Contract of Adhesion/Unconscionable-Contract Cause of Action Should Have Survived Summary Judgment

The Second Department determined a hearing was required on respondents’ motion to dismiss the cause of action which alleged a contract of adhesion.  The action was brought against the respondents-operators of “three-quarter houses” by residents who had committed their housing allowances to the operators only to find themselves (according to the complaint) “living in abject and overcrowded conditions with no support services on site:”

A contract of adhesion contains terms that are unfair and nonnegotiable and arises from a disparity of bargaining power or oppressive tactics'” … . ” A determination of unconscionability generally requires a showing that the contract was both procedurally and substantively unconscionable when made'” … .

“In determining the conscionability of a contract, no set weight is to be given any one factor; each case must be decided on its own facts” … . “However, [in general, it can be said that] procedural and substantive unconscionability operate on a sliding scale; the more questionable the meaningfulness of choice, the less imbalance in a contract’s terms should be tolerated and vice versa” … . ” The determination of unconscionability is a matter of law for the court to decide'” … . ” Where there is doubt . . . as to whether a contract is fraught with elements of unconscionability, there must be a hearing where the parties have an opportunity to present evidence with regard to the circumstances of the signing of the contract, and the disputed terms’ setting, purpose and effect'” … . ” However, [w]here the significant facts germane to the unconscionability issue are essentially undisputed, the court may determine the issue without a hearing'” … . “Thus, on a motion for summary judgment, [t]he question . . . then is whether the record presents an issue as to the existence of unconscionability which should not be resolved without a hearing'”… . * * *

…[T]he plaintiffs submitted … affidavits of residents who signed the agreements in question and who stated that they signed the subject agreements under conditions that were procedurally unconscionable. Under these circumstances, a hearing was warranted on the issue of unconscionability, and as such, summary judgment should have been denied… .  David v #1 Mktg Serv Inc, 2014 NY Slip Op 00477, 2nd Dept 1-29-14