The discharge injunction, which allows former debtors to be free from any efforts to collect former debt, is a primary feature of bankruptcy law in the United States. When creditors have systemically violated debtors’ discharge injunctions, some debtors have attempted to challenge those creditors through a class action lawsuit in bankruptcy court. However, the pervasiveness of class-waiving arbitration clauses likely prevents those debtors from disputing discharge injunction violations outside of binding, individual arbitration. This Note first discusses areas of disagreement regarding how former debtors may enforce their discharge injunctions. Then, it examines the types of disputes that allow debtors to collectivize in bankruptcy court.… Read More
In a dispute between construction contractors, the Court of Appeals affirmed the trial court order denying a demand for arbitration as untimely. Holding normally a trial court should determine the validity of an arbitration agreement (namely that a valid agreement exists and that the dispute is within the scope of the agreement), here the trial court instead found that even assuming arguendo that there was an enforceable arbitration provision, the demand was untimely. While this placed “the cart before the horse”, the Court of Appeals held that such determination was appropriate. Recognizing that a party can implicitly waive a contractual right to arbitrate “if by its delay or by actions it takes which are inconsistent with arbitration, another party to the contract [would be] prejudiced by [an] order compelling arbitration.” Cyclone Roofing Co., Inc.… Read More
Santoro brought suit against Accenture, alleging violations of the Age Discrimination in Employment Act (ADEA), the Family and Medical Leave Act (FMLA), the Employee Retirement Income Security Act (ERISA), and the District of Columbia Human Rights Act. Accenture moved to compel arbitration under the employment contract with Santoro, who countered that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 invalidated all arbitration agreements by publicly-traded companies that lack a carve-out for Dodd-Frank whistle blower claims, even if the plaintiff is not a whistle blower.
The Court of Appeals rejected this as an over-extension of Dodd-Frank, which only invalidated arbitration provisions relating only to whistle blower claims “arising under” 7 U.S.C.… Read More
The debtor brought adversary proceeding against Vanderbilt and its agent Mr. Gibson, alleging that they had violated N.C.G.S. §§ 75-51 through 54, by making harassing phone calls that caused an employment demotion and loss of pay, mental and emotional distress, panic attacks, and medical expenses and were, under N.C.G.S. § 75-1.1, unfair and deceptive trade practices, subjecting Vanderbilt to treble damages. Vanderbilt contends that, pursuant to its contract, the Debtor the must pursue this claim through arbitration, requesting that the adversary proceeding be stayed to allow for arbitration.
The bankruptcy court held that mandatory arbitration is not appropriate when “a core proceeding is at issue, the policy in favor of centralized determination in the bankruptcy court generally prevails.” TP, Inc.… Read More
In this putative class action, prospective luxury home buyers allege that a real estate development company unlawfully refused to return deposits when the prospective buyers could not obtain mortgage financing. Toll Brothers sought to dismiss or stay pending arbitration, but the district court found the arbitration provision to be unenforceable as it only required buyers, and not Toll Brothers, to submit disputes to arbitration.
The Federal Arbitration Act “ is a congressional declaration of a liberal federal policy favoring arbitration agreements”, 9 U.S.C. § 2, and, following AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), courts were prohibited from altering otherwise valid arbitration agreements by applying the doctrine of unconscionability to eliminate a term barring classwide procedures.… Read More
Knox obtained payday loans from loan servicers for Community State Bank (CSB), an out of state-chartered bank, and subsequently brought suit in state court alleging various violations of North Carolina lending and usury laws, as well as unfair and deceptive trade practices.
In response, the loan servicers advanced on two fronts- first, the loan servicers sought to have the matters removed to federal court in the Eastern District of North Carolina, arguing that the National Bank Act (NBA) and Federal Deposit Insurance Act (FDIA) completely pre-empted state-law usury claims. The district court remanded to state court, finding that the NBA did not completely pre-empt state law usury claims and accordingly the complaint did not present a federal question and, subject to 28 U.S.C.… Read More
Having previously found that several claims brought by the Debtor against Bank of America were, pursuant to Stern v. Marshall, 131 S. Ct. 2594 (2011), core and subject to bankruptcy court jurisdiction, while others were “statutorily core, but did not qualify as constitutionally core”, the bankruptcy court retained the core issues and referred the non-core claims to arbitration. The Trustee then sought a stay of arbitration pending a determination of the core issues as allowing the arbitration to go forward apace with the Adversary Proceedings, could result in an arbitration award being given “preclusive effect” or the possibility of inconsistent judgments.… Read More
The Court of Appeals held that arbitration rider in mortgage refinance agreement did not render consumer’s right to rescind credit transaction unclear or non-conspicuous under TILA.
For a copy of the opinion, please see:
Klein v. Household Realty- Arbitration Rider did not Render Rescission Notice invalid under TILA.pdf… Read More
Chapter 13 Debtor brought an Adversary Proceeding against Cashcall, seeking a declaratory judgment that the debt owed to Cashcall (resulting from a $1,500.00 payday loan) was in violation of the North Carolina Consumer Finance Act, N.C. Gen. Stat. §§ 53-164 to -191 (2012) and alleging that Cashcall engaged in acts that qualify as Prohibited Acts by Debt Collectors under N.C. Gen. Stat. § 75-50 to -56 (2012) in attempts to collect on the debt, seeking actual and statutory damages.
Cashcall sought dismissal of the Adversary Proceeding on the basis that it was a non-core matter or, alternatively, that it be sent for arbitration.… Read More
At the foreclosure hearing before the New Hanover County Clerk of Court, the Pughes filed an Election of Arbitration. The Clerk of Court did not act on this, instead finding that the Substitute Trustee had meet the six statutory requirements to proceed with foreclosure. The Pughes appealed to Superior Court, where the judge again found that the requirements for foreclosure had been met and declined to rule on the request for arbitration.
The Court of Appeals affirmed, finding that both the Clerk of Court and, on appeal, the Superior Court had scope only to review the six criteria for allowing foreclosure. … Read More