315 Corley CW LLC v. Palmetto Bluff Development, LLC

Summary

The South Carolina Supreme Court held that the Federal Arbitration Act applied because the transactions involved interstate commerce. It further held that the parties had not clearly and unmistakably delegated arbitrability questions to an arbitrator, despite incorporating American Arbitration Association rules, because the agreements also invoked South Carolina arbitration law. The court affirmed as modified the determination that the arbitration provision was unconscionable, including because its sixty-day demand period unlawfully shortened the statute of limitations.

Holdings

1. The transactions implicated interstate commerce, so the Federal Arbitration Act applied.
2. The Membership Agreements did not clearly and unmistakably delegate arbitrability issues to an arbitrator; the circuit court therefore had to decide whether the arbitration provision was unconscionable.
3. The arbitration provision was unconscionable because its sixty-day demand requirement was functionally equivalent to an invalid contractual shortening of the statute of limitations.

Questions Presented

1. Whether the transactions between the property owners and Palmetto Bluff involved interstate commerce such that the Federal Arbitration Act applied.
2. Whether the Membership Agreements clearly and unmistakably delegated questions of arbitrability, including unconscionability, to an arbitrator through incorporation of the American Arbitration Association rules.
3. Whether the arbitration provision was unconscionable because it required arbitration demands to be made within sixty days after the conclusion of mediation, thereby impermissibly shortening the statute of limitations.

Disposition

affirmed