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SHOWMETHEMONEY CHECK CASHERS v. WILLIAMS9/21/2000
Appellant Showmethemoney, Inc. ("Showme") appeals the Clark County Circuit Court's denial of its Motion to Arbitrate the claims of Appellees Wanda Williams and Sharon McGhee. Williams and McGhee filed a class-action lawsuit against Showme alleging it had violated Arkansas's usury law. Showme argues that the trial court erred by not enforcing language contained in a "Check Cashing Agreement" prepared by Showme and signed by the appellees which purported to require arbitration of all claims. We disagree and affirm.
Facts
Showme entered into agreements with its customers wherein the customers obtained up to $100 cash in return for checks of equal amount plus a $15 "check cashing fee." Showme promised to hold the checks and deposit them on an agreed date in the future usually coinciding with their next periodic payment from an employer or other payer. In August 1998, McGhee received a cash advance from the Conway Showme office, where she received $300
cash and provided Showme with three $115 checks ($345 total) to be cashed when she got her next paycheck.
In January 1999, Williams received a cash advance from the Arkadelphia Showme office, where Williams took out a $200 loan and provided Showme with two $115 checks ($230 total) to be cashed when she got her paycheck. Both women did not repay the loans or have their checks cashed on the following payday. Instead, both women returned to the Showme offices, paid an additional $15 for each check ($45 total for McGhee; $30 total for Williams) so that Showme would again hold the checks until the following payday. Both women repeated this process several times. For instance, McGhee ultimately paid $720 in "fees" over an eight-month period on the original $300 advance without reducing the principal of the debt.
On February 5, 1999, Williams filed a class-action complaint against Showme alleging that the cash loans provided by Showme violated the Arkansas usury laws as stated in Article 19, Section 13 of the Arkansas Constitution and Ark. Code Ann. § 4-57-101 to § 4-57-108 (Repl. 1996). Showme filed a motion to dismiss and to compel arbitration on February 26, 1999, alleging that Williams's complaint violates the Arkansas Uniform Arbitration Act because the parties agreed to arbitrate such issues in the loan agreement signed by Williams. In addition, Showme argued that Williams's complaint should be dismissed under Ark.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted.
Williams proceeded to file requests for discovery, and Williams and McGhee filed an Amended Class Action Complaint around July 8, 1999, restating the cause of action in the original complaint, but adding McGhee as an additional class representative based on her claims against Showme. Showme again filed a motion to dismiss and compel arbitration on July 27, 1999.
The trial court held a hearing on August 6, 1999, to consider the pleadings and motions filed by the parties. Showme presented testimony from Robert A. Srygley, owner of Showme, and counsel for the appellees cross-examined the witness. Srygley was the only witness at the hearing. Counsel for both parties argued before the trial court, and the court issued its oral ruling at the hearing,
denying both the motion to dismiss and motion to compel arbitration.
Following the hearing, the court issued its order on August 26, 1999. In its order, the court denied Showme's motion to dismiss, finding that the appellees's amended complaint stated a cause of action for usury under Arkansas law, and further found that the arbitration clause was unconscionable and unenforceable as well as conflicting and potentially illegal shou
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