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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. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  2. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  3. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  4. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  5. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

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