ELIZABETH A. MAXWELL, Plaintiff-Appellant, vs. FIDELITY FINANCIAL SERVICES, INC., an Arizona corporation, Defendant-Appellee., 184 Ariz. 82

Summary

The consumer bought a solar water heater that was declared a hazard, and condemned. The lender provided financing under two contracts for loans totaling $ 17,000 or nearly half the value of her home. The consumer sought to declare the first contract unconscionable and unenforceable. The Arizona Supreme Court vacated the appellate court's opinion and reversed the summary judgment because it did not address the fundamental question of unconscionability as required by statute. The court refused to hold the contracts unconscionable as a matter of law because the lender did not have a meaningful opportunity to present evidence on the commercial setting, purpose, and effect of the earlier contract, as required by Ariz. Rev. Stat. § 47-2302. The court had to first determine whether the underlying contract was unconscionable before it could determine if the second contract was a valid novation. The court held that if found unconscionable, the contracts were invalid for purposes of novation.