Collection Suit Dismissed…because of an Arbitration Clause! Alabama Debt Collection Defense Attorney

Today I beat a collection lawsuit by using an arbitration clause. Pretty cool, huh?

Here’s how it went down. The case was Regional Acceptance Corp. v. Maye [02-CV-2021-900446]. Regional Acceptance Corp. is a finance company that finances automobile sales transactions. They alleged that my client owed them over $13,000 because he defaulted on a car note, that they’d repossessed the car, and then sold it for a pittance, leaving him with a huge balance.

I filed a fairly normal answer for repo deficiency cases: lack of standing, failure of preconditions to suit, noncompliance with UCC rules, etc. But then I did something different: I filed a motion to compel arbitration.

If you’ve seen any of my videos or read any of my posts about arbitration, then this will come as a surprise to you, because I usually hate arbitration agreements. I’ve arbitrated plenty of cases, but I’d almost always prefer to have the right to go to real court. Most lawyers feel the same. Arbitration is generally used to give corporations a get out of jail free card when they are caught in massive wrongdoing. But every now and then, arbitration can be turned against the corporations that love them so much. Which is precisely what happened in this case.

Early on, I noticed that the contract Regional Acceptance alleged my client to have breached contained an arbitration provision. Like most arbitration provisions, this one said that before any dispute could go to court, it had to be sent to arbitration first. I also know that arbitration is expensive. Because private arbitrators aren’t paid by the government, the parties who want arbitration must pay them up front, and the cost is usually thousands of dollars.

So I filed a motion to compel arbitration. Here’s an example of what it looks like:

The motion was granted, and Regional Acceptance was ordered to take the case to arbitration.

But they didn’t. Why? Because that would have required them to pay about $3,000 just to get the case started. Collection law firms are in the business of collecting money, not spending it. They get annoyed by court fees, which are only about $300. So forking out ten times that is just not in their playbook.

After a few months went by with no arbitration, I filed a motion to dismiss the case for “want of prosecution.” What’s that? Basically, if you bring a lawsuit before the courts, you can’t just file it and let it sit there forever. You’ve got to move it along, and if you don’t, then the court can dismiss it. Which is precisely what happened in this case.

So, we won. The victory was all the more satisfying because I was able to use an arbitration clause against a corporation for once.

A copy of the order of dismissal is here: