaint included a single cause of action for the alleged
violation by Oliphant of the California Rosenthal Fair Debt Collection
Practices Act. (Civ. Code, § 1788 et seq.) Oliphant subsequently filed a
petition to compel arbitration. Oliphant’s petition sought to dismiss
Fleming’s class action claims and compel binding arbitration of his individual
claims under the FAA.
The declaration of Michael Crossan, the custodian of records for
Oliphant, supported the petition. According to Crossan’s declaration,
Fleming electronically applied for a Barclay Rewards credit card from
Barclays Bank Delaware (Barclays) on December 1, 2013. The electronic
application included no reference to an arbitration agreement. Fleming
received a Barclay Rewards credit card after Barclays approved his
application.1 Fleming used his credit card for purchases and made payments
on his account. He received account statements. As with the electronic
application, the account statements did not include any reference to
arbitration. The statements did provide: “Please refer to your Cardmember
Agreement for additional information about the terms of your Account.” All
of the account statements submitted to the trial court for review were from
2017 and 2018.
1 After the initial approval of the application by Barclays, a number of
transfers occurred among various entities in 2017 and 2018 for a “pool of
credit card receivables.” The path traversed the following course: from
Barclays to First Bank and Trust, then to CC Receivables Acquistion, LLC,
then to CreditShop Credit Card Company, LLC, and finally to Oliphant.
2
There is no evidence in the record of any signed agreement between
Barclays and Fleming. Additionally, Oliphant provided no evidence that it
even sent such an agreement to Fleming, along with the resultant absence of
evidence of when or how such an agreement might have been sent to him.
Instead, Oliphant proffered three separate Cardmember Agreements—or
exemplars—that were in effect (1) when Fleming opened his account in
December 2013, (2) when he made his last payment to the account in March
2018, and (3) when the account was charged-off in May 2018. The language
in all three exemplars regarding the arbitration agreement is the same.2
Fleming filed an opposition to the petition. In support of his opposition,
he filed a declaration in which he denied ever agreeing to settle any disputes
through arbitration or ever receiving an arbitration agreement, much less
any of the three exemplars.3 Oliphant filed a reply that included a second
2 The arbitration provision in all three exemplars states the following:
“At the election of either you or us, any claim, dispute or controversy (‘Claim’)
by either you or us against the other, arising from or relating in any way to
this Agreement or your Account, or their establishment, or any transaction or
activity on your Account, including (without limitation) Claims based on
contract, tort (including intentional torts), fraud, agency, negligence,
statutory or regulatory provisions or any other source of law and (except as
otherwise specifically provided in this Agreement) Claims regarding the
applicability of this arbitration provision or the validity of the entire
Agreement, shall be resolved exclusively by arbitration . . . . If any Claim is
advanced in a court, arbitration may be elected under this provision instead,
and the right to elect arbitration shall not be deemed to have been waived if
the election is made at any time before commencement of trial.”
3 As part of his opposition, Fleming also made many evidentiary
objections to Crossan’s declaration. He also questioned the transfer of any
purported right to compel arbitration because Oliphant was the fourth
transferee since the inception of the account. For purposes of this opinion, we
assume without deciding that the challenged evidence was properly before
the trial court and that a valid assignment exists.
3
affidavit from Crossan. This second affidavit did not materially alter the
substantive aspects of his earlier affidavit, relative to the arbitration issue. A
hearing on the petition took place on March 3, 2021. On April 28, 2021, the
trial court issued its order denying Oliphant’s petition to compel arbitration.
This appeal followed.
II.
DISCUSSION
A. Standard of Review
A trial court decides the facts when considering a motion to compel.
(Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)
“ ‘There is no uniform standard of review for evaluating an order denying a
motion to compel arbitration. [Citation.] If the court’s order is based on a
decision of fact, then we adopt a substantial evidence standard. [Citations.]
Alternatively, if the court’s denial rests solely on a decision of law, then a de
novo standard of review is employed.’ ” (Carlson v. Home Team Pest Defense,
Inc. (2015) 239 Cal.App.4th 619, 630.) Since the only facts the trial court
relied upon were not in dispute, this also points to a de novo review of the
trial court’s denial of arbitration. (Pinnacle Museum Tower Assn. v. Pinnacle
Market Development (U.S.), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle).)
Against this legal backdrop, it is important to note that the party seeking
arbitration bears the burden of proving the existence of an arbitration
agreement. (Id. at 236.)
B. Compelling Arbitration Where Agreement Exists
Before Congress’s passage of the United States Arbitration Act of 1925,
the courts viewed arbitration warily, if not with outright hostility.
(Kulukundis Shipping Co. v. Amtorg Trading Corp. (2nd Cir. 1942) 126 F.2d
978, 984–985.) These views significantly abated over the last century. The
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enactment of various state laws facilitated arbitration and reflected the
increasing receptiveness by legislatures to it. (See e.g., Code Civ. Pro.
§ 1281.2 et seq.) Subsequent court decisions have further buttressed the
generally favorable view of arbitration. “The policy of California law is to
recognize and give the utmost effect to arbitration agreements.” (Loscalzo v.
Federal Mut. Ins. Co. (1964) 228 Cal.App.2d 391, 398.) The historical
trajectory of arbitration reveals that no judicial reluctancy occurs in
compelling arbitration when the parties have previously agreed to it, and no
other legal impediments preclude it.
1. Threshold Question under State and Federal Law
In evaluating whether a disputed matter requires arbitration, the focus
is preliminarily placed on any agreement by parties to do so. “ ‘Under “both
federal and state law, the threshold question presented by a petition to
compel arbitration is whether there is an agreement to arbitrate.” ’ ” (Long v.
Provide Commerce, Inc. (2016) 245 Cal.App.4th 855, 861 (Long); see also
Sellers v. JustAnswer LLC (2021) 73 Cal.App.5th 444, 460.) The threshold
question requires a response because if such an agreement exists, then the
court is statutorily required to order the matter to arbitration. Code of Civil
Procedure § 1281.2 provides, in relevant part: “On petition of a party to an
arbitration agreement alleging the existence of a written agreement to
arbitrate a controversy and that a party to the agreement refuses to arbitrate
that controversy, the court shall order the petitioner and the respondent to
arbitrate the controversy if it determines that an agreement to arbitrate the
controversy exists.” (See also Gordon v. Atria Management Co., LLC (2021)
70 Cal.App.5th 1020, 1026 [“a trial court shall order arbitration if an
agreement to arbitrate exists.”].) This initial issue also reflects the very plain
principle that you cannot compel individuals or entities to arbitrate a dispute
5
when they did not agree to do so. “[T]here is no policy compelling persons to
accept arbitration of controversies that they have not agreed to arbitrate.”
(Long, supra, 245 Cal.App.4th at 861.)
Federal law is wholly congruent with these principles.4 As the United
States Supreme Court observed two decades ago: “Because the FAA is ‘at
bottom a policy guaranteeing the enforcement of private contractual
arrangements,’ [citation omitted] we look first to whether the parties agreed
to arbitrate a dispute, not to general policy goals, to determine the scope of
the agreement.” (EEOC v. Waffle House, Inc. (2002) 534 U.S. 279, 294
(EEOC).) “For arbitration is a matter of contract and a party cannot be
required to submit to arbitration any dispute which he has not agreed so to
submit.” (United Steelworkers of America v. Warrior & Gulf Navigation Co.
(1960) 363 U.S. 574, 582.)
2. Delegation of Arbitrability Question – Who Decides?
Who then decides at the outset whether an agreement exists—a judge
or arbitrator? Oliphant contends that an arbitrator must decide the question
of arbitrability in the first instance because the agreement stated “[c]laims
regarding the applicability of this arbitration provision or the validity of the
entire Agreement, shall be resolved exclusively by arbitration.” This
contention is accurate only to the extent that both Oliphant and Fleming
4 9 U.S.C. section 3 provides: “If any suit or proceeding be brought in
any of the courts of the United States upon any issue referable to arbitration
under an agreement in writing for such arbitration, the court in which such
suit is pending, upon being satisfied that the issue involved in such suit or
proceeding is referable to arbitration under such an agreement, shall on
application of one of the parties stay the trial of the action until such
arbitration has been had in accordance with the terms of the agreement,
providing the applicant for the stay is not in default in proceeding with such
arbitration.”
6
indisputably made such a delegation to the arbitrator. As the United States
Supreme Court recently observed: “This Court has consistently held that
parties may delegate threshold arbitrability questions to the arbitrator, so
long as the parties’ agreement does so by ‘clear and unmistakable’ evidence.
[Citations omitted.]” (Henry Schein, Inc. v. Archer & White Sales, Inc. (2019)
586 U.S. ___ [139 S.Ct. 524, 530]; see also Nelson v. Dual Diagnosis
Treatment Center, Inc. (2022) 77 Cal.App.5th 643, 654 [“ ‘Under California
law, it is presumed the judge will decide arbitrability, unless there is clear
and unmistakable evidence the parties intended the arbitrator to decide
arbitrability.’ ”].) It becomes evident from the record on appeal that Oliphant
cannot provide clear and unmistakable evidence that the parties intended an
arbitrator to decide the initial arbitrability question. Oliphant adamantly
argues that an agreement occurred between the parties, and Fleming argues
in equally unwavering terms that it did not.
When faced with disparate contentions, the Supreme Court has
provided further clarification to resolve the question about who decides. “To
be sure, before referring a dispute to an arbitrator, the court determines
whether a valid arbitration agreement exists.” (Henry Schein, Inc. v. Archer
& White Sales, Inc., supra, 139 S.Ct. at 530, citing 9 U.S.C., § 2; see Granite
Rock Co. v. Int’l Bhd. of Teamsters (2010) 561 U.S. 287, 299–300 [“Applying
this principle, our precedents hold that courts should order arbitration of a
dispute only where the court is satisfied that neither the formation of the
parties’ arbitration agreement nor (absent a valid provision specifically
committing such disputes to an arbitrator) its enforceability or applicability
to the dispute is in issue. [Citation.] Where a party contests either or both
matters, ‘the court’ must resolve the disagreement.”]; see also Suski v.
Coinbase, Inc., (9th Cir., Dec. 16, 2022, No. 22-15209) ___ F. 4th ____ [2022
7
U.S. App. LEXIS 34806 at *4] (Suski) [“Issues of contract formation may not
be delegated to an arbitrator.”].) Consequently, the circumstances required a
judicial determination about arbitrability.
3. California Law Related to Contract Formation and Consent
Our focus then is primarily placed on California law to address the
issues surrounding the claimed agreement. “When deciding whether the
parties agreed to arbitrate a certain matter (including arbitrability), courts
generally . . . should apply ordinary state-law principles that govern the
formation of contracts.” (First Options of Chicago, Inc. v. Kaplan (1995) 514
U.S. 938, 944; see also Suski , supra, ___ F. 4th at p. ___ [2022 U.S. App.
LEXIS 34806 at *8] [“When determining whether parties have agreed to
submit to arbitration, courts apply state-law principles of contract formation
and interpretation,” citing Holl v. U.S. Dist. Court (In re Holl) (9th Cir. 2019)
925 F.3d 1076, 1083].) More specifically, we look to California law regarding
contracts. “An arbitration agreement is subject to the same rules of
construction as any other contract.” (Toal v. Tardif (2009) 178 Cal.App.4th
1208, 1221.) The existence of a contract under California law requires four
essential elements: parties capable of contracting; their consent; a lawful
object; and a sufficient cause or consideration. (Civ. Code, § 1550.)
Grasping the nettle of this appeal, we turn to one of those elements—
consent—that creates the sharp dispute between Oliphant and Fleming.
Oliphant claims that consent to the arbitration agreement existed; Fleming
makes the contrary claim that it did not. Due to this dispute, we must
necessarily examine the statutory requirements related to consent.
California law provides clarification that the consent of the parties to a
contract must be free, mutual, and communicated by each to the other. (Civ.
Code, § 1565; see also Civ. Code, § 1580 [“Consent is not mutual, unless the
8
parties all agree upon the same thing in the same sense.”].) These three
factors inevitably serve as the guideposts, as they did for the trial court, in
evaluating and determining the legal appropriateness of compelling
arbitration. In analyzing the petition to compel arbitration, the trial court
focused on the consent issue, and in particular, on the absence of mutual
assent. It observed: “Absent evidence of mutual assent, Defendant cannot
show that the cardmember agreements are enforceable arbitration
agreements. Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 381
[‘An essential element of any contract is the consent of the parties, or mutual
assent.’]” Additionally, the trial court observed, “[d]efendant does not explain
how Plaintiff could have consented to any agreement that he was not
provided.” The trial court’s well-directed attention on the absence of consent
(i.e., the consent was neither mutual nor communicated) proved decisive in
denying the motion to compel arbitration. And rightly so. (Ahlstrom v. DHI
Mortg. Co., L.P., (9th Cir. 2021) 21 F.4th 631, 635 [“If no agreement to
arbitrate was formed, then there is no basis upon which to compel
arbitration.”].) Indeed, Oliphant had ultimately failed to provide the
necessary evidence supporting its assertion that Fleming consented to
arbitration. “While both the Federal Arbitration Act . . . and California law
favor arbitration, a party is not required to arbitrate his or her claims absent
consent. [Citations omitted.].” (Costa v. Road Runner Sports, Inc. (2022) 84
Cal.App.5th 224, 233; see Pinnacle, supra, 55 Cal.4th at 236 [“it is a cardinal
principle that arbitration . . . ‘is a matter of consent, not coercion’ ”]; see also
EEOC, supra, 534 U.S. at 294 [“ ‘Arbitration under the FAA is a matter of
consent, not coercion.’ [Citation.]”].)
A final point remains about the substantive law that applies to the
reputed agreement. Oliphant summarily asserts that the agreement is
9
governed by Delaware law. A hint of a conundrum inevitably arises by
Oliphant’s assertion of the need to apply Delaware law in accord with the
agreement—where the agreement’s very existence is questionable. This
assertion is ultimately unpersuasive. First, the lack of any overall agreement
necessarily draws the inference about a similar lack of provision for a choice
of law. Second, Oliphant cites no Delaware statute in its opening brief, and
only passingly refers to a single Delaware case (i.e., Grasso). The Grasso case
cited by Oliphant involves facts disparate from those in this appeal. (Grasso
v. First USA Bank (1998) 713 A.2d 304, 309 [“A short time later, Grasso
received her credit card, along with First USA’s Agreement. The Agreement
set forth the terms of the credit card account.”].) These stark deficiencies
appear to concede that Delaware law is inapplicable. Third, what also
becomes apparent is that California law concerning contractual construction
parallels Delaware law. For instance, in Eagle Force Holdings, LLC v.
Campbell (2018) 187 A.3d 1209, 1212, the Delaware Supreme Court observed
that situations present themselves “where determining something as
seemingly simple as whether a contract was formed proves a challenging
endeavor.” Similar to California law, Delaware law places emphasis on the
party’s intent to be bound to the contract. (Id. at pp. 1229–1230 [“As such, in
applying this objective test for determining whether the parties intended to
be bound, the court reviews the evidence that the parties communicated to
each other up until the time that the contract was signed—i.e., their words
and actions—including the putative contract itself.”].) Accordingly, any
analysis under Delaware contractual law on the issues raised by Oliphant’s
appeal would appear to be substantially comparable to that under California
contractual law. Since no agreement exists under either California or
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Delaware law, California and federal law provide the proper framework for
the evaluation of the legal issues.
C. Further Issues Concerning Arbitrability
As the trial court correctly concluded, Oliphant’s petition to compel
arbitration failed to produce sufficient evidence that Fleming consented to
the agreement that would have compelled arbitration. The failure occurs
whether assessing a purported express agreement or implied one. Regarding
an express agreement, the trial court properly observed that Oliphant did not
contend that Fleming “signed any agreement other than the electronic
application for the credit card, and that application does not contain [an]
arbitration agreement.” In the absence of a signed agreement, Oliphant
argued that Fleming agreed to arbitrate any disputes through his use of the
credit card (i.e., an implied agreement). We now evaluate this argument,
which mirrors a similar argument recently rejected by the Fourth District in
Chambers v. Crown Asset Management, LLC (2021) 71 Cal.App.5th 583(Chambers).
In Chambers, the defendant creditor sought to compel the plaintiff to
arbitration, asserting that “Chambers accepted the arbitration agreement by
using her credit card after receiving the terms of the account agreement and
failing to opt out of its arbitration clause.” (Id. at p. 591.) In opposing the
motion to compel arbitration, Chambers denied ever having received the
account agreement from the defendant. (Id. at p. 589.) This failure to
transmit the agreement—not statements reflecting that the plaintiff’s credit
card purchases were made and payments were posted—was key to the
appellate inquiry concerning the trial court’s denial of the motion to compel
arbitration. (Ibid.) While the Chambers court extensively discussed the
admissibility or inadmissibility of various records or testimony that might
11
have proved the arbitration agreement had been sent, these evidentiary
questions all eventually orbited around the more central issue of consent:
“As the moving party, Crown had the burden of establishing through
admissible evidence that Chambers had agreed to arbitrate the dispute.” (Id.
at p. 590, fn. 1.) In affirming the trial court’s denial of the motion to compel
arbitration, the Court of Appeal discounted statements from Crown about the
alleged absence of any “objection to the arbitration agreement or its return as
undeliverable,” observing that “[w]ithout a predicate showing that Chambers
was mailed the arbitration agreement, these statements do not establish her
consent.” (Id. at p. 602.)
In this appeal, the very same issue arises about consent. The absence
of consent unavoidably follows from the dearth of evidence establishing that
Fleming ever received the agreement. As the trial court emphasized,
“Defendant does not explain how Plaintiff could have consented to any
agreement that he was not provided.” Recognizing this deficiency, Oliphant
again argues that Fleming’s use of the credit card bound him to the
arbitration clause. Oliphant cites a number of cases in ostensible support of
this proposition, but nearly all of them are factually and legally
distinguishable because they involved failing to read an arbitration provision
or opt out of it.5
5 Courts have enforced arbitration agreements against parties for
failing to read or opt out of them, as Oliphant notes. In all the following
cases that Oliphant cites, however, the party indisputably received the
agreement. (See Hill v. Gateway 2000, Inc. (7th Cir. 1997) 105 F.3d 1147,
1148 [failure to read contract]; Kelly v. UHC Mgmt. Co. (N.D. Ala. 1997) 967
F. Supp. 1240, 1245–1249 [failure to read agreement]; Langere v. Verizon
Wireless Servs., LLC (C.D. Cal. Sept. 23, 2016, CV1500191DDPAJWX) [2016
WL 5346064, at *5] [failure to read agreement]; Hicks v. Macy’s Dept. Stores,
Inc. (N.D. Cal. Sept. 11, 2006, No. C 06-02345 CRB ) 2006 WL 2595941 at *2
[failure to opt out]; Guerrero v. Equifax Credit Info. Servs., Inc. (C.D. Cal.
12
Oliphant also cites to the decision in Stinger v. Chase Bank, USA, NA
(5th Cir. 2008) 265 F. App’x 224 (Stinger), for the proposition that “[a]n
arbitration agreement can be enforced even when a party claims to have
never received the agreement.” The facts from the Stinger opinion state that
“when Chase sent Stinger his credit card for each account, it also sent him a
Cardmember Agreement (‘CMA’) that established the terms of each account.”
(Id. at p. 225.) The fact that Chase sent the CMA to Stinger went
unrebutted. But this is quite distinct from the present situation, where there
is no evidence that Fleming was ever provided an agreement. (See Berman v.
Freedom Fin. Network, LLC (9th Cir. 2022) 30 F.4th 849, 853 [district court
properly denied defendant’s motion to compel arbitration and stay
proceedings pursuant to the FAA, 9 U.S.C. § 3, where terms of use containing
arbitration provision were part of a browsewrap agreement; no evidence that
plaintiff had actual notice of the terms of use or was required to affirmatively
acknowledge them before completing his online purchase].) Oliphant seeks to
turn the legal tables in this appeal, however, pointing to Fleming’s actions as
opposed to focusing on its own activity or inactivity. By doing so, Oliphant
impliedly requests this Court to engage in a legal analysis that the Court of
Appeal in Chambers prudentially declined to do, that is, evaluate the actions
of Fleming before requiring a predicate showing that Oliphant sent the
agreement to him.
Oliphant makes the additional argument that “Fleming’s account
statements clearly refer to the Cardmember Agreement and direct Fleming to
his Cardmember Agreement for more information regarding his account.”
This argument possesses a few disconcerting aspects. Initially, Oliphant
Feb. 24, 2012) No. CV 11-6555 PSG PLAX) [2012 WL 7683512, *6] [failure to
opt out].)
13
ignores the incongruity of suggesting that Fleming could have requested the
Cardmember Agreement when there is no evidence of its existence, not to
mention that no information reflects that either it or any of the proffered
exemplars were actually ever transmitted to Fleming. Additionally, the only
account statements provided to the trial court were for the years 2017 and
2018, which are well beyond 2013—when Fleming initially applied for the
credit card—and did not contain the Cardmember Agreement. Further, no
information is present in the record that earlier account statements, if any,
included or even referenced the Cardmember Agreement. As a result,
nothing in the record suggests that Fleming might have consented to the
arbitration provision, the key issue in this appeal. (See Civ. Code, § 1565
[consent of the parties to a contract must be free, mutual, and communicated
by each to the other].)
In sum, after considering all the grounds for relief raised by Oliphant,
we conclude that Oliphant failed to meet its burden demonstrating the
existence of a valid arbitration agreement.
III.
DISPOSITION
The order denying the petition to compel arbitration is affirmed.
Fleming is entitled to his costs on appeal.
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DEVINE, J.
WE CONCUR:
HUMES, P. J.
MARGULIES, J.
A165837P

Judge of the Contra Costa County Superior Court, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.
15
Santa Clara County Superior Court
Hon. Patricia M. Lucas
Kaufman Dolowich & Voluck, Katherine S. Catlos, Marcus Dong for
Defendant and Appellant.
Consumer Law Center, Fred W. Schwinn, Raeon R. Roulston, Matthew C.
Salmonsen for Plaintiff and Respondent.
16