Case Notes

Case Note: Green Tree Servicing, LLC v. Duncan

Case Note: Green Tree Servicing, LLC v. Duncan


            This case note analyzes two related issues addressed in Green Tree Servicing, LLC v. Duncan:

1. Does an otherwise enforceable arbitration agreement become unenforceable under Navajo Nation law if it violates Navajo Nation public policy?[1]

2. When does an arbitration clause violate Navajo public policy?


            In 1994, Georgiana Duncan bought a mobile home, which was financed through a loan from Conseco Finance Corporation (Conseco).[2] The financing contract included a clause stating that all claims arising from the contract would be resolved through arbitration. Specifically, the arbitration clause stated, in all capital letters, “THE PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT ACTION BY ASSIGNEE (AS PROVIDED HEREIN).”[3]

            Conseco later became Green Tree Servicing, LLC (“Green Tree”).[4] Ultimately, Green Tree filed suit in Shiprock District Court to repossess Duncan’s mobile home.[5] Duncan filed counterclaims, including fraud.[6] The Shiprock District Court dismissed Duncan’s counterclaims, ruling that the court lacked jurisdiction.[7] Duncan appealed to the Navajo Nation Supreme Court.[8] In its brief to the Navajo Nation Supreme Court, Green Tree argued that the contract’s arbitration clause barred Duncan’s fraud claim.[9]


            The Court held the mobile home financing contract’s arbitration clause was unenforceable because it violated Navajo Nation public policy.[10]


            The Court determined the arbitration clause violated public policy because it was fundamentally unfair.[11] To reach this conclusion the court looked to Navajo statutory and fundamental law.

            Looking to Navajo statutes, the Court cited the unconscionability provision of the Navajo Uniform Commercial Code, which provides that a court can refuse to enforce a contract if it determines the contract “[is] so one-sided as to be unconscionable[.]”[12]

            The Court further looked to four principles of Navajo Fundamental Law to determine whether the clause was so unfair that it violated Navajo Nation public policy. First, the Court stated that the Navajo maxim of “házhó’ógó mandates more than the mere provision of an English form stating certain rights … and requires a patient, respectful discussion … before a waiver is effective . . . Házhó’ógó requires a meaningful notice and explanation of a right before a waiver of that right is effective.”[13]

            Second, the Court stated that the principal of nábináheezlágo be t’áá lahjį algha’ deet’ą means that an agreement can only be final if “all participants agree that all of the concerns or issues have been comprehensively resolved[.]”[14] Third, during negotiations, each side must meet the requirement of ííshjání ádooniíl, “making something clear or obvious.”[15]

            Finally, the Court cited the principle of áádóó na’nile’dii éi dooda, that “delicate matters and things of importance must not be approached recklessly, carelessly, or with indifference to consequences.”[16] Thus, Navajo decision-making should be “practical and pragmatic . . . the result of talking things out.”[17] People should therefore not be pushed to a decision without adequate explanation.[18]

            Green Tree, however, made two arguments to uphold the arbitration clause. First the Navajo Nation Code “includes provisions encouraging arbitration.”[19] Second, Navajo Fundamental Law recognizes that words are sacred.[20] Green Tree thus implied that the court should hold Duncan to her word, which she gave by signing the arbitration agreement.

            The Court, however, noted that it “balances the value of arbitration agreements with the value of fairness.”[21] It can be inferred from the Court’s holding that the value of enforcing the arbitration clause was outweighed by the unfairness of the clause.

            Accordingly, the Court found (1) an otherwise enforceable arbitration agreement is unenforceable under Navajo Nation law if it violates Navajo Nation public policy, and (2) the arbitration clause violated Navajo Nation public policy because it was fundamentally unfair and therefore inconsistent with principles of Navajo Fundamental Law.[22] In sum, this case provides Navajo consumers a remedy in Navajo court to void fundamentally unfair arbitration clauses that lenders do not adequately explain to the consumer.

Sean McKenzie is a second-year law student at the University of New Mexico. He is originally from Gallup, New Mexico.

[1] Green Tree Servicing, LLC v. Duncan, No. SC-CV-46-05, 2008 WL 5435566, 637 (Navajo Aug. 18, 2008).

[2] Id. at 636.

[3] Id. at 640.

[4] Id. at 636.

[5] Id.

[6] Id. at 636, 638.

[7] Id. at 637.

[8] Id.

[9] Id.

[10] Id. at 642.

[11] Id. at 641-42.

[12] Id. at 640.

[13] Id. at 641 (internal quotes and cites omitted).

[14] Id.

[15] Id.

[16] Id. at 642.

[17] Id.

[18] Id.

[19] Id. at 640.

[20] Id.

[21] Id. at 641.

[22] Id. at 642-43.

By Tribal Law Journal Blog

The Tribal Law Journal was established in fall 1998 for the purpose of promoting indigenous self-determination by facilitating discussion of the internal law of the world’s indigenous nations. The internal law of indigenous nations encompasses traditional law, western law adopted by indigenous nations, and a blend of western and indigenous law. Underscoring this purpose is the recognition that traditional law is a source of law.

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