Court rules arbitration provision null and void

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Tackling an issue of first impression, the Indiana Court of Appeals concluded that an arbitration provision in a loan agreement from a payday loan provider is null and void on the grounds of impossibility because the arbitrator named in the document is no longer available.

In Geneva-Roth Capital, Inc., et al. v. Akeala Edwards, No. 49A02-1101-PL-43, Akeala Edwards filed a lawsuit, on her behalf and a purported class, against LoanPoint USA claiming the loan agreement she entered into with the company violated the Indiana Consumer Credit Code’s Small Loans Act. She filled out an online application for a $300 loan, and part of the agreement included an arbitration provision that said the parties must arbitrate any disputes and that National Arbitration Forum would handle the disputes. Over the course of 90 days, LoanPoint USA deducted more than $700 in finance charges from Edwards’ account and only applied $23 to her original loan balance.

LoanPoint USA moved to stay the proceedings and compel Edwards to arbitrate her claim on an individual basis; Edwards argued since NAF was no longer available to arbitrate – the company was ordered by a Minnesota state court to not participate in any disputes after July 2009 based on fraud allegations filed by the Minnesota attorney general – the arbitration portion is invalid and unenforceable. The trial court concluded that the arbitration provision was null and void as impossible to perform since NAF is no longer available to serve in such a capacity. The trial court also found it could not appoint a replacement arbitrator pursuant to 9 U.S.C.A. Section 5 of the Federal Arbitration Act.

The appellate court looked to several jurisdictions – which have reached opposite results – to decide whether an arbitration agreement fails due to impossibility if the chosen forum cannot serve as arbitrator or if the trial court is obliged to appoint a substitute arbitrator pursuant to Section 5. The COA agreed with the rulings in Rivera v. Am. Gen. Fin. Servs. Inc., (259 P.3d 803 N.M. 2011), and Ranzy v. Tijernina, 393 F. App’x 174 (5th Cir. 2010), which found similar provisions to be null because they would be impossible to perform since the named arbitrator no longer could perform the duty.

“Having concluded that the NAF as the arbitral forum was integral to the arbitration agreement, and given that the NAF is no longer available to conduct consumer arbitrations, the arbitration provision is null and void on grounds of impossibility. Section 5 does not save the arbitration provision and cannot be used as a mechanism to appoint a substitute arbitrator. The trial court did not err in denying LoanPoint USA’s motion to compel arbitration,” wrote Judge Ezra Friedlander.


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  1. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  2. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  3. Paul Hartman of Burbank, Oh who is helping Sister Fuller with this Con Artist Kevin Bart McCarthy scares Sister Joseph Therese, Patricia Ann Fuller very much that McCarthy will try and hurt Patricia Ann Fuller and Paul Hartman of Burbank, Oh or any member of his family. Sister is very, very scared, (YES, I AM) This McCarthy guy is a real, real CON MAN and crook. I try to totall flatter Kevin Bart McCARTHY to keep him from hurting my best friends in this world which are Carolyn Rose and Paul Hartman. I Live in total fear of this man Kevin Bart McCarthy and try to praise him as a good man to keep us ALL from his bad deeds. This man could easy have some one cause us a very bad disability. You have to PRAISAE in order TO PROTECT yourself. He lies and makes up stories about people and then tries to steal if THEY OWN THRU THE COURTS A SPECIAL DEVOTION TO PROTECT, EX> Our Lady of America DEVOTION. EVERYONE who reads this, PLEASE BE CAREFUL of Kevin Bart McCarthy of Indianapolis, IN My Phone No. IS 419-435-3838.

  4. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  5. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.