Filed 6/18/14

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

FRANK SABIA et al.,

Plaintiffs and Appellants,

v.

ORANGE COUNTY METRO REALTY, 

INC., et al.,

Defendants and Respondents.

 B243141

 (Los Angeles County 

 Super. Ct. No. BC469744)

APPEAL from an order of the Superior Court of Los Angeles County. William F. 

Highberger, Judge. Reversed and remanded.

Van Etten Suzumoto & Sipprelle, David B. Van Etten and Keith A. Sipprelle for 

Plaintiffs and Appellants.

Lewis Brisbois Bisgaard & Smith, Raul L. Martinez, Esther P. Holm; Carlson Law 

Group, Mark C. Carlson and Warren K. Miller, for Defendants and Respondents Orange 

County Metro Realty, Inc., Republic Realty Services, Inc., Joseph A. Broderick, Brenda 

Caballero, Elizabeth Broderick, Victoria Viveros, Charles Penusis, and Marshal L. Lewis.

Law Office of Robert E. Gibson and Robert E. Gibson for Defendant and 

Respondent The Master Game.

__________________________
2

In this appeal we are presented with the recurring issue of the reach of the United 

States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion (2011) 

563 U.S. ___, 131 S.Ct. 1740 (Concepcion) as it impacts unconscionability as a state law 

defense to arbitration provisions. The unconscionability defense has been the subject of 

three relevant California Supreme Court cases filed both before and after Concepcion –

Armendariz v. Foundation Health Psychcare Servs. (2000) 24 Cal.4th 83 (Armendariz); 

Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659 (Sonic I), vacated and 

remanded by Sonic-Calabasas A, Inc. v. Moreno (2011) __ U.S. __ [132 S.Ct. 496];

Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 

55 Cal.4th 223 (Pinnacle); and Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 

1109, 1159-1160 (Sonic II), cert. den. (2014) ___ U.S. ___ [82 USLW 3462]. Each of 

these cases upholds unconscionability as a viable defense to an arbitration provision.

We are bound by precedent established by our Supreme Court (Auto Equity Sales,

Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450), and are not free to 

anticipate what the United States Supreme Court might decide if presented with the case

currently before us. Accordingly we apply our state law of unconscionability to the facts 

of the case. In so doing, we conclude that the arbitration provision here was 

unconscionable principally because it applied only to plaintiffs. We therefore reverse the 

trial court’s order granting a motion to compel arbitration.

FACTS AND PROCEDURAL HISTORY

Frank Sabia and eight other persons filed a class action complaint against

mortgage foreclosure consultant The Home Defender Center and several other persons 

and entities allegedly affiliated with Home Defender for fraud, breach of contract, and 

other statutory and common law claims, alleging that they were duped into signing their 

agreements and lost the money they paid for services that were never rendered.1

 

1 The plaintiffs were Frank and Elidia Sabia, Armando Flores, Eladio and Blanca 

Campos, George and Melissa Cruz, and Raul and Rita Venegas. We will refer to them 

collectively as plaintiffs. Plaintiffs’ individual claims ranged from $3,500 to $4,500.
3

Defendants brought a petition to compel arbitration based on the following 

provision in their written agreement with plaintiffs: “If a dispute arises between Home 

Defender Center and Client regarding Home Defender Center’s actions under this 

agreement and Client files suit in any court other than small claims court, Home 

Defender Center will have the right to stay that suit by timely electing to arbitrate the 

dispute under the Business and Professions Code, in which event Client must submit the 

matter to such arbitration. The parties agree to bring any such action or proceeding in a 

state or federal court of competent jurisdiction in Orange County, California, and that 

jurisdiction and venue are proper in Orange County.”

Defendants also contended that arbitration on a classwide basis was prohibited 

pursuant to Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp. (2010) 559 U.S. 662 (StoltNielsen) because the arbitration provision did not mention classwide arbitration.2

 

The entity defendants were: Master Game, Inc., dba the Home Defender Center; 

Orange County Metro Realty, Inc., dba RE/Max Metro and RE/Max Metro Realty; 

Orange County Metro Properties, Inc., dba RE/Max Metro; and Republic Realty 

Services, Inc., dba RE/Max Metro Real Estate Services. The individual defendants were 

Victoria Viveros, Arturo Diaz, Charles Penusis, Marsha Lewis, Joseph A. Broderick, 

Brenda Caballero, Dereck Markovic, and Elizabeth Broderick. Some worked for or were 

in controlling positions at Master Game/Home Defender, while others were either real 

estate agents or brokers who either controlled or worked for the various real estate entity 

defendants that allegedly arranged or took part in the disputed transactions. We will refer 

to them collectively as defendants.

The class action complaint included the following causes of action: (1) Civil 

Code sections 2945-2945.11, which govern foreclosure consultant contracts; (2) Civil 

Code section 1632, which requires that contracts negotiated in a foreign language must be 

written in that language; (3) unfair business practices (Bus. & Prof. Code, § 17200 et 

seq.); (4) breach of contract; (5) various forms of fraud and negligent misrepresentation; 

(6) common counts; and others.

2 Federal law is applicable here because, as plaintiffs concede, their agreements 

with Home Defender involved interstate commerce and were therefore subject to the 

Federal Arbitration Act. (9 U.S.C. § 1 et seq.; FAA.)
4

Plaintiffs opposed the petition on the following grounds: First, the clause was not 

enforceable because its references to courts and the venue for actions, along with its 

mention of nonexistent Business and Professions Code arbitration rules, made it 

hopelessly ambiguous. Second, the arbitration provision was void under the doctrine of 

unconscionability, an ordinary contract law defense available under the FAA. (9 U.S.C. 

§ 2.)

Plaintiffs’ opposition was supported by declarations from four of the nine named 

plaintiffs: Eladio Campos, Armando Flores, Elidia Sabia, and George Cruz. Distilled, 

they said that Spanish was their native language and that defendant Viveros explained in 

Spanish that Home Defender would try to obtain a loan modification for them. Viveros 

said that their up-front fee payments would be held in escrow and returned to them if 

Home Defender failed to obtain a loan modification. Viveros then handed them a pile of 

English-language documents that included their agreement with Home Defender and told 

them not to worry about the contents because they stated in English what she had 

explained to them in Spanish. Viveros never mentioned that the agreement included an 

arbitration provision. Sabia said Viveros told her to hurry and sign the documents 

because Viveros needed to leave right away.

Plaintiffs contended the arbitration provision was procedurally unconscionable

because the declarations showed they signed adhesion contracts written in English when 

the terms were explained in Spanish, and because the arbitration provision did not include 

or attach the Business and Professions Code rules mentioned in the provision. They

contended the arbitration provision was substantively unconscionable because it applied 

to only actions brought by them, leaving Home Defender free to sue in court for any 

claims it might have. Plaintiffs also contended that this defect could not be cured by 

severing it from the provision.

In reply, defendants argued that the lack of mutuality in the one-sided arbitration 

provision was not grounds for invalidating that provision under Concepcion. Defendants 

also argued that the arbitration clause was either not ambiguous, or that any ambiguities 
5

were overcome by its clear and express statement that Home Defender could require 

arbitration.

Defendants also asserted the agreement was not procedurally unconscionable 

because, as evidenced by some of the plaintiffs’ own handwritten letters and notes in 

Home Defender’s files, they could read and write in English. Defendants also pointed to 

Spanish-language forms signed by the plaintiffs stating that plaintiffs had read the 

documents presented to them. They also contended that the provision was not 

substantively unconscionable because mutuality of obligations was not a prerequisite to 

forming a valid contract and because decisions cited by plaintiffs in their opposition were 

inapplicable. Finally, defendants contended that even if unconscionability existed, any 

such terms could be severed.3

As part of its order granting the petition to compel arbitration, the trial court noted 

that only four of the nine named plaintiffs submitted declarations. As to those, the trial 

court found that they were still bound by the contracts even if they did not read them in 

advance or obtain a translation in Spanish. The trial court cited Brown v. Wells Fargo 

Bank, N.A. (2008) 168 Cal.App.4th 938, 959 (Brown) to support that finding.

The trial court found that any ambiguities surrounding the references to rules of 

the Business and Professions Code or to venue for actions or courts were not sufficient 

enough to render the arbitration provision unenforceable because the agreement “clearly 

called out binding arbitration as the dispute resolution mechanism for disputes unless 

they were first filed in small claims court.”

The trial court found that plaintiffs did not “show that the agreements are 

unconscionable to such a degree that they should not be enforced.” On the issue of 

procedural unconscionability, the trial court said that the mere fact that the agreements 

were adhesion contracts was not enough, and that the plaintiffs’ “generalized assertions”

that they were told the contract repeated in English what they had been told in Spanish 

 

3 Defendants have abandoned that contention on appeal.
6

was also insufficient to show procedural unconscionability. Plaintiffs’ alleged failure to 

obtain Spanish translations of the documents was also insufficient, the trial court found.

The trial court found that the provision was “not substantively unconscionable at 

all as it furthers the public policy of the FAA, as interpreted by the United States 

Supreme Court, to send matters to arbitration when a contract so authorizes.” In 

connection with this finding, the trial court cited Iskanian v. CLS Transportation Los 

Angeles, LLC (2012) 206 Cal.App.4th 949, as to which review was granted by the 

California Supreme Court three months later (S204032) for the proposition that the state 

courts must follow United States Supreme Court precedent on this issue.

Finally, relying on Stolt-Nielsen, supra, 559 U.S. 662, the trial court ordered 

arbitration as to plaintiffs’ individual claims alone, concluding that its ruling was the 

“death knell” of any classwide resolution of the dispute.

STANDARD OF REVIEW

Under both the FAA and its California counterpart there is a strong public policy 

in favor of arbitration. (Brown, supra, 168 Cal.App.4th at pp. 953-954.) Doubts 

regarding the validity of an arbitration agreement generally are resolved in favor of 

arbitration. (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 

83 Cal.App.4th 677, 686.) Under the FAA, however, arbitration agreements may be 

invalidated under generally applicable contract defenses. (9 U.S.C. § 2.)

Because unconscionability is a contract defense, plaintiffs bore the burden of 

proving the arbitration provision was unenforceable on that ground. (Chin v. Advanced 

Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th 704, 708.) Unconscionability 

is a question of law that we review independently when there are no meaningful factual 

disputes in the evidence. We review the trial court’s resolution of disputed facts under 

the substantial evidence standard. When the trial court does not make express findings, 

we infer that it made every factual finding necessary to support its order, and review 

those implied findings for substantial evidence. (Ibid.)
7

DISCUSSION

1. The Order Compelling Arbitration Was Appealable

Defendants contend we should dismiss the appeal because orders compelling 

arbitration are not ordinarily appealable. (Elijahjuan v. Superior Court (2012) 

210 Cal.App.4th 15, 19 (Elijahjuan).) One exception to this rule is when an order 

compelling arbitration effectively acts as the “death knell” for any class claims by 

effectively terminating them. (Ibid.)

We agree with the trial court that its ruling was the death knell of plaintiffs’ class 

claims. The court in Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277

(Franco) held that the death knell doctrine applied to a trial court order compelling 

arbitration of a plaintiff’s individual wage claims. The plaintiff filed a class action 

complaint on behalf of himself and other similarly situated employees, but the trial court 

enforced the class action waiver provisions of the parties’ arbitration agreement and 

ordered the plaintiff to litigate only his individual claims. By doing so, the Franco court 

held, the trial court sounded the “death knell” of plaintiff’s class litigation. (Id. at 

p. 1288.)

The trial court here found that under Stolt-Nielsen, supra, 559 U.S. 662, the 

arbitration provision’s silence on the issue of classwide proceedings precluded any 

classwide dispute resolution and ordered the plaintiffs to arbitrate their individual claims. 

Defendants try to distinguish this case from Franco because the trial court in Franco

dismissed the civil action while the trial court in this case stayed the civil action. 

However, the Franco court did not mention the dismissal of the action as a factor in its 

death knell analysis, focusing instead on the order to arbitrate only individual claims.

Upon request of a party, the trial court ordering arbitration must stay a civil action 

covered by the arbitration provision. (Code Civ. Proc., § 1281.4.) The effect of such a 

stay is to retain at best “vestigial jurisdiction” in the trial court with the power to appoint 

arbitrators if the parties’ selected method fails, grant a provisional remedy, and confirm, 

correct, or vacate the arbitration award. (Optimal Markets, Inc. v. Salant (2013) 
8

221 Cal.App.4th 912, 923.) This leaves the civil action in a “twilight zone of abatement.” 

(Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, 1796.)

It is unclear whether the party moving to compel arbitration in Franco asked for a 

stay. Regardless, we see little difference between dismissing an action and leaving it in 

the legal equivalent of the Phantom Zone where its existence would be that of a legal 

shade. In either case, class wide dispute resolution has been eliminated. We therefore 

reject defendants’ attempt to distinguish Franco.

Defendants also contend that the death knell doctrine does not apply unless the 

order compelling arbitration makes it impossible or impracticable for the plaintiffs to 

proceed with the action at all as either an individual or class action. They cite Nelsen v. 

Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115, 1123 (Nelsen) for this 

proposition, which in turn quoted Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 

1098 (Szetela). Neither case is applicable.

The plaintiff in Szetela filed a class action lawsuit against a credit card company, 

which then obtained an order compelling arbitration of the dispute on only an individual 

basis pursuant to a provision in the credit card agreement that required arbitration and 

precluded classwide claims. The plaintiff arbitrated his dispute, and, after being awarded 

$29, appealed the order compelling arbitration. In the interim, a second amended 

complaint was filed that added a new class representative who was not bound by the 

arbitration provision. The Szetela court deemed the appeal a petition for writ of mandate 

after deciding that the death knell doctrine did not apply despite plaintiff’s contention that 

the effect of the trial court’s order was to sharply limit the scope of the class. (Szetela,

supra, 97 Cal.App.4th at p. 1098.)

As part of its general discussion of the death knell doctrine, Szetela cited 

Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470 (Richmond) for the 

proposition that “the death knell doctrine permits the appellate court to review an order 

denying a motion to certify a class when it is unlikely the case will proceed as an 

individual action.” (Szetela, supra, 97 Cal.App.4th at p. 1098.)
9

However, Richmond says no such thing. Instead, citing Daar v. Yellow Cab Co.

(1967) 67 Cal.2d 695, 698-699, the Richmond court said that a trial court order “denying 

certification to an entire class is an appealable order.” (Richmond, supra, 29 Cal.3d at 

470.) Szetela’s citation to Richmond’s true holding makes sense in the context of Szetela

– where the death knell doctrine was found inapplicable because the case would still 

proceed as a class action, albeit one limited to persons not bound by the arbitration 

provision. As best we can determine, however, Szetela simply misquoted Richmond. 

This error was repeated in Nelson.

Nelsen, supra, 207 Cal.App.4th 1115, treated a plaintiff’s appeal from an order 

compelling arbitration of her class action complaint for wage and hour law violations on 

an individual basis only as a petition for writ of mandate. The Nelsen court also 

discussed the death knell doctrine. The court first cited Daar v. Yellow Cab Co., supra,

67 Cal.2d 695, which held that the death knell doctrine applied to an order sustaining a 

demurrer to a class action complaint and transferring the matter to the municipal court as 

to plaintiff’s individual claims only. Darr held that the trial court’s order determined the 

legal insufficiency of the complaint as a class action and preserves for “plaintiff alone his 

cause of action for damages. In its ‘legal effect’ the order is tantamount to a dismissal of 

the action as to all members of the class other than plaintiff. It has virtually demolished 

the action as a class action.” (Daar, at p. 699, citations omitted.)4

Nelsen then cited Szetela’s statement about the death knell doctrine applying 

“when it is unlikely the case will proceed as an individual action.” Based on this, Nelsen

concluded that because the plaintiff could pursue her individual claims through 

arbitration, the death knell doctrine did not apply absent some showing that it was 

impossible or impractical for her to do so. (Nelsen, supra, 207 Cal.App.4th at p. 1123.)

We disagree with Nelsen. The appellate court uncritically quoted Szetela without 

examining the true underlying context. Second, Nelsen and Szetela are flatly at odds with 

Daar v. Yellow Cab Co., supra, 67 Cal.2d at pages 698 and 699 and our Supreme Court’s 

 

4 The Nelsen court was actually citing a quote from Daar that was set forth in 

General Motors Corp. v. Superior Court (1988) 199 Cal.App.3d 247, 251.
10

most recent explanation of the death knell doctrine, which holds that the death knell 

doctrine applies to rulings that “effectively terminate class claims but permit individual 

claims to continue.” (In re Baycol Cases I and II (2011) 51 Cal.4th 751, 754.) Nelsen

never mentioned Baycol, and we therefore choose not to follow that decision. As a result, 

we conclude that the death knell doctrine applies and the order compelling plaintiffs to 

arbitrate is appealable.

2. The Contract Terms Are Not Fatally Ambiguous

Plaintiffs contend the arbitration provision is unenforceable because it is both 

unintelligible and ambiguous in three respects: (1) it calls for arbitration pursuant to 

unspecified “rules” of the Business and Professions Code; (2) it refers to courts and 

venue for actions in Orange County, which could be construed to permit litigation; and 

(3) it merely gives Home Defender the right to stay any superior court action but does 

not give it the power to compel arbitration. Although we have little doubt that these 

provisions were either inapplicable or poorly phrased and thus in the abstract may have 

caused confusion, we disagree that they made the agreement legally unenforceable.

As defendants point out, given the strong public policy in favor of arbitration, if an 

arbitration provision is ambiguous, it must, if possible, be interpreted in a manner that 

makes it lawful and operative. (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 

1473 (Roman).)

The failure to specify an arbitration method or procedure is not fatal because the 

provisions governing arbitration provide that in such a case the trial court will appoint an 

arbitrator. (Code Civ. Proc., § 1281.6; HM DG, Inc. v. Amini (2013) 219 Cal.App.4th

1100, 1103.) Therefore, even though, as defendants concede on appeal, the reference to 

the Business and Professions Code has no ascertainable meaning, that defect can be 

remedied.5

 

5 Defendants contended below that the reference to the Business and Professions 

Code might have been to the provisions governing arbitration of attorney-client fee 
11

Although the provision does not expressly state that Home Defender has the power 

to compel arbitration, such language is not necessary given the clear expression of an 

intent to arbitrate, coupled with the statutory power to compel arbitration when one party 

to an arbitration provision files a civil action instead.

Finally, the provision’s reference to venue in Orange County for actions or 

proceedings is also not hopelessly ambiguous. Instead, because the provision allows 

small claims actions, the provision should be interpreted in that light. The same language 

could apply equally in regard to jurisdiction and venue for petitions to compel arbitration 

as well as to cases where Home Defender elected not to seek arbitration of a superior 

court action brought by its clients.

3. General Principles of the Unconscionability Defense

Plaintiffs contend the arbitration provision is unenforceable because it is both 

procedurally and substantively unconscionable. A written agreement to submit a dispute 

to arbitration is valid, enforceable, and irrevocable, except “upon such grounds as exist 

for the revocation of any contract.” (Code Civ. Proc., § 1281.) When one party to a 

written arbitration agreement refuses to submit to arbitration a dispute covered by the 

agreement, the other party may petition the court to compel arbitration unless the court 

determines that the right to compel arbitration has been waived by the petitioner, or 

grounds exist for revocation of the agreement. (Code Civ. Proc., § 1281.2, subds. (a), 

(b).)

Unconscionability is a defense to the enforcement of an entire contract, or 

particular provisions of a contract, including agreements to arbitrate disputes. (Civ. 

Code, § 1670.5, subd. (a).)6 As noted earlier, the unconscionability defense is still 

 

disputes. They do not make that contention on appeal. Neither side presently asserts that 

provisions of the Business and Professions Code have any applicability to this case.

6 Civil Code section 1670.5 is a codification of this common law contract 

enforcement defense. (Dean Witter Reynolds, Inc. v. Superior Court (1989) 

211 Cal.App.3d 758, 766.)
12

available under section 2 of the FAA.

7

 (9 U.S.C. § 2; Samaniego v. Empire Today, LLC

(2012) 205 Cal.App.4th 1138, 1150 (Samaniego).)

The defense of unconscionability has two components – procedural 

unconscionability and substantive unconscionability. The procedural component 

generally occurs in adhesion contracts that were drafted by the party with superior 

bargaining strength and are presented on a take it or leave it basis. This inquiry focuses 

on oppression or surprise due to unequal bargaining power. The substantive component 

turns on whether the terms are overly harsh or one-sided. (Gentry v. Superior Court

(2007) 42 Cal.4th 443, 468-469 (Gentry).) Both must be present, but not in the same 

degree. Instead, a sliding scale is employed, and the greater the presence of one 

component of unconscionability, the less of the other there need be in order to determine 

that a contract is not enforceable. (Id. at p. 469.)

4. The Arbitration Agreement Was Substantively Unconscionable

(A) The Agreement Is Unconscionably One-Sided

(i) Overview of the Law Regarding Bilaterality

The element of substantive unconscionability involves an inquiry into whether the 

contract terms are unfairly one-sided. (Gentry, supra, 42 Cal.4th at p. 469.) Although 

some courts have framed the test as whether the disputed provisions “shock the 

conscience,” that is simply one of several nonexclusive formulations describing “the 

notion that unconscionability requires a substantial degree of unfairness beyond ‘a simple 

old-fashioned bad bargain.’ [Citation.]” (Sonic II, supra, 57 Cal.4th at pp. 1159-1160.)

This principle was most famously articulated in the context of arbitration 

provisions in Armendariz, supra, 24 Cal.4th 83, which reversed the Court of Appeal and 

 

7 Defendants contend that finding the arbitration agreement is unconscionable 

because it requires only plaintiffs to arbitrate violates the Concepcion court’s 

interpretation of section 2 of the FAA. As set forth in section 4(A)(ii) of our discussion, 

post, we disagree.
13

affirmed a trial court ruling denying an employer’s petition to compel arbitration of sex 

discrimination claims brought by two plaintiffs. The arbitration provision was deemed 

unilateral because it applied to only wrongful termination-related claims brought by 

employees. (Id. at pp. 115, 120-121.)

Although an arbitration provision need not mandate that all claims between 

employer and employee be arbitrated in order to avoid a finding of unconscionability, “an 

arbitration agreement imposed in an adhesive context lacks basic fairness and mutuality if 

it requires one contracting party, but not the other, to arbitrate all claims arising out of the 

same transaction or occurrence or series of transactions or occurrences.” (Armendariz,

supra, 24 Cal.4th at p. 120.) The arbitration provision at issue in Armendariz lacked 

mutuality because it required employees, but not employers, to arbitrate claims arising 

out of a wrongful termination. As a result, an employee fired for stealing trade secrets 

would have to arbitrate his wrongful termination claim while the employer remained free 

to litigate its trade secrets claims. (Ibid.)

Armendariz cited with approval Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 

1519 (Stirlen), where the Court of Appeal affirmed an order denying an employer’s 

petition to compel arbitration of a former company top executive’s action for wrongful 

termination in violation of public policy and other related claims. The arbitration 

provision was deemed unconscionably one-sided because it required the executive to 

arbitrate all disputes related to the termination of his employment, but excluded from 

arbitration all claims by the employer relating to protection of its intellectual property, 

along with enforcement of a covenant not to compete. The agreement also eliminated 

recovery for tort and punitive damages by limiting any award to the amount of actual 

damages for breach of contract, less mitigation of damages, and cut off employer liability 

for salary and benefits while the claims were arbitrated. (Id. at pp. 1528, 1533-1534.)

Armendariz has since been applied in several Court of Appeal decisions, including

some post-Concepcion. For example in Samaniego v. Empire Today, LLC, supra,

205 Cal.App.4th at pages 1147-1148, the court held that the arbitration provision in a 

contract with carpet installers was substantively unconscionable because it excluded from 
14

arbitration certain claims that only employers would bring, shortened the limitations 

period for bringing employee claims, and contained a one-sided attorney’s fee provision. 

As for the impact of the then recent Concepcion decision, the Samaniego court succinctly 

stated: “We hold the provision is unconscionable and unenforceable under Armendariz[, 

supra,] 24 Cal.4th 83 []; that our consideration of the issues is governed by California 

law; and that the recent decision of the Supreme Court of the United States in 

[Concepcion, supra,] 131 S.Ct. 1740[], does not change our analysis.” (Id. at p. 1141.)

Earlier decisions that had relied on Armendariz in finding one sided arbitration 

agreements unconscionable include: Zullo v. Superior Court (2011) 197 Cal.App.4th 

477, 486-487 (arbitration agreement was one-sided even though it referred to arbitration 

of all disputes because other qualifying language showed it applied to only employee 

claims); Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 724-726 (arbitration provision 

unconscionable where it excluded employee claims for workers compensation and 

unemployment benefits, along with employer claims concerning confidentiality and 

noncompetition agreements or intellectual property rights); Flores v. Transamerica 

HomeFirst, Inc. (2001) 93 Cal.App.4th 846, 854-855 (arbitration provision in reverse 

mortgage agreement held unconscionable where it said any disputes would be arbitrated, 

but allowed lender to pursue judicial and nonjudicial self-help remedies, including setoffs, foreclosure, injunctive relief, and appointment of a receiver; as a result, the 

provision realistically applied to only claims brought by borrowers).

(ii) Application of Armendariz and Its Progeny to this Case

The terms of Home Defender’s arbitration agreement bring it within the rationale 

of these decisions. The provision applies when a client “files suit in any court other than 

small claims court” for disputes “regarding Home Defender Center’s actions . . . .” In 

such cases, Home Defender has the option to insist on arbitration.

The net effect of this provision creates a two-pronged form of one-sidedness. 

First, by its terms, only plaintiffs must arbitrate their superior court claims if Home 

Defender so chooses, leaving Home Defender free to sue its clients for any claims it 
15

might have. Second, it appears directly aimed at limiting a client’s access to the courts to 

the $10,000 small claims threshold of recovery. (Code Civ. Proc., § 116.221.) In other 

words, plaintiffs who sustain anything more than a relatively modest amount of damages 

above and beyond the amount of the fees they paid – such as the loss of their home due to 

inaction or improper action by Home Defenders – must arbitrate. As the decisions cited 

above make clear, this type of one-sidedness is substantively unconscionable. 

Defendants contend the provision is not one-sided because: (1) it is silent as to 

what would occur if it had sued and a client pressed for arbitration; and (2) under 

Roman, supra, 172 Cal.App.4th 1462, the provision can be interpreted to require 

arbitration by both parties.

At issue in Roman was an arbitration provision in an employment application that 

said “I hereby agree” to submit to binding arbitration all disputes and claims arising out 

of submission of the application or out of the applicant’s subsequent employment. The 

Roman court held that such language created nothing more than an ambiguity that, under 

ordinary rules of contract interpretation, was best interpreted to mean that both parties 

were bound to arbitrate any disputes. In other words, the “I” referred to each party’s 

respective obligations. (Roman, supra, 172 Cal.App.4th at pp. 1472-1473.)8

The Home Defender arbitration provision is not ambiguous. It uses no “I’s.” It 

states that Home Defender can force a client to arbitrate if the client sues outside of small 

claims court for disputes regarding Home Defender’s actions. The provision is therefore 

expressly limited to actions brought by Home Defender clients against Home Defender, 

and cannot reasonably be construed as bilateral simply because it is silent as to Home 

Defender’s right to litigate its claims. (See Armendariz, supra, 24 Cal.4th at p. 120 [lack 

 

8

In another case that discusses the mutuality of an “I” clause, we rejected an 

employer’s argument that “I” could be construed as “we.” We held there was no 

bilaterality and that only the employee and not the employer was obligated to arbitrate. 

(Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1253-1254 (Higgins).) The 

Roman court acknowledged the differences in the arbitration clauses in the two cases. 

(Roman, supra, 172 Cal.App.4th at pp. 1472-1473.)
16

of mutuality existed even where arbitration provision did not expressly state that 

employer could litigate its claims].)

Although one-sided arbitration provisions may be justified by business realities

that create a special need for the advantage, those realities must either be explained in the 

contract or factually established. (Higgins, supra, 140 Cal.App.4th at p. 1254, fn. 12.) 

The contract contains no such explanation and Home Defenders has never raised the 

issue. We therefore conclude that the provision is substantively unconscionable.

(B) The Armendariz One-Sidedness Rule Survives Concepcion

Defendants contend that even if the provision were otherwise unconscionable, the 

Armendariz rule of mutuality is no longer good law after Concepcion, supra, 131 S.Ct. 

1740. As stated at the outset, we recognize that the law in this area is evolving. It is not 

within our province to decide a case based on our prediction of what the Supreme Court 

might rule in a case not before it. (See People v. Rogers (2013) 57 Cal.4th 296, 342 

[“trial court properly refused to predict how the Florida Supreme Court might rule on the 

issues”].) Time will tell whether the United States Supreme Court addresses the 

unconscionability defense; until then we are duty bound to follow recent decisions by the 

California Supreme Court that reaffirm that unconscionability, including the Armendariz

bilaterality rule, survives Concepcion and are applicable here. We begin by examining 

Concepcion.

(i) The Holding of Concepcion

Concepcion overruled Discover Bank v. Superior Court (2005) 36 Cal.4th 148 

(Discover Bank), which had held that class action waivers in a limited class of consumer 

contracts of adhesion were per se unconscionable in settings involving a scheme to 

defraud large numbers of consumers out of individually small sums of money because 

such waivers had the practical effect of exempting the wrongful party from responsibility 

for its willful misconduct. (Id. at p. 162.)
17

Discover Bank was expressly overruled by Concepcion, supra, 131 S.Ct. 1740 on 

the ground that it conflicted with the FAA. Even though Discover Bank involved the 

application of a standard contract defense that was ordinarily permitted under section 2 of 

the FAA, the Concepcion court concluded that, as applied, it had the effect of disfavoring 

arbitration and was therefore contrary to the FAA’s animating philosophy of encouraging 

arbitration. (Concepcion, at pp. 1746-1748.)

State courts may not rely on the uniqueness of an agreement to arbitrate as a basis 

for holding that the agreement is unconscionable because that would allow the courts to 

do what the state legislatures cannot. (Concepcion, supra, 131 S.Ct. at p. 1747.) 

Examples of such rulings, the Concepcion court said, would be cases finding a consumer 

arbitration agreement unconscionable because it did not provide for judicially monitored 

discovery, did not apply the rules of evidence, or did not allow for a jury to decide the 

case. (Ibid.) Such holdings would “have a disproportionate impact on arbitration 

agreements” even though they seemingly fell under the savings clause of FAA section 2 

as part of the generally applicable state law defense of unconscionability. (Ibid.)

The Discover Bank rule regarding class actions similarly interfered with 

arbitration, the Concepcion court held. While the rule did not require class wide 

arbitration, it essentially allowed any party to a consumer contract to demand it after the 

fact. (Concepcion, supra, 131 S.Ct. at p. 1750.) Although parties to an arbitration 

agreement are free to provide for class wide proceedings, such proceedings are generally 

unsuited to arbitration because they make it more time consuming, expensive, and 

formal. Imposing them on the parties when not provided for by their arbitration 

agreement was therefore inconsistent with the FAA’s policy of enforcing arbitration 

agreements according to their terms. (Id. at pp. 1750-1753.)

(ii) Armendariz Held That Bilaterality Is A Valid Defense Under the 

FAA

Defendants contend the rule of one-sidedness as applied by Armendariz and other 

decisions violates Concepcion because a lack of perfect mutuality of obligation is not 
18

generally grounds to invalidate a contract under California law. As a result, defendants

argue, those decisions impose on arbitration agreements a degree of mutuality above and 

beyond what is ordinarily required for contracts generally, and hence do not come within 

the FAA section 2 savings clause.

Although Armendariz preceded Concepcion by 11 years, the Armendariz court 

considered and rejected this precise contention. After adopting the “modicum of 

bilaterality” rule enunciated in Stirlen, supra, 51 Cal.App.4th at page 1541, the 

Armendariz court distinguished the concept that lack of mutuality does not render a 

contract illusory from the principles of unconscionability. “We conclude . . . that in the 

context of an arbitration agreement imposed by the employer on the employee, such a 

one-sided term is unconscionable. Although parties are free to contract for asymmetrical 

remedies and arbitration clauses of varying scope, Stirlen and Kinney[

9

] are correct that 

the doctrine of unconscionability limits the extent to which a stronger party may, through 

a contract of adhesion, impose the arbitration forum on the weaker party without 

accepting that forum for itself.” (Armendariz, supra, 24 Cal.4th at p. 118.)

Armendariz then rejected the notion that enforcing this bilaterality rule singled out 

arbitration agreements for suspect status in contravention of the FAA. Agreeing with the 

court in Stirlen, supra, 51 Cal.App.4th at page 1551, the Armendariz court said, “the 

ordinary principles of unconscionability may manifest themselves in forms peculiar to the 

arbitration context. One such form is an agreement requiring arbitration only for the 

claims of the weaker party but a choice of forums for the claims of the stronger party. 

The application of this principle to arbitration does not disfavor arbitration.” 

(Armendariz, supra, 24 Cal.4th at p. 119.)

According to Armendariz, supra, 24 Cal.4th at page 119, the judicial forum 

affords plaintiffs the advantages of discovery and the fact that judges and juries are more 

likely to follow the law instead of splitting the difference as arbitrators often do, thereby 

reducing damage awards. “An employer may accordingly consider a court to be a forum 

 

9 Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322.
19

superior to arbitration when it comes to vindicating its own contractual and statutory 

rights, or may consider it advantageous to have a choice of arbitration or litigation when 

determining how best to pursue a claim against an employee. It does not disfavor 

arbitration to hold that an employer may not impose a system of arbitration on an 

employee that seeks to maximize the advantages and minimize the disadvantages of 

arbitration for itself at the employee’s expense. On the contrary, a unilateral arbitration 

agreement imposed by the employer without reasonable justification reflects the very 

mistrust of arbitration that has been repudiated by the United States Supreme Court in 

Doctors’ Associates, Inc. v. Casarotto [(1996)] 517 U.S. 681, and other cases.” (Id. at 

pp. 119-120, italics added.)

(iii) Post-Concepcion Decisions Hold That A Lack of Bilaterality Is Still 

A Valid Defense Under the FAA

Decisions of both the California and federal courts hold that Concepcion still 

permits voiding an arbitration provision that applies to only the party with the weaker 

bargaining strength, or is otherwise oppressively one-sided. (Serpa v. California Surety 

Investigations, Inc. (2013) 215 Cal.App.4th 695, 705 [arbitration agreement in employee 

handbook that on its face required only employees to arbitrate their claims would have 

been found unconscionable for lack of bilaterality except for the fact that arbitration rules 

incorporated by reference made clear that employer was also to arbitrate its own claims];

Truly Nolen of America v. Superior Court (2012) 208 Cal.App.4th 487, 506 (Truly 

Nolen) [finding an adhesive arbitration provision unconscionable because it is overly 

one-sided does not disfavor arbitration]; Sparks v. Vista Del Mar Child and Family 

Services (2012) 207 Cal.App.4th 1511, 1523 [arbitration provision in employee 

handbook unconscionable by forcing employee to relinquish federal and state statutory 

rights and by allowing arbitrator to prevent discovery]; Ajamian v. CantorC02e, L.P.

(2012) 203 Cal.App.4th 771, 797-800 [arbitration provision in broker’s employment 

contract unconscionable because it unreasonably limited damages available to the broker, 

and contained unilateral attorney’s fee provision that might strip broker of right to 
20

recover fees for statutory wage and hour claims]; Noohi v. Toll Bros. (4th Cir. 2013) 

708 F.3d 599, 612-614 [applying Maryland law, Concepcion not violated by invalidating 

for lack of mutuality arbitration provision in home construction contracts that obligated 

only buyers to arbitrate their claims].)

10

Most important, our Supreme Court has recently affirmed the continued vitality of 

the unconscionability defense in general, and the bilaterality doctrine in particular, after 

Concepcion.

Sixteen months after Concepcion, the court in Pinnacle, supra, 55 Cal.4th 223 

considered the enforceability of an arbitration provision that a condominium developer 

included in the recorded covenants, conditions, and restrictions (CCRs) that required 

those who later purchased condominiums to arbitrate any construction related disputes. 

After concluding that the arbitration provision applied to the homeowners association

(HOA) pursuant to the statutory scheme that governed common interest developments, 

the Pinnacle court considered whether the provision was nevertheless unconscionable.

The Pinnacle court began by citing Armendariz, supra, 24 Cal.4th at page 114, for 

the proposition that unconscionability was a generally applicable contract defense 

allowed under the FAA. (Pinnacle, supra, 55 Cal.4th at p. 246.) It also quoted 

Armendariz for the proposition that substantive unconscionability exists when contract 

terms are “overly harsh or one-sided.” (Ibid., citing Armendariz, at p. 114.) Although 

ultimately concluding that the arbitration provision was not unconscionable, the Pinnacle

court considered the HOA’s contention that the provision was substantively 

unconscionable under Armendariz because it applied to only the homeowners and 

therefore lacked bilaterality.

 

10 Other Court of Appeal decisions have recognized that unconscionability remains a 

viable defense after Concepcion even if the facts of those cases did not support a finding 

of unconscionability. (Sanchez v. Carmax Auto Superstores California, LLC (2014) 

224 Cal.App.4th 398, 403 [arbitration provision not substantively unconscionable 

because it was not unduly one-sided]; Nelsen, supra, 207 Cal.App.4th at pp. 1125-1126 

[arbitration provision not unreasonably one-sided under Armendariz]. Both cases cite 

Concepcion for the rule that an unconscionable arbitration provision is unenforceable.
21

In rejecting that contention, the Pinnacle court pointed to the statement in 

Armendariz, supra, 24 Cal.4th at page 120, that arbitration provisions need not mandate 

arbitration of all claims between the parties to avoid a finding of unconscionability, and 

that arbitration clauses may be limited to a specific subject or subjects. (Pinnacle, supra,

55 Cal.4th at p. 248.) “Here, the challenged clause is limited to construction disputes. 

To the extent Pinnacle wishes to allege the [HOA’s] comparative fault as an affirmative

defense with respect to damages[], such issue would fall within the scope of [the 

arbitration provision]. Apart from that, the [HOA] fails to identify any potential 

construction-related claims Pinnacle might assert against it that would not be subject to 

arbitration. Accordingly, there appears no support for the [HOA’s] claims of unfairness 

and absence of mutuality.” (Id. at pp. 248-249.)

In short, by distinguishing its facts from those in Armendariz, the Pinnacle court 

both rejected the defense in the case before it and also implicitly held that the Armendariz

rule of bilaterality is still good law in California. As we have already observed, the 

arbitration provision at issue here qualifies under Armendariz because it applied to all 

claims plaintiffs might have that arose out of their contractual relationship with Home 

Defender.11

In Sonic II, supra, 57 Cal.4th 1109, our Supreme Court reversed its previous 

decision in Sonic I, supra, 51 Cal.4th 659, which held that even though an employer 

could require its employees to arbitrate wage disputes, it was against public policy for 

those arbitration provisions to require the employee’s waiver of his right to a “Berman 

hearing,” a statutory dispute resolution procedure. On remand from the United States 

Supreme Court with directions to reconsider Sonic I in light of Concepcion, the Sonic II

court held that its blanket prohibition against Berman waivers violated the principles set 

 

11 We find it significant that neither Justice Baxter’s majority opinion nor the 

concurring opinions of Justice Werdegar or Justice Liu, nor the dissenting opinion of 

Justice Kennard even mentioned Concepcion, thus suggesting that none of the justices 

believed that Concepcion, a class action arbitration case, had any precedential effect on 

the defense of unconscionability.
22

forth in Concepcion. However, the court also held that the waiver could be invalidated 

under unconscionability principles if the arbitration provision did not provide a dispute 

resolution mechanism that offered benefits and protections roughly comparable to those 

found in Berman hearings, and remanded the matter to the trial court so that issue could 

be developed and adjudicated. (Sonic II, supra, at pp. 1124-1125, 1147-1148.)12

As part of its analysis, the Sonic II court made several pertinent observations 

concerning the continued viability of the unconscionability defense after Concepcion. It 

began by noting that even after Concepcion, unconscionability remained a valid defense 

to a petition to compel arbitration so long as its application did not interfere with the 

fundamental attributes of arbitration. (Sonic II, supra, 57 Cal.4th at pp. 1142, 1169-

1170.) It described the doctrine in terms of bargains that were unreasonably one-sided 

(id. at p. 1143), referred to Armendariz as the “seminal California case” concerning 

unconscionability in the context of adhesive arbitration agreements (id. at p. 1159), and 

cited Stirlen, supra, 51 Cal.App.4th at page 1532, which Armendariz relied on, for the 

rule that the unconscionability doctrine seeks to protect against contract terms that are 

overly harsh. (Sonic II, at p. 1145.) The court also cited Armendariz for the proposition 

that the FAA does not preempt general unconscionability principles merely because they 

are applied in the specific context of arbitration. (Id. at p. 1169, citing Armendariz,

supra, 24 Cal.4th at p. 119.)

When Pinnacle and Sonic II are read together, they show that the California 

Supreme Court still applies the Armendariz bilaterality rule when determining whether to 

invalidate an arbitration provision on the ground of unconscionability.

This makes sense in light of the issues actually decided in Concepcion. As noted, 

Discover Bank announced a per se rule of unconscionability as to class action waivers in 

consumer adhesion contracts where it was alleged the seller had cheated many consumers 

out of small sums of money. Concepcion held that the Discover Bank rule was inimical 

to arbitration, and was therefore inconsistent with the FAA, because it required parties to 

 

12 As noted in our introduction, the United States Supreme Court denied a petition 

for writ of certiorari in Sonic II.
23

an arbitration agreement to arbitrate class claims even when the agreement specifically 

excluded such claims. That factual setting is not analogous to the issue raised here. If 

anything, the rule of bilaterality as we apply it here promotes arbitration because its chief 

complaint is that the party with superior bargaining strength has excluded its own claims 

from the arbitration process. (See Noohi v. Toll Bros., supra, 708 F.3d at pp. 612-613.)13

In short, Concepcion, a class action case, did not discuss the modicum of 

bilaterality standard adopted by Armendariz, an unconscionability not a class action case, 

and Concepcion did not overrule Armendariz. We are therefore bound to follow our 

Supreme Court and apply Armendariz here. (Samaniego, supra, 205 Cal.App.4th at 

p. 1141; see, Truly Nolen, supra, 208 Cal.App.4th at p. 507.) Accordingly, we conclude 

that Concepcion does not apply to invalidate Armendariz’s modicum of bilaterality rule, 

at least in this context.14

 

13 The presence of the class waiver plays no part in our analysis, which is instead 

based on the generally applicable contract defense of unconscionability in light of the 

very one-sided nature of the arbitration provision. We also note that plaintiffs do not 

challenge the trial court’s application of Stolt-Nielsen, supra, 559 U.S. 662, and have 

effectively conceded that if the arbitration provision is enforceable then class wide 

dispute resolution is not available.

14 The California Supreme Court has granted review of numerous Court of Appeal 

decisions that have tackled several issues left by Concepcion’s wake, including some 

which have both found and rejected unconscionability in this context. The following is a 

list of all Concepcion-related cases currently before our Supreme Court. (Vargas v. Sai 

Monrovia B, Inc. (2013) 216 Cal.App.4th 1269 [157 Cal.Rptr.3d 742], review granted 

Aug. 21, 2013, S212033; Brown v. Superior Court (2013) 216 Cal.App.4th 1302

[157 Cal.Rptr.3d 779], review granted Sep. 11, 2013, S211962; Vasquez v. Greene 

Motors, Inc. (2013) 214 Cal.App.4th 1172 [154 Cal.Rptr.3d 778], review granted 

June 26, 2013, S210439; Compton v. Superior Court (2013) 214 Cal.App.4th 873 

[154 Cal.Rptr.3d 413], review granted June 12, 2013, S210261; Natalini v. Import 

Motors, Inc. (2013) 213 Cal.App.4th 587 [153 Cal.Rptr.3d 224], review granted May 1, 

2013, S209324; Flores v. West Covina Auto Group (2013) 212 Cal.App.4th 895 

[151 Cal.Rptr.3d 481], review granted April 10, 2013, S208716; Franco v. Arakelian 

Enterprises, Inc. (2013) 211 Cal.App.4th 314 [149 Cal.Rptr.3d 530], review granted 

Feb. 13, 2013, S207760; Goodridge v. KDF Automotive Group, Inc. (2012) 

209 Cal.App.4th 325 [147 Cal.Rptr.3d 16], review granted Dec. 19, 2012, S206153; 

Reyes v. Liberman Broadcasting, Inc. (2012) 208 Cal.App.4th 1537 [146 Cal.Rptr.3d 
24

5. The Agreement Is Procedurally Unconscionable

Determining whether an arbitration provision was the product of procedural 

unconscionability turns on two factors: oppression and surprise. Oppression arises from 

an inequality of bargaining power that results in no real negotiations and an absence of 

meaningful choice. Surprise involves the extent to which the terms are hidden in a 

lengthy printed form. (Crippen v. Central Valley RV Outlet (2004) 124 Cal.App.4th

1159, 1165 (Crippen).) Ultimately the issue turns on evidence concerning the 

circumstances surrounding the execution of the agreement, because procedural 

unconscionability focuses on the manner in which the disputed clause is presented to the 

weaker party. If the weaker party is effectively told to “take it or leave it” without the 

opportunity for meaningful negotiation, an element of procedural unconscionability is 

present. (Ibid.)

 

616], review granted Dec. 12, 2012, S205907; Caron v. Mercedes-Benz Financial 

Services USA, LLC (2012) 208 Cal.App.4th 7 [145 Cal.Rptr.3d 296], review granted 

Oct. 24, 2012, S205263; and Iskanian v. CLS Transportation Los Angeles, LLC (2012) 

206 Cal.App.4th 949 [142 Cal.Rptr.3d 372], review granted Sept. 19, 2012, S204032.) 

Our colleagues in the Fourth District recently applied Sonic II and Armendariz when 

deciding that a provision in an arbitration clause that granted the arbitrator the right to 

determine whether the clause was enforceable was not unconscionable. (Tiri v. Lucky 

Chances, Inc. 226 Cal.App.4th 231.) Although the Tiri court held that the provision was 

not substantively unconscionable, it cited both Sonic II and Armendariz for the 

proposition that under both federal and California law arbitration provisions may be 

voided if they are unconscionable. (Id. at p. 627.) The Tiri court also cited both 

decisions for the rule that unconscionability exists when an arbitration provision is 

unreasonably favorable to the other party (id. at p. 630), or is overly harsh and one-sided. 

(Id. at p. 331.) 

Recently, a different panel of this court relied on Armendariz in concluding that 

the arbitration provision in question was substantially unconscionable because it was one 

sided as to choice of the arbitral or court forum. “The arbitration agreement lacks 

mutuality not just in available forums, but in a few other ways, and in none of these cases 

is there a justification proffered for the one-sidedness.” (Carmona v. Lincoln Millennium 

Car Wash, Inc. (2014) 226 Cal.App.4th 74.) 
25

Plaintiffs contend there was procedural unconscionability because: (1) Viveros 

violated Civil Code section 1632, which required her to provide a Spanish language 

version of the contract after she presented the terms in Spanish; (2) the trial court’s 

reliance on Brown, supra, 168 Cal.App.4th 938 to determine that plaintiffs were bound 

by the contract even if they did not read it or understand it was misplaced because 

Viveros owed them a fiduciary duty to properly explain all the contract terms; (3) the 

Business and Professions Code rules mentioned in the arbitration provision were not 

attached to the contract; and (4) the contract was adhesive because it was on a preprinted form and was presented on a take it or leave it basis with no meaningful ability to 

negotiate.

Defendants contend there was no procedural unconscionability because: (1) Civil 

Code section 1632 does not apply because it provides only rescission as a remedy, which 

plaintiffs do not seek; (2) Brown applied because there was no evidence that Viveros 

acted as a fiduciary; (3) the failure to supply a copy of any arbitration rules was 

irrelevant because as it turned out the Business and Professions Code reference had no 

effective meaning, and as a result there were no such rules; (4) the arbitration provision 

was conspicuous and the contract was brief; (5) there was no evidence that the contract 

was offered on a take it or leave it basis or that plaintiffs were unable to negotiate or were 

otherwise subject to oppressive tactics; and (6) the contract was not adhesive.

We begin with Brown, which was crucial to the trial court’s finding that there was 

insufficient procedural unconscionability to justify vitiating the arbitration provision. 

The plaintiff in Brown sued his bank for breach of fiduciary duty and unjust enrichment. 

The bank’s petition to compel arbitration was denied by the trial court because, without 

reaching the issue of substantive unconscionability, it determined the provision was 

procedurally unconscionable. Although the trial court found the bank was plaintiff’s 

fiduciary, it did not reach the issue of whether the entire agreement should have been 

voided under the doctrine of fraud in the execution based on allegations that the bank did 

not fully explain the agreement.
26

The Brown court reversed and in its opinion found no substantive 

unconscionability as a matter of law. As a result, the court did not reach the procedural 

unconscionability issue. (Brown, supra, 168 Cal.App.4th at pp. 956-958.) As Brown

also expressly states, the case “is not really about arbitration” but about the consequences 

flowing from a fraud in the execution and breach of fiduciary duty. (Id. at p. 945.) The 

Brown court held that the trial court erred by not reaching the fraud in the execution issue 

and remanded so the trial court could do so. (Id. at p. 959.)

Brown discussed the doctrine of fraud in the execution generally, noting that it is 

applicable when the plaintiff was deceived as to the very nature of the agreement being 

signed and did not know what he was signing. If so, the entire agreement is void. 

(Brown, supra, 168 Cal.App.4th at p. 958.) However, the plaintiff must show reasonable 

reliance on the defendant’s misrepresentation, and the defense ordinarily fails if the 

plaintiff had an opportunity to discover the true contract terms but simply failed to read 

the agreement. (Ibid.) An exception to this rule applies when the other party was 

plaintiff’s fiduciary. In such cases, the defendant has a duty to fully and accurately 

describe the contract terms. (Ibid.)

We conclude that the trial court erred when it relied on Brown for its finding that 

plaintiffs’ failure to read or inability to understand the contract did not make it 

procedurally unconscionable. That portion of Brown went to the fraud in the execution 

doctrine, not to procedural unconscionability, an issue that the Brown court expressly 

declined to reach. (Brown, supra, 168 Cal.App.4th at pp. 944-945.) The rule that failure 

to read a contract may not avoid its enforcement applies only in the absence of 

unconscionable overreaching. In fact, the failure to read the contract helps establish 

actual surprise. (Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1290-1291; see Higgins,

supra, 140 Cal.App.4th at p. 1251 [procedural unconscionability may exist even if

plaintiff reads an agreement; a contrary rule would seriously undermine the 

unconscionability defense].)

Of course, even a finding that a party’s failure to read the document may have 

contributed to procedural unconscionability does not end the inquiry. In some cases the 
27

level of substantive unconscionability may be so low that the modicum of procedural 

unconscionability is insufficient to render the contract unenforceable. We next consider 

whether the arbitration provision was procedurally unconscionable in light of the 

circumstances surrounding the execution of the parties’ agreement.15

We agree that the arbitration provision was not concealed in the three-page written 

contract. The agreement is short and the arbitration provision is as conspicuous as any 

other provision. However, plaintiffs were presented with other documents at the same 

time, including: (1) a one-page description of Home Defender’s services; (2) a onepage list of “DO’s & DON’T’S”; (3) a two-page document granting power of attorney to 

defendants; (4) a two-page authorization to release information; (5) a one-page deposit 

receipt with instructions on when plaintiffs’ fees could be released to defendants; (6) a 

combined eight pages of small print, densely worded California Association of Realtors 

forms concerning agency disclosures and listing agreements for plaintiffs’ homes; and 

(7) the Spanish language form stating that plaintiffs had read all the other forms.

In examining the circumstances surrounding plaintiffs’ execution of these 

documents, we begin with some of the evidence defendants submitted in support of their 

petition to compel arbitration: the Home Defender’s files, which included “hardship”

letters written by plaintiffs to support their need for mortgage foreclosure consulting 

services and a home loan modification. Distilled, the plaintiffs detailed a variety of 

unfortunate circumstances, ranging from business failure, job loss, wage and hour 

cutbacks, divorce, and damage to homes due to flooding or wildfires, that placed them in 

jeopardy of foreclosure and necessitated a mortgage modification to save their homes.

Next, according to plaintiffs’ uncontested declarations, Viveros told them that 

Home Defender could get their mortgage payments reduced. After explaining in Spanish 

how the program worked, Viveros presented them with many documents, claimed that 

the documents stated in English what she had just told them in Spanish, and told them to 

sign. We agree with the trial court that these statements are a bit generalized, but when 

 

15 We agree with defendants that plaintiffs have failed to articulate either a legal or 

factual basis for their contention that Viveros was their fiduciary.
28

read in context with the circumstances shown by the plaintiffs’ hardship letters, it is 

apparent that plaintiffs saw Home Defender as a way out of their serious financial 

difficulties. The clear import of their declarations is that when Viveros told them to sign 

the documents after claiming they simply repeated what she had told them, she was 

effectively telling them there was no need to read them.

Because defendants never submitted declarations or other evidence contradicting 

plaintiffs’ declarations, we accept plaintiffs’ version of events. (Wherry v. Award, Inc.

(2011) 192 Cal.App.4th 1242, 1247.) The trial court did as well, assuming for purposes 

of its analysis that the plaintiffs either did not read the contract or did not understand 

English, while concluding under Brown that they were nevertheless bound by the 

contracts. However, as our analysis of Brown, supra, 168 Cal.App.4th 938, makes clear, 

that does not preclude a finding of procedural unconscionability.

Defendants also contend that plaintiffs could have obtained mortgage foreclosure 

consulting services elsewhere. However, they provide no evidence to support that claim, 

which also overlooks the fact that in ordinary consumer transactions, where consumers 

have little incentive to seek out alternatives, the mere theoretical opportunity to have 

gone elsewhere will not preclude a finding of unconscionability. (Gatton v. T-Mobile 

USA, Inc. (2007) 152 Cal.App.4th 571, 585.) We believe this rule applies here because

Viveros was not entirely a stranger to plaintiffs. Flores had used her as a real estate agent 

in a previous transaction. He felt comfortable with Viveros because she spoke Spanish 

and all of their communications were carried out in that language. Viveros contacted 

Flores about a home loan modification, and Flores referred Campos, Sabia, and Cruz to 

her. It appears that this referral was the reason why plaintiffs chose Viveros and the other 

defendants, making it far less likely they would have looked elsewhere for the same 

services.16

 

16 Defendants ask us to judicially notice “the plethora of loan modification services 

offered to the public since the downfall of the real estate market in 2008.” Apart from the 

fact that this request is procedurally defective, (Cal. Rules of Court, rule 8.252), 
29

We next consider Viveros’s failure to provide a version of the agreements in 

Spanish, in violation of Civil Code section 1632. Even though it appears that Viveros 

violated Civil Code section 1632, the statute itself is inapplicable because plaintiffs do 

not seek rescission. And, as defendants point out, plaintiffs’ hardship letters show a 

certain proficiency in the English language. Further, because plaintiffs, in reliance on 

Viveros, did not read the documents, her failure to provide a Spanish translation of the 

documents arguably had little effect on the outcome. However, the undisputed fact that 

Viveros explained the agreements in Spanish and had plaintiffs sign a Spanish language 

acknowledgment that they had read the forms shows that plaintiffs were more 

comfortable discussing complex concepts and contractual arrangements in their native 

language. Viewed in that light, even though plaintiffs do not seek relief under Civil Code 

section 1632, Viveros’s violation of that provision could be viewed as part of a scheme to 

conceal from plaintiffs all the essential terms of the documents they were signing, 

including the arbitration provision, thereby contributing to procedural unconscionability.

(See Carmona v. Lincoln Millennium Car Wash, Inc., supra, 226 Cal.App.4th 74.) 

Summing up, the evidence shows that plaintiffs were presented a stack of English 

language documents and effectively told not to read them because they reflected what 

Viveros had explained to them in Spanish. The form contract, presented under these 

circumstances, was adhesive. Given plaintiffs’ economic circumstances and their 

preference for dealing with Viveros based on either past experience or Flores’s referral, 

we conclude there was sufficient oppression and surprise to create more than a minimum 

of procedural unconscionability.17

Defendants rely on Crippen, supra, 124 Cal.App.4th at pages 1165-1166 and 

Trend Homes, Inc. v. Superior Court (2005) 131 Cal.App.4th 950, 958, disapproved on 

 

defendants have made no factual or legal showing to support such a request, which we 

therefore deny.

17 We agree with defendants that failure to attach to the agreement any rules of 

arbitration did not contribute to procedural unconscionability under the circumstances of 

this case.
30

other grounds in Tarrant Bell Property, LLC v. Superior Court (2011) 51 Cal.4th 538,

545, footnote 5, to support their contention that there was no procedural 

unconscionability. Neither is applicable here. In Crippen, the court concluded that there 

was no evidence of procedural unconscionability. Although the form contract was an 

adhesion contract, that alone did not make the contract procedurally unconscionable, and 

the plaintiffs had not offered evidence concerning the negotiation and execution of the 

disputed agreement. In Trend Homes, there was no evidence that the plaintiff asked to 

negotiate the contract. In contrast, the record in this case contains circumstances 

surrounding the formation of the contracts and that evidence shows procedural 

unconscionability.

6. The Unconscionable Terms Cannot Be Severed

We may either refuse to enforce an arbitration provision if it is permeated by 

unconscionability, or sever or restrict the offending portions. (Civ. Code, § 1670.5, 

subd. (a).) Plaintiffs contend the arbitration provision is not severable. Defendants do 

not contest that assertion on appeal and we agree with it.

The arbitration provision states that “[i]f a dispute arises between Home Defender 

Center and Client regarding Home Defender Center’s actions under this agreement and 

Client files suit in any court other than small claims court, Home Defender Center will 

have the right to stay that suit by timely electing to arbitrate . . . .” As discussed earlier, 

this provision is substantively unconscionable because it effectively requires plaintiffs to 

arbitrate their claims while leaving Home Defender free to sue in court for any claims it 

might have. There is no language in this provision that could be severed to make it 

bilateral. Instead, it would have to be rewritten to state that either party may require the 

other to arbitrate its claims. However, our power to sever does not include the power to 

reform the contract by augmenting it with additional terms. (Flores v. Transamerica 

HomeFirst, Inc., supra, 93 Cal.App.4th at p. 857.) Therefore severance is not an option.
31

7. The Combined Procedural and Substantive Unconscionability Is Sufficient to 

Preclude Enforcement of the Arbitration Provision

Our final task is to evaluate where on the sliding scale the degree of both 

procedural and substantive unconscionability sit. In regard to substantive 

unconscionability, there are certainly worse examples, where an arbitration provision not 

only applies to one side, but shortens the limitations period, limits available remedies,

and imposes unfair procedures and costs. (See Samaniego, supra, 205 Cal.App.4th at 

pp. 1147-1148; Stirlen, supra, 51 Cal.App.4th at pp. 1533-1534.) However, the provision 

in the Home Defender contract is unfairly one-sided in two significant respects: by 

allowing only Home Defender unfettered access to the courts for any claims it might have 

against its clients, and by limiting plaintiffs’ access to the courts to only small claims 

actions, thus cutting off civil actions involving substantial damage claims. We believe 

this places it somewhere beyond the middle of the sliding scale.

The level of procedural unconscionability sits somewhere below the middle of that 

scale, but not toward the bottom. Plaintiffs were effectively steered away from 

examining the contracts and other documents and were not given Spanish language 

versions even though the negotiations were conducted in Spanish. Plaintiffs were also in 

economic distress at the time. The combined effect of these two forms of 

unconscionability is sufficient to tip the scales to the point where the arbitration provision 

should not be enforced.

DISPOSITION

The order compelling arbitration is reversed and the matter is remanded to the 

superior court for further proceedings. Plaintiffs shall recover their costs on appeal.

RUBIN, J.

I CONCUR:

BIGELOW, P. J.
Sabia et al. v. Orange County Metro Realty, Inc., et al. 

B243141 

Grimes, J., Dissenting.

Respectfully, I dissent, not because of a conviction that the majority opinion 

misapprehends how our Supreme Court would construe AT&T Mobility LLC v. 

Concepcion (2011) 563 U.S. ___ [131 S.Ct. 1740] (Concepcion) as it applies in this case, 

but because I am unable to set aside my doubts. I would have preferred to stay this case 

to obtain the benefit of the opinions in cases now pending decision in our Supreme Court 

that, it appears, will shed light on at least some of the unresolved issues concerning the 

enforceability of arbitration agreements governed by the Federal Arbitration Act (FAA; 9 

U.S.C. § 1 et seq.) that are claimed to be unconscionable. For example, Sanchez v. 

Valencia Holding Co., (review granted Mar. 21, 2012, S199119) may decide the 

following issue: Does the FAA (§ 2), as interpreted in Concepcion preempt state law 

rules invalidating mandatory arbitration provisions in a consumer contract as 

procedurally and substantively unconscionable? 

Recently, the Supreme Court held in Sonic-Calabasas A, Inc. v. Moreno (2013) 57 

Cal.4th 1109 (Sonic II) that unconscionability remains a valid defense to a petition to 

compel arbitration after Concepcion. (Sonic II, supra, at pp. 1142-1143, 1145.) The 

Supreme Court is, as I write, continuing to develop the law in this area; and with so many 

uncertainties, I cannot agree with my colleagues that the arbitration agreement here is 

unenforceable under federal law construing the FAA. I have no desire or intent to violate 

Auto Equity Sales v. Superior Court (1962) 57 Cal.2d 450. And, I do not believe this 

dissenting opinion does so because, in my view, this case presents a question of first 

impression to be determined by the application of federal law. (People v. Johnson (2012) 

53 Cal.4th 519, 528 [“Lower courts may decide questions of first impression, including 

the effect that subsequent events, such as a United States Supreme Court decision, have 

on decisions from a higher court, including this one. . . . If a higher court believes the 

lower court decided a question erroneously, it can take appropriate action. But a lower 

court does not violate [Auto Equity] merely by deciding questions of first impression.”].)
2

The arbitration agreement here is in a contract between the plaintiff mortgage 

homeowners and the real estate business defendants they retained to provide services to 

help them obtain a loan modification, loan restructuring, short-sale authorization, or deed 

in lieu of foreclosure authorization. The majority finds this arbitration agreement is 

substantively unconscionable because it compels only the plaintiff homeowners to 

arbitrate their disputes with the defendants, and did not also expressly compel the 

defendants to arbitrate their disputes with the homeowners. The majority relies largely 

on Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83 

(Armendariz) which carved out a class of claims, those involving an employee’s 

unwaivable statutory rights, and applied a special rule to mandatory agreements to 

arbitrate those claims, requiring them to meet its minimum requirements in order to be 

enforceable. The majority focuses on language in Armendariz to the effect that the 

doctrine of unconscionability prevents enforcement of one-sided arbitration agreements 

imposed by an employer on an employee. As the majority notes, Armendariz rejected the 

argument that requiring mutuality of arbitration disfavored arbitration agreements in 

contravention of the FAA, reasoning in part that an arbitration agreement compelling one 

but not both parties to arbitrate disputes reflects a mistrust of arbitration that has been 

repudiated by the high court. The majority reasons that a rule prohibiting one-sided 

arbitration agreements promotes arbitration by requiring both parties to arbitrate their 

disputes.

Assuming the language in Armendariz concerning one-sided arbitration 

agreements was part of the holding in that case, and not dicta, nonetheless, Armendariz

was decided in 2000, and the Supreme Court did not have the benefit of the high court’s 

decision in Concepcion, decided over a decade later. The Supreme Court may have 

decided Armendariz differently if Concepcion had been the law in 2000, in part because 

Concepcion indicates the way to promote arbitration is to enforce arbitration agreements 

on their terms, not to refuse to enforce them under principles that discriminate against 

arbitration agreements and which are not neutral principles applicable to contracts 

generally.
3

Moreover, it is by no means clear that the Supreme Court would find a one-sided 

arbitration agreement in the context of this contract to be substantively unconscionable. 

Armendariz, Sonic II, and many of the lower court opinions cited in Sonic II (see, e.g., 

57 Cal.4th at p. 1151) concern mandatory employment arbitration agreements. This case 

does not involve an employment agreement or employee rights but a home loan 

restructuring agreement. I do not know how the Supreme Court may apply its precedent 

developed in the employment context to contracts such as the one at issue here.

Sonic II says the doctrine of unconscionability is “concerned with whether the 

agreement is unreasonably favorable to one party, considering in context ‘its commercial 

setting, purpose, and effect.’ (Civ. Code, § 1670.5, subd. (b).)” (Sonic II, supra, 

57 Cal.4th at p. 1148.) The opinion cites the various formulations in the case law to 

describe the test for substantive unconscionability (an issue now before the Supreme 

Court in Sanchez v. Valencia Holding Co., supra) and tells us that all of the “formulations 

point to the central idea that unconscionability doctrine is concerned not with ‘a simple 

old-fashioned bad bargain’ [citation], but with terms that are ‘unreasonably favorable to 

the more powerful party’ [citation]. These include ‘terms that impair the integrity of the 

bargaining process or otherwise contravene the public interest or public policy; terms 

(usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible 

manner fundamental duties otherwise imposed by the law, fine-print terms, or provisions 

that seek to negate the reasonable expectations of the nondrafting party, or unreasonably 

and unexpectedly harsh terms having to do with price or other central aspects of the 

transaction.’ [Citation.]” (Sonic II, at p. 1145.) Later in the opinion, Sonic II gives an 

example of a one-sided agreement that is substantively unconscionable: “adhesive 

contracts or terms that are unreasonably one-sided in favor of the drafting party, such as 

terms that effectively insulate the drafting party from liability.” (Id. at p. 1171.)

I do not find in the record any basis on which to conclude as a matter of law that 

this arbitration agreement falls within any of the categories of substantively 

unconscionable contracts described in Sonic II. The agreement in this case by no means 

insulates defendants from liability. It is not clear to me that either Armendariz or Sonic II
4

establishes that a one-sided arbitration clause in a home loan restructuring contract is per 

se substantively unconscionable. It would be so if it were the law that it is unfair or 

unreasonable to substitute the arbitral forum for a court for one party but not the other. 

But Sonic II says “[b]oth California and federal law treat the substitution of arbitration for 

litigation as the mere replacement of one dispute resolution forum for another, resulting 

in no inherent disadvantage.” (Sonic II, supra, 57 Cal.4th at p. 1152.)

Concepcion determined “a court may not ‘rely on the uniqueness of an agreement 

to arbitrate as a basis for a state-law holding that enforcement would be 

unconscionable’ ” (131 S.Ct. at p. 1747), nor may it enforce “state-law rules that stand as 

an obstacle to the accomplishment of the FAA’s objectives”, including the objective of “ 

‘ensur[ing] that private arbitration agreements are enforced according to their terms.’ 

[Citations.]” (Id. at p. 1748.) Before Concepcion, the high court explained in Perry v. 

Thomas (1987) 482 U.S. 483 (Perry) that the FAA preempts a state unconscionability 

rule that discriminates against arbitration. “A state-law principle that takes its meaning 

precisely from the fact that a contract to arbitrate is at issue does not comport with [the 

FAA’s savings clause]. [Citations.] A court may not, then, in assessing the rights of 

litigants to enforce an arbitration agreement, construe that agreement in a manner 

different from that in which it otherwise construes nonarbitration agreements under state 

law.” (Perry, at p. 492, fn. 9.)

Refusing to enforce an arbitration agreement because it does not require both 

parties to arbitrate their disputes appears contrary to the decisions in Concepcion and 

Perry, because there is no general principle of California contract law that promises must 

be mutual in order to be enforceable. California law does not require mutuality of every 

term and provision in a contract, so long as each party has made binding obligations in 

consideration for their respective promises. (1 Witkin, Summary of Cal. Law (10th ed. 

2005) Contracts, § 212, p. 247 [“the promise of one party is consideration for that of 

another”]; id., § 225, pp. 260-261 [“doctrine of mutuality of obligation requires that the 

promises on each side be binding obligations in order to be consideration for each 

other”]; see also 2 Corbin on Contracts (rev. ed. 1995) § 6.1, p. 197 [“[S]ymmetry is not 
5

justice and the so-called requirement of mutuality of obligation is now widely 

discredited.”]; 25 Williston on Contracts (4th ed. 2002) § 67:42, p. 332 [“mutuality of 

obligation is simply a prerequisite to the formation of a valid bilateral contract” --

“mutuality of obligation in bilateral contracts is but another way of stating that 

consideration is essential”].) Under general principles of California contract law, it is not 

unconscionable to include terms in a contract that benefit one party but not the other, so 

long as there is consideration for the contract. (Cf. Pinnacle Museum Tower Assn. v. 

Pinnacle Market Development (2012) 55 Cal.4th 223, 246 [“A contract term is not 

substantively unconscionable when it merely gives one side a greater benefit; rather, the 

term must be ‘so one-sided as to “shock the conscience.” ’ [Citation.]”].)

Plaintiffs acknowledge they entered binding contracts with defendants: one of 

their claims is for breach of contract. Plaintiffs attack only the arbitration clause as 

lacking mutuality of obligation. Before Armendariz, the Supreme Court had not held 

California law requires that both parties to a contract be subject to arbitration in order for 

their arbitration agreement to be enforceable. The reasoning and analysis of Armendariz, 

supra, 24 Cal.4th at pages 114 through 121, and the decisions by the intermediate 

appellate courts holding that one-sided arbitration agreements are unconscionable, such 

as Stirlen v. Supercuts (1997) 51 Cal.App.4th 1519, rest on special judge-made rules that 

apply only to arbitration agreements, and not on general principles of contract law. 

Because of this, it appears that a rule requiring mutuality of arbitration agreements would 

run contrary to the FAA as interpreted by Concepcion because it discriminates against 

arbitration, requiring arbitration clauses be mutual but not imposing that requirement on 

other contract provisions. (Mortensen v. Bresnan Communications, LLC (9th Cir. 2013) 

722 F.3d 1151, 1159-1161 [FAA preempts Montana reasonable expectations/fundamental 

rights rule because it “disproportionally applies to arbitration agreements, invalidating 

them at a higher rate than other contract provisions” reasoning in part, “We take 

Concepcion to mean what its plain language says: Any general state-law contract 

defense, based in unconscionability or otherwise, that has a disproportionate effect on 

arbitration is displaced by the FAA.”]; see also Allied-Bruce Terminix Cos. v. Dobson
6

(1995) 513 U.S. 265, 281 [“What States may not do is decide that a contract is fair 

enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce 

its arbitration clause. The [FAA] makes any such state policy unlawful, for that kind of 

policy would place arbitration clauses on an unequal ‘footing,’ directly contrary to the 

[FAA’s] language and Congress’ intent.”].) 

In summary, I cannot concur, at this time, in the majority’s conclusion that the 

arbitration agreement is unenforceable.

GRIMES, J.