The Court Avoided Deciding Whether The McGill Rule Applied.
The Cabatits entered into a solar power lease agreement, and sued Sunnova Energy Corporation, alleging roof damage. The Court of Appeal affirmed the trial court's order denying Sunnova's motion to compel arbitration, because the arbitration provision was unconscionable. Cabatit v. Sunnova Energy Corporation et al., C089576 (3rd Dist. 1/29/21) (Mauro, Blease, Duarte).
Sunnova forfeited arguing that the issue of enforceability had been delegated to the arbitrator by failing to raise it in the trial court. Substantive unconscionability existed because the agreement was one-sided, allowing Sunnova to file lawsuits, while requiring customers to arbitrate, and the one-sidedness was not justified and supported by a showing of commercial need based on evidence. Procedural unconscionability existed because it was a "take it or leave it" contract of adhesion.
Sunnova argued that the arbitration provision was conspicuous. However, as the Court of Appeal explains, "[a] finding of procedural unconscionability is highly dependent on context." Here, the agreement was presented by a salesperson on an electronic device. The salesperson showed the Cabatits where to sign, but did not point out or explain the arbitration provision, and the Cabatits were not given a hard copy of the agreement.
COMMENT: The trial court had also concluded that the contract was unenforceable under the rule announced in McGill, which held an arbitration agreement waiving statutory remedies under the Consumer Legal Remedies Act, unfair competition law, and false advertising law is unenforceable. The Court of Appeal avoided the issue, since it agreed the agreement was unconscionable. Perhaps it also avoided the issue so as not to confront whether interstate commerce was involved, and whether the McGill rule was preempted by the Federal Arbitration Act?
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