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In a case where a credit card holder failed to participate in arbitration and later attempted to challenge the award beyond the statutory deadline, the Connecticut Appellate Court held that the cardholder could not avoid the statutory deadline by arguing that there was no arbitration agreement because the cardholder did not object to the arbitration proceeding and thereby failed to preserve the issue of arbitrability.
In MBNA America Bank v. Bailey, No. 27157, 2007 WL 3355482 (Conn. App. Ct. Nov. 20, 2007), MBNA filed an arbitration claim against Bailey for the unpaid balance on an MBNA credit card. Bailey did not participate in the arbitration in any way.
The arbitrator issued a $10,248.25 award in MBNA’s favor. Three months later, MBNA filed an application to confirm the award in court. In opposing confirmation, Bailey argued that he never entered into an arbitration agreement with MBNA.
The trial court found that Bailey agreed to arbitrate by continuing to use the card after receiving notice of an amendment adding an arbitration provision to the cardmember agreement. Accordingly, the trial court entered judgment confirming the award.
On appeal, Bailey argued that the trial court erred in concluding that the parties had entered into a valid arbitration agreement. In response, MBNA argued that the trial court should never have reached the issue because Bailey failed to preserve the issue by not raising any objection to the arbitration proceedings.
In analyzing this issue, the Court relied on the principles set forth in MBNA America Bank, N.A. v. Boata, 926 A.2d 1035 (Conn. 2007). In Boata, the Connecticut Supreme Court held that Connecticut’s 30-day statutory deadline for challenging an arbitration award does not bar a party from arguing that there was no valid arbitration agreement so long as the aggrieved party “properly has preserved a claim as to the existence of an arbitration agreement.”
In Boata, the aggrieved party preserved the issue by claiming he was not bound by any arbitration agreement and asking the arbitrator to dismiss the case. Conversely, in this case, Bailey did not participate in the arbitration in any way. Based on this inaction, the Court held that Bailey failed to preserve the issue of whether the parties had entered into valid arbitration agreement. In reaching this holding, the Court explained: “We interpret Boata to hold that a party must preserve its arbitrability claim by asserting such claim during the underlying arbitration proceeding.”
Courts have previously held that an aggrieved party who participates in arbitration cannot avoid the statutory deadline by arguing that no arbitration agreement exists. See, e.g., MBNA America Bank, N.A. v. Gilbert, No. CA. 06-1324, 2007 WL 3171824 (Ark. Ct. App. Oct. 31, 2007). This case goes a step further in holding that a party who has not objected to an arbitration proceeding cannot avoid the statutory deadline even if the party did not participate in the arbitration.
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