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Harrington v. Pulte Home Corp.9/27/2005
REVERSED AND REMANDED
This case requires us to determine when an arbitration clause in a contract of adhesion may be enforced. The trial court refused to enforce the clause here. Because we find that the arbitration clause in this case was neither contrary to appellees' reasonable expectations nor substantively unconscionable, we reverse.
Facts and Procedural Background
Appellees, and the class of claimants they seek to represent, each purchased a home from appellants Pulte Home Corporation or Del Webb Communities, Incorporated. The homes were purchased through sales agents: appellants Steve Canning, James McGrath, Chris Lewis, and Pamela Davis. The subdivisions are known as Springfield Lakes and Solera, in Chandler, Arizona. Appellees have alleged they "were not provided with full, complete and accurate disclosures" when they purchased their homes. Specifically, appellees assert that they and the other home purchasers were not told that the homes were in close proximity to an "aerobatic box" used for Federal Aviation Administration pilot training procedures and a jet engine test facility operating twenty-four hours a day, seven days a week. They allege that these conditions have had a significant adverse impact on their ability to use their homes, consequently causing the value of their homes to diminish. Accordingly, they filed claims for violation of subdivision reporting statutes, breach of contract, consumer fraud, civil racketeering, negligence and negligence per se, fraudulent misrepresentation or concealment, negligent misrepresentation, breach of the duty of good faith and fair dealing, and rescission.
Appellants moved to dismiss or stay the action and to compel appellees to pursue their claims by arbitration. They relied in the trial court, and also rely here, upon a provision in each of the appellees' home purchase contracts containing virtually identical language:
Any controversy, claim or dispute arising out of or relating to this Agreement or your purchase of the Home (other than claims under the Limited Warranty) shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association (AAA) and the Federal Arbitration Act (Title No. 9 of the United States Code) and judgment rendered by an arbitrator(s) may be confirmed, entered and enforced in any court having jurisdiction.
Appellants contended the arbitration clause applies with equal force to claims against any of the appellants. This is so, they argued, because (1) the claims were based upon the same allegations, (2) appellees asserted that appellants had acted in concert, and (3) the individual appellants were agents of the corporate defendants.
Appellants also argued in the trial court that appellees' request for class action treatment did not affect their obligation to proceed by arbitration because the American Arbitration Association ("AAA") has Supplementary Rules for Class Arbitrations to accommodate potential class arbitration.
In response to appellants' motion, appellees did not dispute that, if enforceable, the arbitration clause would apply to their claims against all appellants and did not dispute that treatment as a class action would not be foreclosed by submitting to arbitration. Their response focused entirely upon their contention that the arbitration clause was not enforceable.
Appellees' enforcement argument is that the arbitration clause is part of a contract of adhesion and is invalid because it violated their reasonable expectations and was unconscionable. They assert their reasonable expectations were contravened by the fai
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