Judge: Gail Killefer, Case: 25STCV00608, Date: 2025-04-23 Tentative Ruling

Case Number: 25STCV00608    Hearing Date: April 23, 2025    Dept: 37

HEARING DATE:                 Wednesday, April 23, 2025

CASE NUMBER:                   25STCV00608

CASE NAME:                        Tania Makoer, et al. v. JPMorgan Chase Bank National Association, et al.

MOVING PARTY:                 Defendant JPMorgan Chase Bank, N.A.

OPPOSING PARTY:             Plaintiffs Tania Makover and Natan Davoodi

TRIAL DATE:                        N/A

PROOF OF SERVICE:           OK

PROCEEDING:                      Motion to Compel Arbitration

OPPOSITION:                        24 March 2025

REPLY:                                  11 April 2025

TENTATIVE:                         Defendant Chase’s motion to compel arbitration and stay the action is granted. The court sets an Order to Show Cause Re: Status of Arbitration for April 22, 2026, at 8:30 a.m.  Defendant to give notice.

Background

On January 9, 2025, Tania Makeover and Natan Davooni (collectively “Plaintiffs”) filed a Complaint against JPMorgan Chase Bank National Association (“Chase”); Wall Street Mortgage Bankers LTD; The Golden 1 Credit Union (collectively “Defendants”) and Does 1 to 100.

The Complaint alleges the following seven causes of action:

1)     Breach of Contract;

2)     Violation of the California Consumer Reporting Agencies;

3)     Violation of the California Rosenthal Act;

4)     Violation of Consumer Legal Remedies Act (Civ. Code § 1750);

5)     Violation of the Unfair Completion Law (Bus. & Prof. Code § 17200);

6)     Violation of False Advertising Act (Civ. Code § 17500); and

7)     Negligence.

Defendant Chase moves to compel to compel Plaintiffs’ claims to arbitration and stay this action pending arbitration. Plaintiffs oppose the Motion. The matter is now before the court.

motion to compel arbitration 

I.         Legal Standard

Parties may be compelled to arbitrate a dispute upon the court finding that: (1) there was a valid agreement to arbitrate between the parties; and (2) the agreement covers the controversy or controversies in the parties’ dispute.¿(CCP § 1281.2; Omar v. Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.)¿¿¿¿ 

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A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court¿(1998) 62 Cal.App.4th 348, 356-57.)¿¿¿¿¿ 

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“If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (CCP § 1281.4.)¿ 

II.        Discussion

Plaintiffs’ Complaint alleges that due to hacking from suspected Chase employees, Chase blocked certain charges to, and automatic payments from, Plaintiffs’ Chase accounts and improperly withheld funds from Plaintiffs’ account, damaging Plaintiffs’ credit score and causing other damages. Defendant Chase asserts that Plaintiffs’ claims are arbitrable due to an arbitration agreements contained in the Deposit Account Agreement and Cardmember Agreement that govern the Chase accounts at issue.

The IOLTA Account ending in 4742 is governed by the Deposit Account Agreement (“DAA”). (Williams Decl., ¶¶ 4, 5, 8-10, Ex. A, C, .) Plaintiff asserts that the IOLTA ending in 4742 is not at issue in this action. The Checking Account ending in 0168 is also governed by the DAA. (Id. ¶¶ 8-9, 11, 12, Ex. D, E.) The DAA then in effect when the 0168 Account was opened is attached as Exhibit D to the Declaration of Halie Williams. Defendant Chase represents that the Exhibit E is the DAA in effect as of November 17, 2024. (Williams Decl., Ex. D.) The 2024 DAA states in relevant part as follows:

DEPOSIT ACCOUNT AGREEMENT

This agreement is the contract that governs your account.

Whether you have a personal or business deposit account, this document is the basic agreement between you and us (JPMorgan Chase Bank, N.A. or “Chase”). By signing a signature card or submitting an account application, or by using any of our deposit account services, you and anyone else identified as an owner of the account agree to the terms in this agreement. Customers of some of our business groups, such as Corporate Banking, will get a different agreement and their accounts will be governed by that agreement, not this one. If you have a product that is not a deposit account, such as a credit card, this agreement does not apply to that product. Also, other products or services, such as online banking or retirement accounts, may have additional agreements.  . . .

I.  Definitions

Here are some important terms that we use throughout this agreement:

Account: Any deposit account, such as a checking or savings account, you have with us that is covered by this agreement.

[ . . . ]

IX. Other Legal Terms

A. Rules Governing Your Account

This agreement, all accounts and services provided to you, and any dispute relating to those accounts and services are governed by federal law and, when not superseded by federal law, the law of the state where your account is located. . .

[ . . . ]

X. Arbitration; Resolving Disputes

You and we agree that upon the election of either of us, any claims or disputes will be resolved by binding arbitration as defined and discussed below, and not through litigation in any court (except for matters in small claims court).

This arbitration agreement is entered into pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (“FAA”) with respect to both substance and procedure.

YOU HAVE A RIGHT TO OPT OUT OF THIS AGREEMENT TO ARBITRATE. . UNLESS YOU OPT OUT OF ARBITRATION IN THE MANNER DESCRIBED BELOW, YOU AND WE ARE WAIVING THE RIGHT TO HAVE OUR DISPUTE HEARD BEFORE A JUDGE OR JURY, OR OTHERWISE TO BE DECIDED BY A COURT OR GOVERNMENT TRIBUNAL . . .

What claims or disputes are subject to arbitration?

Claims or disputed factual or legal issues between you and us that arise out of or relate in any way to any aspect of our relationship, interactions, or dealings with each other, including but not limited to your deposit account, transactions involving your deposit account, whether actual, potential, canceled, or other transactions, any product, service, or agreement with us, or interactions of any kind with Chase employees or agents are subject to arbitration. Additionally, any claims or disputed factual or legal issue arising from or relating in any way to this agreement, any prior account agreement between us, the advertising of our products, or the application for, or the denial, approval or establishment of your account are included. Claims or disputed factual or legal issues that fall within the scope of this arbitration provision are subject to arbitration, regardless of what legal claim or theory they are based on or whether they seek legal or equitable remedies. Arbitration applies to any and all such claims or disputed factual or legal issues, whether they arose in the past, may currently exist, or may arise in the future. All such claims or disputed factual or legal issues are referred to in this section as “Claims.”

[ . . . ]

Does arbitration apply to Claims involving third parties?

Arbitration applies whenever there is a Claim between you and us. If a third party is also involved in a Claim between you and us, then the Claim will be decided with respect to the third party in arbitration as well, and it must be named as a party in accordance with the rules of procedure governing the arbitration. No award or relief will be granted by the arbitrator except on behalf of, or against, a named party. For purposes of arbitration, “you” includes any person who is listed on your account or claims a right or interest in your account, and “we” and “us” includes JPMorgan Chase Bank, N.A., all its affiliates, third-party beneficiaries of this agreement and all third parties who are regarded as agents or representatives of ours in connection with a Claim. (If we assign your account to an unaffiliated third party, then “we” includes that third party.) ) The arbitration may not be consolidated with any other arbitration proceeding.

How does arbitration work?

Arbitrations between us shall be administered by the American Arbitration Association (“AAA”). AAA shall apply its Consumer Arbitration Rules in effect at the time the arbitration is commenced and the Mass Arbitration Supplementary Rules to mass arbitration matters including the additional rules explained below . .

(Williams Decl., Ex. D at pp. 5, 22, 25-27.)

Defendant Chase asserts that Plaintiffs’ claims fall within the scope of the DAA and Card Member Agreement and require that Plaintiffs arbitrate their claim. Defendant Chase further asserts that their records reflect that Plaintiffs did not exercise the opportunity to opt out of the DAA agreement. (Garret Decl., ¶¶ 5-7.)

Plaintiffs’ opposition does not challenge the terms of the DAA or its applicability to Account 0168. Instead, Plaintiffs assert that Defendant Chase failed to attach the arbitration agreement related to First Republic accounts 4859 and 4305. (Compl., ¶¶ 31, 38.) The Complaint alleges that “Plaintiffs opened two First Republic Accounts, one being a Business Operating Account (ending in 4859) and one as an IOLTA Account (ending in 4305).” (Compl., ¶ 31.) In May 2024, First Republic Bank was “bought out / taken over / merged” with Defendant Chase and the two accounts were serviced by Defendant Chase. (Id. ¶¶ 32, 33, Ex. A.)

Accordingly, Plaintiffs contend that “the Causes of Action against CHASE are based upon the 4859 and 4305 Accounts, not the 0168 and 4742 Accounts.” (Opposition, at p. 3.) Therefore, Chase cannot compel arbitration as to the First Republic Bank accounts because no arbitration agreement is shown to apply to those accounts. Given the broad language of the DAA and the fact that Defendant Chase services the First Republic Bank accounts, court disagrees with the proposition that the arbitration agreement in the DAA does not apply to the 4859 and 4305 First Republic Accounts.

Under the FAA, an agreement to arbitrate “is valid under § 2 ‘save upon such grounds as exist at law or in equity for the revocation of any contract[.]’” (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 70 [130 S.Ct. 2772, 2778, 177 L.Ed.2d 403].) “There are two types of validity challenges under § 2: ‘One type challenges specifically the validity of the agreement to arbitrate,’ and ‘[t]he other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract's provisions renders the whole contract invalid.’ ”  (Ibid.) “[W]e held that only the first type of challenge is relevant to a court's determination whether the arbitration agreement at issue is enforceable.” (Ibid.)

Here, Plaintiffs challenge the applicability of the DAA to the First Republic Bank Accounts serviced by Defendant Chase, but fails to challenge the arbitration provision contained therein or its scope. (See Compl., ¶¶ 31-33, Ex. A.) “In other words, if the plaintiff does not specifically and directly challenge the ‘precise agreement to arbitrate at issue,’ [citation], a court must treat the arbitration agreement as valid under § 2 and enforce it[.]” (Tompkins v. 23andMe, Inc. (9th Cir. 2016) 840 F.3d 1016, 1032.)

The arbitration provision in the DAA states that arbitration applies to “[c]laims or disputed factual or legal issues between you and us that arise out of or relate in any way to any aspect of our relationship, interactions, or dealings with each other, including but not limited to . . . or other transactions, any product, service, or agreement with us, or interactions of any kind with Chase employees or agents are subject to arbitration. (Williams Decl., Ex. D at p. 25.) Accordingly, any dispute regarding how Defendant Chase serviced the First Republic Bank accounts is a claim or dispute that is covered by the arbitration agreement in the DAA.

Furthermore, the arbitration agreement in the DAA states that it applies to third party claims, meaning any claims that Plaintiffs may have with First Republic Bank and its account. “For purposes of arbitration . . . ‘we’ and ‘us’ includes JPMorgan Chase Bank, N.A., all its affiliates, third-party beneficiaries of this agreement and all third parties who are regarded as agents or representatives of ours in connection with a Claim.” (Williams Decl., Ex. D at p. 26.) The Complaint asserts that “First Republic Bank was bought out / taken over / merged with CHASE and the First Republic Accounts were serviced by CHASE.” (Compl., ¶ 32.) Accordingly, any claims Plaintiffs have regarding their bank accounts with First Republic Bank are subject to the arbitration provision in the DAA because First Republic is now an affiliate, agent, or representative of Defendant Chase.

Accordingly, the court is not persuaded by the Plaintiffs’ argument that the claims raised in the Complaint are not subject to arbitration under the arbitration agreement contained in the DAA. The court grants Defendant Chase’s motion and stays the action pending arbitration.

Conclusion

Defendant Chase’s motion to compel arbitration and stay the action is granted.