Burch v. Second Judicial District of Nevada case brief

 Burch v. Second Judicial District of Nevada

i.                DD Homes & Burch family entered into a contract for a house. House had a wet basement & DD didn’t fix it. After getting the house, the Burches signed a 1-page document that they were told was giving them extra coverage. DD then sent them a 31-page contract with an arbitration clause on page 6.

a.              Burches file writ of mandamus

b.             DD brings up the “you said (signed) it, you eat it” argument

c.              Court here didn’t enforce the arbitration clause b/c was an Unconscionable Adhesion Contract

(1)               Adhesion Contract-

(i)                       a standardized contract form

(ii)                     offered to consumers on a ‘take it or leave it’ basis

(iii)                    without affording the consumer a realistic opportunity to bargain

(2)               2 times Adhesion Contracts are enforceable:

(i)                       plain & clear notification of terms & understanding of consent

(a)basically, can you read it & understand it?

(ii)                     falls within reasonable expectations of the parties

(a)if you didn’t read it, could you have expected it to be in there?

(3)               2 components of Unconscionability

(i)                       Procedural- sharp practices by the party proposing the terms that undercuts the idea that the other party actually consented

(a)imperfections in the bargaining process; this undercuts the agreement/ promise aspect

·   didn’t give her an opportunity to read it before signing

·   terms were hidden on page 6

·   guy giving the contract said it was automatic & acted like they were giving her something extra (extending her warranty)

(ii)                     Substantive- the contract is so 1-sided & overreaching that the court won’t enforce it; ridiculously unfair & entered into with open eyes

(a)like a public policy objection

·   DD gave themselves the power to pick where arbitration would be, who would be the arbitrator, etc

·   Court says that a lesser showing of Substantive Unconscionability is needed when there is a strong showing of Procedural

 

1.      Facts: Burch purchased a new home found damages told the building company but the building company offered to do things that the Burch’s were not satisfied with so the Burch’s made a complaint in district court for damages relating to Double Diamond’s construction of their new home. It was a valid contractual agreement. They made a motion to compel arbitration because they agreed to the home warranty which had a clause that said you consent for arbitration. P bought a house and signed a 31 page warranty containing an arbitration clause, which she did not read. A year later there was a problem with the floor, and D said they would fix it, but it wasn’t to the liking of P. P brings case to court, but D says not actionable as there is an arbitration clause. District judge agrees, but P brings it to Supreme court for a writ of mandamus ordering the lower court to vacate their decision

2.      Issue: whether the plaintiff entered into a valid contractual agreement via homebuyer warranty

3.      Holding: No, and issued writ of mandamus

4.      What was the underlying contract about? Burch’s bought a new home from Double Diamond. Four months after the home was purchased and the deal closed, DDH offered Mrs. Burch a Home Buyer’s Warranty. Mrs. Burch signed application for warranty, which contained an arbitration clause

5.      What is the legal question about? Now its about the arbitration clause

6.      They asked for a grant of write of mandamus because they could not get a motion to appeal a grant of arbitration

7.      only final orders are appeal able

8.      Said that the adhesion contract was unconscionable

9.      Mrs. Burch by signing the contract was limiting what the Nevada law set place and an arbitration process

10. It really was a warranty limitation

11. Problem was that they didn’t give her a chance to read it and lied about what it was

12. Court says that the contract is so one sided that we wont enforce it

13. Must show the following for an affirmative defense of unconscionability, which works in a hydraulic matter (the worse the procedural aspect of the contract, the less bad the substantive aspect, and vice versa)

14. procedural unconscionability - P says she didn’t read it and that that it was long

15. substantive unconscionability- problem was that it allowed D to set up the procedure for the arbitration