Problem:
Thomas Baker and others who bought new homes from Osborne Development Corp. sued for multiple defects in the houses they purchased. When Osborne sold the homes; it paid for them to be in a new home warranty program administered by Home Buyers Warranty (HBW). When the company enrolled a home with HBW, it paid a fee and filled out a form that stated the following:
By signing below, you acknowledge that you CONSENT TO THE TERMS OF THESE DOCUMENTS
INCLUDING THE BINDING ARBITRATION PROVISION contained therein'. HBW then issued warranty booklets to the New homeowners that stated: 'Any and all claims disputes and controversies by or between the Homeowner, the Builder, the Warrant Insurer and/or HBW shall be submitted to arbitration'.
Would the new homeowners be bound by the arbitration agreement, or could they sue the builder, Osborne, in court? (Baker v Osborne Development Corp., 159 Cal.App.4th 884, 71 Cal.Rptr.3d 854 (2008)
In responding to the question be sure to:
- Discuss what courts are saying about the enforcement of arbitration clauses in contracts.
- Utilize the decision in the NCR Corp v Korala Associates, Ltd. as a basis for answer. For more information on this case go to
https://www.ca6.uscourts.gov/opinions.pdf/08a0029p-06.pdf.