THE STATE OF SOUTH CAROLINA In The Supreme Court

Ralph Wayne Parsons, Jr., and Louise C. Parsons, Respondents,

v.

John Wieland Homes and Neighborhoods of the Carolinas, Inc., Wells F argo Bank, N.A., and South Carolina Bank & Trust, N.A., Defendants,

Of which John Wieland Ho mes and Neighborhoods of the Carolinas, Inc. is Petitioner.

Appellate Case No. 2014-000782

ON WRIT OF CERTIORARI TO THE COURT O F APPEALS

Appeal from York County Jackson Kimball, III, Special Circuit Court Judge

Opinion No. 27655 Heard May 7, 2015 – Filed August 17, 2016

REVERSED

G. Trenholm Walker and Ian W. Freeman, both of PrattThomas Walker, PA, of Charleston, for Petitioner.Herbert W. Hamilton, of Ha milton Martens Ballou & Carroll, LLC, of Rock Hill, for Respondents.

CHIEF JUSTICE PLEICONES: We granted certiorari to review a Court of Appeals' decision affirming a circ uit court order which denied petitioner's ("JWH") motion to compel arbitration. Parsons v. John Wieland Homes and Neighborhoods of the Carolinas, Inc. , Op. No. 2013-UP-296 (S.C. Ct. App. refiled August 28, 2013). We reverse.

FACTS

In 2002, JWH purchased approxima tely sixty-five acres of land f or the development of a residential s ubdivision. The land was previou sly utilized as a
textile-related industr ial site. Following the purchase, JWH d emolished and
removed all visible evidence of the industrial site and removed various underground pipes, valves, and tanks remaining from the industr ial operations.

JWH then began selling lots and " spec" homes on the sixty-five acres. In 2007, respondents ("the Parsons") execu ted a purchase agreement to bu y a home built and sold by JWH ("the Property"). 1 Paragraph 21 of the purchase agreement for the Property states the purchas er has received and read a copy of the JWH warranty ("Warranty") and consen ted to the terms thereof, inclu ding, without limitation, the terms of the arb itration clause. The Parsons i nitialed below the paragraph. Upon executing the purchase agreement, the Parsons were provided a "Homeowner Handbook" containing the Warranty. The arbitration clause is set forth in paragraph O of the War ranty's General Provisions. The Parsons signed an acknowledgment of receipt of the handbook dated the same date as the purchase
agreement.

In 2008, the Parsons discovered PVC pipes and a metal lined concrete box buried on their Property. The PVC pipes and box contained "black slud ge," which tested

1 The Parsons paid $621,102 for the Property, which was financed by the other
defendants named in the lawsuit.positive as a hazardous substance. JWH entered a cleanup contr act with the South Carolina Department of Health a nd Environmental Control. JWH c ompleted and paid for the cleanup pe r the cleanup contract. 2

The Parsons claim they were unawa re the Property was previously an industrial site and contained hazardous substances. In 2011, the Parsons filed the present lawsuit alleging JWH breached the purchase agreement by failing to disclose defects with the Property, se lling property that was contaminat ed, and selling property with known unde rground pipes. The Parsons further all eged breach of contract, breach of implied warra nties, unfair trade practices, negligent misrepresentation, negligence a nd gross negligence, and fraud.

JWH moved to compel arbitration and dismiss the complaint. The motion asserted
that all of the Parsons' claims a rose out of the purchase agree ment, and the Parsons clearly agreed that all such dis putes would be decided by arbit ration. The circuit
court denied the moti on and found the arbitration clause was un enforceable for two

reasons.

First, the circuit court found that because the arbitration cla use was located within the Warranty booklet, its scope wa s limited to c laims under the Warranty. The
circuit court further found that because the Warranty was limit ed to claims caused by a defect or deficiency in th e design or construction of the home, the Parsons' claims fell outside the scope of the arbitration clause, and, t hus, the arbitration
clause was unenforceable.

Second, the circuit court applied the outrageous torts exception to arbitration
enforcement 3 and found that because the Pars ons alleged outrageous tortious

2 The cleanup cost JWH approxim ately $500,000. In addition to t he PVC pipes and box, the cleanup revealed a t welve-inch cast iron pipe asso ciated with the prior industrial site running the length of the Property. The cleanu p further revealed pipes within the foundation of the Parsons' home, some of which were unable to be removed; therefore, they were ca pped and remain on the Property

.

3 See

, e.g. , Wachovia Bank, Nat. Ass'n v. Blackburn , 407 S.C. 321, 755 S.E.2d 437 (2014); Timmons v. Starkey , 389 S.C. 375, 698 S.E.2d 809 (2010); Partain v. Upstate Auto. Grp. , 386 S.C. 488, 689 S.E.2d 602 (2010); Aiken v. World Fin. Corp. of South Carolina , 373 S.C. 144, 644 S.E.2d 705 (2007); Chassereau v. Global Sun Pools, Inc. , 373 S.C. 168, 644 S.E.2d 718 (2007); Simpson v. Worldconduct, namely, the intentiona l and unforeseeable conduct of J WH in failing to
disclose concealed contamination on the Property, the arbitrati on clause was
unenforceable. 4

The Court of Appeals affirmed t he circuit court's finding that the scope of the
arbitration clause was restricte d to Warranty claims and declin ed to address the circuit court's application of t he outrageous torts exception d octrine.

We granted JWH's petition for a writ of certiorari to review th e Court of Appeals'
decision.

ISSUE

Did the Court of Appeals e rr in affirming the circuit court's ruling that the arbitration clause was
unenforceable?

LAW/ANALYSIS

The Court of Appeals found the ci rcuit court correctly determin ed the arbitration clause was unenforceable. We disagree.

The determination whether a clai m is subject to arbitration is reviewed de novo

. Gissel v. Hart , 382 S.C. 235, 240, 676 S.E.2d 320, 323 (2009). Nevertheless, a circuit court's factual finding s will not be reversed on appeal if any evidence reasonably supports the findings. Simpson v. MSA of Myrtle Beach, Inc. , 373 S.C. 14, 22, 644 S.E.2d 663, 667 (2007) (citing Thornton v. Trident Med. Ctr.,

L.L.C.

, 357 S.C. 91, 94, 592 S.E.2d 50, 51 (Ct. App. 2003)).

The policy of the United States and of South Carolina is to fav or arbitration of disputes. Zabinski v. Bright Acres Assocs. , 346 S.C. 580, 590, 553 S.E.2d 110, 115 (2001). Arbitration is a matter of contract law and general co ntract principles of state law apply to a court's ev aluation of the enforceability o f an arbitration clause. Simpson , 373 S.C. at 24, 644 S.E.2d at 668. (citations omitted).

Fin. Corp. of South Carolina , 373 S.C. 178, 644 S.E.2d 723 (2007); Hatcher v. Edward D. Jones & Co., L.P. , 379 S.C. 549, 666 S.E. 2d 294 (Ct. App. 2008).

4 We note the circuit court did not explain how the outrageous t orts doctrine precluded arbitration of the Parsons' non-tort claims.I. Scope

The Court of Appeals affirmed the trial court's finding that be cause the arbitration
clause was located within the Wa rranty, the scope of the arbitr ation clause was
limited to claims cove red by the Warranty. We hold the Court o f Appeals erred in affirming this finding.

To determine whether an arbitra tion clause applies to a dispute , a court must determine whether the factual al legations underlying the claim are within the scope
of the arbitration clause. Zabinski , 346 S.C. at 597, 553 S.E.2d at 118 (citing

Hinson v. Jusco Co.

, 868 F.Supp. 145 (D.S.C. 1994); S.C. Pub. Serv. Auth. v.

Great W. Coal , 312 S.C. 559, 437 S.E.2d 22 (1993)). The heavy presumption i n favor of arbitrability requires th at when the scope of the arbi tration clause is open to question, a court must decide the question in favor of arbit ration. Landers v. Fed. Deposit Ins. Corp. , 402 S.C. 100, 109, 739 S.E. 2d 209, 213 (2013) (quoting Am. Recovery Corp. v. Comput erized Thermal Imaging, Inc. , 96 F.3d 88, 94 (4th Cir. 1996) (quoting Peoples Sec. Life Ins. Co. v. Monumental Life Ins. Co ., 867 F.2d 809, 812 (4th Cir. 1989))).

Paragraph 21 of the purchase agreement provides, in pertinent part:

21. Warranty and Arbitration . Purchaser and Seller hereby agree that, in c onnection with the sale contemplated by this agreement, Purchaser will be
enrolled in the John Wiela nd Home and Neighborhoods 5-20 Extended Warranty program, booklet revision date 04/06 (JWH Warranty), the JWH Warranty being incorporated herein by re ference . . . . PURCHASER

ACKNOWLEDGES THAT PURCHASER HAS

RECEIVED AND R EAD A COPY OF THE CURRENT
JWH WARRANTY AND C ONSENTS TO THE TERMS THEREOF, I NCLUDING, WITHOUT LIMITATION, THE BIND ING ARBITRATION
PROVISIONS CONTAINED THEREIN. . . .

(Capitalization, bold, and underline in original).

Paragraph O of the Warranty pr ovides, in pertinent part:Mandatory Binding Arbitration . Wieland and Homebuyer(s) will cooperate with one another in avoiding and informally res olving disputes between
them. . . .

Any and all unresolved claims or disputes of any kind or nature between [petitioner] a nd Homebuyer(s) arising out of or relating in any manner to any purchase agreement with Wieland (if any), this warranty, the Home and/or property on which it is construc ted, or otherwise, shall be resolved by final and binding arbitration conducted in accordance with this provision, and such resolution shall be final. This applies only to c laims or disputes that arise after the later of: (a) the issuance of the final certificate o f the occupancy for the home, or (b) the initial closing of the purchase of the Home by the initial Homebuyer(s). This specifically includes , without limitation, claims related to any representati ons, promises or warranties alleged to have been m ade by Wieland or its representatives; rescission of any contract or agreement; any tort; any implied warran ties; any personal injury; and any property damage.

. . . .

WIELAND AND HOMEB UYER(S) HEREBY

ACKNOWLEDGE AND AGREE THAT THE

ARBITRATION PROCEDURE SET FORTH HEREIN
SHALL BE THE SOLE AN D EXCLUSIVE REMEDY
FOR THE RESOLUTION OF ANY AND ALL

DISPUTES ARISING AFTER THE INITIAL CLOSING
OF THE PURCHASE OF THE HOME BY THE INITIAL HOMEBUYER(S). WIELAND AND

HOMEBUYERS HEREBY W AIVE ANY AND ALL OTHER RIGHTS AND REMEDIES AT LAW, INEQUITY OR OTHERWISE WHICH MIGHT
OTHERWISE HAVE BEEN AVAILABLE TO THEM

IN CONNECTION WITH ANY SUCH DISPUTES.

(Capitalization, bold, and underline in original).

The plain and unambiguous language of the arbitration clause provides that all claims, including ones based in w arranty, be subject to arbitra tion. Accordingly, we find the Court of Appeals erre d in affirming the circuit cou rt's finding that
because the arbitration clause wa s located within the Warranty, its scope was
limited to claims cove red by the Warranty. See Jackson Mills, Inc. v. BT Capital Corp. , 312 S.C. 400, 403, 440 S.E.2d 877, 879 (1994) ("Arbitration c lauses are separable from the contracts in which they are imbedded." (quot ing Prima Paint Corp. v. Flood & Conklin , 388 U.S. 395, 402, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967))); see also Zabinski , 346 S.C. at 592, 553 S.E.2d at 116 (finding that like other contracts, arbitration cl auses will be enforced in accord ance with their terms (citing Volt Info. Scis. Inc. v. Board of Trs. , 489 U.S. 468, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989))).

II. Outrageous Torts Exception

In 2007, this Court created the outrageous torts exception doct rine permitting parties whose claims arose out of an opponent's "outrageous" tortious conduct to
avoid arbitration. See generally Aiken v. World Fin. Corp. of South Carolina , 373
S.C. 144, 644 S.E.2d 705 (2007) (establishing, in South Carolin a, the outrageous torts exception to arbitration en forcement). The exception est ablished that outrageous torts, which were unforeseeable to the reasonable co nsumer and legally
distinct from the contractual re lationship betwee n the parties, were not subject to
arbitration. See Aiken , 373 S.C. at 151–52, 644 S.E.2d at 709. While this Court has continued to apply this sta ndalone exception to arbitration enforcement, recent United States Supreme Court preced ent requires us to reexamine its viability.

In AT&T Mobility, L.L.C. v. Concepcion , the Supreme Court reiterated its position that "courts must place arbitrati on agreements on equal footing with other contracts, . . . and enforce them according to their terms[.]" 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (citing Buckeye Check Cash ing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204 , 163 L.Ed.2d 1038 (2006); Volt Info. Scis, Inc.

, 489 U.S. at 478). The Concepcion decision further explained that the Federal Arbitration Act ("FAA") permits arbitration agreements to be invalidatedby "generally applicable contract defenses," such as fraud, duress, or unconscionability, but not by defens es that apply solely to arb itration or that derive their meaning from the fact tha t an agreement to arbitrate is a t issue. 5 See 131 S.Ct. at 1746 (citing Doctor's Assocs., Inc. v. Casarotto , 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996) ( finding courts may not inva lidate arbitration agreements under state laws app licable only to arbitration prov isions); Perry v.
Thomas

, 482 U.S. 483, 492–93, n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (198 7) (finding state law, whether of le gislative or judicial origin, is applicable only if it arose to govern issues concerning contract validity, revocability, and enforceability, and state-law princ iples that take their meanin g from the fact that an arbitration agreement is at i ssue does not comport with the req uirements of the FAA) (citation omitted)); see also Nitro-Lift Techs., L.L.C. v. Howard , --- U.S. ---, 133 S.Ct. 500, 502, 184 L.Ed.2d 328 (2012) (reiterating that st ate supreme courts must adhere to United States Supreme Court's interpretations of the FAA).

The Supreme Court recently reconf irmed the obligation state cou rts have to apply Concepcion , and ensure arbitration agreemen ts are "on equal footing with all other

contracts." See DIRECTV, Inc. v. Imburgia , 136 S. Ct. 463, 468 (2015) ("No one
denies that lower courts must follow this Court's holding in Concepcion

. . . . Lower court judges are certainly free to note their disagreemen t with a decision of this Court. . . But the Supremacy Clause forbids state courts to dissociate
themselves from federal law. . . The Federal Arbitration Act is a law of the United States, and Concepcion is an authoritative interpretation of that Act. Consequently, the judges of eve ry State must follow it." (citin g U.S. Const., Art. VI, cl. 2; Howlett v. Rose , 496 U.S. 356, 371 (1990); Khan v. State Oil Co. , 93 F.3d 1358, 1363–1364 (CA7 1996), vacated , 522 U.S. 3 (1997))). In finding California state courts failed to meet the requirements set for th in Concepcion , and, therefore, the arbitration agre ement at issue was enforceable, the Supreme Court found, in relevant part:

[S]everal considerations l ead us to conclude that the court's interpretation of this arbitration contract is unique,
restricted to that field. . . . The language used by the Court of Appeal focused only on arbitration. . . . Framing that question in suc h terms, rather than in generally applicable terms, s uggests that the Court of

5 It is undisputed that the arbitration clause at issue is governed by the FAA.Appeal could well have mea nt that its holding was limited to the specific subject matter of this contract— arbitration. . . . [T ]here is no other principle invoked by the Court of Appeal that suggests that California courts would reach the same interp retation of [the phrase at issue] in other contexts. . . . The fact that we can find no similar case interpreting [t he phrase at issue] . . . indicates, at the least, that th e antidrafter canon would not
lead California courts to r each a similar conclusion in
similar cases that do not involve arbitration.

DIRECTV , 136 S. Ct. at 469–71 (citing 9 U.S.C. § 2; Buckeye Check Cashing, Inc.

, 546 U.S. at 443; Volt Info. Scis, Inc. , 489 U.S. at 476; Perry , 482 U.S. at 493, n.9).

Analogous to DIRECTV , the application of the outra geous torts exception in South Carolina is "unique," and "restric ted" to the field of arbitrat ion. Comparable to the analysis provided in DIRECTV in finding California courts failed to place arbitration on equal footing with other contracts, the language of every outrageous torts exception case published by this Court has focused explicitly on arbitration. Further, comparable to the analysis in DIRECTV , this Court has never used the terminology associated with, or applied the principle of, the o utrageous torts exception outside the context of arbitration enforcement. 6 Because the outrageous

6 The dissent argues the "outrageous and unforeseeable tort exce ption to arbitration" is a general contra ct principle but fails to cite any cases outside the
realm of arbitration where out rageous and unforeseeable conduct has been applied as an exception to contract enfor cement. This exception was cr eated in 2007, and has only been applied not to void a contract itself, but instea d to change the forum
from arbitration to the courtroo m based on the outrageous manne r in which the underlying contract was breached. The Concepcion Court specifically addressed the issue of state laws that appear to apply to "any" contract, but in practice have a disproportionate impact on arbitr ation clauses, and held such d isproportionate application "stands as an obst acle to the accomplishment of the FAA's objectives." Therefore, if the dissent were correct that the outrageous tort s exception is a general contract principle, it is so disproportionately applied in South Carolina that it unquestionably stands as an obs tacle to the FAA's cited obje ctives in violation of Concepcion

.torts exception is not a general contract principle, but instea d one that has been applied only to arbitration clau ses, I find the exception incon sistent with Concepcion and its supporting fede ral jurisprudence. A ccordingly, to the extent South Carolina cases apply the outrageous torts exception, I wo uld now overrule
those cases and find the trial co urt erred by dete rmining the e xception precluded
enforcement of the arbitration clause. 7

Additionally, the dissent contends our opinion "fails to accura tely relay the facts and holding of [ DIRECTV ]." To clarify, the second a nd third sentences of the

DIRECTV opinion reveal that the questi on before the Supreme Court in DIRECTV was decidedly the same question before this Court: "We here con sider a California
court's refusal to enforce an a rbitration provision in a contra ct. In our view, that decision does not rest 'upon such grounds as exist . . . for th e revocation of any contract,' and we consequently set that judgment aside." See DIRECTV , 136 S.Ct. at 464. Contrary to the dissent's reliance on one of six groun ds provided in

DIRECTV regarding how the California courts erred, our opinion relies o n the grounds which lend gene ral guidance as to determining whether a n arbitration clause is being placed on equal footing with all other contract s. Accordingly,
because the DIRECTV analysis we rely upon is not contingent upon the facts, we need not provide a detaile d recitation thereof.

In regard to the dissent's proposition that Kennedy v. Columbia Lumber & Mfg.

Co. , 299 S.C. 335, 384 S.E.2d 730 (1989), should be extended to ar bitration enforcement, nothing in our opinion impacts a homebuyers rights to sue in warranty or in tort, and we refus e to extend the narrow substan tive holdings in Kennedy to the issue of arbitration enforcement before the Court in th is case.

7 We note that JWH argues the C ourt of Appeals erred by failing to address the trial court's ruling as to the outrageous torts exception doctr ine. Because the Court of Appeals affirmed the circuit court on the scope issue, we fi nd JWH's argument
is without merit. See Futch v. McAllister Towi ng of Georgetown, Inc. , 335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999 ) (citation omitted) (noting an appellate court need not address remaining issues on appeal when the disposition of a prior issue is dispositive). Further, because we find the circuit court erred in its ruling as to the scope of the arbitration clause , we address the outrageous tort s issue without a remand to the Court of Appeals in the interest of judicial econ omy. See Furtick v.

S.C. Dep't of Prob., Parole & Pardon Servs. , 352 S.C. 594, 599, 576 S.E.2d 146,III. Unconscionability

As an additional sustaining gro und, the Parsons ask this Court to find the
arbitration clause is unconscionable. Cf. I'On, L.L.C. v. Town of Mt. Pleasant , 338
S.C. 406, 419–20, 526 S.E.2d 716, 723 (2000) (noting the decisi on to review an additional sustaining ground is discretionary). We find the Pa rsons' arguments as to unconscionability ar e without merit. See Simpson , 373 at 25, 644 S.E.2d at 668– 69 (explaining unconscionability r equires courts to focus gener ally on whether the arbitration clause is geared t owards achieving an unbiased decision by a neutral decision-maker (citing Hooters of Am., Inc. v. Phillips , 173 F.3d 933, 938 (4th Cir. 1999))); Carolina Care Plan, Inc. v. United HealthCare Servs., Inc. , 361 S.C. 544, 554, 606 S.E.2d 752, 757 (2004) (c itation omitted) ("Unconscion ability has been recognized as the absence of meaningful choice on the part of one party due to one-sided contract provisions, toge ther with terms that are so oppressive that no reasonable person would make the m and no fair and honest person would accept them.").

CONCLUSION

We reverse the Court of Appeals' decision upholding the circuit court's finding that
because the arbitration clause wa s located within the Warranty, its scope was
limited to the terms of the Wa rranty. Further, while the major ity of this Court finds the outrageous torts exception to arbitration remains via ble, I would hold the exception cannot survive in light of Concepcion , 131 S.Ct. 1740. Finally, we find the Parsons' unconscionability argument is without merit. Accordingly, we find the Court of Appeals erred in aff irming the circuit court's ref usal to enforce the
arbitration clause.

The Court of Appeals' decision is therefore

REVERSED.

KITTREDGE, J., concu rs. HEARN, J., concurr ing in part and diss enting in part in a separate opinion in wh ich BEATTY, J., concurs. Acting Justice Jean

H. Toal, dissenting in a separate opinion.

149 (2003) (addressing the merits o f a claim in the interest of judicial economy).JUSTICE HEARN : With great respect, I concur in result with the majority. However, I write separately to concur in part and dissent in pa rt from both the majority opinion and the dissent.

I agree with the majority that th e scope of the arbitration cla use covers the claims against JWH. However, I also agree with the dissent tha t the outrageous and unforeseeable torts exception remains a viable principle of law after Concepcion

, 8 because it embodies a generally applicable contract principle: effectuating the intent of the parties. In my opinion, abolish ing the "exception"— allegedly applicable only to arbitration 9 —could lead to absurd results, such as forcing parties to arbitrate behavior that they clearly did not contemplate upon entering the contract or arbitration agreement. See Doe v. Princess Cruise Lines,
Ltd. , 657 F.3d 1204, 1214 (11th Cir. 2011) ("Even though there is [ a] presumption in favor of arbitration, the c ourts are not to twist the langua ge of the contract to achieve a result which is favored by federal policy but contrar y to the intent of the parties." (citation omitted) (int ernal quotation and alteration marks omitted)); see also, e.g.

, Koon v. Fares , 379 S.C. 150, 155, 666 S.E.2d 230, 233 (2008) (explaining a contract "interpretation which establishes the mo re reasonable and probable agreement of the parties should be adopted while an in terpretation leading to an absurd result should be avoided"); cf. Auto Owners Ins. Co. v. Rollison , 378
S.C. 600, 609, 663 S.E.2d 484, 488 (2008) (stating the Court wi ll refuse to interpret statutory language in a manner that would lead to an absurd, and clearly uncontemplated, result (citation omitted)).

8 AT&T Mobility, L.L.C. v. Concepcion , 563 U.S. 333 (2011).

9 To the extent the majority may consider this exception only ap plicable to arbitration, I wish to note my disagreement and clarify my unde rstanding of the concept. I believe, despite its name, the legal principles und erlying the outrageous and unforeseeable torts exceptio n are equally applicable to con tracts and arbitration agreements. Thus, if a litigant files a breach of contract suit for behavior not contemplated by the parties upon entering the cont ract, I believe this exception would provide the opposing party a defense to the bre ach of contract claim. Similarly, if a litigant attempts to defend himself by asserting an arbitration
defense to a claim that does not fall within the scope of the a rbitration agreement (perhaps because it was not contemplated by the parties upon en tering the contract), I likewise believe this exception could provide the opposing party a
defense to the dema nd for arbitration.Nonetheless, I disagree with the dissent that the outrageous an d unforeseeable torts exception applies here to bar JWH's demand for arbitration. In a residential purchase agreement, it is entirely foreseeable th at a seller would fail to
disclose defects with the property. 10

More importantly, in examining the scope of arbitration agreeme nts, this Court has traditionally considered whether a "significant relat ionship" exists
between the claims asserted and the contract in which the arbit ration clause is
contained. Zabinski v. Bright Acres Assocs. , 346 S.C. 580, 598, 553 S.E.2d 110, 119 (2001); see also Aiken v. World Fin. Corp. of S.C. , 373 S.C. 144, 150, 644 S.E.2d 705, 708 (2007) (stating the significant relationship te st is not a mere "but

for" causation standard). Thus, the Court must determine "whet her the particular
tort claim is so interwoven with the contract that it could not stand alone."

Zabinski , 346 S.C. at 597 n.4, 553 S.E.2d at 119 n.4. In fact, the Cou rt has specifically stated the outrageous and unforeseeable torts exce ption sought only "to distinguish those outrageous to rts, which although factually re lated to the performance of the contract, are legally distinct from the cont ractual relationship between the parties." Aiken , 373 S.C. at 152, 644 S.E.2d at 709.

Accordingly, in this instance, I believe the correct inquiry is whether JWH 's alleged fraud in failing to disclose the presence of hazardous waste on the property

10 Numerous lawsuits in our state involve a seller's failure to d isclose. See, e.g.

, Lawson v. Citizens & S. Nat'l Bank of S.C. , 259 S.C. 477, 193 S.E.2d 124 (1972) (involving a homebuyer's complaint that the seller failed to di sclose that the
residence's lot was filled with unsuitable material and "capped " with clay); Cohen

v. Blessing , 259 S.C. 400, 192 S.E.2d 204 ( 1972) (involving a homebuyer's complaint that the seller deliberately failed to disclose that the residence was infested with insects); Winters v. Fiddie , 394 S.C. 629, 716 S.E.2d 316 (Ct. App. 2011) (involving a homebuyer's comp laint that the seller failed to disclose the presence of toxic mold in a house prior to closing). As such, it cannot come as a complete shock should a particular seller fail to disclose a de fect to a particular buyer. In fact, the General Assembly has expressly provided a remedy in such an event, further supporting the idea that a seller's failure to d isclose is a foreseeable, albeit regrettable, possibility. See, e.g. , S.C. Code Ann. § 27-50-65 (2007) (permitting recovery of actual damages, court costs, and attorn eys' fees against a seller who knowingly fails to disc lose "any material informatio n on the disclosure
statement that he knows to be fa lse, incomplete, or misleading" ).is essentially a freestanding tort that is not significantly re lated to the sales contract and arbitration agreement betwee n JWH and the Parsons. I would find there is a significant relationship between the claim and the contract in which the arbitration agreement is contained. The Parsons could not bring their clai m against JWH absent the sales contract, as the claim is entirely reliant on the parties' statuses under the contract. In other words, absent the sales contract, JWH would be under no duty to disclose these particular defects with the property to the Parsons or any other third-party.

Therefore, I would find the outrageous and unforeseeable torts exception, while a viable principle of law, does not apply to bar JWH's de mand for arbitration here due to the significant relationship between the claims and the contract in which the arbitration agreement is contained. Accordingly, I c oncur in result with the majority to reverse the deni al of JWH's motion to compel ar bitration.

BEATTY, J., concurs.ACTING JUSTICE TOAL: I respectfully dissent. I disagree that the outrageous and unforeseeable tort exception is not a general contract prin ciple. Accordingly, I believe the majority errs in overr uling previous South Carolina cases that apply the exception. Moreover, the majority's opinion undermines the protections the Court has previously exte nded to homebuyers in Kennedy v. Columbia Lumber & Manufacturing Co. 11 and its progeny. See, e.g.

, Smith v. Breedlove , 377 S.C. 415, 422–24, 661 S.E.2d 67, 71–72 (200 8). Therefore, I dissent.

I. General Contract Principles

In "overrul[ing] the judiciary's long-standing refusal to enfor ce agreements to arbitrate," the United States Supreme Court has held numerou s times that arbitration agreements must be placed "upon the same footing as [all] other

contracts." Volt Info. Scis., Inc. v. Bd. of T rs. of Leland Stanford Junior Univ. , 489

U.S. 468, 478 (1989) (cita tions omitted) (internal quotation ma rks omitted). Accordingly, the Federal Arbitration Act (FAA) 12 "imposes certain rules of fundamental importance, includi ng the basic [contract] precept that arbitration 'is a matter of consent, not coercion.'" Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp.

, 559 U.S. 662, 681 (2010) (quoting Volt , 489 U.S. at 479); see also Volt , 489 U.S. at 478 ("[T]he FAA does not requi re parties to arbitrate when t hey have not agreed to do so, nor does it prevent pa rties who do agree to arbitrate from excluding certain claims from the scope of their arbitration agreement." (internal citations omitted)). 13 Similarly, as with all other c ontracts, when a court interpre ts an arbitration agreement, "'the p arties' intentions control'" such that the court's interpretation merely "'give[s] effect to the contractual rights and expectations of the parties.'" Stolt-Nielsen , 559 U.S. at 681–82 (quoting Volt , 489 U.S. at 479; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 626 (1985)).

11 299 S.C. 335, 384 S.E.2d 730 (1989).

12 9 U.S.C. §§ 1–16 (2006).

13 However, given the strong federal and state policies favoring arbitration, a court should generally compel arbitra tion "[u]nless [it] can say with positive assurance that the arbitration clause is not susceptible to any interpret ation that covers the dispute." Partain v. Upstate Auto. Grp. , 386 S.C. 488, 491, 689 S.E.2d 602, 603– 04 (2010).As I read our precedents, the s o-called "outrageous and unfores eeable tort exception to arbitration" is mere ly a label for this Court's ap plication of a long

standing contract principle—eff ectuating the parties' contractual expectations. In the past, when the Court invoke d the exception, it merely recog nized that upon executing the arbitration agreement, the parties did not intend to arbitrate claims arising out of the other party's extreme and unforeseeable cond uct. Aiken v. World Fin. Corp. of S.C. , 373 S.C. 144, 151, 644 S.E.2d 705, 709 (2007) ("Because even the most broadly-worded arbitr ation agreements still have limit s founded in general principles of contract law, this Court will refuse to i nterpret any arbitration agreement as applying to outrageous torts that are unforeseeabl e to a reasonable
consumer in the context of normal business dealings."); see also Landers v. Fed. Deposit Ins. Corp. , 402 S.C. 100, 115, 739 S.E. 2d 209, 217 (2013) ("[E]ven the broadest of [arbitration] clauses have their limitations."); Partain v. Upstate Auto. Grp. , 386 S.C. 488, 492, 689 S.E.2d 602, 604 (2010). In other word s, absent evidence to the contrary, parties do not intend to arbitrate wholly unexpected, outrageous behavior. Timmons v. Starkey , 389 S.C. 375, 379, 698 S.E.2d 809, 811 (2010) (Toal, C.J., dissenting) ( "An arbitration clause does no t cover every potential suit between the signing parties; instead, it only ap plies to those claims foreseeably arising from the c ontractual relationship."). 14 Forcing the parties to
arbitrate claims based on such b ehavior would be contrary to th eir intent in entering the arbitration agre ement, and would impose the court's will upon the parties.

Accordingly, I disagree with the majority's assertions that the outrageous and unforeseeable tort exception to arbitration is not a genera l contract principle. In my view, the exception treats arbitration agreements and con tracts precisely

14 Cf. Landers , 402 S.C. at 115, 739 S.E.2d at 217 (finding claims arbitrable in part because the plaintiff provided a "clear nexus" between the cont ract, its arbitration clause, and the causes of action, such that they were all signi ficantly related); Mibbs, Inc. v. S.C. Dep't of Rev. , 337 S.C. 601, 608, 524 S .E.2d 626, 629 (1999) (finding that contractual duties may be affected by foreseeable actions taken in the future); S.C. Fed. Sav. Bank v. Thornton-Crosby Dev. Co. , 303 S.C. 74, 78–79, 399 S.E.2d 8, 11–12 (Ct. App. 1990) ( acknowledging that a party cou ld defend itself from a breach of contract suit in part if a consequence of the breach was unforeseeable).equally. Specifically, the excep tion ensures that a court will consider the parties '
intentions when it determines the scope of the agreement at iss ue, be it contract or arbitration agreement. See Chassereau v. Global Sun Pools, Inc. , 373 S.C. 168, 172, 644 S.E.2d 718, 720 (2007) ("A lthough we are constrained t o resolve all doubts in favor of arbitration, t his is not an absolute truism intended to replace careful judicial analysis. While actions taken in an arrangeme nt such as the one entered into by these parties might have the potential to gener ate several legal claims and causes of action, we have no doubt that [the plainti ff] did not intend to agree to arbitrate the claims she asserts in the instant case [ because those claims are based on the defendant's allegedly outr ageous and unforeseeable behavior]."); cf. Volt , 489 U.S. at 478 ("[T]he FAA does not require parties to arbit rate when they have not agreed to do so . . . ." (citations omitted)).

In fact, many courts have recogni zed that outrageous and unfore seeable conduct is generally not arbitrable. See, e.g.

, Doe v. Princess Cruise Lines, Ltd.

, 657 F.3d 1204 (11th Cir. 2011) (holding that claims of false im prisonment,
intentional infliction of emotio nal distress, spoliation of evi dence, invasion of privacy, and fraudulent misrepresen tation were outside the scop e of an arbitration clause in an employment agreement between the cruise line and a crewmember who claimed she was drugged and raped by fe llow crewmembers); cf. Landers v. Fed. Deposit Ins. Corp. , 402 S.C. 100, 108, 739 S.E.2d 209, 213 (2013) ("Whether a party has agreed to arbitrate an issue is a matter of contract interpretation and a party cannot be required to subm it to arbitration any dispute w hich he has not agreed so to submit." (emphasis added) (quoting Am. Recovery Corp. v. Computerized Thermal Imaging, Inc. , 96 F.3d 88, 92 (4th Cir. 1996) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co. , 363 U.S. 574, 582 (1960))) (internal marks omitted)). The majority suggests that considering the scope of the arbitration agreement is a new concept "created in 2007," and that South Carolina disproportionately invalidates arbitration agree ments based on conduct falling outside the scop e of the contract. I strongly disagree with this
contention. Cf. Stolt-Nielsen , 559 U.S. at 684 (rejecting the view that once an
entitlement to arbitration is est ablished, any claim may be arbitrated). Merely
because this Court attributed a f ormal label to the concept of considering the scope of an arbitration agreement is no reason to invalidate the rati onale underlying the
label.

It appears that the majority approves of considering the partie s' intentions in determining the scope of the agre ement, but takes issue with th e exception becauseof its label—the outrageous and unforeseeable tort exception to arbitration

. However, this label is a misnomer. The analysis underlying the exception— defining the scope of the agreem ent by effectuating the parties ' contractual expectations—is equally applicable to contracts and arbitration agreements.

Accordingly, I disagree that the Court should abolish this anal ytical process in future cases. Abolishing the outrageous and unforeseeable t ort exception effectively places arbitration ag reements in a position of vast superiority to all other contracts. In essence, a rbitration agreements now become "super contracts," in which the parties' intentions in outlining the scope of thei r agreement are irrelevant, and courts must now indiscriminately send parties t o arbitration regardless of their intentions. As stated previously, this bli nd imposition of judicial might on the parties not only lacks a legal foundation , but takes the Supreme Court's directives to en force arbitration agreements to irrational lengths.

See Stolt-Nielsen , 559 U.S. at 684 ("It falls to c ourts and arbitrators to give effect to the[] contractual limitations, and when doing so, courts and arbitrators must not lose sight of the purpos e of the exercise: to give effect to the intent of the parties ." (emphasis added)). 15

15 In an effort to shore up its analysis, the majority cites to t he recent Supreme Court holding in DIRECTV, Inc. v. Imburgia , 136 S. Ct. 463 (2015). However, despite its use of selective quotes from the opinion, the major ity fails to accurately relay the facts and holding of that case. As the Imburgia opinion sets forth in detail, in 2005, the California S upreme Court held that a waiver of class arbitration
in a consumer contract of adhesion is unconscionable under Cali fornia law, and
thus unenforceable. Id. at 466 (quoting Discover Bank v. Superior Court , 113 P.3d 1100 (Cal. 2005)). However, in AT&T Mobility L.L.C. v. Concepcion , the Supreme Court specifically invalidated California's so-called Discover Bank rule, holding that it was preempted by the FAA because it stood "'as an obstacle to the accomplishment and execution of the full purposes and objective s of Congress.'"

Id. (quoting AT&T Mobility L.L.C. v. Concepcion , 563 U.S. 333, 352 (2011)). Nonetheless, in Imburgia , the California Court of Appeal held that California law
"'would find the class action wa iver unenforceable,'" citing to the Discover Bank
rule. Id. at 467 (quoting Imburgia v. DIRECTV, Inc. , 170 Cal. Rptr. 3d 190, 194 (Cal. Ct. App. 2014)).

On appeal, the Supreme Court invalidated the decision of the Ca lifornia Court of Appeal, stating, among various other rationale:II. Application

South Carolina courts have applied the outrageous and unforesee able tort exception sparingly and are relu ctant to declare the tortious c onduct underlying a lawsuit to be unrelated to the contract containing the arbitrat ion agreement. 16 In

Fifth, the Court of Appeal reasoned that invalid state arbitrat ion law, namely the Discover Bank rule, maintained legal force despite this Court's holding in Concepcion . The court stated that "[i]f we apply state law alone to the class action waiver, then the waiv er is unenforceable." And at the end of its opinion, it reiterated t hat "[t]he
class action waiver is unenfor ceable under California law, so t he entire arbitration agreement is unconscionable." But those sta tements do not describe California law. The view that state law retains independent force even after it has been authoritatively invalidated by this Court is one courts are unlikely to accept as a general matter and to apply in other contexts

.
Imburgia , 136 S. Ct. at 470 (emphasis adde d) (internal citations and al teration marks omitted). Thus, Imburgia stands merely for the u nsurprising proposition that the Supremacy Clause forbi ds state courts from ignoring th e specific holdings of the Supreme Court.

16 In fact, this Court has cautioned that the exception should no t be used as an
"end-run" around arbitration clauses. See Partain , 386 S.C. at 494, 689 S.E.2d at

605. Only when the parties truly and clearly did not contemplate arbitrating a particular claim should a court decline to enforce an otherwise proper arbitration agreement on the grounds that the claim is not significantly re lated to the contract.

Id. at 494–95, 689 S.E.2d at 605; compare Landers , 402 S.C. at 100, 739 S.E.2d at 209 (finding the slander and intentional infliction of emotiona l distress claims brought by a man who was fired significantly related to his emp loyment contract that specified grounds and remedies for rightful and wrongful t ermination because
the offensive comments related to the man's purported inability to do his job), with

Partain , 386 S.C. at 488, 689 S.E.2d at 602 (finding that a claim invo lving a "bait
and switch" in relation to a use d car purchase was outrageous a nd unforeseeable and thus was not subject to arbitration), and Chassereau , 373 S.C. at 168, 644 S.E.2d at 718 (finding a claim for extensive public harassment of a customer was not significantly related to the contract to pay for a pool, an d thus was not subject to arbitration).determining whether the excepti on applies, a court should focus on the parties' intent, the foreseeability of a pa rticular claim when the parti es entered into the agreement, and whether or not the specific claims fall within t he scope of the arbitration agreement, either e xpressly or because they signifi cantly relate to the

contract. See Chassereau , 373 S.C. at 172–73, 644 S.E.2d at 720–21.

Here, the gravamen of the complai nt is that JWH failed to discl ose certain defects with the property, incl uding industrial pi pes and a con crete box containing a hazardous substance. As explained further, infra , it is unreasonable and
unforeseeable that JWH would fail to clean up such extreme poll ution on a
residential construction site. Cf. Kennedy , 299 S.C. at 344, 384 S.E.2d at 736 ("We
have made it clear that it would be intolerable to allow builde rs to place defective
and inferior construction into t he stream of commerce." (citing Rogers v. Scyphers

, 251 S.C. 128, 135–36, 161 S.E.2d 81 , 84 (1968))). Therefore, i t is inconceivable that the parties contemplated claims involving hazardous pollut ion on the construction site when executing their arbitration agreement. Accordingly, I would not compel arbitration of these particular claims, as doing so would not fulfill the parties' expectations in enteri ng the arbitration agreement.

III. Residential Construction Arbitration Agreements

Although the primary issue in t his appeal involves the enforcea bility of an arbitration agreement, the entir e lawsuit arose due to extreme defects concealed during JWH's construction of a home. Because the case involves residential construction, the protections thi s Court has previously extende d to homebuyers in Kennedy and the like impose an extra "gl oss" on the relevant analysis, one which the majority overlooks.

South Carolina courts have hist orically been inclined to expand general contract and tort principles to protect innocent homebuyers. See, e.g.

, Kennedy

, 299 S.C. at 343–44, 384 S.E.2d at 735–36; Lane v. Trenholm Bldg. Co. , 267 S.C. 497, 501–03, 229 S.E.2d 728, 730–31 (1976) ("Disparity in the l aw should be founded upon just reason and not t he result of adherence to sta le principles which do not comport with current social conditions."); Rogers v. Scyphers , 251 S.C. 128, 132–34, 135–36, 161 S.E.2d 81, 83 , 84–85 (1968). To that end, South Carolina
courts embraced the maxim caveat venditor , or "seller beware," and abolished the requirement of strict privity between a home purchaser and a ho mebuilder. McCullough v. Goodrich & Pennington Mortg. Fund, Inc. , 373 S.C. 43, 53, 644 S.E.2d 43, 49 (2007); Kennedy , 299 S.C. at 343, 344–45, 384 S.E.2d at 735, 736;see also Sapp v. Ford Motor Co. , 386 S.C. 143, 147–48, 687 S.E.2d 47, 49–50 (2009) (discussing Kennedy and noting that its holdi ng "followed cases from around the country expanding protections afforded to homebuyers and imposing tort liability on resi dential homebuilders"). Thus, in cases involving residential construction contracts, general contract and tort principles oc casionally give way to the State's dual policies of pro tecting the homebuyer and making it easier for that buyer to pursue claims again st the builder or seller.

Because Kennedy and its progeny explicitly apply only to residential
construction contracts , this Court has not previously had occasion to address how this line of cases applies to residential construction arbitration agreements

. However, again, the Supreme Cour t has held numerous times that arbitration agreements must be placed "upon the same footing as [all] other contracts." Volt

, 489 U.S. at 478 (citations omitted) ( internal quotation marks omitted). Thus, I
conclude that South Carolina's longstanding policy of protectin g innocent homebuyers extends to arbitrati on agreements involving resident ial construction as
well. See Perry v. Thomas , 482 U.S. 483, 492–93 n.9 (1987) ("Thus state law, whether of legislative or judicial origin, is applicable [to ar bitration agreements] if that law arose to govern issues concerning the validity, revoca bility, and enforceability of contr acts generally. . . . A court may not, then, in assessing the rights of litigants to enforce an arbitration agreement, constr ue that agreement in a manner different fr om that in which it otherwise construes nonarbitration agreements under state law ." (bold emphasis added)). 17 Accordingly, as in all other residential construction cases, I would extend this Court's protection to the Parsons, as the innocent homebuyers. 18

In the arbitration context, I b elieve this protective "gloss" s pecifically applies to whether the homebuilder's conduct is outrageous, unf oreseeable, and not contemplated by the parties when entering into the residential construction contract. Thus, as applied here, Kennedy and its progeny lead me to find that

17 Were I to conclude that Kennedy 's protections did not extend to homebuyers whose contracts involved an arbitration agreement, I would plac e those arbitration agreements in a position of vast superiority over contracts, ra ther than treating them equal to contracts.

18 In failing to extend Kennedy 's protection to the Parsons here, the majority opinion undermines our extensive precedent in the residential c onstruction context.JWH's failure to disclose the ex treme pollution and defects wit h the property was not only unreasonable, but unfor eseeable as well. As stated, supra , I would therefore refuse to compel arbitr ation between the parties, as claims based on such outrageous conduct by a homebuilder surely were not contemplated by the parties.

IV. Conclusion

I believe the outrage ous and unforeseeable tort exception to ar bitration is merely a label for a general c ontract principle: effectuating the contractual expectations of the parties. Therefore, I would adhere to the Court's previous holdings that the exception may invalidate an arbitration agree ment if certain criteria are met. Further, I w ould extend the protections of Kennedy and its progeny to arbitration agreements involving residential constru ction. Accordingly,
I dissent.