Most large companies are slipping arbitration provisions in their contracts. They do not want the consumer in front of a Jury. Sometimes in Arizona, if there was a fraud in the entering of a contract, the arbitration proviso is invalid. In March, the Arizona Court of Appeals ruled that the separability doctrine requires the lower court to ask if fraud invalidates arbitration provisions, separate from the contract as a whole. Duncan contracted with a storage company.  The contract contained an arbitration clause that stated the parties agreed to arbitrate any and all disputes or claims relating to  the relationship between the renter and the storage company.  Duncan claimed that the storage company advertised that no other person would have a key to their storage unit.  A thief ended up stealing Duncan’s property. Duncan & two other renters filed lawsuits against the storage company for consumer fraud and negligence.  The storage company filed a motion to compel arbitration, and the superior court denied that motion.  The superior court held that the storage company fraudulently induced the individuals to agree to the rental contracts by representing there was only a single key, and so the arbitration agreement was invalid.  On appeal, the storage company argued that the superior court erred because it misconstrued the separability doctrine, and erred when it found the arbitration clause was fraudulently induced or unconscionable. The Court of Appeals agreed with the storage company.  The question at issue on remand, then, is whether the storage company’s misrepresentations as to the existence of other keys fraudulently induced the individuals to agree to arbitrate their claims.  These matters are complex and getting out of arbitration is not always the best route.  At the law firm of William A. Miller in Scottsdale, we currently have 2 active arbitrations (Jams and AAA) and 10 suits in the Maricopa County Superior Court system. Give us a  call at 602.319.6899 to discuss your case. Duncan v. Pub. Storage, Inc. 

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