“It’s a Family Affair: SCOTX Compels Non-Signatory Minor Children to Arbitrate Their Construction Defect Claims with Signatory Parents”

As discussed in this Lexology article by Ian Faria and Sydney Warren of Bradley Arant, the Texas Supreme Court has held that non-signatory minor children of a home purchaser are subject to the provisions of an arbitration agreement entered into between the purchaser and the home builder. Quoting the decision, the article notes the court’s holding that

“[W]hen a family unit resides in a home and sues for factually intertwined construction-defect claims concerning that home, a nonsignatory spouse and minor children have accepted direct benefits under the signatory spouse’s purchase agreement such that they may be compelled to arbitrate through direct-benefits estoppel. This is especially true given the special nature of marital and parent–child relationships.”

The authors note that the court’s determination “is a major victory for builders and contractors that, prior to these decisions, were left exposed to the prejudicial effects of defending against separate state court and arbitration lawsuits by multiple occupants of the same home, including inconsistent rulings by different fact finders; loss of the benefit of the bargain (e.g., mandatory agreement to arbitrate and contractual limitations on damages and claims); appellate remedies that otherwise would not be available in arbitration; and the potential double recovery.”