Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014) [click for opinion]

Abraham Inetianbor borrowed money from Western Sky Financial, LLC in a loan serviced by CashCall, Inc. Inetianbor sued CashCall for, among other things, violation of the federal Fair Credit Reporting Act. The loan agreement specified that “any Dispute . . . will be resolved by Arbitration, which shall be conducted by the Cheyenne River Sioux Tribal Nation . . . .” The agreement contained several other references to dispute resolution by the Cheyenne River Sioux Tribal Nation (the “Tribe”).

CashCall filed a motion to compel arbitration, which the district court granted. Inetianbor attempted to comply with the court’s order but returned to the court with a letter from the Tribe explaining that it “does not authorize the Arbitration.” The district court found that the chosen arbitral forum was not available and ruled that the case would be heard in federal court because the clause was integral to the arbitration agreement.

CashCall then submitted clarification from the Tribe that “Arbitration, as in a contractual agreement, is permissible.” The district court reversed itself and held that the forum was available. Inetianbor again attempted to comply with the court’s order, but he again returned to the district court with more evidence that the Tribe had nothing to do with the arbitration process. As result, the district court agreed with Inetianbor that the arbitral forum was unavailable to hear the dispute and refused to compel arbitration.

The Eleventh Circuit affirmed the district court’s denial of the motion to compel. While acknowledging the federal policy favoring enforcement of arbitration agreements, the court noted Eleventh Circuit precedent holding that, whenever a forum selection clause is integral to an arbitration agreement and the selected forum is unavailable, arbitration cannot be compelled. This integral provision rule, while not universally accepted, is the current rule in a majority of Circuit Courts.

Applying the integral provision rule, the court first found that the forum selection clause was integral to the agreement. The court noted the parties’ agreement referenced the Tribe in five of the nine paragraphs regarding arbitration and held that the language of the agreement made clear that the parties intended the forum selection clause to be a central part of the agreement to arbitrate rather than merely an ancillary logistical provision.

Second, the court held that the district court was correct in finding that the chosen arbitral forum was unavailable. The court found that the language of the agreement required some direct participation by the Tribe, but the evidence Inetianbor presented to the district court supported the lower court’s conclusion that the Tribe was not involved in private arbitrations.

Based on these findings, the Eleventh Circuit affirmed the district court’s denial of the motion to compel arbitration, holding that, because the selected forum was unavailable, a substitute arbitrator could not be appointed under the terms of the loan agreement in this case.

Meghan Hausler of the Dallas office contributed to this summary.