AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• A title loan borrower initiated a lawsuit against TitleMax of New Mexico, Inc. and Angelica Vigil for fraud and violations of the Unfair Practices Act. The dispute centered on the enforceability of an arbitration agreement deemed substantively unconscionable by the district court, which TitleMax sought to compel.

Procedural History

• District Court of Santa Fe County: Denied TitleMax's motion to compel arbitration, finding the arbitration agreement substantively unconscionable.

Parties' Submissions

• Plaintiff-Appellee: Argued that the arbitration agreement was substantively unconscionable and therefore unenforceable.
• Defendants-Appellants: Contended that the district court’s denial of their motion to compel arbitration misinterpreted New Mexico unconscionability jurisprudence and should be preempted by the Federal Arbitration Act (FAA).

Legal Issues

• Whether the arbitration agreement is substantively unconscionable and unenforceable under New Mexico law.
• Whether the Federal Arbitration Act preempts New Mexico's jurisprudence on unconscionability as applied to arbitration agreements.

Disposition

• The New Mexico Court of Appeals affirmed the district court's ruling that the arbitration agreement is substantively unconscionable and therefore unenforceable.

Reasons

• Per HANISEE, J. (HENDERSON, J., and YOHALEM, J., concurring):
  The Court of Appeals applied New Mexico contract law to the arbitration agreement, finding it substantively unconscionable due to its one-sided terms that unfairly advantaged TitleMax over the borrower. The agreement excluded certain actions from arbitration, notably allowing TitleMax to pursue foreclosure in court while requiring the borrower to arbitrate disputes, including claims of fraud or unfair practices (paras 5-9). The court rejected TitleMax's argument that an opt-out provision within the agreement remedied its unconscionability, noting the impracticality of the provision for borrowers and its failure to address the substantive unfairness of the contract terms (paras 12-15). Additionally, the court found that New Mexico's approach to evaluating the unconscionability of arbitration agreements does not violate the FAA, as it applies general contract principles without singling out arbitration agreements for special treatment (paras 16-19).