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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2758 September Term, 2005

SHAWN R. HARBY, SUBSTITUTE GUARDIAN OF THE PROPERTY OF DONAVAN MARQUESE BROOKS v. WACHOVIA BANK, N.A.

Adkins, Woodward, Moylan, Charles E., Jr., (Retired, Specially Assigned) JJ. Opinion by Adkins, J.

Filed: January 26, 2007

"No acceptance" and "no consideration" are the twin defenses asserted by appellant Shawn R. Harby, substitute guardian of the property of Donavan Marquese Brooks, to the arbitration clause in appellee Wachovia Bank, N.A.'s depositary agreement. Like the

Circuit Court for Baltimore City, we find no merit in either defense. FACTS AND LEGAL PROCEEDINGS On July 22, 2004, Candace Edwards opened an account at a Wachovia branch office in Baltimore. Acting as the court-appointed guardian of the property of her minor son Donavan Marquese Brooks, Edwards presented a check for $100,000, which represented the proceeds of an insurance policy on the life of Brooks' father. At the bank, Wachovia employee Ralph Thomas, Jr. assisted Edwards in opening this account. Thomas reports that Edwards

denied that the court had issued any order regarding the account, despite the court's order directing that Edwards "shall deposit the inheritance proceeds and any other case assets in an insured financial institution as defined in Md. Code Ann. Estates and Trusts Section 13-301(h)(1991), with withdrawals only upon Court Order[.]" Edwards made a number of withdrawals from the account,

without court approval.1

According to Harby, among the checks drawn on the account under Edwards' signature were checks payable to cash ($20,000), Richard Auto Sales ($12,072.75), Jean C. F. Smith ($6,800), Wendy Smith Barlou ($3,000), and Joan Wayne Smith ($10,000). Withdrawals by Edwards also were made in the amounts of $7,000, $2,500, and $700. In addition to these unauthorized checks, Edwards used (continued...)

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To

open

the

account,

Edwards

signed

a

Customer

Access

Agreement (the Access Agreement). following:

Next to her signature was the

Acceptance of Terms and Conditions: I agree to be bound by the terms and conditions, including, but not limited to Wachovia's Deposit Agreement and Disclosures, applicable to each product or service which I obtain from Wachovia now or in the future, which terms and conditions will be provided to me. I also agree to pay all fees associated with such products, accounts and services in accordance with the fee schedules which will be provided to me by Wachovia. At the time she opened the account Edwards also received the Deposit Agreement and Disclosures for Personal Accounts (the

Deposit Agreement), effective January 1, 2004. following arbitration clause: 25.

This contains the

Arbitration of Disputes/Waiver of Jury Trial and Participation in Class Actions. If either you or we request, any irresolvable dispute or claim concerning your account or your relationship to us will be decided by the binding arbitration under the expedited procedures of the Commercial Financial Disputes Arbitration Rules of the American Arbitration Association (AAA), and Title 9 of the US Code. Arbitration hearings will be held in the city where

(...continued) account funds to make unauthorized purchases from Cingular ($102.86), Walmart ($1,560.03), ExxonMobil ($19.46), Avon ($225.66), Royal Pizza Wings ($20), Best Buy ($1,464,98), Airtran ($158.20), Cardtronic ($81.98), State Farm Insurance ($45.38), and Innovus ($202.50). Many of these withdrawals and purchases occurred within the first month after the account was opened. 2

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the dispute occurred or where mutually agreed. A single arbitrator will be appointed by the AAA and will be a retired judge or attorney with experience or knowledge in banking transactions. A court may enter a judgment on the award. To the extent permitted by law, a judge without a jury will decide any dispute or claim that is not submitted to binding arbitration that results in a lawsuit. The arbitration or trial will be brought individually and not as part of a class action. If it is brought as a class action, it must proceed on an individual (non-class, non-representative) basis. YOU UNDERSTAND AND AGREE THAT YOU AND WE ARE WAIVING THE RIGHT TO A TRIAL BY JURY AND THE RIGHT TO PARTICIPATE OR BE REPRESENTED IN ANY CLASS ACTION LAWSUIT. Edwards was removed as guardian on November 5, 2004.

Appellant Harby was appointed as Substitute Guardian.

Harby filed

suit against both Edwards, alleging tortious conversion, breach of fiduciary duty, and unjust enrichment, as well as appellee

Wachovia, alleging negligence and breach of contract. In addition, Harby sought an accounting by both Edwards and Wachovia. Wachovia filed a motion to enforce the arbitration agreement, seeking dismissal or, alternatively, a stay pending arbitration. After a hearing, the Circuit Court for Baltimore City granted the motion and stayed the lawsuit. ruled: As to the argument that the agreement did not contain an agreement to arbitrate, the court concludes that this is not a correct interpretation of the agreement. . . . [I]t is 3 In a written opinion, the court

the court's conclusion that Wachovia did not retain the unilateral power to amend or revoke the agreement without the consent of the depositor. See Holloman v. Circuit City Stores, 162 Md. App. 332 (2005). Accordingly, the agreement did not lack mutuality and is not invalid for failure of consideration. . . . There being no impediment to the enforcement of the agreement to arbitrate, the court concludes that it must be enforced. Harby noted this appeal, raising a single issue for our review: Did the trial court err in finding that a valid agreement to arbitrate existed between the parties? DISCUSSION Harby argues that neither the Access Agreement nor the Deposit Agreement "creates a validly enforceable agreement to submit to binding arbitration" because "there was no consideration for the agreement to arbitrate, and . . . no acceptance of the agreement to arbitrate either by the appellant or by the appellant's predecessor guardian." We reject both defenses. Principles Governing Judicial Enforcement Of Arbitration Agreements The Court of Appeals has described arbitration as "the process whereby parties voluntarily agree to substitute a private tribunal for the public tribunal otherwise available to them." The Maryland Uniform Arbitration Act (hereinafter, "Arbitration Act"), found in Maryland Code,

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