United States District Court, E.D. Pennsylvania
JOSEPH AND SAMANTHA CANESTRO, et al.
BEAZER HOMES, USA, INC.
MEMORANDUM RE: MOTION TO DISMISS
are owners of over thirty homes (“Homeowners”).
They are suing the developers (Beazer) for alleged defects in
those homes. Some of the homes are still owned by those who
originally bought them from Beazer. (Their owners are the
“Original Homeowners.”) Others have passed
through more than one owner. (Their owners are the
“Subsequent Homeowners.”) The Homeowners'
claims arise under the Purchase and Sale agreements
(“P&Ses”), the Limited Warranties,
moves to dismiss on the grounds that, per the
terms of the P&Ses and Limited Warranties,
the whole suit must be arbitrated. The Court agrees, as to
arbitration, and will stay the case but not dismiss it.
Homeowners respond that the arbitration clauses are
unconscionable: substantively unconscionable, because the
arbitration procedures are intended and designed to benefit
only Beazer; and procedurally unconscionable, because the
contracts are contracts of adhesion. In the alternative, they
contend that even if the Court agrees that arbitration is
appropriate, it should stay the litigation rather than
claims clearly come within the substantive scope of the
P&Ses' and (ten year) Limited Warranties'
arbitration clauses. Although both clauses' scopes are
broad enough to reach the claims at issue,  there are two key
• Only the Limited Warranty contains a clause which
clearly binds the Subsequent Homeowners. See Def.
Mem. Ex. D § VIII.B. There is no comparable clause in
the P&S. Nor does Beazer's briefing
ever explicitly contend that the P&Ses bind the
Subsequent Homeowners. At oral argument, Beazer agreed that
the P&Ses do not bind the Subsequent Homeowners.
• The Limited Warranty also provides that “[a]ny
dispute concerning the interpretation of this arbitration
provision or the arbitratability [sic] of any issue” is
subject to binding arbitration. See Def. Mem. Ex. D
§ VII.F. There is no apparent comparable clause in the
the arbitration clauses provide for appeals to an arbitration
review panel, see Def. Mem. Ex. B § 21(a),
while others provide that the award of the arbitrator is
final, see Def. Mem. Ex. A § 28A, Ex. D §
VII. As the Court stated at the oral argument this date, that
if the agreements do not specify as to the entity that would
hear any appeals, then this Court would likely appoint
arbitrators from this Court's arbitration panel to
determine any appeal.
of the breadth of the Limited Warranties' arbitration
clauses, and because the Limited Warranties commit decisions
about arbitrability to the arbitrator, the Court will order
the parties into arbitration and allow the arbitrator to
determine which claims are arbitrable and under which
agreement. See Henry Schein, Inc. v. Archer & White
Sales, Inc., 139 S.Ct. 524, 531 (2019) (quoting
First Options of Chi., Inc. v. Kaplan, 514 U.S. 938,
stated at oral argument this date, the parties shall proceed,
at least initially, under the terms of the Limited Warranty
which presumably covers all claims and applies to both the
original homeowners and the subsequent homeowners and
designates MARS as administrator to have the arbitrator
selected and to arrange for the hearing. As the Court also
stated, procedural fairness and transparency as to the
selection process, and the contents of the hearing are
essential. There is no reason for the Court to doubt that the
arbitrators will render a fair result based on the evidence
that is produced at the hearing and the contents of the
governing documents, and Pennsylvania law.
Third Circuit precedent, this case must be stayed rather than
dismissed during arbitration. See Lloyd, 369 F.3d at
the Court will enter an order of arbitration and place the
case in suspense for six months and direct the parties to
attempt to resolve all these claims within that time period.