Narayan v. Ritz-Carlton Dev. Co.Annotate this Case
Plaintiffs, individual condominium owners, entered into purchase agreements with the developer of a Maui condominium project. Homeowners received the condominium declaration, which contained an arbitration clause, and other documents governing the project along with their purchase agreements. When the condominium development began experiencing financial problems, Homeowners filed suit against Respondents, the development and management companies for the project. Respondents filed a motion to compel arbitration, which the circuit court summarily denied. The intermediate court of appeals (ICA) reversed, holding that a valid arbitration agreement existed, this dispute fell within the scope of that agreement, the arbitration terms were procedurally conscionable, and the arbitration clause was not an unenforceable contract of adhesion. The Supreme Court vacated the ICA’s judgment and affirmed the circuit court’s order denying Respondents’ motion to compel arbitration, holding (1) because Plaintiffs did not unambiguously assent to arbitration, the agreement to arbitrate was unenforceable; (2) the ICA erred by placing dispositive weight on procedural unconscionability without addressing the alleged substantive unconscionability of the arbitration terms; and (3) the ICA erred by concluding that Plaintiffs had failed to demonstrate procedural unconscionability.