THE STATE OF SOUTH CAROLINA 

In The Supreme Court 

Gregory W. Smith and Stephanie Smith, Respondents, 

v. 

D.R. Horton, Inc., Tom's Vinyl 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 OF 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 Smoak & Stewart, PC, of 

Greenville, for Petitioner. 

Phillip Ward Segui, Jr., of Segui Law Firm, of Mt. 

Pleasant, John T. Chakeris, of Chakeris Law Firm, and 
 

Michael A. Timbes, of Thurmond 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 circuit court's refusal to compel arbitration between 

Gregory and Stephanie Smith (collectively, the Smiths) and D.R. Horton. We 

affirm. 

FACTS/PROCEDURAL BACKGROUND 

D.R. Horton is a corporation specializing in residential construction. In 

March 2005, the Smiths entered into 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 into numbered paragraphs and lettered 

subparagraphs, and sets forth the various responsibilities of the parties prior to and 

immediately following closing.1

 Paragraph 14 of the Agreement is titled 

"Warranties and Dispute Resolution," and consists of subparagraphs 14(a) through 

14(j). Subparagraphs 14(c) and 14(g) contain provisions stating that the parties 

agree to arbitrate any claim arising out of D.R. Horton's construction of the home, 

as well as any disputes related to the warranties contained in the Agreement. 

However, in the majority of the remaining subparagraphs of paragraph 14, D.R. 

Horton expressly disclaims all warranties for the home—including the implied 

warranty of habitability—except for a ten-year structural warranty. Moreover, 

subparagraph 14(i) stipulates that D.R. Horton "shall not be liable for monetary 

damages of any kind, including secondary, consequential, punitive, general, special 

or indirect damages." (Emphasis in original). 

In August 2005, D.R. Horton completed construction of the Smiths' home, 

and the Smiths closed on the property and received the deed. Thereafter, the 

Smiths experienced a myriad of problems with the home that resulted in severe 

1

 For example, the Agreement requires the Smiths to obtain suitable financing to 

purchase the home prior to the start of construction and to deposit a specified 

amount of earnest money, and requires D.R. Horton to convey marketable 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 construction defect case against D.R. Horton and 

seven subcontractors. In response, 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 arbitration, finding 

that the arbitration agreement was unconscionable. The court based its ruling on "a 

number of oppressive and one-sided provisions," including D.R. Horton's 

attempted waiver of the implied warranty of habitability, as well as subparagraph 

14(i)'s prohibition on awarding money damages of any kind against D.R. Horton. 

D.R. Horton made a motion to reconsider pursuant to Rule 59(e), SCACR, but the 

circuit court again denied the motion to compel.2 

D.R. Horton appealed, and the court of appeals affirmed the circuit 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 unconscionable, citing subparagraph 14(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 severed 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 subparagraph would be 

inappropriate. Id. 

D.R. Horton petitioned the court of appeals for rehearing, asserting that the 

court of appeals made two fundamental errors. First, D.R. Horton argued that the 

court of appeals' unconscionability analysis was flawed because it did not discuss 

whether the Smiths lacked a meaningful choice in entering the arbitration 

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 the parties to the contract lacked a meaningful 

2

 In the second order denying D.R. Horton's motion to compel arbitration, the court 

elaborated on its previous finding of unconscionability, finding 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 that the court of appeals' decision violated the 

United States Supreme Court's holding in Prima Paint Corp. v. Flood & Conklin 

Manufacturing Co. See 388 U.S. 395, 406 (1967) (holding 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 interpretation of Prima Paint 

in South Carolina, and holding that "a party cannot avoid arbitration 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 contained exclusively in subparagraph 14(g), and 

therefore, the court of appeals' consideration of the allegedly one-sided terms in 

subparagraph 14(i) was inappropriate.3 

Ultimately, the court of appeals denied the petition for rehearing, and we 

granted D.R. Horton's petition for a writ of certiorari to review the court of appeals' 

decision. 

ISSUE 

Whether the arbitration agreement is unconscionable? 

STANDARD OF REVIEW 

Arbitrability determinations are 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 findings will not be reversed on appeal if any evidence 

reasonably supports the findings. Id. at 453, 730 S.E.2d at 315. 

ANALYSIS 

3 In conjunction with this argument, D.R. Horton also asserted that a severability 

analysis was inappropriate because the portions of the Agreement that the court of 

appeals considered severing were not actually part of the arbitration 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 contractual defense to the arbitration agreement itself, and not to the 

contract as a whole. See 388 U.S. at 406. Thus, for example, 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 unconscionability inquiry, courts may only consider 

the provisions of the arbitration 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 arbitration 

agreement is wholly contained in subparagraph 14(g). Therefore, according to 

D.R. Horton, the Court may not consider any of the remaining subparagraphs of 

paragraph 14—such as subparagraph 14(i)'s damages limitation—in determining 

whether the arbitration agreement is unconscionable. We disagree. 

Like the lower courts, we construe the entirety of paragraph 14, entitled 

"Warranties and Dispute Resolution," as the arbitration agreement. As the title 

indicates, all the subparagraphs of paragraph 14 must be read as a whole to 

understand the scope of the warranties and how different disputes are to be 

handled. The subparagraphs within paragraph 14 contain numerous 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 arbitration 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 Agreement we may properly consider 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 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." 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 speaks 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 669). 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 contracts as "standard form contract[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 upon them with 

"considerable skepticism" because they give rise to "considerable doubt that any 

true agreement ever existed to submit 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 parties' bargaining power, the parties' relative 

sophistication, whether the parties were represented by independent counsel, and 

whether "'the plaintiff is a substantial business concern.'" Id. (quoting Simpson, 

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

"We have [] taken judicial cognizance of the fact that a modern buyer of new 

residential housing is normally in an unequal bargaining position as against the 

seller." 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 South Carolina's "courts have shifted 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 record that the 

Smiths enjoyed a substantially stronger bargaining position against D.R. Horton 

than the average homebuyer, or that they were represented by independent counsel. 

Moreover, the Smiths were a single client to a corporation that constructs houses in 

5

 We note that the court of appeals addressed only the allegedly oppressive nature 

of the terms found in the arbitration agreement, but appears not to have considered 

whether the Smiths lacked a meaningful choice in agreeing to arbitrate. We 

caution courts and parties in the future to analyze both prongs of unconscionability. 
 

 

twenty-seven states. Thus, the Smiths were also not a substantial 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 Smiths lacked a meaningful choice in their 

ability to negotiate the arbitration clause in the Agreement. 

Moreover, in considering the actual provisions of the arbitration agreement, 

we find that D.R. Horton's attempts to disclaim implied warranty claims and 

prohibit any monetary damages are clearly one-sided and oppressive. 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 the relief to the whim of D.R. Horton while 

simultaneously allowing no monetary recuperation when, as here, the repairs are 

simply inadequate. We therefore affirm the court of appeals and hold the 

arbitration provision is unconscionable and thus unenforceable.6 

6

 Because the arbitration agreement does not contain a severability clause, we find 

the parties did not intend for the Court to strike unconscionable provisions from the 

arbitration agreement. Thus, we decline to analyze whether the unconscionable 

provisions are severable, as doing so would be the result of the Court rewriting the 

parties' contract rather than enforcing their stated intentions. See Simpson, 373 

S.C. at 34, 644 S.E.2d at 673. 
CONCLUSION 

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

se
 

 

JUSTICE KITTREDGE: The underlying contract involves interstate commerce 

and, as a result, the Federal Arbitration Act (FAA) controls. Because I believe the 

majority has not followed controlling precedent of the United States 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 refusal to compel arbitration. I would 

reverse. 

I. 

This arbitration agreement is subject to the FAA, a fact conspicuously absent in the 

majority opinion. "'Generally, any arbitration agreement affecting interstate 

commerce is subject to the FAA.'" Cape Romain Contractors, 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 previously described the [FAA]'s reach 

expansively as coinciding with that 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 whether the FAA applies to a particular arbitration 

agreement, a court considers whether the contract concerns a transaction 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 motion to compel arbitration, D.R. Horton submitted affidavits 

from several executives indicating that D.R. Horton is a Delaware corporation with 

its principal place of business in Texas. These affidavits further establish D.R. 

Horton is engaged in the residential construction business in twenty-seven states 

and that many of the building materials and supplies used in constructing the 

Smiths' home in Summerville were obtained from suppliers outside South 

Carolina.7

 Because the arbitration clause at issue here is included in a contract 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 sheathing, 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 affidavits in determining whether a transaction 

involves interstate commerce). 

II. 

The FAA requires that an arbitration 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 Court has construed 

section 2 of the FAA as permitting "agreements to arbitrate to be invalidated by 

generally applicable contract defenses, 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 arbitration agreement." 

Preston v. Ferrer, 552 U.S. 346, 353 (2008) (internal quotations omitted). The 

United States Supreme Court has determined that "unless the challenge is to the 

arbitration clause itself, the issue of the contract's validity is considered by the 

arbitrator in the first instance." Buckeye Check Cashing, Inc. v. Cardegna, 546 

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

388 U.S. 395 (1697)). Indeed, absent a "discreet challenge to the validity of the 

arbitration clause," federal law establishes that challenges to the validity of 

contractual provisions "are within 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 attacks on the validity of the contract, as distinct from 

attacks on the validity of the arbitration clause itself, are to be resolved by the 

arbitrator in the first instance . . . ." Nitro-Lift Techs., LLC, v. Howard, 133 S.Ct. 

500, 503 (2012) (internal quotation marks 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 "specifically 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 remainder of the contract is for the arbitrator 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 only the question of whether the parties validly agreed to 
arbitrate the dispute that has arisen; 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 the findings of the trial court, which circumvent the 

application of these legal principles by expanding the relevant scope of the 

contractual language at issue to include matters beyond the arbitration provision. 

This is accomplished by the fiction that the arbitration provision is the entirety of 

Paragraph 14, which contains more than 1,800 words. Indeed, the following is the 

portion of the parties' contract the majority finds to constitute the "arbitration 

provision": 

14. WARRANTIES AND DISPUTE RESOLUTION 

a. Structural Warranty. At Closing, Seller shall execute and deliver to 

Purchaser at no additional cost a warranty from Residential Warranty 

Corporation ("RWC") or such other national warranty provider as Seller 

may reasonably elect (the "RWC Warranty"). This RWC Warranty will 

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 warranties 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 the 

manufacturer of any product installed 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 administered by the Residential Warranty 

Corporation. Validation of the RWC Warranty is conditioned upon the 

Seller's compliance with all RWC's enrollment procedures and upon 

Seller remaining in good standing in the RWC Program. 

c. The RWC Warranty is provided by Seller to Purchaser in lieu of all 

other warranties, verbal agreements, or representations and Seller 

makes no warranty, express or implied, as to quality, fitness for a 

particular purpose, merchantability, habitability or otherwise, except 

as is expressly set forth in the Program or as otherwise required by 

Federal or State law. Particularly, Purchaser understands and 
agrees that any and all complaints of any nature in regard to the 

property that arise more than 365 days after closing must be 

submitted to RWC. Purchaser understands and agrees that the 

warranties of all appliances and other consumer products installed in the 

home are those of the manufacturer or supplier and same are assigned to 

Purchaser, effective on the date of Closing. In any event, Seller shall not 

be liable for any personal injury or other consequential or secondary 

damages and/or losses, which may arise from or out of any and all 

defects. Except for purchasers of FHA or VA financed homes, 

Purchaser acknowledges and understands that the RWC Warranty 

includes a provision requiring all disputes that arise under the 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, "Foundations." Purchaser understands and 

agrees to all warranties to their extent as outlined in said manual. 

Purchaser shall execute an acknowledgement that Seller makes no 

warranties express or implied, as to fitness for a particular purpose, 

merchantability, and habitability 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 excluded in the RWC Warranty documents; 

(ii) those matters excluded in sub-paragraph (f) below, and (iii) the 

following matters: 

Landscaping, including trees, shrubs, grass and flowers are not 

covered by any warranty. All grading, fill, landscaping, disposition of 

trees and control of water flow shall be constructed and maintained at 

the sole discretion of Seller prior to Closing. Grading and drainage 

are not covered by any warranty nor will they be maintained or 

modified by Seller after closing in any way whatsoever UNLESS the 

grading or drainage is found to be in violation of the applicable 

provision of the South Carolina Residential Construction Standards. 

Many areas will be left in their natural state and will not be 

landscaped in any way. As of the date and time of Closing, Seller 

shall have no further responsibility for soil erosion, the growth of 

grass, death of trees, grass or shrubbery, or soil conditions. Seller is 
not liable for trees or shrubs, or damage or destruction to same. Seller 

makes no warranty whatsoever as to the type, location or amount of 

trees, which will exist on the property after construction. Seller will 

plant grass seeds or install sod, as the case may be, as part of its 

construction. Because the growth of grass seeds and the health of sod 

is dependent on Purchaser's care and maintenance, no warranty is 

provided and all grass is installed "as-is." Because prevention of 

erosion is dependent on Purchaser's proper maintenance of the grass 

and sod, Seller provides no warranty for erosion. Purchaser's closing 

of the sale constitutes an acceptance of Seller's drainage and erosion 

controls for the Property, except for matters noted on Purchaser's 

"Punch list." Seller shall not be responsible for the correction of any 

leakage or seepage caused by (i) damaged water pipes or mains, (ii) 

alteration of the landscaping by a party other than Seller (specifically 

including, without limitation, any changes which cause water to flow 

toward the dwelling), or (iii) prolonged direction of water against the 

outside foundation wall from a spigot, sprinkler, hose, or improperly 

maintained gutters or down spouts. Seller will not warrant any 

cosmetic defect post-closing unless this condition is listed on the 

"punch list" prior to Closing. Examples of "cosmetic defects" include 

sheetrock dings, dimples and nail pops, paint discoloration, chips 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 assigns 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. Those trees 

that must be removed will be removed at the sole discretion of the Area 

Manager and their Field Manager. D.R. Horton reserves the right to 

remove any trees, which in their judgment may have roots damaged 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 removed. Additionally, trees that impede 

the drainage of the site, or overall community drainage plan will be 

removed. D.R. Horton does not guarantee the health, survival or growth 

of any tree after closing. Repairs to living trees and removal or 
replacement of dead trees at any time after closing is the responsibility 

of the buyer unless requested before 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 guarantee the continued health, 

growth or life of any landscape components after closing. Survival of 

landscaping components (trees, bushes, plants, sod, seed etc.) after 

closing is the buyer's responsibility. No landscaping items will be 

replaced or repaired after closing unless noted in writing and agreed 

upon at the "Pre-settlement Orientation Inspection." Landscaping 

requires a continuous maintenance program, which includes proper 

watering, fertilization, mowing and weed control. Deficiencies, other 

than those noted prior to closing, will not be warranted by D.R. Horton. 

Upon closing, all maintenance is the responsibility of the buyer. The 

buyer is responsible for any damage due to neglect or inadequate 

maintenance. Wetland, wetland buffers and wooded natural areas 

throughout the Community will be left "as is." Buyer understands that 

"standing water" beyond 40'-0" of the home may occur in wetland, 

wetland buffers and wooded natural areas. Maintenance and repair of 

the aforementioned areas are the sole responsibility of the Buyer after 

closing. Clearing and disturbance of natural areas in order to provide 

underground utility services to the home may be necessary. These areas 

will be left un-landscaped and allowed to return to their natural state. 

The remaining undisturbed area will be left in its natural state. 

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 desire to 

arbitrate all disputes between themselves. The list of disputes which 

shall be arbitrated in accordance with this paragraph include, but are not 

limited to: (1) any claim arising out of Seller's construction of the home; 

(2) Seller's performance under any Punch List or Inspection Agreement; 

(3) Seller's performance under any warranty contained in this Agreement 

or otherwise; and (4) any other matters as to which Purchaser and Seller 

agree to arbitrate. 
i. If the arbitration arises out of a claim arising under the RWC 

Warranty, the rules, terms and conditions in the RWC Warranty 

certificate and related materials delivered to Purchaser shall control. 

ii. If the arbitration arises out of 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 arbitrators 

agreed upon by the parties, and to the extent possible, the proceeding 

shall be conducted under rules, which provide for an expedited 

hearing. The filing fee for such arbitration shall be paid by the party 

filing the arbitration demand, but the arbitrator shall have the right to 

assess or allocate the filing fees and any other costs of the arbitration 

as part of the arbitrator's final order. The arbitration referred to in this 

paragraph shall be binding and any party shall have the right to seek 

judicial enforcement of the arbitration award. 

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

h. In addition to the rights and obligations of each party specified in 

subparagraphs (a)–(d) above, in the event that a bona fide dispute, as 

determined by the Seller, should arise between Purchaser and Seller 

prior to the Closing Date, and such dispute cannot in good faith be 

resolved completely and to the mutual satisfaction of all parties within 

ten (10) days after the beginning of the dispute, then Seller shall have the 

right, upon written notice to Purchaser, to terminate this Agreement and 

return the Earnest Money to Purchaser, and no cause of action shall 

accrue on behalf of Purchaser because of such termination. 

i. Limitation of liability. EXCEPT FOR THE RWC WARRANTY, 

AND EXCEPT FOR THE TITLE WARRANTIES SPECIFIED IN 

PARAGRAPH 4 ABOVE, AND EXCEPT FOR ANY 

WARRANTIES IMPOSED BY LAW, WHICH CANNOT BE 

DISCLAIMED, SELLER MAKES NO OTHER WARRANTY OF 

ANY KIND, ALL SUCH OTHER WARRANTIES ARE HEREBY 

DISCLAIMED BY SELLER. SELLER MAKES NO WARRANTY AS 

TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR 

PURPOSE, EITHER EXPRESSED OR IMPLIED. THE 

EXCLUSIVE REMEDY FOR ANY DEFECT OF ANY ITEM OR 
CLAIMED 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 DISCRETION. NO SUCH ACTIONS 

TAKEN BY SELLER TO REPAIR OR REPLACE A DEFECT 

SHALL EXTEND THE WARRANTY PERIOD. SELLER SHALL 

NOT BE LIABLE FOR MONETARY DAMAGES OF ANY KIND, 

INCLUDING SECONDARY, CONSEQUENTIAL, PUNITIVE, 

GENERAL, SPECIAL OR INDIRECT DAMAGES. 

j. Requests for warranty service within the first 365 days after closing, 

must be in writing and faxed, mailed, or delivered to Seller at Seller's 

address as indicated below Seller's signature on this Agreement. Verbal 

requests to Seller's staff are not acceptable. Such requests must comply 

with all applicable law and must state the nature of the problem with 

particularity. Seller has 30 days to determine whether such request will 

be fulfilled. 

(italicization added). 

In seeking to avoid arbitration on the basis of unconscionability, the Smiths 

claimed the italicized language in the above excerpt represents D.R. Horton's 

attempt to disclaim certain implied warranties and to eliminate liability for 

monetary damages, the terms of which are unfairly oppressive and one-sided. 

However, in opposing arbitration, the Smiths do not challenge any provision of 

subparagraph (g) titled "MANDATORY BINDING ARBITRATION." More to 

the point, the Smiths do not contend the specific agreement to arbitrate was 

unconscionable. 

As noted, federal law requires that unless the claim of unconscionability goes to 

the arbitration clause itself, the issue of enforceability must be resolved by the 

arbitrator, not by the courts. Thus, courts can consider unconscionability 

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 counsel for 

invalidation of an arbitration agreement if the grounds for revocation relate 

specifically to the arbitration clause. . . . However, when claims allege 

unconscionability of the contract generally, these issues are determined by an 
arbitrator because the dispute pertains 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 controlling federal law by construing the entirety of 

paragraph fourteen—i.e. all ten separately denominated subparagraphs—as 

comprising the arbitration agreement. In attempting to justify such a construction, 

the majority cites no supporting authority, instead reasoning that the contract 

groups warranties and dispute resolution together under a single heading 

"Warranties and Dispute Resolution" and that "[t]he subparagraphs 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 liability disclaimers into a 

challenge to the arbitration provision, only the latter being proper for judicial rather 

than arbitral determination. 

I reject the majority's construction that the arbitration provision is the entirety of 

paragraph fourteen. In my judgment, under well-established state law, paragraph 

fourteen is comprised of numerous severable provisions, which include not only 

the parties' mutual promise to settle any disputes through arbitration, but also 

various other distinct provisions, including D.R. Horton's promise to provide a tenyear structural warranty, D.R. Horton's promise to assign appliance manufacturer 

warranties to the Smiths, mutual promises regarding which party is responsible for 

landscaping maintenance at various points in time, and the Smiths' promise to give 

written notice of any warranty claims in accordance with specified procedures, 

among many other things. 

Specifically, I believe the challenged warranty disclaimers and liability limitations 

are separate and distinct from the agreement to arbitrate, in terms of both 

formatting and subject matter. Indeed, not only does the parties' chosen paragraph 

structure and subparagraph denomination spatially delineate these provisions as 

separate from the agreement to arbitrate, but also the gravamen of each of these 

terms is distinct and independently operative. Consequently, as a matter of South 

Carolina law, these provisions are 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 and purpose susceptible of division and apportionment, 

having two or more parts, in respect to matters and things contemplated and 
embraced by it, not necessarily dependent upon each other, nor is it intended by the 

parties that they shall be," and finding a lump-sum contract for services involved 

severable provisions despite interdependence of material terms); Packard & Field 

v. Byrd, 73 S.C. 1, 51 S.E. 678, 680 (1905) (finding contract terms relating to the 

seller's promise to deliver shoes and the buyer's promise to purchase shoes were 

distinct and severable, and therefore enforceable, despite the presence of other 

contractual provisions which were deemed unenforceable as against 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 was comprised of three discrete provisions because 

"separate and distinct rights" were implicated in each provision). 

Further, I emphasize the fact that the Smiths separately initialed subparagraph (g) 

titled "MANDATORY BINDING ARBITRATION" (and four other subparagraphs 

within paragraph fourteen), which in my judgment indicates the parties themselves 

viewed these terms as distinct contractual provisions to which they separately 

consented. See Schulmeyer v. State Farm Fire & Cas. Co., 353 S.C. 491, 495, 579 

S.E.2d 132, 134 (2003) (noting "[t]he cardinal rule of contract interpretation is to 

ascertain and give legal effect to the parties' intentions" (citation omitted)); 

Columbia Architectural Group., 274 S.C. at 641, 266 S.E.2d at 429 ("The entirety 

or severability of a contract depends primarily upon the intent of the parties rather 

than upon the divisibility of the 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 acceptance 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 substantive 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 contract are treated as separable parts of the contract, so 

that the illegality of another part of the contract does not nullify an agreement to 

arbitrate." (citing Robert Lawrence Co. v. Devonshire Fabrics. Inc., 271 F.2d 402 

(2d Cir. 1959))). The United States Supreme Court has identified an arbitration 

provision as consisting of the "specific written provision to settle by arbitration a 

controversy." Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 72 (2010) 

(internal quotation marks omitted). Stated differently, as a function of federal law, 

the relevant arbitration provision consists of only that portion of subparagraph (g) 
in which the parties agree to arbitrate any controversies. Accordingly, even if state 

law justified the majority's finding that the entirety of paragraph fourteen 

constitutes the relevant arbitration provision (which it does not), such a finding 

would in any event be in conflict with, and therefore preempted by, federal 

substantive law identifying only 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 FAA]" are preempted and invalidated); 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 the 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 determine the remedy for 

a breach of contract but only the forum in which the remedy for the breach is 

determined."). 

PLEICONES, C.J., concurs.