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Senior Citizens Must Arbitrate Before They Litigate
Description Class action suit by senior citizens who claimed Truth in Lending Act violations in reverse mortgage arrangements they entered into. Circuit court agreed that Federal Arbitration Act requires each plaintiff to go to arbitration before there is any possibility of litigation.
Topic Alternate Dispute Resolution
Key Words Federal Arbitration Act; Class Action Suit
C A S E   S U M M A R Y
Facts Senior citizen homeowners entered into "reverse mortgage" loan agreements with defendant. Plaintiffs filed a class-action suit alleging that defendants misrepresented some key terms in the agreement in violation of the Truth in Lending Act.
Lower Court Decision The loan agreements contained valid arbitration provisions and so each plaintiff must submit their claims to arbitration. Plaintiffs appealed the dismissal.
Court of Appeals Decision Appeal dismissed for lack of jurisdiction. Agreeing with a similar decision from the 8th Circuit, because the agreements contained a valid arbitration provision, the Federal Arbitration Act requires each plaintiff to go arbitration. The courts may not hear about this matter prior to arbitration. Once plaintiffs have arbitrated their claims, they may seek review later in the courts if there are any reviewable issues.
Citation McCarthy v. Providential Corp., ---F.3d--- (1997 WL 471876, 9th Cir.)
122 F. 3d 1242 (9th Cir., 1997)

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