Principal Investments v. Harrison

Appellant, a payday loan company, provided loans to the named plaintiffs. The named plaintiffs and other borrowers did not repay their loans, prompting Appellant to file several thousand individual collection actions. Appellant secured thousands of default judgments against the named plaintiffs. It was later discovered that the process server hired by Appellant falsified affidavits of service. The named plaintiffs sued Appellant, alleging that Appellant improperly obtained its default judgments against them and other similarly situated borrowers without their knowledge. Appellant moved to compel arbitration based on the arbitration provisions in its loan agreements. The district court denied Appellant’s motions, holding that Appellant waived its right to arbitrate by bringing collection actions in justice court and obtaining default judgments based on falsified affidavits of service. The Supreme Court affirmed, holding that the district court correctly concluded that Appellant waived its right to an arbitral forum where the named plaintiffs’ claims all concerned the validity of the default judgments Appellant obtained against them in justice court. View "Principal Investments v. Harrison" on Justia Law