Arbitration & Mediation

Yet Another Arbitration Clause Bites the Dust

By Victoria Pynchon

When we bought our house 6 years ago, Mr. Thrifty struck all ADR provisions from the sales contract.  He's come to respect ADR much more in the last few years.  Still, I believe he'd choose access to the justice system over its alternatives.

Though Mr. Thrifty -- a litigator -- was bold enough to alter a form contract, few other home buyers would be.  

Now it appears that the California courts will protect home buyers from arbitration agreements buried in the voluminous documents all home buyers sign when they purchase a house.  See Bruni v. Dideon, just decided by the Fourth Appellate District of California.  Summary below courtesy of the Metropolitan News-Enterprise. 

Where homebuyers alleged that arbitration clause was contained in preprinted and "voluminous" documents, there was no negotiation, they understood the documents were being presented to them on a "take it or leave it" basis, they [were] generally . . not familiar with real estate documents or with "legalese," were not told to read to read warranty--which contained arbitration provisions . . . .  and were not given enough time to read the warranty or any of the other documents [prior to signing, the] issue as to whether homebuyers knowingly agreed to arbitrate was subject to judicial determination regardless of provision requiring that issues regarding enforceability of arbitration clause be submitted to arbitration.

Where . . . plaintiffs had to accept arbitration provisions if they wanted to buy a house, [the]provisions were part of a preprinted form contract, any attempt to negotiate . . . . the terms of the warranty would have been fruitless, the provisions took up one page of a 30-page booklet that was buried in [a] "voluminous" stack of purchase and sale documents, and plaintiffs were never asked to read the arbitration provisions before signing, those provisions were adhesive and unconscionable, and trial court correctly exercised its discretion by refusing to enforce them.

Full post as published by Settle It Now Negotiation Blog on March 16, 2008 (boomark / email).