Aanderud v. Superior Court of Kern Cnty.

• Decision Date: 26 July 2017
• Docket Number: F073277
• Citation: 221 Cal.Rptr.3d 225,13 Cal.App.5th 880
• Parties: Larry AANDERUD, et al., Petitioners, v. The SUPERIOR COURT of Kern County, Respondent; Vivint Solar Developer, LLC, Real Party in Interest.
• Court: California Court of Appeals Court of Appeals

13 Cal.App.5th 880

221 Cal.Rptr.3d 225

Larry AANDERUD, et al., Petitioners,

v.The SUPERIOR COURT of Kern County, Respondent; Vivint Solar Developer, LLC, Real Party in Interest.

F073277

Court of Appeal, Fifth District, California.

Filed July 26, 2017

Kostas Law Firm, James S. Kostas, Palmdale; Law Office of Eugene E. Siegel and Eugene E. Siegel, Littlerock, for Petitioners.

No appearance for Respondent.

Wilson Sonsini Goodrich & Rosati, Keith E. Eggleton and Dale R. Bish, Palo Alto, for Real Party in Interest.

OPINION

GOMES, J.

Larry and Margaret Aanderud entered into an agreement with Vivint Solar Developer, LLC (Vivint Solar), pursuant to which Vivint Solar agreed to install a solar power generating system on the Aanderuds' property in exchange for the Aanderuds' agreement to purchase the solar power generated by the system. The Aanderuds later sued Vivint Solar in superior court, seeking rescission of the agreement and asserting individual and class claims for declaratory relief and violations of the Unfair Competition Law (UCL), Business and Professions Code section 17200, et seq. The trial court granted Vivint Solar's petition to compel arbitration based on the arbitration provision in the agreement, ordered the Aanderuds to submit their individual claim to arbitration, and dismissed the class claims without prejudice.

The Aanderuds assert the trial court erred in (1) dismissing the class claims, as under California law statutory claims for injunctive relief are not subject to compulsory arbitration; and (2) finding the arbitration provision was enforceable, as the provision does not meet certain minimum standards required for the arbitration of public claims, and is procedurally and substantively unconscionable. The Aanderuds also contend a clause in the arbitration provision that delegates to the arbitrator "the determination of the scope or applicability" of that provision (the delegation clause) is unenforceable.

We will treat this appeal as a petition for writ of mandate. We conclude that the delegation clause is enforceable and therefore it is the arbitrator, not the court, who is required to determine the enforceability of the arbitration provision and whether it covers class claims. Accordingly, we will issue a peremptory writ of mandate commanding the trial court to vacate that portion of its order in which it found the arbitration provision is not unconscionable or unenforceable, the claims asserted in the complaint are arbitrable, and the arbitration provision's prohibition against bringing class claims is enforceable. We also vacate the order dismissing the class claims. In all other respects, the peremptory writ challenging the order compelling arbitration is denied.

FACTUAL AND PROCEDURAL BACKGROUND

In July 2014, the Aanderuds entered into a 20–year solar power purchase agreement (SPPA) with Vivint Solar. Vivint Solar agreed to install a solar power generating system on the Aanderuds' property, while the Aanderuds agreed to purchase all the solar power generated by that system. Vivint Solar completed installation of the system on the roof of the Aanderuds' home the following month. According to the Aanderuds, there were delays in completing the work and as of February 2015, Vivint Solar had not completed the installation or interconnection of the system to the power grid. The Aanderuds sent Vivint Solar a notice of cancellation and rescission of the agreement, but Vivint Solar did not remove the system or restore their home to its pre-installation condition.

The Aanderuds filed this lawsuit in September 2015. They allege that Margaret allowed a Vivint Solar salesperson, who appeared at her home unannounced, to make a sales presentation regarding Vivint Solar's solar power products and services. During the presentation, the salesperson explained that under the SPPA, Vivint Solar would design and install the solar power system on the Aanderuds' property, bear all associated costs, interconnect the system with the Aanderuds' utility provider, and service and maintain the system at its sole cost and expense for the entire 20–year contract term. The Aanderuds' only responsibility was to pay Vivint Solar a flat fee of $.15 per kilowatt hour for all solar power the Aanderuds used. The salesperson produced a copy of the pre-printed form SPPA, explained its terms in about five minutes, and showed Margaret where to initial, telling her that she could execute the SPPA for her husband. Margaret then initialed the agreement for both herself and Larry, who was in another room and not present during the presentation. The salesperson did not verbally explain the three-day right to cancel.

The Aanderuds allege the SPPA violated the California home improvement and home solicitation laws in numerous ways, and as a proximate result of these violations, they were unaware of the true scope and extent of their obligations and potential liabilities, Margaret was unaware of the number of kilowatt hours and corresponding charges she might expect to be responsible for each month, and they never received notice of their cancellation rights. In addition to their own interests, the Aanderuds seek to represent a class of similarly situated consumers consisting of all persons who entered into SPPA transactions with Vivint Solar in the past four years where the SPPA contained the same provisions as the Aanderuds' SPPA and who were subjected to the same business practices.

The complaint alleges three causes of action. In the first, the Aanderuds seek rescission and restitution as to themselves in their individual capacity.

The other two causes of action are brought on behalf of the Aanderuds and the proposed class. In the second, the Aanderuds seek declaratory relief as to the parties' "respective rights, duties and obligations under the pre-printed form SPPA," and in the third, they seek injunctive relief under the UCL to "ensure Vivint's compliance with applicable law and to deter future wrongdoing." The Aanderuds also seek attorney fees on a private attorney general theory.

Vivint Solar filed a petition to compel arbitration pursuant to an arbitration provision in the SPPA. That clause, entitled "5. Arbitration of Disputes," provides that if Vivint Solar's customer service department is unable to resolve the customer's concern, "You and We agree to resolve any Dispute (as defined below) through binding arbitration or small claims court instead of courts of general jurisdiction. BY SIGNING BELOW, YOU ACKNOWLEDGE AND AGREE THAT (I) YOU ARE HEREBY WAIVING THE RIGHT TO A TRIAL BY JURY; AND (II) YOU MAY BRING CLAIMS AGAINST US ONLY IN YOUR INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. You and We agree to arbitrate all disputes, claims and controversies arising out of or relating to (i) any aspect of the relationship between You and Us, whether based in contract, tort, statute or another legal theory; (ii) this Agreement or any other agreement concerning the subject matter hereof; (iii) any breach, default, or termination of this Agreement; and (iv) the interpretation, validity, or enforceability of this Agreement, including the determination of the scope or applicability of this Section 5 (each, a "Dispute ")."

The arbitration provision states how to institute an arbitration, which "shall be administered by JAMS pursuant to its Streamlined Arbitration Rules and Procedures (available at: http://www.jamsadr.com/rules-streamlined-arbitration, the "JAMS Rules ") and under the rules set forth in this Agreement." The arbitrator is bound by the terms of the agreement and is not permitted to award "punitive, special, exemplary, indirect, or consequential damages to either party." If the customer initiates arbitration, the customer is responsible to pay $250, and "[a]ll attorneys' fees, travel expenses, and other costs of the arbitration shall be borne by You and Us in accordance with the JAMS Rules and applicable law." The arbitration clause further provides that "[n]othing in this Section 5 shall preclude You or We from seeking provisional remedies in aid of arbitration from a court of competent jurisdiction."

In their petition, Vivint Solar argued that the Aanderuds' individual claims were subject to mandatory arbitration under the arbitration clause and asked the trial court to order arbitration of their claims and either dismiss the complaint with prejudice or stay the proceedings until conclusion of the arbitration. Moreover, because the arbitration provision's class action prohibition was valid and enforceable, the arbitration would be only on the Aanderuds' individual claims.

The Aanderuds opposed the petition, arguing (1) the arbitration provision does not provide the minimum protections required for arbitration of the non-waivable statutory rights alleged in the complaint; (2) the arbitration provision is unconscionable; (3) the delegation of the threshold issue of arbitrability to the arbitrator contained in the arbitration provision is unenforceable; and (4) the UCL claims are not subject to arbitration. The Aanderuds submitted Margaret's declaration in support of their opposition, in which she explained what occurred during the salesperson's presentation; stated that she did not see the arbitration provision or read it before signing the SPPA, and it was not explained to her; she did not see the additional terms and conditions that were on the back of the SPPA, and she could not read them even with her glasses on; and she had no prior experience negotiating contracts, she graduated high school in 1957, she had no other formal education, and she had been a homemaker since 1969. She also stated that she and her husband live on a fixed income and could not afford to pay the costs of arbitration.

The Aanderuds asked the trial court to take judicial notice of (1) the "JAMS Streamlined Arbitration Rules & Procedures"; (2) the representative fee schedules for JAMS arbitrators...