Henry v. Cash Biz, LP
551 S.W.3d 111
| Tex. | 2018Background
- Borrowers sued Cash Biz alleging it used the criminal-justice system (bad-check prosecutions) in collecting loans, causing criminal fines, jail time, and reputational harm.
- Cash Biz moved to compel arbitration under a broad FAA-governed arbitration clause in the loan agreements; the trial court denied the motion.
- Court of appeals reversed, holding the disputes were within the arbitration clause and Cash Biz had not waived arbitration; one justice dissented on waiver.
- Texas Supreme Court considered whether the claims fall within the arbitration provision and whether Cash Biz waived arbitration by invoking the criminal process.
- Record evidence showed Cash Biz provided information to district attorneys and was listed as complainant in many prosecutions; an affidavit from a Cash Biz representative denied direct prosecution participation.
- The Supreme Court affirmed the court of appeals: the claims are arbitrable and the Borrowers failed to prove waiver (and thus actual prejudice).
Issues
| Issue | Borrowers' Argument | Cash Biz's Argument | Held |
|---|---|---|---|
| Whether claims fall within the arbitration clause | Claims relate solely to illegal use of criminal system, not the loan contract; thus outside scope | Clause covers "all disputes" broadly; allegations are factually intertwined with loan agreements | Claims are within the arbitration provision; arbitration required |
| Whether Cash Biz waived arbitration by invoking judicial process | Filing/initiating criminal prosecutions and being complainant shows substantial invocation; waived right | Cash Biz only provided information to prosecutors and did not participate in prosecutions; no substantial invocation or inconsistent litigation conduct | No waiver: providing information to prosecutors does not substantially invoke judicial process absent further litigation conduct |
| Whether Borrowers proved actual prejudice from Cash Biz's conduct | Criminal prosecutions caused fines, jail, reputational harm — prejudiced ability to arbitrate | Borrowers produced no evidence tying prejudice to Cash Biz beyond prosecutions initiated by prosecutors | Court did not reach detailed prejudice ruling because no substantial invocation proved; Borrowers failed burden to show waiver |
| Enforcement of waiver-of-class-action provision | (Borrowers opposed) | Cash Biz argued trial court erred by not enforcing it | Raised by Cash Biz but not dispositive; court enforced arbitration and affirmed lower court on arbitration/waiver issues |
Key Cases Cited
- In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (presumption favoring arbitration and liberally construing scope)
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (waiver requires substantial invocation of judicial process and prejudice)
- G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502 (Tex. 2015) (factors for implied-waiver analysis)
- In re Labatt Food Serv., L.P., 279 S.W.3d 640 (Tex. 2009) (standard of review for arbitration denials)
- Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896 (Tex. 1995) (arbitration clause scope should be construed broadly)
- Pinto Tech. Ventures, L.P. v. Sheldon, 526 S.W.3d 428 (Tex. 2017) (broad forum-selection/arbitration clauses reach disputes not exclusively contractual)