Construction Law

SC Courts Will Not Enforce Arbitration of Unforseen and Outrageous Torts

By Ryan McCabe

    In Chassereau v. Global-Sun Pools, 644 S.E.2d 718 (S.C. 2007),a buyer and seller entered into a contract for the purchase of a swimming pool. The contract contained an agreement to arbitrate any disputes arising out of the contract. The buyer encountered some problems with the pool which the seller refused to correct. Upon this refusal to correct, the buyer simply stopped making the payments on the pool as set out in the contract. After the buyer refused to make payments on the pool, the seller began harassing the buyer by making false defamatory statements about the buyer and also disclosing the buyer?s personal information.

    The buyer subsequently sued the seller for intentional infliction of emotional distress, defamation, and violation of S.C. Code Ann. §16-17-430 (unlawful communication). The seller moved to compel arbitration as was stated in the contract. Both the trial court and the South Carolina Court of Appeals ruled that the motion to compel arbitration be denied. The South Carolina Supreme Court affirmed the lower courts? decision based on the buyer?s inability to foresee the seller?s actions associated with the tort of outrage. This reasoning along with the similar very recent South Carolina Supreme Court ruling in Aiken v. World Fin. Corp. of S.C., 644 S.E.2d 705 (S.C. 2007), led the court rule in favor of the buyer by rejecting the motion to compel arbitration.  The court wrote that when "...uncivilized acts ... arise in the course of performance of contracts containing arbitration clauses, South Carolina courts will not interpret arbitration clauses to apply to such acts which are outrageous and unforeseen."

    The court quoted the following language from its opinion in the Aiken case which summarizes the rule applied in this case:  "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.

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Full post as published by The South Carolina Construction Law Blog on April 01, 2008 (boomark / email).