NoteWorld / Meracord Loses Arbitration Agreement With Court

An interesting development in the NoteWorld / Meracord world and a court case involving an arbitration agreement. The Ninth Circuit Court of Appeals heard the case between Amrish Rajagopalan and NoteWorld.

Apparently NoteWorld tried to rely on the arbitration agreement the debt settlement company had in their agreement to compel this situation out of court and into arbitration.

According to the appeal Amrish Rajagopalan had about $15,000 in debt when he contacted First Rate Debt Solutions. Amrish allegedly received the same old sales pitch his debts would be settled for pennies on the dollar and he would have skilled lawyers working on his case.

The contract close went as usual with the sales representative walking Amrish through the online agreement to get him to click in the right place to seal the deal.

The agreement included an arbitration clause:

10. Legal Disputes: In the event of any litigation arising out of or relating to this Agreement, all parties, including Client, P&E Solutions agree to resolve the dispute with neutral binding arbitration according to the laws of the State of Florida. Venue for all arbitrations shall be in Broward County. This Agreement represents the entire Agreement by and between the parties. All prior oral agreements or written understandings are deemed merged herein. This Agreement may not be amended except by a written document signed by each of the parties hereto.

Where the hell did P&E Solutions come from?

After eleven months in the program Amrish cancelled and requested a full refund from NoteWorld. NoteWorld had taken out $8,290.15 but only refunded $5,424.97 but would not refund the $2,865 that had been paid out to the debt relief service provider.

The NoteWorld response at the time was:

Shocked Face“NoteWorld is a completely separate entity from your DRSP, is independently owned and operated and does not perform the duties that you would have contracted your DRSP to do.” NoteWorld is a “vehicle for payment processing,” and “[a]t all times, NoteWorld undertakes these obligations as an independent third-party and does not act as an agent for the DRSP, nor does it take on any of the contractual obligations of the DRSP.” “NoteWorld is not a debt relief company and did not enter into a contract with you to provide you with debt relief services.”

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Amrish then filed a class action complaint in the State of Washington alleging the usual stuff: RICO, and other violations.

In the case, NoteWorld said since the debt settlement contract included an arbitration clause and the issues that arose were the result of the debt settlement company contract, that arbitration clause should prevail.

The appeals court concluded, “The district court correctly concluded that NoteWorld is not entitled to invoke the arbitration clause as a third-party beneficiary.”

So back to court NoteWorld goes.

You’ve got to wonder if NoteWorld, now Meracord received enough benefit out of working with debt settlement companies during the heyday of advance fee debt settlement that it was worth all the lawsuits and legal costs.

You can read the full appeals opinion here.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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