Olshan Foundation Repair Company did foundation stabilization work for Remigio and Martha Ayala.
As part of the contract, both parties signed a binding arbitration agreement. When the Ayalas sued Olshan for breach of contract, fraud, negligence, and violations of the Deceptive Trade Practices Act, alleging that their foundation had failed, Olshan moved to compel arbitration.
The trial court granted the motion and the parties moved to begin arbitration with the AAA. Later, the Ayalas were informed that their half of the arbitration would cost more than $33,000. The Ayalas renewed their objection to arbitration, asserting that the excessive costs made the arbitration agreement unconscionable. Olshan argued that the arbitration treated both sides fairly (they split the costs evenly), which negated the unconscionability argument.
The trial court denied Olshan's motion to compel arbitration, and Olshan appealed. The appeals court also found the arbitration agreement unconscionable, and denied Olshan's motion to compel arbitration. What reasons did the court give for finding the arbitration agreement unconscionable?
Olshan Foundation Repair Co. v. Ayala, 180 S.W.3d 212 (Tex. Ct. App. 2005)