The Lopez court required separate consideration to support the arbitration clause in addition to the consideration needed to bind the parties with respect to the contract itself. Therefore, the court found that the lender had not obligated itself to submit any of its own claims to arbitration. In reaching its conclusion, Lopez distinguished other courts, most notably the Doctor's Assocs. An arbitration clause may be drafted so that it provides for the trial of any dispute involving nonpayment of the debt or a nonmonetary breach of the loan documents but requires arbitration of lender liability issues. A more evenhanded bifurcation would involve a judicial hearing for monetary default and arbitration for nonmonetary default and lender liability.
Bifurcation protects the lender's right to get to court quickly if there is a monetary breach.
Any financial institution which considers using arbitration clauses in loan documents should remember that they can be molded to the advantage of a lender in a number of significant ways. On both issues the court adopted a position closer to that advocated by the debtor rather than the creditor. The bankruptcy court had valued the 1990 Pontiac car based upon the average of its wholesale and retail values. The court fixed an interest rate of nine percent to compensate the creditor for receiving the value of its claim over a period of time. The district Court affirmed.