Rickenbaugh v. Power Home Solar, LLC

• Decision Date: 20 December 2019
• Docket Number: 19 CVS 244
• Citation: 2019 NCBC 79
• Parties: JAMES RICKENBAUGH; and MARY RICKENBAUGH, Individually and on Behalf of all Others Similarly Situated, Plaintiffs, v. POWER HOME SOLAR, LLC, Defendant.
• Court: Superior Court of North Carolina

2019 NCBC 79

JAMES RICKENBAUGH; and MARY RICKENBAUGH, Individually and on Behalf of all Others Similarly Situated, Plaintiffs, v. POWER HOME SOLAR, LLC, Defendant.

No. 19 CVS 244

Superior Court of North Carolina, Mecklenburg

December 20, 2019

Weaver, Bennett & Bland, P.A., by Matthew M. Villmer and Bo Caudill, for Plaintiffs James and Mary Rickenbaugh.

The Law Office of B. Elizabeth Todd, PLLC, by Elizabeth Todd Womble Bond Dickinson (US) LLP, by James P. Cooney DarrowEverett LLP, by David A. Sullivan, for Defendant Power Home Solar LLC.

ORDER AND OPINION ON DEFENDANT'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO COMPEL BILATERAL ARBITRATION AND STAY PROCEEDINGS

Louis A. Bledsoe, III Chief Business Court Judge

1. THIS MATTER is before the Court upon Defendant Power Home Solar, LLC's ("Power Home") Motion to Dismiss or, in the Alternative, to Compel Bilateral Arbitration and Stay Proceedings (the "Motion"). (ECF No. 15.)

2. After considering the Motion, the related briefs, and the arguments of counsel, the Court hereby DENIES the Motion, DEFERS to an arbitrator to be selected by the parties the determination of the availability of class arbitration for the claims Plaintiffs James ("James") and Mary ("Mary") Rickenbaugh (together, the "Rickenbaughs") have asserted in this action, ORDERS all claims asserted by Plaintiffs to arbitration, and STAYS litigation of Plaintiffs' claims in this civil action pending the outcome of arbitration proceedings between the parties.

I. FINDINGS OF FACT

3. Power Home is a Delaware limited liability company with its principal place of business in Mooresville, North Carolina. The company is one of the largest solar installation companies in the United States and operates in North Carolina, South Carolina, Virginia, Ohio, and Michigan. (Class Action Compl. ¶¶ 1, 3, 14-15, ECF No. 3.)

4. The Rickenbaughs are residents of Mecklenburg County. In 2017, they agreed to have Power Home install its standard energy savings package, including a NEST thermostat, ten LED lightbulbs, blown attic insulation, a hot water heater "blanket," and twelve solar panels at their residence and at a detached building that served as a home office in Charlotte, North Carolina. (Class Action Compl. ¶¶ 16, 25, 30, 32.)

5. According to the Rickenbaughs, Power Home's sales process was designed to make customers believe they would experience a "guaranteed drop in their energy bills" of between 80% and 99% over the 25-year lifespan of the Power Home solar energy system. (Class Action Compl. ¶ 21.) They allege that the Power Home representative they spoke with advised that the standard energy savings package they eventually purchased "was guaranteed to save [them] at least 97% on their energy bills, and any bill from Duke Energy would be a nominal amount." (Class Action Compl. ¶ 30.) Based on these representations, on February 21, 2017, James, with Mary's consent, agreed to pay $15, 708 for Power Home's energy savings package. (Class Action Compl. ¶ 32, Ex. A.) James and Power Home's representative electronically signed Power Home's standard purchase contract (the "Agreement") to effect the transaction. (Class Action Compl. ¶ 32, Ex. A.)

6. Of significance here, the Agreement contained the following provision titled "Arbitration of Disputes":

In the event of any dispute the parties will work together in good faith to resolve any issues. If such issues cannot be resolved, the parties agree that any dispute arising out of or relating to the negotiation, award, construction, performance or non-performance, of any aspect of this agreement, shall be settled by binding arbitration in accordance with the Construction Industry Rules of the American Arbitration Association and judgment upon the award rendered by any such arbitrator may be entered in any court having jurisdiction thereof.

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY NORTH CAROLINA & SOUTH CAROLINA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OF JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPLELLED [sic] TO ARBITRATE UNDER THE AUTHORITY OF THE BUSINESS AND PROFESSIONS CODE OR OTHER APPLICABLE LAWS, YOUR AGREEMENT TO THE ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTER INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION OF NEUTRAL ARBITRATION.

(Class Action Compl. Ex. A. ¶ 13.)

7. Between February and April 2017, Power Home installed its energy efficiency products at the Rickenbaughs' residence and home office, and on April 11, 2017, the newly installed solar panels were activated. (Class Action Compl. ¶¶ 33- 34.) The Rickenbaughs allege that the actual energy savings reflected in their power bills for May and June 2017 were only "a fraction" of the 97% energy savings promised by Power Home. (Class Action Compl. ¶¶ 30, 35-36.) The Rickenbaughs complained to a Power Home representative, and they allege in this lawsuit that Power Home refused to provide the promised energy savings or otherwise afford them a remedy. (Class Action Compl. ¶¶ 37-40.)

8. The Rickenbaughs commenced this action on January 7, 2019 "as representatives of all others similarly situated under the provisions of Rule 23(a) of the North Carolina Rules of Civil Procedure[.]" (Class Action Compl. ¶¶ 41-43.) They assert claims against Power Home for common law fraud and fraud in the inducement, unfair and deceptive trade practices under N.C. G.S. § 75-1.1, breach of contract, punitive damages, and unjust enrichment. (See Class Action Compl.) The Rickenbaughs allege that other members of the purported class include homeowners in the states in which Power Home does business and "in other places throughout the United States[, ]" thus creating a class that could be made up of more than 10, 000 people. (Class Action Compl. ¶¶ 59-60.)

9. On March 26, 2019, Power Home filed the Motion with supporting brief, contending that the Agreement requires that the Rickenbaughs' claims be adjudicated through bilateral arbitration. (ECF Nos. 15-17.) The Motion was fully briefed and came on for hearing before the Court on May 10, 2019. The Court thereafter entered a stay of these proceedings under N.C. G.S. § 1-569.7(f) pending the Court's determination of the Motion and requested supplemental briefing. (ECF No. 31.) Supplemental briefing was completed on June 10, 2019. (ECF Nos. 32-35.)

10. The Motion has been fully briefed and is now ripe for resolution.

II. CONCLUSIONS OF LAW

A. Applicable Law

11. "[I]t is incumbent upon a trial court when considering a motion to compel arbitration to 'address whether the Federal Arbitration Act ("FAA") or the North Carolina Revised Uniform Arbitration Act [("NCRUAA")] applies' to any agreement to arbitrate." King v. Bryant, 225 N.C.App. 340, 344, 737 S.E.2d 802, 806 (2013) (quoting Cornelius v. Lipscomb, 224 N.C.App. 14, 18, 734 S.E.2d 870, 872 (2012)). "Determining whether the FAA applies 'is critical because the FAA preempts conflicting state law[.]'" Epic Games, Inc. v. Murphy-Johnson, 247 N.C.App. 54, 60, 785 S.E.2d 137, 142 (2016) (quoting Sillins v. Ness, 164 N.C.App. 755, 757-58, 596 S.E.2d 874, 876 (2004)). A "trial court should . . . address[ ] the issue of choice of law before addressing any other legal issue." Bailey v. Ford Motor Co., 244 N.C.App. 346, 350, 780 S.E.2d 920, 924 (2015).

12. The Agreement here provides that covered disputes will be resolved by arbitration "AS PROVIDED BY NORTH CAROLINA & SOUTH CAROLINA LAW[, ]" (Class Action Compl. Ex. A ¶ 13), suggesting that the parties agreed that either the NCRUAA or the South Carolina Arbitration Act, as appropriate, should apply to the application and interpretation of the arbitration provision in the Agreement. Defendant argues, however, that the FAA should govern the arbitration provision despite the parties' choice of law. (Def.'s Brief Supp. Mot. Dismiss or, Alternative, Compel Bilateral Arbitration & Stay Proceedings [hereinafter "Def.'s Brief ISO"] 6- 7, ECF No. 16.) The Court agrees.

13. The FAA applies to any "contract evidencing a transaction involving commerce[.]" 9 U.S.C. § 2 (2012). As used here, "the word 'involving' is broad and is indeed the functional equivalent of 'affecting[ ]'" which "signals an intent to exercise Congress' commerce power to the full." Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 273-74, 277 (1995). The phrase "a contract evidencing a transaction involving commerce" requires only that the transaction involve interstate commerce; the parties to the transaction need not "contemplate" an interstate commerce connection. Id. at 278-81. Here, Plaintiffs are residents of North Carolina, and Power Home is a limited liability company organized in Delaware that operates from its North Carolina principal place of business. (Def.'s Brief ISO 7; Class Action Compl. ¶ 14-16.) According to Plaintiffs, Power Home "operates a sophisticated and fraudulent scheme throughout the states of North Carolina, South Carolina, Virginia, Ohio, and Michigan." (Def.'s Brief ISO 7; Class Action Compl. ¶ 1.) Plaintiffs' proposed class consists of Power Home customers who reside in those states and "in other places throughout the United States and its territories" who purchased Power Home's energy efficiency equipment in reliance on Power Home's guarantee of substantial...