District Court (Cal.) Finds that Clause Permitting New Arbitration Before 3-Arbitrator Panel in Standard Form Automobile RISC’s Arb. Clause Should Be Severed to Preserve Arbitration Clause

In Trabert v. Consumer Portfolio Services, Inc., — Cal.Rptr.3d —-, 2015 WL 880949 (Cal.App. 4 Dist. 2015), the Court of Appeal previously had held that the three-arbitrator review provision of the standard Law Printing auto purchase contract’s arbitration clause is unconscionably one-sided.  In this case, the Court of Appeal held that it can be, and must be, severed by striking the two sentences which allow the three-arbitrator review, and allowing both parties to proceed with a single-arbitrator arbitration with no exception to the finality of the single arbitrator’s award other than statutory grounds for vacating an award.

This is the second time this court has considered an appeal in this case involving an automobile purchaser who brought consumer claims against the creditor-assignee of the parties’ sales contract. The first appeal involved the enforceability of an arbitration agreement in the contract. (Trabert v. Consumer Portfolio Services, Inc. (Apr. 8, 2013, D060491) [nonpub. opn.] (Trabert I ).) In Trabert I, we held the arbitration agreement contained certain unconscionable provisions, and remanded for the court to determine whether these provisions could be severed from the remaining agreement. On remand, the trial court declined to sever the provisions and denied the creditor-assignee’s motion to compel arbitration. The creditor-assignee, Consumer Portfolio Services, Inc. (Portfolio), challenges this order in this second appeal.  We conclude the trial court erred in denying Portfolio’s motion. The unconscionable provisions concern only exceptions to the finality of the arbitra-tion award, and can be deleted without affecting the core purpose and intent of the arbitration agreement. The deletion of these exceptions creates a binding arbitration award and promotes the fundamental attributes of arbitration, including speed, efficiency, and lower costs. We reverse and remand with directions for the court to sever the unconscionable provisions from the arbitration agreement and grant Portfolio’s motion to compel arbitration.