[Cite as Cleveland v. Power Home Solar, L.L.C., 2024-Ohio-2145.]
COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT
JUDGES: KIMBERLY CLEVELAND, ET AL : Hon. W. Scott Gwin, P.J : Hon. William B. Hoffman, J. Plaintiffs-Appellees : Hon. Craig R. Baldwin, J. : -vs- : : Case No. 2023CA00164 POWER HOME SOLAR, LLC, ET AL : : Defendants-Appellants : OPINION
CHARACTER OF PROCEEDING: Appeal from the Stark County Court of Common Pleas, Case No 2023CV00730
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: June 4, 2024
APPEARANCES:
For Plaintiffs-Appellees For Defendants-Appellants
STACIE L. ROTH ELISABETH GENTILE The Carnegie Building 65 East State Street, Suite 2550 236 3rd Street S.W. Columbus, OH 43215 Canton, OH 44702 [Cite as Cleveland v. Power Home Solar, L.L.C., 2024-Ohio-2145.]
Gwin, P.J.,
{¶1} Appellant Power Home Solar, LLC appeals the November 7, 2023 judgment
entry of the Stark County Court of Common Pleas denying their motion to compel
arbitration.
Facts & Procedural History
{¶2} On April 24, 2023, appellees Kimberly and William Cleveland filed a
complaint against Jayson Waller (founder and CEO of Power Home Solar), Power Home
Solar, LLC d/b/a Pink Energy (“PHS”), Cross River Bank, Sunlight Financial, LLC, Trivest
Partners, AM Roofing & Siding, LLC, and Aaron Maddux. PHS filed bankruptcy on
October 7, 2022, but appellees received relief from the automatic stay to pursue the
claims listed in their complaint.
{¶3} Appellees entered into a “Solar Energy System Purchase & Installation
Agreement” (“Agreement”) with PHS and a “Loan Agreement” with Cross River Bank and
Sunlight Financial on May 1, 2021. On May 25, 2021, PHS installed twenty-eight solar
panels on the roof over appellees’ indoor pool room. In June of 2021, the panels failed
an electrical inspection. After a heavy storm on June 30, 2021, there was leakage and
flooding from the roof where the panels had been installed. PHS switched out the incorrect
panels for new panels in July of 2021. The new panels failed to activate and the new
wiring installation failed electrical inspection. Because the panels were never able to be
activated, they were removed from appellees’ property in 2022.
{¶4} Appellees allege as follows in their complaint: Waller developed sales
techniques, and routinely pushed for sales representatives to engage in hard-sell tactics;
PHS and Waller directed and trained employees to engage in pressured and hard-sell Stark County, Case No. 2023CA00164 3
sales tactics, including misleading customers as to the efficiency of the solar panels and
manipulating “pain points” regarding customers’ electric bills; and PHS and Waller
directed and trained employees to misrepresent tax credits, and make false promises
regarding discounts, rebates, and deductions. As to the transaction on May 1, 2021,
appellees allege: the PHS employee/agent produced an electronic copy of the
Agreement on a tablet; the Agreement was not provided in written, hard-copy format; the
salesman acquired appellees signatures on the arbitration provision without appellees’
knowledge and consent by having them sign electronically and without giving them a
chance to review it; the salesman used high pressure sales tactics; the salesman scrolled
through the Agreement at an unacceptably rapid pace; appellees signed the Agreement
via DocuSign, which included auto-filling of their initials after each paragraph; and
appellees also received the Loan Agreement in the same manner and format.
{¶5} Appellees asserted the following claims against PHS and Waller: breach of
contract; fraudulent misrepresentation; negligent misrepresentation; fraud in the
inducement; a declaratory judgment action to void the undisclosed arbitration agreement
and limitation of liability clauses in the Agreement; a declaratory judgment action to void
the undisclosed arbitration agreement and limitation of liability clauses in the Loan
Agreement; negligent selection, retention, and training; breach of warranty; violations of
the Ohio Consumer Sales Practices Act (“CSPA”); civil conspiracy; negligence; a
declaratory judgment action to hold Waller personally liable for damages associated with
PHS’ fraudulent sales and marketing practices; and a punitive damages claim.
{¶6} Waller filed a motion to dismiss the complaint against him pursuant to Civil
Rule 12(B)(6), in which he argued: appellees failed to state a claim against him because Stark County, Case No. 2023CA00164 4
the complaint consisted only of vague accusations that fall short of Ohio’s pleading
standards; appellees did not allege specific facts from which Waller could be held
individually liable for the alleged acts of PHS; appellees failed to adequately plead their
fraud-based claims; appellees failed to adequately plead negligent retention, hiring, and
training claims; and the economic loss doctrines precludes appellees from recovering
purely economic losses.
{¶7} Appellees filed a memorandum in opposition to the motion to dismiss on
June 26, 2023. After requesting a fourteen-day extension, Waller filed his reply brief on
July 17, 2023. The trial court denied Waller’s motion on July 31, 2023. Waller filed a
motion for reconsideration on September 7, 2023, arguing that personal officer liability
against Waller cannot lie due to the alleged corporate conduct of PHS. The trial court
denied Waller’s motion to reconsider on September 22, 2023.
{¶8} Sunlight Financial filed a motion to compel arbitration on May 31, 2023.
Cross River Bank sought to join in Sunlight Financial’s arbitration motion on June 13,
2023. Appellees filed memoranda in opposition to the motions. Sunlight Financial filed
a reply brief in support of their motion to compel arbitration on July 18, 2023.
{¶9} On July 31, 2023, the trial court issued a judgment denying Sunlight
Financial’s motion to compel arbitration. The trial court found the arbitration provision
substantively and procedurally unconscionable. Sunlight Financial appealed the trial
court’s order.
{¶10} PHS filed an answer to appellees’ complaint on July 10, 2023. PHS did not
assert arbitration as an affirmative defense. Waller filed an answer to the complaint on
August 10, 2023. Waller did assert arbitration as an affirmative defense, stating “plaintiffs Stark County, Case No. 2023CA00164 5
failed to abide by the terms and conditions of their contract with the Defendant Power
Home Solar which requires the plaintiffs’ to arbitrate any dispute arising from its contract
with Power Home Solar.”
{¶11} The parties filed a Report of Discovery Planning Meeting and Agreed
Discovery Plan on September 19, 2023. The report stated the discovery and planning
meeting occurred on September 8, 2023 and counsel for Waller and PHS participated.
Waller and PHS sought to stay discovery in the case pending Sunlight Financial’s appeal,
but, alternatively, were willing to agree to deadlines at the initial pre-trial. The trial court
held a pre-trial and case management conference on September 26, 2023, setting case
management dates.
{¶12} PHS filed a motion to compel arbitration on October 11, 2023. Waller filed
a motion to compel arbitration on October 25, 2023.
{¶13} Appellees filed a memorandum in opposition to PHS and Waller’s motions
to compel arbitration, arguing the parties waived their right to arbitrate and arguing the
arbitration provision is substantively and procedurally unconscionable. Appellees
attached to their memorandum the American Arbitration Association’s Construction
Industry Arbitration Rules and Mediation Procedures, and the American Arbitration
Association’s Consumer Arbitration Rules.
{¶14} Appellees also attached to the memorandum in opposition the affidavit of
Kimberly Cleveland. She averred as follows: PHS’ advertisements represented the
superior quality and craftsmanship of its solar energy systems and components, the
superior skill and expertise of its installers, the continual maintenance of the solar energy
systems after they were installed, the extraordinary savings the solar energy systems Stark County, Case No. 2023CA00164 6
would generate, and the near-complete reduction in monthly electric bills; on May 1, 2021,
a salesperson identifying themselves as an agent for PHS represented the cost of the
solar energy system would be $122,478, the system would produce approximately 9,365
watts per year, she would be eligible for various credits and other discounts including a
federal tax credit if she would immediately sign the agreements to finance and install the
solar energy system; the salesperson stated the discounts and credits could not be
promised if she did not immediately sign the agreements; the cost of the system included
the cost of a new roof for the house that she was advised was needed to safely install the
system; as a result of these representations, she felt rushed to enter into the Agreement
and Loan Agreement; after explaining the agreements needed to be signed as a condition
to receiving the solar energy system and aforementioned credits and discounts, the
salesperson presented the Sales Agreement that he requested she sign; the salesman
asked her to first sign the electronic block with her full signature and initials; her signature
and initials were auto-filled throughout the document, so she never signed or initialed any
other portion of the Agreement; the salesperson gave a rapid and inaccurate summary of
the contents of the Agreement; the portions of the Agreement discussing arbitration and
limitation of liability were not fully or accurately explained; she was not told she was giving
up the right to pursue an action in a court of law, that she was giving up a right to a jury
trial, or that the provision was limiting the amount of compensation she could be awarded;
she was not given the opportunity to seek other sources of financing because she was
told time was of the essence to qualify for the credits and promotions described above;
the salesperson rapidly and inaccurately summarized the contents of the Loan
Agreement; her signature and initials on the Loan Agreement were only entered once and Stark County, Case No. 2023CA00164 7
then auto-filled throughout the rest of the Loan Agreement, including the initials that
appear near the portion of the agreement discussing arbitration; at no time during the
signing was she provided with a hard copy of either the Agreement or Loan Agreement;
she had to rely solely on the inaccurate interpretation and explanation of the agreements
by the salesperson; she was not told any portion of the agreements were negotiable; she
was concerned that if she questioned any provision of the Loan Agreement or Agreement,
she would not be able to purchase the solar panels and take advantage of the discounts
and credits promised; and she did not receive all the rebates, deductions, and credits she
was promised.
{¶15} The trial court issued a detailed and thorough judgment entry on November
7, 2023. The trial court denied the motion to compel arbitration for two separate reasons:
(1) waiver and (2) unconscionability. As to waiver, the trial court found PHS knew of the
existence of the arbitration provision, failed to assert any right to arbitration in their
answer, acted inconsistently with its rights, actively participated in the litigation without
demanding arbitration, and appellees were prejudiced by this delay in demanding
{¶16} With regard to procedural unconscionability, the trial court examined the
Agreement and the circumstances surrounding the execution of the Agreement, and
noted the following: appellees had no role in preparing the document; the document is a
pre-printed form contract that was wholly electronic and viewable only on an electronic
tablet that belonged to the PHS employee; the document is forty pages long and includes
multiple “sub-agreements”; appellees were never given an opportunity to review the
document at their own pace; appellees did not receive a hard copy of the agreement; the Stark County, Case No. 2023CA00164 8
salesman swiped through each page and summarized the forty-page document in less
than two minutes; appellees were not told any of the provisions were negotiable; Kimberly
only signed her name once and never signed or initialed any other portion of the
document; the signatures and initials of appellees were auto-filled through the document,
including the signatures at the end of the arbitration section; Kimberly was told time was
of the essence to obtain certain tax credits, promotions, or discounts; the sales
representative scrolled through the document in a rapid fashion, providing verbal (and
allegedly inaccurate) summaries, but never disclosed the arbitration agreement;
appellees had no ability to change any of the contract terms; the electronic signature
appearing twenty-five times throughout the document was the same and was signed in a
rapid fashion; because each section was not specifically read and initialed, it is impossible
to discern whether appellees read or had an opportunity to read any of the sections; and
the sales agent who presented the Agreement had superior experience with respect to
this contract and type of sales mechanism in comparison to appellees.
{¶17} The trial court also found the arbitration agreement substantively
unconscionable for these reasons: the consumer and construction arbitration rules were
never provided to appellees; the arbitration clause does not say what the costs of
arbitration will be, prohibits appellees from joining in a class action suit, and states
arbitration proceeding must be confidential; PHS is permitted to take self-help actions
outside of arbitration such as removal of the entire system and filing of a mechanic’s lien
or UCC financing statement in the event of a default by appellees; arbitration would be
costly as opposed to the cost of a jury trial; and, even though the bulk of the claims are
not about construction itself, but about the circumstances surrounding the inducement Stark County, Case No. 2023CA00164 9
and execution of the contract which involve allegations of fraud, collusion, and CSPA
violations, appellees had to agree to Construction Industry Arbitration in the arbitration
agreement. The trial court also examined, in detail, how the Construction Industry
Arbitration Rules limited the rights of appellees as opposed to a traditional case in the
common pleas court with a jury trial.
{¶18} Appellant PHS appeals the November 7, 2023 judgment entry of the Stark
County Court of Common Pleas and assigns the following as error:
{¶19} “I. THE TRIAL COURT ERRED IN DENYING POWER HOME SOLAR, LLC
D/B/A PINK ENERGY’S MOTION TO COMPEL ARBITRATION BASED ON THE
COURT’S FINDING THAT PINK ENERGY WAIVED ITS RIGHT TO ARBITRATION.
{¶20} “II. THE TRIAL COURT ERRED IN DENYING PINK ENERGY’S MOTION
TO COMPEL ARBITRATION BASED ON THE COURT’S FINDINGS THAT THE
ARBITRATION PROVISION IN THE SALES AGREEMENT BETWEEN APPELLEES
AND PINK ENERGY IS UNENFORCEABLE.”
{¶21} In denying appellant’s motion to compel arbitration, the trial court made two
separate determinations, either of which would result in a denial of the motion to compel:
(1) waiver and (2) unconscionability.
I.
{¶22} In their first assignment of error, PHS contends the trial court committed
error in finding PHS waived its right to arbitrate.
{¶23} Where the issue is whether a party has waived arbitration, we apply an
abuse of discretion standard due to the “fact-driven” nature of the inquiry. Steese v.
Canton Regency, 5th Dist. Stark No. 2022CA00038, 2022-Ohio-4711. An abuse of Stark County, Case No. 2023CA00164 10
discretion means the trial court’s decision is arbitrary, unreasonable, or unconscionable.
Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983). “Waiver attaches
where there is active participation in a lawsuit evincing an acquiescence to proceeding in
a judicial forum.” Tinker v. Oldaker, 10th Dist. Franklin Nos. 03AP-671, 03AP-1036, 2004-
Ohio-3316.
{¶24} As with any other contract, a party may waive the right to arbitrate. Crosscut
Capital, LLC v. Dewitt, 10th Dist. Franklin No. 20AP-222, 2021-Ohio-1827. In light of
Ohio’s public policy favoring arbitration, the party asserting waiver bears the burden of
proof. Id. A party asserting waiver must establish: (1) the waiving party knew of the right
to arbitrate; and (2) under the totality of the circumstances, the waiving party acted
inconsistently with that known right. Id. No one factor is determinative of whether the
party seeking arbitration has acted inconsistently with the right to arbitrate. Id.
{¶25} “The essential question is whether, based on the totality of the
circumstances, the party seeking arbitration has acted inconsistently with the right to
arbitrate.” Harsco Corp. v. Crane Carrier Co., 122 Ohio App.3d 406, 701 N.E.2d 1040
(3rd Dist. Union 1997). In determining whether the totality of the circumstances supports
a finding of waiver, the court may consider such factors as: (1) any delay in the requesting
party’s demand to arbitration via a motion to stay judicial proceedings and an order
compelling arbitration; (2) the extent of the requesting party’s participation in the litigation
prior to its filing a motion to stay the judicial proceeding; (3) whether the requesting party
invoked the jurisdiction of the court by filing a counterclaim or third-party complaint without
asking for a stay of the proceedings; and (4) whether the non-requesting party has been Stark County, Case No. 2023CA00164 11
prejudiced by the inconsistent acts of the requesting party. Church v. Fleishour Homes,
Inc., 172 Ohio App.3d 205, 2007-Ohio-1806, 874 N.E.2d 795 (5th Dist. Stark).
{¶26} In this case, it is clear PHS knew of the right to arbitrate. The PHS logo
appears at the top of each page of the agreement, including the pages containing or
referencing the arbitration agreement. The complaint alleged numerous claims, including
declaratory judgment claims to void the undisclosed arbitration agreements and limitation
of liability clauses in the Agreement and Loan Agreement. The Agreement and Loan
Agreement were attached to the complaint. PHS was served with the complaint on April
28, 2023. Accordingly, PHS’ right to arbitrate was triggered in April of 2023.
{¶27} Further, we find PHS acted inconsistently with the right to arbitrate. PHS
filed its answer without first requesting a stay, thereby indicating the invocation of the trial
court’s jurisdiction. Additionally, PHS did not include the right to arbitration as an
affirmative defense, or otherwise, in its answer. “Although it is not necessary to
affirmatively plead arbitration as a defense in order to avoid waiver, the failure to plead
such right may be considered as a factor under the totality of the circumstances.”
Crosscut Capital, LLC v. Dewitt, 10th Dist. Franklin No. 20AP-222, 2021-Ohio-1827. The
failure to include the right to arbitrate in their answer supports a finding of waiver,
particularly in this case because, by the time PHS filed its answer, Sunlight Financial had
already filed a motion to compel arbitration.
{¶28} PHS also waited over five-and-a-half months from the filing of the complaint
before filing the motion to compel arbitration. While PHS cites several cases in which
delays of three to six months did not establish waiver of a party’s right to arbitrate, this
Court has specifically stated, “while we recognize a number of courts have found this Stark County, Case No. 2023CA00164 12
general time period of three to six months insufficient to show waiver, we note other courts
have found this general time period to be sufficient, depending upon the degree of
participation in the litigation during this time period.” Steese v. Canton Regency, 5th Dist.
Stark No. 2022CA00038, 2022-Ohio-4711; see also Debois v. Guy, 8th Dist. Cuyahoga
No. 108943, 2020-Ohio-4989 (a delay of six months has been deemed sufficient to show
waiver, depending upon the degree of participation in the litigation).
{¶29} We find the trial court did not abuse its discretion in determining PHS
extensively participation in the litigation during this time. PHS participated in the litigation
not only by filing an answer prior to demanding arbitration, but by participating in the
parties’ Rule 26(F) planning meeting, signing off on a report filed on September 19, 2023.
PHS also participated in a lengthy pre-trial/case management conference with the trial
court on September 26, 2023, during which the parties, including PHS, agreed to a
comprehensive case management schedule and private mediation. Much of this
occurred after the trial court issued a judgment entry on July 31, 2023 stating, “of
additional concern is the fact that Defendants Power Home Solar/Pink Energy, despite
having a similar agreement with Plaintiffs, have not demanded arbitration * * *.” Despite
this explicit language in July of 2023, PHS participated in the litigation for another two-
and-a-half months before it filed its motion to compel arbitration. PHS’ participation was
not passive, and this factor weighs in favor of finding PHS acted inconsistently with the
right to arbitrate. Steese v. Canton Regency, 5th Dist. Stark No. 2022CA00038, 2022-
Ohio-4711.
{¶30} As to the fourth factor, we find the trial court did not abuse its discretion in
finding appellees were prejudiced by the inconsistent acts of PHS due to the extensive Stark County, Case No. 2023CA00164 13
motion practice and case management details that had already been completed in the
case by the time PHS filed its motion to compel arbitration.
{¶31} Having reviewed the totality of the circumstances, considering Ohio’s public
policy favoring arbitration and mindful of the standard of review, we find the trial court did
not abuse its discretion in concluding PHS waived its right to arbitration. PHS’ first
assignment of error is overruled.
II.
{¶32} In their second assignment of error, PHS contends the trial court committed
error in denying their motion to compel arbitration due to substantive and procedural
unconscionability. Arbitration agreements are valid, irrevocable, and enforceable, except
upon grounds that exist in law or equity for the revocation of any contract. Taylor Building
Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12.
Unconscionability is a ground for revocation of a contract. Id.
{¶33} This Court uses a de novo standard of review to determine whether an
arbitration agreement alleged to be unconscionable is enforceable. Id. However, “when
a trial court makes factual findings supporting its determination that a contract is or is not
unconscionable, such as any findings regarding the circumstances surrounding the
making of the contract, those factual findings should be reviewed with great deference.”
Id.
{¶34} Unconscionability refers to the absence of a meaningful choice on the part
of one of the parties to a contract, combined with contract terms that are unreasonably
favorable to one party. Id. Accordingly, unconscionability consists of two separate
concepts: (1) substantive unconscionability, which refers to the commercial Stark County, Case No. 2023CA00164 14
reasonableness of the contract terms themselves and (2) procedural unconscionability,
which refers to the bargaining positions of the parties. Id. In order to negate an arbitration
clause, a party asserting unconscionability must establish a quantum of both substantive
and procedural unconscionability. Id.
Procedural Unconscionability
{¶35} Procedural unconscionability involves factors bearing on the relative
bargaining positions of the contracting parties, such as age, education, intelligence,
business acumen and experience, relative bargaining power, who drafted the contract,
whether the terms were explained to the weaker party, whether alteration in the printed
terms were possible, and whether there were alternative sources of supply for the goods
in question. Taylor Building Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-
938, 884 N.E.2d 12.
{¶36} In this case, it is undisputed that appellees had no role in preparing the
Agreement or the arbitration clause. The Agreement is a preprinted form contract which
was wholly electronic and viewable only on the electronic tablet of the PHS representative
during the course of the sale. The complete document is forty pages long and includes
multiple “sub-agreements,” such as a Roof Installation Agreement, an Addendum, and
the Solar Power System Installation Agreement, plus numerous exhibits, notices, and
memoranda. The sub-agreement entitled “Solar Energy System Purchase & Installation
Agreement” begins on the tenth page, and is seventeen pages long, including the
attached exhibits. Exhibit F to this sub-agreement contains the arbitration provision. It is
written in upper-case letters and appears in single-spaced, bold type. Stark County, Case No. 2023CA00164 15
{¶37} We find the averments contained in Kimberly’s affidavit support the trial
court’s finding of procedural unconscionability. In her affidavit, Kimberly describes a
scenario in which: the contract was presented entirely electronically wherein the agent
of PHS scrolled through the 40-page document rapidly; PHS’ agent directed her to
provide her electronic signature and initials only once; the remainder of the signatures
and initials were “auto-filled” throughout the document, including the signatures lines at
the end of the arbitration section; the contract terms were non-negotiable because it was
pre-printed on the electronic tablet controlled by PHS’ agent; she had no option to reject
or negotiate the arbitration provision; she was hurried and rushed through the signature
process, because she was told certain credits, promotions, and discounts may not be
available if the documents were not signed immediately; she was not able to review the
documents at her own pace; important terms were either not explained or not explained
accurately because the agent summarized the 40-page document in less than two
minutes; and she did not receive a hard copy of the contract or arbitration agreement to
review. PHS did not submit any evidence or affidavits to contradict Kimberly’s assertions
regarding the circumstances surrounding the execution of the agreement.
{¶38} The timing of the signatures on the documents also demonstrates
procedural unconscionability. The first page of the Agreement, “Offsets to 100% or
Greater,” purports to bear the electronic signature of appellees. The next page is entitled
“Addendum,” which purports to contain the exact same electronic signature of Kimberly,
timed at 2:45 p.m. EDT, as well as the typed name of William, timed at 11:47 PDT
(presumably an electronic mistake which should have been 2:47 EDT). Several pages
later, a DocuSign “Certificate of Completion” tracks the progress of signing the Stark County, Case No. 2023CA00164 16
documents. It indicates the document contains 32 pages, with 25 signatures and 17
initials. The document originated with the PHS agent at 1:33:20 p.m. on May 1, 2021. It
was “sent” to the agent at 1:34:07 p.m. and “signed” by the agent at 2:44:09 p.m. The
documents were “sent” to Kimberly at 2:44:12 p.m., “viewed” by her at 2:44:43 p.m., and
“signed” by her at 2:45:52 p.m. William was “sent” the documents at 2:18:10 p.m.,
“viewed” them at 2:20:05 p.m., and “signed” them at 2:20:54 p.m.
{¶39} The next section of the contract begins on the eighth page of “Exhibit A,” a
two-page section called “Roofing Installation Agreement.” This is followed by a “Solar
Energy System Purchase & Installation Agreement.” This section contains numerous
initialed spaces being the identical, auto-populated initials of appellees, although it is
unclear where the first or original initialing actually occurred. The “Terms and Conditions”
of the Solar Energy Purchase Agreement begin on the seventh page of that portion of the
Agreement. The terms and conditions are five pages long, singled-spaced, in ten-point
font. There is an electronic signature at the end of the terms and conditions segment.
This signature page is 19 pages beyond the Addendum appearing at the beginning of the
document. However, it contains the identical electronic signatures that appear on the
Addendum, with precisely the same timing (2:45 p.m. EDT for Kimberly and 11:47 a.m.
PDT for William). Five pages later is “Exhibit F,” the arbitration agreement. It also
contains the same electronic signatures with exactly the same time markings.
{¶40} We agree with the trial court that because each section was not specifically
read and individually initialed by appellees, we cannot discern whether appellees read,
or had an opportunity to read, any of the sections. Even though the arbitration provision
is in bold print, the signatures on the document acknowledging they read, reviewed, and Stark County, Case No. 2023CA00164 17
agreed to the arbitration provision were not specifically made by appellees. Rather, they
were “auto-filled” onto the provision. This provision was prepared by PHS, not appellees.
Appellees did not have an opportunity to make any changes to any portion of the
arbitration agreement.
{¶41} Due his position, the sales agent who scrolled through the Agreement had
superior experience with respect to the contract and this type of sale mechanism, in
comparison to appellees. Despite his superior position, the agent never informed
appellees about the arbitration agreement, and failed to inform them that when the
documents were “auto-filled,” such auto-filling would result in a forfeiture of their right to
a court adjudication or jury trial.
{¶42} We find the trial court did not commit error in finding the Agreement and
arbitration provision procedurally unconscionable.
Substantive Unconscionability
{¶43} Substantive unconscionability involves factors which relate to the contract
terms themselves and whether they are commercially reasonable. Id. Because this
varies by contract, no generally accepted or bright-line set of factors has been developed
for this category of unconscionability. Fortune v. Castle Nursing Home, Inc., 164 Ohio
App.3d 689, 2005-Ohio-6195, 843 N.E.2d 1216 (5th Dist. Holmes). However, courts
examining whether a particular limitations clause is substantively unconscionable have
considered some of the following factors: fairness of the terms, charge for the service
rendered, standard in the industry, and ability to accurately predict the extent of future
liability. Id. Stark County, Case No. 2023CA00164 18
{¶44} In their complaint, appellees allege claims for fraud, declaratory judgment,
civil conspiracy, and violations of the CSPA. In cases involving the CSPA, an arbitration
provision may be substantively unconscionable if it involves fee-shifting or excessive
costs, when it prohibits class actions, when it restricts discovery, or when it requires
confidentiality. See e.g., Eagle v. Fred Martin Motor Co., 157 Ohio App.3d 150, 2004-
Ohio-829, 809 N.E.2d 1161 (9th Dist. Summit 2004). In this case, the arbitration
agreement prohibits appellees from joining in any class action and states the proceedings
“shall” be confidential.
{¶45} Unlike the arbitration provision in the Loan Agreement, the arbitration
provision in the Agreement requires appellees to proceed with arbitration under
Construction Industry Rules, rather than Consumer Arbitration Rules. Appellees attached
AAA’s published Construction Industry Rules and Consumer Arbitration Rules to their
brief opposing PHS’ motion to stay. Those rules reveal that the fees required to pursue
the claims vary with the amount of damages alleged. Further, these fees do not reflect
additional costs that will be incurred by the parties during the course of arbitration. See
Porpora v. Gatliff Bldg. Co., 160 Ohio App.3d 843, 2005-Ohio-2410, 828 N.E.2d 1081
(9th Dist. Medina). This process seems particularly unreasonable in light of the much
greater bargaining power of PHS. See Williams v. Aetna Finance Co., 82 Ohio St.3d 464,
700 N.E.2d 859 (1998).
{¶46} The arbitration clause does not disclose either the costs of arbitration or the
fact that those costs are substantially higher than the costs associated with a regular court
proceeding. Porpora v. Gatliff Bldg. Co., 160 Ohio App.3d 843, 2005-Ohio-2410, 828
N.E.2d 1081 (9th Dist. Medina). While the clause makes clear that the AAA’s Stark County, Case No. 2023CA00164 19
Construction Industry Rules govern, the clause makes no reference to the fees required
by that group. Id. Prohibitive arbitration costs and fees alone may render an arbitration
provision substantively unconscionable upon a case-by-case determination. Nefores v.
Branddirect Marketing, Inc., 5th Dist. Richland No. 03-CA-104, 2004-Ohio-5006; Brunke
v. Ohio State Home Services, Inc., 9th Dist. Lorain No. 08CA009320, 2008-Ohio-5394.
In this case, the arbitration provision fails to set forth any of the arbitration fees or costs.
This is worsened by the fact that the PHS salesman failed to give appellees any
meaningful explanation of the arbitration provision. Brunke v. Ohio State Home Services,
Inc., 9th Dist. Lorain No. 08CA009320, 2008-Ohio-5394. Also weighing in favor of a
finding of unconscionability is that the fees in Construction Industry Arbitration are shared
equally between the parties, whereas, in Consumer Arbitration, the supplier/seller must
bear a larger share of the costs than the consumer.
{¶47} Further, the arbitration clause is skewed in favor of PHS, imposing
restrictions on appellees alone. PHS is permitted to pursue other methods in the event
of the default of appellees, such as the filing of a mechanic’s lien and/or a UCC-1 financing
statement. However, the arbitration clause provides appellees have only one method
through which to enforce the contract, i.e., arbitration. Porpora v. Gatliff Bldg. Co., 160
Ohio App.3d 843, 2005-Ohio-2410, 828 N.E.2d 1081 (9th Dist. Medina).
{¶48} We find there are concerns regarding the form of the document in which
appellees allegedly waived their right to a jury trial, specifically the number of sub-
agreements, and the fact that the documents contained no warnings that by signing the
Agreement, appellees were waiving their right to a jury trial. The format of the document Stark County, Case No. 2023CA00164 20
and language used is such that a person executing the document is not placed on notice
of the ramifications of agreeing to such a clause.
{¶49} In this case, the arbitration provision fails to clearly and unequivocally alert
appellees that, by executing the Agreement and included arbitration clause, they waive
their constitutional right to a jury and waive their right to have the matter determined by a
court. Fortune v. Castle Nursing Homes, Inc., 164 Ohio App.3d 689, 2005-Ohio-6195,
843 N.E.2d 1216 (5th Dist. Homes); Bayes v. Merle’s Metro Builders/Boulevard Contr.,
LLC, 11th Dist. Lake No. 2007-L-067, 2007-Ohio-7125. The language in the arbitration
agreement states, “[t]he award rendered by the arbitrator shall be final and binding on the
parties and judgment may be entered upon it in accordance with applicable law in any
court having jurisdiction.” As noted by the Eleventh District, “most consumers would not
equate this language with waiver of a constitutional right and waiver of right to have a
dispute determined by a court * * * to the contrary, it suggests to some extent that a court
will at least have some jurisdictional review of the case.” Bayes v. Merle’s Metro
Builders/Blvd. Constr., LLC, 11th Dist. Lake No. 2007-L-067, 2007-Ohio-7125.
{¶50} We agree with the trial court that it is unconscionable and inappropriate for
Construction Industry Arbitration Rules to be applied in a case in which the bulk of the
claims are not about the construction itself, but about the circumstances surrounding the
inducement and execution of the contract, and primarily involve allegations of fraud,
collusion, and violations of the CSPA.
{¶51} The trial court examined the rules in the Construction Industry Arbitration
proceedings and noted how these rules provide a much more restrictive proceeding than
a jury trial. For example, according to the Construction Industry Rules, discovery is Stark County, Case No. 2023CA00164 21
extremely limited. A party may request documents and other information, but the
arbitrator has the discretion to decide if this discovery will occur (Rule 24). The parties
must exchange copies of the exhibits they intend to submit during the hearing seven days
prior to the hearing, but the Rule provides “there shall be no other discovery,” unless
ordered by the arbitrator in “exceptional” cases. Further, the scope of the award that may
be issued by the arbitrator is limited. An arbitrator may grant “any remedy or relief that
the arbitrator deems just and equitable and within the scope of the agreement of the
parties * * *.” (Rule 45). This clause could arguably preclude appellees from recovering
any non-contract damages on their claims for fraud, civil conspiracy, violations of the
CSPA, CSPA statutory damages, or punitive damages.
{¶52} Based on the foregoing, we find the trial court did not commit error in finding
substantive unconscionability.
Adhesion Contract
{¶53} Additionally, we find there are strong indications the Agreement is an
adhesion contract. An “adhesion contract is a standardized form contract prepared by
one party, and offered to the weaker party, usually a consumer, who has no realistic
choice as to the contract term.” Taylor Building Corp. of Am. v. Benfield, 117 Ohio St.3d
352, 2008-Ohio-938, 884 N.E.2d 12. One common feature of an adhesion contract is the
stronger party’s refusal to negotiate a key term. Id.
{¶54} Though an adhesion contract is not unconscionable per se, the Ohio
Supreme Court has stated that an arbitration clause, “contained in a consumer credit
agreement with some aspects of an adhesion contract, engenders more reservations than
an arbitration clause in a different setting, such as in a collective bargaining agreement, Stark County, Case No. 2023CA00164 22
or a commercial contract.” Williams v. Aetna Finance Co., 82 Ohio St.3d 464, 700 N.E.2d
859 (1998). Further, the Supreme Court noted the presumption in favor of arbitration
“should be substantially weaker” in cases in which there are “strong indications that the
contract at issue is an adhesion contract, and the arbitration clause itself appears to be
adhesive in nature.” Id. The Court rationalized that, in this type of situation, there is
“considerable doubt” there was a “true agreement” to submit disputes to arbitration. Id.
{¶55} In this case, there are “strong indications” the contract is an adhesion
contract. Further, the arbitration clause itself appears to be adhesive in nature. The
contract was a standardized form contract prepared by PHS and offered to a weaker party
(appellees) as consumers, who had no realistic choice as to the terms of the contract or
arbitration provision. Section 13 of the Agreement, entitled “Arbitration of Disputes” states
the arbitration agreement, “shall be signed by the parties as of the date hereof.” Exhibit
F, the arbitration agreement, provides the parties “shall be subject to binding bilateral
arbitration.” Thus, the standardized contract form offered appellees goods on essentially
a “take it or leave it” basis, without affording them a realistic opportunity to bargain and
under such conditions that appellees could not obtain the solar panels except by
acquiescing to the form contract and arbitration provision. See Eagle v. Fred Martin Motor
Co., 157 Ohio App.3d 150, 2004-Ohio-829, 809 N.E.2d 1161 (9th Dist. Summit 2004).
{¶56} Based on the foregoing, we find the trial court did not commit error in finding
both procedural and substantive unconscionability. PHS’ second assignment of error is
overruled.
{¶57} PHS’ first and second assignments of error are overruled. Stark County, Case No. 2023CA00164 23
{¶58} The November 7, 2023 judgment entry of the Stark County Court of
Common Pleas is affirmed.
By Gwin, P.J.,
Hoffman, J., and
Baldwin, J., concur