Lyons v. PNC Bank , N.A.
MEMORANDUM OPINION. Signed by Judge Stephanie A. Gallagher on 1/6/2021. (ols, Deputy Clerk)
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 1 of 16
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
WILLIAM T. LYONS JR.,
PNC BANK, N.A.,
Civil No. 1:20-cv-02234-SAG
William Lyons, Jr. (“Plaintiff”), filed suit against PNC Bank, N.A. (“Defendant”), alleging
violations of the Truth in Lending Act (“TILA”) and the Real Estate Settlement Procedures Act
(“RESPA”). Currently pending is Defendant’s Motion to Compel Arbitration, to Strike Class
Action Demand, and to Stay Litigation (“the Motion”). ECF 10. I have reviewed the Motion, the
opposition, the reply, and the parties’ supplemental filings. ECF 10-1, 13, 16, 18, 19. No hearing
is necessary. See Local Rule 105.6 (D. Md. 2018). For the reasons stated below, as to the
compulsion of arbitration and the striking of Plaintiff’s class action demands in Count One of his
Complaint, the Motion will be granted in part and denied in part. The Motion will be denied
insofar as it seeks to stay litigation of Count Two pending arbitration.
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 2 of 16
Factual and Procedural Background
At this stage, there appears little dispute as to the basic facts of this case. 1 Plaintiff obtained
a Home Equity Line of Credit (“HELOC”) from National City Bank (“National City”)2 on or about
February 4, 2005. ECF 3 ¶ 13. At the closing, Plaintiff and National City signed an Equity Reserve
Agreement (“HELOC Agreement”), which did not contain an arbitration clause or a class action
waiver. ECF 9-4. The HELOC set a ten-year loan term and allowed Plaintiff to take draws up to
a maximum amount of $149,650.00. Id.
Separately, Plaintiff opened two deposit accounts at PNC: one on May 3, 2010, ECF 9-1,
and one on July 6, 2016, ECF 9-2. As part of each transaction, Plaintiff signed a statement
“agreeing to be bound by the terms and conditions of PNC Bank’s Account Agreement for
Checking Accounts and Savings Accounts[.]” Id. The Account Agreement included a set-off
provision authorizing Defendant to charge the deposit accounts for “any loans, overdrafts,
obligations, or other indebtedness . . . now or hereafter owing to us by you . . . .” ECF 9-3. The
Account Agreement also specifies that Plaintiff granted PNC a security interest in his deposit
accounts. Id. While the Account Agreement did not, when first agreed to by Plaintiff in 2010,
include an arbitration clause or class action waiver, it did include a change-in-terms provision
allowing Defendant “to amend this Agreement . . . from time to time,” with such amendments
becoming “effective 30 days . . . after notice of the amendment is posted in our branches, or by
such other method of notice as we may deem appropriate or as may be specifically required by
applicable law.” Id. In February 2013, Defendant used this change-in-terms provision to amend
The parties filed their supplemental briefings simultaneously, such that neither had a formal
opportunity to respond to the other.
Defendant acquired National City in 2009 and is National City’s successor in interest. ECF 3 ¶
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 3 of 16
the Account Agreement to include an arbitration clause and class action waiver. ECF 18-1 ¶ 6.
As part of the amendment process, Defendant posted the 2013 amendments in its branches,
highlighted the change on each customer’s monthly statement, and also provided its customers,
including Plaintiff, the right to opt out of the arbitration clause. ECF 18-1 ¶¶ 6-8. Plaintiff never
did so, despite opportunities in February 2013, June 2014, November 2015, and November 2017.
ECF 18-1 ¶¶ 6, 11, 12, 15, 16.
On September 26, 2019, PNC used the set-off provision to make a payment due on the
HELOC in the amount of $1,396.97. ECF 3 ¶ 17. To make this payment, PNC debited Plaintiff’s
deposit account ending 2553, which Plaintiff had opened with PNC on May 3, 2010. ECF 9 ¶ 17.
On February 26, 2020, PNC used the set-off provision to apply another payment due on the
HELOC, in the amount of $1,589.00. ECF 3 ¶ 25. To make this payment, PNC debited Plaintiff’s
deposit account ending 6411, which Plaintiff had opened with PNC on July 6, 2016. ECF 9 ¶ 25.
Standard of Review
“Motions to compel arbitration exist in the netherworld between a motion to dismiss and a
motion for summary judgment,” and “[w]hether the motion should be treated as a motion to
dismiss or a motion for summary judgment turns on whether the court must consider documents
outside the pleadings.” PC Const. Co. v. City of Salisbury, 871 F.Supp. 2d 475, 477-78 (D. Md.
2012); see also Iraq Middle Mkt. Dev. Found. v. Harmoosh, 848 F.3d 235, 241-42 (4th Cir. 2017)
(adopting the district court's use of the summary judgment standard). Because resolution of this
dispute requires consideration of contracts and other materials outside the pleadings, this Court
will consider those documents and will apply the summary judgment standard—though, as
previously noted, there do not appear to be any significant disputes of fact at this stage.
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 4 of 16
In general, under the Federal Arbitration Act (“FAA”), court must stay any proceeding that
involves an issue subject to arbitration under a written arbitration agreement. See 9 U.S.C. § 3.
The FAA makes written arbitration agreements “valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Congress
enacted the FAA for the purpose of “revers[ing] the longstanding judicial hostility to arbitration
agreements . . . and to place arbitration agreements upon the same footing as other contracts.”
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991); Shearson/American Express,
Inc. v. McMahon, 482 U.S. 220, 225-26 (1987). Under the FAA, a court must compel arbitration
where (1) interstate commerce exists, (2) a valid written arbitration agreement exists, and (3) the
dispute falls within the scope of the agreement. See Glass v. Kidder Peabody & Co., 114 F.3d
446, 453 (4th Cir. 1997); see also 9 U.S.C. §§ 3-4.
“[H]aving made the bargain to arbitrate, [a] party should be held to it unless Congress itself
has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.”
Gilmer, 500 U.S. at 26 (internal citations omitted). “That is the case even when the claims at issue
are federal statutory claims, unless the FAA’s mandate has been overridden by a contrary
congressional command.” CompuCredit Corp. v. Greenwood, 565 U.S. 95, 98 (2012) (internal
citations omitted). The burden is on the party challenging arbitration to show that “Congress
intended to preclude a waiver of a judicial forum” for the claim at issue. See Gilmer, 500 U.S. at
26 (internal citations omitted). “If such an intention exists, it will be discoverable in the text of
the [statute], its legislative history, or an inherent conflict between arbitration and the [statute’s]
underlying purposes.” Id. (internal citations omitted).
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 5 of 16
A. Motion to Compel Arbitration
i. The Scope of Dodd-Frank’s Arbitration Ban
Defendant attempts to compel arbitration using the Account Agreement governing
Plaintiff’s two different deposit accounts with the bank, which contain 1) a term permitting
Defendant to garnish deposit accounts to pay off outstanding debts and 2) arbitration agreements
for all matters that “arise out of or relate to” the Account Agreement. Plaintiff responds that
federal law prohibits arbitration clauses in the context of mortgage-related transactions like the
HELOC and that, regardless, the specific arbitration agreements at issue here are invalid for lack
of consideration and mutuality.
The disputed statutory provisions became law as part of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (“Dodd-Frank”). While the FAA enshrines a general
presumption in favor of arbitration, the Dodd-Frank Act “imposes, among its many initiatives, the
refinement and restriction of” the policy favoring arbitration of certain claims. Pezza v. Investors
Capital Corp., 767 F.Supp.2d 225, 226 (D. Mass. 2011) (quoting Preston v. Ferrer, 552 U.S. 346,
353 (2008)). Specifically, Dodd-Frank added 15 U.S.C. § 1639c(e) and 12 C.F.R. § 1026.36(h)
to the Truth in Lending Act (“TILA”), the statute under which Plaintiff brought his first claim.
The relevant statutory language regarding arbitration states as follows:
(1) In general. No residential mortgage loan and no extension of credit under an
open end consumer credit plan secured by the principal dwelling of the
consumer may include terms which require arbitration or any other nonjudicial
procedure as the method for resolving any controversy or settling any claims
arising out of the transaction.
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 6 of 16
(3) No waiver of statutory cause of action. No provision of any residential
mortgage loan or of any extension of credit under an open end consumer credit
plan secured by the principal dwelling of the consumer, and no other agreement
between the consumer and the creditor relating to the residential mortgage loan
or extension of credit referred to in paragraph (1), shall be applied or interpreted
so as to bar a consumer from bringing an action in an appropriate district court
of the United States, or any other court of competent jurisdiction, pursuant to
section 1640 of this title or any other provision of law, for damages or other
relief in connection with any alleged violation of this section, any other
provision of this subchapter, or any other Federal law.
15 U.S.C.A. § 1639c. The implementing regulation, meanwhile, states:
(1) Arbitration. A contract or other agreement for a consumer credit transaction
secured by a dwelling (including a home equity line of credit secured by the
consumer's principal dwelling) may not include terms that require arbitration or
any other non-judicial procedure to resolve any controversy or settle any claims
arising out of the transaction. This prohibition does not limit a consumer and
creditor or any assignee from agreeing, after a dispute or claim under the
transaction arises, to settle or use arbitration or other non-judicial procedure to
resolve that dispute or claim.
12 C.F.R. § 1026.36.
There is limited precedent interpreting the scope of the foregoing provisions. It is clear
from the plain language that, at the very least, mortgage notes and other security instruments
directly tied to a mortgage loan cannot contain arbitration clauses, but the prohibition’s reach
beyond such clear cases remains unsettled. Against this backdrop, this Court must determine
whether Plaintiff has carried his burden to show that Congress intended § 1639c to preclude
arbitration where the dispute arises under a mortgage agreement, but the lender seeks to invoke an
arbitration clause in a separate contract purportedly empowering it to unilaterally use funds from
the mortgagee’s deposit accounts to pay off the mortgage instrument. See Gilmer, 500 U.S. at 29
(establishing that it is a plaintiff’s burden to show congressional intent to preclude arbitration).
Here, the Court finds the statutory language to encompass the arbitration clause in the
Account Agreement, where applied to a claim arising out of a HELOC. The HELOC under which
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 7 of 16
the Plaintiff is bringing suit is, by any definition, an “extension of credit under an open end
consumer credit plan secured by the principal dwelling of the consumer.” 15 U.S.C.A. §
1639c(e)(1). As its name suggests, the HELOC is a line of credit that Plaintiff can draw against
and that is secured by Plaintiff’s home. Had an arbitration clause been included in the HELOC,
then, there can be no doubt that it would have been voided by the Dodd-Frank arbitration ban. The
HELOC itself does not contain an arbitration provision, however—instead, the arbitration clause
is located in the separate Account Agreement, which Plaintiff agreed to when he opened his deposit
accounts with Defendant. The Account Agreement also included language authorizing Defendant
to use set-offs from the deposit accounts to collect any loan payments due and granting Defendant
a security interest in the deposit accounts. ECF 9-3 at 11. Defendant relied on these provisions to
unilaterally make payments on Plaintiff’s HELOC using money from his deposit accounts on two
different occasions. ECF 9 ¶ 17, 25. It is this connection upon which Defendant relies to argue
that arbitration is required, despite the fact that the HELOC itself contains no arbitration clause.
Since Plaintiff’s claims “arise out of or relate to” Defendant’s unilateral set-off payments and the
Account Agreement allegedly authorizing them, Defendant says the Account Agreement’s
arbitration clause should control. The question is, then, whether the fact that the arbitration
provision exists in a separate agreement leaves it beyond Dodd-Frank’s purview, despite the fact
that the provision was invoked in the context of HELOC payments.
Nothing in the statutory language restricts the covered mortgage credit transaction to the
original loan documents.
The statute refers only to “residential mortgage loan[s]” and
“extension[s] of credit under an open end consumer credit plan,” without specifying further what
constitutes such “loans” or “plans”. Defendant contends that the Consumer Financial Protection
Bureau (“CFPB”) has interpreted the scope of the arbitration ban as limited to the documents
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 8 of 16
memorializing a consumer’s mortgage loan agreement, ECF 16 at 4, but that overstates the CFPB’s
guidance: the agency has merely articulated the common sense proposition that the prohibition
does not “appl[y] to agreements that are not part of the credit transaction.” Loan Originator
Compensation Requirements Under the Truth in Lending Act (Regulation Z), 78 Fed. Reg. 11280,
11388 (Feb. 13, 2013). It has not defined the outer scope of “the credit transaction,” and in fact
has specifically noted that “[t]he prohibition applies to the terms of the whole transaction,
regardless of which particular document contains those terms.” Id. Thus, a term is covered by the
Dodd-Frank arbitration ban if it is part of “the whole transaction.”
§ 1639c(e)(1)’s plain language does not exempt terms from the arbitration ban simply
because they appear in a document that also governs a separate and distinct bank-depositor
relationship. To conclude that the Account Agreement’s arbitration clause is not part of the
HELOC credit transaction would be to improperly ignore Defendant’s own intertwining of the
Agreement with the HELOC. Terms that provide mechanisms for the payment of outstanding
balances of the HELOC logically lie at the very heart of the credit transaction. After all, what is
more central to a loan than terms implicating how the creditor will be paid and, perhaps even more
importantly, how the creditor can secure the loan against non-payment?
Indeed, it would be an extraordinary loophole in the statute to suggest it does not apply to
this term providing Defendant with significant power to secure its HELOC loan simply because it
is contained in a later-drafted document. Such interpretation would improperly allow Defendant
to use the Account Agreement as both a sword and a shield. It would functionally eviscerate §
1639c(e)(1)’s ban on arbitration by allowing creditors to easily avoid the ban by memorializing
key terms implicating the mortgage transaction in documents that also cover an ostensibly separate
relationship between the parties.
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 9 of 16
Defendant’s extensive reference to CMH Homes, Inc. v. Sexton is unavailing. 441 F. Supp.
3d 1202 (D.N.M. 2020). In CMH Homes, plaintiff financed and purchased a manufactured home,
signing an arbitration agreement as part of the purchase agreement. Id. at 1205. Plaintiff later
sought to cancel the purchase contract and brought suit, only for defendants to move to compel
arbitration. Id. The court ultimately found that TILA’s ban on arbitration clauses did not apply.
It concluded that the dispute over revocation of the purchase arose out of the sale transaction rather
the loan transaction, and § 1639c(e)(1) only applies to disputes arising out of credit transactions.
Id. at 1208. CMH Homes is of little assistance to Defendant here, however, because this case
unmistakably presents a “dispute concerning a credit transaction,” which the CMH Homes court
concluded that § 1639c(e)(1) plainly covered. The facts here, as alleged by Plaintiff, are that
Defendant illegally used money from his deposit accounts to pay off the outstanding balance of
his HELOC—the sort of settling up of an outstanding loan payment that unmistakably arises out
of the credit transaction.3
Even if § 1639c(e)(1) applied solely to the documents directly constituting the mortgage
and therefore did not cover the separate Account Agreement, the Agreement’s terms allowing
Defendant to pay an outstanding sum due on the HELOC certainly “relate to the residential
mortgage loan” and would therefore be subject to the ban on arbitration clauses under §
1639c(e)(3) instead. Defendant argues at length that § 1639c(e)(3)’s language does not apply to
Defendant’s emphasis on the fact that it “seeks to enforce an Arbitration Clause set forth in the
Account Agreement governing Plaintiff’s deposit accounts, not in the HELOC Agreement
governing Plaintiff’s HELOC,” ECF 16 at 6, ultimately confuses the issue. The critical decision
point in CMH Homes was not where the arbitration agreement was located or out of which
transaction it arose, but rather whether the dispute arose out of a credit transaction or not.
Similarly, Defendant’s focus on the fact that it acted pursuant to the Account Agreement, not the
HELOC, matters little when Plaintiff’s lawsuit explicitly bases its claims in violation of TILA’s
protections regarding the HELOC, not the Account Agreement. ECF 3 ¶¶ 49-51.
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 10 of 16
arbitration agreements, but his arguments fail for several reasons. First, § 1639c(e), of which §
1639c(e)(3) is a sub-part, is entitled “Arbitration.” Defendant’s attempt to categorize the latter as
a separate “Waiver Ban” falls short, as the statute itself discusses waiver as part of its overarching
arbitration section. See Almandarez-Torres v. United States, 523 U.S. 224, 234 (1998) (“[T]he
title of a statute and the heading of a section are tools available for the resolution of a doubt about
the meaning of a statute.”) (internal citations omitted).
Second, while the plain language of § 1639c(e)(3) states that no provision “shall be applied
or interpreted so as to bar a consumer from bringing an action in an appropriate district court of
the United States. . . ., ” Defendant now aims to bar Plaintiff from bringing an action in district
court via this motion. Defendant states, correctly, that “a statute that creates a cause of action and
that gives a plaintiff the right to bring the cause of action in court does not automatically preclude
arbitration,” citing extensive case law to this end. ECF 16 at 8-9. While “contractually required
arbitration of claims satisfies the statutory prescription of civil liability in court,” Greenwood, 565
U.S. at 101, § 1639c(e)(3) does not merely prescribe civil liability in court, but instead explicitly
bars the waiver of one’s right to have such liability determined in district court. That provision is
unlike any addressed in the precedent Defendant cites. There is a substantive difference between,
on the one hand, enshrining a cause of action but allowing agreements to arbitrate in lieu of
pursuing it and, on the other hand, enforcing agreements to arbitrate where the statute clearly
prohibits any waiver of the right to sue in district court. While the precedent cited by Defendant
allows the former, the reasoning does not go so far as to justify the latter.
Third, Defendant’s surplusage arguments are unpersuasive. The two subsections of §
1639c(e) serve distinct purposes with separate meanings. § 1639c(e)(1) states that mortgage loan
agreements cannot contain arbitration clauses in any form. § 1639c(e)(3), meanwhile, applies to
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 11 of 16
a broader range of agreements—any that “relate” to a mortgage loan—but applies a narrower
proscription: they cannot bar borrowers from bringing suit in district court to invoke statutory
causes of action. § 1639c(e)(3) would permit, for example, agreements relating to mortgage loans
requiring arbitration for common law causes of action. Thus, while there may be overlapping
situations like this particular case in which both subsections of § 1639c(e) are implicated, the
respective subsections serve distinct purposes, and there is no superfluity.
As a final attempt to stave off application of § 1639c(e) to its arbitration clause, Defendant
suggests that the Account Agreement does not “relate to” the HELOC because the Agreement does
not mention the HELOC specifically. In Defendant’s view, the Account Agreement governs the
relationship between a bank and its depositors separately from the consumer-mortgage relationship
created in the HELOC. As outlined previously, this argument beggars belief where, as here,
Defendant relied on the Agreement to pay off the HELOC by unilaterally taking funds from the
deposit accounts in question and now seeks to compel arbitration using the Agreement in a dispute
arising out of the HELOC. These circumstances are little different than in Attix v. Carrington
Mortg. Servs., in which the district court concluded that an agreement relating to how mortgage
payments could be made via phone “related to” the mortgage. 2020 WL 5757624 (S.D. Fla. Sep.
16, 2020). Here, the Account Agreement contains a term that, per Defendant’s own apparent
interpretation of it, empowers it to take money from Plaintiff’s account in order to satisfy
outstanding HELOC debt. It is, then, an agreement that has a role in determining how the mortgage
instrument is paid, and therefore it clearly “relates to” the mortgage just like the agreement in Attix.
§ 1639c(e)’s ban on arbitration clauses applies to the arbitration clause in the Account Agreement
here, whether via § 1639c(e)(1), § 1639c(e)(3), or both.
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 12 of 16
ii. The Retroactivity of Dodd-Frank’s Arbitration Ban
While the Account Agreement’s language falls within the scope of the Dodd-Frank
provisions barring arbitration clauses, Defendant points out that one of the two relevant deposit
accounts predates Dodd-Frank’s effective date. See 78 Fed. Reg. at 11387 (“[T]he Bureau is
providing an effective date of June 1, 2013.”). Several courts have considered whether DoddFrank’s restrictions apply retroactively to contracts entered before June 1, 2013. Many of those
courts have concluded that § 1639c(e) and 12 C.F.R. § 1026.36(h) only apply prospectively. See
Trevisani v. Ocwen Loan Servicing, LLC, No. 16-cv-63018, 2017 WL 7731792, at *5-6 (S.D. Fla.
May 3, 2017); Davies v. Green Tree Servicing, LLC, Civil Action No. 3:14-1711, 2015 WL
3795621, at *11-19 (M.D. Pa. Jun. 18, 2015); Beckwith v. Caliber Home Loans, No. 3:15-cv00581-RDP, 2015 U.S. Dist. LEXIS 78332, at *7- 10 (N.D. Ala. Jun. 17, 2015); Weller, 971 F.
Supp. 2d at 1077-79.
This Court agrees. “Retroactivity is not favored in the law.” Bowen v. Georgetown
University Hospital, 488 U.S. 204, 208 (1988). Against the backdrop of this presumption against
retroactivity, the fact that the statute does not include language evincing Congress’s clear intent to
give it retroactive effect is telling. See Landgraf v. USI Film Products, 511 U.S. 244, 259–60
(1994) (had Congress intended statute to have retroactive effect, “it surely would have used
language comparable to . . . ‘shall apply to all proceedings pending on or commenced after the
date of enactment of this Act’”) (internal citations omitted). Indeed, the presumption against
retroactivity weighs especially strongly where retroactivity would “affect contractual or property
rights, matters in which predictability and stability are of prime importance.” Id. at 271. The
contractual right to arbitrate is at the core of this dispute, and Supreme Court precedent makes
clear that preserving established contractual expectations—like the expectation that a claim will
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 13 of 16
be arbitrated—is of the utmost import when determining retroactivity.
amendments codified at 15 U.S.C. § 1639c(e)(3) do not, therefore, operate retroactively.
Here, Plaintiff opened the deposit account ending 2553 on May 3, 2010 and opened the
deposit account ending 6411 on July 6, 2016. ECF 9-1 & 9-2. The May 3, 2010 deposit account
agreement was updated to include an arbitration provision and a class action waiver effective
February 1, 2013, and Plaintiff did not opt out of said agreement within the time period specified
by Defendant. ECF 18-1 ¶¶ 8-9. The updated Account Agreement’s effective date of February
1, 2013 was several months prior to the June 1, 2013 effective date of Dodd-Frank’s statutory
provisions banning arbitration. Plaintiff’s TILA claim is based on one setoff that PNC applied
against the 2010 deposit account, and one setoff applied against the 2016 deposit account. Since
Dodd-Frank’s arbitration ban does not apply retroactively, any claims related to the 2010 deposit
account (and its related 2013 amendment to the Account Agreement adding the arbitration
agreement) remain subject to arbitration. Therefore, Plaintiff’s TILA claim must be arbitrated, to
the extent it relates to the 2010 deposit account. The TILA claim related to the 2016 deposit
account, for the reasons stated above, is governed by Dodd-Frank, and must proceed in this Court.
iii. The Enforceability of the Arbitration Agreement
Plaintiff raises a handful of additional arguments as to why, even if the Dodd-Frank
statutory bar does not apply, the arbitration clause itself is invalid. Namely, he alleges that he
never agreed to be bound to arbitrate, and that even if he did, the arbitration clause lacked both
consideration and mutuality of obligation and is therefore illusory. ECF 19 at 2-4. These
arguments lack merit. Maryland courts have explicitly affirmed that entities such as Defendant
may amend customer agreements to include arbitration clauses, so long as the underlying customer
agreement includes a change-in-terms provision and Defendant follows the applicable notice
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 14 of 16
procedures. See DIRECTV, Inc. v. Mattingly, 376 Md. 302 (2003) (recognizing that an arbitration
provision added pursuant to a customer agreement’s change-in-terms provision would have been
enforceable had DIRECTV followed the notice procedures outlined in the agreement). Despite
Plaintiff’s contention to the contrary, the existence of a change-in-terms provision does not render
an arbitration agreement illusory for lack of consideration or mutuality under Maryland law.
Harby v. Wachovia Bank, N.A., 172 Md. App. 415, 425-26, (2007) (enforcing arbitration clause
where change-in-terms provision gave bank “the right to change the terms of this Agreement and
the fees, charges and other terms and conditions described in other documents incorporated by
reference” and required bank to “notify you in writing at least thirty calendar days before the
change will take effect if the change is not in your favor.”).
Here, when Plaintiff agreed to the 2010 version of the Account Agreement, it contained a
change-in-term provision. Defendant went well above and beyond its own notice procedures when
it amended the Agreement to include an arbitration clause later in 2013. It gave Plaintiff the
opportunity to opt out from the arbitration at least four different times, to which he never
responded. Thus, because the Account Agreement was properly amended to include an arbitration
clause in accordance with Maryland law—and because this Agreement and the amendment both
predate the effective date of the Dodd-Frank arbitration ban—Plaintiff’s TILA claim must be
arbitrated to the extent it relates to the deposit account opened in 2010.
B. Motion to Strike Class Action Demand
The enforceability of a class action waiver is a question for the court to decide. See Del
Webb Cmtys., Inc. v. Carlson, 817 F.3d 867, 873 (4th Cir. 2016). The class action waiver found
in the Account Agreement states that “If either you or we elect to arbitrate a Claim, neither you
nor we will have the right . . . to participate in a class action . . . .” ECF 9-3 at 17 (emphasis added).
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 15 of 16
Its plain language explicitly makes the waiver contingent on arbitration. For Plaintiff’s TILA
claim arising out of the HELOC payments taken from the account created on June 2016, then, the
class action waiver is not enforceable because the claim will proceed in this Court.
Because the claim related to the 2010 deposit account is subject to arbitration, Plaintiff
cannot assert a class action as to that claim. Plaintiff’s primary argument to the contrary relies on
§ 1639c(e)(3)’s ban on waivers of statutory causes of action, ECF 13 at 11, but even if Dodd-Frank
does preclude waiver of his class action right, it cannot be retroactively applied to the 2013
Account Agreement and related deposit account, as outlined in Section III(A)(ii). Plaintiff also
points to the fact that he never agreed to arbitrate or waive his class action rights as part of the
HELOC agreement, id. at 13, but that does not obviate the fact that he did agree to arbitration and
a class action waiver when he declined to opt out of the 2013 amendment to the Account
Agreement. By failing to opt out, despite notice and multiple opportunities to do so, he allowed
Defendant to include the arbitration and class action waiver provisions, which apply to any claim
that “arises out of or relates to” the Account Agreement. ECF 9-3 at 15. Plaintiff’s TILA claim
certainly “relates to” the Agreement, particularly given the FAA’s broad presumption in favor of
C. Motion to Stay RESPA Claim Pending Arbitration
Defendant’s arguments in favor of staying the RESPA claim are predicated on its belief
that resolution of this claim would be impacted by the outcome of the TILA claim. Therefore,
Defendant posits, deferring proceedings until the TILA claim is resolved via arbitration would
promote judicial economy and conserve the parties’ resources. However, because Plaintiff’s TILA
claim involving the deposit account opened in 2016 will proceed in this forum, it would be
Case 1:20-cv-02234-SAG Document 20 Filed 01/06/21 Page 16 of 16
inefficient to stay the RESPA claim. The claims will be heard together, and the Motion to Stay is
For the reasons set forth above, Defendant’s Motion to Compel Arbitration, to Strike Class
Action Demand, and to Stay Litigation, ECF 10, will be granted in part and denied in part.
Specifically, with regard to Plaintiff’s Count One TILA claim pertaining to the HELOC payment
taken from the 2010 deposit account, the Motion will be granted—arbitration will be compelled
and the class action demand will be stricken. With regard to Plaintiff’s Count One TILA claim
pertaining to the HELOC payment taken from the 2016 deposit account, the Motion will be denied,
and the claim will be permitted to proceed in this Court, along with its accompanying class action
demand. Defendants’ Motion will be denied insofar as it seeks to stay litigation of Count Two of
the Complaint pending resolution of the arbitration. 4
January 6, 2021
Stephanie A. Gallagher
United States District Judge
This Court will not dictate to the parties when the arbitration should proceed vis-à-vis this
litigation, despite some potential risk of inconsistent verdicts between the arbitrated and litigated
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?