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Estep v. World Finance Corporation of Illinois

August 16, 2010

LAWRENCE ESTEP, PLAINTIFF,
v.
WORLD FINANCE CORPORATION OF ILLINOIS, DEFENDANT.



The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge

OPINION

This matter is before the Court on a Motion to Compel Arbitration of Plaintiff's Claims and Stay Proceedings (d/e 13) filed by Defendant World Finance Corporation of Illinois (World Finance). World Finance seeks an order compelling Plaintiff Lawrence Estep to submit his claims to arbitration on an individual basis. World Finance also asks the Court to stay the instant matter until arbitration is concluded. For the reasons set forth below, Defendant's Motion is allowed.

BACKGROUND

Estep's claims arise out of a consumer loan that Estep obtained from a World Finance office in Springfield, Illinois, on October 20, 2008. Estep financed $300.00 at an annual percentage rate of 145.52%. He executed a document entitled "Loan Repayment and Security Agreement and Disclosures Required by State and Federal Law" (Loan Agreement), in which he agreed to make seven monthly payments of $66.00 for a total amount of $462.00. Defendant's Memorandum in Support of Motion to Compel Arbitration of Plaintiff's Claims and Stay Proceedings (d/e 14) (Defendant's Memorandum), Ex. 1.*fn1 Estep also executed a document titled "Agreement to Settle Disputes by Arbitration" (Arbitration Agreement) in connection with the loan transaction. Id., Ex. 2.*fn2

The Arbitration Agreement provides as follows:

1. EXCEPT AS PROVIDED IN PARAGRAPH NUMBER 2, ALL DISPUTES, CONTROVERSIES OR CLAIMS OF ANY KIND AND NATURE BETWEEN LENDER AND BORROWER ARISING OUT OF OR IN CONNECTION WITH THE LOAN AGREEMENT, OR ARISING OUT OF ANY TRANSACTION OR RELATIONSHIP BETWEEN LENDER AND BORROWER OR ARISING OUT OF ANY PRIOR OR FUTURE DEALINGS BETWEEN LENDER AND BORROWER, SHALL BE SUBMITTED TO SINGLE ARBITRATION AND SETTLED BY SINGLE ARBITRATION IN ACCORDANCE WITH THE UNITED STATES ARBITRATION ACT, THE EXPEDITED PROCEDURES OF THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION (THE "ARBITRATION RULES OF THE AAA"), AND THIS AGREEMENT. JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF, SUCH ARBITRATION SHALL BE CONDUCTED BY A PANEL OF ONE (1) ARBITRATOR SELECTED IN ACCORDANCE WITH THE ARBITRATION RULES OF THE AAA.

Disputes covered under the above include but are not limited to:... ! any claim based upon a federal or state statute including, but not limited to, the Truth-in-Lending Act and Regulation Z; the Equal Credit Opportunity Act and Regulation B, state insurance laws, state usury and lending laws including state consumer protection statutes and regulations;

....

Defendant's Memorandum, Ex. 2, p. 1. Paragraph 2 of the Arbitration Agreement provides as follows:

2. Notwithstanding this Agreement, in the event of a Default under the Loan Agreement, Lender may seek its remedies in an action at law or in equity, including but not limited to, judicial foreclosure or repossession. Lender may also exercise its other remedies provided by law (such as, but not limited to, the right of self-help repossession under Article 9 of the Uniform Commercial Code or other applicable law and/or the foreclosure power of sale). This section shall not constitute a waiver of Lender's rights thereafter to seek specific enforcement of its rights under this Agreement in the event Borrower shall assert a counterclaim or right of setoff in such judicial or non-judicial action.

Id.

Estep alleges in his Complaint (d/e 1) that World Finance violated the Truth in Lending Act, 15 U.S.C. § 1638, and Regulation Z, 12 C.F.R. § 226.18 (Count I) and the Illinois Interest Act, 815 ILCS 205/4(1) (Count II) in connection with the October 2008 transaction. Estep also seeks a declaration that the Arbitration Agreement is invalid (Count III). World Finance asks the Court to stay these proceedings and compel arbitration of Estep's claims based on the Arbitration Agreement.

ANALYSIS

The Federal Arbitration Act mandates that, as a matter of federal law, arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The Seventh Circuit instructs as follows: "Under the Federal Arbitration Act, arbitration may be compelled if the following three elements are shown: a written agreement to arbitrate, a dispute within the scope of the arbitration agreement, and a refusal to arbitrate." Zurich American Ins. Co. v. Watts Industries, Inc., 417 F.3d 682, 687 (7th Cir. 2005). It is clear that these three elements are present in the instant case. The Arbitration Agreement, which was signed by both Estep and a representative from World Finance, constitutes a written agreement to arbitrate. Estep's claims fall within the broad scope of the Arbitration Agreement, which covers all claims of any kind or nature arising out of the Loan Agreement. In fact, the Arbitration Agreement expressly includes as ...


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