Court Grants Center’s Publication Request of Opinion Holding That Debt Buyers Must Offer Sufficient Evidence To Prove An Arbitration Agreement Exists In Order To Compel Arbitration

November 30, 2021

The Fourth District Court of Appeal granted the Center’s request to publish Chambers v. Crown Asset Management, which offers a nuanced examination of the secondary evidence rule and the business records exception to the hearsay rule in the context of a debt buyer’s arbitration motion. The opinion offers a useful example of how courts should consider evidence from an original creditor that is offered by a debt buyer. 

This case affirms the basic principle that no litigant is exempt from the rules of evidence. After Pamela Chambers filed a putative class action against Crown Asset Management, a debt buyer, alleging violations of the California Fair Debt Buying Practices Act, Crown filed a motion to compel arbitration. Crown relied on a short affidavit from the original creditor that it had mailed Chambers an arbitration contract as part of its credit card agreement. The plaintiff objected to the admission of the affidavit on various evidentiary grounds. The trial court sustained the objections, rejecting Crown’s arguments that the affidavit satisfied the secondary evidence rule and the business records exception to the hearsay rule. The Court of Appeal affirmed. 

The opinion explains the relevant standard for reviewing evidence offered in support of a motion to compel arbitration. The opinion clarifies that while the secondary evidence rule can allow evidence about a writing to come in, the evidence offered must still be admissible under other rules of evidence, such as the business records exception to the hearsay rule. Here, the Court determined that the affidavit lacked the specifics necessary to satisfy the business records exception. In particular, the affidavit failed to state the specific practices governing which documents were sent to consumers and when they were sent. The affidavit was therefore inadmissible. 

This decision will help ensure that parties seeking arbitration have ample evidence to demonstrate that a valid arbitration agreement exists. While arbitration provisions may have become ubiquitous in consumer contracts, companies seeking to enforce them still need to provide solid evidence that an agreement was made. Otherwise, Californians would be denied their right to appear in court, on the basis of a “contract” to which they never agreed. In particular, with the already enormous number of Californians in debt spiking even higher in the wake of the COVID-19 pandemic, debt buyers must be held accountable for providing the protections enshrined in California law. 

The Center was joined in its publication request by a group of distinguished legal services organizations, including the National Consumer Law Center, Housing and Economic Rights Advocates, Consumer Federation of California, Public Law Center, Western Center on Law and Poverty, Santa Clara Law School’s Katharine & George Alexander Community Law Center, and Public Counsel.

When the decision was first issued, the plaintiff asked that the court publish its opinion; the court denied the request. A couple of days after the court received the Center’s letter seeking publication, it ordered the opinion published.