How to Avoid Being a Victim of a Solar Scam

Solar energy systems are growing in popularity with each passing year. Unfortunately, there are numerous issues that all consumers should be aware of before deciding to purchase solar panels. This article will explore common solar scams happening in Arizona and how homeowners can avoid some costly pitfalls.

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How to Fight Solar Scams

With solar scams on the rise, it’s important to know how you can fight your current contract in court.  

Most contracts have a clause that specifies that any dispute regarding the contract that would result in a lawsuit must have that dispute go through “alternative dispute resolution” rather than, or before, any court case. 

Alternative dispute resolution is a process whereby parties agree to attempt to resolve their issue outside of court. The two most common kinds of alternative dispute resolution are mediation and arbitration. 

Mediation is when the parties agree to discuss issues, usually with a neutral referee. Arbitration is more like a court case: a judge (usually an attorney picked randomly), witnesses, and a hearing. The judgment from a judge is almost always enforceable.

Why Should I Care Where a Case is Decided?

The most significant benefit to those involved in a suit (or potentially those involved in a suit) with alternative dispute resolution is the costs. 

Even an expensive arbitration is almost always cheaper than a court lawsuit. However, the most significant danger to litigants from alternative dispute resolution clauses is that the contract signer rarely pays much attention to that clause when signing. The contract could mandate that the alternative dispute resolution takes place in a location (the “forum”) very inconvenient for the consumer but very convenient for the company. 

For example, consider a company headquartered in Delaware, due to the tax laws of Delaware, but doing business in Arizona; their contracts could mandate arbitration in Delaware, their legal “home” state. This would be much more convenient for the company than the consumer and would induce the consumer to avoid any dispute with the company. 

What would a consumer want to avoid alternative dispute resolution? This is primarily a tactical decision, but alternative dispute resolution proceedings are not public, court cases are not public, and the results of public court cases often are (unless they settle). If a consumer is interested in publicizing the solar company’s conduct, avoiding alternative dispute resolution should be critical.

Avoid Playing on Their Turf

So how does a consumer avoid having to arbitrate or mediate a case, especially a case regarding a solar energy system that the consumer strongly believes is the product of fraud? In Arizona, the consumer would sue the solar company on the “legal theory” of fraudulent inducement of the contract. That is, the consumer would sue the company on the concept that the contract was a product of fraud. Since the consumer is saying that the contract is a product of fraud and is not actually suing the solar company “under” the contract but “proximately (legally) prior” to the contract, then the alternative dispute resolution provision of the contract does not apply. The consumer is not suing based on the contract, but on the conduct that led to the contract, and thus what the contract requires is not relevant. 

A further “legal theory” that a consumer would sue a fraudulent solar company in order to avoid an alternative dispute resolution clause in a contract is “rescission.” Rescission is a legal theory that directly asks a court to undo a contract. There are numerous court cases that have held that when one party seeks to rescind a contract, the dispute must occur in court regardless of whether the contract includes an alternative dispute resolution clause because the contract itself cannot rescind itself, only a court can do that. 

So, let’s say that you are the owner of a solar energy system, and after reading this series and considering the circumstances of the pitch that sold you the system, and after reviewing the contract that you signed you think that perhaps you were taken advantage of. Perhaps you have realized that your system has not provided the benefits that were promised, that you are not receiving the significant savings that you were promised and you come to the conclusion that you do not want to be bound by the contract that established your solar energy system any longer. What should you do? 

Contact Counxel Legal Firm

We encourage you to contact our legal team as soon as possible. You will receive a no-obligation, 5-minute phone call with one of our attorneys to discuss whether your matter may be worth exploring further. We look forward to helping you navigate your solar contract and seeing how we may best assist you in avoiding any obligation that you may not be legally required to perform.  

Note: This article was written with Arizona residents in mind. We offer legal counsel in additional states. Contact us if you do not live in Arizona but want to discuss your rights.

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