Alternative Dispute Resolution
In Ball v. Ohio State Home Servs., Inc., 168 Ohio App.3d 622, 2006-Ohio-4464, a homeowner brought lawsuit in court against mold removal contractor, alleging fraud, breach of contract, breach of warranties, and violations of the Ohio Consumer Sales Practices Act. The contractor moved to compel arbitration and the homeowners appealed. the court said that public policy in Ohio favors arbitration as a means to settle disputes. An arbitration provision may be held unenforceable under the statute, RC 2711.01, on "grounds that exist at law or in equity for the revocation of any contract." A party seeking to invalidate an arbitration clause on grounds of unconscionability must establish that the provision is both procedurally and substantively unconscionable. In this case, the homeowners were in a sound bargaining position when they signed the contract, each having some college education, and nothing to indicate advanced age, infirmity, or incompetence to contract. Since the arbitration clause was not procedurally unconscionable, the court did not review whether it was substantively unconscionable.
In Fortune v. Castle Nursing Homes, Inc., 164 Ohio App.3d 689, 2005-Ohio-6195, the Fifth District Court of Appeals, on a de novo review (as opposed to abuse-of-discretion) held that "substantively unconscionable" nursing home contract arbitration clause was enforceable because the clause was not "procedurally unconscionable." The resident sued over alleged negligence by a nursing home employee. The nursing home asked for a stay of the suit, so they could arbitrate under the resident's contract. The trial court refused to require arbitration under the substantively unconscionable clause. The Court of Appeals agreed that the clause was substantively unconscionable, because it required the resident to waive a jury trial and required the arbitration loser to pay winner's attorneys' fees. But the court said, "In order to negate an arbitration clause, a party must establish a quantum of both substantive and procedural unconscionability." Para. 23. The resident failed to establish that she was in an uneven bargaining position due to age, intelligence, education, business acumen and/or experience in similar transactions and failed to present any failure to explain the terms of the agreement. Result: The resident must arbitrate under the unconscionable arbitration clause.
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