Opinion ID: 1280542
Heading Depth: 2
Heading Rank: 3

Heading: Relevant South Carolina Law

Text: This Court has not considered whether or not classwide arbitration may be ordered when the arbitration agreement is silent. Generally, however, this Court favors arbitration of disputes. Heffner v. Destiny, Inc., 321 S.C. 536, 471 S.E.2d 135 (1995). Further, our courts resolve any doubts concerning the scope of arbitrable issues in favor of arbitration. See Towles v. United HealthCare Corp., 338 S.C. 29, 524 S.E.2d 839 (Ct.App.1999). This Court examined the arbitration clause at issue last year in Munoz v. Green Tree Financial Corp, 343 S.C. 531, 542 S.E.2d 360, (2001). In Munoz, this Court held general principles of state law apply to arbitration clauses governed by the FAA. 343 S.C. at 539, 542 S.E.2d at 364 (2001) (citing Doctor's Assoc., Inc. v. Casarotto, 517 U.S. 681, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)). Generally, if the terms of a contract are clear and unambiguous, this Court must enforce the contract according to its terms regardless of its wisdom or folly. Ellis v. Taylor, 316 S.C. 245, 449 S.E.2d 487 (1994). Ambiguous language in a contract, however, should be construed liberally and interpreted strongly in favor of the non-drafting party. Myrtle Beach Lumber Co., Inc. v. Willoughby, 276 S.C. 3, 274 S.E.2d 423 (1981). After all, the drafting party has the greater opportunity to prevent mistakes in meaning. It is responsible for any ambiguity and should be the one to suffer from its shortcomings. Id. The United States Supreme Court has applied this common-law rule of contract construction, construing ambiguous language against the drafting party in a case involving arbitration issues. In Mastrobuono v. Shearson Lehman Hutton, Inc., a suit brought by customers of a securities brokerage firm, the Court permitted an arbitration panel to award punitive damages although the arbitration agreement was silent regarding punitive damages, but contained a choice of law provision which the brokerage firm claimed prohibited the arbitrator from awarding punitive damages. 514 U.S. 52, 115 S.Ct. 1212, 131 L.Ed. 2d 76 (1995). The Court framed the question presented in broad terms, asking whether the award of punitive damages was consistent with the FAA's purpose of ensuring arbitration agreements are enforced according to their terms. Mastrobuono, 514 U.S. at 54, 115 S.Ct. at 1214, 131 L.Ed.2d at 82. The Court found the choice of law provision introduced an ambiguity into an agreement that would otherwise permit punitive damage awards. The Court then resolved the ambiguity against the brokerage firm as the drafting party, based on the federal policy favoring arbitration [17] and the common law rule of contract interpretation construing ambiguous language against the drafting party. Mastrobuono. Although this Court has not addressed whether class-wide arbitrations are permissible when the agreement is silent, this Court has considered whether consolidation of arbitration is permissible. In Episcopal Housing Corp. v. Federal Ins. Co., this Court authorized consolidation of the claims of plaintiff (owner of an apartment complex) against an architect and builder absent contractual or statutory authority. 273 S.C. 181, 255 S.E.2d 451 (1979). In sum, this Court held, [w]hile we recognize that arbitration is a creature of contract, appellant would not be denied its contracted-for right to arbitration; rather the consolidation would provide a logical, expeditious method by which to enforce that right. Episcopal Housing, 273 S.C. at 183-84, 255 S.E.2d at 452. Significantly, the Court considered whether the objecting parties had demonstrated any prejudice which would result from consolidated proceedings and found that they had not. Id. The Court of Appeals applied Episcopal Housing's prejudice analysis in a more recent decision, and this Court has not revisited the issue. Plaza Development Services v. Joe Harden Builder, Inc., 294 S.C. 430, 365 S.E.2d 231 (Ct.App.1988).