Justia Contracts Opinion Summaries

In a putative class action, plaintiffs Joe Maldonado, Alfredo Mendez, J. Peter Tuma, Jonabette Michelle Tuma, and Roberto Mateos Salmeron (collectively referred to as “the Customers”), claimed Fast Auto Loans, Inc., (Lender) charged unconscionable interest rates on loans in violation of California Financial Code sections 22302 and 22303. Lender filed a motion to compel arbitration and stay the action pursuant to an arbitration clause contained within the Customers’ loan agreements. The court denied the motion on the grounds the provision was invalid and unenforceable because it required consumers to waive their right to pursue public injunctive relief, a rule described in McGill v. Citibank, N.A., 2 Cal.5th 945 (2017). On appeal, Lender argued the “McGill Rule” did not apply, but even if it did, other claims were subject to arbitration. Alternatively, Lender contended the McGill Rule was preempted by the Federal Arbitration Act . Finding Lender’s contentions on appeal lacked merit, the Court of Appeal affirmed the trial court’s order. View "Maldonado v. Fast Auto Loans" on Justia Law

The Supreme Court held that a unilateral attorney's fee provision in a credit card contract was made reciprocal to prevailing debtors under Fla. Stat. 57.105(7) where the debtors prevailed in an account stated action brought to collect unpaid credit card debt.The First District Court of Appeal held that the debtors could not recover attorney's fees on the grounds that section 57.105(7) was inapplicable because the actions for account stated did not rely upon the credit card contracts containing the fee provisions. The Supreme Court quashed the decision below, holding that section 57.105(7) allowed the debtors to recover reciprocal attorney's fees because the conditions required by the statute were met. View "Ham v. Portfolio Recovery Associates, LLC" on Justia Law

In a matter of first impression, the Pennsylvania Supreme Court granted review in this case to consider whether Section 310.74(a) of the Insurance Department Act of 1921 prohibited a licensed insurance producer from charging fees in addition to commissions in non-commercial, i.e. personal, insurance transactions. During its investigation, the Department discovered that, between March 2011 and October 2015, appellants charged a non-refundable $60- $70 fee to customers seeking to purchase personal insurance products. These fees were collected from the customers before appellants prepared the insurance policy applications. One consumer complaint indicated appellants kept an “un- refundable broker application fee” when the consumer declined to buy a policy. The Department’s investigation also revealed appellants paid a “one-time” $50 referral fee to car dealership sales personnel when they referred their customers in need of insurance. The Department concluded appellants’ fee practices included improper fees charged to consumers “for the completion of an application for a contract of insurance” and prohibited referral payments to the car dealerships. The Supreme Court held lower tribunals did not err when they determined Section 310.74(a) of the Act did not authorize appellants to charge the $60-$70 non-refundable fee to their customers seeking to purchase personal motor vehicle insurance. The Commonwealth Court’s decision upholding the Commissioner’s Adjudication and Order was affirmed. View "Woodford v. PA Insurance Dept." on Justia Law

Discover Bank (Discover) appealed a district court order denying its motion for judgment and dismissing the case. Discover sued Bryan Hornbacher, alleging he was indebted to it on a credit card debt for $14,695.13. The parties entered into a stipulation and consent. The stipulation provided an acknowledgment by Hornbacher that he had been served with the summons and complaint and an admission that he had no defenses to the allegations in the complaint. Hornbacher consented to entry of judgment in the amount of $14,695.13 in exchange for Discover’s agreement to accept $10,080.00 payable over three years as full satisfaction of the judgment, and to forego execution on the judgment unless there were a default in the agreed-upon payment schedule. In its order, the trial court found that “[p]laintiff files a stipulation stating it will not move for judgment unless the terms of the agreement are [breached].” The North Dakota Supreme Court found this was an error, as was the trial court's focus on the lack of default under the stipulation having occurred: "Discover was not moving to execute the judgment, but rather was, by affidavit, moving for judgment to be entered against Hornbacher pursuant to the stipulation. The court misread the stipulation and misapplied the law." Because the plain language of the stipulation provided for judgment against Hornbacher to be entered, the Supreme Court reversed and remanded for entry of judgment. View "Discover Bank v. Hornbacher" on Justia Law

Michael Falligant, as next friend of Michelle McElroy, who Falligant alleged was an incapacitated person, filed an action against TitleMax of Alabama, Inc. ("TitleMax"), alleging that TitleMax wrongfully repossessed and sold McElroy's vehicle. TitleMax filed a motion to compel arbitration of Falligant's claims, which the circuit court denied. TitleMax appealed. After review, the Alabama Supreme Court determined TitleMax met its burden of proving that a contract affecting interstate commerce existed, and that that contract was signed by McElroy and contained an arbitration agreement. The burden then shifted to Falligant to prove that the arbitration agreement was void. But the Court concluded Falligant failed to present substantial evidence indicating that McElroy was permanently incapacitated and, thus, lacked the mental capacity to enter into the contracts. Because Falligant failed to create a genuine issue of fact, the circuit court erred in ordering the issue of McElroy's mental capacity to trial. Accordingly, the circuit court's decision was reversed, and the matter remanded back to the circuit court for further proceedings. View "TitleMax of Alabama, Inc. v. Falligant" on Justia Law

The Eleventh Circuit affirmed the district court's grant of summary judgment for Dish Networks in plaintiff's action for breach of contract and violations of the Fair Credit Reporting Act (FCRA). Plaintiff alleges that Dish negligently and willfully violated the FCRA by requesting and obtaining a consumer report from a consumer reporting agency after an identity thief fraudulently submitted some of plaintiff's personal information to Dish. Plaintiff also alleges that Dish's actions violated a settlement agreement that the parties signed after a similar incident occurred several years ago involving the same parties.The court held that Dish had a "legitimate business purpose" under the FCRA when it obtained plaintiff's consumer report. The court also held that Dish did not violate the settlement agreement where the district court correctly found that plaintiff's claim failed to establish the breach element. View "Domante v. Dish Networks, LLC" on Justia Law

After encountering problems with their used 2011 Dodge Grand Caravan, plaintiffs Dina C. and Pastor O. Felisilda brought an action against Elk Grove Auto Group, Inc., doing business as Elk Grove Dodge Chrysler Jeep (Elk Grove Dodge) and the manufacturer, FCA US LLC (FCA) for violation of the Song-Beverly Consumer Warranty Act. Relying on the retail installment sales contract signed by the Felisildas, Elk Grove Dodge moved to compel arbitration. FCA filed a notice of nonopposition to the motion to compel. The trial court ordered the Felisildas to arbitrate their claim against both Elk Grove Dodge and FCA. In response, the Felisildas dismissed Elk Grove Dodge. The matter was submitted to arbitration, and the arbitrator found in favor of FCA. The trial court confirmed the arbitrator’s decision. The Felisildas appealed, contending: (1) the trial court lacked jurisdiction to compel them to arbitrate their claim against FCA for lack of notice that the motion to compel included FCA; and (2) the trial court lacked discretion to order the Felisildas to arbitrate their claim against FCA because FCA was a nonsignatory to the sales contract. After review, the Court of Appeal concluded the Felisildas forfeited their claim regarding lack of notice by arguing against FCA’s participation in arbitration. Furthermore, the Court concluded the trial court correctly determined the Felisildas’ claim against FCA was encompassed by the arbitration provision in the sales contract. View "Felisilda v. FCA US LLC" on Justia Law

The Fourth Circuit vacated the district court's order denying DIRECTV's motion to compel arbitration in an action brought by plaintiff, alleging violations of the Telephone Consumer Protection Act (TCPA). Plaintiff alleged that defendants called her cell phone to advertise DIRECTV products and services even though her telephone number is listed on the National Do Not Call Registry.Because plaintiff signed an acknowledgement expressly agreeing to the arbitration provision of the Wireless Customer Agreement with AT&T, which provision applies to her as an authorized user, the court rejected plaintiff's argument that she did not form an agreement to arbitrate. The court held that plaintiff formed an agreement to arbitrate with DIRECTV where the ordinary meaning of "affiliates" and the contractual context convinced the court that the term includes affiliates acquired after the agreement was signed. Furthermore, in light of the expansive text of the arbitration agreement, the categories of claims it specifically includes, and the parties' instruction to interpret its provisions broadly, the court must conclude that plaintiff's TCPA claims fall within the scope of the arbitration agreement. Therefore, the court remanded for further proceedings. View "Mey v. DIRECTV, LLC" on Justia Law

The Supreme Court reversed the order of the district court dismissing Plaintiff's complaint against Defendant, his student loan servicer, as expressly preempted by the Higher Education Act (HEA), 20 U.S.C. 1098g, holding that Plaintiff's state law claims were not expressly or implicitly preempted by the HEA.Plaintiff raised claims that Defendant violated the Consumer Protection Act, was negligent in its accounting of his payments, breached the implied covenant of good faith and fair dealing, and engaged in deceit, negligent misrepresentation, or constructive fraud. The district court dismissed the complaint, determining that the HEA expressly preempted Plaintiff's claims. The Supreme Court reversed, holding that Plaintiff's state law claims as pleaded were neither expressly preempted by 20 U.S.C. 1098g, nor were they preempted under conflict preemption, and thus the claims survived dismissal. View "Reavis v. Pennsylvania Higher Education Assistance Agency" on Justia Law

The plaintiffs obtained payday loans from AWL, an online entity owned by the Otoe-Missouria Tribe of Indians. The loan agreement stated that the loan was governed by tribal law and that the borrowers consented to the application of tribal law. The plaintiffs filed a purported class action, asserting that AWL charged unlawfully high interest rates, in violation of federal and Pennsylvania law, including the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961-1968. The defendants moved to compel arbitration. The district court denied their motion, holding that the loan agreements, which provided that only tribal law would apply in arbitration, stripped the plaintiffs of their right to assert statutory claims and were therefore unenforceable. The Third Circuit affirmed. Because AWL permits borrowers to raise disputes in arbitration only under tribal law, and such a limitation constitutes a prospective waiver of statutory rights, its arbitration agreement violates public policy and is therefore unenforceable. View "Williams v. Medley Opportunity Fund II, LP" on Justia Law