743 S.E.2d 868
S.C. Ct. App.2013Background
- Carlsons contracted to buy a Del Webb home in 2002 with an arbitration clause in the purchase agreement; deed at closing lacked an arbitration clause.
- Carlsons filed a 2008 tort action for stucco defects, part of ~140 Sun City cases against Del Webb and Pulte.
- Defendants asserted Right to Cure Act and argued arbitration mandated by the contract.
- Circuit court delayed arbitration issue to address the Right to Cure Act threshold, then denied arbitration motion in 2011 for waiver.
- Carlsons amended complaint to add class action in 2010; motion to compel arbitration was filed in 2011 and denied in 2011.
- Court confronts whether Del Webb and Pulte waived arbitration, and whether arbitration clause is enforceable and broad enough to cover tort claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver whether delay forfeited right to arbitrate | Carlsons pressed waiver defense against arbitration | Del Webb and Pulte claim delay caused waiver | Waiver not established; court erred in denial of arbitration |
| Unconscionability of arbitration clause | Arbitration clause unconscionable and oppressive | Clause not unconscionable; mutual and identifiable | Unconscionability not shown; clause valid |
| Merger of arbitration clause into deed | Deed supersedes arbitration clause | Parties intended clause survive closing | Merger not intended; clause survives by contract terms |
| Scope of arbitration clause (tort vs contract claims) | Clause limited to contract claims | Clause broadly covers all disputes arising out of or relating to the Agreement | Clause covers tort claims; broad scope applies |
Key Cases Cited
- Davis v. KB Home of S.C., Inc., 394 S.C. 116 (Ct.App.2011) (waiver requires prejudice; no fixed rule; factors include delay, discovery, prejudice)
- Liberty Builders, Inc. v. Horton, 336 S.C. 658 (Ct.App.1999) (prejudice required beyond mere inconvenience; delays weigh in waiver analysis)
- Gen. Equip. & Supply Co. v. Keller Rigging & Constr., SC, Inc., 344 S.C. 553 (Ct.App.2001) (limited discovery does not establish waiver)
- Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14 (Ct.App.2007) (arbitration clause analyzed for adhesion, conspicuousness, and remedies; not controlling here)
- Landers v. FDIC, 402 S.C. 100 (Ct. 2009) (broad ‘arising out of or relating to’ clause encompasses disputes with significant contract relationship)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (Supreme Court 1967) (federal law on arbitration contract formation)