Noohi v. Toll Bros., Inc

708 F.3d 599 (4th Cir. 2013)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P contracted with D for the construction of a home in Maryland. P contracted with D for the construction of a home in Maryland. The Agreement required that P seek approval of a mortgage, and included an arbitration provision. P received a 'Mortgage Loan Commitment' letter from at least one lender that was later rescinded, and though several other of their mortgage applications were all denied, D sought to keep $77,008 in P's deposits. On February 17, 2008, P made an 'initial reservation deposit' of $5,000. On February 24, 2008, they entered into the Agreement with D to purchase a pre-construction home for $1,006,975. P made an additional deposit of $45,348 and later deposited another $26,660. P was obligated to obtain mortgage financing. P agreed to make a good-faith, 'truthful and complete application to TBI Mortgage and any other lender of [their] choosing,' accept a loan commitment and comply with all terms imposed by the lender. If P was not approved for a mortgage after 60 days, D could either extend the mortgage application period in order to submit a mortgage request on behalf of P or declare the Agreement 'null and void' and refund P's deposit. P's TBI application was rejected. P then applied for a =mortgage with First Preferred Financial, Inc., which provided them with a 'Mortgage Loan Commitment' letter for $906,275 on April 24, 2008. Though Plaintiffs accepted the letter, First Preferred Financial informed P on June 13, 2008, that it could no longer provide them with financing in light of a recent Maryland law prohibiting 'stated income' loans. P also sought to secure a mortgage from GMAC but were unsuccessful. P demanded a refund. D demanded that P contact APEX Funding Group. APEX Funding Group gave P a loan commitment letter but then declined to approve them for a mortgage. P also sought mortgage approvals from other lenders but were unable to secure financing. D refused a refund. P filed a class action suit. D filed a motion to dismiss or stay Plaintiffs' complaint pending arbitration based on the Agreement's arbitration provision. After determining that the arbitration provision required only P to submit disputes to arbitration, the court held that Section 13 of the Agreement was unenforceable for lack of consideration. D appealed.