Opinion of the Court
¶2 In 2014, Plaintiff opened a checking account with CMCU, signing the
Agreement. This Agreement provided that CMCU reserved the right to “change the
terms of [the] agreement” and contemporaneously notify customers of any such
modification.
¶3 From 2018 to 2020, CMCU allegedly charged Plaintiff fees not authorized by
the Agreement.
¶4 In 2021, CMCU amended the Agreement to include provisions requiring any
dispute thereunder to be decided through arbitration and waiving class actions (the
“Amendment”).
¶5 In March 2021, Plaintiff commenced this class action against CMCU seeking
monetary damages, restitution, and declaratory relief in connection with CMCU’s
unauthorized overdraft fees. CMCU answered with a motion to stay and to compel
arbitration, claiming that Plaintiff was bound by the terms of the Amendment.
¶6 The trial court entered an order denying CMCU’s motion. CMCU timely
appealed.
II. Appellate Jurisdiction
¶7 This appeal is from an interlocutory order. Interlocutory orders are generally
not immediately appealable; however, an interlocutory order which affects a
substantial right is immediately appealable. N.C. Gen. Stat. §§ 1-277(a), 7A-
27(b)(3)(a) (2021). Our Court has held that an order denying arbitration affects a
substantial right and is, therefore, immediately appealable. Gay v. Saber Healthcare
Grp., L.L.C., 271 N.C. App. 1, 5, 842 S.E.2d 635, 638 (2020). Therefore, we have
appellate jurisdiction.
III. Analysis
¶8 Public policy favors settling disputes by means of arbitration. Cyclone Roofing
Co. v. David M. LaFave Co., 312 N.C. 224, 229, 321 S.E.2d 872, 876 (1984). See also
N.C. Gen. Stat. § 1-569.3 (2020). “However, before a dispute can be settled [by
arbitration], there must first exist a valid agreement to arbitrate.” Routh v. Snap-
On Corp., 108 N.C. App. 268, 271, 423 S.E.2d 791, 794 (1992). In determining
whether a valid agreement to arbitrate exists, we are bound by the principles of
general contract law. Southern Spindle v. Milliken & Co., 53 N.C. App. 785, 786, 281
S.E.2d 734, 735 (1981). There is no presumption favoring arbitration when
addressing this threshold issue. Hager v. Smithfield E. Health Holdings, LLC, 264
N.C. App. 350, 362, 826 S.E.2d 567, 576 (2019).
¶9 The Agreement executed by Plaintiff in 2014 contained a provision which
provided the choice of law and procedure, including the appropriate forum, to resolve
any disputes thereunder:
GOVERNING LAW – This Agreement is governed by . . . the laws . . . and regulations of the state in which the credit union’s main office is located . . . . As permitted by applicable law, you agree that any legal action regarding this Agreement shall be brought in the county in which the
credit union is located.
This signed Agreement also contained a provision allowing CMCU to change the
terms of the Agreement by notifying Plaintiff of any such change:
Notice of Amendments. Except as prohibited by applicable law, we may change the terms of this Agreement. We will notify you, in a manner we deem appropriate under the circumstances, of any changes in terms, rates or fees as required by law. We reserve the right to waive any terms of this Agreement. Any such waiver shall not affect our right to future enforcement.
The Agreement further provided that CMCU could provide said notice electronically.
¶ 10 Plaintiff assented to these provisions when she executed the Agreement in
2014.
¶ 11 For three consecutive months in 2021, CMCU emailed Plaintiff her statement
along with a notice of “Changes to the Membership and Account Agreements.” The
email contained hyperlinks entitled “Information about Arbitration”, “Arbitration
and Class Action Waiver” and “Membership and Account Agreement Change in
Terms”, all under the heading “Additional Forms and Notices”. The email message
itself was short, with the hyperlinks following a message regarding Plaintiff’s
monthly account statement.
¶ 12 Plaintiff states that she never noticed these emails. In any event, the
“Arbitration and Class Action Waiver” hyperlink led to a 2-page document which
contained a provision amending the Agreement to require arbitration and a provision
allowing Plaintiff a means to opt-out of the new arbitration provision.
¶ 13 Plaintiff did not notify CMCU that she was opting out of the arbitration
provision and, otherwise, continued to use her checking account.
¶ 14 These above facts are undisputed.
¶ 15 We conclude that these facts show the existence of a binding arbitration
agreement. The arbitration provision was a change to the forum selection procedure
contained in the original Agreement. Plaintiff agreed to be notified by email of any
such change. Plaintiff, in fact, was notified on three different occasions. And Plaintiff
assented to the amendment by her failure to opt-out and her continued use of her
checking account. Her failure to read the provisions is no excuse. See, e.g,, Davis v.
Davis, 256 N.C. 468, 472, 124 S.E.2d 130, 133 (1962) (holding that a party who
assents to the terms of an agreement is not excused by failure to read the terms).
¶ 16 Plaintiff argues, and the trial court held, CMCU’s contractual right to change
the terms of the Agreement did not authorize CMCU to add provisions addressing an
entirely new subject, such as arbitration. The trial court held that such addition was
not contemplated and, otherwise, that CMCU 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 [A]greement”, citing Sears Roebuck & Co. v.
Avery, 163 N.C. App. 207, 221, 593 S.E.2d 424, 434 (2004). Indeed, we held in Sears
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.” Id. at 208, 593 S.E.2d at 426 (applying
Arizona law). Other courts have similarly held. See Badie v. Bank of Am., 67 Cal.
App. 4th 779, 79 Cal. Rptr. 2d 273 (1998) (wherein the court denied defendant’s
motion to compel arbitration because “[n]one of the agreements admitted into
evidence contained any provision regarding the method or forum for resolving
disputes”); Maestle v. Best Buy Co., 2005-Ohio-4120 (Ct. App.) (“the amendment
provision referenced only changes to payments, charges, fees and interest… nowhere
in the contract is there a clause addressing forums of dispute.”)
¶ 17 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 CMCU could change this provision to allow for disputes to be
settled, not in the court where CMCU was located, but rather in another forum,
including before an arbitrator. See Scherk v. Alberto-Culver Co., 417 U.S. 506, 519
(1974) (“[a]n agreement to arbitrate before a specified tribunal is, in effect, a
specialized kind of forum selection clause[.]”)
¶ 18 Indeed, other courts have enforced an arbitration provision where a bank
customer was provided notice of an amendment containing the provision. Stiles v.
Home Cable Concepts, 994 F. Supp. 1410 (M.D. Ala. 1998) (arbitration clause added
by amendment enforceable because original agreement contained a change-of-terms
provision and plaintiff received notice of the amendment, yet failed to opt out); Bank
One, N.A. v. Coates, 125 F. Supp. 2d 819 (S.D. Miss. 2001) (arbitration clause added
by amendment enforceable where defendant received proper notice which made clear
his option to accept or reject the clause and the amendment was not filled with
legalese); Marsh v. First USA Bank, N.A., 103 F. Supp. 2d 909 (N.D. Tex. 2000)
(arbitration clause added by amendment enforceable where cardmember was given
reasonable notice of the arbitration amendment and failed to respond); Herrington v.
Union Planters Bank, N.A., 113 F. Supp. 2d 1026, 1031 (S.D. Miss. 2000) (arbitration
clause added by amendment enforceable where plaintiff agreed to a change of terms
provision contained in the original deposit agreement).
¶ 19 We note Plaintiff’s contention that she did not receive adequate notice of the
amendment. Plaintiff admits that CMCU notified her of the change three times by
email, each entitled “Charlotte Metro CU Online Statement and Changes to
Membership and Account Agreements are Available”. The notices were sent along
with Plaintiff’s monthly statements. Information pertaining to the Amendment was
contained in hyperlinks which unambiguously pertained to “arbitration” and “class
action waiver”.
¶ 20 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 he has made an improvident contract, when he could inform himself
and has not done so.” Weaver v. St. Joseph, 187 N.C. App. 198, 213, 652 S.E.2d 701,
712 (2007) (citation omitted) (internal quotation marks omitted). We have enforced
an arbitration agreement despite the plaintiff’s argument that the agreement was
unconscionable because notice was improper. Westmoreland v. High Point
Healthcare, 218 N.C. App. 76, 721 S.E.2d 712 (2012).
¶ 21 Here, not only did CMCU’s email notice include the text of the new
amendment, but it also included a link to a thorough explanation in plain language.
Even so, Plaintiff contends that CMCU “buried the arbitration and class action
waiver provision under ‘Additional Forms and Notices’” in the email. After examining
the notice email in its entirety, we do not find this argument persuasive. Both the
“Information about Arbitration” and “Arbitration and Class Action Waiver” links are
clearly visible in the body of the email. The subject line of the email further put
Plaintiff on notice of the change in terms. Plaintiff opted-in to receive electronic
notifications. She does not dispute that she received all three notice emails from
CMCU. Although Plaintiff may take issue with the method in which notice was
provided, we conclude that the notice was sufficient.
¶ 22 We further note that 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 opt-
out 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 in this
case.
IV. Conclusion
¶ 23 We reverse the trial court’s order denying CMCU’s motion to compel
arbitration. We remand this matter, directing the trial court to stay this action
pending arbitration.
REVERSED AND REMANDED.
Judge DIETZ concurs.
Judge ARROWOOD dissents by separate opinion.
No. COA22-59 – Canteen v. Charlotte Metro Credit Union
ARROWOOD, Judge, dissenting.
¶ 24 I respectfully dissent from the majority’s holding that these facts show the
existence of a binding arbitration agreement and that the trial court erred in denying
CMCU’s motion to compel arbitration. Accordingly, I would hold the trial court’s
order should be affirmed because there is no valid arbitration agreement.
¶ 25 It is well established by this Court that before a dispute can be settled by
arbitration, “there must first exist a valid agreement to arbitrate.” Routh v. Snap-
On Tools Corp., 108 N.C. App. 268, 271, 423 S.E.2d 791, 794 (1992) (citations
omitted). “The law of contracts governs the issue of whether there exists an
agreement to arbitrate.” Id. (citations omitted). Therefore, “a party cannot be forced
to submit to arbitration of any dispute unless he has agreed to do so.” Sloan Fin.
Grp., Inc. v. Beckett, 159 N.C. App. 470, 478, 583 S.E.2d 325, 330 (2003), aff’d per
curiam, 358 N.C. 146, 593 S.E.2d 583 (2004) (citation omitted). The responsibility of
demonstrating a valid agreement exists is placed upon the party seeking arbitration.
Routh, 108 N.C. App. at 271-72, 423 S.E.2d at 794.
¶ 26 Additionally, because arbitration agreements are governed by the principles of
contracts, they are also subject to the implied covenants of good faith and fair dealing.
See Bicycle Transit Auth., Inc. v. Bell, 314 N.C. 219, 228, 333 S.E.2d 299, 305 (1985)
(citation omitted) (“In every contract there is an implied covenant of good faith and
fair dealing that neither party will do anything which injures the right of the other
to receive the benefits of the agreement.”). This responsibility is even more important
Justice Arrowood, dissenting
when an agreement “confers on one party a discretionary power affecting the rights
of the other[.]” Mezzanotte v. Freeland, 20 N.C. App. 11, 17, 200 S.E.2d 410, 414
(1973), cert. denied, 284 N.C. 616, 201 S.E.2d 689 (1974). However, a promise may
be illusory where a promisor reserves “an unlimited right to determine the nature or
extent of his performance[.]” Wellington-Sears & Co. v. Dize Awning & Tent Co., 196
N.C. 748, 752, 147 S.E. 13, 15 (1929).
¶ 27 I agree with the trial court that CMCU had no authority to unilaterally alter
the Agreement and add entirely new terms. In the present case, the Agreement
between the parties, allowed the appellant to “change” certain terms and allowed
them to serve those changes by electronic means. Specifically, the Agreement allowed
CMCU to “change the terms of this Agreement[,]” and stated CMCU would notify
customers of “any change in terms,” but did not put customers on notice that it would
add additional, uncontemplated terms. (emphasis added)
¶ 28 Therefore, in my opinion, nothing in the Agreement allowed CMCU 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
for in other litigation.
¶ 29 In addition even if the Agreement allowed CMCU to “add” new terms as
opposed to changing current terms, which I do not believe it did, the cunning method
in which CMCU 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), in my opinion, blatantly breached the covenants of good faith and fair
dealing provisions inherent in every contract. Furthermore, allowing CMCU
unlimited authority to alter the terms of an established contract renders the contract
illusory.
¶ 30 This view is consistent with the previous holdings of the Court, which the
majority is required to follow under the holding set forth in In re Civil Penalties. 324
N.C. 373, 384, 379 S.E.2d 30, 37 (1989) (citations omitted) (“Where a panel of the
Court of Appeals has decided the same issue, albeit in a different case, a subsequent
panel of the same court is bound by that precedent, unless it has been overturned by
a higher court.”). Specifically, the majority’s holding violates the principal that
allowing one party to an agreement to unilaterally alter the terms of the agreement
is antithetical to the contractual principles of mutual assent and this Court’s
contention that “a party cannot be forced to submit to arbitration of any dispute
unless he has agreed to do so.” Sloan Fin. Grp., Inc., 159 N.C. App. at 478, 583 S.E.2d
at 330 (emphasis added).
¶ 31 Other jurisdictions have found similarly. In Sears Roebuck and Company v.
Avery, this Court, applying Arizona law, found that the plaintiff company could not
unilaterally add an arbitration provision. 163 N.C. App. 207, 219, 593 S.E.2d 424,
432 (2004). In Sears Roebuck, the plaintiff company’s original contract with
defendant did not contain an arbitration clause, but they later amended the
agreement to change the terms. Id. at 212, 593 S.E.2d at 428.
¶ 32 However, this Court reasoned that allowing Sears to “unilaterally insert” a
“wholly new term” would “ignore the requirement of good faith implied in all contracts
of adhesion[,]” be contrary to “black letter contract law[,]” and “render the contract
illusory.” Id. at 218-19, 593 S.E.2d at 432. Other courts have found similarly. Id. at
219, 593 S.E.2d at 432-33 (citing Badie v. Bank of Am., 67 Cal. App. 4th 779, 783, 79
Cal. Rptr. 2d 273, 275 (1998); Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1179
(9th Cir. 2003), cert. denied, 540 U.S. 1160, 157 L. Ed. 2d 1204 (2004); Dumais v. Am.
Golf Corp., 299 F.3d 1216, 1219 (10th Cir. 2002); Floss v. Ryan’s Family Steak Houses,
Inc., 211 F.3d 306, 316 (6th Cir. 2000), cert. denied, 531 U.S. 1072, 148 L. Ed. 2d 664
(2001)).
¶ 33 Because I believe that the majority’s view is violative of previous precedent of
this Court and of the black letter principals of contract law I dissent. I would find
there to be no mutual assent and thus no binding arbitration agreement and I would
conclude the trial court was correct in denying CMCU’s motion to compel arbitration.
For the foregoing reasons, I would affirm the trial court’s order and I dissent.