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Arbitration Agreement Enforceability

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CaseRichard A. Berent v. CMH Homes, Inc. et al.

Issue:  May an arbitration agreement be enforced that restricts all claims from a buyer to arbitration, but allows the seller to pursue judicial remedies?

Facts:  Buyer bought a mobile home from Seller and entered into a retail installment contract, which included an arbitration agreement. Buyer brought an action against Seller on multiple grounds, and alleged that the arbitration provision in the installment contract was unconscionable and void. The trial court, relying on our Supreme Court’s 1996 decision in Taylor v. Butler, found the provision unconscionable because it restricted Buyer’s claims to arbitration, and allowed Seller to pursue judicial remedies for some claims.

Appellate Decision:  The intermediate court affirmed the outcome of the trial court, stating that Taylor was correctly applied. The court explained that courts will not enforce adhesion contracts that are seen to be oppressive and burdensome on weaker parties or which clearly serve to benefit one party reasonably more so than the other. Although most jurisdictions do not follow the rule in Taylor, the court noted that Taylor remains binding until our Supreme Court holds otherwise.

Review Granted:  June 24, 2014.

Prediction:  This case seems to be parallel to the parameters of the Taylor case. Courts in all jurisdictions have traditionally applied the notion that unfair and unconscionable contracts are not to be enforced. Ben thinks the Supreme Court will maintain this principal in one-sided arbitration agreements and affirm the case in favor of Buyer.