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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DONIA TOWNSEND and BOB PEREZ, individually, on behalf of their marital community, and as class representatives; PAUL YSTEBOE and JO ANN YSTEBOE, individually, on behalf of their marital community, and as class representatives; VIVIAN LEHTINEN and TONY LEHTINEN, individually, on behalf of their marital community and on behalf of their minor children, NIKLAS and LAUREN; JON SIGAFOOS and CHRISTA SIGAFOOS, individually, on behalf of their marital community, and on behalf of their minor children, COLTON and HANNAH, Respondents, v. THE QUADRANT CORPORATION, a Washington corporation; WEYERHAEUSER REAL ESTATE COMPANY, a Washington corporation; and WEYERHAEUSER COMPANY, a Washington corporation, Appellants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No. 62700-7-I DIVISION ONE PUBLISHED OPINION

FILED: December 28, 2009

Appelwick, J. -- Four families who purchased homes built by Quadrant Corporation sued Quadrant and its parent corporations, Weyerhaeuser Real Estate Company and Weyerhaeuser Corporation, for fraud, negligence, negligent misrepresentation, rescission, and a declaration of the unenforceability

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of the arbitration clause for unconscionability.

The purchase and sale

agreement (PSA) used in all four transactions contains a broad mandatory arbitration provision covering any controversy or claim arising out of or relating to breach of the PSA or any claimed defect. Quadrant appeals the order

denying its motion to stay proceedings and to compel arbitration as a matter of right under RCW 7.04A.280(1)(a). Quadrant contends that an arbitrator, not a court, must decide whether the PSA was invalid for unconscionability. RCW 7.04A.060(2) grants the court the authority to decide whether an agreement to arbitrate exists, so the trial court did not err in considering the validity of the arbitration clause. However, the facts alleged by the Homeowners do not support a finding that the arbitration clause itself was procedurally or substantively unconscionable. Under the arbitration statute, the arbitrator must decide whether a contract containing a valid agreement to arbitrate is enforceable. Because the arbitration clause itself is valid, we reverse and

remand for the trial court to refer the claims to arbitration. FACTS Respondents (the Homeowners) purchased houses designed, built, and sold by appellants The Quadrant Corporation, Weyerhaeuser Real Estate Company (WRECO), and Weyerhaeuser Company. The respondents are four married couples: Donia Townsend and Bob Perez (the Perezes), Paul and Jo Ann Ysteboe, Vivian and Tony Lehtinen, Jon and Crista Sigafoos, and the Lehtinen and Sigafoos children.1 Quadrant is a wholly owned subsidiary of

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WRECO, and WRECO is a wholly owned subsidiary of Weyerhaeuser. Quadrant designs, develops, builds, and markets planned residential

communities throughout Washington. The Homeowners' declarations contain descriptions of the purchasing process, wherein they allege that Quadrant presented them with the PSA on a "take it or leave it" basis, used high-pressure sales tactics, withheld material information about other lawsuits against it, and precluded the Homeowners from reviewing the PSA before signing it electronically.2 After purchasing and living in their homes and discovering the alleged defects, the Homeowners alleged that they had not received the homes they bargained for, paid for, or expected, as the homes were built in a rapid, assembly line style, allowing only 54 total working days for the entire production of each home. The Homeowners allege that the reckless construction process resulted in numerous construction defects, caused injury in the form of mold growth, pests, and poisonous gases, and violated the Consumer Protection Act3 (CPA). The Homeowners sued the defendants for fraud, outrage, violation of the CPA, negligence, negligent misrepresentation, rescission, breach of warranty, and a declaration of the unenforceability of the arbitration clause contained in the PSA. The PSAs used in all four transactions are virtually identical, as are the
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Initially, the Perezes and Ysteboes filed a class action complaint against Quadrant, WRECO, and Weyerhaeuser. The King County Superior Court consolidated the actions brought by the Sigafooses and Lehtinens into the Perez/Ysteboe class action suit in February 2008. 2 The facts presented here are those alleged by the plaintiffs, as the trial court has not entered findings. 3 Ch. 19.86 RCW .

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arbitration clauses, which are located on the last page, just above the signature line. The language of the arbitration provision reads: Any controversy or claim arising out of or relating to this Agreement, any claimed breach of this Agreement, or any claimed defect relating to the Property, including, without limitation, any claim brought under the [CPA], (but excepting any request by Seller to quiet title to the Property) shall be determined by arbitration commenced in accordance with RCW 7.04[A].060. On January 11, 2008, Quadrant moved to compel arbitration of all claims brought by the Perezes and Ysteboes and to stay trial court proceedings. That same day, Weyerhaeuser and WRECO moved for summary judgment seeking dismissal of all the claims on the merits with prejudice. In opposition to

Quadrant's motion to compel arbitration, the Homeowners challenged the validity of the arbitration clause for procedural and substantive unconscionability. The court denied Weyerhaeuser and WRECO's summary judgment motion and Quadrant's motion to compel arbitration and stay proceedings.4 Once the trial court consolidated the Lehtinen and Sigafoos lawsuits with the class action, Weyerhaeuser and WRECO moved to compel arbitration of the consolidated cases, as did Quadrant. Again, the Homeowners challenged the enforceability of the arbitration provision and the PSA itself as procedurally and substantively unconscionable. On December 2, 2008, the trial court denied the appellants' motions to compel arbitration. The court signed the appellants' proposed order. The order stated two reasons for denial of the motions. First, there were "disputes of fact
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Weyerhaeuser and WRECO moved for reconsideration, which the trial court also denied.

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concerning whether the plaintiffs' PSAs with Quadrant were negotiated contracts or contracts of adhesion." Second, "[a]s a matter of law, the arbitration clauses in the plaintiffs' [PSAs] with Quadrant do not apply to plaintiffs' claims regarding subsequent remediation costs due to construction defects."5 WRECO, and Weyerhaeuser appealed this order. On December 3, 2008, appellants filed with this court a motion for stay of trial court proceedings pending appeal. On December 22, 2008, a commissioner granted Quadrant's motion to stay proceedings, finding that the trial court lacked authority under RAP 7.2 to engage in further discovery or pretrial motion practice in the suits subject to this appeal. DISCUSSION I. Validity of Agreement to Arbitrate--RCW 7.04A.060 Quadrant6 contends that the trial court acted ultra vires when it decided that the PSA was unenforceable. Citing specifically to RCW 7.04A.060(3), Quadrant,

Quadrant suggests that an arbitrator, not a court, decides issues of enforceability of the underlying contract under the Uniform Arbitration Act, chapter 7.04A RCW. Arbitrability is a question of law we review de novo. Zuver v. Airtouch Commc'ns, Inc., 153 Wn.2d 293, 302, 103 P.3d 753 (2004). The burden of proof is on the party seeking to avoid arbitration. Id. As a threshold matter, the

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The Homeowners assert that this issue was not briefed to the trial court, so it is unclear why the appellants included it in their proposed order. 6 Quadrant refers to all three appellants unless otherwise specified.

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parties dispute whether chapter 7.04A RCW gives the courts or the arbitrator the authority to decide the challenges at issue in this case.7 RCW 7.04A.060 provides circumscribed decision-making authority for both the courts and arbitrators: (1) An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of contract. (2) The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate. (3) An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable. RCW 7.04A.060 is based on section 6 of the uniform act. Comment 2 to section 6 explains that subsection (b) and (c) in the uniform act8 set up a clear distinction between substantive and procedural arbitrability: Subsections (b) and (c) of Section 6 are intended to incorporate the holdings of the vast majority of state courts and the law that has developed under the FAA [Federal Arbitration Act, 9 USC

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