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Noohi v. Toll Brothers, Inc.

United States Court of Appeals for the Fourth Circuit
709 F.3d 599 (2013)


Facts

Medhi Noohi (plaintiff) and his wife, Soheyla Bolouri (plaintiff), contracted with a subsidiary of Toll Brothers, Inc. (Toll Brothers) (defendant), a real-estate developer, for the purchase of a newly constructed luxury home. The plaintiffs provided Toll Brothers with deposits totaling over $77,000. The agreement included a clause under which the plaintiffs agreed to submit all disputes against Toll Brothers to binding arbitration. The clause did not require Toll Brothers to submit disputes against the plaintiffs to binding arbitration. Additionally, the agreement required the plaintiffs to make a good-faith effort to obtain mortgage financing, accept a loan if one was offered by a lender, and comply with other terms and conditions. If the plaintiffs were unsuccessful in obtaining financing within a specified time frame, Toll Brothers could either extend the mortgage-application period or nullify the agreement and refund the plaintiffs’ deposits. Although the plaintiffs submitted mortgage applications with several lenders, and even briefly received approval from one lender that was later rescinded, the plaintiffs were unable to secure a mortgage. Toll Brothers refused to return the plaintiffs’ deposits. The plaintiffs filed suit in federal district court against Toll Brothers and its subsidiaries, alleging breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment, and unfair and deceptive trade practices in violation of Maryland law. The district court denied Toll Brothers’ motion to dismiss or to stay the plaintiffs’ complaint pending arbitration, holding that the arbitration provision was unenforceable due to lack of consideration. Toll Brothers appealed.

Rule of Law

Issue

Holding and Reasoning (Davis, J.)

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