Syson

FACTS AND PROCEDURAL HISTORY

The Sysons purchased their family home in Santa Barbara with a loan from Montecito secured by a deed of trust. Montecito sold the loan, which eventually ended up being held by Bank of America. The Sysons also obtained a home equity line of credit (Home Equity Access Line or HEAL) from Montecito secured by a subordinate deed of trust. As part of the HEAL transaction, the Sysons signed a four-page “Credit Agreement and Disclosure” (Credit Agreement) containing a mandatory arbitration clause. A year later, they signed a similar agreement, also containing a mandatory arbitration clause, that reduced their credit limit. The nine-page deed of trust securing the HEAL also contained an agreement to arbitrate any disputes. Subsequently, a wildfire destroyed the Sysons’ home. The Sysons’ insurer settled their loss claim for nearly $1.1 million. The funds were deposited with Countrywide Financial, Bank of America’s predecessor in interest, and were made jointly payable to Countrywide, Montecito, and the Sysons. Under the agreements between Montecito and the Sysons, Montecito had an ownership interest in the insurance proceeds, which served as additional security…