Opinion
B162108.
11-6-2003
LUCILLE DALE, Plaintiff and Respondent, v. TERMINIX INTERNATIONAL COMPANY, Defendant and Appellant.
Hill, Farrer & Burrill, Ian M. Green, and Douglas Graham for Defendant and Appellant. No appearance for Plaintiff and Respondent.
The trial court denied the petition brought by appellant Terminix International Company (Terminix) to compel respondent Lucille Dale (Dale) to arbitrate her complaint for negligence. Terminix appeals, contending that the trial court erred when it ruled that the arbitration clause was unconscionable.
We reverse.
FACTS
Terminix entered into an agreement to provide Dale with general pest control services on a monthly basis (the agreement). During a service call, Dale slipped and fell on what her complaint characterizes as an "oily and watery" substance. Dale sued Terminix for negligence.
The agreement provided for mandatory arbitration. Based on that, Terminix petitioned to compel Dale to arbitrate.
In its tentative ruling on the record, the trial court stated that the agreement was unconscionable because the arbitration provision was on the back page of the contract, the print was small, and Dale was required to arbitrate in Tennessee. The trial court proceeded to deny the petition.
This timely appeal followed.
DISCUSSION
Terminix calls upon us to determine whether the arbitration clause in its service contract should survive the unconscionability doctrine. In a case such as this, where the facts are undisputed, our review is de novo. (Flores v. Transamerica Homefirst, Inc. (2001) 93 Cal.App.4th 846, 851.)
1. The law.
The judicially created concept of unconscionability has both a procedural and substantive element. (Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1296.) A contractual provision is procedurally unconscionable if it is the result of either oppression or surprise. Oppression "refers to an inequality of bargaining power resulting in no real negotiation and the absence of meaningful choice[.]" (Ibid.) Surprise "occurs when `the supposedly agreed-upon terms of the bargain are hidden in a prolix printed form drafted by the party seeking to enforce the disputed terms." (Ibid.) The substantive element "consists of an allocation of risks or costs which is overly harsh or one-sided and is not justified by the circumstances in which the contract was made. [Citation.]" (Ibid.) Both elements must be satisfied for a civil litigant to escape the legal traps that might have sprung and caught her unaware in an executory contract. That said, there is a sliding scale at play. In other words, as Samura states, "`a relatively larger degree of one will compensate for a relatively smaller degree of the other. [Citation.]" (Samura, at pp. 1296-1297.)
But if a contract is unconscionable, that is not the end of the story. "If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result." (Civ. Code, § 1670.5, subd. (a).)
2. The arbitration clause.
We begin our analysis with procedural unconscionability.
That arbitration is a widely accepted and encouraged form of dispute resolution in the commercial context is beyond dispute. With this reality in mind, we presume that if Dale wanted the services of a pest control company, she probably had to agree to an arbitration provision. However, her complaints largely revolve around her concerns about venue and arbitrating before the National Arbitration Forum (NAF), not arbitration per se. Dale did not submit evidence showing that she lacked a meaningful choice of other pest control companies, i.e., that other pest control companies use arbitration clauses similar to Terminixs.
The arbitration clause was referenced on the front of the one page, two-sided service contract that Dale signed. In approximately eight point type, in bold-faced words appearing about two inches above the signature line, the front of the contract stated: "The Terms and Conditions on the reverse side, including the arbitration agreement, are part of this agreement." That sentence, along with notice of the consumers right to cancel the contract, was enclosed within a box that set it off from the rest of the verbiage on the front page. The bottom three inches of the back page contained eight terms and conditions in a very small font (approximately six or seven point), the seventh of which was the arbitration clause. The arbitration clause was preceded by the bold-faced words "MANDATORY ARBITRATION" in a slightly larger font size. As well, the end of the arbitration clause stated in bold-faced words: "THE PARTIES UNDERSTAND THAT THEY WOULD HAVE HAD A RIGHT OR OPPORTUNITY TO LITIGATE DISPUTES THROUGH A COURT AND TO HAVE A JUDGE OR JURY DECIDE THEIR CASE, BUT THEY CHOOSE TO HAVE ANY DISPUTES DECIDED THROUGH ARBITRATION."
Although the print pertaining to the arbitration clause was relatively small, it was set off and clearly identifiable. In other words, it was not hidden in a prolix form. Dale stated in her declaration below that Terminix did not draw her attention to the arbitration provision, or provide her with the NAFs rules. While that may establish actual surprise, that alone does not excuse Dales compliance. (See Patterson v. ITT Consumer Fin. Corp. (1993) 14 Cal.App.4th 1659, 1666 (Patterson).)
Based on the foregoing, we conclude that the oppression in Terminixs arbitration clause was no more than that which generally exists in a consumer-service provider relationship, and any surprise was limited.
Next, we turn to substantive unconscionability.
The arbitration clause states in part: "Any arbitration hearing at which you appear will take place at a location near your residence. . . . Each party consents to the personal jurisdiction and venue of the courts in which the property is located and the courts of the state of Tennessee and the U.S. District Court for the Western District of Tennessee."
As noted in Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1532, to determine whether the arbitration provision is substantively unconscionable, we must query it if is so one-sided as to "`shock the conscience." We conclude that it does not rise to that level. To the contrary, because it guarantees that any arbitration hearing will be near Dales residence, we find it to be reasonable. Also, even if Dale was required to arbitrate in Tennessee, and even if that requirement was unduly harsh, the remedy would have been severance of the provision. As our Supreme Court established in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 121-122, a contract provision should be enforced either in whole or in part unless it is permeated by unconscionability, i.e., the entire provision should not be voided if the unconscionable portion is only collateral. Here, the consent to jurisdiction clause was collateral to the agreement to arbitrate.
In opposing the motion to compel arbitration, Dale argued that the arbitration provision was substantively unconscionable on the additional grounds that the NAF imposes exorbitant arbitration fees. However, the arbitration provision stated that any claim relating to the contract would "be resolved by the [NAF] or any otherwise mutually agreeable arbitrator under the Code of Procedure of the [NAF]." Dale was in no way locked into appearing before the NAF. Also, Dale failed to provide any evidence regarding the fees the NAF charges. Therefore, the issue of the fees is not before us on appeal.
Dale further lobbied the trial court to deny Terminixs petition by complaining that she was not given a copy of the NAFs rules of arbitration. On this point, we note that the arbitration provision supplied Dale with a toll free telephone number and also a website to obtain those rules.
Last, we address Patterson, the case Dale relied on below. That case involved an arbitration provision between a lender and borrower that required the borrower to submit to binding arbitration before the NAF. (Patterson, supra, 14 Cal.App.4th at p. 1665.) The First District found the arbitration clause unconscionable. But Patterson gives us no pause. In Patterson, the borrower did not have a choice of arbitrators or a guarantee that any hearing would be at a location near the borrowers residence. Rather, the arbitration provision stated that any dispute would be resolved by the "`[NAF], Minneapolis, Minnesota." (Ibid.) If the borrower, being unwary, responded to a claim with a written denial of responsibility sent to Minnesota, then the NAF presumed that the borrower had conferred jurisdiction on the NAF in Minnesota. That arbitration provision had pitfalls and restrictions that are not present in Terminixs contract.
Applying the sliding scale analysis, we conclude that the arbitration provision was enforceable. There was a limited degree of procedural unconscionability. For Dale to prevail, then, she had to demonstrate a high degree of substantive unconscionability. She did not succeed in that task.
DISPOSITION
The order denying Terminixs petition to compel arbitration is reversed. Terminix shall recover its costs on appeal.
We concur: BOREN, P. J. and DOI TODD, J.
Dale did not file a respondents brief. As a result, we "decide [this] appeal on the record, the opening brief, and any oral argument by the appellant." (Cal. Rules of Court, rule 17(a)(2).)