Among today’s new rulings from the N.C. Supreme Court is a split decision in a case involving subprime consumer loan transactions. The court dealt with the issue of whether an arbitration clause tied to particular loans was “unconscionable.”

While the 5-2 ruling allows customers to move forward with their case against their creditors, the justices split three ways. In his dissent, Justice Paul Newby (joined by Chief Justice Sarah Parker) notes:

I recognize that subprime lenders are under close
scrutiny and that our General Assembly decided to outlaw the sale
of single premium insurance some time after the execution of the
contracts at issue. This case, however, is not about regulating
subprime loans. Instead, the Court’s decision today implicates
bedrock principles of contract law which should not be disturbed
in response to policy concerns over a disfavored industry. For
the first time in our history, a North Carolina appellate court
has found a contract to be unconscionable.

Later Newby raises another objection to the ruling:

Since
1996, 68,000 loans were made containing this arbitration
provision. Having considered ?all the facts and circumstances of
[this] particular case,? I do not believe the provisions of this
agreement are shocking or so oppressive that a reasonable,
honest, and fair person would not offer or agree to them. I believe ?[t]he bargain was one that a reasonable person of sound
judgment might accept.? … Beyond
that, we are not allowed to inquire ?’as to whether the contract
was good or bad, whether it was wise or foolish.’? …

I do not
believe this case presents the landmark occasion for invalidating
a bargain due to unconscionability. Justice Oliver Wendell
Holmes warned of cases such as this:

Great cases like hard cases make bad
law. For great cases are called great, not
by reason of their real importance in shaping
the law of the future, but because of some
accident of immediate overwhelming interest
which appeals to the feelings and distorts
the judgment. These immediate interests
exercise a kind of hydraulic pressure which
makes what previously was clear seem
doubtful, and before which even well settled
principles of law will bend.

I fear that certain ?well
settled principles of law? have been bent, not to straighten
again.