Court Finds Arbitration Clause in Builder's Warranty Unconscionable

SAN DIEGO - A California appellate court has refused to compel arbitration of construction defect claims, ruling that expansive arbitration provisions in home warranties were not clearly disclosed to homebuyers. Baker v. Osborne Development Corp., No. E042006 (Calif. Ct. App., 4th Dist.).

California's 4th Appellate District on Jan. 31 affirmed a trial court's decision not to compel arbitration of construction defect claims brought by homeowners against a builder, ruling in the published opinion that the arbitration agreement was unconscionable.

Thomas Baker and other owners sued Osborne Development Corp. in 2005 for alleged defects in plumbing systems, stucco, windows, roofs and …