ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, May 9, 2018

Just to reiterate, fraudulent inducement claims go to arbitration, too

A recent case out of the Eastern District of Missouri, Schoemehl v. Unwin, No. 4:18-cv-00031-JAR, underlines the fact that arbitration is favored in this country, including to decide claims of fraudulent inducement to enter into the contract in the first place. The plaintiff tried to argue that he would not have agreed to the arbitration clause were it not for the alleged fraud committed by the defendant. However, the court noted that the Federal Arbitration Act requires fraud in the inducement of a contract to be submitted to arbitration. Fraud in the inducement of the arbitration clause specifically would be a different question, but the plaintiff was not alleging that. The fraud in plaintiff's allegations went to the substance of the entire contract, and there was nothing about the validity of the arbitration clause itself as separate from the rest of the contract. Therefore, the court stayed the action pending arbitration. 

https://lawprofessors.typepad.com/contractsprof_blog/2018/05/just-to-reiterate-fraudulent-inducement-claims-go-to-arbitration-too.html

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Comments

I am an individual - pro se suing a large corporation.

After being informed via my response to the company’s Motion to Dismiss, (which was very involved and time consuming for me) that the testimony in their supporting affidavit was perjurious, they subsequently (almost a month later, postponed the scheduled hearing date) and filed a Motion to Compel Arbitration.

I have several avenues along which to proceed,( although limited by rulings on the power of the FAA) but what I am finding incredulous are decisions such as:

Schoemehl v. Unwin, No. 4:18-cv-00031-JAR (seen on your site),

which, even in egregious situations such as overt fraud committed in the sale of a product (a car in this instance) completely erode the ability to litigate in a local court before a judge, wherein proper discovery can be conducted and the rules are laid out and clear and the up front fees are rather minimal compared to arbitration, of what will most certainly be classified as a commercial arbitration.

Posted by: Joel Goodman | Feb 6, 2019 11:52:09 AM

America is drunk.

Posted by: Jack Rupp | Jul 10, 2019 1:23:50 PM

So would you say this is a good or bad thing? If so, for which side?

Posted by: Robert | Sep 13, 2019 1:58:08 AM

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