PAMELA SHEREE CHAMBERS, Plaintiff and Respondent, v. CROWN ASSET MANAGEMENT, LLC, Defendant and Appellant.
D079074
COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA
October 21, 2021
NOT TO BE PUBLISHED IN OFFICIAL REPORTS. California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 18CV338800)
Carlson & Messer, David J. Kaminski and Stephen A. Watkins, for Defendant and Appellant.
Consumer Law Center, Fred W. Schwinn, Raeon R. Roulston, and Matthew C. Salmonsen, for Plaintiff and Respondent.
Pamela Sheree Chambers filed a putative class action lawsuit against Crown Asset Management, LLC (Crown) based on alleged violations of the California Fair Debt Buying Practices Act (CFDBPA;
Crown appeals. It contends the trial court erred by sustaining Chambers‘s evidentiary objections and denying the motion to compel. We disagree and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In her complaint, Chambers alleged that she received a written communication from a debt collector contracted by Crown that failed to comply with the CFDBPA‘s notice formatting requirement. (
Crown moved to compel arbitration. It contended that Synchrony sent Chambers a credit card account agreement, with an arbitration clause, when
To support its contentions, Crown relied on an affidavit from Jodi Anderson, who was employed by Synchrony as a litigation analyst. Anderson stated she had “personal knowledge of the business records of Synchrony” and was “a qualified person authorized to declare and certify on behalf of Synchrony.” She wrote, “My responsibilities include regularly accessing Synchrony‘s cardholder records and helping to maintain and compile histories of credit card accounts. I also regularly review and analyze account records and transaction histories, including communications to and from cardholders.”
Anderson continued, “On or about December 13, 2012, Synchrony approved an application in the name of Pam Chambers for a [credit card] and opened an account in her name . . . . Synchrony‘s records show that on or about December 13, 2012, the card and a copy of the [account agreement] were mailed to Pam Chambers at the address of record on the Account. . . . Synchrony has no record that the card or the Account Agreement were returned as undeliverable.” In essentially the same language, Anderson described Synchrony‘s mailing of a replacement card and another account agreement a few years later. Anderson attached copies of both account agreements to her affidavit. She did not attach any documentation regarding mailing.
As to the opt-out provision, Anderson explained, “As part of Synchrony‘s regular activities in the ordinary course of business, Synchrony maintains a record of any correspondence it receives from its cardholders, including requests to reject or opt out of an arbitration provision. I have reviewed Synchrony‘s records, and I have found no record of a notice from Pam Chambers exercising her right to reject the arbitration provision.”
Anderson stated that “Synchrony‘s records reflect that purchases and payments were posted to the account.” She attached 12 billing statements, approximately 30 pages, to her affidavit. Later, “[d]ue to non-payment,” the outstanding account balance was charged off, and Synchrony sold Chambers‘s account to Crown. (A Crown employee also submitted a declaration attaching, among other things, a similar sheaf of billing statements.)
Chambers opposed the motion to compel arbitration. She primarily contended that Crown had not shown an agreement to arbitrate existed between
On reply, Crown maintained that Anderson had personal knowledge “based upon her review of the relevant business records of Synchrony,” including Chambers‘s account. It contended Anderson‘s affidavit satisfied the secondary evidence rule as to “the content of Synchrony‘s business records,” because among other things there was no genuine dispute about their material terms. It claimed “the documents [Anderson] reviewed and attached” to her affidavit satisfied the requirements for the business records exception to the hearsay rule.
After hearing argument, the trial court denied Crown‘s motion to compel arbitration. In a detailed order, the court wrote, “Unlike many motions to compel arbitration, [Crown] relies on testimony—not documents—to show [Chambers‘s] assent to arbitration. Anderson relies solely on what ‘Synchrony‘s records show’ to prove Synchrony mailed the arbitration agreement to [Chambers]. [Citation.] Anderson does not describe what those records looked like (e.g., whether they were electronic or paper records) and does not testify regarding their reliability or why she is testifying as to the contents of those records rather than attaching the records to her affidavit. Further, Anderson does not testify she has any personal knowledge regarding the mailing of the arbitration agreement outside what the ‘records show.’ Anderson provides no information regarding the regular business practices or procedures of Synchrony Bank with regard to the mailing of credit card agreements. All she says is that ‘Synchrony approved an application’ and then, based on unspecified records, she says Synchrony mailed the credit agreement to [Chambers]. [¶] The Court finds the Anderson Affidavit lacks foundation and violates the secondary evidence rule and therefore does not provide admissible evidence showing the Agreement was mailed to [Chambers]. Consequently, [Crown] has not met its burden to show the existence of an arbitration agreement between the parties to which [Chambers] assented.” Crown appeals.
I
Motions to Compel Arbitration
California statutes create a “summary proceeding” for resolving petitions or motions to compel arbitration. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972 (Engalla).) “The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court‘s discretion, to reach a final determination.”1 (Ibid.)
“Thus, our Supreme Court has clearly stated that a court, before granting a petition to compel arbitration, must determine the factual issue of ‘the existence or validity of the arbitration agreement.’ [Citation.] In this way, a court‘s role, though limited, is critical. ‘There is indeed a strong policy in favor of enforcing agreements to arbitrate, but there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate and which no statute has made arbitrable.’ ” (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1219-1220 (Toal).)
” ‘An “arbitration agreement is subject to the same rules of construction as any other contract . . . .” ’ [Citation.] For any contract, the parties’ consent is a basic element. [Citation.] In addition, the parties’ consent must be communicated to one another. [Citation.] Thus, a party‘s consent is essential to ‘the contractual underpinning of the arbitration procedure . . .
“A party‘s acceptance of an agreement to arbitrate may be express, as where a party signs the agreement. A signed agreement is not necessary, however, and a party‘s acceptance may be implied in fact [citation] or be effectuated by delegated consent [citation]. An arbitration clause within a contract may be binding on a party even if the party never actually read the clause.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) Crown contends 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. (See Cavalry SPV I, LLC v. Watkins (2019) 36 Cal.App.5th 1070, 1081 (Cavalry SPV).)
II
Standards of Review
” ‘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.) Here, the trial court‘s order is based on a decision of fact, i.e., whether Synchrony mailed the credit card account agreement containing an arbitration clause to Chambers.
Because the trial court excluded Crown‘s evidence on this factual issue, Crown primarily challenges the court‘s underlying evidentiary rulings. “Trial court rulings on the admissibility of evidence . . . are generally reviewed for abuse of discretion.” (Pannu v. Land Rover North America, Inc. (2011) 191 Cal.App.4th 1298, 1317; accord, Christ v. Schwartz (2016) 2 Cal.App.5th 440, 446-447.) “The abuse of discretion standard is not a unified standard; the deference it calls for varies according to the aspect of a trial court‘s ruling under review. The trial court‘s findings of fact are reviewed for substantial evidence, its conclusions of law are reviewed de novo, and its application of the law to the facts is reversible only if arbitrary and capricious.”
Crown claims the rules of evidence are “relaxed” in connection with a motion to compel arbitration. The import of Crown‘s proposed “relaxed” standard is unclear. In any event, Crown has not shown the trial court erred by applying the Evidence Code. Crown cites an unpublished federal district court order for the proposition that a trial court may consider written declarations in connection with a motion to compel arbitration, notwithstanding the fact that such declarations would be considered hearsay at trial. (See Lomeli v. Midland Funding, LLC (N.D.Cal., Sept. 26, 2019, No. 19-CV-01141-LHK) 2019 WL 4695279, at *7 (Lomeli).) On this point, California law is similar. A motion to compel arbitration “shall be heard in a summary way in the manner . . . provided by law for the making and hearing of motions.” (
Crown cites Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931 (Sweetwater Union), but it did not involve arbitration. It considered an anti-SLAPP motion (
In contrast to an anti-SLAPP motion, a motion to compel arbitration requires the court to sit as a trier of fact and make factual findings regarding the existence of an arbitration agreement. (Engalla, supra, 15 Cal.4th at p. 972; Toal, supra, 178 Cal.App.4th at pp. 1219-1220.) A hearing on a motion to compel arbitration does not serve a mere gatekeeping function. It is the proceeding in which these factual issues are addressed. The standard articulated in Sweetwater Union makes no sense in the arbitration context. There is no future trial concerning the existence and coverage of an arbitration agreement where such statements would be any more relevant or admissible than at the hearing on a motion to compel arbitration. Crown has not shown the Sweetwater Union anti-SLAPP standard should apply here.
III
Evidentiary Objections
Crown contends the court erred by excluding the Anderson affidavit because it was admissible under the secondary evidence rule (
The current secondary evidence rule descends from “the venerable common law rule that lost documents may be proved by secondary evidence.” (Dart Industries, Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059, 1068.)
The business records exception to the hearsay rule provides, “Evidence of a writing made as a record of an act, condition, or event is not made inadmissible by the hearsay rule when offered to prove the act, condition, or event if: [¶] (a) The writing was made in the regular course of a business; [¶] (b) The writing was made at or near the time of the act, condition, or event; [¶] (c) The custodian or other qualified witness testifies to its identity and the mode of its preparation; and [¶] (d) The sources of information and method and time of preparation were such as to indicate its trustworthiness.” (
The court‘s analysis in Pajaro Valley Water Management Agency v. McGrath (2005) 128 Cal.App.4th 1093 (Pajaro Valley) provides a helpful introduction to the relationship between these two statutes. In that case, a public agency sought to establish its damages with a declaration from its general manager. (Id. at p. 1106.) The declaration stated the total amount owed, based on bills the public agency sent to the defendant. (Ibid.) Attached to the declaration was a table summarizing the agency‘s claimed damages. (Ibid.) The defendant objected to the declaration on various grounds, but the trial court overruled his objections. (Id. at pp. 1106-1107.)
The appellate court reversed. (Pajaro Valley, supra, 128 Cal.App.4th at p. 1097.) As an initial matter, the court noted the general manager‘s declaration was technically hearsay, but it was not inadmissible for that reason under the general authorization for motion practice. (Id. at p. 1107.) The problem with the declaration was the amount of damages stated. (Ibid.) It reflected another layer (or two) of hearsay, including the underlying bills and the calculation table. (Ibid.) The court explained, “The original bills might be admissible over a hearsay objection as business records [citation] or perhaps official records [citation], but to establish either exception would require a showing of the time and circumstances of the documents’ creation. [Citations.] No such showing was attempted.” (Ibid.)
The court in Pajaro Valley explained that the secondary evidence rule did not save the declaration. “Section 1521 permits the introduction of ‘otherwise admissible secondary evidence’ to prove the contents of a writing. It does not excuse the proponent from complying with other rules of evidence, most notably, the hearsay rule. [Citation.] As applicable here,
The trial court here was confronted with an analogous situation. Anderson‘s affidavit expressly referenced “Synchrony records” as the basis for her statement that the credit card account agreement had been mailed to Chambers. In order for Anderson‘s statement to be admissible, the underlying Synchrony records would have to be admissible (among other conditions).
Crown argues that the underlying Synchrony records were admissible as business records under
For the same reasons, the trial court could reasonably find that Anderson‘s affidavit was insufficient to establish that the unspecified records were “made at or near the time of the act, condition, or event” and “[t]he sources of information and method and time of preparation were such as to indicate its trustworthiness.” (
Crown relies on Jazayeri v. Mao (2009) 174 Cal.App.4th 301 (Jazayeri), but it shows the inadequacy of Anderson‘s affidavit. Jazayeri involved a dispute between the plaintiff, a chicken supplier, and the defendant, a poultry processor. (Id. at p. 306.) To support its claims, the plaintiff sought to introduce purchase orders and other documentary records showing the number of chickens that were found dead on delivery to the defendant (the DOA number). (Id. at pp. 308-309, 313.) The trial court
The appellate court held this was error. (Jazayeri, supra, 174 Cal.App.4th at p. 305.) It noted that the plaintiff “testified that the DOA count was obtained on the date of delivery after the chickens were unloaded by [defendant‘s] employee and generally written on the purchase order.” (Id. at p. 322.) Several employees of the defendant “testified concerning the manner of preparing the DOA count. Alland Zapata, head of quality control, testified that when chickens were delivered, one of [the defendant‘s] employees counted the DOA chickens and recorded the total on the purchase order or other handy piece of paper; Zapata then used that document to fill in the DOA box on the [documents]. Susan Mao testified at her deposition that DOA chickens were counted by an employee of [the defendant] at the time of delivery. Pitman, the defense expert, confirmed that the procedures for counting and recording the number of DOA chickens described by [the plaintiff] were followed generally in the industry.” (Id. at pp. 322-323.) Based on this evidence, the appellate court concluded that the DOA number qualified as a business record because it “was obtained through a count performed in the regular course of business by [defendant‘s] employee and transmitted to Zapata, who was responsible for inputting that information onto the [documents].” (Id. at pp. 323-324.)
Crown points out Jazayeri‘s comment that evidence should not be excluded “because the offering party did not follow the standard or preferred method of laying the foundation for admission.” (Jazayeri, supra, 174 Cal.App.4th at p. 324.) But in Jazayeri, “the means by which the DOA numbers were routinely recorded on the [documents] was sufficiently established by witnesses with firsthand knowledge of the process to qualify the evidence for admission under
Crown also relies heavily on People v. Dorsey (1974) 43 Cal.App.3d 953 (Dorsey). In that case, involving charges of writing bad checks, a bank operations officer testified that “he was the custodian of the bank‘s records and that all the records involved were kept in the normal course of business.” (Id. at p. 958.) Based on the bank‘s records, the officer testified about the date the defendant opened an account, the date the bank
The court went on, “Moreover, we believe that bank statements prepared in the regular course of banking business and in accordance with banking regulations are in a different category than the ordinary business and financial records of a private enterprise. It is common knowledge that bank statements on checking accounts are prepared daily and that they consist of debit and credit entries based on the deposits received, the checks written and the service charges to the account. We fail to see where appellant has been prejudiced by the absence of testimony as to the ‘method’ of preparation of the records, i.e., whether by hand or by computer and from what sources. Such testimony would not have a bearing on the basic trustworthiness of the records. While mistakes are often made in the entries on bank statements, such matters may be developed on cross-examination and should not affect the admissibility of the statement itself.” (Dorsey, supra, 43 Cal.App.3d at pp. 960-961.) The court found no abuse of discretion in admitting the bank officer‘s testimony. (Id. at p. 961.)
Dorsey does not aid Crown under the circumstances here. First, even accepting that bank statements may be more readily found to be business records than other hearsay documents, bank statements are not at issue here. What is at issue are the records showing the mailing of the credit card account agreement to Chambers. Their nature and mode of preparation is unknown. The fact that they were apparently maintained by a bank is not dispositive. “A rule allowing or requiring admissibility of any document found in a bank‘s records without evidence of reliability would be a sharp break with past practice [and] could raise grave implications for the continued maintenance of reliable bank records over the long term.” (Remington Investments, Inc. v. Hamedani (1997) 55 Cal.App.4th 1033, 1039.) Second, Dorsey considered a situation where the trial court admitted the testimony, and it noted a trial court‘s “broad discretion in admitting business records” under
Crown contends that the elements of the business records exception can be inferred from the circumstances, but it has not shown the court abused its discretion by finding Crown‘s showing inadequate. Crown claims the court should have inferred that Synchrony‘s “account records and transaction histories” were made at or near the time of mailing, but it provides no basis for such an inference—other than the implicit assumption that a business should work that way. The trial court was not required to make this inference based on the scant information Crown provided.
Crown points to the fact that Chambers received her credit card from Synchrony and she received other correspondence at the address identified by Anderson. But only Anderson‘s review of “Synchrony‘s records” shows that the credit card and account agreement were mailed at the same time or to that address. Crown‘s position still depends on the admissibility of the underlying records regarding mailing.
Crown claims the court “erred by holding Ms. Anderson had to attach the ‘account records and transaction histories’ she reviewed.” Our review of the court‘s order reveals no such mandate. The court referenced the lack of records as the reason for its close examination of Anderson‘s affidavit, since that was the only evidence of mailing provided by Crown. Additionally, the court found it noteworthy that Anderson had not attached any records, and had only vaguely alluded to unspecified Synchrony records, to prove mailing. The trial court was entitled to consider these circumstances when evaluating Anderson‘s affidavit. We note that Anderson attached other records, including dozens of pages of Chambers‘s account statements, but not any record of mailing.5
Crown additionally contends the trial court erred by finding that Anderson “provide[d] no information regarding the regular business practices or procedures of Synchrony Bank with regard to the mailing of credit card agreements.” Crown asserts that Anderson provided “overwhelming evidence that it was the regular custom and practice of Synchrony to mail cardholder Agreements (and accompanying arbitration provisions) to consumers.” This assertion is wholly unsupported by the record. Crown relies on the following statement from Anderson: “As part of Synchrony‘s regular activities in the ordinary course of business, Synchrony maintains a record of any correspondence it receives from its cardholders, including requests to reject or opt out of an arbitration provision.” This statement discusses Synchrony‘s regular
Crown relies on numerous and largely unpublished federal decisions, but they highlight the shortcomings of Anderson‘s affidavit. The evidence in these decisions included an explicit statement of the custom and practice of mailing, i.e., what was sent, and when, in the regular course of business. (See Izett v. Crown Asset Management, LLC (N.D.Cal., Oct. 1, 2019, No. 18-CV-05224-EMC) 2019 WL 4845575, at *4 [declarant stated “that it has been the Bank‘s ‘regular business practice to send a new card agreement to customers at the time they open a new account’ “]; Lomeli, supra, 2019 WL 4695279, at *5 [declarant stated “it is Citibank‘s regular business practice to mail a card agreement to customers at the time of the opening of an account“]; Brecher v. Midland Credit Management, Inc. (E.D.N.Y., March 13, 2019, No. 18-CV-3142 (ERK) (JO)) 2019 WL 1171476, at *4 [declarant stated that Synchrony ” ‘had a regular procedure of mailing, via United States Postal Service, the credit card and a copy of the credit card agreement that governed the account for each new Old Navy cardholder’ “]; Biggs v. Midland Credit Management, Inc. (E.D.N.Y., March 9, 2018, No. 17-CV-340 (JFB) (ARL)) 2018 WL 1225539, at *8 [declarant stated that “at the time plaintiff‘s account was opened, ‘Synchrony had a regular procedure of mailing a letter via United States Postal Service containing the account number, and a copy of the credit card agreement that governed the account for each new Amazon cardholder’ “]; Oyola v. Midland Funding, LLC (D.Mass. 2018) 295 F.Supp.3d 14, 15-16 [declarant stated that “after an account holder opens an account, Credit One mails their credit card, enclosed with Credit One‘s [cardholder agreement]“]; Beattie v. Credit One Bank (N.D.N.Y., Aug. 9, 2016, No. 5:15-CV-1315 (LEK/TWD)) 2016 WL 4203511, at *3 [declarant stated “that including a Cardholder Agreement when mailing a credit card is Defendant‘s policy“]; Flowers v. Citigroup Inc. (S.D.Cal., Sept. 9, 2013, No. 12-CV-2748-CAB (NLS)) 2013 WL 12075973, at *1 [declarant stated that ” ’ [p]ursuant to regular office practices and procedures in place as of September 2005, [a] Card Agreement was included with the cards mailed to customers, like Plaintiff, after an account was opened’ “]; Chavez v. Bank of America (N.D.Cal., Oct. 7, 2011, No. C 10-653 JCS) 2011 WL 4712204, at *7-8 [declarant describing mailing “in the ordinary course of the . . . enrollment process“]; Haas v. J.A. Cambece Law Office, P.C. (S.D.Cal., April 5, 2006, No. 05cv2039 DMS (RBB)) 2006 WL 8455381, at *3 [declarant stated “that ‘at the time MBNA acquired the account, it was the general policy of MBNA to provide the Credit Card Agreement to all of its cardmembers’ “]; see also Cavalry SPV, supra, 36 Cal.App.5th at p. 1082
Crown also relies on several decisions that credited the personal knowledge of the declarant or witness. (See People ex rel. Owen v. Media One Direct, LLC (2013) 213 Cal.App.4th 1480, 1484 [declarant stated “the Department sent certain correspondence to Media One” and attached the documents; “[t]he trial court was entitled to accept [the declarant‘s] assertion of personal knowledge“]; Mason v. Midland Funding LLC (11th Cir. 2020) 815 Fed.Appx. 320, 329 [declarant had “personal knowledge of the mailing“]; Kensu v. JPay, Inc. (E.D.Mich., March 11, 2019, No. 18-11086) 2019 WL 1109948, at *3, fn. 4 [“the Court is satisfied that the information in the affidavit is based on [the declarant‘s] personal knowledge“].)
Personal knowledge is ” ‘a present recollection of an impression derived from the exercise of the witness‘[s] own senses.’ ” (People v. Lewis (2001) 26 Cal.4th 334, 356.) Unless a witness is testifying as an expert, “the testimony of a witness concerning a particular matter is inadmissible unless he has personal knowledge of the matter.” (
In its reply brief, for the first time, Crown contends “it is arguable that the [Anderson affidavit] was not proving the contents of a writing at all,” and thus the secondary evidence rule did not apply. This contention appears to contradict Crown‘s position in its opening brief. And we generally do not consider arguments made for the first time on reply. (See In re Groundwater Cases (2007) 154 Cal.App.4th 659, 692-693.) Even if we were to consider it, we would conclude Crown had not shown error. Crown is correct that the relevant issue is the fact of mailing, not what Synchrony‘s records show. But Crown attempted to prove mailing by reference to Synchrony‘s records, rather than by testimony of a witness with personal knowledge of mailing. The admissibility of those records is therefore crucial. (See Pajaro Valley, supra, 128 Cal.App.4th at pp. 1107-1108.)
DISPOSITION
The order is affirmed. Chambers is entitled to her costs on appeal.
GUERRERO, J.
WE CONCUR:
McCONNELL, P. J.
HUFFMAN, J.