Royston, Rayzor, Vickery & Williams, LLP v. Lopez
No. 13-1026 & 14-0109
Case Summary written by Allison Grayson, Online Edition Editor.
JUSTICE JOHNSON delivered the opinion of the Court.
Francisco Lopez sought the representation of Royston, Rayzor, Vickery, & Williams, LLP (the firm) in his divorce. The contract between the two parties included an arbitration provision.
After the firm filed for divorce on Lopez’s behalf, the parties were ordered to attend mediation. The parties ultimately settled. Thereafter, Lopez sued the firm “claiming the firm induced him to accept an inadequate settlement.” In response, the firm moved to compel arbitration.
After the trial court denied the firm’s motion, the firm “filed both an interlocutory appeal challenging the denial under the Arbitration Act, and an original proceeding seeking mandamus relief under common law.” The court of appeals affirmed the trial court’s decision and denied mandamus relief.
In its analysis, the court of appeals determined that Lopez’s claims fell within the scope of the agreement. Then, the court examined Lopez’s affirmative defenses to arbitration. Looking at whether the arbitration provision was unconscionable, the court determined that Lopez need only prove the provision was procedurally unconscionable or substantively unconscionable, not both. The court of appeals concluded the provision was unenforceable based on its substantive unconscionability.
“In cause number 13-1026, [the firm sought] relief from the court of appeals’ judgment denying its interlocutory appeal, and in cause number 14-0109, it [sought] mandamus relief directing the trial court to order arbitration.” In response, Lopez urged the Court to affirm the previous decisions because “(1) the court of appeals correctly determined that an arbitration provision need not be both procedurally and substantively unconscionable to be unenforceable, and this provision [was] substantively unconscionable because it [was] excessively one-sided; (2) the arbitration provision was entered into in the context of Lopez’s agreeing to become a client of the law firm, and given that context it violates public policy; (3) Lopez’s status as a prospective client shifted the burden of proof to [the firm] to establish it met its ethical obligation to explain the effects of the arbitration provision to him and [the firm] did not do so; and (4) the arbitration provision [was] illusory because it [allowed the firm] to avoid arbitration as to its fee disputes while requiring Lopez to arbitrate all his disputes.”
In explaining its reversal of the court of appeals’ decision, the Court stated that arbitration provisions in an attorney-client contract are not “presumptively unconscionable.” Further, the Court argued that parties asserting defenses to arbitration clauses have the burden of proving unconscionability.
Because the provisions in question related to the contract as a whole, the Court refrained from deciding whether the provisions were unconscionable. The Court explained that “challenges relating to an entire contract will not invalidate an arbitration provision in the contract; rather, challenges to an arbitration provision in a contract must be directed specifically to that provision.”
While Lopez argued that the arbitration provision was one-sided because it forced him to arbitrate, but allowed the firm to choose whether to arbitrate or litigate, the Court argued that this was not true. In fact, the Court determined that the “provision equally [bound] both parties to arbitrate claims within its scope and [ensured] that the same rules [applied] to both parties[.]” Therefore, Lopez failed to show the arbitration provision was substantively unconscionable.
Furthermore, in response to Lopez’s urging that the firm failed to fully explain the agreement, the Court declined to require that attorneys explain arbitration provisions in attorney-client employment contracts to prospective clients. The Court explained that prospective clients who sign contracts containing arbitration provisions “are deemed to know and understand the contracts’ content and are bound by their terms on the same basis as are other contracting parties.”
Discussing the idea of illusory promises, the Court stated that “the fact that the scope of an arbitration provision binds parties to arbitrate only certain disagreements does not make it illusory.” Moreover, an arbitration clause is not illusory just because it is one-sided.
Based on the above-mentioned considerations, the Court reversed the court of appeals’ decision in cause number 13-1026 and remanded the cause to the trial court. The Court also denied the writ of mandamus in cause number 14-0109.
JUSTICE GUZMAN, joined by JUSTICE LEHRMANN and JUSTICE DEVINE, concurring.
Justice Guzman wrote to “emphasize the need for rules more specifically delineating the means and methods by which attorneys can discharge their ethical responsibilities in this context.” While the Disciplinary Rules do not specifically speak to arbitration agreements, attorneys must generally provide enough information to allow the client to make an informed decision. In her concurrence, Justice Guzman argued that the rulemaking process would be the best forum for achieving more clarity in how best to discharge such responsibilities.