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Amicus Brief

COMES NOW Ray Marlin Crawford, plaintiff in the case captioned above, and responds to the Petitions to Appeal Interlocutory Order filed by Cavalier Homes of Alabama, Inc. ("Cavalier Homes"), Results Oriented, Inc. d/b/a/ Assured Housing ("Assured Housing") and Green Tree Financial Servicing Corporation ("Green Tree") under O.C.G.A. §5-6-34(b) and Ga. Ct. App. Rule 30.

I. Did the trial court correctly decide that the arbitration clauses imposed upon Mr. Crawford by petitioners in contracts of adhesions were unconscionable, where they required Mr. Crawford to pay large fees in pursuing his claims and where one required Mr. Crawford to forgo his right to a day in court while preserving judicial remedies for two of the three petitioners? (YES)

II. Did the trial court correctly decide that petitioner Cavalier Homes' effort to use its arbitration clause to deprive Mr. Crawford of a judicial remedy for his claims of breach of express warranty was prohibited under the Magnuson-Moss Warranty Act and therefore could not be enforced? (YES)

Mr. Crawford and the petitioners signed contracts that included two arbitration clauses. The trial court, upon examining the circumstances and substantive terms of these arbitration clauses, determined that they are not enforceable. That ruling was correct. Contrary to petitioners' strenuous assertions, arbitration agreements are not inviolate; they are contracts and receive only the deference and scrutiny that contracts generally receive.

Numerous courts -- including four reported federal appellate decisions -- have recently held that arbitration agreements may not be enforced where they impose substantial undisclosed fees on claimants. A number of other courts -- including several state high courts -- have held that arbitration clauses are unconscionable and unenforceable where they establish unnecessarily one-sided terms by forcing individuals to arbitrate all claims, while allowing a corporation to retain some judicial remedies. And every court to consider the question has refused to enforce an arbitration clause that would deprive a consumer of his right to a judicial remedy under the federal Magnuson-Moss Warranty Act.

Not content to run afoul of any one of these lines of cases, petitioners' arbitration clauses achieve a trifecta - their clauses are independently unconscionable and illegal on all three grounds. The trial court found that the cost of the arbitration required and non-mutuality constituted unconscionability, and therefore rendered the clauses unenforceable. Further, the trial court found that the Magnuson-Moss Warranty Act precludes warrantors from forcing consumers into binding arbitration. The trial court's subsequent interlocutory order presents thorough and unassailable justification for its refusal to compel arbitration.

Petitioners should not be allowed to delay a review of the merits of this case pursuing this unnecessary appeal. This Court should not undertake a lengthy appellate review to consider becoming the first court in the United States to enforce arbitration clauses that impose excessive fees, are not mutual and violate the Magnuson-Moss Warranty Act. Accordingly, petitioners' applications should be denied.

In August 1997, Mr. Crawford paid more than $76,000 for a mobile home manufactured by Cavalier Homes, sold by Assured Housing and financed by Green Tree. Before purchasing, Mr. Crawford made three trips to the Assured Housing lot to examine model homes and discuss the contours of the sales transaction: price, warranties and financing. During these discussions, Mr. Crawford was never advised that should problems arise with his new mobile home, he would have to pay for an arbitration proceeding to enforce any remedies to which he was entitled.

On the day of the sale, an Assured Housing manager presented Mr. Crawford with a stack of papers approximately one inch thick, assuring him that they were standard documents for mobile home sales. Without advising Mr. Crawford to review the documents or disclosing that the documents contained terms previously not discussed, the manager quickly shepherded Mr. Crawford through the stack, requesting his signature and initials at various points.

Among these papers, Mr. Crawford signed sales documents that included two mandatory arbitration provisions. The first appears as §10 of the Acknowledgment and Agreement between Cavalier Homes, Assured Housing and Mr. Crawford (herein "Cavalier Homes Clause," attached as Exhibit 1) and requires Mr. Crawford to arbitrate any dispute through the American Arbitration Association ("AAA"). The second appears as § 14 of the Retail Installment Contract and Security Agreement between Assured Housing, Green Tree and Mr. Crawford (herein "Green Tree Clause," attached as Exhibit 2); under this clause, Assured Housing and Green Tree have reserved their rights to sue Mr. Crawford in court to enforce the monetary obligation secured by the manufactured home or to foreclose on the manufactured home while limiting Mr. Crawford to an arbitral forum. Because these clauses are substantially similar and came into effect under the same conditions, they will be treated as one agreement ("the arbitration agreement") in this brief, unless specific reference to the differences listed identified above is made.

From the time it was assembled, Mr. Crawford's home has never been right. As a result of racking and torquing, the two halves of the prefabricated home have never matched properly and the home cannot be leveled. Other defects have been noted by Assured Housing (attached as Exhibit 3) and the State Fire Marshall (attached as Exhibit 4). After giving Assured Housing and Cavalier Homes eleven months to repair or replace the unit, Mr. Crawford attempted to initiate an arbitration proceeding, only then learning of the fees and costs associated with arbitrating this complaint.⁽¹⁾

Under this arbitration agreement, Mr. Crawford must pay substantial fees - not disclosed in the sales documents - to pursue his claim.⁽²⁾ In addition to the $1250 filing fee to initiate an arbitration proceeding and a daily administrative fee of $150, he may be responsible for some or all of the arbitrator's fees, which may range between $100/hour and $1400/day according to the American Arbitration Association (AAA).⁽³⁾ And though this dispute arose over a transaction that was negotiated and consummated in Georgia by Georgia citizens, the Cavalier Homes Clause specifies that the arbitration proceeding shall take place at the manufacturer's principal place of business. Cavalier Homes Clause, Exhibit 1, §10. That location -- not disclosed in the arbitration provision -- is Addison, Alabama, which is more than three hours by car from Mr. Crawford's house in Carroll County; in addition to administrative and service fees, Mr. Crawford would incur costs for travel and accommodations in pursuing his claim through arbitration. The minimum total that Mr. Crawford would expect to pay to cover these fees and arbitrate his claim is $2000; he might be required to pay a great deal more. Mr. Crawford has sworn under oath that he cannot afford these fees. Crawford Affidavit, attached as Exhibit 6, at 3.

Unable to spur responsive or corrective action from Cavalier Homes and Assured Housing by direct communication and unable to afford the cost of arbitration, Mr. Crawford sued them and Green Tree in the state court for Carroll County, claiming breach of contract, warranty and fraud. All three petitioners answered the complaint, but refused to respond to discovery requests, instead asking the trial court to stay the litigation and compel arbitration. After briefing and a hearing, the trial court entered a detailed and fact-specific order refusing to compel arbitration of Mr. Crawford's claims. Court Order, attached as Exhibit 7. The trial court's ruling was based on two findings: first, that the arbitration clauses were procedurally and substantively unconscionable; second, that Cavalier Homes, as the issuer of a written warranty (attached as Exhibit 8), was prohibited under the Magnuson-Moss Warranty Act from limiting Mr. Crawford's avenues of recourse to binding arbitration.

I.. THE TRIAL COURT CORRECTLY CONCLUDED THAT THE ARBITRATION AGREEMENT WAS UNCONSCIONABLE AND THEREFORE UNENFORCEABLE.

A. United States Supreme Court jurisprudence has identified unconscionability as a ground for invalidating an arbitration agreement.

The Federal Arbitration Act (FAA) provides that a contractual agreement to arbitrate is valid, "save upon any grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. §2 (emphasis added). As the Supreme Court has stated, the purpose of the FAA is to "place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). Fully consistent with the purpose and text of the FAA, arbitration agreements may be challenged and invalidated on any generally applicable contract principles.

Under state contract law principles, the validity of a contract may be challenged under several theories, including fraud, duress and unconscionability. The Supreme Court has expressly stated that these defenses are available to a party challenging an arbitration agreement. Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996) ( "generally applicable contract defenses, such as fraud, duress or unconscionability, may be applied to invalidate arbitration agreements without contravening [the Federal Arbitration Act]"); Gilmer, 500 U.S. at 33 ("courts should remain attuned to well-supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds 'for the revocation of any contract'") (citation omitted). As the trial court explained, the Supreme Court has ruled that Section 2 of the FAA "gives states a method for protecting consumers against unfair pressure to agree to a contract with an unwanted arbitration provision. States may regulate contracts, including arbitration clauses, under general contract law principles and they may invalidate an arbitration clause" on legal or equitable grounds. Court Order, Exh. 7 at 5, quoting Allied-Bruce Terminex Companies, Inc v. Dobson, 513 U.S. 265, 281 (1995).

State courts of last resort across the United States have refused to enforce arbitration agreements where they have found procedural or substantive unconscionability. For recent illustrations, see e.g. Graham v. Scissor-Tail, 623 P.2d 165 (Cal. 1990); Iwen v. U.S. West Direct, 977 P.2d 989 (Mont. 1999); Williams v. Aetna Finance Co., 700 N.E. 2d 859 (Ohio 1998), cert. denied, 1999 U.S. LEXIS 2366 (Apr. 5, 1999); Sosa v. Paulos, 924 P.2d 357 (Utah 1996); Arnold v. United Companies Lending Co., 1998 W. Va. LEXIS 220 (W. Va., Dec. 11, 1998).

B. The trial court applied the facts of this case to the objective criteria enunciated in Georgia contract decisions to reach its determination of unconscionability.

Assured Housing has represented to this Court that an unconscionable contract is "such an agreement as no sane man not acting under a delusion would make and that no honest man would take advantage of." Assured Housing Application at 3, quoting R. L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962, 965, 214 S.E. 2d 360, 363 (1975). This characterization, recently recalled by the Georgia Supreme Court in a footnote to its decision in NEC Technologies, Inc. v. Nelson, 267 Ga. 390, 391 n.2, 478 S.E. 2d 769, 771 (1996), is not a standard; Georgia courts evaluate neither the sanity nor the honesty of parties disputing contract provisions. Rather, the trial court used the analysis articulated by the Georgia Supreme Court in NEC Technologies: that a finding of unconscionability will be based upon examination of a contract's procedural genesis and substantive components. Court Order, Exh. 7 at 4-5, relying on NEC Technologies, Inc., 267 Ga. at 391, 478 S.E. 2d at 771.

The trial court dutifully evaluated the arbitration agreements here using the exact criteria outlined in NEC Technologies and applied by this Court in Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27, 505 S.E.2d 818 (1998), rev. denied, 1999 Ga. LEXIS 37 (Jan. 8, 1999).⁽⁴⁾ Court Order, Exh. 7 at 5-8. The trial court determined that the defendants' failure to disclose the substantial administrative and service fees and costs associated with arbitration combined with the presentation of the sales contracts as standard documents not open to negotiation constituted "surprise"⁽⁵⁾ and "oppression," the two factors that constitute procedural unconscionability. Court Order, Exh. 7 at 5-6. Assured Housing has suggested that a full or partial waiver of the administrative fees may be available. Assured Housing App. at 17. This possibility, which does not apply to the arbitrator's fees, is speculative, not guaranteed, however. AAA Rules, Exhibit 5, p. 2, R-51. The AAA Rules do not explain how and when such waivers are granted, and no evidence in the record suggesting how often such fees are actually waived in AAA's practice. Assured Housing's suggestion would make Mr. Crawford's right to remedy contingent upon the unknown and uncertain charity of a private arbitration operation.

The trial court further found that the foreclosure of remedies effectuated by the prohibitive cost of arbitration and the non-mutuality of the Green Tree Clause constituted substantive unconscionability. Court Order, Exh. 7 at 6-7. Rather than reformulate the clauses, the trial court declined to enforce them and severed them from the contracts.

C. THE TRIAL COURT'S RULING ON UNCONSCIONABILITY IS CONSISTENT WITH NUMEROUS RECENT REPORTED APPELLATE DECISIONS FROM AROUND THE COUNTRY.

The recent proliferation of arbitration clauses imposed unilaterally upon unknowing or uncomprehending parties to consumer and employment contracts has generated a spate of opinions - emerging from federal and state courts, nationwide - that examine arbitration agreements like that challenged by Mr. Crawford. While arbitration agreements are enforceable and favored in general, numerous courts have held that particularly onerous and unfair arbitration clauses - like the ones at issue here - are procedurally and substantively unconscionable.

1. Many courts, including three circuits of the federal Court of Appeals, have concluded that substantial, undisclosed fees are unconscionable.

In a wave of cases decided during the last two years, courts have closely examined the fees associated with arbitration. Considering the practical effects of such fees, they have determined that where fees may discourage or prevent a party from bringing a claim, the agreement should not be enforced. Three opinions from the federal Court of Appeals capture this reasoning.

In a thorough opinion resolving Cole v. Burns International Security Servs., the D.C. Circuit concluded that an employee could not be required to pay an arbitrator's fee - which the court estimated to range from $500 to $1000 or more, daily - to pursue his discrimination claims because the fees would discourage such an action and prevent him from vindicating his statutory rights.⁽⁶⁾ Cole v. Burns International Security Servs., 105 F.3d 1465, 1484 (D.C.Cir. 1997).

Building on Cole, the Eleventh Circuit found unenforceable an arbitration clause that imposed a $2000 filing fee and potential responsibility for a portion of the arbitrator's fees, holding "costs of this magnitude [are] a legitimate basis for a conclusion that the clause does not comport with statutory policy [enabling people subjected to workplace discrimination to vindicate their rights]." Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054, 1062 (11th Cir. 1998) (Cox, J. concurring, for a majority of the court). The Eleventh Circuit revisited this issue in an opinion published a few weeks ago, concluding forcefully that -- like the Green Tree Clause here, which does not specify a fee schedule -- the arbitration clause in dispute "raise[d] serious concerns with respect to filing fees, arbitrators' costs and other arbitration expenses that may curtail or bar a plaintiff's access to the arbitral forum" and that, "fail[ing] to provide the minimum guarantees required to ensure [the plaintiff's] ability to vindicate her statutory rights will not be undone by steep filing fees, steep arbitrators' fees, or other high costs of arbitration" was unenforceable.⁽⁷⁾ Randolph v. Green Tree Financial Corporation, 1999 U.S. App. LEXIS 13697 at *24-25 (11^th Cir. June 22, 1999).

In Shankle v. B-G Maintenance Management of Colorado, the Tenth Circuit examined an arbitration agreement governing an employment relationship. The court refused to compel arbitration where the claimant would be required to pay one-half of the arbitrator's fees -- an amount projected to total between $1875 and $5000 -- to resolve a discrimination claim against his employer. The court found that the agreement was unenforceable, "plac[ing] Mr. Shankle between the proverbial rock and a hard place - it prohibited use of the judicial forum, where a litigant is not required to pay for a judge's services, and the prohibitive cost substantially limited use of the arbitral forum." Shankle v. B-G Maintenance Management of Colorado, 163 F.3d 1230, 1235 (10th Cir. 1999).

Other courts have similarly found that substantial fees create a significant, if not impassable, roadblock that prevents consumers and workers from pursuing valid claims, and therefore are unconscionable. Martens v. Smith Barney, Inc., 181 F.R.D. 243, 255-56 (S.D.N.Y. 1998) (stating "arbitration agreement cannot impose financial burdens on plaintiff access to the arbitral forum" including steep filing fees and arbitrators' fees); Patterson v. ITT Consumer Financial Corp., 18 Cal. Rptr. 2d 563, 566-67 (Cal. App. 1993) (refusing to compel arbitration of consumer claims where claimants were required to pay fees on grounds of unconscionability), review denied, 1993 Cal. LEXIS 4322 (Aug. 12, 1993), cert. denied, 510 U.S. 1176 (1994); Spence v. Omnibus Industries, 119 Cal. Rptr. 171, 173-73 (Cal. App. 1975) (refusing to require plaintiff seeking judicial resolution of $37,000 claim against building contractor to pay $720 filing fee to submit claim to arbitration); Brower v. Gateway 2000, 676 N.Y.S.2d 569, ___ (N.Y. App. 1998) (finding that "excessive cost factor [of approximately $5000] that is necessarily entailed" rendered provision requiring arbitration in an International Chamber of Commerce forum unconscionable); In Matter of Arbitration between Teleserve Systems Inc. and MCI Telecommunications Corp., 659 N.Y.S. 2d 659, 660, 664 (N.Y. App. 1997) (finding filing fee calculated on basis of one-half percent of the amount claimed - $204,000 fee in a $40 million anti-trust dispute - patently excessive, oppressive, burdensome and a bar to arbitration and therefore unconscionable in contract between sophisticated telecommunications firms); Myers v. Terminex Int'l Co., 697 N.E.2d 277, 280-81 (Ohio Ct. of Comm. Pleas 1998) (holding unconscionable arbitration clause that would require claimant to pay a filing fee of $2000 to pursue claim worth approximately $120,000).

2. Courts regard non-mutual arbitration requirements as one-sided or unnecessarily harsh terms that constitute substantive unconscionability.

In recent years dozens of appellate courts have found particularly unfair and one-sided arbitration agreements to be unconscionable, and thus unenforceable. One type of one-sided provisions that courts have repeatedly found to render an arbitration clause unconscionable are "non-mutual" provisions, where an arbitration clause requires the drafter's customers or employees to submit their disputes to arbitration, but permits the drafter to litigate its claims.

The Green Tree Clause is a classic non-mutual arbitration provision. Under it, any and every claim that Mr. Crawford may assert is forced into mandatory arbitration. The corporate lenders, Assured Housing and Green Tree, retained their right to seek judicial relief to enforce the security agreements or foreclose on Mr. Crawford's home. Green Tree Clause, Exh. 2, §14. After making findings of fact that the petitioners were in a superior bargaining position, and that the contract at issue was a contract of adhesion where Mr. Crawford was not in a position to negotiate any of the specific terms, the trial court held that the non-mutual provision rendered the Green Tree Clause substantively unconscionable. Court Order, Exh. 7 at 7-8.

Assured Housing and Green Tree suggest that the trial court's ruling on this point was unusual and out of keeping with applicable precedent, but their briefs do not provide this Court with an applicable, or representative, sample of the case law on this point. In fact, a number of appellate courts have published opinions striking down non-mutual clauses within the last three years, putting the trial court's ruling here firmly in the mainstream of established law on this point.

In Arnold v. United Companies Lending Corp., 511 S.E.2d 854 (W.Va. 1998), for example, the West Virginia Supreme Court held that "the wholesale waiver of the Arnolds' rights together with the complete preservation of United Lending's rights 'is inherently inequitable and unconscionable because in a way it nullifies all the other provisions of the contract'." Arnold, 511 S.E.2d at 861-62 (citation omitted). The court suggested that one might expect such a provision in a contract between rabbits and foxes. Arnold, 511 S.E.2d at 861.

Accordingly, under the circumstances of this action, we hold that where an arbitration agreement entered into as part of a consumer loan transaction contains a substantial waiver of the borrower's rights, including access to the courts, while preserving the lender's right to a judicial forum, the agreement is unconscionable and, therefore, void and unenforceable as a matter of law.

Arnold, 511 S.E.2d at 862.

In Kinney v. United Healthcare Services, Inc., 83 Cal. Rptr.2d 348 (Cal. Ct. App. 1999), similarly, the court held as follows:

Faced with the issue of whether a unilateral obligation to arbitrate is unconscionable, we hold that it is. The party who is required to submit his or her claims to arbitration forgoes the right, otherwise guaranteed by the federal and state Constitutions, to have those claims tried before a jury.... Further, except in extraordinary circumstances, that party has no avenue of review for an adverse decision, even if that decision is based on an error of fact or law that appears on the face of the ruling and results in substantial injustice to that party.... By contrast, the party requiring the other to waive these rights retains all of the benefits and protections the right to a judicial forum provides. Given the basic and substantial nature of the rights at issue, we find that the unilateral obligation to arbitrate is itself so one-sided as to be substantively unconscionable.

Kinney, 83 Cal. Rptr.2d at 354 (citations omitted).

While the Arnold and Kinney decisions are particularly eloquent, they are only two of many decisions reaching the same conclusion. See Nicholson v. Labor Ready, Inc., 1997 U.S. Dist. LEXIS 23494 at *15 (N.D. Cal. 1997) (stating that the court could "not imagine any [business or other reason] that would justify requiring the plaintiff to forgo his right to trial by jury while preserving such right for defendant," and finding arbitration clause unconscionable and unenforceable); Gonzalez v. Hughes Aircraft Employees Federal Credit Union, 83 Cal. Rptr.2d 763, 766 (Cal. Ct. App. 1999) (finding arbitration clause unconscionable where, among other provisions, "Hughes could use the judicial system when it desired, and avoid it when it was advantageous"), rev. granted, 978 P.2d 1 (Cal. 1999); Worldwide Ins. Group v. Klopp, 603 A.2d 788 (Del. 1992) (refusing to enforce arbitration agreement that preserved insurer's right to appeal and obtain trial de novo if arbitrator's award exceeded certain limits, but denied insured the same right if an award was below those limits); Reed v. Farmers Ins. Group, 685 N.E.2d 385, 390 (Ill. Ct. App. 1997) (finding "that [arbitration] clause's structural inequality coupled with its mandatory presence in the policy render[ed] it particularly oppressive and unconscionable, and, consequently, unenforceable" where clause provided selective right of appeal that would have benefitted insurer but was "highly unlikely" to ever benefit an insured."), appeal granted, 689 N.E.2d 1146 (Ill. 1997); Iwen v. U.S. West Direct, 977 P.2d 989, 996 (Mont. 1999) (striking down as unconscionable arbitration clause where a corporation "pointedly protected itself by preserving its constitutional right of access to the judicial system while at the same time completely remov[ing] that right from the advertiser" noting that the disparity "makes no sense").

Still other courts have refused to enforce non-mutual arbitration clauses on grounds other than unconscionability. See Hooters of America v. Phillips, 173 F.3d 933 (4^th Cir. 1999) (refusing to enforce an arbitration agreement "utterly lacking in the rudiments of even-handedness," where, among other things, the corporate defendant but not the employee could go to court to vacate or modify an arbitral award where it could be shown that the arbitration panel exceeded its authority); Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126 (7^th Cir. 1997) (finding unenforceable under Indiana law arbitration clause that required an employee to arbitrate all disputes against the employer, but not vice versa); Hull v. Norcom, Inc., 750 F.2d 1547, 1550 (11^th Cir. 1985) (holding mutual promise to arbitrate was illusory where one party reserved the right to sue in court for any breach); Lopez v. Plaza Finance Co., 1996 U.S. Dist. LEXIS 5566 at *12 (N.D. Ill. 1996) ("[w]here only one party is bound to arbitrate, the agreement is unenforceable.") (citation omitted).

II. THE TRIAL COURT CORRECTLY CONCLUDED THAT CAVALIER HOMES WAS PRECLUDED FROM ASSERTING ITS ARBITRATION CLAUSE BY THE MAGNUSON-MOSS WARRANTY ACT.

Independent of the contract basis for refusing to enforce the arbitration agreement, the trial court found that the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312, bars Cavalier Homes, the issuer of a written warranty, from enforcing a binding arbitration clause. Court Order, Exh. 7 at 10. None of the petitioners addressed this portion of the trial court's order, even though it would preclude arbitration even if the finding of unconscionability were overruled.⁽⁸⁾

The trial court's decision is supported by the reasoning put forth in the leading case addressing arbitration in the context of Magnuson-Moss Warranty Act claims, Wilson v. Waverlee Homes, Inc.:

The plaintiffs correctly observe that the language of the Magnuson-Moss Act, the regulations adopted pursuant to it, and its legislative history all confirm that Congress and the Federal Trade Commission intended that, with the exception of an informal and non-binding dispute resolution mechanism regulated and defined under the Act, consumers are to retain full and unfettered access to the courts for the resolution of their disputes...Because the arbitration clauses contained in the installment sales and financing contracts between the plaintiffs and [the dealer-warrantor] are binding, rather than non-binding, and are thus a bar to court relief, they conflict with the Magnuson-Moss Act and are unenforceable. 954 F. Supp. 1530, 1538 (M.D. Ala. 1997), aff'd, 127 F.3d 40 (11th Cir.1997).⁽⁹⁾ See also Rhode v. E & T Investments, Inc., 6 F. Supp. 2d 1322, 1332 (M. D. Ala. 1998) (refusing to compel consumer's claims for breach of written and express warranties against warrantor); Southern Energy Homes v. Lee, 1999 Ala. LEXIS 24 at *8 (Ala. Jan. 8,1999) (holding that an arbitration clause included in a written warranty could not be enforced as to any claim against the warrantor whether based upon contract, breach of warranty or fraud).

Respondent knows of no authority suggesting that arbitration may be compelled with respect to written warranty claims, and in pretending that the trial court did not raise this issue, petitioners have failed to cite any such authority. Nevertheless, petitioners ask this Court to hold that the trial court committed error in following the lead of every known decision on this topic, without offering any support for this request.

Based upon the foregoing, petitioners' applications for leave to appeal the trial court's interlocutory order should be denied.

Respectfully submitted,
________________________________
T. Michael Flinn
Attorney at Law
Georgia State Bar No. 264530
LAW OFFICES OF T. MICHAEL FLINN
402 Tanner Street Carrollton, GA 30117
770/832-0300

Victoria S. Nugent, Esq.
F. Paul Bland, Jr., Esq.
TRIAL LAWYERS FOR PUBLIC JUSTICE
1717 Massachusetts Avenue, N.W.
Suite 800
Washington D.C. 20036
202/797-8600

1. Assured Housing has asserted that Mr. Crawford should be estopped from seeking adjudication of his complaint on the basis of this preliminary demand for arbitration, citing Dews v. Roadway Package System, Inc., as support for this contention. Assured Housing Application. at 24. Neither Mr. Crawford's claims nor his actions are comparable to those considered in Dews. After electing to arbitrate a claim against his former employer, as required by his employment contract, and accepting a $15,000 arbitration award, Dews sought to rescind the employment contract and litigate a fraud claim against the defendant. Dews v. Roadway Package System, Inc., 227 Ga. App. 9, 10, 488 S.E. 2d 94 at 95 (1997). This Court held that by his actions Dews affirmed the contract and subsequently was bound by its terms. Id. Here, Mr. Crawford did not initiate arbitration and the trial court did not strike the arbitration agreement on the basis of fraud.

2. Fees applicable to arbitration under the Cavalier Homes Clause are explained in the American Arbitration Association's Commercial Dispute Resolution Procedures (1999) ("AAA Rules," attached as Exhibit 5). No forum is specified in the Green Tree Clause; Green Tree has suggested that Mr. Crawford use a cheaper arbitration service to file his claim against the lender. Green Tree App. at 11. Green Tree's suggestion would require Mr. Crawford to file two arbitral complaints, and pay fees and costs associated with two proceedings arising from one transaction.

3. The AAA states the average arbitrator's daily fee as $700. Cole v. International Security Servs., 105 F.3d 1465, 1480, n.8 (D.C.Cir. 1997).

4. Assured Housing denies the applicability of these cases to the present dispute, characterizing them as "warranty cases" and this case as an "arbitration case" without offering any authority to support its suggestion that correspondingly distinct treatment is appropriate. Assured Housing App. at 14. Their assertion fails for two reasons. First, this case, NEC Technologies and Mullis are contract cases; under the FAA arbitration agreements are not treated differently than other contracts. Second, Mr. Crawford has alleged warranty claims against Assured Housing and Cavalier Homes.

5. Assured Housing rebuts this finding citing Bumgarner v. Green, 227 Ga. App. 156, 160, 489 S.E. 2d 43, 47, where this Court determined that a real estate developer bound by a clear and unambiguous partnership agreement was not excused from performance because he had not read the agreement to which he had assented. Assured Housing App. at 20-21. The trial court here did not excuse Mr. Crawford from the agreement because he had not read it; the finding of "surprise" resulted because without cost information (which the defendant-drafters had) Mr. Crawford could not understand the true meaning of the arbitration agreement. Court Order, Exh. 7 at 6-7).

6. Ultimately, the court interpreted an ambiguous provision in the agreement to require the employer to pay all of the arbitrator's fees, and so found the agreement enforceable. Cole, 105 F.3d at 1485.

7. Green Tree, directly and adversely affected by this decision, has suggested that this opinion is not relevant here and has represented to this Court that the basis of the Eleventh Circuit's decision was statutory preclusion of the arbitration clause by the Truth in Lending Act (TILA). Green Tree App. at 15. The Eleventh Circuit opinion clearly states "We conclude that the arbitration clause at issue here is unenforceable [on the basis of fees]. Because we decide the issue on this ground, we need not decide whether the TILA precludes all arbitration agreements." Randolph, 1999 U.S. App. LEXIS 13697 at 27-28. Further, this decision contemplates the practical effect of substantial arbitration fees as foreclosure of remedies, preventing the vindication of rights, and therefore is relevant here. It makes no difference whether the statutory rights precluded relate to TILA or to the Magnuson-Moss Warranty Act.

8. The trial court applied this holding to Cavalier Homes. Mr. Crawford's complaint alleges that Assured Housing also provided a written warranty when it promised to set up the home in compliance with all applicable regulations. Assured Housing Purchase Contract, § Optional Equipment, Labor and Accessories, §17, attached as Exhibit 9.

9. The U.S. District Court's interpretation of the Magnuson-Moss Warranty Act was recently confirmed by the Federal Trade Commission (FTC). In April, the FTC published a Final Action interpreting the Act stating: "the Commission determined [in 1975] that 'reference within the written warranty to any binding, non-judicial remedy is prohibited by the [FTC] Rule and the Act.' The Commission believes that this interpretation continues to be correct. Therefore, the Commission has determined not to amend [its Rule] to allow for binding arbitration. [The Rule] will continue to prohibit warrantors from including binding arbitration clauses in their contracts with consumers that would require consumers to submit warranty disputes to binding arbitration." Final Action Concerning Review of Interpretations of the Magnuson-Moss Warranty Act, 64 Fed. Reg. 19700, 19708-09 (Apr. 22, 1999).