|
An Alabama bankruptcy court ordered arbitration of a truth-in-lending claim based on its finding that arbitration of the claim would not jeopardize the objectives of the United States Bankruptcy Code.
In Gardner v. Wells Fargo, No 06-80112-JAC-13, 2006 WL 3735942 (Bankr. N.D. Ala. Dec. 14, 2006), the Gardners filed for bankruptcy and later brought a claim against Wells Fargo, one of their creditors, seeking damages under the Truth in Lending Act (TILA).
The Gardners had entered into a secured lending contract with Wells Fargo for the purchase of an automobile. The agreement included an arbitration clause. When the Gardners filed for bankruptcy, Wells Fargo filed a claim for payment on the contract. The Bankruptcy Court had already confirmed an order providing for full payment of Wells Fargo's claim.
When Wells Fargo filed a motion to compel arbitration of the TILA claim, the Gardners argued that the Bankruptcy Court should decide the issue as part of its "core" jurisdiction. The Court disagreed and ordered arbitration of the TILA claim.
The Court found that ordering arbitration of the Gardners' TILA claim would not jeopardize the objectives of the Bankruptcy Code because it would not affect the terms of the bankruptcy plan, and any proceeds that Gardner might receive would be distributed to creditors.
Subscribe to a free weekly update on ADR case law and
legislation
|