# Tillman v. Commercial Credit Loans, Inc. > Supreme Court of North Carolina · January 25, 2008 · 362 N.C. 93 URL: https://www.frixlaw.com/law-library/cases/9568174 ## Case - **Full name:** FANNIE LEE TILLMAN and SHIRLEY RICHARDSON, on Behalf of Themselves and All Others Similarly Situated v. COMMERCIAL CREDIT LOANS, INC.; COMMERCIAL CREDIT CORPORATION; CITIGROUP, INC.; CITICORP, INC.; CITIFINANCIAL, INC.; And CITIFINANCIAL SERVICES, INC - **Court:** Supreme Court of North Carolina - **Decided:** January 25, 2008 - **Citations:** 362 N.C. 93; 655 S.E.2d 362; 2008 N.C. LEXIS 21 - **Precedential status:** Published - **Opinion:** Concurrence by Edmunds - **Judges:** Edmunds, Newby, Martin, Parker - **Cited by:** 83 later opinions in the Frix Law Library ## Citator (automated) - **Red flag:** Abrogated — as noted by a later court. - Negative treatments: 1 - Distinguished by: 0 - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9568174 ## How later opinions describe it (automated extraction) - concluding that an arbitration agreement in an unnegotiated adhesion contract was procedurally unconscionable where, among other things, “the bargaining power between defendants and plaintiffs was unquestionably unequal in that plaintiffs are relatively unsophisticated consume… - stating that prohibition of class actions “contributes to the financial inaccessibility of the arbitral forum ... because it deters potential plaintiffs from bringing and attorneys from taking cases with low damage amounts in the face of large costs that cannot be shared with … - stating that “the right to make contracts is embraced *77 in the conception of liberty as guaranteed by the Constitution. ... It is the simple law of contracts that as a man consents to bind himself, so shall he be bound” - stating that "the right to make contracts is embraced in the conception of liberty as guaranteed by the Constitution.... It is the simple law of contracts that as a man consents to bind himself, so shall he be bound" - holding an arbitration clause unconscionable, in part, because it “deters potential plaintiffs from bringing and attorneys from taking cases with low damage amounts in the face of large costs” ## Opinion text Justice EDMUNDS concurring in the result only. I concur in the result only and agree that the trial court properly denied defendants’ motion to compel arbitration. I write separately because I believe that this Court should apply the totality of the circumstances test set out in Brenner v. Little Red School House, Ltd., 302 N.C. 207 , 274 S.E.2d 206 (1981). In Brenner , we considered whether a contract between a noncustodial parent and a private school was unconscionable. Id. at 213-14 , 274 S.E.2d at 210-11 . The contract required the school to enroll the plaintiff’s son during the upcoming school year in exchange for payment of a confirmation fee and tuition. Id. at 208-09 , 274 S.E.2d at 208 . The contract further provided that tuition was “payable in advance on the first day of school, no portion refundable.” Id. at 208 , 274 S.E.2d at 208 . The plaintiff paid the confirmation fee and tuition as required, but the child’s custodial parent refused to allow the child to attend the school. Id. at 208-09 , 274 S.E.2d at 208 . When the defendant denied the plaintiff’s subsequent request for a refund, the plaintiff filed suit in district court alleging, in part, unconscionability of the contract. Id. at 209 , 274 S.E.2d at 208 . The trial court granted summary judgment for the plaintiff. Id. On review, we explained that “a court must consider all the facts and circumstances of a particular case” to “determin[e] whether a contract is unconscionable.” Id. at 213 , 274 S.E.2d at 210 . If the court, after examining the totality of the circumstances, determines that “the inequality of the bargain is so manifest as to shock the judgment of a person of common sense” and that “the terms are so oppressive that no reasonable person would make them on the one hand” or “accept them on the other,” then the court may “refuse to enforce [a] contract on the ground of unconscionability.” Id. Circumstances this Court considered in Brenner included equality of bargaining power, *110 availability of other schools, and reasonableness of the disputed term. Id. at 213-14 , 274 S.E.2d at 211 . We found that “[t]he bargain was one that a reasonable person of sound judgment might accept” and concluded that the contract was “enforceable as written.” Id. at 214 , 274 S.E.2d at 211 . Applying Brenner here, I am persuaded that the facts and circumstances found by the trial court establish that the arbitration clause is unconscionable. Particularly compelling circumstances include the cost-shifting (“loser pays”) provision for arbitration proceedings exceeding eight hours, the cost-shifting provision for de novo appeal from the initial arbitration, the prohibitions against joinder of claims and class actions, the $15,000.00 cap on the value of claims that can be pursued outside of arbitration, and the exclusion of foreclosure claims from arbitration. The cost-shifting provisions are particularly onerous because the trial court found that “compensation rates for American Arbitration Association (“AAA”) arbitrators in North Carolina range from $500.00 to $2,380.00 per day,” that “[t]he average daily rate of AAA arbitrator compensation in North Carolina is $1,225.00,” that “the average hourly rate for attorneys working on litigation matters such as this is between $150.00-$250.00 per hour,” and that “[t]o successfully prosecute a complex case ... such as this one[] a law firm would likely need the assistance of expert witnesses. ... in the fields of economics, lending practices, and credit insurance” whose rates “can range from $150.00 to $300.00 per hour, plus expenses.” Taken together, these circumstances effectively prevented plaintiffs from vindicating their rights under the contract in any forum. At the same time, the exclusionary clause allows defendants to pursue claims against borrowers in superior court. Perhaps the lopsided effect of the arbitration clause is best demonstrated by defendant CitiFinancial Services, Inc.’s (CitiFinancial) 68,000-to-0 record. Since it began including this arbitration clause in its loan agreements, CitiFinancial has made more than 68,000 loans in North Carolina. While no North Carolina borrower has ever requested arbitration of any dispute with CitiFinancial, CitiFinancial has pursued lawsuits in civil court against more than 3,700 borrowers in North Carolina, including more than 2,000 collection actions and 1,700 foreclosures. CitiFinancial has never requested arbitration of any dispute involving a North Carolina borrower. Based on the preceding circumstances found by the trial court, I would hold that the inequality of the bargain represented by the arbi *111 tration clause is so manifest as to shock the judgment of a person of common sense, and that the term is so oppressive that no reasonable person would offer it on the one hand or accept it on the other. This Court has long held that “findings of fact made by the trial judge are conclusive on appeal if supported by competent evidence, even if . . . there is evidence to the contrary.” Lumbee River Elec. Membership Corp. v. City of Fayetteville, 309 N.C. 726, 741 , 309 S.E.2d 209, 219 (1983); see also Cardwell v. Cardwell, 64 N.C. 528, 528 , 64 N.C. 621, 622 (1870) (“We can no.more review the finding of a Judge when it is his province to find facts than we can review the finding of a jury.”). The form or manner in which a trial court receives evidence has never controlled the standard of review an appellate court applies to the trial court’s findings of fact. See, e.g., State v. Elliott, 360 N.C. 400, 417 , 628 S.E.2d 735, 747 (applying a deferential standard to the trial court’s findings of fact when those findings were based upon a newspaper article), cert. denied, — U.S. -, 166 L. Ed. 2d 378 (2006); Stephenson v. Bartlett, 357 N.C. 301, 309 , 582 S.E.2d 247, 252 (2003) (applying a deferential standard of review to the trial court’s findings of fact when those findings were based upon written redistricting plans); Homebuilders Ass’n of Charlotte, Inc. v. City of Charlotte, 336 N.C. 37, 47 , 442 S.E.2d 45, 52 (1994) (applying a deferential standard of review to the trial court’s findings of fact when those findings were based upon uncontradicted affidavits). We should not hasten to abandon century-old precedent applying a deferential standard of review to a trial court’s findings of fact, especially when the issue has not been raised, briefed, or argued by any party. For the reasons stated above, I concur in the result only. Justice MARTIN joins in this separate opinion. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9568174. Public record. Not legal advice.