Vasquez v. Greene Motors - detailed decision re: enforceability of an adhesion contract and its arbirtration clause

On March 27, 2013,  1st Appellate District handed down a decision in Vasquez v. Greene Motors, Case No. A134829. There, Vasquez, a buyer of a used car, was challenging the car's purchase agreement, printed out on a standard form ("553-CA-ARB"), particularly its arbitration clause, arguing that the clause may not be enforced, because it is unconscionable, procedurally and substantially, and is overall one-sided and unfair. This decision contains a few thoughts worth to notice.

The court held the form satisfactory. The court also acknowledged that a noticeable volume of litigation is concerned with this form, with California Supreme Court expected to review at least two cases: Sanchez v. Valencia Holding Co., LLC, 201 Cal.App.4th 74 (2011), review granted March 21, 2012, S199119; and Goodridge v. KDF Automotive Group, Inc., 209 Cal.App.4th 325 (2012), review granted and briefing deferred Dec. 19, 2012, S206153. Two more cases were mentioned: Flores v. West Covina Auto Group, LLC,  212 Cal.App.4th 895 (2013), and Natalini v. Import Motors, Inc., 213 Cal.App.4th 587  (2013). "Both are the subject of currently unresolved petitions for review in the Supreme Court." (Vasquez, Id. at 4, fn.4).


That the last word in the discussion over a one particular contract form is not yet told may be of interest to a more specific audience, while a couple of more general thoughts, expressed in the Vasquez decision, a decision well written and very detailed, are good to know for the rest of us. Here is what caught my eye:

- that the other side to a contract (there, Greene Motors, the car's vendor) does not have to make a consumer to read the contract; it will suffice if a vendor did not prevent a consumer from reading, did not coerce a consumer into signing it, and gave her/him an opportunity to read or review the contract with an attorney. Id. at 10;

- [never thought about it, but agree] that if the contract's drafter will work too hard on making one clause too conspicuous, it would actually make the contract more unconscionable, by making at least some other clause(s) shadowed out: "Any attempt to make one clause more conspicuous inevitably makes every other clause less conspicuous. By attempting to avoid an argument of "surprise" with respect to one provision, the merchant risks having the same argument made with respect to any other provision not given more prominent treatment." Id. at 16;

- that the signatory to a contract, even to a contract of adhesion (which is "a contract presented without the option of negotiation, on a take-it-or-leave-it basis," Id. at 6) has no duty to read the contract, and will not receive a more lenient treatment in court for a mere reason that (s)he actually failed to read: "to find surprise on the basis of a consumer‘s declared failure to read a contract ... discourages diligence by penalizing the consumer who admits to reviewing a preprinted contract." Id. at 17.

The court agreed with Vasquez that the arbitration clause is unconscionable and ... held it enforceable, explaining that the present unconscionability is "minimal" and would not prevent the parties from arbitrating their dispute.

P.S. As a sideline curious comment, the court explained, why in California we have these 26-inch long car agreement's forms, dense with small print on both sides. I never knew, but apparently "[th]e use of a single, unusually long page with writing on both sides was, arguably, dictated by state law, which requires a vehicle installment sale contract to "be printed in type no smaller than 6-point" and "contain in a single document all of the agreements of the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle." (§ 2981.9.) The vehicle sales industry has traditionally interpreted "single document" to mean "single sheet of paper."" Now we know!