Reuben v. Palmetto Traditional Homes

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE
239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Lucy J. Reuben, PhD and Dr. John A. Cole,       
Respondents,

v.

Palmetto Traditional Homes, L.L.C. and Home Buyers Warranty Corporation,
Defendants,

of whom Palmetto Traditional Homes,
L.L.C. is,        Appellant.

Appeal From Richland County

L. Casey Manning, Circuit Court Judge

Unpublished Opinion No. 2004-UP-283

Submitted April 6, 2004 – Filed April 29, 2004

AFFIRMED

William G. Besley, Esquire, Andrew E. Haselden, Esquire, George
V. Hanna, IV, of Columbia; for Appellant.

Carey M. Ayer, Esquire, Lisa Lee Smith, of Lexington; for
Respondents.

PER CURIAM:  Lucy J. Reuben and John A.
Cole (collectively “Respondents”) commenced an action against Palmetto Traditional
Homes, L.L.C. (“Palmetto”) alleging negligence, loss of consortium, negligent
misrepresentation and breach of express and implied warranties.  Palmetto filed
a motion to compel arbitration.  After a hearing, the trial judge found Respondents’
negligence and loss of consortium claims were not subject to arbitration and
denied the motion.  Palmetto appeals.  We affirm.

FACTUAL/PROCEDURAL
BACKGROUND

Respondents entered into an agreement
to purchase a new home from Palmetto for $266,900.  Respondents allege that
prior to the closing, Palmetto took Respondents on a walk-through of the house,
at which time they were shown an upstairs room over the garage which Palmetto
represented to be a storage room, suitable for storing personal items.  Respondents
further allege that the door to the storage area had a doorknob on each side,
indicating the doorway was to be utilized to enter the storage area and that
the door could be closed by a person standing inside the storage room.  Palmetto
denies that it represented personal items could be stored in the storage room
or that the room was suitable for walking and/or standing. 

The Respondents purchased the home on February
18, 2000.  On December 3, 2000, Respondent Reuben entered the storage room;
however, the flooring did not support her weight, and she fell through the floor
and landed atop a car in the garage below.  Respondents allege Reuben sustained
serious personal injuries as a result of the fall. 

Respondents filed a complaint against
Palmetto alleging various causes of action based on negligence and breach of
warranty.  Palmetto filed an answer and a motion to compel arbitration asserting
the purchase agreement required any claims arising out of or related to the
agreement were to be settled by arbitration, and that the contract documents
between the parties required Respondents to arbitrate this dispute.  Respondents
conceded that their claims for negligent misrepresentation, breach of express
warranty, and breach of implied warranty of habitability were subject to arbitration
under the agreement.  However, they contended their causes of action for negligence
and loss of consortium were not subject to arbitration.  After a hearing on
the matter, the trial judge denied Palmetto’s motion to compel arbitration finding
(1) Respondents’ personal injury claims did not arise out of the contract and
were not subject to arbitration and (2) S.C. Code Ann. § 15-48-10(b)(4) specifically
excludes personal injury claims from arbitration and that the Federal Arbitration
Act (“FAA”) did not preempt the South Carolina Uniform Arbitration Act (“SCUAA”). 

STANDARD
OF REVIEW

Unless otherwise provided by the parties,
the question of the arbitrability of a claim is an issue for judicial determination. 
Stokes v. Metropolitan Life Ins. Co., 351 S.C. 606, 609, 571 S.E.2d
711, 713 (Ct. App. 2002).  The determination of whether or not a matter is
arbitrable is subject to de novo review.  Id.  However,
a circuit court’s factual findings on the arbitrability of a claim will not
be overruled if there is any evidence reasonably supporting them.  Id. 
at 609-10, 571 S.E.2d at 713.

LAW/ANALYSIS

Palmetto contends the trial court erred in
denying its motion to compel arbitration.  It argues (1) Respondents’ claims
for negligence and loss of consortium fall within the scope of the arbitration
agreement and (2) even though S.C. Code Ann § 15-48-10(b)(4) of the SCUAA
excludes personal injury claims, the FAA preempts the SCUAA with respect
to Respondents claims.  Because we find Respondents’ claims for negligence
and loss of consortium do not fall within the scope of the parties’ arbitration
agreement, we find the trial court properly denied the motion to compel. 
Accordingly, we need not reach the issue of preemption. 

“An arbitration clause is a contractual
term, and general rules of contract interpretation must be applied to determine
a clause’s applicability to a particular dispute.”  Towles v. United
HealthCare Corp., 338 S.C. 29, 41, 524 S.E.2d 839, 846 (Ct. App. 1999). 
Arbitration rests on the agreement of the parties, and the range of issues
that can be arbitrated is restricted by the terms of the agreement; a party
cannot be required to submit to arbitration any dispute which he has not
agreed to submit.  Zabinski v. Bright Acres Assocs., 346 S.C. 580,
596-97, 553 S.E.2d 110, 118 (2001).    

The arbitration agreement in the instant case provides
in pertinent part:

Any controversy, claim or dispute arising out of or relating
to this Agreement or your purchase of the Home including claims under the
Limited Warranty shall be settled by arbitration pursuant to the Uniform
Arbitration Act, Section 15-48-10 et seq., Code of Laws of South
Carolina (1976) as amended, in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association (“AAA”), and judgment
rendered by the arbitrator(s) may be confirmed, entered and enforced in
any court having jurisdiction. 

The plain meaning of this clause
is that arbitration was intended by the parties to resolve all disputes
arising out of or relating to the purchase of the home.  The clause is expressly
limited to “[a]ny controversy, claim or dispute arising out of or relating
to this Agreement or your purchase of the Home including claims
under the Limited Warranty.” (emphasis added) Thus, the arbitration
clause would clearly apply to contract-based causes of action – those claims
relating to the agreement, the purchase of the home, or the limited warranty. 
However, Respondents’ claims for negligence and loss of consortium are tort-based
claims, unrelated to any of these three subjects. 

In order to decide whether an arbitration agreement
encompasses a dispute, the court must determine whether the factual allegations
underlying the claim fall within the scope of the arbitration clause, regardless
of the label assigned to the claim.  Zabinski, 346 S.C. at 597, 553
S.E.2d at 118.  One method to determine whether a tort cause of action falls
within the scope of an agreement to arbitrate is to determine whether “the
particular tort claim is so interwoven with the contract that it could not
stand alone.”  Id., at 597 n.4, 553 S.E.2d at 119 n.4.  “[I]f the
tort claim is completely independent of the contract and could be maintained
without reference to the contract, the tort claim is not arbitrable.”  Id. 

In the instant case, Respondents’ alleged personal
injuries stem from the fact that a storage room was improperly constructed
such that it could not support Reuben’s weight.  As public policy imposes
a legal duty upon builders to construct safe housing, Respondents need not
sue Palmetto under the contract to recover for such tort-based injuries. 
See Kennedy v. Columbia Lumber & Mfg. Co., 299 S.C. 335,
346, 384 S.E.2d 730, 737 (1989) (“public policy . . . demands the imposition
of a legal duty on a builder to refrain from constructing housing that he
knows or should know will pose serious risks of physical harm. . .” and
“such a duty . . . should extend to foreseeable parties. . . .”).  In the
case at hand, the alleged serious risk of physical harm was not personal
to Respondents as those who purchased the home and entered the arbitration
agreement.  We find compelling Palmetto’s argument that the person falling
through the floor could have been a household member or guest in the home
who would not be bound by the arbitration agreement, yet could maintain
a tort action against Palmetto.  The fact that Reuben is a party to the
agreement and is the person who allegedly fell through the floor is inconsequential. 
The personal injuries alleged by Respondents, based on Palmetto’s negligent
acts, are not so interwoven with the contract that they could not stand
alone.

AFFIRMED.

HUFF, STILWELL, and CURETON,
A.J., concur.