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 Fargo Bank, N.A., and South 

Carolina Bank & Trust, N.A., Defendants, 

Of which John Wieland Homes and Neighborhoods of 

the Carolinas, Inc. is Petitioner. 

Appellate Case No. 2014-000782 

ON WRIT OF CERTIORARI TO THE COURT OF 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 Hamilton Martens Ballou & 

Carroll, LLC, of Rock Hill, for Respondents. 

CHIEF JUSTICE PLEICONES: We granted certiorari to review a Court of 

Appeals' decision affirming a circuit 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 approximately sixty-five acres of land for the 

development of a residential subdivision. The land was previously utilized as a 

textile-related industrial site. Following the purchase, JWH demolished and 

removed all visible evidence of the industrial site and removed various 

underground pipes, valves, and tanks remaining from the industrial operations. 

JWH then began selling lots and "spec" homes on the sixty-five acres. In 2007, 

respondents ("the Parsons") executed a purchase agreement to buy a home built 

and sold by JWH ("the Property").1

 Paragraph 21 of the purchase agreement for 

the Property states the purchaser has received and read a copy of the JWH 

warranty ("Warranty") and consented to the terms thereof, including, without 

limitation, the terms of the arbitration clause. The Parsons initialed 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 Warranty'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 sludge," 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 contract with the South 

Carolina Department of Health and Environmental Control. JWH completed and 

paid for the cleanup per the cleanup contract.2 

The Parsons claim they were unaware 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, selling property that was contaminated, and selling 

property with known underground pipes. The Parsons further alleged breach of 

contract, breach of implied warranties, unfair trade practices, negligent 

misrepresentation, negligence and gross negligence, and fraud. 

JWH moved to compel arbitration and dismiss the complaint. The motion asserted 

that all of the Parsons' claims arose out of the purchase agreement, and the Parsons 

clearly agreed that all such disputes would be decided by arbitration. The circuit 

court denied the motion and found the arbitration clause was unenforceable for two 

reasons. 

First, the circuit court found that because the arbitration clause was located within 

the Warranty booklet, its scope was limited to claims under the Warranty. The 

circuit court further found that because the Warranty was limited to claims caused 

by a defect or deficiency in the design or construction of the home, the Parsons' 

claims fell outside the scope of the arbitration clause, and, thus, the arbitration 

clause was unenforceable. 

Second, the circuit court applied the outrageous torts exception to arbitration 

enforcement3

 and found that because the Parsons alleged outrageous tortious 

2

 The cleanup cost JWH approximately $500,000. In addition to the PVC pipes 

and box, the cleanup revealed a twelve-inch cast iron pipe associated with the prior 

industrial site running the length of the Property. The cleanup further revealed 

pipes within the foundation of the Parsons' home, some of which were unable to be 

removed; therefore, they were capped 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. World 
 

 

conduct, namely, the intentional and unforeseeable conduct of JWH in failing to 

disclose concealed contamination on the Property, the arbitration clause was 

unenforceable.4 

The Court of Appeals affirmed the circuit court's finding that the scope of the 

arbitration clause was restricted to Warranty claims and declined to address the 

circuit court's application of the outrageous torts exception doctrine. 

We granted JWH's petition for a writ of certiorari to review the Court of Appeals' 

decision. 

ISSUE 

Did the Court of Appeals err in affirming the circuit 

court's ruling that the arbitration clause was 

unenforceable? 

LAW/ANALYSIS 

The Court of Appeals found the circuit court correctly determined the arbitration 

clause was unenforceable. We disagree. 

The determination whether a claim 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 findings 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 favor 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 contract principles of 

state law apply to a court's evaluation of the enforceability of 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 torts doctrine 

precluded arbitration of the Parsons' non-tort claims. 
 

 

I. Scope 

The Court of Appeals affirmed the trial court's finding that because the arbitration 

clause was located within the Warranty, the scope of the arbitration clause was 

limited to claims covered by the Warranty. We hold the Court of Appeals erred in 

affirming this finding. 

To determine whether an arbitration clause applies to a dispute, a court must 

determine whether the factual allegations 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 in 

favor of arbitrability requires that when the scope of the arbitration clause is open 

to question, a court must decide the question in favor of arbitration. Landers v. 

Fed. Deposit Ins. Corp., 402 S.C. 100, 109, 739 S.E.2d 209, 213 (2013) (quoting 

Am. Recovery Corp. v. Computerized 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 connection with the sale 

contemplated by this agreement, Purchaser will be 

enrolled in the John Wieland Home and Neighborhoods 

5-20 Extended Warranty program, booklet revision date 

04/06 (JWH Warranty), the JWH Warranty being 

incorporated herein by reference . . . . PURCHASER 

ACKNOWLEDGES THAT PURCHASER HAS 

RECEIVED AND READ A COPY OF THE CURRENT 

JWH WARRANTY AND CONSENTS TO THE 

TERMS THEREOF, INCLUDING, WITHOUT 

LIMITATION, THE BINDING ARBITRATION 

PROVISIONS CONTAINED THEREIN. . . . 

(Capitalization, bold, and underline in original). 

Paragraph O of the Warranty provides, in pertinent part: 
 

Mandatory Binding Arbitration. Wieland and 

Homebuyer(s) will cooperate with one another in 

avoiding and informally resolving disputes between 

them. . . . 

Any and all unresolved claims or disputes of any kind or 

nature between [petitioner] and 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 constructed, 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 claims or disputes that arise 

after the later of: (a) the issuance of the final certificate of 

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 representations, promises or warranties 

alleged to have been made by Wieland or its 

representatives; rescission of any contract or agreement; 

any tort; any implied warranties; any personal injury; and 

any property damage. 

. . . . 

WIELAND AND HOMEBUYER(S) HEREBY 

ACKNOWLEDGE AND AGREE THAT THE 

ARBITRATION PROCEDURE SET FORTH HEREIN 

SHALL BE THE SOLE AND 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 WAIVE ANY AND ALL 

OTHER RIGHTS AND REMEDIES AT LAW, IN 
EQUITY 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 warranty, be subject to arbitration. Accordingly, 

we find the Court of Appeals erred in affirming the circuit court's finding that 

because the arbitration clause was located within the Warranty, its scope was 

limited to claims covered by the Warranty. See Jackson Mills, Inc. v. BT Capital 

Corp., 312 S.C. 400, 403, 440 S.E.2d 877, 879 (1994) ("Arbitration clauses are 

separable from the contracts in which they are imbedded." (quoting 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 clauses will be enforced in accordance 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 doctrine 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 Carolina, the outrageous 

torts exception to arbitration enforcement). The exception established that 

outrageous torts, which were unforeseeable to the reasonable consumer and legally 

distinct from the contractual relationship between 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 standalone exception to arbitration enforcement, recent 

United States Supreme Court precedent 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 arbitration 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 Cashing, 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 invalidated 
 

 

 

by "generally applicable contract defenses," such as fraud, duress, or 

unconscionability, but not by defenses that apply solely to arbitration or that derive 

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

agreements under state laws applicable only to arbitration provisions); Perry v. 

Thomas, 482 U.S. 483, 492–93, n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987) 

(finding state law, whether of legislative or judicial origin, is applicable only if it 

arose to govern issues concerning contract validity, revocability, and 

enforceability, and state-law principles that take their meaning from the fact that an 

arbitration agreement is at issue does not comport with the requirements 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 state supreme courts 

must adhere to United States Supreme Court's interpretations of the FAA). 

The Supreme Court recently reconfirmed the obligation state courts have to apply 

Concepcion, and ensure arbitration agreements 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 disagreement 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 every State must follow it." (citing 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 forth in Concepcion, and, 

therefore, the arbitration agreement at issue was enforceable, the Supreme Court 

found, in relevant part: 

[S]everal considerations lead 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 such terms, rather than in 

generally applicable terms, suggests that the Court of 

5

 It is undisputed that the arbitration clause at issue is governed by the FAA. 
 

Appeal could well have meant 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 interpretation of [the phrase at 

issue] in other contexts. . . . The fact that we can find no 

similar case interpreting [the phrase at issue] . . . 

indicates, at the least, that the antidrafter canon would not 

lead California courts to reach 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 outrageous torts exception in South 

Carolina is "unique," and "restricted" to the field of arbitration. 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 outrageous torts 

exception outside the context of arbitration enforcement.6 Because the outrageous 

6

 The dissent argues the "outrageous and unforeseeable tort exception to 

arbitration" is a general contract principle but fails to cite any cases outside the 

realm of arbitration where outrageous and unforeseeable conduct has been applied 

as an exception to contract enforcement. This exception was created in 2007, and 

has only been applied not to void a contract itself, but instead to change the forum 

from arbitration to the courtroom based on the outrageous manner 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 arbitration clauses, and held such disproportionate 

application "stands as an obstacle to the accomplishment of the FAA's objectives." 

Therefore, if the dissent were correct that the outrageous torts exception is a 

general contract principle, it is so disproportionately applied in South Carolina that 

it unquestionably stands as an obstacle to the FAA's cited objectives in violation of 

Concepcion. 
 

 

torts exception is not a general contract principle, but instead one that has been 

applied only to arbitration clauses, I find the exception inconsistent with 

Concepcion and its supporting federal jurisprudence. Accordingly, to the extent 

South Carolina cases apply the outrageous torts exception, I would now overrule 

those cases and find the trial court erred by determining the exception precluded 

enforcement of the arbitration clause.7 

Additionally, the dissent contends our opinion "fails to accurately relay the facts 

and holding of [DIRECTV]." To clarify, the second and third sentences of the 

DIRECTV opinion reveal that the question before the Supreme Court in DIRECTV 

was decidedly the same question before this Court: "We here consider a California 

court's refusal to enforce an arbitration provision in a contract. In our view, that 

decision does not rest 'upon such grounds as exist . . . for the 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 grounds provided in 

DIRECTV regarding how the California courts erred, our opinion relies on the 

grounds which lend general guidance as to determining whether an arbitration 

clause is being placed on equal footing with all other contracts. Accordingly, 

because the DIRECTV analysis we rely upon is not contingent upon the facts, we 

need not provide a detailed 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 arbitration 

enforcement, nothing in our opinion impacts a homebuyers rights to sue in 

warranty or in tort, and we refuse to extend the narrow substantive holdings in 

Kennedy to the issue of arbitration enforcement before the Court in this case. 

7

 We note that JWH argues the Court of Appeals erred by failing to address the 

trial court's ruling as to the outrageous torts exception doctrine. Because the Court 

of Appeals affirmed the circuit court on the scope issue, we find JWH's argument 

is without merit. See Futch v. McAllister Towing 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 torts issue without a 

remand to the Court of Appeals in the interest of judicial economy. 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 ground, 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 decision to review an 

additional sustaining ground is discretionary). We find the Parsons' arguments as 

to unconscionability are without merit. See Simpson, 373 at 25, 644 S.E.2d at 668– 

69 (explaining unconscionability requires courts to focus generally on whether the 

arbitration clause is geared towards 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) (citation omitted) ("Unconscionability has been 

recognized as the absence of meaningful choice on the part of one party due to 

one-sided contract provisions, together with terms that are so oppressive that no 

reasonable person would make them 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 was located within the Warranty, its scope was 

limited to the terms of the Warranty. Further, while the majority of this Court 

finds the outrageous torts exception to arbitration remains viable, 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 affirming the circuit court's refusal to enforce the 

arbitration clause. 

The Court of Appeals' decision is therefore 

REVERSED. 

KITTREDGE, J., concurs. HEARN, J., concurring in part and dissenting in 

part in a separate opinion in which BEATTY, J., concurs. Acting Justice Jean 

H. Toal, dissenting in a separate opinion. 

149 (2003) (addressing the merits of 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 part from both the 

majority opinion and the dissent. 

I agree with the majority that the scope of the arbitration clause covers the 

claims against JWH. However, I also agree with the dissent that 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, abolishing the "exception"— 

allegedly applicable only to arbitration9

—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 courts are not to twist the language of the contract to 

achieve a result which is favored by federal policy but contrary to the intent of the 

parties." (citation omitted) (internal 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 more reasonable and 

probable agreement of the parties should be adopted while an interpretation 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 will 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 applicable to 

arbitration, I wish to note my disagreement and clarify my understanding of the 

concept. I believe, despite its name, the legal principles underlying the outrageous 

and unforeseeable torts exception are equally applicable to contracts and 

arbitration agreements. Thus, if a litigant files a breach of contract suit for 

behavior not contemplated by the parties upon entering the contract, I believe this 

exception would provide the opposing party a defense to the breach 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 arbitration agreement 

(perhaps because it was not contemplated by the parties upon entering the 

contract), I likewise believe this exception could provide the opposing party a 

defense to the demand for arbitration. 
 

 

 

 

Nonetheless, I disagree with the dissent that the outrageous and 

unforeseeable torts exception applies here to bar JWH's demand for arbitration. In 

a residential purchase agreement, it is entirely foreseeable that a seller would fail to 

disclose defects with the property.10 

More importantly, in examining the scope of arbitration agreements, this 

Court has traditionally considered whether a "significant relationship" exists 

between the claims asserted and the contract in which the arbitration 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 test is not a mere "butfor" causation standard). Thus, the Court must determine "whether 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 Court has 

specifically stated the outrageous and unforeseeable torts exception sought only "to 

distinguish those outrageous torts, which although factually related to the 

performance of the contract, are legally distinct from the contractual 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 disclose. 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 disclose 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 complaint 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 defect 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 disclose 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 attorneys' fees against a 

seller who knowingly fails to disclose "any material information on the disclosure 

statement that he knows to be false, incomplete, or misleading"). 
 

 

 

 

is essentially a freestanding tort that is not significantly related to the sales contract 

and arbitration agreement between 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 claim 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 demand for arbitration 

here due to the significant relationship between the claims and the contract in 

which the arbitration agreement is contained. Accordingly, I concur in result with 

the majority to reverse the denial of JWH's motion to compel arbitration. 

BEATTY, J., concurs. 
 

 

 

ACTING JUSTICE TOAL: I respectfully dissent. I disagree that the outrageous 

and unforeseeable tort exception is not a general contract principle. Accordingly, I 

believe the majority errs in overruling previous South Carolina cases that apply the 

exception. Moreover, the majority's opinion undermines the protections the Court 

has previously extended 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 (2008). Therefore, I dissent. 

I. General Contract Principles 

In "overrul[ing] the judiciary's long-standing refusal to enforce agreements 

to arbitrate," the United States Supreme Court has held numerous times that 

arbitration agreements must be placed "upon the same footing as [all] other 

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

U.S. 468, 478 (1989) (citations omitted) (internal quotation marks omitted). 

Accordingly, the Federal Arbitration Act (FAA)12 "imposes certain rules of 

fundamental importance, including 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 require parties to arbitrate when they have not agreed 

to do so, nor does it prevent parties 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 contracts, when a court interprets an 

arbitration agreement, "'the parties' 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 arbitration "[u]nless [it] can say with positive assurance 

that the arbitration clause is not susceptible to any interpretation 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 so-called "outrageous and unforeseeable tort 

exception to arbitration" is merely a label for this Court's application of a longstanding contract principle—effectuating the parties' contractual expectations. In 

the past, when the Court invoked the exception, it merely recognized that upon 

executing the arbitration agreement, the parties did not intend to arbitrate claims 

arising out of the other party's extreme and unforeseeable conduct. 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 arbitration agreements still have limits founded in 

general principles of contract law, this Court will refuse to interpret any arbitration 

agreement as applying to outrageous torts that are unforeseeable 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 words, 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 not cover every 

potential suit between the signing parties; instead, it only applies to those claims 

foreseeably arising from the contractual relationship.").14 Forcing the parties to 

arbitrate claims based on such behavior would be contrary to their intent in 

entering the arbitration agreement, 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 general contract principle. 

In my view, the exception treats arbitration agreements and contracts 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 contract, its arbitration 

clause, and the causes of action, such that they were all significantly 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 could defend itself 

from a breach of contract suit in part if a consequence of the breach was 

unforeseeable). 
equally. Specifically, the exception ensures that a court will consider the parties' 

intentions when it determines the scope of the agreement at issue, 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) ("Although we are constrained to resolve all 

doubts in favor of arbitration, this is not an absolute truism intended to replace 

careful judicial analysis. While actions taken in an arrangement such as the one 

entered into by these parties might have the potential to generate several legal 

claims and causes of action, we have no doubt that [the plaintiff] 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 outrageous and unforeseeable behavior]."); 

cf. Volt, 489 U.S. at 478 ("[T]he FAA does not require parties to arbitrate when 

they have not agreed to do so . . . ." (citations omitted)). 

In fact, many courts have recognized that outrageous and unforeseeable 

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 imprisonment, 

intentional infliction of emotional distress, spoliation of evidence, invasion of 

privacy, and fraudulent misrepresentation were outside the scope of an arbitration 

clause in an employment agreement between the cruise line and a crewmember 

who claimed she was drugged and raped by fellow 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 submit to arbitration any dispute which 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 agreements based on 

conduct falling outside the scope 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 established, any claim may be arbitrated). Merely 

because this Court attributed a formal label to the concept of considering the scope 

of an arbitration agreement is no reason to invalidate the rationale underlying the 

label. 

It appears that the majority approves of considering the parties' intentions in 

determining the scope of the agreement, but takes issue with the exception because 
 

 

 

 

of 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 agreement by effectuating the parties' contractual 

expectations—is equally applicable to contracts and arbitration agreements. 

Accordingly, I disagree that the Court should abolish this analytical process 

in future cases. Abolishing the outrageous and unforeseeable tort exception 

effectively places arbitration agreements in a position of vast superiority to all 

other contracts. In essence, arbitration agreements now become "super contracts," 

in which the parties' intentions in outlining the scope of their agreement are 

irrelevant, and courts must now indiscriminately send parties to arbitration 

regardless of their intentions. As stated previously, this blind imposition of 

judicial might on the parties not only lacks a legal foundation, but takes the 

Supreme Court's directives to enforce arbitration agreements to irrational lengths. 

See Stolt-Nielsen, 559 U.S. at 684 ("It falls to courts and arbitrators to give effect 

to the[] contractual limitations, and when doing so, courts and arbitrators must not 

lose sight of the purpose 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 the 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 majority fails to accurately 

relay the facts and holding of that case. As the Imburgia opinion sets forth in 

detail, in 2005, the California Supreme Court held that a waiver of class arbitration 

in a consumer contract of adhesion is unconscionable under California 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 objectives 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 waiver 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 California 

Court of Appeal, stating, among various other rationale: 
 

 

 

 

 

 

II. Application 

South Carolina courts have applied the outrageous and unforeseeable tort 

exception sparingly and are reluctant to declare the tortious conduct underlying a 

lawsuit to be unrelated to the contract containing the arbitration agreement.16 In 

Fifth, the Court of Appeal reasoned that invalid state arbitration 

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 waiver is 

unenforceable." And at the end of its opinion, it reiterated that "[t]he 

class action waiver is unenforceable under California law, so the 

entire arbitration agreement is unconscionable." But those statements 

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 added) (internal citations and alteration 

marks omitted). Thus, Imburgia stands merely for the unsurprising proposition 

that the Supremacy Clause forbids state courts from ignoring the specific holdings 

of the Supreme Court. 

16 In fact, this Court has cautioned that the exception should not 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 related 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 emotional distress claims 

brought by a man who was fired significantly related to his employment contract 

that specified grounds and remedies for rightful and wrongful termination 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 involving a "bait 

and switch" in relation to a used car purchase was outrageous and 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, and thus was not subject 

to arbitration). 
determining whether the exception applies, a court should focus on the parties' 

intent, the foreseeability of a particular claim when the parties entered into the 

agreement, and whether or not the specific claims fall within the scope of the 

arbitration agreement, either expressly or because they significantly relate to the 

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

Here, the gravamen of the complaint is that JWH failed to disclose certain 

defects with the property, including industrial pipes and a concrete box containing 

a hazardous substance. As explained further, infra, it is unreasonable and 

unforeseeable that JWH would fail to clean up such extreme pollution 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 builders to place defective 

and inferior construction into the stream of commerce." (citing Rogers v. Scyphers, 

251 S.C. 128, 135–36, 161 S.E.2d 81, 84 (1968))). Therefore, it is inconceivable 

that the parties contemplated claims involving hazardous pollution 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 entering the arbitration agreement. 

III. Residential Construction Arbitration Agreements 

Although the primary issue in this appeal involves the enforceability of an 

arbitration agreement, the entire lawsuit arose due to extreme defects concealed 

during JWH's construction of a home. Because the case involves residential 

construction, the protections this Court has previously extended to homebuyers in 

Kennedy and the like impose an extra "gloss" on the relevant analysis, one which 

the majority overlooks. 

South Carolina courts have historically 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 law should be 

founded upon just reason and not the result of adherence to stale 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 homebuilder. 

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 holding "followed cases from 

around the country expanding protections afforded to homebuyers and imposing 

tort liability on residential homebuilders"). Thus, in cases involving residential 

construction contracts, general contract and tort principles occasionally give way to 

the State's dual policies of protecting the homebuyer and making it easier for that 

buyer to pursue claims against 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 Court 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 protecting innocent 

homebuyers extends to arbitration agreements involving residential 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 arbitration agreements] if 

that law arose to govern issues concerning the validity, revocability, and 

enforceability of contracts generally. . . . A court may not, then, in assessing the 

rights of litigants to enforce an arbitration agreement, construe that 

agreement in a manner different from 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 believe this protective "gloss" specifically 

applies to whether the homebuilder's conduct is outrageous, unforeseeable, 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 place those arbitration 

agreements in a position of vast superiority over contracts, rather 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 construction context. 
JWH's failure to disclose the extreme pollution and defects with the property was 

not only unreasonable, but unforeseeable as well. As stated, supra, I would 

therefore refuse to compel arbitration 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 outrageous and unforeseeable tort exception to arbitration is 

merely a label for a general contract 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 agreement if certain 

criteria are met. Further, I would extend the protections of Kennedy and its 

progeny to arbitration agreements involving residential construction. Accordingly, 

I dissent.