California Appeals Court Enforces Retail Installment Sales Contract Arbitration Agreement.

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On March 27, the California Court of Appeal, First Appellate District, enforced an arbitration agreement in a retail installment sales contract. Vasquez v. Greene Motors, Inc., No. A134829, 2013 WL 1232343 (Cal. Ct. App. Mar. 27, 2013). While the court held that the agreement was “procedurally unconscionable” because the agreement “was imposed on [the Defendant] without the opportunity for negotiation, and was therefore adhesive,” it reversed the lower court’s denial of a motion to compel arbitration. In so holding, the court reasoned that the level of procedural unconscionability was “minimal” and that there was no significant substantive unconscionability. The court held “the only suggestion of substantive unconscionability . . . was the failure of the clause to permit an ‘appeal’ arbitration in the event a buyer sought and was denied injunctive relief,” but that “this asymmetry is mitigated by the provision permitting a second arbitration if a buyer is denied a monetary recovery.” Finding “minimal unconscionability,” the court reversed the trial court order denying the petition to compel arbitration and directed the trial court to order arbitration.

Topics:  Arbitration, Arbitration Agreements, Retail Installment Sales Contracts, Unconscionable Contracts

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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