The district court of South Carolina granted National Home Insurance Company’s (“National”) motion to compel arbitration in a dispute over new home defects. Home Buyers Warranty Corporation (“HBW”) manages a program for home warranties. National provides warranties to home builders associated with this program. Respondent, Ruth Bridges (“Bridges”), obtained a home warranty through HBW. Prior to the expiration of the warranty, Bridges contacted National over alleged structural defects in her home. National originally denied the claim and Bridges subsequently sued. National sought arbitration under the agreement which mandated arbitration for “any claim, dispute, or controversy . . . .”
Procedurally, the court first found that it had subject matter jurisdiction over the dispute as the parties were diverse—National is based in Colorado and Bridges is from South Carolina. The threshold question became whether the Federal Arbitration Act (“FAA”) governed the arbitration provision. This question hinged on whether the HBW warranty involved interstate commerce. The court found that because the HBW warranty was located in South Carolina, that HBW completed the warranty application in Georgia, and because National insured the warranty in Colorado, the FAA applied. Because the FAA applied, National’s motion to compel was granted. However, the court did deny National’s petition to stay the proceedings in South Carolina state court pending arbitration. The court found that “[National] has alleged no facts indicating that the state court would fail to act in accordance with its obligations under the FAA . . .” Additionally, the court’s decision did not preclude National from seeking a similar stay order in the South Carolina state court. National Home Ins. Co., v. Bridges et al., No. 6:15-00112-MGL (D.S.C. Oct. 30, 2015)
This post written by Matthew Burrows, a law clerk at Carlton Fields in Washington, DC.
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