Declining to award attorney fees to a lender who successfully compelled arbitration of a dispute with a consumer borrower, an Ohio federal court held that the fee-shifting provisions in the loan agreement were unenforceable because the lender failed to prove equal bargaining power.

In Boyd v. Allied Home Mortgage Capital Corp., No. 3:07 CV 1192, 2007 WL 4119034 (N.D. Ohio. Nov 20, 2007), the Boyds obtained a mortgage loan from Allied. The mortgage agreement contained an arbitration clause. Further, the agreement contained a fee shifting provision that required a party resisting arbitration to pay the costs incurred by the other party in compelling arbitration.

The Boyds sued Allied and Bank United for breach of fiduciary duty and other claims. Allied moved to compel arbitration pursuant to the arbitration clause. In opposing the motion, the Boyds argued that the arbitration agreement was invalid. Additionally, Allied moved for attorney fees.

The Court held the arbitration agreement was valid, but declined to award Allied attorney fees. Ohio law presumes that fee-shifting arrangements between a consumer borrower and lender may be unfair. Moreover, under Ohio law, Allied had the burden of showing that the "fee provisions in the [m]ortgage were the product of free and understanding negotiations between two equally sophisticated parties." Based on that rule, the Court declined to award attorney fees because Allied failed to offer any evidence showing the parties had similar bargaining power and sophistication.