Baker v. Osborne Legal Review

Thomas Baker and early(a)s bought mod homes from Osborne Development Corp. The new homeowners later filed a guardianship against Osborne Development Corp. for dual construction defects in the houses they purchased. The complaint alleged causes of action for strict liability, and other breaches of contract, and negligence. Baker and the other homeowners had along with the home purchases signed a constructor application form containing the following language CONSENT TO THE TERMS OF THESE DOCUMENTS INCLUDING THE spine ARBITRATION PROVISION contained therein. By signing the application, the homeowners were presumed to have agreed to the ground of the guarantee. (Baker v. Osborne Development Corp. , 2008). The question posed is whether the new homeowners are bound by the arbitrement agreement they signed, or whether they could just execute Osborne Development Corp. in court. The Fourth Appellate District of the California administration of Appeal answered two questions in its 2008 decision when it held that arbitration provisions in the HBW 2-10 warranty were unenforceable, because they were unconscionable. The warranty was unconscionable because the arbitration language was broad and did not clearly and unmistakably reserve the sole authority to decide whether the arbitration provision was enforceable to the arbitrator. The arbitration provision was procedurally unconscionable because it was hidden in a booklet not available when Baker executed the warranty application. It was substantively unconscionable because it was only if intended to benefit Osborne, as Osborne would have no think to sue Baker after the close of escrow. In NCR Corp. v. Korala Associates, Ltd., (2008), the court of Appeals weighed the issue by determining the scope of the arbitration agreement based on the reason that a party should not be compelled to arbitrate a challenge which it has not agreed to arbitrate. To determine whether or not a good example is arbitrable, the Six th Circuit looked at the allegations in each count of the complaint to determine whether the agreement was a necessary part of each claim. The measuring used by the Sixth Circuit was this whether an action could be well-kept without reference to the contract or relationship issue (NCR Corp.v. Korala Associates, Ltd. , 2008, p. 4). If it could, then it is seeming to be outside the scope of the arbitration agreement. Going by the Court decisions in Baker and NCR, the homeowners are not bound by the arbitration clause, and are therefore free to pursue damages in a court of law. References Baker v. Osborne Development Corp. (2008) 159 Cal. App. 4th 884 Cal. Rptr. 3d NCR Corp. v. Korala Associates, Ltd. , No. 06-3685, 2008 WL 140978 (6th Cir. Jan. 16, 2008)