Justia Arbitration & Mediation Opinion Summaries

Facing more than $40,000 in unsecured debt that she owed to Discover Bank and other banks, Susan Ossello enrolled in a debt reduction program and signed a contract with Global Client Solutions. Ossello subsequently stopped making payments on her credit card debt, and Discover Bank brought a collection action against her. Ossello filed a third-party complaint against Global, alleging that Global used deceptive and fraudulent representations to solicit her participation in an illegal debt settlement plan. Global filed a motion to compel arbitration and to dismiss the third-party complaint for lack of jurisdiction. The district court concluded that the arbitration clause in Global’s contract was unconscionable and not unenforceable and therefore denied Global’s motion to dismiss and to compel arbitration. The Supreme Court affirmed, holding that the district court did not err in (1) reserving to itself the determination of arbitrability, and (2) declaring that the arbitration provision was unconscionable and therefore not enforceable against Ossello. View "Discover Bank v. Ossello" on Justia Law

The Arbitration Certification Program (ACP) certifies the qualified dispute resolution process identified in the Song-Beverly Consumer Warranty Act, Civil Code 1790, the “lemon law.” Not all automobile manufacturers must have an ACP certified program. Those manufacturers who choose to operate a certified arbitration process have limited lemon law liability. Plaintiffs bought new cars that were under the original manufacturers’ warranties when they sought declaratory relief claiming that public statements in ACP publications were illegal underground regulations not adopted in conformity with California’s Administrative Procedures Act, because the ACP states that car manufacturers may adjust the price of a defective vehicle to be repurchased from its owner as a lemon for excessive wear and tear and that it is not within an arbitrator’s purview to make such an adjustment. The court concluded plaintiffs were interested persons under Government Code 11350 and denied a motion to dismiss. The court of appeal vacated. Plaintiffs may not invoke the doctrine of public interest standing, and their individual interests in the controversy are too conjectural to confer standing to bring an action for declaratory relief. View "CA Dep't. Consumer Affairs v. Superior Court" on Justia Law

Plaintiff filed a putative class action against Delbert alleging that Delbert violated debt collection practices. The district court granted Delbert's motion to compel arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. 4. The court concluded, however, that the arbitration agreement in this case is unenforceable where it purportedly fashions a system of alternative dispute resolution while simultaneously rendering that system all but impotent through a categorical rejection of the requirements of state and federal law. The court went on to conclude that the FAA does not protect the sort of arbitration agreement that unambiguously forbids an arbitrator from even applying the applicable law. Accordingly, the court reversed and remanded for further proceedings. View "Hayes v. Delbert Services Corp." on Justia Law

Appellant, a payday loan company, provided loans to the named plaintiffs. The named plaintiffs and other borrowers did not repay their loans, prompting Appellant to file several thousand individual collection actions. Appellant secured thousands of default judgments against the named plaintiffs. It was later discovered that the process server hired by Appellant falsified affidavits of service. The named plaintiffs sued Appellant, alleging that Appellant improperly obtained its default judgments against them and other similarly situated borrowers without their knowledge. Appellant moved to compel arbitration based on the arbitration provisions in its loan agreements. The district court denied Appellant’s motions, holding that Appellant waived its right to arbitrate by bringing collection actions in justice court and obtaining default judgments based on falsified affidavits of service. The Supreme Court affirmed, holding that the district court correctly concluded that Appellant waived its right to an arbitral forum where the named plaintiffs’ claims all concerned the validity of the default judgments Appellant obtained against them in justice court. View "Principal Investments v. Harrison" on Justia Law

In 2013, Plaintiff purchased a new car from Defendant. In 2014, Plaintiff filed the underlying petition for damages, alleging that Defendant violated the Missouri Merchandising Practices Act by failing to pass title for her new vehicle. Thereafter, Defendant asked the trial court to enforce the arbitration agreement between the parties. The trial court overruled the motion to compel arbitration on the ground that the contract between the parties was void under Mo. Rev. Stat. 301.210. The Supreme Court vacated the judgment of the trial court, holding that even though the sale between Plaintiff and Defendant may be void under section 301.210, that question is for the arbitrator to determine, not the trial court. Remanded with instructions for the trial court to grant Defendant’s motion and compel arbitration. View "Ellis v. JF Enters., LLC" on Justia Law

Defendant Westlake Services LLC appealed a trial court order denying its motion to compel arbitration. Alfredo Ramos, and coplaintiffs (who are not parties to this appeal) sued Defendant Westlake Services LLC for causes of actions arising out of their purchase of used automobiles. Ramos alleged that negotiations for his purchase of a car were conducted primarily in Spanish. Defendant charged Ramos money for a “guaranteed auto protection” (GAP) contract to cover the vehicle he purchased. A copy of the GAP contract was not provided to him in Spanish. In exchange for the payment of a premium by the consumer and/or purchaser of the automobile, the ‘GAP’ insurance policy contract, which identifies the respective rights and liabilities of the parties to the contract, is purportedly intended to pay the difference between the actual cash value of the financed automobile and the then-current outstanding balance on the loan for the automobile should the financed automobile be destroyed or ‘totaled’ in an accident. Ramos asserted three causes of action based on Westlake’s failure to provide a translation of the GAP contract: (1) violation of the Consumers Legal Remedies Act (CLRA); (2) violation of section 1632; and (3) violation of the unfair competition law (UCL). Westlake moved to compel arbitration of Ramos’s and his coplaintiffs’ claims, relying on the arbitration provisions contained in the underlying sales contracts they each had signed. Upon review, the Court of Appeal concluded that Ramos reasonably relied on a Spanish translation of the English contract that Pena Motors (as Westlake’s agent) provided him that did not include the arbitration. The Court concluded that mutual assent to the arbitration agreement was lacking, void and that the trial court correctly denied Westlake’s motion to compel arbitration. View "Ramos v. Westlake Services" on Justia Law

Bowman law firm filed suit in Hendricks County Indiana, to recover Bentrud’s credit card debt owed to Capital One. Months later, Bowman moved for summary judgment. Bentrud responded by invoking the arbitration provision in his credit card agreement. The state court granted Bentrud’s election of arbitration and stayed the case, allowing Bentrud 30 days to initiate arbitration. The American Arbitration Association declined to do the arbitration because Capital One had previously failed to comply with its policy regarding consumer claims. Bentrud failed to meet the 30-day deadline, so that the stay automatically dissolved. Bowman filed a second summary judgment motion. Although the state court granted an extension, Bentrud characterized that motion, as an unfair or unconscionable means of attempting to collect a debt, under the Fair Debt Collection Practices Act, 15 U.S.C. 1692f. Bentrud also claimed that the Annual Percentage Rate on his credit card debt was 13.9%, but when Bowman filed its state court complaint, it averred the applicable interest rate to be 10.65%. The Seventh Circuit affirmed judgment in favor of Bowman, noting that when Bowman filed a second summary judgment motion, it acted consistently with the state court order and that any interest rate violation would be attributable to Capital One, which was not a party. View "Bentrud v. Bowman, Heintz, Boscia & Vicia, P.C." on Justia Law

The parties’ dispute involved various “credit repair” services provided to plaintiff consumers, for which some of the disclosure requirements of the Credit Repair Organizations Act (CROA, or the Act), 15 U.S.C. 1679 et seq., were not met. At issue was the district court's denial of a motion to vacate certain aspects of an arbitration award. The court held that the arbitrator did not manifestly disregard the law by determining that plaintiffs failed to prove actual damages under the Act; the court rejected plaintiffs’ various arguments regarding their request for additional attorneys’ fees and costs; and the arbitrator did not exceed the scope of his contractually delegated authority under section 10(a)(4) of the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq. Accordingly, the court affirmed the judgment. View "Jones v. Dancel" on Justia Law

Gladys Tellis, Sherry Bronson, Gwendolyn Moody, Nadine Ivy, and Uneeda Trammell (collectively, "the policyholders") initiated separate actions against American Bankers Insurance Company of Florida, asserting generally that American Bankers had sold them homeowner's insurance policies providing a level of coverage they could never receive, even in the event of a total loss involving the covered property. American Bankers moved the trial court hearing each action to compel arbitration pursuant to arbitration provisions it alleged were part of the subject policies; however, the trial courts denied those motions, and American Bankers appealed. The Supreme Court consolidated the five appeals for the purpose of writing one opinion, and reversed those orders denying the motions to compel arbitration. The Court based its decision on its holdings that the policyholders manifested their assent to the arbitration provision in their policies by continuing to renew the policies, that the sale of the policies affected interstate commerce, and that the arbitration provision in the policies was not unconscionable. View "American Bankers Ins. Co. of Florida v. Tellis" on Justia Law

Oteria Moses borrowed $1,000 under a loan agreement that was illegal under North Carolina law. When Moses filed for Chapter 13 bankruptcy protection, CashCall, Inc., the loan servicer, filed a proof of claim. Moses subsequently filed an adversary proceeding against CashCall seeking a declaration that the loan was illegal and also seeking money damages for CashCall’s allegedly illegal debt collection activities. CashCall filed a motion to compel arbitration. The bankruptcy court denied CashCall’s motion to compel arbitration and retained jurisdiction over both Moses’ first claim for declaratory relief and second claim for damages. On appeal, the district court affirmed. The Fourth Circuit affirmed in part and reversed in part, holding that the district court (1) did not err in affirming the bankruptcy court’s exercise of jurisdiction to retain in bankruptcy Moses’ first claim; but (2) erred in retaining in bankruptcy Moses’ claim for damages and denying CashCall’s motion to compel arbitration of that claim, as this claim was not constitutionally core. Remanded with instruction to grant CashCall’s motion to compel arbitration on Moses’ second claim for damages. View "Moses v. CashCall, Inc." on Justia Law