September 6, 2017
If you want your case heard by a Judge instead of an Arbitrator - Be sure to read those forms!
The Superior Court of Pennsylvania recently decided the case of Fellerman v. PECO. The case involved a homeowner who alleged a home inspector failed to find a rotting utility pole on his property. The pole eventually fell, causing cables owned by PECO Energy and Comcast to allegedly start a fire on the property. The homeowner was severely injured when he attempted to put out the fire.
The contract between the homeowner and the home inspection company contained an arbitration clause. The arbitration clause took any dispute arising under the contract out of the Court of Common Pleas, and required the severely injured homeowner to arbitrate the matter using a private service. In reviewing the arbitration clause, the Superior Court rejected the idea that personal injury claims resulting from an allegedly botched inspection fall outside the scope of the arbitration clause. The court reviewed the facts pled in the complaint and found that every alleged breached duty and every fact supporting the personal injury claim stemmed directly from the duties the home inspector owed to the homeowners. Those duties stemmed from the home inspection contract, and therefore, the arbitration clause applied to the personal injury case.
In Fellerman, the Court outlines the test as to whether an agreement to arbitrate is enforceable. First, it examines whether a valid agreement to arbitrate exists, and secondly, it had to determine whether the dispute was within the scope of the agreement. Pisano v. Extendicare Homes, Inc., 77 A. 3d, 651, 654 (Pa. Super. 2013).
In applying these principles, the Superior Court gives great deference to arbitration agreements, and cited a 2004 case, Callan v. Oxford Land Development, Inc., 858 A. 2d, 1229, 1233 (Pa. Super. 2004), in which the court stated that “every reasonable effort should be made to favor the agreement unless it may be said with positive assurance that the arbitration clause involved is not susceptible to an interpretation that covers the asserted dispute.”
Fellerman shows that arbitration clauses will be given deference. The main damages asserted by the Plaintiffs are those of personal injury, not of those of damage to real property. While the Fellermans argued that the arbitration clause would only cover damages relating to the real property which were missed by the inspection, the court did not see it this way. The Court believed the whole relationship, including personal injury damages, were governed by the contract, and thus, the arbitration clause.
The Plaintiffs also argued that the language in the contract was difficult to understand and the form itself was smudged. The court did not give any deference to this argument, noting that it is a duty of all parties to a contract to read and understand the terms. There was no allegation that the Plaintiffs could not have negotiated the arbitration clause out of the home inspection contract. Thus, the court reaffirmed the age-old notion that it is always important not only to read, but to understand, any legal document before starting what could be a long, difficult and adversial relationship.
The information above is general: we recommend that you consult an attorney regarding your specific circumstances. The content of this information is not meant to be considered as legal advice or a substitute for legal representation.