On July 26, 2010, the Indiana Court of Appeals, in the published decision of Green Tree Servicing, LLC., v. Brian D. Brough, No. 88A01-0911-CV-550, addressed the issue raised by Appellant Green Tree as to whether the trial court erred by vacating its prior Order directing the parties to arbitrate their dispute, which involved a prior bankruptcy filing and a claim under the Fair Credit Reporting Act.
The underlying facts were that Appellee Brough and a predecessor to Green Tree executed a Retail Installment Contract, Security Agreement, Waiver of Trial by Jury, and an Agreement to Arbitration or Trial by Judge Alone. The contract contained a clear arbitration clause which stated, in pertinent part: “You and I agree and understand that we are giving up the right to trial by jury . . .”. In the contract, Brough further agreed that Green Tree could share information about him and his account with credit reporting agencies.
Brough subsequently defaulted on the contract and then filed a Chapter 13 Bankruptcy Petition in the United States District Court for the Southern District of Indiana. His Petition was converted to a Chapter 7 proceeding. Brough’s debt to Green Tree was addressed in the bankruptcy proceeding and the Bankruptcy Court discharged Brough’s Petition on November 14, 2008.
After the bankruptcy discharge, Green Tree commenced litigation is an Indiana trial court against Brough. Brough filed a counterclaim against Green Tree alleging a violation of the Fair Credit Reporting Act. Specifically, Brough accused Green Tree of reporting to credit agencies that Brough still owed Green Tree a debt under the contract, even though the matter had been discharged in bankruptcy.
In ordering the parties to arbitrate Brough’s Fair Credit Reporting Act claim, the Court first noted that arbitration is matter of contract. When construing arbitration agreements, the Court observed that every doubt is to be resolved in favor of arbitration. The Court then began an analysis of determining whether the parties had agreed in the contract to arbitrate the Fair Credit Reporting Act claim. Relying upon several other jurisdictions faced with a similar question, the Indiana Court of Appeals held that the Fair Credit Reporting Act claims could be subject to an arbitration clause. In addition to finding these other cases persuasive, the Court also noted that Brough had admitted that his Fair Credit Reporting Act claim was subject to the arbitration clause. Brough had contended, however, that the contract as a whole was no longer valid because it had been terminated by his bankruptcy discharge. The Indiana Court of Appeals disagreed.
In so doing, the Court relied upon In re Wells Fargo Bank, N.A., 300 S.W.3d 818 (Tex. Ct. App. 2009) and Siegel v. Federal Home Loan Mortgage Corp., 143 F.3d 525, 527-528 (9th Cir. 1998). The Court noted that, just as in those cases, Brough’s bankruptcy proceeding had ended. Therefore, arbitration of his Fair Credit Reporting Act claim would not jeopardize the bankruptcy case or affect his discharge in bankruptcy. The Court further determined that the arbitration clause in the contract was not terminated by Brough’s bankruptcy discharge. Accordingly, the Court concluded that Brough’s contractual obligation to arbitrate his Fair Credit Reporting Act claim against Green Tree was not invalidated by his bankruptcy discharge.