Norwest Financial Miss., Inc. v. McDonald
| Docket Number: | 2002-IA-00963-SCT Linked Case(s): 2002-M-00963-SCT ; 2002-M-00963 |
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| Supreme Court: | Opinion Link Opinion Date: 01-13-2005 Opinion Author: Cobb, P.J. Holding: Reversed and Remanded |
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| Additional Case Information: |
Topic: Contract - Arbitration - Unconscionability - Excessive fees Judge(s) Concurring: Smith, C.J., Waller, P.J., Carlson and Dickinson, JJ. Non Participating Judge(s): Diaz, Easley and Randolph, JJ. Dissenting Author : Graves, J. Procedural History: Bench Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 06-03-2002 Appealed from: Jasper County Circuit Court Judge: Robert G. Evans Disposition: Circuit Court of Jasper County, Mississippi, denying the lenders’ motion to compel arbitration in the lawsuit brought by Paula F. McDonald, Eula Lindsey, Barbara J. Jones, Darryl Matthews, Azalene Hare and Kevin Jones (borrowers). Case Number: 11-0086 |
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| Party Name: | Attorney Name: | |||
| Appellant: | NORWEST FINANCIAL MISSISSIPPI, INC., WELLS
FARGO FINANCIAL MISSISSIPPI, INC. AND
CENTURION LIFE INSURANCE COMPANY |
FRED L. BANKS, JR.
LUTHER T. MUNFORD
REUBEN V. ANDERSON
REBECCA L. HAWKINS
JOE BASENBERG
LOUIS CLIFTON NORVELL |
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| Appellee: | PAULA F. McDONALD, EULA LINDSEY, BARBARA J. JONES, DARRYL MATTHEWS, AZALENE HARE AND KEVIN JONES | JOHN F. HAWKINS RANCE N. ULMER JAMES MICHAEL TERRELL ROBERT GORDON METHVIN, JR. |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Arbitration - Unconscionability - Excessive fees |
| Summary of the Facts: | Paula McDonald, Eula Lindsey, Barbara Jones, Darryl Matthews, Azalene Hare and Kevin Jones filed suit against Norwest Financial Mississippi, Inc., Wells Fargo Financial Mississippi, Inc. and Centurion Life Insurance Co. Loans ranging from $100 to $1,657 were made by Norwest to the borrowers between 1995 and 1999, and five of the six borrowers had signed arbitration agreements with the lenders. The lenders filed a motion to compel arbitration for the five borrowers who signed the arbitration agreements, and the court denied their motion, finding the arbitration agreements unconscionable. The Supreme Court granted the lenders’ petition for interlocutory appeal. |
| Summary of Opinion Analysis: | The lenders argue that the borrowers have not met their burden to show that the arbitration agreements are unconscionable. The indicators of procedural unconscionability generally fall into two areas: lack of knowledge and lack of voluntariness. The borrowers argue that the use of complex, legal terms in the subject arbitration agreements presented on a “take it or leave it” basis, combined with the borrowers’ lack of ability to understand such terms, proved a lack of knowledge, a lack of voluntariness, a lack of meaningful choice and a significant disparity in bargaining power of the two parties. Consumers who sign contracts are charged with knowledge of the documents they execute. None of the borrowers in this case cite either a lack of a basic education or inability to read, none of the borrowers are unemployed, and each borrower received and signed multiple notices that all disputes would be subject to arbitration. In addition to arbitration notices in their finance contracts, each borrower signed a stand-alone, one-page arbitration agreement printed in 12 point typeface. There is no claim that the borrowers asked anyone to explain the process of arbitration or to explain what arbitration meant; the borrowers simply state that no one informed them that they were signing an arbitration agreement, or told them what an arbitration agreement was. Any reasonable person reading this document prior to signing it would expect to be subject to arbitration and would know that they were waiving their right to a jury trial. In addition, there was no mention of any steps besides these that borrowers undertook in an effort to get a loan without signing an arbitration agreement. The borrowers also argue that the fees contained in the arbitration provisions are unreasonable and speculative and that the Court should invalidate an arbitration provision that requires plaintiffs to pay excessive arbitration fees. In letters sent by AAA to each borrower, the fee for arbitration was quoted to be only $125 for the borrower and $625 for the lender, based on an “actual damage” amount of less than $10,000. A maximum $125 fee should not prevent anyone from pursuing a remedy via arbitration. Therefore, the trial court’s order denying the motion to compel arbitration is reversed and remanded. |
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