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Harrington v. Pulte Home Corp.9/27/2005
beyond the range of reasonable expectation if one party to the contract "has reason to believe that the [other party] would not have accepted the agreement if he had known that the agreement contained the particular term." 140 Ariz. at 391-92, 682 P.2d at 396-97 (quoting Restatement § 211 cmt. f). This reason to believe may be (1) shown "by the prior negotiations," (2) "inferred from the circumstances," (3) "inferred from the fact that the term is bizarre or oppressive," (4) proved because the term "eviscerates the non-standard terms explicitly agreed to," or (5) proved if the term "eliminates the dominant purpose of the transaction." Id. at 392, 682 P.2d at 397 (quoting Restatement § 211 cmt. f). The Darner court further held that the doctrine of reasonable expectations (6) "requires drafting of provisions which can be understood if the customer does attempt to check on his rights." Id. at 394, 682 P.2d at 399. We are also required to consider (7) any other facts relevant to the issue of what appellees reasonably expected in this contract. Id. at 393, 682 P.2d at 398 (quoting Smith v. Melson, Inc., 135 Ariz. 119, 121, 659 P.2d 1264, 1266 (1983) ("A contract should be read in light of the parties' intentions as reflected by their language and in view of all the circumstances.").
b. Applying the Reasonable-Expectations Doctrine
We use the seven factors above as a guide in determining whether the clause here either violates the adhering parties' reasonable expectations or creates a fact question requiring submission to a finder of fact. As to factor (1) "prior negotiations," there are no inferences or facts to suggest that any appellee believed there would or would not be an arbitration clause in the contracts. The same holds true as to factor (2), what we can "infer from the circumstances." These contracts were for the sale of homes. There is no record of any discussion or circumstances that go to the presence or absence of an arbitration clause in the contracts.
As to factor (3), a question as to reasonable expectations may be inferred if the terms at issue are "bizarre or oppressive." Id. There is a strong public policy, both federal and state, favoring arbitration. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) ("[The FAA] is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary."); Liberty Mut. Fire Ins. Co. v. Mandile, 192 Ariz. 216, 220, 963 P.2d 295, 299 (App. 1997) ("Arizona has enacted the Uniform Arbitration Act . . . . Our public policy strongly favors arbitration as an expeditious and relatively inexpensive method of resolving disputes.").
We acknowledge that some arbitration clauses may contain terms that are "bizarre or oppressive." See Stevens/Leinweber/Sullens, Inc. v. Holm Dev. and Mgmt., Inc., 165 Ariz. 25, 30, 795 P.2d 1308, 1313 (App. 1990) (setting aside an arbitration provision that gave one party the absolute option of selecting either arbitration or litigation and of reconsidering its choice at any time prior to final judgment, finding it so "grossly inequitable" as to run "counter to the philosophy of encouraging arbitration"). However, there is nothing unusual about the arbitration clause at issue here that would create a question of fact on whether the clause is "bizarre or oppressive."
Factor (4) requires us to consider whether the terms at issue "eviscerate the non-standard terms explicitly agreed to." Darner, 140 Ariz. at 392, 682 P.2d at 397 (quoting Restatement § 211 cmt. f). Appellees have made no such allegation. Factor (5) is a related inquiry: whether the terms would "elim
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