Originally from:

Journal of American Arbitration (JAA) - Vol. 4, No. 1

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ARTICLES

The Florida Supreme Court Holds that State
Law Applies in a Fraud in the Inducement
Claim in Cardegna v. Buckeye Check Cashing,
Inc.
By Jerri L. Fuller

I. OVERVIEW
Borrower John Cardegna filed a class action lawsuit against his
lender, Buckeye Check Cashing, Inc. (Buckeye), claiming that Buckeye
had violated various Florida statutes by making “illegal usurious loans
disguised check cashing transactions.” In response to the allegations,
Buckeye filed a motion to compel arbitration and stay the litigation
proceedings pursuant to the arbitration provision in the deferred deposit
and disclosure agreement. Cardegna then filed a memorandum in
opposition to Buckeye’s motion on the ground that a clause contained in
an illegal usurious contract was void ab initio and thus unenforceable.
See Buckeye Check Cashing, Inc. v. Cardegna, 824 So. 2d 228, 229 (Fla.
Dist. Ct. App. 2002).
The trial court denied Buckeye’s motion and found in favor of
Cardegna based upon two previous decisions of the appellate court:
Party Yards, Inc. v. Templeton, 751 So. 2d 121 (Fla. Dist. Ct. App. 2000)
and FastFunding v. Betts, 758 So. 2d 1143 (Fla. Dist. Ct. App. 2000).
Buckeye appealed to the Florida Fourth District Court of Appeal arguing
that, due to an express provision in the arbitral clause referencing the
authority of the Federal Arbitration Act (FAA), federal law, not state law,
governed the arbitration agreement and the trial court erred in refusing to
compel arbitration. As such, the appellate court found that its jurisdiction