Frazier v. TitleMax of Va., Inc.

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA25-703

Filed 6 May 2026

Guilford County, No. 25CV005050-400

COLEMAN FRAZIER

BRIANA HESTER

DANIEL STANBACK

ELLA STANBACK,

Plaintiffs,

v.

TITLEMAX OF VIRGINIA, INC., and TITLEMAX OF SOUTH CAROLINA, INC.,

Defendants.

Appeal by defendants from order and judgments entered 27 May 2025 by Judge

R. Stuart Albright in Guilford County Superior Court. Heard in the Court of Appeals

24 February 2026.

Brown, Faucher, Peraldo & Benson PLLC, by James R. Faucher, Drew Brown,

and Kevin Rust, for plaintiffs-appellees.

Ellis & Winters LLP, by Andrew S. Chamberlin, and Venable LLP, by Abram

I. Moore, Nelson M. Hua, and Daniel J. Hayes, pro hac vice, for defendants-

appellants.

ZACHARY, Judge.

Defendants TitleMax of Virginia, Inc., and TitleMax of South Carolina, Inc.,

(collectively, “TitleMax”) appeal from 1) an order denying vacatur and confirming the

Arbitration Awards entered in favor of Plaintiffs; and 2) the judgments entered in

favor of Plaintiffs. After careful review, we affirm.

FRAZIER V. TITLEMAX OF VA., INC.

Opinion of the Court

I. Background

TitleMax made consumer car title loans to Plaintiffs, all of whom are North

Carolina residents. A title loan is a “loan[ ] secured by a motor vehicle.” Leake v.

AutoMoney, Inc., 284 N.C. App. 389, 391, 877 S.E.2d 22, 27 (2022), disc. review denied,

384 N.C. 190, 884 S.E.2d 738 (2023). Although legal under South Carolina and

Virginia law—the states in which the subject TitleMax stores are located—the types

of loans offered by TitleMax were prohibited in North Carolina at the time they were

made: “[t]he highest rate of interest permitted by N.C. Gen. Stat. § 53-176(a), at the

relevant time, was 30% per annum on loans not exceeding $15,000.[00].”1

Plaintiff Frazier entered into a loan agreement with TitleMax for $1,020.00 at

143.00% per annum and a subsequent loan agreement for $4,000.00 at 143.11% per

annum. To secure each loan, TitleMax placed a lien on Plaintiff Frazier’s vehicle and

recorded the liens with the North Carolina Department of Motor Vehicles (“DMV”) to

perfect its security interests.

Plaintiff Hester entered into a loan agreement with TitleMax for $1,932.00 at

189.43% per annum and an additional loan agreement for $2,172.00 at 192.38% per

annum; the Stanback Plaintiffs entered into a loan agreement with TitleMax for

$680.00 at 204.79% per annum. As in Plaintiff Frazier’s case, TitleMax secured its

1 The North Carolina legislature has since amended portions of the North Carolina Consumer

Finance Act, of which this section is a part. Effective 1 October 2023, the highest legal interest rate

permitted for installment loans not exceeding $12,000.00 that are not secured by a deed of trust or

mortgage is 33% per annum. N.C. Gen. Stat. § 53-176(a)(1) (2025).

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FRAZIER V. TITLEMAX OF VA., INC.

Opinion of the Court

loans to Plaintiff Hester and the Stanback Plaintiffs by placing liens on their

respective vehicles as collateral and recording the liens with the DMV to perfect its

security interests.

Plaintiffs traveled from North Carolina to either a Virginia or South Carolina

TitleMax store, where their vehicles were appraised and they discussed the terms of

the loans with TitleMax employees, executed the loan contracts, and received the loan

proceeds.

Each of the loan contracts (the “Loan Agreements”) contained similar terms:

the lender and borrower agreed that most disputes would be resolved by a third-party

arbitrator following the JAMS2 arbitration rules, and each Loan Agreement

contained a “Governing Law” provision specifying that either Virginia or South

Carolina “law governs this Note, but the Federal Arbitration Act governs the Waiver

of Jury Trial and Arbitration Clause.”

Nonetheless, the record reveals that TitleMax had significant contacts with

North Carolina. The DMV records reveal that as of 16 January 2020, TitleMax

employees traveled to and recorded over 50,000 liens in North Carolina—for which

TitleMax charged each customer a lien fee. In addition to using the DMV to perfect

its security interests in the vehicles, TitleMax employees solicited business, discussed

2 JAMS is a “provider of alternative dispute resolution (ADR) services” for “business and legal

disputes at any stage of conflict.” About Us, https://www.jamsadr.com/about (last visited 1 April 2026).

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FRAZIER V. TITLEMAX OF VA., INC.

Opinion of the Court

loan terms, received payment from debtors, and repossessed automobiles in North

Carolina.

On 9 April 2020, Plaintiffs filed individual suits against TitleMax in North

Carolina state court, alleging that the Loan Agreements violated the North Carolina

Consumer Finance Act (“CFA”) (N.C. Gen. Stat. § 53-164 et seq.); North Carolina

usury laws (N.C. Gen. Stat. § 24-1 et seq.); and the North Carolina Unfair and

Deceptive Trade Practices Act (“UDTPA”) (N.C. Gen. Stat. § 75-1.1 et seq.). Plaintiffs’

actions were removed to federal court, consolidated, and ordered to arbitration on 10

May 2020.

Plaintiffs prevailed at arbitration. Plaintiff Frazier received a Final Award of

$47,245.34 on 3 March 2025. Plaintiff Hester received a Final Award of $31,393.79

on 3 March 2025. The Stanback Plaintiffs received a Final Award of $18,079.12 on 26

February 2025.

On 4 March 2025, Plaintiffs filed a complaint against TitleMax in Guilford

County Superior Court seeking confirmation of the Arbitration Awards and entry of

judgment “consistent with the Awards,” together with interest and attorney’s fees as

provided by law. On 4 April 2025, TitleMax filed motions to vacate the Plaintiffs’

Arbitration Awards. TitleMax alleged that the Loan Agreements “each contain an

unambiguous and enforceable choice-of-law provision confirming” that either South

Carolina or Virgina law governed the Loan Agreements; therefore, because the

arbitrators applied North Carolina law, they “exceeded [their] powers.” (Citation

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FRAZIER V. TITLEMAX OF VA., INC.

Opinion of the Court

omitted). TitleMax sought vacatur of the Arbitration Awards, denial of Plaintiffs’

motion for confirmation and judgment, and dismissal of Plaintiffs’ complaint.

The matter came on for hearing on 12 May 2025, and on 27 May 2025, the trial

court entered an order granting Plaintiffs’ motion to confirm and denying TitleMax’s

motions to vacate. The trial court concluded that “[n]one of the arbitrators exceeded

their authority in issuing the Arbitration Awards” and that the “Awards did not fail

to draw their essence from the agreements, as each directly construed the Governing

Law provision.” That same day, the court entered separate judgments consistent with

the Arbitral Awards in favor of Plaintiffs.

TitleMax entered timely notice of appeal.

II. Discussion

TitleMax raises two issues on appeal: whether (1) “[t]he trial court erred by

denying vacatur and confirming the Awards, which all failed to draw their essence

from the relevant Loan Agreement(s)”; and (2) “[t]he trial court further erred by

confirming the Awards based on reasons not stated in the Awards.” We address each

argument in turn.

A. Applicable Law and Standard of Review

It is well settled that “[j]udicial review of an arbitration award is severely

limited in order to encourage the use of arbitration and in turn avoid expensive and

lengthy litigation”; accordingly, “an arbitration award is presumed valid, and the

party seeking to vacate it must shoulder the burden of proving the grounds for

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Opinion of the Court

attacking its validity.” First Union Secs., Inc. v. Lorelli, 168 N.C. App. 398, 400, 607

S.E.2d 674, 676 (2005) (citations omitted). The “general rule [is] that errors of law or

fact, or an erroneous decision of matters submitted to arbitration, are insufficient to

invalidate an award fairly and honestly made.” Turner v. Nicholson Props., Inc., 80

N.C. App. 208, 212, 341 S.E.2d 42, 45 (cleaned up), disc. review denied, 317 N.C. 714,

347 S.E.2d 457 (1986). In short, an erroneous legal or factual determination will not

justify the vacatur of an arbitrator’s award. See Smith v. Young Moving & Storage,

Inc., 167 N.C. App. 487, 489–90, 606 S.E.2d 173, 175–76 (2004) (“Where an arbitrator

makes such a mistake, it is the misfortune of the party.” (cleaned up)).

As the parties acknowledge, “this arbitration dispute involves a contract

affecting interstate commerce, and thus is governed by the Federal Arbitration Act

(FAA).” Lorelli, 168 N.C. App. at 399, 607 S.E.2d at 676.3 “According to well-

established law, when an action is brought under a Federal statute”—such as the

FAA—“in so far as it has been construed by the Supreme Court of the United States,

we are bound by that construction.” Snipes v. TitleMax of Va., Inc., 285 N.C. App.

176, 183, 876 S.E.2d 864, 870 (2022) (cleaned up), disc. review denied, 384 N.C. 191,

884 S.E.2d 740 (2023). The lower federal court opinions “may be considered

persuasive authority in interpreting a federal statute.” Id. at 184, 876 S.E.2d at 870

(citation omitted).

3 Each Loan Agreement states: “This Note and the Loan involve interstate commerce.”

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Opinion of the Court

Pursuant to 9 U.S.C. § 10(a) (2026), vacatur of an arbitrator’s decision is

permitted only under the following limited circumstances:

(1) where the award was procured by corruption, fraud, or undue

means;

(2) where there was evident partiality or corruption in the

arbitrators, or either of them;

(3) where the arbitrators were guilty of misconduct in refusing to

postpone the hearing, upon sufficient cause shown, or in

refusing to hear evidence pertinent and material to the

controversy; or of any other misbehavior by which the rights of

any part have been prejudiced; or

(4) where the arbitrators exceeded their powers, or so imperfectly

executed them that a mutual, final, and definite award upon

the subject matter submitted was not made.

“[T]he standard of review of the trial court’s vacatur of an arbitration

award . . . is the same as for any other order in that we accept findings of fact that

are not clearly erroneous and review conclusions of law de novo.” Snipes, 285 N.C.

App. at 184, 876 S.E.2d at 870 (cleaned up).

B. Essence of the Loan Agreements

TitleMax first argues that “[t]he trial court erred by denying vacatur and

confirming the Awards, which all failed to draw their essence from the relevant Loan

Agreement(s).” We disagree.

The “essence of the contract is a doctrine that fits with the FAA provision

allowing for vacatur where the arbitrators ‘exceeded their powers.’ ” Id. at 186, 876

S.E.2d at 871 (italics omitted) (quoting 9 U.S.C. § 10(a)(4)). “The bar for an

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Opinion of the Court

arbitrator’s award drawing its essence from a contract is low; the arbitrator need only

be arguably construing or applying the contract.” Id. (cleaned up); see also Oxford

Health Plans LLC v. Sutter, 569 U.S. 564, 573, 186 L. Ed. 2d 113, 122 (2013) (“Under

§ 10(a)(4), the question for a judge is not whether the arbitrator construed the parties’

contract correctly, but whether he construed it at all.”).

In the case at bar, each of the Loan Agreements contains a generic choice-of-

law clause providing that either South Carolina or Virginia law “governs this Note.”

Nonetheless, each arbitrator applied North Carolina law. TitleMax contends that

“[w]here parties direct an arbitrator to apply one state’s law, and the arbitrator

applies another state’s law, the arbitrator has exceeded the authority given by the

parties.” Plaintiffs respond that the arbitrators had the authority to determine the

enforceability of the contracts and that the generic governing-law provision did not

apply to Plaintiffs’ extra-contractual statutory and tort claims; accordingly, the

Arbitral Awards did not fail to draw their essence from the contracts nor did the

arbitrators exceed their powers. For the following reasons, we agree with Plaintiffs.

The Enforceability of the Contracts

The United States Supreme Court addressed whether an arbitrator may

declare void a contract that contains an arbitration clause subject to the FAA in

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 442, 163 L. Ed. 2d 1038, 1041

(2006). In Buckeye, two individuals filed suit against a lender, advancing claims for

usury and violations of various Florida lending and consumer-protection laws. Id. at

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FRAZIER V. TITLEMAX OF VA., INC.

Opinion of the Court

443, 163 L. Ed. 2d at 1042. The loan agreement provided for arbitration, which the

respondents opposed on the ground that the loan agreement was void. Id. at 448, 163

L. Ed. 2d at 1045. The Supreme Court concluded that “a challenge to the validity of

the contract as a whole, and not specifically to the arbitration clause, must go to the

arbitrator.” Id. at 449, 163 L. Ed. 2d at 1046. In other words, a general challenge to a

contract containing an arbitration provision falls within the province of the

arbitrator. Thus, an arbitrator may determine whether a contract is void or

unenforceable without exceeding his powers in violation of 9 U.S.C. § 10(a)(4).

The Governing-Law Provision

In the instant case, each Loan Agreement provides that either South Carolina

or Virginia “law governs this Note.” The parties disagree as to the proper

characterization of Plaintiffs’ claims as sounding in contract or tort and whether the

claims fall within the scope of the choice-of-law provision. TitleMax argues that this

choice-of-law provision encompasses all of Plaintiffs’ claims, while Plaintiffs maintain

that the provision is limited to contractual claims and therefore does not cover their

statutory and tort claims.

The Loan Agreements’ choice-of-law clause is generic; that is, it simply

provides that the contract shall be “governed by” the law of a particular state without

specifically providing that the clause governs “[a]ny and all claims arising from or

relating to” the Agreements. See, e.g., Tanya Monestier, The Scope of Generic Choice

of Law Clauses, 56 U.C. Davis L. Rev. 959, 968–72 (2023) (identifying four broad

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Opinion of the Court

categories of choice-of-law clauses, including generic clauses, which “tend to provide

fodder for litigation”). See also Restatement (Second) of Confl. of L. § 187 cmt. c (A.L.I.

1971) (“The parties, generally speaking, have power to determine the terms of their

contractual engagements. They may spell out these terms in the contract. In the

alternative, they may incorporate into the contract by reference extrinsic material

which may, among other things, be the provisions of some foreign law.”); id. § 188

cmt. b (observing that “the protection of the justified expectations of the parties is of

considerable importance in contracts whereas it is of relatively little importance in

torts”).

The caselaw regarding the scope of a generic choice-of-law provision is

unsettled, with the courts divided as to whether a generic choice-of-law clause only

applies to contractual claims or more broadly applies to statutory and tort claims that

relate to the contract. See generally Monestier, at 973 (noting “the lack of clarity on

what law governs” the determination of whether a generic choice-of-law clause

encompasses non-contractual claims arising between the parties: the law of the forum

or the parties’ chosen law); Restatement (Second) of Confl. of L. § 188 cmt. b (“In the

torts area, it is the rare case where the parties give advance thought to the law that

may be applied to determine the legal consequences of their actions. On the other

hand, parties enter into contracts with forethought and are likely to consult a lawyer

before doing so.”).

Given this split of authority, it is unclear whether Plaintiffs’ claims against

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FRAZIER V. TITLEMAX OF VA., INC.

Opinion of the Court

TitleMax fell within the ambit of the Loan Agreements’ choice-of-law clause. In

wrestling with this issue, an arbitrator could have reasonably interpreted the

provision either way. Yet we are not tasked with determining whether the arbitrator

correctly interpreted the choice-of-law clause. The dispositive issue under 9 U.S.C. §

10(a)(4) is “whether the arbitrator (even arguably) interpreted the parties’ contract,

not whether he got its meaning right or wrong.” Oxford Health Plans, 569 U.S. at

569, 186 L. Ed. 2d at 119; see also Snipes, 285 N.C. App. at 186, 876 S.E.2d at 871.

Here, it is clear that the arbitrators “arguably constru[ed]” the choice-of-law

provision in determining that North Carolina law applied. Snipes, 285 N.C. App. at

186, 876 S.E.2d at 871 (citation omitted). In making the Awards, each of the

arbitrators recognized that the Loan Agreement contained a choice-of-law provision;

considered whether the choice-of-law provision frustrated the prosecution of

Plaintiffs’ statutory and tort claims; and explained why—despite the choice-of-law

provision—North Carolina law applied. The Frazier Award contains an entire section

denominated “Choice of Law Analysis,” in which the arbitrator concluded that

“applying any choice of law analysis, the CFA and the UDTPA apply to the Loan

Agreements, and no choice of law analysis bars [Plaintiff Frazier]’s claims under the

CFA or UDTPA.” The Hester Award contains a section titled “Is the Choice of Law

Provision in the Loan Agreements Enforceable?”, and the Stanback Award likewise

addresses the choice-of-law provision.

At minimum, the arbitrators “arguably constru[ed]” the choice-of-law provision

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Opinion of the Court

in the contracts. Id. (citation omitted). Therefore, the Arbitration Awards did not fail

to draw their essence from the parties’ contracts and the arbitrators did not exceed

their powers in violation of 9 U.S.C. § 10(a)(4). The trial court properly confirmed the

Awards.

C. Basis for Arbitral Awards

TitleMax next argues that the trial court erred “by confirming the Awards

based on reasons not stated in the Awards.” Specifically, as to each Award, TitleMax

challenges the court’s determination that the respective “[a]rbitrator ‘construed’ the

choice of law provision and found that . . . it does not apply” to Plaintiffs’ claims.

In confirming the Awards, the court determined that each arbitrator properly

performed his or her role in this matter, concluding that “[i]t [wa]s enough that the

arbitrators construed the ‘Governing Law’ provision at all, as the Arbitration Awards

demonstrate that each arbitrator did.” (Citing id.). For the reasons explained above,

we agree with the trial court.

It was not necessary that each arbitrator explicitly analyze the scope of the

choice-of-law clause when it is manifest that the arbitrators expressly construed the

choice-of-law clause. As discussed above, the arbitrators “arguably constru[ed]” the

relevant provisions in the contracts, which is all that is required. Id. (citation

omitted). Therefore, the arbitrators did not exceed their authority under the FAA.

TitleMax’s argument to the contrary is overruled.

III. Conclusion

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Opinion of the Court

We conclude that the arbitrators did not exceed their authority because they

construed the choice-of-law provision contained in each Loan Agreement and thus,

the resulting Arbitration Awards did not fail to draw their essence from the Loan

Agreements. Accordingly, we affirm 1) the trial court’s order confirming Plaintiffs’

Arbitration Awards and denying TitleMax’s motions to vacate, and 2) the court’s

individual judgments entered against TitleMax and in favor of Plaintiff Frazier,

Plaintiff Hester, and the Stanback Plaintiffs, respectively.

AFFIRMED.

Judges STROUD and GORE concur.

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