Glasser et al v. Blue World Pools Inc

Filing 20

ORDER granting 8 Motion to Stay; granting 8 Motion to Compel Arbitration; finding as moot 8 Motion for More Definite Statement. Signed by Honorable Joseph F Anderson, Jr on 06/22/2011.(bshr, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
Michael Lawrence and Lorraine
Lawrence,

)
)
)
Plaintiffs,
)
)
v.
)
)
Blue World Pools, Inc.,
)
)
Defendant.
)
_________________________________)
Lynda Glasser, Eddie Hamm and Lisa )
Hamm, Angela Taylor, Lisa Mack, Beth )
Sturkey, Donald Taylor and Leslie
)
Taylor, Dean Campbell and Shirley
)
Campbell, Robert G. Baker, Sylvia
)
Conner, Wayne Moore and Billie Sue
)
Moore, Christopher Haltiwanger, Tony )
Smith, David Whitten and Menuel
)
Whitten, Laston Pool and Christina Pool, )
Heather Mars, Shannon Lovell and
)
Heather Lovell,
)
)
Plaintiffs,
)
)
v.
)
)
Blue World Pools, Inc.,
)
)
Defendant.
)
_________________________________)
Peggy Tant and Eugene Tant,
)
)
Plaintiffs,
)
)
v.
)
)
Blue World Pools, Inc.,
)
)
Defendant.
)

C.A. No.: 8:11-1099-JFA

ORDER

C.A. No. 3:11-cv-1086-JFA

C.A. No.: 9:11-cv-1102-JFA

_________________________________
Clifford Braden and Patricia Braden,
)
Nancy Iliac, Hazel Slifco and Jerry
)
Taylor, Simon Peter Golson and Carmon )
Golson, Robert Kimmerlin, Hope Green, )
Estate of Georgiana Cody, Gregory
)
Simpson, Amanda Holly, Ruth Berry
)
and Virginia Ulmer and Angela M.
)
Whetstone,
)
)
v.
)
)
Blue World Pools, Inc.,
)
)
Defendant.
)
_________________________________)

C.A. No. 5:11-cv-1091-JFA

This matter is before the court on Defendant Blue World Pools, Inc.’s motion to
stay these four proceedings and to compel the Plaintiffs to arbitrate their claims. In the
alternative, Blue World Pools moves the court to require the Plaintiffs to provide a more
definite statement for some of the claims they assert. For the following reasons, the court
grants Blue World Pool’s motion to stay the case and compel the parties to arbitrate. As
such, the court finds Blue World Pool’s motion for a more definite statement moot.
BACKGROUND
All of the Plaintiffs in these four cases purchased above-ground swimming pools
from Blue World Pools, Inc., and to secure the Plaintiffs’ purchase of the pool, Blue
World pools obtained a mortgage on the Plaintiffs’ homes. According to the Plaintiffs,
they originally contacted Blue World Pools to purchase an “econoline” pool, which was
advertised as costing $399; however, a Blue World Pool sales representative talked all of
them into buying a “midline” pool, which cost significantly more. The Plaintiffs now
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allege that Blue World Pools misrepresented the nature of the transaction and violated
numerous state and federal laws through the manner in which they had the Plaintiffs enter
into the sales agreement and through the manner in which they took security for payment
of the pools in the form of a mortgage. They ask the court to void the transactions in
question and terminate any security interest taken by Blue World Pools in Plaintiffs’
properties.
Each sales contract entered into by all of the Plaintiffs contained the following
arbitration provision:
SECTION G) BINDING ARBITRATION AGREEMENT: ANY
DISPUTE, CLAIM OR CONTROVERSY OF ANY KIND
WHETHER IN CONTRACT, TORT, OR OTHERWISE ARISING IN
ANY MANNER RELATING TO THIS AGREEMENT WHETHER
IT BE PRIOR, PRESENT, OR FUTURE DEALINGS WITH US
THAT CANNOT BE RESOLVED BY NEGOTIATION BETWEEN
THE PARTIES SHALL BE SUBJECT TO MANDATORY,
EXCLUSIVE AND BINDING ARBITRATION IN CARSON CITY,
NEVADA OR PURCHASER(S) LOCAL CITY OR STATE
WHICHEVER IS APPLICABLE, UNDER THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION OR ANY OTHER MEDIATION OR ARBITRATION
ASSOCIATION IN EXISTENCE AT THE TIME THE DISPUTE
ARISES. NEITHER PARTY MAY TAKE ANY OTHER ACTION BY
WAY OF REQUEST FOR INJUNCTIVE RELIEF OR OTHERWISE.
THE ORDER OF THE ARBITRATORS(S) MAY BE ENTERED
INTO ANY COURT OF COMPETENT JURISDICTION. THE
PURCHASER AND DEALER (BLUE WORLD POOLS, INC.)
AGREE TO ABIDE BY THE RULING OF THE ARBITRATION
ASSOCIATION IN LIEU OF FILING A LAWSUIT. . . . THIS
ARBITRATION
PROVISION
SHALL
BE
CONSTRUED
ACCORDING TO FEDERAL LAW AND THE LAWS OF THE
STATE OF NEVADA. A COURT MAY ONLY DECIDE WHETHER
AN
AGREEMENT
TO
ARBITRATE
EXISTS
OR
A
CONTROVERSY IS SUBJECT TO ANY AGREEMENT TO
ARBITRATE. AN ARBITRATOR SHALL DECIDE WHETHER A
CONDITION PRECEDENT TO ARBITRABILITY HAS BEEN
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FULFILLED AND WHETHER A CONTRACT CONTAINING AN
AGREEMENT TO ARBITRATE IS ENFORCEABLE. . . . THE
RESULT OF THIS ARBITRATION SECTION IS THAT THE
PURCHASER IS WAIVING THEIR RIGHTS FOR A DISPUTE
BETWEEN THE PARTIES TO BE LITIGATED IN COURT, TRIED
BEFORE A JURY, BROUGHT AS A MEMBER OF A CLASS
ACTION OR BROUGHT AS A PRIVATE ATTORNEY GENERAL
ACTION.
(Pls.’ Resp. in Opp’n Ex. A.) In addition to this language, all of the Plaintiffs were also
required to initial by the following statement listed on the first page of the sales contract,
“I (WE) AGREE TO BINDING ARBITRATION AS WRITTEN IN SECTION G.
(SEE SECTION ‘G’).” (Id.) At some point in the sales process, the Plaintiffs were also
asked to sign a separate, stand-alone arbitration agreement, which contained similar
language to the language quoted above in that it reflected the parties’ agreement to
arbitrate any disputes arising from the sales agreement and informed the Plaintiffs that
they would not be able to seek a jury trial, among other things. (Id. Ex. C.) It appears that
this stand-alone arbitration agreement was an addendum to the sales agreement. In their
brief, however, the Plaintiffs assert that this stand-alone arbitration agreement was not
presented to them until the day the pool was delivered and installed, which was well after
the sales agreement was entered into and well after the three-day right to rescind the
transaction had lapsed. Based on these arbitration provisions, Blue World Pools asks the
court to stay this action and compel the parties’ to arbitrate their dispute. The Plaintiffs
contend that the arbitration provisions are unconscionable and in violation of public
policy; therefore, they ask the court to deny Blue World Pool’s motion.

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ANALYSIS
Congress enacted the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, “to
replace judicial indisposition to arbitration with a national policy favoring it and placing
arbitration agreements on equal footing with all other contracts.” Hall St. Assocs., L.L.C.
v. Mattel, Inc., 552 U.S. 576, 128 S. Ct. 1396, 1402 (2008) (internal quotations and
alterations omitted). Section 2 of the Act declares that a written agreement to arbitrate in
any contract involving interstate commerce or a maritime transaction “shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract,” 9 U.S.C. § 2, and § 4 allows a party to such an arbitration
agreement to “petition any United States district court . . . for an order directing that such
arbitration proceed in the manner provided for in such agreement.” Pursuant to § 3, the
FAA requires a court to stay “any suit or proceeding” pending arbitration of “any issue
referable to arbitration under an agreement in writing for such arbitration, and “[t]his
stay-of-litigation provision is mandatory.” Adkins v. Labor Ready, Inc., 303 F.3d 496,
500 (4th Cir. 2002).
In the Fourth Circuit, arbitration is appropriate under the FAA if a litigant can
demonstrate “(1) the existence of a dispute between the parties, (2) a written agreement
that includes an arbitration provision which purports to cover the dispute, (3) the
relationship of the transaction, which is evidenced by the agreement, to interstate or
foreign commerce, and (4) the failure, neglect or refusal of [a party] to arbitrate the
dispute.” Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83, 87 (4th Cir. 2005)
(internal quotation omitted). Of course, an arbitration provision may be invalidated by
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“generally applicable contract defenses, such as fraud, duress, or unconscionability.”
Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772, 2776 (2010) (internal quotation
omitted). In this matter, the Plaintiffs contest the second element, denying the existence
of a binding contract to arbitrate their dispute. Whether a party agreed to arbitrate a
particular dispute is a question of state law governing contract formation. First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). The arbitration agreement in question
states that it “shall be construed according to federal law and the laws of the state of
Nevada.” (Pls.’ Resp. in Opp’n Ex. A.)
The Plaintiffs contend that the arbitration agreement violates public policy because
it purports to limit the type of damages the Plaintiffs can recover. The Plaintiffs further
argue that the arbitration provision should not be enforced because the sales agreements
and mortgages entered into by the Plaintiffs were a result of fraud in the inducement. The
Plaintiffs also claim that they lacked any meaningful choice in the bargaining of this
transaction and that the terms of the arbitration provision were not conspicuous because
all of the words used in the sales agreement were in all capitals. It is clear from the
Plaintiffs’ complaints and arguments, however, that they attack the entire sales
transaction, rather than lodge a specific challenge to the arbitration agreement found in
the sales agreement, as most of the Plaintiffs allegations assert that the entire transaction,
including the sales agreement, mortgage, stand-alone arbitration agreement, etc. were
unconscionable and should be voided. Therefore, despite these objections to Blue World
Pool’s motion to compel arbitration, the court is bound by Supreme Court precedent to

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grant Blue World Pool’s motion, for the sales agreement contained an arbitration
provision that specifically incorporated this type of dispute.
As the Supreme Court recently reiterated, “[i]f a party challenges the validity
under § 2 of the precise agreement to arbitrate at issue, the federal court must consider
the challenge before ordering compliance with that agreement under § 4.” See Rent-ACenter, West, Inc. v. Jackson, 130 S. Ct. 2772, 2778 (2010). And “as a matter of
substantive federal arbitration law, an arbitration provision is severable from the
remainder of the contract . . . unless the challenge is to the arbitration clause itself, the
issue of the contract’s validity is considered by the arbitrator in the first instance.”
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445–46 (2006). “Thus, a party’s
challenge to another provision of the contract, or to the contract as a whole, does not
prevent a court from enforcing a specific agreement to arbitrate.” Rent-A-Center, West,
Inc., 130 S. Ct. at 2778.
Even if the court sets aside the stand-alone arbitration agreement signed by the
Plaintiffs, which the Plaintiffs claim in their briefs that they were forced to sign after the
transaction was entered into, the contents of the sales agreement first entered into by the
Plaintiffs for the purchases of the pools contained a conspicuous arbitration provision.
The Plaintiffs have made no credible claim that Blue World Pools improperly induced
them to agree to the arbitration provision specifically, and in fact, each Plaintiff initialed
a separate line on the first page of the sales contract, specifically acknowledging that they
agreed to arbitrate any disputes that arose from the transaction. Moreover, the arbitration
agreement specifically states that, “A court may only decide whether an agreement to
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arbitrate exists or a controversy is subject to any agreement to arbitrate. An arbitrator
shall decide whether a condition precedent to arbitrabilty has been fulfilled and whether a
contract containing an agreement to arbitrate is enforceable.” (Pls.’ Resp. in Opp’n Ex.
A) (all caps removed).
To the extent that the Plaintiffs do challenge the arbitration agreement, they only
complain of the arbitration’s provision’s attempt to limit the damages payable by Blue
World Pool in the instance that it was found liable to the Plaintiffs. Therefore, this does
not appear to be a challenge to the agreement to arbitrate any dispute that arose between
the parties. And to the extent the Plaintiffs claim that the arbitration agreement was
buried in an adhesion contract, which did not give them a meaningful choice to agree o
its terms, this argument is defeated by the fact that the Plaintiffs each initialed a separate
line on the very first page of the sales agreement, indicating that they agreed to settle
their disputes with Blue World Pools through binding arbitration.
CONCLUSION
Because the agreement contained an arbitration provision and because the
Plaintiffs initialed a separate statement in the sales agreement acknowledging that they
agreed to arbitrate any dispute arising between the parties, the court grants Blue World
Pool’s motion to stay these four cases and compel arbitration, regardless of whether or
not the stand-alone arbitration agreement can be enforced. The Plaintiffs have not made a
sufficient showing in their briefs that there is reason to question the fact that they agreed
to

binding

arbitration.

Of

course,

the

Plaintiffs

complaints

regarding

any

misrepresentations made by Blue World Pools or regarding the mortgages taken as
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security interests on the Plaintiffs’ homes are encompassed by the arbitration provision
and are to be decided by the arbitrator.
IT IS SO ORDERED.

June 22, 2011
Columbia, South Carolina

Joseph F. Anderson, Jr.
United States District Judge

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