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Harrington v. Pulte Home Corp.9/27/2005
BR>
Because of this policy, " enerally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening ยง 2" of the FAA. Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996). Courts may not, however, "invalidate arbitration agreements under state laws applicable only to arbitration provisions." Id.
Accordingly, Arizona contract law may be applied if it is contract law applicable to contracts generally and not simply arbitration clauses. Both the doctrines of reasonable expectations and substantive unconscionability are such doctrines. Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383, 392, 682 P.2d 388, 397 (1984) ("In adopting this rule [of reasonable expectations] we do not create a special field of contract law . . . ."); Maxwell v. Fid. Fin. Servs., Inc., 184 Ariz. 82, 87-88, 907 P.2d 51, 56-57 (1995) ("This court previously has noted the rule that 'reasonable expectations' and unconscionability are two distinct grounds for invalidating or limiting the enforcement of a contract . . . ."). Arizona law pertaining to reasonable expectations and substantive unconscionability is applicable here.
b. Enforceability of the Arbitration Clause as to the Claims Against All Appellants
Appellants argue that the arbitration clause in this case applies to require arbitration of appellees' claims against all appellants. Appellees contend that appellants have raised this issue for the first time on appeal and urge us to refuse to address it.
The record demonstrates that appellants did make this argument in the superior court in their motion to compel arbitration. Appellees' response to that motion did not dispute the point. The trial court was therefore justified in concluding that the question was not in dispute. We do not find it significant, as appellees suggest, that the trial court's minute entry failed to address it. Moreover, having not disputed appellants' argument in the trial court proceedings, appellees have waived any challenge to it on appeal. ABC Supply, Inc. v. Edwards, 191 Ariz. 48, 50, 952 P.2d 286, 288 (App. 1996). Thus, the arbitration clause, if enforceable, is applicable to all appellants.
c. The Impact of Class Action Issues
Appellants also assert that the enforceable nature of the arbitration agreement is not affected by appellees' desire to obtain class action treatment for their claims. Appellees did not dispute this contention in the trial court proceedings when appellants raised it in their motion to compel arbitration. Here, they assert that we need not address the issue as, they contend, costs incurred on an individual basis are sufficient to render the clause unenforceable.
Appellants represented to the trial court, and appellees did not deny, that the AAA has adopted rules for class arbitrations to make possible the administration of potential class claims in arbitration. Further, the United States Supreme Court has recently held that, under an arbitration clause with "sweeping language concerning the scope of questions committed to arbitration, the question whether the parties intended to have class action treatment available in arbitration is a question of contract interpretation and arbitration procedures which was to be resolved by the arbitrator." Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 453 (2003). The breadth of the arbitration clause in this case, supra 3, matches that of the clause in Bazzle: "All disputes, claims, or controversies arising from or relating to this contract or the relationships which result from this contract . . . shall be resolved by
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