Geneva-Roth, Capital, Inc. v. Edwards
956 N.E.2d 1195
| Ind. Ct. App. | 2011Background
- Edwards obtained a $300 payday loan from LoanPoint USA online in August 2009, agreeing to arbitration under the National Arbitration Forum (NAF) rules.
- The arbitration clause required disputes to be resolved by binding arbitration under NAF, with fees waived if unable to pay, and stated interstate commerce subject to the FAA.
- Edwards later challenged the contract as violating Indiana statutes and the Deceptive Consumer Sales Act, and sought class certification in May 2010.
- In June 2010, LoanPoint USA moved to stay proceedings and compel individual arbitration; Edwards argued the NAF was unavailable and the clause was void for impossibility and unconscionability.
- The trial court found a valid agreement but held the arbitration clause was impossible to perform because the NAF was no longer available, denying the motion to compel arbitration.
- The Indiana Court of Appeals reviewed de novo and held that the NAF’s unavailability rendered the clause null and void, and Section 5 of the FAA could not supply a substitute arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does impossibility of the chosen arbitration forum void the arbitration clause? | Edwards (plaintiff) argues NAF unavailability makes arbitration impossible and voids agreement. | LoanPoint USA argues Section 5 permits appointing a substitute arbitrator when a forum is unavailable. | Arbitration clause void; Section 5 not available to substitute. |
Key Cases Cited
- In re Salomon Inc. Shareholders' Derivative Litig., 68 F.3d 554 (2d Cir. 1995) (integral forum designation bars substitution when unavailable)
- Carr v. Gateway, Inc., 944 N.E.2d 327 (Ill. 2011) (integral forum designation; Section 5 cannot save if forum is integral)
- Rivera v. Am. Gen. Fin. Servs., Inc., 259 P.3d 803 (N.M. 2011) (integral designation of NAF; unavailability defeats arbitration)
- Ranzy v. Tijerina, 393 Fed. Appx. 174 (5th Cir. 2010) (NAF exclusive forum; explicit language shows integral designation)
- Reddam v. KPMG LLP, 457 F.3d 1054 (9th Cir. 2006) (naming a specific arbitrator not always integral)
- Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217 (11th Cir. 2000) (unavailability of NAF not necessarily integral to arbitration)
- Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (1989) (arbitration governed by contract terms; enforcement per terms)