Court Grants Center’s Request to Publish Decision Holding Solar Panel Arbitration Clause Unenforceable

February 2, 2021

The Center successfully sought publication of Cabatit v. Sunnova Energy Corp. (2021) 60 Cal.App.5th 317, a decision from the Third Appellate District holding that the arbitration clause in a door-to-door solar panel contract was unconscionable and therefore unenforceable. 

The case presented an all-too-common scenario: a solar panel energy salesman signed up a couple for solar panels on their home, and scrolled through an electronic contract without explaining the terms of the agreement to the homeowners, who didn’t speak fluent English, or offering them a chance to review it. Later, when the couple discovered damage to their home, they sued the company and were met with an increasingly familiar adversary: an arbitration clause. Here, however, the court denied the company’s motion to compel arbitration because the contract was unconscionable.

The opinion explains that contracts of adhesion — take-it-or-leave-it contracts — are presumed to be procedurally unconscionable. In this case, not only was the contract of the take-it-or-leave-it variety, but the homeowners were also not told about the arbitration provision, and didn’t even get a copy of the contract to review. The contract was thus procedurally unconscionable on multiple fronts.

The opinion also concludes that the arbitration provision was substantively unconscionable because it was “clearly one-sided.” The agreement required the Cabatits to arbitrate, but allowed the solar panel company, Sunnova, to file a court action for most of its claims. Sunnova argued that it had a “legitimate commercial need” for the one-sidedness, but the court found no logical support for “giving Sunnova access to the courts while denying the Cabatits the same privilege.”

The Cabatits’ story is a familiar one to legal services advocates, whose clients in recent years have all too frequently encountered serious issues after entering an agreement for solar panels with a door-to-door salesman. Whether it is physical damage to their home (as in this case), or financial strife after entering the agreement (for example, by being inappropriately enrolled in an energy-improvements financing program), there are many serious problems that arise from the sale of residential solar panels — up to and including foreclosure. 

The Center’s letter seeking publication was joined by a group of eminent legal services organizations, including Bet Tzedek, Community Legal Services in East Palo Alto, Elder Law and Advocacy, Housing and Economic Rights Advocates, Public Law Center, UC Irvine School of Law, and Watsonville Law Center. 

This opinion will provide useful guidance in circumstances where consumers are rushed through a door-to-door sales contract with an arbitration provision — in solar panel sales and beyond.