THE STATE OF SOUTH CAROLINA In The Supreme Court

Gregory W. Smith and Ste phanie Smith, Respondents,

v.

D.R. Horton, Inc., Tom's Vi nyl Siding, LLC, Lutzen Construction, Inc., Boozer Lumber Company, All American Roofing, Inc., Myers Landscaping, Inc., Defendants,

of whom D.R. Horton, Inc. is the Petitioner.

Appellate Case No. 2013-001345

ON WRIT OF CERTIORARI TO THE COURT O F APPEALS

Appeal From Dorchester County Edgar W. Dickson, Circuit Court Judge

Opinion No. 27645 Heard March 3, 2015 – Filed July 6, 2016

AFFIRMED

Matthew Kinard Johnson and W. Kyle Dillard, both of Ogletree Deakins Nash S moak & Stewart, PC, of Greenville, for Petitioner.

Phillip Ward Segui, Jr., of Segui Law Firm, of Mt. Pleasant, John T. Chakeris, o f Chakeris Law Firm, andMichael A. Timbes, of T hurmond Kirchner Timbes & Yelverton, PA, both of Charleston, for Respondents.

CHIEF JUSTICE TOAL: D.R. Horton, Inc., asks this Court to reverse the court of appeals' decision in Smith v. D.R. Horton, Inc. , 403 S.C. 10, 742 S.E.2d 37 (Ct. App. 2013), affirming the ci rcuit court's re fusal to compe l arbitration between Gregory and Stephanie Smith (co llectively, the Smiths) and D.R. Horton. We
affirm.

F ACTS /P ROCEDURAL B ACKGROUND

D.R. Horton is a corporation speci alizing in residential constr uction. In March 2005, the Smiths entered in to a home purchase agreement ( the Agreement) with D.R. Horton for the design and construction of a new home in Summerville,
South Carolina.

The Agreement is organized int o numbered paragr aphs and lettere d subparagraphs, and sets forth t he various responsibilities of t he parties prior to and immediately following closing. 1 Paragraph 14 of the Agreement is titled "Warranties and Dispute Resolution," and consists of subparagra phs 14(a) through 14(j). Subparagraphs 14(c) and 14( g) contain provisions stating that the parties agree to arbitrate any claim ar ising out of D.R. Horton's construction of the home, as well as any disputes related t o the warranties contained in the Agreement. However, in the majority of the remaining subparagraphs of para graph 14, D.R. Horton expressly disclaims all wa rranties for the home—includin g the implied warranty of habitability—except for a ten-year structural warra nty. Moreover, subparagraph 14(i) stipulates that D.R. Horton "shall not be li able for monetary damages of any kind, including secondary, consequential, puniti ve, general, special or indirect damages." (Emphasis in original).

In August 2005, D.R. Horton complete d construction of the Smith s' home, and the Smiths closed on the pr operty and received the deed. T hereafter, the Smiths experienced a myriad of pr oblems with the home that resu lted in severe

1 For example, the Agreement requi res the Smiths to obtain suita ble financing to purchase the home prior to the s tart of construction and to dep osit a specified amount of earnest money, and requi res D.R. Horton to convey mar ketable title to the Smiths at the closing.water damage to the property. D.R . Horton attempted to repair the alleged
construction defects on "numerous occasions" during the next five years, but was ultimately unsuccessful.

In 2010, the Smiths filed a cons truction defect case against D. R. Horton and seven subcontractors. In respon se, D.R. Horton filed a motion to compel arbitration. The Smiths opposed the motion, arguing, inter alia , that the arbitration
agreement was unconscionable and therefore unenforceable.

The circuit court denied D.R. Horton's motion to compel arbitra tion, finding that the arbitration agreement was unconscionable. The court b ased its ruling on "a number of oppressive and one-sid ed provisions," including D.R. Horton's attempted waiver of the implie d warranty of habitability, as well as subparagraph 14(i)'s prohibition on awarding money damages of any kind again st D.R. Horton. D.R. Horton made a motion to reconsider pursuant to Rule 59(e), SCACR, but the circuit court again deni ed the motion to compel. 2

D.R. Horton appealed, and the cour t of appeals affirmed the cir cuit court's
order. See Smith , 403 S.C. at 10, 742 S.E.2d at 37 . The court of appeals found the arbitration agreement was uncon scionable, citing subparagraph 1 4(i) and its prohibition on awarding money damages against D.R. Horton. Id. at 15, 742
S.E.2d at 40–41. Further, the court of appeals sua sponte conducted a severability analysis to determine whether subparagraph 14(i) could be sever ed from the remaining provisions of the arbitration agreement. Id. at 17, 742 S.E.2d at 41. The court of appeals ultimately concluded that severing the subpara graph would be inappropriate. Id.

D.R. Horton petitioned the court of appeals for rehearing, asserting that the court of appeals made two funda mental errors. First, D.R. Hort on argued that the court of appeals' unconscionability analysis was flawed because it did not discuss
whether the Smiths lacked a mean ingful choice in entering the a rbitration
agreement. See Simpson v. MSA of Myrtle Beach, Inc. , 373 S.C. 14, 24–25, 644 S.E.2d 663, 668 (2007) (stating that an unconscionability analysis has two prongs,
one of which is whether one of th e parties to the contract lack ed a meaningful

2 In the second order denying D.R. Horton's motion to compel arbitration, the court elaborated on its previous findi ng of unconscionability, findin g that the Agreement was a contract of adhesion, and that the Smiths had significantly less bargaining power than D.R. Horton.choice in agreeing to arbitrate (citing Carolina Care Plan, Inc. v. United HealthCare Servs., Inc. , 361 S.C. 544, 554, 606 S.E.2d 752, 757 (2004); S.C. Code Ann. § 36-2-302(1) (1976))).

Second, D.R. Horton asserted tha t the court of appeals' decisio n violated the United States Supreme Court's holding in Prima Paint Corp. v. Flood & Conklin Manufacturing Co. See 388 U.S. 395, 406 (1967) (hol ding that courts may only consider the threshold question of whether the arbitration agreement is fraudulently induced and thus invalid, not whether the contract as a whole is invalid); see also S.C. Pub. Serv. Auth. v. Great W. Coal (Ky.), Inc. , 312 S.C. 559, 562–63, 437 S.E.2d 22, 24 (1993) (adopting a broad interpretati on of Prima Paint in South Carolina, and holding th at "a party cannot avoid arbit ration through rescission of the entire contract when there is no independent challenge to the arbitration clause" (the Prima Paint doctrine)). In D.R. Horton's view, the arbitration agreement was contai ned exclusively in subparagraph 14(g), and therefore, the court of appeals' consideration of the allegedly one-sided terms in subparagraph 14(i) w as inappropriate. 3

Ultimately, the court of appeals denied the petition for rehear ing, and we granted D.R. Horton's petition fo r a writ of certiorari to revi ew the court of appeals'
decision.

I SSUE

Whether the arbitration ag reement is unconscionable?

S TANDARD OF R EVIEW

Arbitrability determinations a re subject to de novo review. Bradley v. Brentwood Homes, Inc. , 398 S.C. 447, 453, 730 S.E.2d 312, 315 (2012). However,
a circuit court's factual findi ngs will not be reversed on appe al if any evidence reasonably supports the findings. Id. at 453, 730 S.E.2d at 315.

A NALYSIS

3 In conjunction with this argument, D.R. Horton also asserted that a severability analysis was inappropriate because the portions of the Agreemen t that the court of appeals considered severing were not actually part of the arbit ration agreement, i.e., were not part of subparagraph 14(g).I. The Prima Paint Doctrine

As an initial matter, we address D.R. Horton's argument regarding the court of appeals' alleged failure to heed the Prima Paint doctrine. 4

In Prima Paint , the Supreme Court held that to avoid arbitration, a party

must assert a contract ual defense to the a rbitration agreement itself, and not to the
contract as a whole. See 388 U.S. at 406. Thus, for exa mple, a party must allege
that the arbitration agreement is unconscionable, not that the entire contract is
unconscionable. See S.C. Pub. Serv. Auth. , 312 S.C. at 562–63, 437 S.E.2d at 24. Similarly, in conducting an unc onscionability inquiry, courts m ay only consider the provisions of the arbitratio n agreement itself, and not those of the whole

contract.

Here, the parties fundamentally disagree on the application of the Prima

Paint doctrine to the Agreement. D.R . Horton asserts that the arbit ration agreement is wholly contained in subparagraph 14(g). Therefore , according to

D.R. Horton, the Court may not c onsider any of the remaining su bparagraphs of paragraph 14—such as subparagra ph 14(i)'s damages limitation—in determining whether the arbitration agreemen t is unconscionable. We disagr ee.

Like the lower courts, we construe the entirety of paragraph 14 , entitled "Warranties and Dispute Resoluti on," as the arbitration agreement. As the title indicates, all the subparagraphs of paragraph 14 must be read a s a whole to understand the scope of the warra nties and how different disput es are to be handled. The subparagraphs within paragraph 14 contain numerou s crossreferences to one another, intertwining the subparagraphs so as to constitute a single provision.

Thus, in accordance with the Prima Paint doctrine, we find that in determining whether the arbitra tion agreement is unconscionable, we may properly consider the entirety of paragraph 14.

II. Unconscionability

4 As will be explained further, infra , we must address this issue first because it controls which portions of the Ag reement we may properly consid er in conducting our unconscionability analysis."In South Carolina, unconscionability is defined as the absence of meaningful choice on the part of one party due to one-sided con tract provisions, together with terms that are so oppressive that no reasonable person would make them and no fair and honest per son would accept them." Simpson , 373 S.C. at 24– 25, 644 S.E.2d at 668 (citations omitted)). 5

Whether one party lacks a meaningful choice in entering the arbitration agreement at issue typically sp eaks to the fundamental fairness of the bargaining

process. Gladden v. Boykin , 402 S.C. 140, 148, 739 S.E.2d 882, 886 (2013) (quoting Simpson , 373 S.C. at 25, 644 S.E.2d at 6 69). Thus, parties frequently allege they lacked a meaningful choice when the dispute involves an adhesion

contract. See Munoz v. Green Tree Fin. Corp. , 343 S.C. 531, 541, 542 S.E.2d 360, 365 (2001) (defining adhesion cont racts as "standard form contr act[s] offered on a take-it or leave-it basis with terms that are not negotiable"). While adhesion
contracts are not unconscionable per se, courts tend to look up on them with "considerable skepticism" because they give rise to "considerable doubt that any true agreement ever existed to s ubmit disputes to arbitration." Id. at 26–27, 644 S.E.2d at 669–70 (quotation marks omitted). In determining whether a party lacked a meaningful choice to arbitrate, courts should consider

, inter alia , the relative disparity in the partie s' bargaining power, the partie s' relative sophistication, whether the partie s were represented by indepen dent counsel, and whether "'the plaintiff is a s ubstantial business concern.'" Id. (quoting Simpson

, 373 S.C. at 25, 644 S.E.2d at 669).

"We have [] taken judicial cogni zance of the fact that a modern buyer of new residential housing is normally in an unequal bargaining positi on as against the
seller." Kennedy v. Columbia Lumber & Mfg. Co. , 299 S.C. 335, 343, 384 S.E.2d 730, 735–36 (1989); cf. Sapp v. Ford Motor Co. , 386 S.C. 143, 147–48, 687 S.E.2d 47, 49–50 (2009) (stating that S outh Carolina's "courts have sh ifted from following
the doctrine of caveat emptor ('let the buyer beware ') to the doctrine of caveat venditor ('let the seller beware')"). There is no indication in the re cord that the Smiths enjoyed a substantially s tronger bargaining position aga inst D.R. Horton than the average home buyer, or that they were represented by in dependent counsel. Moreover, the Smiths were a single client to a corporation that constructs houses in

5 We note that the court of appeal s addressed only the allegedly oppressive nature
of the terms found in the arbitra tion agreement, but appears no t to have considered
whether the Smiths lacked a mean ingful choice in agreeing to ar bitrate. We caution courts and parties in the future to analyze both prongs of unconscionability.twenty-seven states. Thus, the S miths were also not a substant ial business concern of D.R. Horton, as they did not comprise a large portion of D.R . Horton's clientele.

Accordingly, we find that the S miths lacked a meaningful choice in their ability to negotiate the arbitrati on clause in the Agreement.

Moreover, in considering the actu al provisions of the arbitrati on agreement, we find that D.R. Horton's attemp ts to disclaim implied warrant y claims and prohibit any monetary damages are clearly one-sided and oppr essive. Under the terms of paragraph 14, the only remedy provided for a defect in the home is repair or replacement—options left entirely in the discretion of D.R. Horton. This is no remedy at all because it leaves t he relief to the whim of D.R. Horton while simultaneously allowing no moneta ry recuperation when, as here, the repairs are simply inadequate. We therefore affirm the court of appeals an d hold the arbitration provision is unconsci onable and thus unenforceable. 6

6 Because the arbitration agreem ent does not contain a severability clause, we find the parties did not intend for th e Court to strike unconscionable provisions from the arbitration agreement. Thus, we decline to analyze whether the unconscionable provisions are severable, as doi ng so would be the result of th e Court rewriting the parties' contract rather than e nforcing their stated intentions

. See Simpson , 373
S.C. at 34, 644 S.E.2d at 673.C ONCLUSION

For the foregoing reasons, the decision of the court of appeals is

FFIRMED.

ATTY and HEARN, JJ., concur. KITTREDGE, J., dissenting in a parate opinion in which PLEICONES, C.J. concurs. A

BE

seJUSTICE KITTREDGE: The underlying contract invol ves interstate commerce and, as a result, the Federal Arbitration Act (FAA) controls. Because I believe the majority has not followed cont rolling precedent of the United S tates Supreme Court, I respectfully dissent. In my judgment, state law does not provide a valid basis to avoid enforcing this particular agreement to arbitrate, and the court of appeals erred in upholding the circuit court's re fusal to compe l arbitration. I would

reverse.

I.

This arbitration agreement is s ubject to the FAA, a fact conspi cuously absent in the majority opinion. "'Generally, a ny arbitration agreement affec ting interstate commerce is subject to the FAA.'" Cape Romain Contractor s, Inc. v. Wando E.,

LLC , 405 S.C. 115, 121–22, 747 S. E.2d 461, 464 (2013) (quoting Landers v. Federal Deposit Ins. Co., 402 S.C. 100, 108, 739 S. E.2d 209, 213 (2013)). "The United States Supreme Court 'has p reviously described the [FAA] 's reach expansively as coinciding with t hat of the Commerce Clause.'" Id . at 122, 747 S.E.2d at 464 (quoting Allied–Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 274 (1995)). "Thus, in determining wh ether the FAA applies to a particular arbitration agreement, a court considers whet her the contract concerns a tr ansaction involving
interstate commerce." Id . (citing Episcopal Housing Corp. v. Fed. Ins. Co., 269
S.C. 631, 637, 239 S.E.2d 647, 650 (1977)).

In support of its mo tion to compel arbitration, D.R. Horton sub mitted affidavits from several executives indicating that D.R. Horton is a Delaware corporation with its principal place of business in Texas. These affidavits fur ther establish D.R. Horton is engaged in the residen tial construction business in t wenty-seven states and that many of the building ma terials and supplies used in co nstructing the
Smiths' home in Summerville were obtained from suppliers outsid e South
Carolina. 7 Because the arbitration clause at issue here is included in acontract that evidences a transaction involving interstate commerce, the FAA governs the enforceability of the arbitration provision. See Cape Romain , 405 S.C. at 123–24, 747 S.E.2d at 465 (citing Zabinski v. Bright Acres Assocs., 346 S.C. 580, 594–95, 553 S.E.2d 110, 117–18 (2001); Episcopal Housing, 269 S.C. at 640, 239 S.E.2d 647 S.E.3d at 652) (observing that out-of-state materials used in construction were

7 These materials include rebar , framing materials, wall sheathi ng, windows, gypsum drywall, shingles, cabinets, carpet, vinyl flooring, plumbing fixtures, lighting hardware, and appliances.instrumentalities of interstate commerce); see also Zabinski , 346 S.C. at 594, 553 S.E.2d at 117 (relying upon affi davits in determining whether a transaction involves interstate commerce).

II.

The FAA requires that an arbitra tion agreement "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The United States Supreme Cou rt has construed section 2 of the FAA as permitti ng "agreements to arbitrate to be invalidated by generally applicable contract def enses, such as fraud, duress, or unconscionability." AT & T Mobility LLC v. Concepcion , 131 S. Ct. 1740, 1746 ( 2011). However, this provision of the FAA has been narrowly construed.

Moreover, "[a] recurring question under § 2 [of the FAA] is who should decide whether grounds exist at law or in equity to invalidate an arbi tration agreement."

Preston v. Ferrer , 552 U.S. 346, 353 (2008) (intern al quotations omitted). The United States Supreme Court has de termined that "unless the cha llenge is to the arbitration clause itself, the i ssue of the contract's validity is considered by the
arbitrator in the first instance." Buckeye Check Cashing, Inc. v. Cardegna , 546

U.S. 440, 445–46 (2006) (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co

., 388 U.S. 395 (1697)). Indeed, abse nt a "discreet challenge to the validity of the arbitration clause," federal law establishes that challenges to the validity of contractual provisions "are w ithin the arbitrator's ken." Preston , 552 U.S. at 353–

54.

"[W]hen parties commit to arbitrate contractual disputes, it is a mainstay of the [FAA]'s substantive law that at tacks on the validity of the contract, as distinct from attacks on the validity of the ar bitration clause itself, are t o be resolved by the
arbitrator in the fi rst instance . . . ." Nitro-Lift Techs., LLC, v. Howard , 133 S.Ct. 500, 503 (2012) (inter nal quotation mark s omitted) (citing Preston , 552 U.S. at 349; Prima Paint , 388 U.S. at 403–04). The permissible scope of the initial judicial inquiry is "highly circumscribed" and must relate "spe cifically to the
arbitration clause." Hooters of America, Inc. v. Phillips, 173 F.3d 933, 938 (4th Cir. 1999). If the arbitration provision is found to be valid (or is not challenged), then the validity of the remainde r of the contract is for the a rbitrator to decide. Nitro-Lift , 133 S.Ct. at 503. Moreover, "this arbitration law applies in state as well
as federal courts." Buckeye , 546 U.S. at 446. Simply put, courts—state or federal—may decide onl y the question of whet her the parties val idly agreed toarbitrate the dispute that has a risen; controversies as to the enforceability of any other contractual provision(s)— including those which may be so objectionable as to undermine the contract in its entirety—are to be resolved by the arbitrator.

Here, the majority acknowledges this point of law, as it must. However, the majority nevertheless adopts th e findings of the trial court, w hich circumvent the application of these legal pri nciples by expandi ng the relevant scope of the contractual language at issue to include matters beyond the arb itration provision. This is accomplished by the fiction that the arbitration provis ion is the entirety of Paragraph 14, which contains mor e than 1,800 words. Indeed, th e following is the portion of the parties' contract the majority finds to constitu te the "arbitration provision":

14. WARRANTIES AND DISP UTE RESOLUTION

a. Structural Warranty. At Closing, Seller shall execute and deliver to
Purchaser at no additional cost a warranty from Residential War ranty Corporation ("RWC") or such ot her national warranty provider as Seller may reasonably elect (the "RWC W arranty"). This RWC Warranty w ill provide, at a minimum, a ten (10 ) year structural warranty. The RWC Warranty referred to in this paragraph is the only warranty being made by Seller, except for such warrantie s which may not be disclaimed by
State or Federal law. In addition, Seller hereby assigns to Purchaser all warranties, expressed or implied, which arise or are given by t he manufacturer of any product inst alled in the home built on the Property.

b. RWC Warranty. Purchaser has been, or will be prior to Closing, provided with a copy of the RWC Warranty book on the Ten Year Limited Warranty, which is admi nistered by the Residential Warr anty Corporation. Validation of the RWC Warranty is conditioned upo n the Seller's compliance with all RWC' s enrollment procedures and up on Seller remaining in good sta nding in the RWC Program.

c. The RWC Warranty is provided by Se ller to Purchaser in lieu of all other warranties, verbal agreements , or representations and Seller makes no warranty, express or implie d, as to quality, fitness for a particular purpose, merchantability, ha bitability or otherwise, except as is expressly set forth in the Pr ogram or as otherwise required by
Federal or State law. Particularly, Purchaser understands andagrees that any and all complai nts of any nature in regard to t he property that arise more than 365 days after closing must be
submitted to RWC. Purchaser understands and agrees that the warranties of all app liances and other consumer products instal led in the
home are those of the manufacture r or supplier and same are ass igned to Purchaser, effective on the date of Closing. In any event, Sel ler shall not be liable for any personal injury or other consequential or sec ondary damages and/or losses, which may arise from or out of any and a ll
defects. Except for purchasers of F HA or VA financed homes, Purchaser acknowledges and und erstands that the RWC Warranty includes a provision requiring a ll disputes that arise under th e RWC Warranty to be submitted to binding arbitration. Purchaser has been, or will be given prior to Closing, provided with a copy of the D.R. Horton Warranty manual, "Foundati ons." Purchaser understands a nd agrees to all warranties to their extent as outlined in said ma nual.
Purchaser shall execute an ack nowledgement that Seller makes no warranties express or implied, a s to fitness for a particular p urpose, merchantability, and hab itability as set forth above at Closing , which
statement shall be affixed to Purchaser's deed.

Purchaser Initial(s): s/GS s/SM

d. Exclusions. The following are excluded from all warranties provided by Seller: (i) those matters excl uded in the RWC Warranty docum ents; (ii) those matters excluded in sub-paragraph (f) below, and (ii i) the following matters:

Landscaping, including trees, shrub s, grass and flowers are not covered by any warranty. All grading, fill, landscaping, dispo sition of
trees and control of water flow shall be construc ted and mainta ined at
the sole discretion of Seller prior to Closing. Grading and dr ainage are not covered by any warranty nor will they be maintained or modified by Seller after closin g in any way whatsoever UNLESS t he grading or drainage is found to be in violation of the applicab le provision of the South Carolina Residential Construction Standa rds. Many areas will be left in their n atural state and will not be landscaped in any way. As of th e date and time of Closing, Sel ler shall have no further responsibility for soil erosion, the grow th of grass, death of trees, grass or shrubbery, or soil conditions. Seller isnot liable for trees or shrubs, o r damage or destruction to sam e. Seller makes no warranty whatsoever as to the type, location or amount of trees, which will exist on the pr operty after construction. Se ller will plant grass seeds or install sod , as the case may be, as part o f its construction. Because the growt h of grass seeds and the health of sod is dependent on Purchaser's care and maintenance, no warranty i s provided and all grass is install ed "as-is." Because preventio n of erosion is dependent on Purchase r's proper maintenance of the g rass and sod, Seller provides no warranty for erosion. Purchaser's closing of the sale constitutes an accep tance of Seller' s drainage and erosion controls for the Property, excep t for matters noted on Purchase r's
"Punch list." Seller shall not b e responsible for the correcti on of any leakage or seepage caused by (i) damaged water pipes or mains, (ii) alteration of the landscaping by a party other than Seller (spe cifically including, without limitation, a ny changes whic h cause water to flow toward the dwelling), or (iii) prolonged direction of water aga inst the
outside foundation wall from a spi got, sprinkler, hose, or impr operly maintained gutters or down sp outs. Seller will not warrant any cosmetic defect post-closing un less this condition is listed on the "punch list" prior to Closing. E xamples of "cosmetic defects" include sheetrock dings, dimples and nail pops, paint discoloration, ch ips or irregularities in marble, Formica , or tile. Unless a defect is noted on the "punch list," Seller does not warrant the installation or the quality of any carpet or flooring product (however, note that Seller as signs the manufacturer warranties to Purchaser at Closing).

Purchaser Initial(s): s/GS s/SM

e. Existing Trees: D.R. Horton will make every effort to save as many existing trees as possible during the construction process. Th ose trees that must be removed will be rem oved at the sole discretion of the Area Manager and their Field Manager . D.R. Horton reserves the righ t to remove any trees, which in their judgment may have roots damage d by construction to the extent that the tree would not be expected to live.
Those trees that are in or within close vicinity of the home's footprint or
concrete flatwork area will be r emoved. Additionally, trees th at impede the drainage of the site, or overall community drainage plan wi ll be removed. D.R. Horton does not gua rantee the health, survival or growth of any tree after closing. Repai rs to living trees and removal orreplacement of dead trees at any time after closing is the resp onsibility of the buyer unless requested b efore closing, agreed upon, and noted in writing at the "Pre-settlement Orientation Inspection."

Purchaser Initial(s): s/GS s/SM

f. Landscaping . D.R. Horton does not guarant ee the continued health, growth or life of any landscape components after closing. Surv ival of landscaping components (trees, bus hes, plants, sod, seed etc.) after closing is the buyer's respons ibility. No landscaping items wi ll be replaced or repaired after clo sing unless noted in writing and agreed upon at the "Pre-settlement Orient ation Inspection." Landscapi ng requires a continuous maintenan ce program, which includes prope r watering, fertilization, mowing and weed control. Deficiencies , other than those noted prior to closin g, will not be warranted by D.R . Horton. Upon closing, all maintenance is the responsibility of the buye r. The buyer is responsible for any damage due to neglect or inadequat e maintenance. Wetland, wetland buffers and wooded natural areas throughout the Community will be left "as is." Buyer understan ds that "standing water" beyond 40'-0" of t he home may occur in wetland

, wetland buffers and woode d natural areas. Maintenance and repa ir of
the aforementioned areas are the sole responsibility of the Buy er after closing. Clearing and disturban ce of natural areas in order to provide underground utility services to the home may be necessary. The se areas will be left un-landscaped and a llowed to return to their natur al state. The remaining undisturbed area w ill be left in its natural stat e.

Purchaser Initial(s): s/GS s/SM

g. MANDATORY BINDING ARBITRATION. Purchaser and Seller each agree that, to the maximum extent allowed by law, they des ire to arbitrate all disputes between t hemselves. The list of disputes which
shall be arbitrated in accordan ce with this paragraph include, but are not limited to: (1) any claim arisi ng out of Seller's construction of the home; (2) Seller's performance under any Punch List or Inspection Agr eement; (3) Seller's performance under any warranty contained in this A greement or otherwise; and (4) any other matters as to which Purchaser a nd Seller agree to arbitrate.i. If the arbitration arises out o f a claim arising under the RWC Warranty, the rules, terms and conditions in the RWC Warranty
certificate and related material s delivered to Purchaser shall control.

ii. If the arbitration arises out o f any claim other than a claim under the RWC Warranty, then the arbitration shall be conducted in Charleston/Dorchester/Berkeley County, South Carolina. The arbitrations shall be conducted by an arbitrator or panel of ar bitrators agreed upon by the parties, and t o the extent possible, the pro ceeding shall be conducted under rules, wh ich provide for an expedited hearing. The filing fee for such arbitration shall be paid by the party filing the arbitration demand, b ut the arbitrator shall have th e right to assess or allocate the filing fees and any other costs of the a rbitration as part of the arbitrator's final order. The arbitration refer red to in this paragraph shall be binding and a ny party shall have the right t o seek judicial enforcement of the arbitration award.

Purchaser Initial(s): s/GS s/SM

h. In addition to the rights and ob ligations of each party specif ied in subparagraphs (a)–(d) above, in the event that a bona fide disp ute, as determined by the Seller, should arise between Purchaser and Se ller prior to the Closing Date, and such dispute cannot in good fait h be resolved completely and to the mutual satisfaction of all parti es within ten (10) days after the beginning of the dispute, then Seller s hall have the right, upon written notice to Purch aser, to terminate this Agre ement and return the Earnest Money to Purchaser, and no cause of action s hall
accrue on behalf of Purchaser because of such termination

.

i. Limitation of liability. E XCEPT FOR THE RWC WARRANTY,

AND EXCEPT FOR THE TITLE W ARRANTIES SPECIFIED IN
PARAGRAPH 4 ABOVE , AND EXCEPT FOR ANY WARRANTIES IMPOSED BY LAW, WHICH CANNOT BE DISCLAIMED, SELLER MAKES NO OT HER WARRANTY OF ANY KIND, ALL SUCH OTHER WARRANTIES ARE HEREBY
DISCLAIMED BY SELLER. SE LLER MAKES NO WARRANTY AS

TO MERCHANTABILIT Y OR FITNESS FOR A PARTICULAR PURPOSE, EITHER EXPRESSED OR IMPLIED. THE
EXCLUSIVE REMEDY FOR ANY DEFECT OF ANY ITEM ORCLAIMED DEFECT IN THE HOME IS BY WRITTEN

NOTIFICATION PRIOR TO THE EXPIRATION OF THE
WARRANTY PERIOD. SELLER' S OBLIGATION SHALL BE
THE CORRECTION OF SUCH DEFECT BY REPAIR OR REPLACEMENT, IN ITS DISCRE TION. NO SUCH ACTIONS
TAKEN BY SELLER TO REPAI R OR REPLACE A DEFECT
SHALL EXTEND THE WARRANTY PERIOD. SELLER SHALL

NOT BE LIABLE FOR MONETA RY DAMAGES OF ANY KIND, INCLUDING SECONDARY, CONS EQUENTIAL, PUNITIVE, GENERAL, SPECIAL OR INDIRECT DAMAGES.

j. Requests for warranty service within the first 365 days after closing, must be in writing and faxed, ma iled, or delivered to Seller at Seller's
address as indicated below Selle r's signature on this Agreement . Verbal requests to Seller's staff are not acceptable. Such requests m ust comply with all applicable law and must s tate the nature of the proble m with particularity. Seller has 30 days to determine whether such re quest will
be fulfilled.

(italicization added).

In seeking to avoid arbitration on the basis of unconscionabili ty, the Smiths claimed the italicized language i n the above excerpt represents D.R. Horton's attempt to disclaim certain imp lied warranties and to eliminate liability for monetary damages, the terms of which are unfairly oppressive an d one-sided. However, in opposing arbitrati on, the Smiths do not challenge a ny provision of subparagraph (g) titled "MANDATORY BINDING A RBITRATION." More to the point, the Smiths do not conte nd the specific agreement to arbitrate was
unconscionable.

As noted, federal law requires that unless the claim of unconsc ionability goes to
the arbitration clause itself , the issue of enforceability must be resolved by the arbitrator, not by the courts . Thus, courts can consider uncon scionability challenges only when they relate to the issue of whether the parties agreed to arbitrate disputes in the first place. See Sydnor v. Conseco Fin. Servicing Corp.

, 252 F.3d 302, 305 (4th Cir. 2001) ("Principles of equity may co unsel for invalidation of an arbitration agreement if the grounds for rev ocation relate specifically to the arbitration clause. . . . However, when cl aims allege unconscionability of the contract generally, these issues are d etermined by anarbitrator because the dispute pe rtains to the formation of the entire contract, rather
than the arbitration agreement." (citing Hooters of America , 173 F.3d at 938; Coleman v. Prudential Bache Sec., Inc., 802 F.2d 1350, 1352 (11th Cir. 1986))).

Here, the majority circumvents c ontrolling federa l law by const ruing the entirety of paragraph fourteen—i.e. all ten separately denominated subparag raphs—as comprising the arbitration agre ement. In attempting to justify such a construction, the majority cites no supporting authority, instead reasoning t hat the contract groups warranties and dispute resolution together under a singl e heading "Warranties and Dispute Resolu tion" and that "[ t]he subparagrap hs within paragraph 14 contain numerous cross-references to one another, intertwining the paragraphs so as to constitute a single provision." Indeed, it is only by treating paragraph fourteen as a single, indivisible provision that the majority is able to transform the Smiths' objection to certain warranty and liabili ty disclaimers into a challenge to the arbitration provision, only the latter being proper for judicial rather
than arbitral determination.

I reject the majority's construc tion that the arbitration provi sion is the entirety of paragraph fourteen. In my judgmen t, under well-established state law, paragraph fourteen is comprised of numerous severable provisions, which i nclude not only the parties' mutual promise to settle any disputes through arbi tration, but also various other distinct provision s, including D.R. Horton's prom ise to provide a tenyear structural warranty, D.R. Ho rton's promise to assign appli ance manufacturer warranties to the Smiths, mutual promises regarding which party is responsible for landscaping maintenance at vari ous points in time, and the Smit hs' promise to give written notice of any warranty clai ms in accordance with specif ied procedures, among many other things.

Specifically, I believe the chall enged warranty disclaimers and liability limitations are separate and distinct from th e agreement to arbitrate, in terms of both formatting and subject matter. I ndeed, not only does the parties' chosen paragraph structure and subparagraph deno mination spatially delineate the se provisions as separate from the agreement to a rbitrate, but also the gravamen of each of these terms is distinct and independen tly operative. Consequently, a s a matter of South Carolina law, these provisions ar e properly viewed as discrete terms rather than as a cohesive contractual provision. See Columbia Architectural Grp., Inc. v. Barker

, 274 S.C. 639, 641, 266 S.E.2d 428, 429 (1980) (explaining that a "severable
contract is one in its nature a nd purpose susceptible of divisi on and apportionment, having two or more parts, in respect to matters and things cont emplated andembraced by it, not necessarily dependent upon each other, nor is it intended by the parties that they shall be," a nd finding a lump-sum contract fo r services involved severable provisions despite interdependence of m aterial terms) ; Packard & Field

v. Byrd , 73 S.C. 1, 51 S.E. 678, 680 (1905) (finding contract terms re lating to the seller's promise to deliver shoes and the buyer's promise to pu rchase shoes were distinct and severable, and ther efore enforceable, despite the presence of other contractual provisions which were deemed unenforceable as again st public policy); Beach Co. v. Twillman, Ltd. , 351 S.C. 56, 65, 566 S.E. 2d 863, 867 (Ct. App. 2002) (finding a single subparagraph wa s comprised of three discrete provisions because "separate and distinct rights" we re implicated in each provisio n).

Further, I emphasize the fact that the Smiths separately initia led subparagraph (g)
titled "MANDATORY BINDI NG ARBITRATION" (and four other subparag raphs within paragraph fourteen), whic h in my judgment indicates the parties themselves
viewed these terms as distinct contractual provisions to which they separately
consented. See Schulmeyer v. State Fa rm Fire & Cas. Co. , 353 S.C. 491, 495, 579 S.E.2d 132, 134 (2003) ( noting "[t]he cardina l rule of contract interpretation is to ascertain and give legal effect t o the parties' intentions" (ci tation omitted)); Columbia Architectural Group. , 274 S.C. at 641, 266 S.E. 2d at 429 ("The entirety or severability of a contract dep ends primarily upon the intent of the parties rather than upon the divisibility of th e subject, although the latter aids in determining the intention." (quoting Packard & Field , 73 S.C. at 6, 51 S.E. at 679)); Jaffe v.
Gibbons , 290 S.C. 468, 473, 351 S.E.2d 343, 346 (Ct. App. 1986) (finding a party's act of initialing two paragraphs amounted to a signing and an a cceptance of a counter offer relating to those two provisions). Thus, it is my view that the majority's decision to ignore the obvious divisibility of the multitude of contractual terms within paragraph fourteen contravenes state law.

Moreover, "as a matter of substa ntive federal arbitration law, an arbitration provision is severable from the remainder of the contract." Buckeye Check Cashing , 546 U.S. at 445; see also 6 C.J.S. Arbitration § 11 ("Agreements for
arbitration contained in a contr act are treated as separable pa rts of the contract, so that the illegality of another pa rt of the contract does not nu llify an agreement to arbitrate." (citing Robert Lawrence Co. v. Devonshire Fabrics. Inc ., 271 F.2d 402 (2d Cir. 1959))). The United Stat es Supreme Court has identifi ed an arbitration provision as consisting of the "specific written provision to s ettle by arbitration a controversy." Rent-A-Center, West, Inc. v. Jackson , 561 U.S. 63, 72 (2010) (internal quotation marks omitted). State d differently, as a f unction of federal law, the relevant arbitration provis ion consists of only that portio n of subparagraph (g)in which the parties agree to arbitrate any controversies. Acc ordingly, even if state law justified the majority's fin ding that the entirety of parag raph fourteen
constitutes the relevant arbitrat ion provision (which it does n ot), such a finding would in any event be in conflict with, and therefore preempted by, federal substantive law identifying onl y a portion of subparagraph (g) as the arbitration
agreement. See Concepcion , 563 U.S. at 352 (finding state law rules that conflict
with or "stand as an obstacle to the accomplishment and execution of the full purposes and objectives of [the F AA]" are preempted and invalid ated); see also DirecTV, Inc. v. Imburgia , 136 S.Ct. 463, 468–69 (2015) (citing U.S. Const. art. VI, cl. 2) (reaffirming the holding in Concepcion that state contract principles which conflict with the FAA are preempted).

Because the Smiths fail to raise any challenge to the arbitration provision in subparagraph (g), I would find th e Smiths' claims regarding unconscionability must
be resolved in an arbitral forum , and I would reverse the court of appeals' decision. Cf. Munoz v. Green Tree Fin. Corp. , 343 S.C. 531, 542, 542 S.E.2d 360, 365 (2001) ("An agreement providing for arbitration does not determ ine the remedy for a breach of contract but only the forum in which the remedy for the breach is determined.").

PLEICONES, C.J., concurs.