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Quickclick Loans, LLC v. Melody A. Russell

February 1, 2011

QUICKCLICK LOANS, LLC,
PLAINTIFF AND COUNTERDEFENDANT-APPELLANT,
v.
MELODY A. RUSSELL,
DEFENDANT AND COUNTERPLAINTIFF-APPELLEE.



No. 08 MI 180139 Appeal from the Circuit Court of Cook CountyJudge Presiding.Honorable Kathleen Pantle,

JUSTICE HARRIS delivered the judgment of the court, with opinion. Justices Karnezis and Connors concurred in the judgment and opinion.

OPINION

Plaintiff QuickClick Loans, LLC, initiated collection proceedings against defendant, Melody Russell, alleging that Russell had defaulted under a loan agreement and promissory note agreed to by the parties. Russell filed a counterclaim for herself and a putative class of similarly situated Illinois consumers against QuickClick alleging violations of the Truth in Lending Act (15 U.S.C. §1601 et seq. (2006)), Regulation Z (12 C.F.R. §226.1 et seq. (2008)), the Illinois Consumer Installment Loan Act (205 ILCS 670/1 et seq. (West 2008)), and the Illinois Interest Act (815 ILCS 205/1 et seq. (West 2008)). QuickClick then filed a motion to compel arbitration and stay proceedings, which the circuit court denied. QuickClick appeals.

We affirm the judgment of the circuit court, finding that the agreement between the parties to arbitrate allows for only two organizations to administer any dispute between the parties in arbitration, neither of which was available. The two exclusive administrators were unavailable due to external constraints, and therefore, the arbitration agreement between the parties was impossible to enforce. Additionally, we find that an alternative administrator cannot be named by this court because the designation by the parties of two exclusive arbitration organizations was an integral part of the agreement between the parties.

JURISDICTION

On January 14, 2010, the circuit court denied QuickClick's motion to compel individual arbitration and to stay the proceedings. On February 9, 2010, QuickClick filed its interlocutory appeal. Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rule 307(a)(1) governing interlocutory appeals as of right. Ill. S. Ct. R. 307(a)(1) (eff. Feb. 26, 2010).

BACKGROUND

On December 2, 2006, Russell obtained a loan from QuickClick by executing a loan agreement and a promissory note. The loan agreement contained an arbitration provision, titled "Arbitration Agreement."*fn1 The Arbitration Agreement states that either party may require the claim to be arbitrated. It defines what claims are covered, how to start the arbitration, and which of two predetermined arbitration organizations may be selected. The sections of the Arbitration

Agreement that are at the center of the parties' dispute state in relevant part:

"b. What Claims Are Covered: 'Claim' means any claim dispute or controversy between you and us that in any way arises from or relates to the Note. 'Claim' has the broadest possible meaning, and includes initial claims, counterclaims, cross-claims and third-party claims. It includes disputes based upon contract, tort, consumer rights, fraud and other intentional torts, constitution, statute, regulation, ordinance, common law and equity (including any claim for injunctive or declaratory relief). *** It also includes disputes about the validity, enforceability, arbitrability or scope of this Arbitration Agreement or the Note *** However, we will not choose to arbitrate an individual Claim that you bring against us in small claims court or your state's equivalent court, if any. But if that Claim is transferred, removed or appealed to a different court, we then have the right to choose arbitration.

c. How Arbitration Is Started: Either you or we may require any Claim to be arbitrated. Arbitration is started by giving written notice to the other party of the intent to start or compel arbitration. This notice may be given before or after a lawsuit has been started over the Claim or with respect to other Claims brought later in the lawsuit. The notice may be in the form of a motion or petition to compel arbitration. Arbitration of a Claim must comply with this Arbitration Agreement and, to the extent not inconsistent or in conflict with this Arbitration Agreement, the applicable rules of the arbitration administrator.

d. Choosing the Administrator: The party requiring arbitration must choose one of the following arbitration organizations as the Administrator: American Arbitration Association ('AAA'), *** or National Arbitration Forum ('NAF'), ***. In all cases, the arbitrator(s) must be a lawyer with more than 10 years of experience. If for any reason the chosen organization is unable or unwilling or ceases to serve as the Administrator, the party requiring arbitration will have 20 days to choose a different Administrator consistent with the requirements of this Arbitration Agreement." (Emphasis added)

If the parties choose arbitration, they are prohibited from participating in a class action in court or a class-wide arbitration under the Arbitration Agreement. Additionally, the Arbitration Agreement states that it is governed by the Federal Arbitration Act (Act)(9 U.S.C. § 1 et seq. (2006).

On July 17, 2009, the NAF, one of the two administrators permitted under the Arbitration Agreement, entered a consent judgment with the State of Minnesota for the purpose of requiring

No.1-10-0436 "the complete divestiture by the NAF entities of any business related to the arbitration of consumer disputes." Pursuant to this consent judgment, the NAF ceased administering consumer arbitrations, including the counterclaim in this case. After the NAF ceased administering consumer arbitrations, the AAA issued a moratorium on consumer debt collection arbitrations. The AAA posted a notice on its Web site describing which claims the moratorium covered, the time frame of the moratorium, and the reasons for the moratorium. Specifically, the notice, in relevant part, states:

"Matters included in this moratorium are: consumer debt collections programs or bulk filings and individual case filings in which the company is the filing party and the consumer has not agreed to arbitrate at the time of the ...


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