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Dell Webb Communities, Inc. v. Carlson

United States Court of Appeals, Fourth Circuit

March 28, 2016

DELL WEBB COMMUNITIES, INC.; PULTEGROUP, INC., Petitioners - Appellants,
v.
ROGER F. CARLSON; MARY JO CARLSON, Respondents - Appellees

         Argued December 9, 2015

Page 868

          Appeal from the United States District Court for the District of South Carolina, at Beaufort. (9:14-cv-01877-SB). Solomon Blatt, Jr., Senior District Judge.

         ARGUED

         Robert Leon Widener, MCNAIR LAW FIRM, P.A., Columbia, South Carolina, for Appellants.

         Michael S. Seekings, LEATH BOUCH & SEEKINGS, LLP, Charleston, South Carolina, for Appellees.

         ON BRIEF

         A. Victor Rawl, Jr., Henry W. Frampton, IV, MCNAIR LAW FIRM, P.A., Charleston, South Carolina, for Appellants.

         William Jefferson Leath, Jr., LEATH BOUCH & SEEKINGS, LLP, Charleston, South Carolina; Phillip W. Segui, Jr., Amanda Morgan Blundy, SEGUI LAW FIRM, PC, Mount Pleasant, South Carolina, for Appellees.

         Before TRAXLER, Chief Judge, GREGORY and DIAZ, Circuit Judges. Judge Diaz wrote the opinion, in which Chief Judge Traxler and Judge Gregory joined.

          OPINION

Page 869

          DIAZ, Circuit Judge

         Roger and Mary Jo Carlson signed a sales agreement with PulteGroup, Inc. and its subsidiary Del Webb Communities, Inc. (together, " Pulte" ) for the purchase of a lot and construction of a home in Hilton Head, South Carolina. The agreement contained an arbitration clause. This appeal stems from the Carlsons' attempt to arbitrate class-action claims against Pulte under the agreement, and Pulte's efforts to limit arbitration to the claims between the three parties. The district court held that the availability of class arbitration under an arbitration agreement is a procedural question for the arbitrator to decide, rather than a question for the court.

         Because the primary goal in enforcing an arbitration agreement is to discern and honor party intent, and because of the fundamental differences between bilateral and class arbitration--which change the nature of arbitration altogether--we hold that whether parties agree to class arbitration is a gateway question for the court. Accordingly, we reverse the district court's order denying Pulte's motion for partial summary judgment, vacate the judgment dismissing Pulte's petition, and remand the case for the district court to determine whether the arbitration clause permits class arbitration.

         I.

         The relevant facts are not in dispute. The Carlsons signed the sales agreement at issue in March of 2002. Section 4.3 of the agreement contains an arbitration clause that, in relevant part, states:

Any controversy or claim arising out of or relating to this Agreement or Your purchase of the Property shall be finally settled by arbitration . . . .
After Closing, every controversy or claim arising out of or relating to this Agreement, or the breach thereof shall be settled by binding arbitration as provided by the South Carolina Uniform Arbitration Act. . . . The rules of the American Arbitration Association (AAA), published for construction industry arbitrations, shall govern the arbitration proceeding and the method of appointment of the arbitrator.
. . . .
Any party to this Agreement may bring action . . . to compel arbitration . . . .

J.A. 34-35.

         In September 2008, the Carlsons filed suit in South Carolina state court against Pulte and two other parties. The complaint raised several claims, all regarding alleged construction defects. The Carlsons later moved to amend their complaint to add class-action allegations because their lawsuit was one of approximately 140 like cases pending against Pulte. The state court granted the motion over Pulte's objection.

         Pulte then moved to dismiss the amended complaint, or in the alternative, to compel bilateral arbitration of the Carlsons' claims. The state court denied both motions, but the South Carolina Court of Appeals reversed, finding the Carlsons' claims subject to arbitration under the sales agreement with Pulte. Carlson v. S.C. State Plastering, LLC, 404 S.C. 250, 743 S.E.2d 868, 875 (S.C. Ct. App. 2013).

         The Carlsons subsequently filed a demand for arbitration with the American Arbitration Association (AAA). Their ...


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