THE STATE OF SOUTH CAROLINA

In The Supreme Court

Patricia Damico and Lenna Lucas, Individually and on 

behalf of all others similarly situated, Joshua and 

Brettany Buetow, Edward and Sylvia Dengg, Jonathan 

and Theresa Douglass, Anthony and Stacey Ray, Danny 

and Ellen Davis Morrow, Czara and Chad England, 

Bryan and Cynthia Camara, and Matthew Collins, 

Respondents,

v.

Lennar Carolinas, LLC, Spring Grove Plantation 

Development, Inc., Manale Landscaping, LLC, Super 

Concrete of SC, Inc., Southern Green, Inc., TJB 

Trucking/Leasing, LLC, Paragon Site Constructors, Inc., 

Civil Site Environmental and Rick Bryant, Individually, 

Defendants,

of which Spring Grove Plantation Development, Inc., 

Manale Landscaping, LLC, Super Concrete of SC, Inc., 

Southern Green, Inc., TJB Trucking/Leasing, LLC, and 

Civil Site Environmental are Respondents.

and

Lennar Carolinas, LLC, Appellant,

v.

The Earthworks Group, Inc., Volkmar Consulting 

Services, LLC, Geometrics Consulting, LLC, Land/Site 

Services, Inc., Myers Landscaping, Inc., A.C. & A. 

Concrete, Inc., Knight's Concrete Products, Inc., Knight's 

Redi-Mix, Inc., Coastal Concrete Southeast, LLC, 

Coastal Concrete Southeast II, LLC, Guaranteed 

Framing, LLC, Ozzy Construction, LLC, Construction 

Applicators Charleston, LLC, LA New Enterprises, LLC, 
Decor Corporation, DVS, Inc., Raul Martinez Masonry, 

LLC, Alpha Omega Construction Group, Inc., South 

Carolina Exteriors, LLC, Builders Firstsource-Southeast 

Group, LLC, and Low Country Renovations and Siding, 

LLP, Third-Party Defendants,

of which Volkmar Consulting Services, LLC, Land/Site 

Services, Inc., Myers Landscaping, Inc., A.C. & A. 

Concrete, Inc., Knight's Concrete Products, Inc., Knight's 

Redi-Mix, Inc., Coastal Concrete Southeast, LLC, 

Coastal Concrete Southeast II, LLC, Guaranteed 

Framing, LLC, Ozzy Construction, LLC, Construction 

Applicators Charleston, LLC, LA New Enterprises, LLC, 

Decor Corporation, DVS, Inc., Raul Martinez Masonry, 

LLC, Alpha Omega Construction Group, Inc., South 

Carolina Exteriors, LLC, Builders Firstsource-Southeast 

Group, LLC, are also Respondents.

and

Decor Corporation, Fourth Party Plaintiff,

v.

Baranov Flooring, LLC, DJ Construction Services, LLC, 

Creative Wood Floors, LLC, Geraldo Cunha, Ebenezer 

Flooring, LLC, Emmanuel Flooring and Siding, LLC, 

Eusi Flooring and Covering, LLC, Nicolas Flores, 

Alexander Martinez, Isidru Mejia, Juan Perez, N&B 

Construction, LLC, Jose Dias Rodrigues, Livia Sousa, 

Jose Paz Castro Hernandez, Divinio Aperecido 

Corgosinho, Ricardo Chiche, CEBS Construction, 

Bayshore Siding and Flooring, Sebastio Luiz de Araujo, 

and John Does 1-4, Fourth-Party Defendants.

of whom Patricia Damico, Joshua and Brettany Beutow, 

Bryan and Cynthia Camara, Matthew Collins, Jonathan 

and Teresa Douglas, Czarra and Chad England, Lena 

Lucas, and Danny and Ellen Davis Morrow are the 

Petitioners.
Appellate Case No. 2020-001048

ON WRIT OF CERTIORARI TO THE COURT OF APPEALS

Appeal from Berkeley County

J.C. Nicholson Jr., Circuit Court Judge

Opinion No. 28114

Heard February 1, 2022 – Filed September 14, 2022

AFFIRMED IN PART, REVERSED IN PART, AND 

REMANDED

Jesse Sanchez, of The Law Office of Jesse Sanchez, John 

Calvin Hayes IV, of Hayes Law Firm, LLC, and 

Catherine Dunn Meehan, of The Steinberg Law Firm, 

LLP, all of Charleston; and Michael J. Jordan, of The 

Steinberg Law Firm, LLP, of Goose Creek, all for 

Petitioners.

James Lynn Werner, Jenna Brooke Kiziah McGee, and 

Katon Edwards Dawson Jr., all of Parker Poe Adams & 

Bernstein LLP, of Columbia, for Respondent Lennar 

Carolinas, LLC; Robert Trippett Boineau, Heath 

McAlvin Stewart III, and John Adam Ribock, all of 

McAngus, Goudelock & Courie, LLC, of Columbia, for 

Respondent Spring Grove Plantation Development, Inc.; 

Carmen Ganjehsani, James H. Elliott Jr., and Francis 

Heyward Grimball, all of Richardson, Plowden, & 

Robinson, of Columbia, for Respondents Manale 

Landscaping, LLC and Decor Corporation; Samia Hanafi 

Nettles, of Richardson Plowden & Robinson, PA, of 

Charleston, for Respondent Decor Corporation; Theodore 
L. Manos, of Robertson Hollingsworth Manos & Rahn, 

LLC for Respondent Super Concrete of SC; David 

Cooper Cleveland and Trey Matthew Nicolette, both of 

Clawson and Staubes, LLC, of Charleston, for 

Respondent Myers Landscaping, Inc.; Rogers Edward

Harrell III, of Murphy & Grantland, PA, of Columbia, for 

Respondents Knight's Concrete Products, Inc. and 

Knight's Redi-Mix, Inc.; Steven L. Smith and Zachary 

James Closser, both of Smith Closser, of Charleston, and 

Samuel Melvil Wheeler, of Whitfield-Cargile Law, 

PLLC, of Brevard, NC, all for Respondent Knight's 

Concrete Products, Inc.; Brent M. Boyd and Timothy J. 

Newton, both of Murphy & Grantland, PA, of Columbia, 

for Respondents Coastal Concrete Southeast, LLC and 

Coastal Concrete Southeast II, LLC; Alan Ross Belcher 

Jr. and Elizabeth Wieters, both of Hall Booth Smith, PC, 

of Mount Pleasant, and Christine Companion Varnado, of 

Siebels Law Firm, of Charleston, all for Respondent 

Guaranteed Framing, LLC; Erin DuBose Dean, of 

Tupper, Grimsley, Dean & Canaday, PA, of Beaufort, for 

Respondents LA New Enterprises Construction, Inc. and 

Raul Martinez Masonry; Stephen Lynwood Brown and 

Catherine Holland Chase, both of Clement Rivers, LLP, 

of Charleston, and Preston Bruce Dawkins Jr., of Aiken 

Bridges Elliott Tyler & Saleeby, PA, of Florence, all for 

Respondent Alpha Omega Construction Group, Inc.; and 

Jenny Costa Honeycutt, of Best Honeycutt, PA, of 

Charleston, for Respondent South Carolina Exteriors, 

LLC; Clarke W. DuBose, of Haynsworth Sinkler Boyd, 

PA, of Columbia, for Respondent Southern Green, Inc.;

Stephen P. Hughes, of Howell Gibson & Hughes, PA, of 

Beaufort, for Respondent Builders Firstsource-Southeast 

Group, LLC; Ronald G. Tate Jr., of Gallivan, White & 

Boyd, PA, and Robert Batten Farrar, of Rogers 

Townsend, LLC, both of Greenville, for Respondent 

Volkmar Consulting Services, LLC; Sidney Markey 

Stubbs, of Baker Ravenel & Bender, LLP, of Columbia,

for Respondent DVS, Inc.; David Shuler Black, of 

Howell Gibson & Hughes, PA, of Beaufort, for 

Respondent TJB Trucking/Leasing, LLC; Shanna 
Milcetich Stephens and Wade Coleman Lawrimore, both

of Anderson Reynolds & Stephens, LLC, of Charleston,

for Respondent A.C.&A. Concrete, Inc.; John Elliott 

Rogers II, of Ward Law Firm, PA, of Spartanburg, for 

Respondent Land/Site Services, Inc.; David Starr Cobb, 

of Turner Padget Graham & Laney, PA, of Charleston, 

for Respondent Construction Applicators Charleston, 

LLC; Kathy Aboe Carlsten, of Copeland, Stair, Valz & 

Lovell, LLP, and N. Keith Emge Jr., of Resnick & Louis, 

PC, both of Charleston, for Respondent Civil Site 

Environmental, Inc.; Scott Harris Winograd, Jeffrey A.

Ross, and Philip Paul Cristaldi III, all of Ross & 

Cristaldi, LLC, of Mount Pleasant, for Respondent Ozzy 

Construction, LLC.

JUSTICE KITTREDGE: This case arises out of a construction defect suit 

brought by a number of homeowners (Petitioners) against their homebuilder and

general contractor, Lennar Carolinas, LLC (Lennar). Lennar moved to compel 

arbitration, citing the arbitration provisions in a series of contracts signed by 

Petitioners at the time they purchased their homes. As we will explain, those 

contracts were contracts of adhesion. Petitioners pointed to purportedly 

unconscionable provisions in the contracts generally and in the arbitration 

provision specifically. Citing a number of oppressive terms in the contracts, and 

without delineating between the contracts generally and the arbitration provision 

specifically, the circuit court denied Lennar's motion to compel, finding the 

contracts were grossly one-sided and unconscionable and, thus, the arbitration 

provisions contained within those contracts were unenforceable. The court of 

appeals reversed, explaining that the United States Supreme Court's holding in 

Prima Paint Corp. v. Flood & Conklin Manufacturing Co. forbids consideration of 

unconscionable terms outside of an arbitration provision (the Prima Paint

doctrine).1

 Damico v. Lennar Carolinas, L.L.C., 430 S.C. 188, 844 S.E.2d 66 (Ct. 

 1 See generally Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 

403–06 (1967) (explaining that under the Federal Arbitration Act, courts may 

"consider only issues relating to the making and performance of the agreement to 

arbitrate," rather than those affecting the contract as a whole); S.C. Pub. Serv. Auth. 

v. Great W. Coal (Ky.), Inc., 312 S.C. 559, 562–63, 437 S.E.2d 22, 24 (1993) 

(holding Prima Paint applied not only to claims of fraud in the inducement of an 

arbitration agreement, but to all contract defenses, including unconscionability, and 
App. 2020). The court of appeals found the circuit court's analysis ran afoul of the 

Prima Paint doctrine as it relied on the oppressive nature of terms outside of the 

arbitration provisions.

While we agree with the court of appeals that the circuit court violated the Prima 

Paint doctrine, we nonetheless agree with Petitioners and find the arbitration 

provisions—standing alone—contain a number of oppressive and one-sided terms, 

thereby rendering the provisions unconscionable and unenforceable under South 

Carolina law. We further decline to sever the unconscionable terms from the 

remainder of the arbitration provisions for two reasons. First, doing so would 

require us to blue-pencil the agreement regarding a material term of the contract, a 

result strongly disfavored in contract disputes. Second, as a matter of policy, we 

find severing terms from an unconscionable contract of adhesion (in this case, an 

arbitration provision) discourages fair, arms-length transactions. Rather, were we 

to honor the severability clause in contracts such as these, it would encourage 

sophisticated parties to intentionally insert unconscionable terms—that often go 

unchallenged—throughout their contracts, believing the courts would step in and 

rescue the party from its gross overreach. This is not to say severability clauses in 

general should not be honored, because of course we are constrained to enforce a

contract in accordance with the parties' intent. Rather, we merely recognize that 

where a contract would remain one-sided and be fragmented after severance, the 

better policy is to decline the invitation for judicial severance. We therefore affirm 

in part and reverse in part the court of appeals' decision and reinstate the circuit

court's denial of Lennar's motion to compel.

I.

The Abbey is a subdivision in the Spring Grove Plantation neighborhood located in 

Berkeley County and consists of sixty-nine single-family homes constructed 

between 2010 and 2015. The lots in the Abbey were originally owned and 

developed by Spring Grove Plantation Development, Inc. (Spring Grove), which 

graded the area and constructed the storm drainage system and roads. Spring 

Grove in turn sold the partially-developed subdivision to Lennar, which completed 

construction with the help of a number of subcontractors and sold all sixty-nine 

homes.

 

stating that "a party cannot avoid arbitration through rescission of the entire 

contract when there is no independent challenge to the arbitration clause").
In the course of development, Petitioners contracted with Lennar to build new 

homes to their specifications in The Abbey.2

 As part of those transactions, Lennar 

and Petitioners executed individual form contracts (the purchase and sale 

agreement) containing an arbitration provision. Section 16 of the purchase and 

sale agreement, titled "Mediation/Arbitration of Disputes," contains ten, numbered 

paragraphs setting forth the arbitration agreement. In relevant part, paragraph 1 

states:

The parties to this [purchase and sale a]greement specifically agree 

that this transaction involves interstate commerce and that any 

Dispute . . . shall first be submitted to . . . binding arbitration as 

provided by the Federal Arbitration Act . . . . "Disputes" (whether 

contract, warranty, tort, statutory or otherwise)[] shall include, but are 

not limited to, any and all controversies, disputes or claims (1) arising 

under, or related to, this [purchase and sale a]greement, the Property, 

the Community or any dealings between Buyer and [Lennar]; (2) 

arising by virtue of any . . . warranties alleged to have been made by 

[Lennar] or [Lennar's] representatives; and (3) relating to personal 

injury or property damage alleged to have been sustained by Buyer, 

Buyer's children or other occupants of the Property, or in the 

Community. Buyer has executed this [purchase and sale a]greement 

on behalf of his or her children and other occupants of the Property 

with the intent that all such parties be bound hereby.

Paragraph 4 further provides "that [Lennar] may, at its sole election, include 

[Lennar's] contractors, subcontractors and suppliers, as well as any warranty 

company and insurer as parties in the mediation and arbitration" and "that the 

mediation and arbitration will be limited to the parties specified herein." Finally, 

paragraph 5 states, "Buyer and [Lennar] further agree that no finding or stipulation 

of fact, no conclusion of law, and no arbitration award in any arbitration hereunder 

shall be given preclusive or collateral estoppel effect in any other arbitration, 

judicial, or similar proceeding unless there is mutuality of parties."

After closing on their new homes, Petitioners became aware of damage to their 

properties, which they attributed to Spring Grove, Lennar, and the subcontractors 

 2 We note Petitioner Lenna Lucas bought a pre-owned home built by Lennar in the 

Abbey, so there is no direct contract between Petitioner Lucas and Lennar.
(collectively, Respondents). As a result, they filed a construction defect suit 

against Respondents for, among other things, negligence, breach of contract, and 

breach of various warranties.

Subsequently, Lennar moved to compel arbitration under either the Federal 

Arbitration Act (FAA)3 or the South Carolina Uniform Arbitration Act (SCUAA).4

 

As is relevant to this appeal, Lennar argued Petitioners were required to arbitrate 

under two different contracts: (1) the purchase and sale agreement; and (2) a 

limited home warranty agreement (the limited warranty booklet). The arbitration 

provisions within both contracts are virtually identical, so for ease of reference, we 

will refer only to the terms in the purchase and sale agreement unless otherwise 

noted. Petitioners opposed Lennar's motion to compel arbitration, claiming, among 

other things, that the arbitration agreement was unconscionable.

Ultimately, the circuit court denied Lennar's motion to compel. Initially, the circuit 

court found the "arbitration agreement" consisted of the entirety of the purchase 

and sale agreement and the limited warranty booklet, explaining the extensive 

cross-references between the two contracts combined them into a single agreement 

akin to that found in Smith v. D.R. Horton, Inc., 417 S.C. 42, 790 S.E.2d 1 (2016) 

(holding an arbitration agreement was not merely a standalone provision but was 

instead embedded in multiple contract terms, including ones dealing with a limited 

home warranty). Likewise, the circuit court held the contracts were 

unconscionable, citing a number of oppressive, one-sided provisions. The court 

declined to sever the unconscionable provisions because the oppressive terms 

pervaded the entirety of the contracts, "thereby rendering 'severability' impractical, 

if not impossible."5

 3 9 U.S.C. §§ 1–16 (2021).

4 S.C. Code Ann. §§ 15-48-10 to -240 (2005).

5 The circuit court additionally held arbitration could not be compelled under 

federal or state law. Specifically, the court determined the contracts involved 

intrastate commerce, rather than interstate commerce, and therefore the FAA did 

not apply. Further, the circuit court determined the arbitration agreement did not 

comply with the SCUAA, specifically, section 15-48-10(a). See S.C. Code Ann. 

§ 15-48-10(a) ("Notice that a contract is subject to arbitration pursuant to [the 

SCUAA] shall be typed in underlined capital letters . . . on the first page of the 

contract and unless such notice is displayed thereon the contract shall not be 
Lennar appealed, and the court of appeals reversed. In relevant part, the court of 

appeals found the arbitration agreement between Petitioners and Lennar consisted 

only of Section 16 of the purchase and sale agreement. Relying on the Prima 

Paint doctrine, the court of appeals held the circuit court wrongly considered terms 

outside of the actual arbitration agreement. In particular, the court of appeals 

distinguished the "intertwined" arbitration agreement in D.R. Horton from the 

"distinct, separate" arbitration agreement in the purchase and sale agreement, and 

found the circuit court impermissibly considered the terms found in the limited 

warranty booklet. However, the court of appeals ended its analysis upon 

concluding that the arbitration agreement was composed entirely of Section 16 of 

the purchase and sale agreement.

While we agree with the court of appeals in that regard, we find it necessary to 

continue the analysis to determine whether any terms within Section 16 of the 

purchase and sale agreement were unconscionable in and of themselves. We

therefore granted Petitioners' petition for a writ of certiorari.

II.

As an initial matter, Petitioners argue the contracts at issue do not involve 

interstate commerce, and therefore Lennar cannot compel Petitioners to arbitrate 

under federal law, namely, the FAA. We disagree. The transactions here 

manifestly involve interstate commerce, as they involved the construction of new 

homes built to Petitioners' specifications rather than the purchase of pre-existing 

homes. See, e.g., Bradley v. Brentwood Homes, Inc., 398 S.C. 447, 458 n.8, 730 

S.E.2d 312, 318 n.8 (2012) ("[O]ur appellate courts have consistently recognized 

that contracts for construction are governed by the FAA."); Episcopal Hous. Corp. 

v. Fed. Ins. Co., 269 S.C. 631, 640, 239 S.E.2d 647, 652 (1977) (explaining that 

contracts requiring the construction of a new building implicate interstate 

commerce because it would be "virtually impossible" to construct the building 

"with materials, equipment[,] and supplies all produced and manufactured solely 

within the State of South Carolina"). Because federal law preempts state law in 

this instance, we need not decide whether Lennar could also compel arbitration 

under the SCUAA.

 

subject to arbitration [pursuant to the SCUAA].").
III.

Petitioners present two challenges to the court of appeals' opinion. First, 

Petitioners defend the circuit court's reliance on D.R. Horton, asserting the court of 

appeals erred in limiting the scope of the arbitration agreement to Section 16 of the 

purchase and sale agreement alone. Specifically, Petitioners claim the purchase 

and sale agreement and the limited warranty booklet expressly incorporate one 

another by reference and extensively cross-reference one another such that one 

cannot be read without the other. Petitioners therefore contend the two contracts 

should be read as one large arbitration agreement rather than two separate 

contracts. We agree with the court of appeals and reject Petitioners' first argument.

Pursuant to the Prima Paint doctrine, the FAA requires courts to separate the 

validity of an arbitration clause from the validity of the contract in which it is 

embedded. Munoz v. Green Tree Fin. Corp., 343 S.C. 531, 540, 542 S.E.2d 360, 

364 (2001) (citing Prima Paint, 388 U.S. at 395). The validity of the arbitration 

clause is a matter for the courts, whereas the validity of the contract as a whole is a 

matter for the arbitrator. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 

445–46 (2006) ("[U]nless the challenge is to the arbitration clause itself, the issue 

of the contract's validity is considered by the arbitrator in the first instance.").

As a result, as we stated in D.R. Horton, "in conducting an unconscionability 

inquiry, courts may only consider the provisions of the arbitration agreement itself, 

and not those of the whole contract." 417 S.C. at 48, 790 S.E.2d at 4. Necessarily, 

then, the Court must first define the scope of the arbitration agreement before 

considering whether that agreement is unconscionable. Id. at 48 n.4, 790 S.E.2d at 

3 n.4 (explaining the scope of the arbitration agreement must first be determined 

"because it controls which portions of the Agreement we may properly consider in 

conducting our unconscionability analysis").

In D.R. Horton, one of the central issues involved defining the scope of the 

arbitration agreement. Id. at 48, 790 S.E.2d at 4. The plaintiff-homeowners 

claimed the arbitration agreement comprised the entire section of the contract titled 

"Warranties and Dispute Resolution"; the defendant-homebuilder claimed the 

arbitration agreement was contained solely within one subparagraph of that 

section. Id. A majority of the Court ultimately agreed with the plaintiffs, finding 

the arbitration agreement broadly encompassed the entirety of the "Warranties and 

Dispute Resolution" section of the contract. Id. The Court explained the various 

subparagraphs in the "Warranties and Dispute Resolution" section "contain[ed] 

numerous cross-references to one another, intertwining the subparagraphs so as to 

constitute a single provision." Id. Therefore, the Court concluded that the section
as a whole—including the subparagraphs relating to arbitration and those relating 

to warranties—"must be read [together] to understand the scope of the warranties 

and how different disputes are to be handled." Id.

Here, in contrast to D.R. Horton, there is a distinct section of the purchase and sale 

agreement that sets forth the entirety of the arbitration agreement. As correctly 

noted by the court of appeals, Section 16 of the agreement—titled 

"Mediation/Arbitration of Disputes"—deals solely with the scope of arbitration and 

the requisite formalities accompanying an arbitration proceeding, such as the 

procedural rules and the number of arbitrators required to resolve the dispute. 

Within Section 16, there is nothing that refers to the limited warranty booklet or 

incorporates it by reference. Rather, Section 16 is a standalone arbitration 

provision, dissimilar from that in D.R. Horton.

We therefore find the arbitration agreement is contained solely within Section 16 

of the purchase and sale agreement.6

IV.

Petitioners' second argument posits that even assuming the court of appeals 

correctly narrowed the scope of the arbitration agreement to Section 16 of the 

purchase and sale agreement, it nonetheless erred in failing to analyze whether 

Section 16 contained unconscionable terms that would render the agreement to 

arbitrate unenforceable. Petitioners contend they lacked a meaningful choice with 

 6 As noted above, the limited warranty booklet contains an arbitration agreement 

that uses identical language to Section 16 of the purchase and sale agreement. 

Because the arbitration agreements in both contracts are standalone provisions, it is 

legally irrelevant that the portions of the contracts outside of the arbitration 

agreements extensively cross-reference one another and incorporate one another by 

reference. See Buckeye Check Cashing, Inc., 546 U.S. at 445–46 ("Prima Paint

and Southland [Corp. v. Keating, 465 U.S. 1 (1984),] . . . establish[ed] three 

propositions. First, as a matter of substantive federal arbitration law, an arbitration 

provision is severable from the remainder of the contract. Second, unless the 

challenge is to the arbitration clause itself, the issue of the contract's validity [as a 

whole] is considered by the arbitrator in the first instance. Third, this arbitration 

law applies in state as well as federal courts.").
respect to Section 16 and that certain terms in Section 16 are so oppressive that no 

reasonable person would have agreed to them. We agree and now turn to the 

general law of unconscionability.

Section 2 of the FAA provides that any arbitration provision contained within a 

written contract involving interstate commerce must be enforced except for "upon 

such grounds as exist at law or in equity for the revocation of any contract." 9 

U.S.C. § 2. "Thus, generally applicable contract defenses, such as fraud, duress, or 

unconscionability, may be applied to invalidate arbitration agreements without 

contravening [the FAA]." Dr.'s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 

(1996).

At its core, unconscionability is defined "as the absence of meaningful choice on 

the part of one party due to one-sided contract provisions, together with terms 

which are so oppressive that no reasonable person would make them and no fair 

and honest person would accept them." Fanning v. Fritz's Pontiac-Cadillac-Buick, 

Inc., 322 S.C. 399, 403, 472 S.E.2d 242, 245 (1996); 17A Am. Jur. 2d Contracts § 

272 (2016) (characterizing these two prongs as procedural and substantive 

unconscionability, respectively); see also id. § 271 ("Generally, the doctrine of 

unconscionability protects against unfair bargains and unfair bargaining 

practices . . . ."). This general description of unconscionability applies to all 

contract terms, not merely arbitration provisions. Cf. AT&T Mobility L.L.C. v. 

Concepcion, 563 U.S. 333, 339 (2011) (noting that while arbitration agreements 

may be invalidated by generally applicable contract defenses, including 

unconscionability, they may not be invalidated by "defenses that apply only to 

arbitration or derive their meaning from the fact that an agreement to arbitrate is at 

issue"). Compare Fanning, 322 S.C. at 403, 472 S.E.2d at 245 (involving an 

unconscionability analysis of a contract that did not contain an arbitration 

provision), with Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14, 24–25, 644 

S.E.2d 663, 668 (2007) (involving a similar unconscionability analysis for a 

contract that contained an arbitration provision).

A determination of whether a contract is unconscionable depends upon all the facts 

and circumstances of the case. S.C. Farm Bureau Mut. Ins. Co. v. Kennedy, 398 

S.C. 604, 614, 730 S.E.2d 862, 867 (2012) (citation omitted). Indeed, we have 

previously "emphasize[d] the importance of a case-by-case analysis in order to 

address the unique circumstances inherent in the various types of consumer 

transactions." Compare Simpson, 373 S.C. at 36, 644 S.E.2d at 674 (holding an 

adhesion contract between an automobile dealership and a customer was 

unconscionable), with Munoz, 343 S.C. at 541–42, 542 S.E.2d at 365 (declining to 

find unconscionable an adhesion contract between a consumer and a lender). "In 
analyzing claims of unconscionability in the context of arbitration agreements, the 

[United States Court of Appeals for the] Fourth Circuit has instructed courts to 

focus generally on whether the arbitration clause is geared towards achieving an 

unbiased decision by a neutral decision-maker." Simpson, 373 S.C. at 25, 644 

S.E.2d at 668–69 (citing Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 938–40 

(4th Cir. 1999)).

As explained further below, a take-it-or-leave-it contract of adhesion is not 

necessarily unconscionable, even though it may indicate one party lacked a 

meaningful choice. See generally 17A Am. Jur. 2d Contracts § 274; 17 C.J.S. 

Contracts § 9 & n.9 (2020) (collecting cases). Rather, to constitute

unconscionability, the contract terms must be so oppressive that no reasonable 

person would make them and no fair and honest person would accept them. 

Fanning, 322 S.C. at 403, 472 S.E.2d at 245; see also 17A Am. Jur. 2d Contracts § 

272 ("Although procedural and substantive unconscionability must both be present 

in order for a court to exercise its discretion to refuse to enforce a contract or 

clause under the doctrine of unconscionability, both need not be present to the 

same degree; the agreement may be judged on a sliding scale: the more 

substantively oppressive the contract term, the less evidence of procedural 

unconscionability is required to come to the conclusion that the term is 

unenforceable, and vice versa. In an exceptional case, however, a court may find 

that a contract provision is so outrageous as to warrant holding it unenforceable on 

the grounds of substantive unconscionability alone." (footnotes omitted)). In this 

case, we do not hesitate in upholding the finding of unconscionability concerning 

Section 16 of the purchase and sale agreement.

A.

As noted, under South Carolina law, the same principles of unconscionability 

apply to contract terms and arbitration provisions alike. The touchstone of the 

analysis begins with the presence or absence of meaningful choice. See Fanning, 

322 S.C. at 403, 472 S.E.2d at 245; see also Carolina Care Plan, Inc. v. United 

HealthCare Servs., Inc., 361 S.C. 544, 555, 606 S.E.2d 752, 758 (2004), 361 S.C. 

at 555, 606 S.E.2d at 758 (explaining that a party seeking to prove an arbitration 

agreement is unconscionable must allege he lacked a meaningful choice as to the 

arbitration clause specifically, not merely that he lacked a meaningful choice as to 

the contract as a whole). "Whether one party lacks a meaningful choice . . .

typically speaks to the fundamental fairness of the bargaining process." D.R. 

Horton, 417 S.C. at 49, 790 S.E.2d at 4 (citation omitted). Thus, in determining 

whether an absence of meaningful choice taints a contract term, such as an 

arbitration provision, courts must consider, among all facts and circumstances, the 
relative disparity in the parties' bargaining power, the parties' relative 

sophistication, and whether the plaintiffs are a substantial business concern of the 

defendant. Simpson, 373 S.C. at 25, 644 S.E.2d at 669; see generally 17A Am Jur. 

2d Contracts § 272 (listing a number of factors that courts may considering in 

conducting an unconscionability analysis); 17 C.J.S. Contracts § 10 (same).

Parties frequently claim they lack a meaningful choice when a contract of adhesion 

is involved. D.R. Horton, 417 S.C. at 49, 790 S.E.2d at 4 (explaining adhesion 

contracts are "standard form contracts offered on a take-it or leave-it basis with 

terms that are not negotiable" (internal alteration marks omitted) (citation 

omitted)). Because contracts of adhesion are non-negotiable, "[a]n offeree faced 

with such a contract has two choices: complete adherence or outright rejection." 

Lackey v. Green Tree Fin. Corp., 330 S.C. 388, 394, 498 S.E.2d 898, 901 (Ct. 

App. 1998) (citation omitted).

Adhesion contracts are not per se unconscionable. Simpson, 373 S.C. at 27, 644 

S.E.2d at 669; 17A Am. Jur. 2d Contracts § 274; 17 C.J.S. Contracts § 9 & n.9 

(collecting cases). However, given that one party to an adhesion contract "has 

virtually no voice in the formulation of the[] terms and language" used in the 

contract, Lackey, 330 S.C. at 394, 498 S.E.2d at 901, courts tend to view adhesive 

arbitration agreements with "considerable skepticism," as it remains doubtful "any 

true agreement ever existed to submit disputes to arbitration," Simpson, 373 S.C. at 

26, 644 S.E.2d at 669 (citations omitted). See also 17A Am. Jur. 2d Contracts §

274 (noting that "[c]ontracts of adhesion are enforceable unless they are 

unconscionable," but "[n]evertheless, the fact that a contract is one of adhesion is a 

strong indicator that [there was] an absence of meaningful choice"); 17 C.J.S. 

Contracts § 9 ("A consumer transaction which is essentially a contract of adhesion 

may be examined by the courts with special scrutiny to assure that it is not applied 

in an unfair or unconscionable manner against the party who did not participate in 

its drafting.").

The distinction between a contract of adhesion and unconscionability is worth 

emphasizing: adhesive contracts are not unconscionable in and of themselves so 

long as the terms are even-handed. Nevertheless, and regrettably, it is common 

practice for the sophisticated drafter of contracts to routinely argue that a particular 

contract is not one of adhesion when that is plainly untrue. Such a specious 

argument does not advance the party's position and instead detracts from other 

legitimate arguments the party may have. After all, unconscionability requires a 

finding of a lack of meaningful choice coupled with unreasonably oppressive 
terms. Thus, an adhesion contract with fair terms is certainly not unconscionable, 

and the mere fact a contract is one of adhesion does not doom the contract-drafter's 

case.

Here, we find it manifest that the purchase and sale agreement is a contract of 

adhesion given by Lennar to all of the homebuyers in the Abbey, with only a few 

blank spaces to fill in, including the buyer's name, the relevant property address,

and the purchase price. Other than those type of minor blank spaces, the terms of 

the purchase and sale agreement—particularly those of any consequence to 

Lennar—are non-negotiable, with some terms not even applying to specific 

homebuyers.

7

Moreover, the sophistication of Petitioners, as individual homebuyers, pales in 

comparison to Lennar. Given that Lennar has sold thousands of homes in the 

Carolinas, whereas Petitioners will likely only purchase, at best, a handful of 

homes in their entire lifetime, we find it fair to characterize Lennar as significantly 

more sophisticated than Petitioners in home buying transactions. These factors 

combine to highlight the significant disparity in the parties' bargaining power, with 

Lennar enjoying a much stronger bargaining position than Petitioners. We 

therefore find Petitioners lacked a meaningful choice in their ability to negotiate 

the arbitration agreement. See Kennedy v. Columbia Lumber & Mfg. Co., 299 S.C. 

335, 343, 384 S.E.2d 730, 735–36 (1989) ("We have [] taken judicial cognizance 

of the fact that a modern buyer of new residential housing is normally in an 

unequal bargaining position as against the seller."). 

B.

Within Section 16, Petitioners point to three provisions that are allegedly so onesided and unreasonable as to render the agreement unconscionable. Specifically, 

Petitioners claim provisions in paragraphs 1, 4, and 5 require the Court to 

invalidate the arbitration agreement. We agree. Because paragraph 4 of Section 

16 of the purchase and sale agreement contains the most egregious term, we focus 

our attention there.

8

 7 For example, Section 4 of the purchase and sale agreement lists two financing 

options that are mutually exclusive with one another, with checkboxes to mark 

which of the two options applies for any particular client.

8 We note Lennar made no attempt in its brief to defend paragraph 4 from 

Petitioners' unconscionability challenge.
In particular, paragraph 4 states, "Seller may, at its sole election, include Seller's 

contractors, subcontractors and suppliers, as well as any warranty company and 

insurer as parties in the mediation and arbitration; and . . . the mediation and 

arbitration will be limited to the parties specified herein." (Emphasis added.) It is 

a fundamental principle of law that the plaintiff is the master of his own complaint 

and is the sole decider of whom to sue for his injuries. Myles v. United States, 416 

F.3d 551, 552 (7th Cir. 2005) ("[L]itigants are masters of their own complaints and 

may choose who to sue—or not to sue."); 71 C.J.S. Pleading § 149 (Supp. 2021) 

(citation omitted). Giving Lennar the "sole election" to include or exclude 

subcontractors in the arbitration proceeding strips Petitioners of that right and 

overturns a firmly entrenched legal principle. Cf. 17A Am. Jur. 2d Contracts § 

272 ("Mutuality [] is a paramount consideration when assessing the substantive 

unconscionability of a contract term.").

It is equally concerning that paragraph 4, in conjunction with paragraph 5, creates 

the possibility of inconsistent factual findings that would preclude Petitioners from 

recovery on a purely procedural (rather than a merit) basis—a legal defense to 

which neither Lennar nor the other Respondents are entitled. In particular, 

paragraph 5 states the parties agree no factual or legal finding made in arbitration 

is binding in any other arbitral or judicial proceeding "unless there is mutuality of 

parties." However, Lennar can ensure there is never a "mutuality of parties" by 

exercising its "sole election" in paragraph 4 to choose the parties to the arbitration. 

Suppose Lennar is unable or—of more concern—unwilling to compel the other

named defendants to arbitrate, instead forcing Petitioners to litigate with the 

remaining defendants in circuit court. In that case, it is possible for the arbitration

defendants to blame the remaining circuit-court defendants for Petitioners' 

damages, and vice versa. Were the respective fact finders to agree with the 

defendants' arguments to that effect, Petitioners could lose in both forums merely 

because the fact finder believes the absent defendants to be at fault, and, critically, 

it is not Petitioners' choice that those defendants are absent. Compounding the 

problem, paragraph 5 prevents any findings of fact or conclusions of law in the 

arbitration to be binding in any subsequent arbitral or judicial proceeding instituted 

by Petitioners to recover their damages fully. Thus, Petitioners could not even use 

the fact that the arbitrator had found Lennar was not at fault when pursuing 

liability against the remaining circuit-court defendants, or vice versa.

This creation of a procedural defense to liability for Lennar is wholly unreasonable 

and oppressive to Petitioners. Moreover, the likelihood of inconsistent factual 

findings due to paragraphs 4 and 5 of the arbitration agreement—and the resultant, 

inherent unfairness to Petitioners—has become probable, rather than merely 
theoretically possible. We say this because, as it stands now, Spring Grove and a 

significant number of the subcontractors are not required to arbitrate with Lennar 

and Petitioners because either (1) their contracts with Lennar do not contain an 

arbitration provision; or (2) their contracts with Lennar (including the arbitration 

agreements therein) were executed after Petitioners filed their lawsuit, i.e., after the 

subcontractors had completed the work on Petitioners' homes and the Abbey in 

general; or (3) they did not have a contract with Lennar at all—much less an 

arbitration agreement.

As a result, we hold the arbitration agreement is unconscionable and unenforceable 

as written.

Ordinarily, the question of unconscionability beyond the arbitration provision 

would be determined in the arbitral forum. See Rent-A-Ctr., W., Inc. v. Jackson, 

561 U.S. 63, 71–72 (2010). However, in agreeing with the circuit court concerning 

the unconscionability of the arbitration provision, we note our additional

agreement with the circuit court that unconscionability pervades the various 

agreements between the parties. An example of the oppressive, one-sided nature 

of the parties' agreement includes a provision that Petitioners "expressly negotiated 

and bargained for the waiver of the implied warranty of habitability [for] valuable 

consideration . . . in the amount of $0." (Emphasis added.) Lennar also 

specifically states the "[l]oss of use of all or a portion of your Home" is not 

covered by its warranty to new homebuyers.9

 Likewise, another provision of the 

adhesive contract states, "[T]his Agreement shall be construed as if both parties 

jointly prepared it"—a blatant falsehood—"and no presumption against one party 

or the other shall govern the interpretation or construction of any of the provisions 

of this Agreement." Yet another provision asserts, "Buyer acknowledges that 

justice will best be served if issues regarding this agreement are heard by a judge in 

a court proceeding, and not a jury." (Original emphasis omitted, new emphasis 

added.) This is not even to mention the fact that Lennar attempted to insert an 

arbitration agreement in Petitioners' deeds, characterizing the arbitration agreement 

as an "equitable servitude" that runs with the land in perpetuity.

 9 Apparently, for Lennar to even consider repairing any defects in the homes they 

construct and sell, the defects must be minor and become apparent very quickly 

after the sale date. Otherwise, Lennar is off the hook for the defective housing, 

and the innocent homebuyers are out of luck. After all, Lennar specifically 

disclaims any responsibility to fix major problems to the home that result in the 

homebuyers losing partial or complete use of their (not-inexpensive) home.
We find these and other terms of the contracts to be absurd, factually incorrect, and

grossly oppressive. While none of these terms factor into our unconscionability 

analysis for the arbitration agreement, we recognize that although the circuit court 

failed to honor the Prima Paint doctrine, it certainly hit the nail on the head in 

characterizing the contracts as unquestionably unconscionable.

V.

Lennar does not argue to this Court that, should we find any provision of the 

arbitration agreement unconscionable, we should sever that portion of the 

agreement in accordance with the severability clause found in the arbitration 

agreement.

10 However, because Lennar made a severability argument to the circuit

court and court of appeals, we assume Lennar views it as an additional sustaining 

ground and therefore address it in the interest of judicial economy. As we will 

explain, we decline to sever the unconscionable provisions of the arbitration 

agreement.

If a court finds a contract clause unconscionable, the court may refuse to enforce 

the contract clause, or it may limit the application of the unconscionable clause so 

as to avoid any possible unconscionable result. S.C. Code Ann. § 36-2-302(1) 

(2003); Lackey, 330 S.C. at 397, 498 S.E.2d at 903; 17A Am. Jur. 2d Contracts § 

313. However, severability is not always appropriate to remedy unconscionable 

contractual provisions. Simpson, 373 S.C. at 34, 644 S.E.2d at 673; 17A Am Jur. 

2d Contracts § 314. In particular, courts are reluctant to sever the unconscionable 

provisions when illegality pervades the entire agreement "such that only a 

disintegrated fragment would remain after hacking away the unenforceable parts." 

Simpson, 373 S.C. at 34, 644 S.E.2d at 673 (citation omitted); see also 17A Am 

Jur. 2d Contracts § 314. In those cases, judicial severing "look[s] more like 

rewriting the contract than fulfilling the intent of the parties." Simpson, 373 S.C. at 

34, 644 S.E.2d at 673 (citation omitted); see also 17A Am Jur. 2d Contracts § 313.

Thus, "[c]ourts have discretion [] to decide whether a contract is so infected with 

unconscionability that it must be scrapped entirely, or to sever the offending terms 

so the remainder may survive." Doe v. TCSC, L.L.C., 430 S.C. 602, 615, 846 

S.E.2d 874, 880 (Ct. App. 2020); see also Simpson, 373 S.C. at 36, 644 S.E.2d at 

674 (noting there is no specific set of factual circumstances indicating when 

 10 Paragraph 4 of Section 16 of the purchase and sale agreement states, "The 

waiver or invalidity of any portion of this Section shall not affect the validity or 

enforceability of the remaining portions of this Section."
complete invalidation of the contract is a better option than merely excising the 

offending clauses). In exercising their discretion, courts should be guided by the 

parties' intent. Doe, 430 S.C. at 615, 846 S.E.2d at 880; 17A Am. Jur. 2d 

Contracts §§ 313–14; see also 17A Am. Jur. 2d Contracts § 273 ("To assess 

whether unconscionable terms can be severed from a contract or whether the entire 

contract should be invalidated, a court considers whether the illegality is central or 

collateral to the purpose of the contract.").

A.

We first note the unconscionable portion of the agreement Lennar presumably 

wishes us to sever from the remainder of paragraph 4 deals with the proper, 

"agreed upon"11 parties to the arbitration proceeding. We decline to blue-pencil 

that provision.

It goes without saying that the clause of a contract that names the persons or 

entities that may properly be joined as parties to proceedings arising from any 

dispute involving that contract is a material term of the agreement. Cf. Grant v. 

Magnolia Manor-Greenwood, Inc., 383 S.C. 125, 131–32, 678 S.E.2d 435, 439 

(2009) (discussing when a term is integral to a contract, as compared to an 

"ancillary logistical concern," and explaining courts must look to the "essence" of 

the arbitration agreement; "[w]here [a particular term] has implications that may 

substantially affect the substantive outcome of the resolution, we believe that it is 

neither 'logistical' nor 'ancillary.'" (emphasis added)). Were we to sever such a

clause from the arbitration agreement here, it would be the opposite of excising an 

"ancillary logistical concern." Rather, we would be materially rewriting the 

contract by controlling who will—or will not—participate in arbitration.

Blue-pencilling an agreement is, of course, within the Court's discretion. Here, we 

decline to excise a material term of the arbitration agreement and enforce the 

remaining, fragmented agreement. See Stevens & Wilkinson of S.C., Inc. v. City of 

Columbia, 409 S.C. 568, 578, 762 S.E.2d 696, 701 (2014) ("A valid and 

enforceable contract requires a meeting of the minds between the parties with 

regard to all essential and material terms of the agreement." (citation omitted)); cf.

 11 We say "agreed upon" in quotation marks to emphasize that this is an adhesion 

contract, making it "considerably doubtful" the agreement truly encapsulates both

parties' intent. See Simpson, 373 S.C. at 26, 644 S.E.2d at 669 (citation omitted). 

Nonetheless, because Lennar drafted the adhesion contract, we assume it does 

accurately represent Lennar's intent.
id. at 579, 762 S.E.2d at 701 (noting even when parties manifest an intent to be 

bound, an indefinite material term may invalidate the agreement (quoting 1 Corbin 

on Contracts § 2.8 (Rev. ed. 1993))); Shotts v. OP Winter Haven, Inc., 86 So. 3d 

456, 478 (Fla. 2011) ("Further, if the [unconscionable] provision were severed, the 

trial court would be hard pressed to conclude with reasonable certainty that, with 

the illegal provision gone, there still remains of the contract valid legal promises 

on one side which are wholly supported by valid legal promises on the other—

particularly[] when those legal promises are viewed through the eyes of the 

contracting parties." (internal quotation marks omitted) (internal citation omitted)). 

Succinctly stated, once we sever the unconscionable terms in the arbitration 

provision, there is essentially nothing left.

B.

There are two additional, important considerations in this case that bear on 

severability. The first of these two considerations is that this arbitration 

agreement—and, indeed, the purchase and sale agreement as a whole—is a 

contract of adhesion. As mentioned above, adhesion contracts "are subject to 

considerable skepticism upon review, due to the disparity in bargaining positions 

of the parties." Simpson, 373 S.C. at 26, 644 S.E.2d at 669 (citation omitted); see 

also 17A Am. Jur. 2d Contracts § 274; 17 C.J.S. Contracts § 9. In particular, 

when a contract of adhesion is at issue, "there arises considerable doubt that any 

true agreement ever existed to submit disputes to arbitration." Simpson, 373 S.C. 

at 26, 644 S.E.2d at 669 (citation omitted). Similarly, given the adhesive nature of 

the contract here, we find it "considerably doubtful" any true agreement ever 

existed to sever any oppressive provisions from the arbitration agreement, 

particularly given that the less sophisticated and less powerful party(s) (Petitioners) 

had no hand in drafting or negotiating any of the language of the arbitration 

agreement. See Doe, 430 S.C. at 615, 846 S.E.2d at 880 (explaining that when 

exercising its discretion to sever portions of the agreement, a court must be guided 

by the parties' intent).

The second additional consideration of which we take note is that this contract 

involves a consumer transaction. See Simpson, 373 S.C. at 36, 644 S.E.2d at 674 

(placing emphasis on the need for a case-by-case analysis in cases involving 

consumer transactions so as to address the unique circumstances inherent in those 

types of contacts). More specifically, this contract involves the purchase of a new 

home. South Carolina has a deeply-rooted and long-standing policy of protecting 

new home buyers. Kennedy, 299 S.C. at 341–44, 384 S.E.2d at 734–36 (rejecting a 

result in which "a builder who constructs defective housing escapes liability while 

a group of innocent new home purchasers are denied relief because of the 
imposition of traditional and technical legal distinctions"; and explaining that in 

the past, when the Court is confronted with a new scenario "not properly disposed 

of by our present set of rules," it "[o]nce more[] respond[s] by expanding our rules 

to provide the innocent buyer with protection" (citing Lane v. Trenholm Building 

Co., 267 S.C. 497, 229 S.E.2d 728 (1976))). As we stated over thirty years ago, it 

is "intolerable to allow builders to place defective and inferior construction into the 

stream of commerce." Id. at 344, 384 S.E.2d at 736 (citing Rogers v. Scyphers, 

251 S.C. 128, 135–36, 161 S.E.2d 81, 84 (1968)). Thus, the fact that the 

arbitration agreement contained within the purchase and sale agreement involves

the construction and sale of a new home is relevant to our analysis of this 

consumer transaction.

Generally, courts will not enforce contracts that violate public policy. Carolina 

Care Plan, Inc., 361 S.C. at 555, 606 S.E.2d at 758 (citation omitted).

A refusal to enforce a contract on the grounds of public policy is 

distinguished from a finding of unconscionability; rather than 

focusing on the relationship between the parties and the effect of the 

agreement upon them, public policy analysis requires the court to 

consider the impact of such arrangements upon society as a whole.

17A Am. Jur. 2d Contracts § 238 (Supp. 2021) (citation omitted). Public policy 

may be expressed in constitutional or statutory authority or in judicial decisions. 

White v. J.M. Brown Amusement Co., 360 S.C. 366, 371, 601 S.E.2d 342, 345 

(2004); see also 17A Am. Jur. 2d Contracts § 238 (2016) (explaining courts may 

consider, inter alia, the subject matter of the contract, the strength of the public 

policy, and the likelihood that refusal to enforce the challenged term in the contract 

will further public policy).

Given the pervasive presence of oppressive terms in the arbitration provision, we 

find the severability clause here, in an unconscionable, adhesive home construction 

contract, is unenforceable as a matter of public policy. We are specifically 

concerned that honoring the severability clause here creates an incentive for 

Lennar and other home builders to overreach, knowing that if the contract is found 

unconscionable, a narrower version will be substituted and enforced against an 

innocent, inexperienced homebuyer. Cf. Maria Kalogredis et al., Addressing 

Increasing Uncertainty in the Law of Non-Competes, Ass'n Corp. Couns. 36 (Apr. 

2018), https://www.hangley.com/wp-content/uploads/2018/04/ AddressingIncreasing-Uncertainty-in-the-Law-of-Non-Competes.pdf (expressing a similar 

concern in the context of non-compete agreements); Shotts, 86 So. 3d at 478

(explaining it did not "make sense for a court to remake [the arbitration] agreement 
to excise the offending provisions. Given the nature of the relationship between a 

nursing home and its patient, the courts ought to expect nursing homes to proffer 

form contracts that fully comply with [the law], not to revise them when they are 

challenged to make them compliant. Otherwise, nursing homes have no incentive 

to proffer a fair form agreement." (emphasis added) (citation omitted)); Richard P. 

Rita Pers. Servs. Int'l, Inc. v. Kot, 191 S.E.2d 79, 81 (Ga. 1972) (declining to bluepencil an overly restrictive non-compete agreement because it would encourage 

employers to "fashion truly ominous covenants with confidence that they will be 

pared down and enforced when the facts of a particular case are not unreasonable. 

This smacks of having one's employee's cake, and eating it too." (quoting Harlan 

M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625, 683 

(1960)))12; see also Howard Schultz & Assocs. of the Se., Inc. v. Broniec, 236 

S.E.2d 265, 269 (Ga. 1977) ("It is these very requests which are the reason for 

rejecting severability of employee covenants not to compete. Employers covenant 

for more than is necessary, hope their employees will thereby be deterred from 

competing, and rely on the courts to rewrite the agreements so as to make them 

enforceable if their employees do compete. When courts adopt severability of 

covenants not to compete, employee competition will be deterred even more than it 

is at present by these overly broad covenants against competition.").

Moreover, we do not doubt that "for every [arbitration agreement] that finds its 

way to court, there are thousands that exercise an in terrorem effect on 

[homebuyers] who respect their contractual obligations." Kalogredis, supra, at 36 

 12 We note that prior to 2012, Georgia courts prohibited blue-penciling noncompete agreements under the common law. However, in 2012, Georgia's 

legislature enacted sections 13-8-53 and 13-8-54, permitting—but not requiring—

courts to blue-pencil such agreements. Ga. Code Ann. §§ 13-8-53(d) (2022) ("[A] 

court may modify a covenant that is otherwise void and unenforceable . . . ." 

(emphasis added)); id. § 13-8-54(b) (2022) ("[I]f a court finds that a contractually 

specified restraint does not comply with [the law], then the court may modify the 

restraint provision . . . ." (emphasis added)). Following the statutory enactments, 

Georgia courts have remained reluctant to modify overly burdensome non-compete 

agreements to make them enforceable, as "unreasonable restrictive covenants are 

against Georgia public policy." Belt Power, L.L.C. v. Reed, 840 S.E.2d 765, 770–

71 (Ga. Ct. App. 2020) (finding significant that sections 13-8-53(d) and 13-8-54(b)

gave the court discretion whether to blue-pencil an agreement, and upholding the 

trial court's refusal to blue-pencil the burdensome non-compete agreement in that 

case).
(quoting Blake, supra, at 682). "Because most [homebuyers] simply comply with 

their [arbitration agreements] rather than challenging them in court, the argument 

goes, the law should provide a strong incentive for [home builders] not to 

overreach." Id.

C.

Given that the subject matter of the contract involves new home construction, and 

South Carolina has an extensive history of expanding its common law on contracts 

so as to protect new homebuyers, we find honoring the severability clause here—

particularly because it goes to a material term of the arbitration agreement—would 

violate public policy. Our holding is based primarily upon two factors. First, the 

contract at issue is a contract of adhesion, in which it is "considerably doubtful" 

both parties truly intended a court to sever an unconscionable provision and 

enforce the remainder of the agreement. Second, with respect to the public policy 

considerations inherent in this type of consumer transaction (homebuying), "the 

likelihood that refusal to enforce the bargain or term will further [public] policy" 

is, we hope, high. See 17A Am. Jur. 2d Contracts § 238.

VI.

In sum, we hold the court of appeals correctly limited the scope of the arbitration 

agreement to Section 16 of the purchase and sale agreement, in accordance with

the Prima Paint doctrine. However, while the court of appeals declined to address 

the matter, there are several unconscionable provisions within Section 16, the most 

egregious of which strips Petitioners of their ability to name the parties against 

whom they are asserting their claims in the arbitration proceeding. Because this is 

a contract of adhesion, and because the transaction involves new home 

construction, we decline to sever the unconscionable provisions for public policy 

reasons. It is clear Lennar furnished a grossly one-sided contract and arbitration 

provision, hoping a court would rescue the one-sided contract through a 

severability clause. We refuse to reward such misconduct, particularly in a home 

construction setting. We therefore affirm in part and reverse in part the decision of 

the court of appeals and reinstate the circuit court's denial of Lennar's motion to 

compel. The matter is remanded to the circuit court.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

BEATTY, C.J., HEARN, FEW, JJ., and Acting Justice Blake A. Hewitt, 

concur.