Smith v. Microskills San Diego L.P.

The arbitration provisions of a student loan agreement do not apply to claims against a school which are entirely unrelated to the terms or enforceability of the loan. In particular, the reference in an arbitration clause of a student loan agreement to “relationships which result from” the loan agreement does not include the borrower’s relationship with his or her school. Accordingly, we affirm the trial court’s order denying the defendant school’s petition to arbitrate the plaintiff student’s statutory claims.

FACTUAL AND PROCEDURAL BACKGROUND

In the spring of 2004 plaintiff and respondent Ron Smith attended classes at a postsecondary vocational institution owned and operated by defendant and appellant Microskills San Diego L.P. (Microskills). Smith paid for a portion of his $19,995 tuition by borrowing funds from Sallie Mae, an educational lender. The note Smith executed in favor of Sallie Mae contained an arbitration provision which covered “any claim, dispute or controversy . . . arising from or relating to this Note or my application for a loan or advertisements, promotions or oral or written statements related to this Note or the program under which such a loan is…