Advance America Servicing v. McGinnis

• Decision Date: 06 November 2008
• Docket Number: No. 08-492.,08-492.
• Citation: Advance America Servicing v. McGinnis, 289 S.W.3d 37, 375 Ark. 24 (Ark. 2008)
• Parties: ADVANCE AMERICA SERVICING OF ARKANSAS, INC., d/b/a Advance America Cash Advance; Advance America, Cash Advance Centers of Arkansas, Inc.; and Advance America, Cash Advance Centers, Inc., Appellants, v. Brenda McGINNIS, Individually and o/b/o a Class of Similarly Situated Persons, Appellee.
• Court: Arkansas Supreme Court

289 S.W.3d 37

375 Ark. 24

ADVANCE AMERICA SERVICING OF ARKANSAS, INC., d/b/a Advance America Cash Advance; Advance America, Cash Advance Centers of Arkansas, Inc.; and Advance America, Cash Advance Centers, Inc., Appellants, v.Brenda McGINNIS, Individually and o/b/o a Class of Similarly Situated Persons, Appellee.

No. 08-492.

Supreme Court of Arkansas.

November 6, 2008.

Rehearing Denied December 11, 2008.

Wright, Lindsey & Jennings, by Claire Shows Hancock and Gary D. Marts, Jr., Little Rock; Sutherland Asbill & Brennan, by Lewis S. Wiener, Phillip E. Stano, and Brendan Ballard, Washington, DC, for appellants.

Arnold, Batson Turner & Turner, by Todd Turner and Dan Turner, Arkadelphia; Scholtens & Averitt, by Chris Averitt and Jay Scholtens, Jonesboro, for appellee.

DONALD L. CORBIN, Justice.

Appellants, Advance America Servicing of Arkansas, Inc., d/b/a Advance America Cash Advance; Advance America, Cash Advance Centers of Arkansas, Inc.; and Advance America, Cash Advance Centers, Inc., appeal from the order of the Clark County Circuit Court denying their motion to compel arbitration of a putative class-action complaint for alleged violations of Arkansas's Constitution and laws prohibiting usurious interest and deceptive trade practices.Our jurisdiction is pursuant to Arkansas Supreme Court Rule 1-2(a)(1) as an appeal involving the interpretation or construction of the Arkansas Constitution.On appeal, Appellants argue the circuit court erred in concluding the arbitration provision in question was invalid for lack of mutuality, in looking outside the arbitration provision to other parts of the underlying contract, and in failing to strike the invalid portion of the contract and to enforce the arbitration provision.We find no error and affirm the circuit court's denial of the motion to compel arbitration.

Appellee, Brenda McGinnis, filed a putative class-action complaint against Appellants in circuit court on February 27, 2007, alleging Appellants had charged her and other potential class members usurious interest, engaged in deceptive trade practices, and violated a prior court-approved settlement agreement.According to the complaint, Appellee engaged in a transaction with Appellants at their Jonesboro, Arkansas, branch office on November 3, 2006, whereby she wrote a check for $278.83 and Appellants gave her $250.00 in cash and agreed to hold her check until her next payday.The complaint alleged this transaction was typical of the transactions between Appellants and its customers in Arkansas and amounted to a loan resulting in an effective annual percentage rate of over 150% in violation of the prohibition of usurious interest contained in article 19, section 13 of the Arkansas Constitution.As such, the complaint alleged entitlement to twice the amount of interest paid plus costs and attorney's fees.SeeArk. Const. art. 19, § 13;Ark.Code Ann. §§ 4-57-101 et seq.(Repl.2001 & Supp.2005).In addition to being a usurious loan, the complaint also alleged this transaction was a violation of the Arkansas Deceptive Trade Practices Act, Arkansas Code Annotated sections 4-88-101 et seq.(Repl.2001 & Supp.2003), entitling Appellee to her actual damages plus costs and attorney's fees.The complaint alleged further that the transaction demonstrated that Appellants were operating under the Check-Cashers Act, Arkansas Code Annotated sections 23-52-101 et seq.(Repl.2000 & Supp.2005), and charging fees under that act in violation of a settlement agreement to cease conducting check-cashing transactions in Arkansas approved by the circuit court in Garrett v. Advance America, Cash Centers of Arkansas, Inc., Clark County Circuit Court, Case No. CIV-99-152.

Appellants moved to compel arbitration of the matters alleged in the complaint.¹They argued that Appellee's claims arose from six transactions between her and Appellants conducted from September 1, 2006 to February 2, 2007, pursuant to a Deferred Presentment Option Agreement (Customer Agreement)she executed with Appellants.Appellants contended that, pursuant to the express terms of the Customer Agreement she signed, Appellee was required to submit to arbitration the claims alleged in her complaint.Appellants argued that Appellee did not challenge the arbitration provision of the Customer Agreement; rather, she asserted a challenge to the Customer Agreement as a whole and therefore Buckeye Check Cashing, Inc. v. Cardegna,546 U.S. 440, 126 S.Ct. 1204, 163 L.Ed.2d 1038(2006), required the circuit court to send the case to arbitration.Appellants attached to their motion to compel arbitration a copy of the Customer Agreement.The portions of that Customer Agreement that are at issue in this appeal are as follows:

Deferred Presentment Option Agreement

....

Default, Returned Check Fee, Court Costs, and Attorney's Fee.You will be in default under this Customer Agreement if you do not pay us any amount you owe us under this Customer Agreement or you cause your Check not to be honored on or after the Presentment Date.If the Check is returned to us from your bank or other financial institution due to insufficient funds, closed account, or a stop-payment order, we shall have the right to all civil remedies allowed by law to collect the check and shall be entitled to recover a returned check fee of $25.00 as authorized by applicable Arkansas law, court costs, and reasonable attorney's fee paid to an attorney who is not our salaried employee.Neither we nor any other person on our behalf will institute or initiate any criminal prosecution against you.

....

Acknowledgments.Please note that this Customer Agreement contains a binding Waiver of Jury Trial and Arbitration Provision.You acknowledge that we issued a copy of this Customer Agreement to you.You acknowledge that we paid the proceeds of the transaction to you, in cash....You further acknowledge that you have read, understand, and agree to all of the terms on both sides of this Customer Agreement, including the provision on the other side of this Customer Agreement entitled "Waiver Jury Trial and Arbitration Provision."

....

WAIVER OF JURY TRIAL AND ARBITRATION PROVISION.Arbitration is a process in which persons with a dispute: (a) waive their rights to file a lawsuit and proceed in court and to have a jury trial to resolve their disputes; and (b) agree, instead, to submit their disputes to a neutral third person (an "arbitrator") for a decision.Each party to the dispute has an opportunity to present some evidence to the arbitrator.Pre-arbitration discovery may be limited.Arbitration proceedings are private and less formal than court trials.The arbitrator will issue a final and binding decision resolving the dispute, which may be enforced as a court judgment.A court rarely overturns an arbitrator's decision.Nothing contained in this Waiver of Jury Trial and Arbitration Provision (hereinafter the "Arbitration Provision") shall prevent or limit the authority of the Arkansas State Board of Collection Agencies from fully exercising its administrative remedies as set forth in Act 1216 of 1999 nor preclude you from any administrative remedies available to you under the Act.THEREFORE, YOU ACKNOWLEDGE AND AGREE AS FOLLOWS:

1.For purposes of this Arbitration Provision, the words "dispute" and "disputes" are given the broadest possible meaning and include, without limitation (a) all claims, disputes, or controversies arising from or relating directly or indirectly to the signing of this Arbitration Provision, the validity and scope of this Arbitration Provision and any claim or attempt to set aside this Arbitration Provision; (b) all federal or state law claims, disputes or controversies, arising from or relating directly or indirectly to this Customer Agreement (including the Arbitration Provision), the information you gave us before entering into this Customer Agreement, including the Application, and/or any past agreement or agreements between you and us; (c) all counterclaims, cross-claims and third-party claims; (d) all common law claims, based upon contract, tort, fraud, or other intentional torts; (e) all claims based upon a violation of any state or federal constitution, statute or regulation; (f) all claims asserted by us against you, including claims for money damages to collect any sum we claim you owe us; (g) all claims asserted by you individually against us and/or any of our employees, agents, directors, officers, shareholders, governors, managers, members, parent company or affiliated entities (hereinafter collectively referred to as "related third parties"), including claims for money damages and/or equitable or injunctive relief; (h) all claims asserted on your behalf by another person; (i) all claims asserted by you as a private attorney general, as a representative and member of a class of persons, or in any other representative capacity, against us and/or related third parties(hereinafter referred to as "Representative Claims"); and/or (j) all claims from or relating directly or indirectly to the disclosure by or related third parties of any non-public personal information about you.

2.You acknowledge and agree that by entering into this arbitration Provision:

(a) YOU ARE WAIVING YOUR RIGHT TO HAVE A TRIAL BY JURY TO RESOLVE ANY DISPUTE ALLEGED AGAINST U.S.OR RELATED THIRD PARTIES;

(b) YOU ARE WAIVING YOUR RIGHT TO HAVE A COURT, OTHER THAN A SMALL CLAIMS TRIBUNAL, RESOLVE ANY DISPUTE ALLEGED AGAINST U.S.OR RELATED THIRD PARTIES; and

(c) YOU ARE WAIVING YOUR RIGHT TO SERVE AS A REPRESENTATIVE, AS A PRIVATE ATTORNEY GENERAL, OR IN ANY OTHER REPRESENTATIVE CAPACITY, AND/OR TO PARTICIPATE AS A MEMBER OF A CLASS OF CLAIMANTS, IN ANY LAWSUIT FILED AGAINST U.S. AND/OR RELATED THIRD PARTIES.

3.Except as provided in Paragraph 6 below, all disputes including any Representative Claims against us and/or related third partiesshall be resolved by binding arbitration only on an...