Filed 3/3/20 Camargo v. Sunnova Energy Corp. CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

JAIME CAMARGO,

Plaintiff and Respondent,

v.

SUNNOVA ENERGY CORPORATION,

Defendant and Appellant.

D075322

(Super. Ct. No.

37-2018-00032445-CU-BT-CTL)

APPEAL from an order of the Superior Court of San Diego County, Joan M. Lewis and Ronald F. Frazier, Judges. Reversed.

Baker Marquart and Ryan G. Baker, Teresa L. Huggins for Defendant and Appellant.

Golden & Cardona-Loya and Octavio Cardona-Loya II for Plaintiff and Respondent.

Appellant Sunnova Energy Corporation (Sunnova), a residential solar panel provider, appeals an order denying its petition to compel arbitration in which the trial court ruled that Sunnova’s arbitration clause was procedurally and substantively unconscionable. Sunnova contends the court erred by failing to give Sunnova notice and an opportunity to respond to its independent finding that the arbitration clause is unconscionable. Sunnova also contends the court erred by: (1) finding the arbitration clause was procedurally and substantively unconscionable; (2) failing to sever the purportedly unconscionable provision; and (3) failing to grant Sunnova’s request for an evidentiary hearing regarding the commercial setting, purpose and effect of the arbitration clause. Sunnova explains: “The need for such a hearing was particularly acute, given that respondent [Jaime Camargo] claimed for the first time in his opposition that he did not sign the [purchase power agreements (PPA’s)]—an allegation that appears nowhere in his complaint—and the court’s mistaken belief that electronic DocuSign signatures reflect an individual’s actual signature.” (Some capitalization omitted.)

Camargo contends: “Sunnova failed to meet its burden of proof establishing that [he] agreed to arbitrate,” adding that “[t]here is substantial evidence supporting [his] uncontroverted declaration that he did not sign the agreements. Sunnova failed to present any evidence to the contrary.” Camargo also contends the arbitration clause was procedurally unconscionable in part because Sunnova did not provide him any documents translated into Spanish, his native language. He alternatively argues the arbitration clause was one-sided and thus substantively unconscionable. Camargo contends that “[t]he trial court properly did not request further briefing [regarding unconscionability]” because “there was no need for it.” Camargo argues, “Sunnova did not request an evidentiary hearing in its reply to [his] opposition. [It] requested an evidentiary hearing on completely different grounds at oral argument on its motion to compel arbitration.”

We conclude the court erred by ruling on unconscionability without giving Sunnova an opportunity to develop the record regarding the arbitration clause’s commercial setting, purpose and effect. We therefore reverse the order and remand for the court to conduct proceedings as set forth below.

FACTUAL AND PROCEDURAL BACKGROUND

Camargo sued Sunnova for assertedly violating the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.), the unfair competition law (Bus. & Prof. Code, § 17200 et seq.), the Home Sales Solicitation Act (Civ. Code, § 1689.7), and the Elder Abuse Act (Welf. and Inst. Code, § 15610.30). Camargo also sought rescission (Civ. Code, §§ 1632, 1689) and asserted causes of action for damage to real property, and fraud or alternatively negligent misrepresentation. He alleged that Sunnova installed solar panels that did not reduce his electricity bill, contrary to Sunnova’s representation. Moreover, the installation caused his roof to leak when it rains. Camargo further alleged that he does not speak English with ease. He alleged Sunnova never translated the PPA’s; otherwise, he would not have entered into them.

Sunnova petitioned to compel arbitration, pointing out that Camargo entered into two PPA’s—one in 2016 and another in 2017—permitting Sunnova to install solar panels on his house. Sunnova stated that both PPA’s contain identical arbitration clauses. Furthermore, Camargo initialed a 2017 California-specific document titled, “Arbitration of Disputes.” Sunnova argued cursorily that the arbitration clause is enforceable because it is separable and not unconscionable.

Sunnova’s director of customer care, Michell Saksenberg, submitted a declaration with the 2016 PPA attached as exhibit A, and the 2017 PPA attached as exhibit B. She stated: “Any customer interested in leasing a solar power system from Sunnova is and always was required to enter into a written Solar Service Agreement with Sunnova. . . . I am very familiar with the structure and terms of the Solar Service Agreements that Sunnova requires all residential customers to sign.”

Camargo opposed Sunnova’s motion on grounds he did not sign the PPA’s. He averred in a declaration: “I was asked to initial something on a tablet but was not provided any translated copy prior to initialing it. The initial on the first page of [] Exhibit A appears to be mine but the signature on page 12 does not. I do not recall signing [] Exhibit A and dispute that the signature on page 12 is mine. [¶] I never signed [] Exhibit B either physically or electronically. I also did not initial that document. The purported e-signature and initials on [] Exhibit B are not mine. I did not provide them.” Camargo summarily argued the arbitration clause is unconscionable, without identifying any specific portion of it. Moreover, he did not explain in what ways it is substantively unconscionable.

Sunnova in reply generally rejected Camargo’s claim that the arbitration clause is unconscionable. Sunnova also requested an evidentiary hearing on “the validity of the Agreements.” Sunnova attached another declaration by Saksenberg, who elaborated the circumstances surrounding Camargo’s signing of both PPA’s and the role Sunnova’s third-party sales partner played in obtaining Camargo’s signature: “Southwest Sun Solar is a channel partner who works with Sunnova on the sale and installation of Sunnova solar power systems. A representative from Southwest Sun Solar conducted the sales transaction with Camargo that resulted in Sunnova and Camargo entering into the [] Agreement. At the same time that Camargo signed the [] Agreement through the electronic signature program DocuSign, Camargo also appears to have applied his handwritten signature to a number of related documents from Southwest Sun Solar, pertaining to the sale and installation of the solar power system governed by the [] Agreement.”

The court issued its tentative ruling to deny Sunnova’s motion. At a hearing on that ruling, Sunnova offered to submit another declaration to support its claim Camargo signed the agreement using DocuSign, and requested an evidentiary hearing. The court asked what additional evidence Sunnova would present. Sunnova’s counsel mentioned the DocuSign evidence, “[a]nd the fact that . . . [Camargo] received e-mail notification that he had signed the agreement. And he did nothing to protest it or to say anything to the contrary.” At that hearing, Sunnova’s counsel again sought permission to provide additional briefing: “Regarding substantive unconscionability, there is a carve out here, it’s extremely narrow. And courts allow carve outs where there’s a business justification. Solar panels is a highly regulated business and Sunnova has its own contracts with financing companies and certain requirements. [¶] And I have cases talking about business justification for carve outs, Armendariz [v. Foundation Health Psychare Services, Inc. (2000)] 24 Cal.4th 83[;]Bigler [v. Harker School (2013) 213 Cal.App.4th 727] also talks about it.” Sunnova’s counsel added: “In any event, we got the tentative yesterday about around 3:00. Most of these issues were not raised in [Camargo’s] papers. We would like to request an opportunity for further briefing and if in [sic] the alternative to clarify the order is without prejudice, and then we can bring another motion later.”

The court denied Sunnova’s request, reasoning “it’s really not relevant about the signatures at this point. The—the legal conclusion the Court made in looking at the—the contracts themselves, the Court found that it was unconscionable. So to go and have an evidentiary hearing on signatures and DocuSign and all of that is really not relevant.”

The court in its final order also addressed the evidentiary conflict regarding Camargo’s signatures: “[Camargo] argues, in part, that he did not sign (or does not recall signing) the 2016 and 2017 agreements. He affirmatively states that the e-signature on the 2017 agreement is not his. Although Michell Saksenberg makes certain assertions in his [sic] reply declaration concerning the nature of electronic signatures (Para. 7), he [sic] fails to explain why the electronic signatures on the two agreements vary so much in appearance. In this regard, the Court further notes [Sunnova’s] failure to submit a declaration from any individual acting on behalf of [Sunnova] that was responsible for obtaining [Camargo’s] signatures to these documents.” The court concluded, “even if it could be determined [Camargo] signed both agreements, the agreements to arbitrate are unconscionable (being one-sided) and [ ] the offending provision should not be severed.”

The court ruled the arbitration clause is procedurally unconscionable because it is included in the PPA’s, which are adhesion contracts. The court also ruled the arbitration clause is substantively unconscionable because it contains this provision: “If you are in default under this PPA, Sunnova may elect, at its sole discretion, remedies available under the terms of this PPA, at law, or in equity. We agree that any other dispute, claim or disagreement between us (a ‘Dispute’) shall be resolved exclusively by arbitration except as specifically provided below.” The court explained: “In other words, if [Camargo] had defaulted under the agreements (e.g., not making the required payments), then under this language [Sunnova] would not be required to arbitrate the dispute. As the court in [Flores v. Transamerica HomeFirst, Inc. (2001) 93 Cal.App.4th 846] concluded (and with slight modification) ‘[r]ealistically, then, the mandatory arbitration provisions apply to claims of [Camargo] against [Sunnova] but not vice-versa.’ ”

DISCUSSION

We conclude that the court erred by failing to provide Sunnova with an adequate opportunity to address the question of unconscionability. As set forth above, the parties had not fully briefed that issue in their moving and opposing papers. Nonetheless, the trial court tentatively ruled that the arbitration clause was unconscionable, and it “should not be severed.” The court also did not permit Sunnova to submit further briefing or evidence on the issue; thus, it violated Civil Code section 1670.5, subdivision (b), which states: “When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.”

 

DISPOSITION

The order denying the petition to compel arbitration is reversed and the matter is remanded with directions that the trial court vacate that order and thereafter conduct further proceedings consistent with this opinion. The parties shall bear their own costs on appeal.

O’ROURKE, J.

WE CONCUR:

HALLER, Acting P. J.

DATO, J.