Defendant builders appealed an order from the Superior Court of San Bernardino County (California), which denied the builders' motions to compel arbitration in construction defect cases brought by plaintiff home buyers.
The builders provided an application for an express limited warranty and induced the buyers to sign it by telling them that it was a bonus and gave them extra protection. The warranty included arbitration provisions that purported to require arbitration of disputes arising from or related to not only the warranty, but also the home, the sale of the home, and the arbitration provisions themselves. The trial court ruled that the agreement was unconscionable. The court held that because the buyers were claiming that they never knowingly agreed to the arbitration provisions, the trial court and not the arbitrator had to resolve the unconscionability claim. Under such circumstances, the arbitration provisions California class action lawyers could not be separately enforced under the severability doctrine of the Federal Arbitration Act, 9 U.S.C. § 1 et seq. The court found the arbitration provisions to be unconscionable because they were contained in a contract of adhesion and violated the buyers' reasonable expectations. Although the application form contained a recital that the applicant had read a sample copy of the warranty booklet, Evid. Code, § 622, was inapplicable because the contract was an adhesion contract.
The court affirmed the trial court's order.
Appellants, an insurer, a general agent, and others, challenged a judgment from the Superior Court of Kern County (California) granted in favor of respondent insured in the insured's action alleging that the failure to settle the third party's claim within the coverage limits of the public liability policy was not made in good faith.
The insured filed a complaint claiming that the opposing parties' decision not to settle the third party's claim litigated against the insured and defended by the insurer was not made in good faith. Appellants challenged the superior court judgment rendered upon the jury verdict, which the court affirmed. The court found sufficient evidence to sustain the jury's implied finding that the insurer did not exercise good faith in declining the settlement offer. The court found that the insurer made reasonably diligent efforts to investigate the facts on the issue of liability. The court found that the third party made a firm offer to settle. The court found no merit in the insured's contention that the insurer did not provide immediate notice of the settlement offer and that this failure was bad faith. The court concluded that the record did not prove that the insurer failed to intelligently consider the settlement offer because the investigation was sufficiently adequate and diligent and its attorneys were qualified to satisfy the demands of good faith. The court found that the insurer was not prevented from protecting its interests.
The court affirmed the judgment of the superior court.