This is an appeal from an order denying Appellant Clyde E. Goins’s motion to compel arbitration. We reverse.
FACTS
In 1978 and 1980 South Carolinа Public Service Authority (Santee Cooper), contracted with Great Western (Kentucky), Inc., and Great Western Coal, Inc., to purchase coal for ten and twenty years, respectively. Great Western Coal and Great Western Coal (Kentucky) are cоllectively referred to herein as Great Western. Both contracts contained an arbitration clause.
On November 21, 1990, Santee filed a complaint against Great Western; Great Western’s President, individually (Goins); and a former Santee employee, Joе C. Norman, alleging civil conspiracy, fraud, fraudulent interference with an employee contract, and breach of fiduciаry duty by Norman. 1 Santee alleged Norman and Goins had increased the price of the coal while lowering its quality. On December 11, 1990, Gоins demanded arbitration.
On February 11, 1991, Goins made a motion to dismiss and compel arbitration. Judge Mclnnis held the motion for arbitration in abеyance pending discovery and denied the motion to dismiss. Goins appealed. This Court dismissed the appeal without prejudicе to any party’s right to appeal the final order regarding arbitration. Further, this Court granted exclusive jurisdiction to hear all pretrial matters to Judge Howell.
In August 1991, Goins renewed his motion to compel arbitration. After a hearing on the motion, Judge Howell denied the motion.
ISSUES
(1) Did the trial judge err in holding the arbitration provision was unenforceable?
(2) Did Judge Howell err in concluding Santee, a quasi-public entity, cannot enter into binding arbitration agreements?
*562 DISCUSSION
(1) Enforceability
Goins contends the trial judge erred in holding the arbitration clause was unenforcеable because of fraud in factum. The trial judge held there was no allegation of fraud in inducement but found fraud in factum. The only evidence of any type of fraud in the complaint is Santee’s allegation that Goins made false representations which cаused it to undertake transactions.
In
Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
A few courts have distinguished fraud in the inducement from fraud in factum. In
Cancanon v. Smith, Barney, Harris, Upham & Co.,
805 F. (2d) 998, 1000 (11th Cir. 1986), the court held “where the allegation is one of fraud in factum, i.e., ineffective assent to the contract, the issue is not subject to resolution pursuant to an arbitration clause contained in the contract.”
See Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc.,
925 F. (2d) 1136 (9th Cir. 1991) (interpreted
Prima Paint
to be limited to challenges based upon fraud in inducеment);
Republic of Philippines v. Westinghouse Elect. Corp.,
We join the jurisdictions which have rejected limiting the holding in Prima Paint. We hold a party cannot avoid arbitration through rescission of the entire con *563 tract when there is no independent challenge to the arbitration clause. Fraud as a defense to an arbitration clause must be fraud specifically as to the arbitration clause and not the contract generally. The arbitration clause is separable from the contract. Prima Paint, supra. Therefore, the trial judge erred in holding the arbitration clause is unenforceable because Santee did not plead the arbitration clause was fraudulently induced.
Goins also argues the trial judge erred in ruling Goins is not entitled to demand arbitration because he did not sign the contraсt in his individual capacity. We agree.
In Arnold v. Arnold Corp., 920 F. (2d) 1269 (6th Cir. 1990), the court held that a party should not be allowed to avoid an arbitration agreement by naming nonsignatory parties in his complaint, or signatory parties in their individual capacity because this would nullify the rule requiring arbitration. The court further held when the nonsignatory pаrties are willing to submit to arbitration, the case should be arbitrated. Id. Goins is the party seeking arbitration. Therefore, we hold the trial judgе erred in denying Goins’s motion to compel arbitration because he did not sign the contract.
Goins argues the trial judge erred in ruling the сauses of action set forth in Santee’s complaint are not covered by the arbitration clause. The arbitration clаuse in this case reads: “Any controversy between the parties hereto arising out of or related to this contract, or the breach thereof, shall be settlеd by arbitration.” (Emphasis added.)
Arbitration is a matter of contract and controlled by contract law. 5 Am. Jur. (2d) Arbitration and Aivard § 11 (1962). Santee in its amended complaint alleges, among other things, tortious interference with its employee contract with Joe Norman. Although the complaint does not allege a breach of the coal contract, Goins contends the actual cause of action is based upon the coal contracts.
To decide whether an arbitration agreement encompasses a dispute a court must determine whether the factual allegations underlying the claim are within the scope of the broad arbitration clause, regardless of the label assigned to the claim.
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
Here, we find only the actions for which Santee sеeks damages based upon the coal contracts are arbitrable and not the remaining causes of action. Therеfore, we reverse the order denying arbitration and remand this case for the trial court to determine which causes of action are arbitrable under this criterion.
(2) Quasi-public Entity
Goins also argues the trial judge erred in holding San-tee was barred from entering arbitration agrеements because it is a governmental agency or a quasi-public entity. We agree. S.C. Code Ann. § 58-31-30(17) (Supp. 1992) authorizes the Public Service Authority (Santee) “to enter into agreements providing for binding arbitration....” Thus, Santee is specifically authorized by statute to enter arbitration agreements.
Reversed and remanded.
Notes
Santee and Great Western have reached a settlement in this action. Joe Norman died and his estate has not been substituted. Thus, the only defendant remaining in this action is Goins.