Court Opinion

ID: 9600491
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:27:47.184695+00
Date Added: 2024-06-11T09:09:29.206597
License: Public Domain

Acting Justice YOUNG.
I concur in Part 1. B. and Part 2 of the majority’s opinion. I respectfully dissent from Part 1. A., in which the majority holds that the Appellant’s complaint does not specifically allege fraud in the inducement of the making of the arbitration clause contained in the contract. The majority finds the complaint alleges fraud in the inducement of only the contract. I disagree. I read the Second Amended Complaint as pleading a cause of action that sufficiently alleges fraud in the inducement of the arbitration clause to comply with precedents of this Court and Rule 12(b)(6), SCRCP. Therefore, I would reverse the trial court’s grant of the Respondents’ Rule 12(b)(6) motion to dismiss and remand to the trial court for further proceedings on that cause of action.
As the majority notes, in S.C. Pub. Serv. Auth. v. Great W. Coal (Ky), Inc., 312 S.C. 559, 563, 437 S.E.2d 22, 24 (1993), this Court adopted the Prima Paint rule, which holds that to avoid arbitration through the rescission of the entire contract, a party must allege fraudulent inducement in the making of the arbitration clause specifically. A party may not avoid arbitration by alleging fraudulent inducement in the making of the contract generally. I find the Appellant has met this burden.
The Appellant’s 21st cause of action in the Second Amended Complaint alleges that the United Respondents10 inserted the arbitration clause into the contract to limit Appellant’s ability *560to discover the extent of the United Respondents’ misconduct and to limit Appellant’s right to recover punitive damages. Specifically, the amended complaint alleges that Bill Martin, an employee of the United Respondents and, allegedly, an agent of Appellant, knew the true reason the United Respondents wanted the arbitration clause inserted, knew of the Appellant’s Board of Directors reliance on him to advise the Board concerning contractual matters, and failed to disclose to the Board why the United Respondents wanted the arbitration clause inserted or of its impact. The complaint alleges that Martin informed the Appellant’s Board that the contract merely changed the method of payment between the parties and that the United Respondents required Martin and other United employees to provide Appellant with false information regarding their true intentions concerning the fulfillment of contract obligations. This cause of action further alleges the United Respondents planned to commit additional torts, breaches of contract and fiduciary duties, as well as other unspecified wrongs. The complaint specifically alleges the United Respondents had the arbitration clause inserted in an effort to prevent the Appellant from discovering these past and future planned wrongdoings, as well as to limit the Appellant’s right to recover punitive damages for this misconduct. Finally, the cause of action alleges the United Respondents required their employees to hide both the reason for the insertion of the arbitration clause and the impact of the clause.
At no point does the Second Amended Complaint allege the Respondents fraudulently induced Appellant into entering the contract generally. This cause of action appears to be carefully drafted and is very specific in its averment of facts that allege the arbitration clause was fraudulently inserted in an attempt by the United Respondents to limit the Appellant’s ability to discover other wrongful acts committed by the United Respondents as well as to limit the Appellant’s right to recover punitive damages for those wrongful acts.
The Appellant’s original complaint and its first amendment would not have survived a S.C. Pub. Serv. Auth. v. Great W. Coal (Ky), Inc. challenge. However, the trial court allowed the Appellant to amend the complaint a second time, and in my opinion this last amendment corrected the earlier defects. The Appellant should not be penalized for these earlier short*561comings when analyzing the Second Amended Complaint. When viewed in a light most favorable to the Appellant as required in a Rule 12(b)(6) motion, the Second Amended Complaint sets forth facts that specifically allege the arbitration clause itself was the subject of the fraudulent inducement, and not the contract generally. Therefore, I would remand the case to the trial court with instructions to proceed on the fraudulent inducement cause of action while staying the remainder of the case until such time as that issue has been resolved.
TOAL, C.J., concurs.

. United Healthcare Services, Inc., United Healthcare Group, Incorporated, and United Healthcare Insurance Co.