## Facts

- Ethel Marie Mintze, a retired and disabled homeowner, entered a home equity loan with American General Financial Services, Inc. to finance a heater purchase and consolidate existing debts.
- The loan (principal balance about $44,716) included the prior mortgage, credit card debt, settlement charges, and life-insurance premiums.
- The loan agreement contained an arbitration clause.
- Mintze later asserted that the lender induced her into an illegal and abusive home equity loan and that she had rescinded the mortgage pre-petition under the Truth in Lending Act (TILA).
- Mintze filed a Chapter 13 petition; American General filed a secured proof of claim based on the loan.
- Mintze filed an adversary proceeding asserting federal consumer claims (TILA and HOEPA) and Pennsylvania consumer-protection claims and sought to enforce the asserted rescission.

## Issues

1. Whether a bankruptcy court may refuse to enforce an otherwise applicable arbitration clause for a Chapter 13 debtor’s TILA/HOEPA and state-law claims brought in an adversary proceeding.
2. Whether the debtor showed a contrary congressional command or an inherent conflict between arbitration and the purposes of the Bankruptcy Code sufficient to override the Federal Arbitration Act (FAA).

## Decision

- The Third Circuit reversed the order affirming the bankruptcy court’s denial of the motion to compel arbitration.
- The court held the bankruptcy court lacked authority and discretion to deny enforcement of the arbitration clause on this record.
- The case was remanded with instructions to compel arbitration pursuant to the agreement.

## Legal Principles

- The FAA requires enforcement of arbitration agreements according to their terms unless the party opposing arbitration proves Congress intended to preclude arbitration of the specific statutory claims.
- A bankruptcy court may decline to enforce an arbitration clause only where arbitration would inherently conflict with the purposes of the Bankruptcy Code or where the statute creating the cause of action contains a contrary congressional command.
- The core/non-core label may inform the analysis but does not by itself justify refusing arbitration; the court must identify a specific Bankruptcy Code conflict.
- Consumer-protection claims arising under non-bankruptcy statutes (including TILA/HOEPA) are generally arbitrable absent proof that arbitration would impair bankruptcy administration or reorganization.

## Conclusion

Because the debtor’s adversary claims were based on TILA/HOEPA and state law and she did not show congressional intent to preclude arbitration or an inherent conflict with Bankruptcy Code objectives, the arbitration agreement had to be enforced and the parties compelled to arbitrate.


In re Mintze, 434 F.3d 222 (3d Cir. 2006)