Information on Ohio's Consumer Laws from Attorney Daniel Myers, Myers Law, LLC, not legal advice
By Daniel Myers
If you follow this Blog, you know we regularly talk about the real disadvantages that consumers face when they forced into mandatory arbitration instead of going to court. It is our general opinion that in most cases, arbitration should be avoided like the plague, and that consumers should try to review their contracts and avoid agreeing to arbitration clauses.
But what happens when you sign a contract with an arbitration clause? Normally you are stuck going through arbitration instead of litigating in court. As fun as court may sound, arbitration is more stressful and often more expensive. Also, in arbitration you have fewer rights and protections than you would have in court.
So, what happens if you sign a contract that has an arbitration clause, but later that contract is cancelled under the Home Solicitation Sales Act? That is the issue that attorney Samantha Vajskop successfully handled in a recent appeal.
In Wisniewski v. Marek Builders, Inc., a consumer used the Home Solicitation Sales Act to cancel a home improvement contract he had with his contractor. That contract contained a mandatory arbitration clause, and the contractor wanted to enforce that clause. Our argument to the court was, “if the contract is no longer valid because it was cancelled, then the arbitration clause in the contract cannot be valid, either.” The trial court disagreed with us, and said claims should be arbitrated. We respectfully disagreed, and decided to appeal the ruling. Samantha handled the briefing and argument on appeal.
At the time we filed the appeal, this issue under this law (which has been around since the 1970s) had not been brought up in any appellate courts in the State of Ohio. The appellate courts had been silent. The Eighth District Court of Appeals in Cuyahoga County broke the silence, and agreed with Myers Law.
The Court held that when a consumer cancels a contract under the Home Solicitation Sales Act, that consumer cannot be forced to arbitrate the dispute when the dispute is filed in court. The Court also noted and confirmed that the cancellation law generally applies to home repair and home improvement projects, and that when contractors do not give consumers the legally required information about the right to cancel, then the three (3) day right to cancel “does not expire.” This means cancellation may be possible years after the contract is signed.
Why is this new decision important? If you hire a contractor to perform work on your home, and the project falls apart, you may need to bring your dispute to court. If you are forced into arbitration, it could cost you more than $5,000 simply to file for arbitration,. That does not include arbitrator costs, mediation costs, or other fees which may add up to thousands of dollars more. However, if you could bring your dispute in Court, your filing fee is usually only a few hundred dollars ($250 in Cuyahoga County). Most consumers cannot afford to pay $5,000+ for the privilege of bringing their claims in arbitration, where they have fewer rights and remedies than in court. Why pay more for fewer protections and a potentially lower recovery? Now, under this decision, many consumers have a new opportunity to avoid arbitration entirely.
But remember! Before cancelling a contract, you should discuss your plan with a consumer attorney to make sure it is the right course of action to take. Sometimes the cancellation law does not apply, even in situations similar to the situation in Wisniewski v. Marek Builders, Inc. Also, cancelling the contract could have an impact on your other potential claims, your potential recover, and your other rights. It is not the best choice for every single consumer. A lawyer can help you decide what is the best option for your case.