Court Opinion

ID: 9522109
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:18:06.917998+00
Date Added: 2024-06-11T13:02:18.672022
License: Public Domain

Dooley, J.,
¶ 32. concurring and dissenting. This case reminds me of the child’s game, pickup sticks. The trick is to pick up the right stick very carefully. Here, the right “stick” is the clause limiting liability to the cost of the inspection, and I concur completely in the decision to strike down that clause. Were this case to proceed in arbitration or in court, the limitation of liability would prevent any meaningful relief. It fails the Dalury v. S-K-I, Ltd. standard for an exculpatory clause and is not a valid liquidated damages provision. 164 Vt. 329, 332-33, 670 A.2d 795, 797-98 (1995). It is unconscionable as a matter of law. Therefore, I concur with the majority’s decision to strike the limited-liability provision.
*18¶ 33. The right “stick,” however, is not the arbitration clause, at least in this Court. Vermont law favors arbitration. Union Sch. Dist. #45 v. Wright & Morrissey, Inc., 2007 VT 129, ¶ 12, 183 Vt. 555, 945 A.2d 348 (mem.). Standing alone, a requirement to arbitrate disputes under a home inspection contract is valid. See 9 U.S.C. § 2; 12 V.S.A. § 5652(a). Courts in many of the states that have struck down the liability limit in a home inspection contract, or both the liability limit and the arbitration requirement, have upheld the arbitration requirement standing alone. See Lynes v. Calcagni Assocs., 2006 WL 894913, at **2-3 (Conn. Super. Ct. 2006); Meglio v. Taylor Real Estate, Inc., 2006 WL 3153426, at *4 (N.J. Super. Ct. App. Div. 2006); Bozich v. Kozusko, 2009-Ohio-6908, ¶¶ 12-13, 2009 WL 5150264 (Ct. App.). Once the limitation on liability is removed, the major reason for striking down the arbitration requirement — that it costs more to obtain arbitration than the homeowner can recover — is also gone. If there were no limitation of liability in the contract, I do not believe that on this record we would strike down the arbitration requirement as a matter of law in this Court; we should not strike it down here when the same circumstances are created by removing the limitation of liability. This is the holding of Bozich, 2009-Ohio-6908, ¶¶ 21-22, the appellate decision with facts closest to those before us. It is entirely consistent with the law of remedies in unconscionable contract cases.
¶ 34. In general, if a contract or a term within a contract is unconscionable, a court can choose either to refuse to enforce the contract, or it may choose to enforce the remainder of the contract with the unconscionable term excised so as to avoid any unconscionable result. Restatement (Second) of Contracts §208 (1981). Courts generally may sever an illegal or unconscionable provision of a contract as long as the provision does not constitute the essential purpose of the agreement but, rather, is only a part of multiple reciprocal promises in the agreement. See In re Poly-America, L.P., 262 S.W.3d 337, 359-60 (Tex. 2008). Under this theory, it is possible to continue with a requirement for arbitration but sever terms that make the arbitration unconscionable. Id. at 360. Severing or restricting illegal contract terms is often preferable to voiding an entire contract. Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d 669, 696 (Cal. 2000).
¶ 35. My disagreement over the majority decision to strike down the arbitration requirement does not mean that I believe that *19plaintiffs should be required to proceed to arbitration in this case. Plaintiffs challenged the arbitration requirement on a number of grounds, one of which involved its interaction with the limitation on liability. Plaintiffs particularly challenged the fairness of an industry-created arbitration process with a single arbitrator selected by the arbitration administrator. They also challenged the fee provisions generally and the cost-shifting provision that allows the home inspection company, but not the homeowner, to collect “all associated costs, reasonable attorney fees and insurance policy deductible assignments incurred by the” home inspection company. I would remand for the superior court to reconsider whether the arbitration requirement is unconscionable in light of our decision regarding the limitation of liability.