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In re American Homestar of Lancaster, Inc.

50 S.W.3d 480 (2001)

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In re American Homestar of Lancaster, Inc.

Texas Supreme Court
50 S.W.3d 480 (2001)

EP

Facts

James and Clara Van Blarcum (plaintiffs) purchased a home from Nationwide Housing System (NHS) that was built by American Homestar (AH) and financed by Associates Housing Financing Services (defendants). The transaction included a home warranty and accompanying Retail Installment Contract Security Agreement (agreement) with an arbitration provision. In 1998, the Van Blarcums filed suit, alleging breach of warranty due to property defects and violations of the Magnuson-Moss Warranty Act (Warranty Act), the Texas Deceptive Trade Practices Act, and the Texas Manufactured Housing Standards Act. The trial court granted NHS and AH’s motion to compel arbitration. The court of appeals reversed the trial court, finding that the Warranty Act applied to invalidate the agreement. NHS and AH filed a writ for mandamus relief. The Van Blarcums argued that the Warranty Act applied and prohibited arbitration. The Van Blarcums claimed that the Federal Trade Commission (FTC) instructed that informal dispute resolution was not binding but was merely a prerequisite and that the Warranty Act was not a bar to filing suit, as shown by its statutory language and legislative history. NHS and AH argued that the Warranty Act did not prohibit or even mention arbitration.

Rule of Law

Issue

Holding and Reasoning (Baker, J.)

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