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Appellate court affirms arbitration on claims against college

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With one judge frustrated that Indiana residents and students may have been “hornswoggled” by a college’s advertisements about being accredited, the Indiana Court of Appeals has upheld an order compelling arbitration on a claim that three students were fraudulently induced to enroll because of misrepresentation about that accreditation.

The order comes in the case of Connie Brumley, et al. v. Commonwealth Business College Education Corp., No. 45A04-1002-CT-66, a case from Lake Superior Court.

Three student plaintiffs alleged they were fraudulently induced to enroll in a surgical technology program at Brown Mackie’s Merrillville location by the college’s misrepresentation of its accreditation. Each signed an enrollment agreement and supplemental arbitration form, both of which contained arbitration clauses, and they paid tuition and attended the courses. But at some point they learned of the accreditation issue, and later filed suit alleging breach of express and implied contract, intentional and negligent misrepresentation, and fraud –- on the grounds they wouldn’t be able to obtain the type of surgical jobs they were being trained for.

Brown Mackie moved to compel arbitration based on the signed documents, and the original judge on the case denied the college’s motion to compel arbitration based on the enrollment agreement stating the institution was accredited when it was not. But after the case was consolidated with a similar action and transferred to Superior Judge Gerald Svetanoff, he readdressed the issue and granted the motion to compel arbitration. Though he agreed with his colleague about the enrollment agreement not being able to mandate arbitration based on its validity, Judge Svetanoff found that the rationale didn’t extend to the separate arbitration form that none of the student plaintiffs alleged was false or fraudulent.

The plaintiffs asked for interlocutory appeal, the trial court granted that certification, and the Court of Appeals accepted the appeal and heard arguments March 2.

Even though the Federal Arbitration Act and caselaw allows for arbitration agreements to be invalidated by issues such as fraud or unconscionability, the Indiana appellate panel found that the language of this Brown Mackie arbitration agreement didn’t cross any of those lines.

“We conclude that, because plaintiffs’ action challenges the enrollment agreements in their entirety rather than the arbitration clauses in particular, the plaintiffs’ claims remain subject to arbitration,” Judge Nancy Vaidik wrote.

The appellate panel also ruled on other matters that came up in the appeal, such as Brown Mackie’s need or ability to file a cross-appeal relating to the trial judge’s rationale.

Judge Michael Barnes concurred with a separate opinion, finding the majority was correct and he agreed with the arbitration provisions per se based on precedent from the Supreme Court of the United States. However, he pointed out his concerns with what possibly happened in this case, even though the students’ allegations are still unproven at this point.

“Still, if true, it is plainly evident that Brown Mackie at best was disingenuous in its advertising, and at worst was actively dishonest in touting the surgical technology degree it offered,” he wrote. “Although Brown Mackie trumpeted being ‘accredited’ in its advertising and materials, that ‘accreditation’ allegedly was insufficient to allow graduates to take the required exam for surgical technology certification. Indiana residents likely were hornswoggled here, and I am frustrated that we are powerless to intervene. I must trust that an arbitrator will fairly consider the students’ claims. I concur fully, but grudgingly.”

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  1. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  2. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  3. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  4. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  5. I totally agree with John Smith.

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