In the class action Donia Townsend, et al. v. The Quadrant Corp., et al., four married couples who bought homes from builder The Quadrant Corp. charged that after moving in to their respective homes, various construction defects had caused them to incur damages from mold, pests and toxic gases, and had violated Washington’s Consumer Protection Act.

Each purchase contract included a clause mandating that any disputes with the builder would be arbitrated, not litigated.

In the class action Donia Townsend, et al. v. The Quadrant Corp., et al., four married couples who bought homes from builder The Quadrant Corp. charged that after moving in to their respective homes, various construction defects had caused them to incur damages from mold, pests and toxic gases, and had violated Washington’s Consumer Protection Act.

Each purchase contract included a clause mandating that any disputes with the builder would be arbitrated, not litigated.

The homeowners asked the court to find the arbitration clause unenforceable, alleging that the builder had presented the purchase agreement containing the clause on a "take it or leave it" basis, had applied high-pressure sales tactics to get them to sign the purchase agreement, and had failed to allow the homeowners to review the purchase agreement before signing it digitally.

The builder moved to compel the homeowners to arbitrate their claims, under the arbitration clause of the purchase agreement.

The trial court denied the builder’s motion. The builder appealed, arguing that the arbitrator, not the court, had the sole authority to determine whether the arbitration clause was valid.

The appeals court overturned the trial court’s decision on the enforceability of the arbitration clause. The court interpreted the Uniform Arbitration Act, Revised Code of Washington 7.04.A, to provide that in cases where a party challenges the validity of only the arbitration clause, rather than disputing the enforceability of the entire contract, it is the province of the court to determine whether the clause is valid.

Here, the homeowners’ argument was that the arbitration clause itself was substantively unconscionable, i.e., "one-sided or overly harsh." Accordingly, the Court of Appeals held, the lower court had the authority to determine the validity of the clause.

The court found that the arbitration clause was not, as the homeowners had argued, substantively unconscionable, as it did not exclude class-action lawsuits or impose costs prohibiting homeowners from vindicating their claims. The issue of whether the clause was invalid because the entire contract was procedurally unconscionable, the court ruled, was an issue to be determined by the arbitrator.

However, the homeowners’ noncontract claims of property damage and injury were not covered by the arbitration clause. The trial court was ordered to comply with the Court of Appeal’s findings.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.

***

What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Don’t miss out! Inman Connect Las Vegas is this week and you can catch all the excitement with a virtual ticket.Register Now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription