Opinion ID: 1293411
Heading Depth: 2
Heading Rank: 2

Heading: Significant relationship between the underlying claims and the contract containing the arbitration agreement.

Text: World Finance argues that the court of appeals erred in finding that Aiken's claims were not within the scope of the parties' arbitration agreement. We disagree. Both state and federal policy favor arbitration of disputes and unless a court can say with positive assurance that the arbitration clause is not susceptible to any interpretation that covers the dispute, arbitration should generally be ordered. Zabinski v. Bright Acres Assocs., 346 S.C. 580, 596-97, 553 S.E.2d 110, 118-19 (2001). However, arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to submit. Id. at 596, 553 S.E.2d at 118. Given these principles, courts generally hold that broadly-worded arbitration agreements [2] apply to disputes in which a significant relationship exists between the asserted claims and the contract in which the arbitration clause is contained. Id. at 598, 553 S.E.2d at 119 (quoting Long v. Silver, 248 F.3d 309 (4th Cir.2001)). World Finance primarily argues that because Aiken's contracts with World Finance gave the conspirators access to Aiken's information in order to carry out their crimes, there is a significant relationship between Aiken's claims and the underlying loan agreement, thereby warranting arbitration. We find this argument unpersuasive. In our opinion, the relationship asserted by World Finance between Aiken's tort claims and the parties' prior dealings under the loan agreements hardly rises to the level of significant. Applying what amounts to a but-for causation standard essentially includes every dispute imaginable between the parties, which greatly oversimplifies the parties' agreement to arbitrate claims between them. Such a result is illogical and unconscionable. See Seifert v. U.S. Home Corp., 750 So.2d 633, 638 (Fla.1999) ([T]he mere fact that the dispute would not have arisen but for the existence of the contract and consequent relationship between the parties is insufficient by itself to transform a dispute into one `arising out of or relating to' the agreement.). See also The Vestry and Church Wardens of the Church of the Holy Cross v. Orkin Exterminating Co., Inc., 356 S.C. 202, 209, 588 S.E.2d 136, 140 (Ct.App.2003) ([T]he mere fact that an arbitration clause might apply to matters beyond the express scope of the underlying contract does not alone imply that the clause should apply to every dispute between the parties.). The court of appeals also rejected this overly simplified approach. Replying heavily on the fact that Aiken had paid his loans in full when the employees' tortious acts occurred, the court of appeals found that there was no significant relationship between Aiken's tort claims and his loan agreements with World Finance. See Aiken, 367 S.C. at 182-83, 623 S.E.2d at 876. Therefore, the court held that Aiken's claims were not within the scope of the arbitration agreement found in the underlying contract. [3] Although we agree with the ultimate conclusion reached by the court of appeals, we do not consider the timing of the employees' tortious conduct to be relevant to the arbitrability of Aiken's claim. Instead, we pronounce a more definitive rule for determining whether a significant relationship exists between a dispute between parties to a contract and the underlying contract, thereby implicating an arbitration agreement in the contract. 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. [4] In this case, we find the theft of Aiken's personal information by World Finance employees to be outrageous conduct that Aiken could not possibly have foreseen when he agreed to do business with World Finance. Consequently, in signing the agreement to arbitrate, Aiken could not possibly have been agreeing to provide an alternative forum for settling claims arising from this wholly unexpected tortious conduct. [5] Accordingly, we hold that Aiken's claims for unanticipated and unforeseeable tortious conduct by World Finance's employees are not within the scope of the arbitration agreement with World Finance. [6] In establishing the line for claims subject to arbitration, this Court does not seek to exclude all intentional torts from the scope of arbitration. For instance, the parties in the instant case stipulate that a tort claim which essentially alleges a breach of the underlying contract (e.g., breach of fiduciary duty, misappropriation of trade secrets) would be within the contemplation of the parties in agreeing to arbitrate. We only seek 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. See McMahon v. RMS Electronics, Inc., 618 F.Supp. 189, 191 (S.D.N.Y.1985). Our decision today does not ignore the state and federal policies favoring arbitration as a less formal and more efficient means for resolving disputes. See Lackey v. Green Tree Fin. Corp., 330 S.C. 388, 396, 498 S.E.2d 898, 902 (Ct.App.1998). This Court merely seeks, as a matter of public policy, to promote the procurement of arbitration in a commercially reasonable manner. To interpret an arbitration agreement to apply to actions completely outside the expectations of the parties would be inconsistent with this goal.