The Idaho Supreme Court has reversed a district court order confirming an arbitration award, holding that the party seeking confirmation did not satisfy the burden of showing a valid agreement to arbitrate by exhibiting a contract containing a conditional right to modify and presenting an affidavit alleging that an arbitration agreement was validly added through notice to the consumer.

In MBNA America Bank, N.A. v. McGoldrick, No. 34055, 2008 WL 2586304 (Idaho July 1, 2008), McGoldrick opened a credit card account with MBNA. A billing dispute arose, and MBNA filed an arbitration claim against McGoldrick, ostensibly in accordance with an arbitration agreement between the parties that came into being through an amendment sent by MBNA to McGoldrick. An arbitration award was eventually entered in favor of MBNA. MBNA moved to confirm the award; McGoldrick moved to vacated it.

The district court – treating the motions as if they were for summary judgment – found a genuine issue of material fact as to the arbitration agreement's existence. After proceeding to trial, the district court found that the original contract did not contain an arbitration agreement, but that MBNA reserved the right to amend the contract under certain circumstances. After additional fact-finding, the district court held that MBNA had added an arbitration agreement to the contract through a valid amendment, based on an affidavit submitted by MBNA stating that it had sent McGoldrick notice of the amendment. The district court confirmed the award.

The Court agreed that the district court properly found that MBNA had retained the right to amend the contract in certain circumstances. However, the Court noted that no evidence was taken at the trial court as to what particular circumstances triggered the right to amend and whether those circumstances existed at the time McGoldrick's contract was amended. Without such evidence, the Court found that MBNA had not sustained its burden of showing that a valid arbitration agreement existed through unilateral amendment. See Idaho R. Civ. P. 56(d) (allowing a court to consider established facts, and not those subject to "substantial controversy," at trial after denying a motion for summary judgment).

Other courts have held that a company may unilaterally add an arbitration agreement to its contracts through the inclusion of notice in the manner MBNA maintained it used here – a "bill stuffer." See e.g., Samadi v. MBNA America Bank, N.A., 178 Fed.Appx. 863 (11th Cir. Apr. 21, 2006), cert. denied, 127 S.Ct. 494 (U.S. Oct. 30, 2006), rehearing denied, 127 S.Ct. 1361 (U.S. Feb. 20, 2007) (holding that MBNA's method of modification was valid in light of Del. Code tit. 5, § 952(a), allowing a bank to amend a revolving credit contract in any respect at any time).

However, the Idaho Supreme Court suggests in McGoldrick that an amendment may not be deemed effective if the contract qualifies the right to unilaterally amend and there is no basis for determining what particular circumstances trigger the right to amend. See also MBNA America Bank, N.A. v. Fouche, No. 34054, 2008 WL 2586403 (Idaho July 1, 2008) (holding that the identical MBNA contract and attempted amendment was ineffective).