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. Especially I would like to see all the republican voting patriotic good ole boys to stop and understand that the wars they have been volunteering for all along (especially the past decade at least) have not been for God & Jesus etc no far from it unless you think George Washington's face on the US dollar is god (and we know many do). When I saw the movie about Chris Kyle, I thought wow how many Hoosiers are just like this guy, out there taking orders to do the nasty on the designated bad guys, sometimes bleeding and dying, sometimes just serving and coming home to defend a system that really just views them as reliable cannon fodder. Maybe if the Christians of the red states would stop volunteering for the imperial legions and begin collecting welfare instead of working their butts off, there would be a change in attitude from the haughty professorial overlords that tell us when democracy is allowed and when it isn't. To come home from guarding the borders of the sandbox just to hear if they want the government to protect this country's borders then they are racists and bigots. Well maybe the professorial overlords should gird their own loins for war and fight their own battles in the sandbox. We can see what kind of system this really is from lawsuits like this and we can understand who it really serves. NOT US.... I mean what are all you Hoosiers waving the flag for, the right of the president to start wars of aggression to benefit the Saudis, the right of gay marriage, the right for illegal immigrants to invade our country, and the right of the ACLU to sue over displays of Baby Jesus? The right of the 1 percenters to get richer, the right of zombie banks to use taxpayer money to stay out of bankruptcy? The right of Congress to start a pissing match that could end in WWIII in Ukraine? None of that crud benefits us. We should be like the Amish. You don't have to go far from this farcical lawsuit to find the wise ones, they're in the buggies in the streets not far away....

  2. Moreover, we all know that the well heeled ACLU has a litigation strategy of outspending their adversaries. And, with the help of the legal system well trained in secularism, on top of the genuinely and admittedly secular 1st amendment, they have the strategic high ground. Maybe Christians should begin like the Amish to withdraw their services from the state and the public and become themselves a "people who shall dwell alone" and foster their own kind and let the other individuals and money interests fight it out endlessly in court. I mean, if "the people" don't see how little the state serves their interests, putting Mammon first at nearly every turn, then maybe it is time they wake up and smell the coffee. Maybe all the displays of religiosity by American poohbahs on down the decades have been a mask of piety that concealed their own materialistic inclinations. I know a lot of patriotic Christians don't like that notion but I entertain it more and more all the time.

  3. If I were a judge (and I am not just a humble citizen) I would be inclined to make a finding that there was no real controversy and dismiss them. Do we allow a lawsuit every time someone's feelings are hurt now? It's preposterous. The 1st amendment has become a sword in the hands of those who actually want to suppress religious liberty according to their own backers' conception of how it will serve their own private interests. The state has a duty of impartiality to all citizens to spend its judicial resources wisely and flush these idiotic suits over Nativity Scenes down the toilet where they belong... however as Christians we should welcome them as they are the very sort of persecution that separates the sheep from the wolves.

  4. What about the single mothers trying to protect their children from mentally abusive grandparents who hide who they truly are behind mounds and years of medication and have mentally abused their own children to the point of one being in jail and the other was on drugs. What about trying to keep those children from being subjected to the same abuse they were as a child? I can understand in the instance about the parent losing their right and the grandparent having raised the child previously! But not all circumstances grant this being OKAY! some of us parents are trying to protect our children and yes it is our God given right to make those decisions for our children as adults!! This is not just black and white and I will fight every ounce of this to get denied

  5. Mr Smith the theory of Christian persecution in Indiana has been run by the Indiana Supreme Court and soundly rejected there is no such thing according to those who rule over us. it is a thought crime to think otherwise.