Opinion ID: 1940044
Heading Depth: 2
Heading Rank: 5

Heading: Federal Cases Based on Different Circumstances

Text: Instead of following the federal cases that have decided this identical issue under identical facts, the majority relies on other cases that considered different attacks on different types of contracts. In particular, the majority cites cases refusing to refer issues to arbitration. Majority op. at 863-64. As the Sixth Circuit emphasized in Burden, 267 F.3d at 489, however, in those cases the question was not whether a party assented to a contract that later was alleged to violate state law. 267 F.3d at 490. Rather, in each case, the complaining party alleged that because of some defect in signatory power, no contract ever was formed. See, e.g., Sandvik, 220 F.3d at 112 (holding that where a party claimed that the signee lacked authority to bind it to the contract containing the arbitration clause, the very existence of [the] agreement [was] disputed and the court must resolve the threshold question of whether an arbitration agreement exists); Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc., 925 F.2d 1136, 1138, 1144 (9th Cir.1991) (holding that the court, not the arbitrator, must decide whether the signatory had authority to bind the plaintiffs to contracts containing arbitration clauses); Spahr v. Secco, 330 F.3d 1266, 1273 (10th Cir.2003) (holding that a claim that the signatory lacked the mental capacity to enter into the contract goes to the making of both the contract and the arbitration agreement); Sphere Drake Ins. Ltd. v. All American Ins. Co., 256 F.3d 587, 590-91 (7th Cir.2001) (A person whose signature was forged has never agreed to anything. Likewise with a person whose name was written on a contract by a faithless agent who lacked authority to make that commitment. This is not a defense to enforcement, as in Prima Paint; it is a situation in which no contract came into being[.]). In Bess, the Eleventh Circuit similarly distinguished its earlier decision in Chastain v. Robinson-Humphrey Co., 957 F.2d 851 (11th Cir.1992). In Chastain, the plaintiff never personally signed the customer agreements at issue, and thus she contended that she was not bound by the arbitration provisions within them. 957 F.2d at 853. The court acknowledged that parties cannot be forced to submit to arbitration if they have not agreed to do so. Id. at 854 (citing Volt Info. Scis., Inc., 489 U.S. at 478, 109 S.Ct. 1248). Thus, [u]nder normal circumstances, an arbitration provision with a contract admittedly signed by the contractual parties is sufficient to require the district court to send any controversies to arbitration. 957 F.2d at 854. The court found the case before it to be the rare case in which the very existence of any agreement, including the existence of an agreement to arbitrate  was at issue. Id. Under those facts, there [wa]s no presumptively valid general contract. Id. If a party did not sign the underlying contract, then the party may not have agreed to arbitration. Thus, the making of the arbitration agreement was at issue, and under the FAA a court, not an arbitrator, should decide the question. Id. at 855. In Bess, the Eleventh Circuit noted both the distinctive facts of Chastain and its narrow holding. 294 F.3d at 1305. The court explained that the focus of the court's decision in Chastain ... was on the question of assent, i.e., whether the parties mutually had agreed to the contracts, and contrasted the claim before it that the deferred payment contracts violated state law: At bottom, Colburn challenges the content of the contracts, not their existence. Indeed, unlike the contracts in Chastain, both the arbitration agreement and the deferred payment contracts were signed by Colburn, and there is no question about Colburn's assent to those contracts. Thus, this case falls within the normal circumstances described in Chastain, where the parties have signed a presumptively valid agreement to arbitrate any disputes, including those about the validity of the underlying transaction. Therefore, the issue raised by Colburn  whether the deferred payment transactions are void as illegal  is one for the arbitrator, not the court. 294 F.3d at 1305-06 (emphasis added). Thus, the distinction in the cases is not between voidable contracts (which are arbitrable) and void contracts (which are not), as the majority finds. Rather, it is between contracts to which the plaintiff admittedly assented, but now claims are either void or voidable, and contracts to which the plaintiff gave no assent. If no contract was formed, then the arbitration agreement, which was part of that contract, was not formed, either. Courts must determine this threshold issue. The plaintiffs in this case, however  and in all the cases involving check-cashing transactions  do not allege that no contract was formed. They admit assenting to both the arbitration agreements and the underlying contracts. Rather, they argue that the contracts were usurious. Therefore, the making of the agreement for arbitration is not at issue, and under the FAA the arbitrators, not the courts, must decide the issue.