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COA: arbitration provision null and void

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The Indiana Court of Appeals has affirmed the denial of a payday loan company’s motion to compel arbitration in a lawsuit filed by a customer. The COA relied on a nearly identical case involving the same plaintiff in which another appellate panel found that since the arbitrator named in the agreement is no longer available, the arbitration provision is null and void on grounds of impossibility.

In Apex 1 Processing, Inc. v. Akeala Edwards, on Behalf of Herself and Others Similarly Situated, No. 49A05-1103-PL-85, Akeala Edwards filed a class-action lawsuit against Apex 1 Processing Inc., alleging it engaged in unfair trade practices. She got a payday loan through Apex’s company doing business as Paycheck Today, and she was charged $360 in finance charges on her $300 loan. The suit has not yet been certified as a class action.

Apex sought to compel Edwards to arbitrate her claim individually based on a provision in the loan agreement. The National Arbitration Forum was named as the arbitrator to be used, but the NAF has been ordered to not participate in any arbitration of consumer disputes after July 2009 based on a suit filed by the Minnesota attorney general.

This suit is similar to one Edwards filed against Geneva-Roth Capital Inc. An appellate panel in November found that the arbitration provision in that suit was null and void on the grounds of impossibility because NAF is not longer available to arbitrate. At the time, the issue was one of first impression in Indiana. In Geneva-Roth Capital v. Edwards, No. 49A02-1101-PL-43, the COA also found that 9 U.S.C.A. Section 5 of the Federal Arbitration Act does not oblige the trial court to appoint a substitute arbitrator.

“The language of the Apex contract, like that in the Geneva-Roth contract, provides claims ‘shall be resolved by binding . . . arbitration by and under the Code of Procedure of [NAF],’” wrote Judge Melissa May. “Thus, the identification of NAF as the arbitrator was integral to the contract, and the arbitration provision fails.”

The panel in the instant case adopted the reasoning in Geneva-Roth and affirmed the denial of Apex 1’s motion to compel arbitration.

 

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  1. Thank you, John Smith, for pointing out a needed correction. The article has been revised.

  2. The "National institute for Justice" is an agency for the Dept of Justice. That is not the law firm you are talking about in this article. The "institute for justice" is a public interest law firm. http://ij.org/ thanks for interesting article however

  3. I would like to try to find a lawyer as soon possible I've had my money stolen off of my bank card driver pressed charges and I try to get the information they need it and a Social Security board is just give me a hold up a run around for no reason and now it think it might be too late cuz its been over a year I believe and I can't get the right information they need because they keep giving me the runaroundwhat should I do about that

  4. It is wonderful that Indiana DOC is making some truly admirable and positive changes. People with serious mental illness, intellectual disability or developmental disability will benefit from these changes. It will be much better if people can get some help and resources that promote their health and growth than if they suffer alone. If people experience positive growth or healing of their health issues, they may be less likely to do the things that caused them to come to prison in the first place. This will be of benefit for everyone. I am also so happy that Indiana DOC added correctional personnel and mental health staffing. These are tough issues to work with. There should be adequate staffing in prisons so correctional officers and other staff are able to do the kind of work they really want to do-helping people grow and change-rather than just trying to manage chaos. Correctional officers and other staff deserve this. It would be great to see increased mental health services and services for people with intellectual or developmental disabilities in the community so that fewer people will have to receive help and support in prisons. Community services would like be less expensive, inherently less demeaning and just a whole lot better for everyone.

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