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BlueMountain

TN Payday Loan Lawsuit

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Hi everyone. I am a college student who stupidly took out a 250%+ payday loan my freshman year and never paid it back. I am now being sued in General Sessions court in Chattanooga, Tennessee. I have NOT yet been served, but got a letter in the mail advertising the services of a bankruptcy lawyer so presume they know my new address... I called to get a copy of the lawsuit but since it's out for service by the Sheriff's department I was told they don't have it yet. 

I have been lurking around the past few days and my understanding is the arbitration argument won't work since General Sessions is small claims and there is an exclusion for it in the loan agreement (I found a copy of it). Can anyone recommend what a good strategy might be? I don't have a job or any significant assets for them to seize/garnish so that is at least one consideration.

 

1. Who is the named plaintiff in the suit? Harpeth Financial Services (Advance Financial)

2. What is the name of the law firm handling the suit? Robert Hill (Hill Law Firm) Nashville, TN

3. How much are you being sued for? $2,620.52

4. Who is the original creditor? Harpeth Financial Services (Advance Financial)

5. How do you know you are being sued? (You were served, right?)  Not yet served, received ad from another lawyer

6. How were you served? (Mail, In person, Notice on door) Not yet served, out by Sheriff's office

7. Was the service legal as required by your state? N/A

8. What was your correspondence (if any) with the people suing you before you think you were being sued? None before

9. What state and county do you live in? Tennessee, Hamilton County

10. When is the last time you paid on this account? Approx 1.5 years

11. What is the SOL on the debt? 6 Years I believe

12. What is the status of your case? Suit served? Motions filed?  Lawsuit filed, but not returned for service

13. Have you disputed the debt with the credit bureaus (both the original creditor and the collection agency?) Since it's a payday loan it isn't on my credit

14. Did you request debt validation before the suit was filed? N/A

15. How long do you have to respond to the suit? Unsure, no court date set since not yet served

16. What evidence did they send with the summons? N/A

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Do you have the original loan agreement?  This might be worth using arbitration, if it's an option from your loan agreement.

Otherwise, it seems Harpeth is properly licensed, and, because they are the original creditor, I would count on them having everything they need to win a judgment against you in court.

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16 minutes ago, Harry Seaward said:

This might be worth using arbitration, if it's an option from your loan agreement.

It isn't an option.  From the first post:  "my understanding is the arbitration argument won't work since General Sessions is small claims and there is an exclusion for it in the loan agreement (I found a copy of it)."

On 8/1/2019 at 11:09 AM, BlueMountain said:

Can anyone recommend what a good strategy might be? I don't have a job or any significant assets for them to seize/garnish so that is at least one consideration.

See if you can borrow enough money from family to settle this.  Judgments are good for at least 10 years in TN and carry a 10% per year interest rate or the contractual rate which on a payday loan would be far worse.  Either way by the time you graduate and do get a job that debt could balloon to near $10,000 and make garnishing your wages VERY attractive to them.

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That doesn't mean you can't use arbitration.  It just means they MIGHT have a valid opposition IF they use it.

How is the supposed "small claims exclusion" worded in the contract?   Is there proof in TN that General Sessions is the exact same as "small claims"?

If it were me, I would use it anyway. As far as I am concerned, it is always a valid option until a judge says it isnt.  My backup plan would to be to look up TN laws on interest rates and payday loans.  Often times these places work on the very edge of the law and the suit or at least most of the amount could be tossed if it is found to be above the legal rate for TN.

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On 8/1/2019 at 11:09 AM, BlueMountain said:

I have been lurking around the past few days and my understanding is the arbitration argument won't work since General Sessions is small claims and there is an exclusion for it in the loan agreement (I found a copy of it).

Post the language of the arbitration agreement, including any delegation provision.

It does seem that TN General Sessions court is considered to be some type of small claims court.  But if there is a delegation provision, you might be able to require that an arbitrator decide that question.

In 2017 (Atkinson et al v. Harpeth Financial Services, LLC et al) it seems that there was a delegation provision.

Harpeth spent a fair amount lobbying a couple of years ago against CFPB's proposed rule regarding arbitration in consumer adhesion contracts, because they use arbitration a lot to kill off lawsuits based upon state consumer or banking laws.  All of that is ancient history now, the CFPB is currently captured by the payday loan industry.

If all of the above fails, try to find some violation of state consumer or banking laws. Read news reports (Lender promises arbitration rather than lawsuits — then sues) and any legal complaints filed against Harpeth and Advance for ideas.

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Hi everyone. This is the some of the language from the arbitration agreement:

Are you waiving rights? Yes. You waive your rights to: 1.Have juries solve Disputes. 2.Have courts, other than small-claims courts, solve Disputes. 3.Serve as a private attorney general or in a representative capacity. 4.Be in a class action.

 

Can small-claims court solve some Disputes? Yes Each party has the right to arbitrate, or to go to small-claims court if the small-claims court has the power to hear the Dispute. Arbitration will solve all Disputes that the small-claims court does not have the power to hear. If there is an appeal from small-claims court, or if a Dispute changes so that the small-claims court loses the power to hear it, then the Dispute will only be heard by an Arbiter.

 

How does arbitration start? Mailing a notice. Either party may mail the other a request to arbitrate, even if a lawsuit has been filed. The notice should describe the Dispute and relief sought. The receiving party must mail a response within 20 days. If you mail the demand, you may choose the arbitration group. Or, your demand may state that you want the parties to choose a local Arbiter. If related third parties or we mail the demand, you must respond in 20 days. Your response must choose an arbitration group or propose a local Arbiter. If it doesn’t, we may choose the group.

 

Who arbitrates? AAA, JAMS, or an agreed Arbiter. You may select the American Arbitration Association (“AAA”) (1-800-778-7879) http://www.adr.org or JAMS (1-800-352-5267) http://www.jamsadr.com. The parties may also agree in writing to a local attorney, retired judge, or Arbiter in good standing with an arbitration group. The Arbiter must arbitrate under AAA or JAMS consumer rules. You may get a copy of these rules from such group. Any rules that conflict with any of our agreements with you, don’t apply. If these options aren’t available, and the parties can’t agree on another, a court may choose the Arbiter. Such Arbiter must enforce your agreements with us, as they are written.

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On 8/3/2019 at 10:37 PM, Harry Seaward said:

Do you have the original loan agreement?  This might be worth using arbitration, if it's an option from your loan agreement.

Otherwise, it seems Harpeth is properly licensed, and, because they are the original creditor, I would count on them having everything they need to win a judgment against you in court.

Unfortunately this is what I figured 😕

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1 hour ago, BlueMountain said:

Hi everyone. This is the some of the language from the arbitration agreement:

Is there some language about "which claims are covered" that includes language about who decides "claims related to the validity, enforceability, coverage or scope of the arbitration clause"?

If the language states that only a court decides "claims related to the validity, enforceability, coverage or scope of the arbitration clause", then there is no delegation.

If the language states that only an arbitrator decides "claims related to the validity, enforceability, coverage or scope of the arbitration clause", then there is delegation.

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3 hours ago, BlueMountain said:

if a Dispute changes so that the small-claims court loses the power to hear it, then the Dispute will only be heard by an Arbiter.

One of our Ohio guys just found a rule up there that lets them move cases out of small claims court. I'd see if something like this exists where you are. 

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7 hours ago, Harry Seaward said:

One of our Ohio guys just found a rule up there that lets them move cases out of small claims court. I'd see if something like this exists where you are. 

 

I'm not quite sure, the agreement seems to cover cases that start in small claims court too. I'm uploading a copy of the wording here. Do you see an immediate out by chance?

Advance Snip 1.pdf

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9 hours ago, Pericles said:

Is there some language about "which claims are covered" that includes language about who decides "claims related to the validity, enforceability, coverage or scope of the arbitration clause"?

If the language states that only a court decides "claims related to the validity, enforceability, coverage or scope of the arbitration clause", then there is no delegation.

If the language states that only an arbitrator decides "claims related to the validity, enforceability, coverage or scope of the arbitration clause", then there is delegation.

Unfortunately, from what I can see it says all claims are covered. Although the language is complicated, it does say in the agreement that "Arbitration will solve appeals of a small-claims court judgment." Can you look at the attached agreement and see if there seems to be any delegation? Thank you!

Advance Snip 1.pdf

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13 hours ago, Harry Seaward said:

One of our Ohio guys just found a rule up there that lets them move cases out of small claims court. I'd see if something like this exists where you are. 

This is a long shot, that said, before mentioning arbitration or the clause, what about demanding trial by jury to remove the case to a trial court. https://www.tncourts.gov/rules/rules-civil-procedure/3803.

Then when the case is removed from general sessions court (small claims); then file a MTC.

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20 hours ago, BlueMountain said:

If there is an appeal from small-claims court, or if a Dispute changes so that the small-claims court loses the power to hear it, then the Dispute will only be heard by an Arbiter.

That says an appeal from small claims will only be heard by an arbiter.  If you lose in small claims, your appeal can go arbitration.

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3 hours ago, Robby8900 said:

This is a long shot, that said, before mentioning arbitration or the clause, what about demanding trial by jury to remove the case to a trial court. https://www.tncourts.gov/rules/rules-civil-procedure/3803.

Then when the case is removed from general sessions court (small claims); then file a MTC.

Don’t you think it would look suspicious to demand a jury trial, and once the lawsuit has be moved to the trial court, then say, “Never mind.  I want to arbitrate.”?

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35 minutes ago, BV80 said:

Don’t you think it would look suspicious to demand a jury trial, and once the lawsuit has be moved to the trial court, then say, “Never mind.  I want to arbitrate.”?

Probably. Do you think if one was to demand a trial and move the case, that the plaintiff would then exercise its right to arbitrate, where it was able to avoid it in small claims?

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19 minutes ago, Robby8900 said:

Probably. Do you think if one was to demand a trial and move the case, that the plaintiff would then exercise its right to arbitrate, where it was able to avoid it in small claims?

Courts take contracts seriously.   If the plaintiff had the case removed, the defendant could rely on the terms of the agreement to show that the plaintiff was attempting to circumvent the terms to which it agreed to abide.  

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On 8/8/2019 at 9:32 PM, BlueMountain said:

Unfortunately, from what I can see it says all claims are covered. Although the language is complicated, it does say in the agreement that "Arbitration will solve appeals of a small-claims court judgment." Can you look at the attached agreement and see if there seems to be any delegation? Thank you!

The agreement delegates "substantive arbitrability" to an arbitrator.  See here for a summary about delegation.

The relevant section in the agreement is;

Which Disputes are covered?

The relevant language in the agreement is;

It includes claims related to setting aside this Clause. It includes claims about the Clause’s validity and scope. It includes claims about whether to arbitrate.

For comparison to another payday lender (that uses the same legal services for the drafting of its agreements) that does not delegate, see this agreement.

When there is delegation, a party can require that an arbitrator decide gateway questions, such as what claims are subject to arbitration.

An argument has to be made about the existence of the delegation provision if one is to expect the court to enforce it.

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Nothing in this agreement precludes arbitration in any way.  If this were me I would immediately file an Motion to Compel Arbitration and once granted, I would file in JAMS and ask JAMS to bill the company for the full filing fee per the contract.

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1 hour ago, fisthardcheese said:

Nothing in this agreement precludes arbitration in any way.

It is correct that there isn't any language within the agreement that states that any type of claim is not subject to arbitration.

Because of the delegation provision, any such question isn't even required to be put before the court - which eliminates any possibility of some lower TN court misinterpreting the language.  If delegation isn't raised in the motion, it could be waived.

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On 8/11/2019 at 3:24 AM, Pericles said:

It is correct that there isn't any language within the agreement that states that any type of claim is not subject to arbitration.

Because of the delegation provision, any such question isn't even required to be put before the court - which eliminates any possibility of some lower TN court misinterpreting the language.  If delegation isn't raised in the motion, it could be waived.

I don't even see any way for it to be misinterpreted.  There is NOTHING that says small claims precludes arbitration from being ordered.  This is a very standard arbitration clause.

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