Hinman v. Silver Star Group, LLC

380 P.3d 994, 280 Or. App. 34, 2016 Ore. App. LEXIS 970
CourtCourt of Appeals of Oregon
DecidedAugust 3, 2016
Docket130622; A154637
StatusPublished
Cited by2 cases

This text of 380 P.3d 994 (Hinman v. Silver Star Group, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hinman v. Silver Star Group, LLC, 380 P.3d 994, 280 Or. App. 34, 2016 Ore. App. LEXIS 970 (Or. Ct. App. 2016).

Opinion

ARMSTRONG, P. J.

Defendant appeals an order that denied its motion to compel arbitration. Plaintiff, an elderly homeowner, commenced an action against defendant, alleging that defendant had misled her into purchasing services for her home that she could not afford. Defendant moved to compel arbitration on the ground that the parties had entered into a contract that included an arbitration clause, and plaintiffs claims came within the clause. The trial court concluded that plaintiffs claims were claims to which the arbitration clause applied. However, the trial court further concluded that the parties’ contract was unconscionable and, therefore, that the arbitration clause, as part of the contract, was unenforceable. The trial court denied defendant’s motion to compel arbitration on that basis and entered an order reflecting that decision. Defendant appeals the order, arguing that the trial court lacked authority to determine whether the parties’ contract was unconscionable and, hence, unenforceable, and that the trial court erred when it assumed, for purposes of its unconscionability decision, that the allegations in plaintiffs complaint were true. We conclude that the trial court had authority to deny defendant’s motion on the ground that the parties’ contract was unenforceable, but the court erred in resolving that question by assuming the allegations in plaintiffs complaint to be true rather than by engaging in the factfinding necessary to decide the question. Consequently, we vacate the court’s order and remand to allow the court to undertake the required factfinding task.

Plaintiff is an elderly woman who lives in her home on the Oregon coast. Defendant is a limited liability company that constructs and repairs buildings. The roof on plaintiffs home needed repair, and plaintiff contacted defendant about repairing it. Defendant responded and entered into a written contract with plaintiff to repair her roof. The contract provided that defendant would determine the work necessary to repair the roof and would perform that work. The contract also contained an arbitration clause, which provided that “all disputes or claims arising in connection with this agreement, breach thereof, or related in any way to the relationship between [the parties] shall be resolved by binding, nonappealable arbitration.”

[37]*37A storm damaged plaintiffs roof before defendant undertook to repair it. Defendant proceeded to repair the roof, including the damage caused by the storm, and sent an invoice for its work in the amount of $20,353 to Allstate Insurance Company, with which plaintiff carried homeowner’s insurance. Defendant received $6,491 from Allstate for the portion of the work that Allstate believed to be covered by plaintiffs insurance policy. Defendant then sought the remaining $13,862 from plaintiff.

Plaintiff responded by filing an action against defendant, seeking monetary damages and an injunction to prevent defendant from collecting the money that it claimed to be owed by plaintiff. Plaintiff alleged in the action claims for fraudulent misrepresentation, negligent misrepresentation, unlawful trade practices, and elder abuse.

Defendant responded by filing a motion to dismiss plaintiffs complaint — on the ground that there was another action pending between the parties1 — and to compel arbitration — on the ground that plaintiffs claims were subject to arbitration under the parties’ contract. Plaintiff opposed the motion, contending that the arbitration clause did not apply to her claims because her claims dealt with the cost to repair the damage caused by the storm, while the parties’ contract covered only repairs for damage that preceded the storm.

The trial court issued a letter opinion in which it concluded that plaintiffs claims came within the arbitration clause of the parties’ contract. However, without prompting from either party, the court proceeded to presume that the allegations of plaintiffs complaint were true, and, in light of those allegations and the terms of the contract, the court concluded that the contract was unconscionable. It consequently concluded that the arbitration clause was unenforceable, and it entered an order denying defendant’s motion.

[38]*38Defendant filed a motion for reconsideration and, in the alternative, to stay the action pending appeal. Defendant contended that, in ruling on the motion to compel arbitration, the trial court had authority under Oregon law to determine only whether the arbitration clause in the parties’ contract was enforceable, not whether the contract containing the clause was enforceable. Consequently, the court had erred in denying the motion to compel on the ground that the parties’ contract was unconscionable and, hence, unenforceable. Defendant further contended that, even if the court had authority to determine the enforceability of the parties’ contract, it nonetheless had erred by assuming the allegations in plaintiffs complaint to be true without taking into account the countervailing evidence presented by defendant. The trial court denied reconsideration but stayed the action pending appeal.

Defendant appeals the order denying its motion to compel arbitration, reprising the arguments that it made in its reconsideration motion.2 Plaintiff, in turn, defends the trial court’s ruling.3

We begin by addressing whether the trial court erred by determining the enforceability of the parties’ contract, as opposed to the enforceability of the arbitration clause in their contract, in ruling on defendant’s motion to compel arbitration. Neither party disputes that the Oregon Uniform Arbitration Act, ORS 36.600 to 36.740, governs the enforcement of an arbitration agreement that does not implicate interstate commerce, such as the one in this case. ORS 36.620, which is part of the act, provides in relevant part:

“(1) An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising [39]*39between the parties to the agreement is valid, enforceable and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.
“(2) Subject to ORS 36.625(8), the court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.
“(3) An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled.
“(4) If a party to a judicial proceeding challenges the existence of, or claims that a controversy is not subject to, an agreement to arbitrate, the arbitration proceeding may continue pending final resolution of the issue by the court, unless the court otherwise orders.”

ORS 36.625, in turn, provides, as relevant:

“(1) On petition of a person showing an agreement to arbitrate and alleging another person’s refusal to arbitrate pursuant to the agreement:
ifc * ⅛ *

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Related

State v. Meyers
514 P.3d 1147 (Court of Appeals of Oregon, 2022)

Cite This Page — Counsel Stack

Bluebook (online)
380 P.3d 994, 280 Or. App. 34, 2016 Ore. App. LEXIS 970, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hinman-v-silver-star-group-llc-orctapp-2016.