Lojewski v. Group Solar USA, LLC

Background

The plaintiffs alleged that defendants fraudulently induced them to buy and install residential solar panels. The Garcias alleged that a salesperson promised three “Welcome Checks” totaling $6,606, but they received less than that amount; that their panels initially did not produce energy; and that they incurred solar-loan and electric-bill costs. They asserted claims including deceptive business practices, false advertising, breach of contract, violation of the Retail Installment Sales Act, unjust enrichment, and warranty-related claims.

This opinion concerned Solar Mosaic’s motions directed only to Smith Garcia and Danielle Garcia. Solar Mosaic moved to compel arbitration of the Garcias’ claims against it. It also sought a stay of the Garcias’ related claims against Solar Mosaic, Group Solar, and Solar Program, and moved to dismiss the Garcias’ claims or strike their class allegations.

Arbitration Agreement

The Garcias’ loan documents included an arbitration provision covering claims connected to the loan, related promotions and statements, and products or services provided in connection with the loan. The provision required individual, rather than class-wide, arbitration if either side elected arbitration. It also included a 45-day written procedure for rejecting the arbitration provision. The opinion states that neither party claimed the Garcias sent a rejection notice.

Danielle Garcia electronically signed the documents on June 2, 2021, through DocuSign while a representative was present at the Garcias’ home. The Garcias said they were not given an opportunity to review or scroll through the documents and did not know about the arbitration provision. Solar Mosaic produced the documents and DocuSign records showing Danielle Garcia’s electronic signature.

Court’s Analysis

The court applied New York law to the contract-formation question. It held that Danielle Garcia had reasonable, or constructive, notice that she was signing an agreement containing terms and conditions. Although she said the representative did not show or explain the agreement and the tablet displayed only a signature area, the court concluded that a reasonable person in the circumstances would understand that signing the document assented to contractual terms. The court also found no evidence that the representative hurried, coerced, defrauded, or actively misled her about the agreement.

The court held that Danielle Garcia agreed to arbitrate as a signatory. It also held that Smith Garcia, who did not sign the agreement, was bound under a direct-benefits estoppel theory. That doctrine can prevent a nonsignatory from avoiding arbitration when he knowingly receives a benefit that flows directly from the agreement. The court found that Smith directly benefited from the solar-panel installation and the loan that enabled the purchase, and that his claims paralleled Danielle Garcia’s claims.

The court further held that all of the Garcias’ claims against Solar Mosaic fell within the arbitration provision because they concerned the solar panels, the financing, the alleged Welcome Checks, and related statements or conduct. The court did not identify a federal claim that Congress had made non-arbitrable.

Stay and Motions to Dismiss

The court stayed the Garcias’ claims against Solar Mosaic because all of their claims against that defendant were being sent to arbitration. It also extended the stay to their claims against Group Solar and Solar Program because those claims involved theories of derivative liability and significant factual overlap. The court did not stay the other claims in the case. Claims involving Salal’s separate arbitration motion were not decided.

In light of the arbitration ruling, the court denied Solar Mosaic’s motion to dismiss the Garcias’ claims without prejudice and stated that any such motion should be directed to the arbitrator. The court also denied Solar Mosaic’s motion to strike the Garcias’ class claims without prejudice to pursuing those claims in arbitration. The opinion noted that the arbitration provision’s class-action waiver was an issue for the arbitrator.

Disposition

The court granted Solar Mosaic’s motion to compel arbitration of the Garcias’ claims against Solar Mosaic; stayed the Garcias’ claims against Solar Mosaic, Group Solar, and Solar Program pending arbitration; and denied Solar Mosaic’s motion to dismiss and motion to strike the Garcias’ class claims without prejudice.