Barbara Elizabeth Lawson v. Life of the South Insurance Company
2011 U.S. App. LEXIS 16412
| 11th Cir. | 2011Background
- Lawsons purchased a used 2000 Chevrolet Blazer in December 2002 and financed it via a loan later assigned to Chase Manhattan Bank.
- The loan agreement included an arbitration clause, defining arbitration as an option for disputes arising from or relating to the loan, with a scope limited to the Lawsons and the creditor parties or assignees.
- Lawsons separately purchased credit life insurance from Life of the South; the policy contained no arbitration clause.
- The insurance policy obligated Life of the South to pay off the loan balance if either Lawson died, with a refund of any unearned premium upon early loan payoff; the premium was prepaid.
- Lawsons paid off the loan about April 2005, but Life of the South did not refund the remaining unearned premium.
- In March 2006, Lawsons filed a nationwide class action in Georgia state court alleging improper refund handling and other damages; Life of the South moved to compel arbitration under the FAA, which the district court denied; the case was removed to federal court for review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Life of the South may compel arbitration against the Lawsons. | Life of the South | Lawsons | No; Life of the South cannot compel arbitration as a nonsignatory. |
| Whether equitable estoppel permits arbitration against Life of the South. | Life of the South | Lawsons | No; equitable estoppel does not apply here. |
| Whether Georgia law or the McCarran-Ferguson Act governs enforceability of the arbitration clause. | Life of the South | Lawsons | Georgia law governs; arbitration not compelled under Georgia law. |
Key Cases Cited
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (Supreme Court, 2009) (state law governs enforcement of nonparty arbitral rights per Carlisle)
- MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942 (11th Cir. 1999) (test: claims must arise out of or relate directly to the written agreement to justify equitable estoppel)
- Arain v. Autonation Fin. Servs. Corp., 592 S.E.2d 96 (Ga. App. 2003) (equitable estoppel requires direct relation between claims and the contract containing arbitration clause)
- LaSonde v. CitiFinancial Mortg. Co., 614 S.E.2d 224 (Ga. App. 2005) (illustrates when claims arise from a contract containing arbitration clause via reference/presumption)
- Love v. Money Tree, Inc., 614 S.E.2d 47 (Ga. 2005) (McCarran-Ferguson preemption; Georgia law on insurance dispute arbitration)