Creditor Waived Arbitration When It Filed Suit
A historic win for Maryland consumers was just announced last month by the Court of Appeals.
If a creditor with an arbitration clause files suit to enforce the contract it has waived arbitration. In a case against well known debt collector, Midland Funding, the court held that by filing a small claims case against the debtor, Midland had acted in a manner “inconsistent with the enforcement of the arbitration clause.”
The opinion can be found here.
Arbitration clauses are notorious because they are titled towards the creditor and do not offer consumers the full swath of remedies available for cases tried in court. Chances are you are bound by one or more arbitration clauses and you do not know it. As Amalia Kessler, a professor of law and legal history at Stanford University puts it “You can opt out of society. That’s how you can opt out of these things” in a Baltimore Sun article.
Anything from a credit card to financing of big ticket items such as cars and household appliances come with arbitration clauses.