ILNews

Arbitration of FCRA claim survives bankruptcy discharge

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A man’s Fair Credit Reporting Act claim can be arbitrated even though the debt was addressed and discharged in bankruptcy proceedings, the Indiana Court of Appeals ruled today.

Brian Brough entered into a contract with Green Tree Servicing, in which Green Tree loaned Brough money to buy a mobile home. The contract included an arbitration clause. Brough also agreed that Green Tree could share information about him and his account with credit reporting agencies.

Brough defaulted on the contract and filed for bankruptcy in 2003. His debt to Green Tree was addressed in the proceedings and the bankruptcy court discharged Brough’s petition in November 2008. Green Tree then filed a suit against Brough, which wasn’t identified in the appeal, and Brough filed a counterclaim alleging Green Tree violated the Fair Credit Reporting Act by reporting to credit agencies that he still owed the company a debt under the contract even though the matter was discharged in bankruptcy.

The trial court granted Brough’s request to vacate the arbitration order.

At issue in Green Tree Servicing LLC v. Brian D. Brough, No. 88A01-0911-CV-550, is whether the FCRA claim is subject to the arbitration provision in the contract.

The appeals court looked to U.S. District Court rulings from New York and Illinois to conclude that FCRA claims can be subject to arbitration clauses. In addition, Brough even admitted his claim is subject to the arbitration clause, noted Senior Judge John Sharpnack.

The judges also disagreed with Brough’s argument that the whole contract is not valid because it was terminated by his bankruptcy discharge. Again, the court looked outside of Indiana for authority and relied on In re Wells Fargo Bank, N.A., 300 S.W.3d 818 (Tex. Ct. App. 2009). In that case, homeowners who defaulted on a home equity loan and filed for bankruptcy claimed they didn’t have to arbitrate the suit they filed against the lender because the bankruptcy proceedings released them from any further obligations under their agreements with the lender, including an agreement to arbitrate. The Texas appellate court ruled the arbitration agreement survived bankruptcy.

As is the case In re Wells, Brough’s bankruptcy proceeding ended, so the arbitration of his FCRA claim won’t jeopardize the bankruptcy case or affect his discharge, wrote Senior Judge Sharpnack. The contract’s arbitration clause wasn’t terminated by his bankruptcy discharge. The trial court must order the parties to attend arbitration.
 

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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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