unconscionability prevents enforcement of arbitration agreement for consumer claims

Cabatit v. Sunnova Energy Corp., No. C089576, —
Cal.Rptr.3d —-, 2020 WL 8365909 (Ct. App. Dec. 31, 2020)

California isn’t fond of mandatory consumer arbitration.
Here, the court finds the arbitration agreement unconscionable and refuses to
enforce it against a claim relating to the solar power lease agreement between
the Cabatits and Sunnova. The rule of McGill v. Citibank, N.A., 2 Cal.5th 945 (2017)—that
an arbitration agreement waiving statutory remedies under California consumer
protection law is unenforceable—was unnecessary to the decision. Because
Sunnova didn’t argue in the trial court that the arbitrator had to determine
the unconscionability issue, that issue was waived; the arbitration clause was procedurally
and substantively unconscionable under general principles independent of McGill.
Some details:

The salesperson said the Cabatits
did not need to read the agreement language because he would go over the
details, but the Cabatits would need to sign the agreement and initial certain
parts before any work could be done. The salesperson scrolled through the
agreement language quickly, indicating where signatures or initials were
needed.

Indiana Cabatit speaks and
understands English fairly well, but she does not understand complicated or
technical terms. As the salesperson scrolled through the agreement language,
Indiana Cabatit signed or initialed where the salesperson indicated, even
though she did not understand most of what he was saying. The salesperson did
not explain anything about arbitration.

The Cabatits had no computer and no
internet access. They did not receive a copy of the agreement until this
dispute arose and their daughter obtained a copy.

This was a procedurally unconscionable contract of adhesion,
with no opportunity to bargain over terms, which were not explained anyway. It
wasn’t enough that Indiana Cabatit signed a statement that she had read the
terms of the agreement, and even if the arbitration provision was “conspicuous”
in the abstract, the evidence was that the salesperson scrolled through the
agreement, and the arbitration clause was not called to the Cabatits’
attention. And any right to cancel within 7 days “was meaningless because
Sunnova did not give them a copy of the agreement during the relevant time
period and there is no evidence such a right was explained to the Cabatits.”
The context indicated oppression and surprise, resulting in “a high degree of
procedural unconscionability.”

Substantively, this was a one-sided agreement which required
the Cabatits to arbitrate their claims, but allowed Sunova to file in court if
the Cabatits defaulted (defined as failure to make a payment, failure to
perform an obligation under the lease, providing false information, or assigning
the lease without prior authorization). “In other words, Sunnova reserved the
right to take most of its claims to court but purported to deny the Cabatits
the same opportunity.” Although the Cabatits were allowed to go to court to
seek (1) injunctive relief for any threatened conduct that could cause
irreparable harm, (2) a judgment confirming the award, or (3) a small claims
judgment, that was still too one-sided given the breadth of “default” favoring
Sunnova. Sunnova didn’t show it had special need for this one-sidedness.

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