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The Supreme Court of New Jersey held that an arbitration clause in a contract of adhesion was valid and enforceable because there was no evidence of fraud which would have prevented the complaining party from reading it.
In Meglio v. Taylor Real Estate, Inc., No. A-1992-05T3, 2006 WL 3153426 (N.J. Super. Ct. App. Div. Nov 06, 2006), homeowners Steven and Jennifer Meglio sued Ecological One Source Inspections, Inc. (Ecological One) alleging prior fire damage not discovered during a pre-purchase inspection. Ecological One successfully moved to dismiss, citing the arbitration terms contained in the inspection agreement between the parties. The Meglios concurrently arbitrated the dispute and moved for reconsideration.
A small arbitral award was issued in the Meglios’ favor and they sought to have it confirmed. On appeal, the Court rejected the Meglios’ argument that they did not agree to arbitrate. The arbitration terms were not hidden nor in small print, and appeared twice within the agreement. Further, the “language appear[ed] to be clear on its face as to the scope and intent of the arbitration clause.” The Meglios accepted the terms of the arbitration clause by accepting the inspection agreement.
The Court further disagreed with the Meglios’ contention that the arbitration clause was unconscionable because it was contained within an adhesion agreement. No fraud was exercised in the signing of the agreement that would have prevented the Meglios from reading its terms. The Court also acknowledged that agreements to arbitrate will be respected, with only a “narrow scope of judicial review” in light of New Jersey’s commitment to arbitration as a favored method of dispute resolution.
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