Bay Area Houston

Most Americans don’t even know what the 7th Amendment of the Constitution is until they need to use the protections it used to provide under the Bill of Rights.

Here it is:
In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.

So the bottom line is that the Bill of Rights protects your right to a civil trial like when your new home has a construction defect or your new or used car is a lemon. You have (had) the right under the US Constitution to file a lawsuit. Unfortunately that right has now been limited with many contracts requiring you to surrender your rights to the Constitution as a requirement to a purchase.

Homebuilders started using this little scheme back in the mid 90’s. If you buy a new home you will have to sign an agreement to resolve all disputes by mandatory, binding, arbitration. It is not an option. New and used car dealers require it also. If you look at your credit card agreements and cell phone contracts they have mandatory arbitration clauses. A few years ago the home insurance industry attempted to use arbitration clauses in their contracts but it was turned down by the Texas Department of Insurance and for good reason.

Arbitration has been sold as being faster, cheaper, and better than our Constitutional rights to a trial. That is not completely true. In fact the car dealers in Texas sponsored a bill to prohibit the use of mandatory binding arbitration claiming it gave an unfair advantage to the car makers. It passed but the dealers still use it with their consumers. But faster, cheaper, or better, isn’t the issue. You have no choice. If you buy the house, the car, the cell phone contract, you sign the agreement. Period.

Sometimes arbitration works out for the consumer (sometimes) but if it doesn’t then you lose. It’s binding. You can’t appeal. It’s also in secret so no one will ever know what happened. And most of all, it is mandatory. I have many stories I could tell. I

So while you were clutching your pearls and your guns you lost.

My favorite story:
Back in 1996 Mr and Mrs Cull filed a suit against Bob Perry Homes for a defective foundation. They went to arbitration. The arbitrator awarded them $800,000 to cover the cost of the home, mental anguish, and more. Bob Perry went to the Supreme Court to overturn the “binding” arbitration and actually won! So the owners had to go back to a civil trial. The jury awarded them $51 Million. I met the Culls and attended the hearing in the Texas Supreme Court.

This entry was posted on Friday, October 6th, 2023 at 7:05 am and is filed under Consumer. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.