FASTFUNDING THE COMPANY, INC., APPELLANT,
v.
WENDY BETTS, ETC., ET AL., APPELLEES
AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.
FastFunding appealed a trial court's denial of its motion to compel arbitration of a consumer lending dispute involving alleged usurious interest rates. The appellate court affirmed, holding that where a borrower alleges colorable evidence of usury law violations, the trial court must resolve the usury question before ordering arbitration, as arbitrators cannot enforce illegal contracts.
The trial court correctly refused to compel arbitration because where a party alleges colorable evidence that a contract violates usury laws, the trial court must determine the usury question before ordering arbitration, as arbitrators cannot enforce illegal contracts.
[1] A trial court must determine the legality of a contract before compelling arbitration when a party alleges and offers colorable evidence that the contract violates usury…
[2] An arbitrator cannot order a party to perform an illegal act.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“A claim that a contract is illegal and ... criminal in nature[ ] is not a matter which can be determined by an arbitrator. An arbitrator cannot order a party to perform an illegal act.”
Establishes the core principle that arbitrators lack authority to determine contract illegality or enforce illegal agreements.
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Join FLexlaw to unlock all legal intelligenceWendy Betts obtained three $100 checks from FastFunding by providing three $125 personal checks, with an agreement that FastFunding would hold her che…
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ANTOON, Chief Judge.
FastFunding The Company, Inc. appeals the trial court’s order denying its motion to compel arbitration or, alternatively, to dismiss the complaint filed by Wendy Betts. We affirm.
Ms. Betts’ complaint alleged that she began doing business with FastFunding because she needed money to pay personal bills. To obtain three $100 checks from FastFunding, Ms. Betts gave FastFunding three personal checks, each in the amount of $125. FastFunding agreed to hold Ms. Betts’ checks until Ms. Betts’ next payday. Ms. Betts had the option of redeeming her checks on the date her loan became due or renewing her loan by writing three new $125 checks. During an eight month period, Ms. Betts rolled over her debt every two to three weeks, eventually incurring $900 in interest for the use of the principal amount of $300. When she became unable to pay the $75 necessary to roll the debt over once more, FastFunding deposited Ms. Betts’ checks. After the checks were returned for insufficient funds, FastFund-ing demanded payment from Ms. Betts. Ms. Betts responded to the demand by filing suit. The complaint alleged that FastFund-ing, “under the guise of a payment instrument sale,” compelled her to pay unconscionable, usurious interest rates on her loan. The complaint advanced counts for violations of Chapter 687, Florida Statutes, entitled “Interest and Usury; Lending Practices,” the Florida Consumer Finance Act,1 and the Florida Deceptive and Unfair Trade Practices Act,2 and also set forth a claim of fraud. In response to the suit, FastFunding moved to compel the parties to arbitrate the dispute pursuant to the arbitration clause of the contract and alternatively asked the trial court to dismiss Ms. Betts’ complaint. The trial court found that the arbitration clause was unenforceable as a contract of adhesion in the context of a consumer lending transaction. The court cited the extreme disparity in bargaining power between the parties and the language of the arbitration clause itself as supporting the conclusion that enforcement of the arbitration clause would be unconscionable as a matter of public policy.
Although the trial court did not have the benefit of this court’s opinion in Party Yards, Inc. v. Templeton, 751 So. 2d 121 (Fla. 5th DCA 2000), at the time of its ruling, the trial court’s analysis is consistent with that decision. In Party Yards, Inc., this court held that where a party alleges and offers colorable evidence that a contract violates usury laws, the trial court must determine the usury question before ordering the parties to arbitration because only trial courts can determine a contract’s legality. This court noted that “[a] claim that a contract is illegal and ... criminal in nature[ ] is not a matter which can be determined by an arbitrator. An arbitrator cannot order a party to perform an illegal act.” Id. If Ms. Betts is correct in her complaint that the contract violates the usury laws, then the contract is illegal and an arbitrator could not require Ms. Betts to perform under the contract. Pursuant to Party Yards, Inc., the trial court was correct in refusing to order the parties to arbitrate Ms. Betts’ claims.
Accordingly, we affirm the trial court’s denial of FastFunding’s motion to compel arbitration and alternatively to dismiss the complaint, and we remand for further proceedings.
AFFIRMED.
W. SHARP, J., concurs.
DAUKSCH, J., concurs and concurs specially, with opinion.
. Ch. 516, Fla. Stat. (1999).
. §§ 501.201-.213, Fla. Stat. (1999).
DAUKSCH, J.,
concurring and concurring specially.
I fully concur with the majority opinion and as appellate courts often recommend the enactment of legislation, I suggest that in this case. I also suggest the attorney general may be interested.
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Cardegna v. Buckeye Check Cashing, Inc., 894 So. 2d 860 (Fla. 2005)…ANSTEAD, J. We have for review Buckeye Check Cashing, Inc. v. Cardegna, 824 So. 2d 228 (Fla. 4th DCA 2002), which expressly and directly conflicts with the decision in Fast-Funding the Company, Inc. v. Betts, 758 So. 2d 1143 (Fla. 5th DCA 2000). We have jurisdiction. See art. V, 3(b)(3), Fla. Const. For the reasons expressed below, we quash the decision of the Fourth District Court of Appeal in Buckeye, and approve the decision of the Fifth District Court of Appeal in F…1 / 2
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Buckeye Check Cashing, Inc. v. Cardegna, 824 So. 2d 228 (Fla. 4th DCA 2002)…See Parlier v. Eagle-Picher Indus., Inc., 622 So. 2d 479 (Fla. 5th DCA 1993). The trial court denied Appellant’s motion to compel arbitration, relying on Party Yards, Inc. v. Templeton, 751 So. 2d 121 (Fla. 5th DCA 2000), and FastFunding v. Betts, 758 So. 2d 1143 (Fla. 5th DCA 2000). Appellant contends the Federal Arbitration Act applies and that the trial court erred when it failed to construe the arbi [*230] tration provision in a manner consistent with Prima Paint Corp. v. Flood & Conklin Manufacturing Co…
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Vacation Beach, Inc. v. Charles Boyd Constr., Inc., 906 So. 2d 374 (Fla. 5th DCA 2005)…ruction”), was illegal or in violation of public policy. In view of the Florida Supreme Court’s ruling in Cardegna v. Buckeye Check Cashing, Inc., 894 So. 2d 860 (Fla.2005), approving this court’s decisions in FastFunding the Company, Inc. v. Betts, 758 So. 2d 1143 (Fla. 5th DCA 2000), and Party Yards v. Templeton, 751 So. 2d 121 (Fla. 5th DCA 2000), we reverse. The facts are not complicated. Vacation Beach' contracted with Boyd Construction to build a condominium project on land owned by Vacation Beach in Co…
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Party Yards, Inc. v. Templeton, 751 So. 2d 121 (Fla. 5th DCA 2000)