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Gorden v. Lloyd Ward & Associates, PC

Court of Appeals of Washington, Division 3

April 8, 2014

Sherrie Kay Gorden et al., Respondents ,
Lloyd Ward & Associates, PC, et al., Appellants

Reconsideration denied May 22, 2014.

Page 1075

Appeal from Spokane Superior Court. Docket No: 12-2-01551-6. Date filed: 12/21/2012. Judge signing: Honorable Kathleen M O'connor.

Lloyd Eugene Ward and Amanda Glen Ward, pro se.

Darrell W. Scott, Matthew J. Zuchetto, Boyd M. Mayo, Andrew S. Biviano (of The Scott Law Group PS ), for respondents.

AUTHOR: Stephen M. Brown, J. WE CONCUR: Kevin M. Korsmo, J., Evan Eugene Sperline, J.P.T.


Page 1076

Stephen M. Brown, J.

[180 Wn.App. 557] ¶ 1 Respondent Washington debtors, Sherrie K. Gorden and Debbie K. Miller, individually and on behalf of a class of similarly situated Washington residents, sued appellant Texas debt adjusting service providers for violating Washington's debt adjusting act (DAA), chapter 18.28 RCW, and Washington's Consumer Protection Act (CPA), chapter 19.86 RCW. Lloyd Ward & Associates P.C.; Lloyd Ward P.C.; The Lloyd Ward Group P.C.; Lloyd E. Ward (a Lawyer) and Amanda G. Ward; Silver Leaf Debt Solutions LLC; Michael Miles, individually and on behalf of the marital community of Michael Miles and Jane Doe Miles; and John and Jane Does 1-5 (collectively LWG) appeal the trial court's denial of their arbitration and dismissal requests. LWG contends the trial court erred in deciding the contract was unconscionable and did not reserve all arbitration questions to the arbitrator. LWG additionally contends the Washington trial court lacked personal jurisdiction over the Texas residents and is by later settlement moot. We disagree and affirm.

Page 1077


¶ 2 Ms. Gorden and Ms. Miller desired debt reduction assistance. After seeing an Internet advertisement, each [180 Wn.App. 558] separately enrolled in LWG's debt settlement program and electronically signed a client services agreement from Washington containing an attorney retainer agreement partly providing, " By this Agreement, Client retains Attorney for the limited and express purposes of providing legal and administrative services limited to Savings and Debt Negotiation with respect to Client's existing debt and current creditors, as identified by Client." Clerk's Papers (CP) at 36.

¶ 3 The agreement partly states it is " governed by the laws of the State of Texas, without regard to the conflict of law rules of that state. Further, venue and jurisdiction for any dispute or conflict arising from or in any way related to this Agreement shall be exclusively in Dallas, Dallas County, Texas." CP at 37. Relating to arbitration, the agreement sets venue and jurisdiction in Collin County, Texas:

If, after giving LWG thirty (30) days notice of any complaint, you remain unsatisfied with LWG's response to your complaint, you hereby agree to mediate and/or arbitrate any complaint against Firm prior to the initiation of any public or private complaints or claims of any kind against LWG or any of its attorneys. You agree to submit any dispute over the amount of fees charged to you to the Fee Dispute Committee of the Collin County Bar Association, State Bar of Texas. Client understands that this agreement is performable in Collin County, Texas and hereby consents to venue and jurisdiction in Collin County, Texas under Texas state law for any dispute arising hereunder. The parties will submit all disputes arising under or related to this Agreement to binding arbitration according to the then prevailing rules and procedures of the American Arbitration Association. Texas law will govern the rights and obligations of the parties with respect to the matters in controversy. The arbitrator will allocate all costs and fees attributable to the arbitration between the parties. The arbitrator's award will be final and binding and judgment may be entered in any court of competent jurisdiction.

CP at 37.

[180 Wn.App. 559] ¶ 4 No attorney or attorney's representative discussed these provisions with the respondents or advised them of the rights at stake. The respondents were not counseled or advised regarding the consequences of relinquishing the legal protections provided by Washington law or of the protections provided by Texas law. Ms. Gorden and Ms. Miller were not informed of the advantages or disadvantages of arbitration, including the requirement that they must bring arbitration claims in Texas. No one explained the inconsistent and mutually exclusive venue and jurisdiction provisions.

¶ 5 The respondents made monthly payments as required under LWG's debt settlement program: Ms. Gorden paid several thousand dollars, while Ms. Miller paid $800. After getting continued calls from creditors, Ms. Gorden and Ms. Miller each contacted LWG and learned none of the money they paid into the program had been paid to creditors; rather, LWG applied the payments to their own fees. Ms. Gorden and Ms. Miller believed they were in worse financial situations than before they entered the program, with increased debt, less money available to pay debts, and damaged credit scores. Both lacked the resources to travel to Texas to arbitrate their claims. LWG offered to move arbitration to Washington.

¶ 6 Not wanting to arbitrate, the respondents sued LWG, alleging it violated the DAA and CPA by charging predatory fees. The respondents requested injunctive relief. The action was brought on behalf of Ms. Gorden and Ms. Miller, as well as a proposed class of all Washington residents who have paid debt adjuster fees to LWG in violation of Washington law. The class, however, has not been certified.

¶ 7 About six months after the respondents served the complaint on LWG, it unsuccessfully requested orders to compel arbitration and dismiss the complaint based on a lack of subject matter and personal ...

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