Author Topic: Gorman v. S/W Tax Loans, Inc. (D. N. M. 2015)  (Read 1136 times)

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Gorman v. S/W Tax Loans, Inc. (D. N. M. 2015)
« on: March 27, 2015 01:38:48 PM »
This is an arbitration case.  The part of it that may be useful to DBers is the discussion of a clause in the contract requiring the consumer to pay half of the arbitrator's fees that conflicts with the AAA Consumer Arbitration Rules.  The court rules that the contract is therefore ambiguous and must be construed against the drafter, meaning that the consumer would not be required to pay arbitrator fees.

While the Court concludes that the fee sharing clause does not violate the effective vindication doctrine, it suffers from a different problem — ambiguity. As detailed above, the clause states that "the parties shall share equally the fee of the arbitrator." Doc. 47, Ex. 1, at 2 & Ex. 3, at 2. Earlier in the arbitration provision however, the parties agree that "any claim or dispute . . . shall be exclusively resolved . .. by binding arbitration pursuant to this arbitration provision and the applicable rules of the American Arbitration Association (`AAA') in effect at the time the claim is filed and the AAA Consumer Due Process Protocol." Id. Those rules require that the consumer pay only a $200 nonrefundable filing fee "unless the parties' agreement provides that the consumer pay less"—not more. CAR at 34. The business, on the other hand, is to pay a filing fee of $1500 or $2000, depending on number of arbitrators. Id. The business is also required to "pay the arbitrator's compensation unless the consumer, post dispute, voluntarily elects to pay a portion of the arbitrator's compensation." Id. at 33-34. Further still, the rules require that "[a]ll expenses of the arbitrator, including required travel and other expenses, and any AAA expenses . . . shall be borne by the business." Id. at 35. Thus, the RAL Agreement's requirement that the parties share equally in the fee of the arbitrator conflicts with its other requirement that the Consumer Arbitration Rules apply, which require the business to bear the brunt of the filing fee and to pay the arbitrator's compensation and expenses.

Under New Mexico law, "[a] contract is ambiguous if separate sections appear to conflict with one another or when the language is reasonably and fairly susceptible of more than one meaning." Heye v. Am. Golf Corp., Inc., 80 P.3d 495, 499 (N.M. Ct. App. 2003) (citing Allsup's Convenience Stores, Inc. v. North River Ins. Co., 976 P2d 1 (N.M. 1998)). When ambiguous, the court is to "construe ambiguities . . . against the drafter to protect the rights of the party who did not draft it." Id. (citing W. Farm Bureau Ins. Co. v. Carter, 979 P.2d 231 (N.M. 1999)).

Given the clear conflict on the matter of cost sharing, the arbitration clause must be construed against the drafter — Defendant S/W Tax Loans, Inc. Thus, the clause requiring equal cost sharing of the fee of the arbitrator is trumped by the fee allocation provisions of the AAA's Consumer Arbitration Rules.

EDIT: Link
« Last Edit: March 27, 2015 01:46:15 PM by rjaguar3 »

Bruno the JDB Killer

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Re: Gorman v. S/W Tax Loans, Inc. (D. N. M. 2015)
« Reply #1 on: March 27, 2015 02:24:50 PM »
Who is RAL? Bank agreements don't have this type of contradictory  language.
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.


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Re: Gorman v. S/W Tax Loans, Inc. (D. N. M. 2015)
« Reply #2 on: March 27, 2015 02:56:13 PM »
Who is RAL? Bank agreements don't have this type of contradictory  language.

RAL is probably an abbreviation for "Refund Anticipation Loan" - a loan against one's tax refund repaid when the government pays the refund.
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