Hinman v. Silver Star Group, LLC

Under ORS 36.600 to 36.740, a trial court has the power to determine both whether claims fall under an arbitration clause and whether the contract as a whole is unconscionable, but must engage in factfinding to make these determinations rather than relying solely on the allegations of the parties.

Defendant appealed an order denying its motion to compel arbitration under a contract it entered into with an elderly homeowner to repair her roof. Defendant received partial payment from Plaintiff’s insurance company and sought the balance from Plaintiff, after which Plaintiff filed an action for monetary damages and an injunction to prevent collection. In the complaint, Plaintiff alleged fraudulent misrepresentation, negligent misrepresentation, unlawful trade practices, and elder abuse. Defendant moved to dismiss based on another pending action and to compel arbitration under the parties’ contract. Plaintiff claimed the arbitration clause did not apply to her because the claims arose from work done outside the contract. The trial court concluded the claims came under the parties’ arbitration clause, and found the contract was unconscionable solely based on Plaintiff’s allegations in her complaint. Upon denying Defendant’s motion for consideration, Defendant appealed the order denying its motion to compel arbitration. The Court held that, under ORS 36.600 to 36.740, the statutes governing arbitration agreements, the trial court had properly found the claims came under the parties’ arbitration clause but that it was unenforceable because the contract was unconscionable; however, the trial court erred by finding the contract unconscionable based solely on Plaintiff’s allegations rather than allowing the parties to present evidence on the factual issue. Vacated and remanded.