In re Marcia L. Pate

198 B.R. 841 (1996)

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In re Marcia L. Pate

United States Bankruptcy Court for the Southern District of Georgia
198 B.R. 841 (1996)

Facts

Marcia L. Pate (debtor) bought a mobile home from Melvin Williams Manufactured Homes (Melvin Williams) (defendant) and financed the purchase through Greentree Financial Corporation (Greentree). The sales contract for the mobile home contained an arbitration clause, which provided the parties would refer all disputes and claims arising from the contract to arbitration. The arbitration clause also stated the parties voluntarily and knowingly waived any right to a jury trial. The arbitration clause allowed Greentree to pursue a judicial remedy to enforce a security agreement. When Pate declared Chapter 13 bankruptcy, Greentree filed a secure claim within the bankruptcy proceedings. Pate filed an adversarial proceeding against Melvin Williams and Greentree, asserting they violated the Uniform Commercial Code–Sales adopted in Georgia, the Georgia Motor Vehicle Sales Finance Act, and the Federal Truth in Lending Act. After answering the complaint, Greentree filed a motion to stay proceedings and to compel Pate to submit the claims to arbitration. Pate asserted that under Georgia law, the arbitration clause lacked mutuality of obligation because the clause allowed Greentree to pursue judicial remedies while barring Pate from any judicial remedy. Pate also argued that enforcing the arbitration clause under the Federal Arbitration Act (FAA) conflicted with the policies and goals of the Bankruptcy Code.

Rule of Law

Issue

Holding and Reasoning (Dalis, J.)

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