U.S. HOME CORPORATION, A DELAWARE CORPORATION, Appellant,
THE MICHAEL BALLESTEROS TRUST; RODRIGO ASANION, INDIVIDUALLY; FEDERICO AGUAYO, INDIVIDUALLY; FELIPE ENRIQUEZ, INDIVIDUALLY; JIMMY FOSTER, JR., INDIVIDUALLY; THE GARCIA FAMILY TRUST; ARNULFO ORTEGO-GOMEZ, INDIVIDUALLY; ELVIRA GOMEZ-ORTEGA, INDIVIDUALLY; JOHN J. OLSON, INDIVIDUALLY; IRMAA. OLSON, INDIVIDUALLY; OMAR PONCE, INDIVIDUALLY; BRANDON WEAVER, INDIVIDUALLY; JON YATES, INDIVIDUALLY; AND MINTESNOT WOLDETSADIK, INDIVIDUALLY, Respondents.
from a district court order denying a motion to compel
arbitration. Eighth Judicial District Court, Clark County;
Joanna Kishner, Judge.
& Fears LLP and Gregory H. King, Sarah J. Odia, and Chad
D. Olsen, Las Vegas, for Appellant.
Shinnick, Ryan & Ransavage P.C. and Duane E. Shinnick,
Courtney K. Lee, Melissa Orr, and Bradley S. Rosenberg, Las
Vegas, for Respondents.
Riedy Abele and Scott K. Canepa, Las Vegas, for Amicus Curiae
Nevada Justice Association.
Smith, Henning & Berman, LLP, and Janice M. Michaels, T.
Blake Gross, and Anthony S. Wong, Las Vegas, for Amicus
Curiae Nevada Home Builders Association.
an appeal from an order denying a motion to compel
arbitration in a construction defect action. The Federal
Arbitration Act (FAA) declares written arbitration agreements
'Valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of
any contract." 9 U.S.C. § 2. In this appeal, we
must determine whether the FAA governs the arbitration
agreement contained in the common-interest community's
Covenants, Conditions, and Restrictions (CC&Rs). Because
the underlying transaction involved interstate commerce, we
hold that it does and that, to the extent Nevada case law
concerning procedural unconscionability singles out and
disfavors arbitration of disputes over transactions involving
interstate commerce, that case law is preempted by the FAA.
We therefore reverse and remand for entry of an order
directing the parties to arbitration.
construction defect action concerns 12 single-family homes
located in a southern Nevada common-interest community.
Appellant U.S. Home Corporation is the developer. The
community is subject to CC&Rs that define U.S. Home as a
"declarant." The CC&Rs include a section
entitled "Arbitration, " which states in relevant
Arbitration. Any dispute that may arise
between: (a) the . . . Owner of a Unit, and (b) the relevant
Declarant, or any person or entity who was involved in the
construction of any. . . Unit, shall be resolved by
submitting such dispute to arbitration before a mutually
acceptable arbitrator who will render a decision binding on
the parties which can be entered as a judgment in court
pursuant to NRS 38.015, et seq.
of the respondents are original purchasers who contracted
directly with U.S. Home to build and sell them homes. These
respondents each signed a Purchase and Sales Agreement (PSA).
The PSAs include an arbitration clause, in addition to that
contained in the CC&Rs, in which the parties
"specifically agree that this transaction involves
interstate commerce and that any dispute . . . shall first be
submitted to mediation and, if not settled during mediation,
shall thereafter be submitted to binding arbitration as
provided by the Federal Arbitration Act (9 U.S.C.
§§ 1 et seq.) or, if inapplicable, by
similar state statute, and not by or in a court of law."
The remaining ten respondents are subsequent purchasers who
took title subject to the CC&Rs but did not sign a PSA.
August 2013 and February 2015, U.S. Home received
construction defect pre-litigation notices on behalf of all
respondents (the Homeowners). U.S. Home responded with
letters demanding arbitration. The Homeowners then filed, in
the district court, an NRS Chapter 40 construction defect
complaint against U.S. Home seeking damages for breach of
contract, breach of implied warranties, and negligence. U.S.
Home filed a motion to compel arbitration based on the
arbitration clauses in the CC&Rs and PSAs. The district
court denied the motion. It held that the underlying
transaction did not involve interstate commerce so the FAA
did not apply. Applying state law, the district court
invalidated the arbitration agreements as unconscionable.
This appeal followed.
considering whether the FAA controls, there is a threshold
question we must resolve: Does the arbitration clause in the
CC&Rs bind the Homeowners? The Homeowners maintain that U.S.
Home cannot compel arbitration based on the CC&Rs because
"CC&Rs are not 'contracts, ' but covenants
that run with the land." Citing Pinnacle Museum
Tower Association v. Pinnacle Market Development, LLC,282 P.3d 1217 (Cal. 2012), where the California Supreme Court
held that an arbitration provision contained in recorded
CC&Rs was enforceable against a non-signatory
homeowners' association, U.S. Home argues that, by
purchasing homes in a common-interest community, the
Homeowners assented to the obligations the CC&Rs impose,
including, in this case, the obligation to arbitrate their