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Contracts of Adhesion and Unconscionability

Posted By Cliff Tuttle | October 15, 2014

No. 1,111

William Towne v. Sensible Home Warranty, LLC, Pittsburgh Legal Journal, Vol. 162 No. 20 page 314. AR 12-6409. June 3, 2014.

Image: douglaswhaley.blogspot.com

Image: douglaswhaley.blogspot.com

This case involves a claim made under a home warranty which provided that a warranty dispute must be submitted to the American Arbitration Association in Washoe County, Nevada, the location of the defendant’s office. After a bench trial, the court awarded damages to the plaintiff, together with exemplary damages and attorneys fees under the Unfair Trade Practices and Consumer Protection Law (UTPCPL)  The Defendant filed post trial motions, then withdrew them and appealed to the Superior Court on grounds that the trial court should have ordered AAA arbitration at some location other than Nevada.

Under the Rules, Judge Alan Hertzberg, the trial judge, prepared an opinion explaining his reasoning to the Superior Court.

In his opinion, Judge Herzberg stated:

“A term of a contract “is unconscionable, and therefore avoidable, when there was a lack of meaningful choice in the acceptance of the challenged provision and the provision unreasonably favors the party asserting it.” Salley v. Option One Mortgage Corp., 592 Pa. 323, 925 A.2d 115 (2007). The warranty Sensible provided Mr. Towne is a standardized contract form offered to consumers of goods and services on a ‘take it or leave it’ basis. See Black’s Law Dictionary (5h ed. 1979). Accordingly, it cannot be disputed that Mr. Towne lacked a meaningful choice. See Denlinger, Inc. v. Dendler, 415 Pa. Super 164 at 174-175, 608 A.2d 1061 at 1066-1067 (1992).

The arbitration clause in Sensible’s warranty also unreasonably favors Sensible. Sensible offered no justification for a clause that discourages customers from initiating meritorious disputes with it (unless they are Nevada residents). The clause deters a customer in Pittsburgh, Pennsylvania by the expenses of travel and lodging and the time commitment for AAA arbitration in Nevada. It appears Sensible’s goal in having this clause in the warranty is to avoid disputes with customers without regard to whether or not they have merit. This is an improper goal. Therefore Sensible must not be permitted to have its choice of a forum, AAA, forced upon a customer with a meritorious dispute who chooses resolution via the court system. Additionally, the Nevada venue and the AAA forum are too closely connected for severance of one from the other. Together they comprise an arbitration clause that unreasonably favors Sensible and therefore is unconscionable.”

CLT

Category: Pittsburgh Legal Back Talk

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CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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