Malveda v. Experian Information Solutions, Inc.

Background

Zenaida Malveda sued five defendants, alleging violations of federal and state credit-reporting laws. Oportun, Inc. moved to compel arbitration based on a 2018 loan agreement between Oportun and Malveda. That agreement required arbitration of claims arising from or relating to the loan, and stated that the arbitrator would decide both the claim and whether the claim could be arbitrated.

After Malveda stopped making loan payments, she received debt-collection calls from Oportun. In April 2019, the parties entered into a settlement agreement that resolved her claims and reduced her balance with Oportun to $0.00. The settlement agreement did not contain an arbitration provision. In July 2021, Malveda saw that Oportun had reported the account to TransUnion as “Charged Off,” with a past-due balance of $4,675.00. She alleged that Oportun furnished inaccurate information in violation of the California Consumer Credit Reporting Agencies Act.

Analysis

The court applied the Federal Arbitration Act, which requires courts to enforce valid arbitration agreements covering the dispute. Malveda did not dispute that the loan agreement and its arbitration clause were valid when she entered the loan agreement. The issue was whether the later settlement agreement replaced the loan agreement.

The court held that the settlement agreement did not clearly show an intent to extinguish the entire loan agreement. Its integration clause was better understood as limiting the use of outside evidence to interpret the settlement, rather than as replacing every term of the loan agreement. The settlement expressly changed some obligations, including Malveda’s obligation to repay the loan, but did not expressly replace the entire loan agreement or modify every term. The loan agreement also stated that its arbitration clause would remain effective after the loan was paid off or terminated.

The court further explained that the arbitration clause covered claims arising from or relating to the loan and included an agreement for the arbitrator to decide “gateway” questions of arbitrability—questions about whether the parties agreed to arbitrate and whether a particular dispute falls within that agreement. Because a valid arbitration clause remained in effect and assigned arbitrability questions to the arbitrator, the court did not decide whether Malveda’s claims actually arose from or related to the loan.

Disposition

The court granted Oportun’s motion to compel arbitration. It stayed all claims against Oportun pending resolution of Malveda’s claims in arbitration. The order did not decide the underlying accuracy of the credit reporting.