Stoll v. Xiong
241 P.3d 301 (2010)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A contract clause is unconscionable, and therefore unenforceable, if there is an absence of meaningful choice on the part of one party combined with contract terms that are unreasonably favorable to the other party, creating an arrangement so one-sided as to be oppressive or unfairly surprising.
Facts:
- Chong Lor Xiong and Mee Yang are Hmong immigrants from Laos with limited formal education and English proficiency.
- On January 1, 2005, Xiong and Yang (Buyers) contracted to purchase a 60-acre parcel of land from Ronald Stoll for $130,000 to establish a poultry farm.
- The contract, which was Stoll's idea, included a clause (Paragraph 10) obligating the Buyers to construct a litter shed and granting Stoll all rights to the chicken litter from their poultry houses for a period of 30 years.
- Under the clause, Stoll was required to empty the shed, but the Buyers received no compensation or other consideration for the litter, which had significant commercial value as fertilizer.
- After starting their farm, the Buyers incurred costs for managing the chicken litter.
- A dispute arose when Buyers did not understand they had signed away the rights to the litter and later began trading it for other supplies.
- In March 2009, Stoll discovered that the Buyers were selling the litter to others and that the litter shed was empty.
Procedural Posture:
- Ronald Stoll filed suit against Chong Lor Xiong and Mee Yang in an Oklahoma trial court, requesting specific performance of the contract and a temporary injunction.
- Buyers filed an answer and counterclaims, raising affirmative defenses including unconscionability and fraud.
- Both parties filed cross-motions for summary judgment in the trial court.
- The trial court granted summary judgment in favor of the Buyers, finding the chicken litter clause was unconscionable as a matter of law, and denied Stoll's motion.
- Stoll, as appellant, appealed the trial court's judgment to the Oklahoma Court of Civil Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is a clause in a real estate contract, which grants the seller all rights to valuable chicken litter produced on the property for 30 years without any additional consideration to the buyers, unconscionable when the buyers have limited education and English proficiency?
Opinions:
Majority - Hetherington, Jr., J.
Yes, the contract clause is unconscionable. A contract is unconscionable if it is one that no person in their senses would make and no fair and honest person would accept. The test for unconscionability involves two components: procedural unconscionability (an absence of meaningful choice) and substantive unconscionability (contract terms unreasonably favorable to one party). Here, the Buyers' limited education and English proficiency created an absence of meaningful choice. Substantively, the clause was grossly one-sided; the estimated value of the chicken litter over 30 years ($216,000 or more) far exceeded the purchase price of the land itself ($130,000), meaning the Buyers were effectively paying a price for the land so excessive it 'shocks the conscience.' This combination of procedural and substantive unfairness renders the clause unenforceable.
Analysis:
This case illustrates the application of the equitable doctrine of unconscionability to a real estate contract, extending a principle often associated with the Uniform Commercial Code (UCC) for the sale of goods. The court's decision emphasizes that a finding of unconscionability requires both procedural and substantive elements: a defect in the bargaining process (like language barriers or lack of sophistication) and terms that are oppressively one-sided. By voiding the clause, the court reinforces its role in policing contracts for fairness and protecting vulnerable parties from exploitation, establishing that gross disparities in value and bargaining power can render a contract term unenforceable even outside of a traditional consumer or goods context.
Unlock the full brief for Stoll v. Xiong